Central District of California
Press releases recorded for this federal judicial district.
High Desert Woman Pleads Guilty in Unemployment Insurance Fraud Scheme involving Bogus Movie Production CompaniesRead the Press Release
LOS ANGELES – An Antelope Valley woman pleaded guilty this morning in a mail fraud scheme that used personal data stolen from elderly victims in an effort to defraud California’s unemployment insurance program out of nearly $300,000.
Dena Peterman, who also uses the name Dena Buttram, 32, of Littlerock, pleaded guilty to one count of conspiracy to commit mail fraud pursuant to a plea agreement filed yesterday in United States District Court.
According to the plea agreement and other court documents, over the course of two years, Peterman and her co-conspirators stole social security numbers and other personal identifying information that was used to defraud the California Employment Development Department (EDD), which administers the state unemployment insurance program. Peterman and her co-conspirators targeted senior citizens as part of the scam, obtaining social security numbers and other personal data from the elderly victims in Oregon and California by telling them that they had an opportunity to be cast in remakes of popular movies.
Peterman and her co-conspirators created bogus companies supposedly related to the movie industry with names such as Nine Maids Movie Production, Western Film Animation and High Desert Productions. Using the stolen personal information, a co-conspirator filed fictitious wage reports with the EDD and then fraudulently sought unemployment insurance benefits for the people who supposedly worked for the movie companies. The EDD subsequently provided unemployment insurance benefits in the names of these individuals through debit cards that were mailed to addresses that Peterman or her co-conspirators controlled.
As a result of this scheme, Peterman and her co-conspirators sought more than $290,000 in unemployment insurance benefits, and the EDD suffered losses of approximately $221,612.
Peterman pleaded guilty before United States District Judge Dolly M. Gee, who is scheduled to sentence the defendant on January 6.
As a result of today’s guilty plea, Peterman faces a statutory maximum penalty of five years in federal prison.
This case is the result of a joint investigation by the U.S. Department of Labor - Office of Inspector General and the California Employment Development Department.
Justice Department Resolves ADA Employment Discrimination Case Against Riverside County, CaliforniaRead the Press Release
Today the Justice Department has reached a settlement agreement with Riverside County, California, resolving claims alleging that the county violated the Americans with Disabilities Act (ADA). The complaint, filed on Sept. 28, 2015, alleges that the county discriminated in its employment practices by failing to hire a probation officer applicant because he has epilepsy. The job applicant was qualified for and could perform the job duties associated with the position, but the county withdrew his offer of employment solely because of his controlled epilepsy.
“Refusal to employ qualified individuals with disabilities, including epilepsy, because of their disability cannot be tolerated by workers in our country and will not be tolerated by the Department of Justice,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.
“All qualified individuals, including those with disabilities, are entitled to equal employment opportunities,” said U.S. Attorney Eileen M. Decker of the Central District of California. “This settlement demonstrates the Department of Justice’s ongoing commitment to eliminating all forms of discrimination.”
Under the consent decree, which must be approved by the court, the county will pay the applicant $50,000, offer him the position as a probation officer, provide training on the ADA and file reports on its compliance with the decree and ADA with the Justice Department. The county, which cooperated with the department in this matter, has also taken steps to ensure that its employment processes will be free of disability based discrimination.
Title I of the ADA prohibits employers, such as Riverside County, from discriminating against a qualified individual on the basis of disability in regard to job application procedures, the hiring, advancement or discharge of employees, employee compensation, job training and other terms, conditions and privileges of employment. An employer may also not deny employment opportunities to a job applicant or employee who is otherwise qualified if the denial is based on the need to make reasonable accommodations for the applicant or employee. This matter was based on a referral from the Los Angeles District office of the Equal Employment Opportunity Commission who completed the initial investigation of the facts.
Those interested in finding out more about federal disability rights statutes can call the Justice Department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD), or access the ADA website at www.ada.gov.
New Indictment Adds Bank Fraud and Financial Aid Fraud Charges Against Two Orange County Men Charged with Conspiring to Provide Material Support to ISILRead the Press Release
Two Orange County men who were indicted in June 2015 for conspiracy to provide material support to the Islamic State of Iraq and the Levant (ISIL) have been indicted for additional charges involving bank fraud and financial aid fraud.
Nader Elhuzayel, 25, and Muhanad Badawi, 24, both of Anaheim, California, were named in a superseding indictment returned today by a federal grand jury in Santa Ana. Elhuzayel is charged in the indictment with 25 counts of bank fraud, and Badawi is charged with one count of federal financial aid fraud.
According to the first superseding indictment, during April and May of this year, Elhuzayel obtained cash through a scheme to defraud three different banks, by depositing stolen checks into his personal checking accounts and then withdrawing cash at Orange County branch offices and ATMs. Co-defendant Badawi is charged with using his federal financial aid to purchase a plane ticket for Elhuzayel to travel to Turkey.
The first superseding indictment reiterates the previous charges against Elhuzayel and Badawi. Both men were charged in count one with conspiring to provide material support to ISIL, in count two Elhuzayel was charged with attempting to provide material support to ISIL, and in count three Badawi was charged with aiding and abetting an attempt to provide material support to ISIL. The time of the alleged fraud and the time of the terrorist activity coincide. In June, both men entered pleas of not guilty to all charges, and they have been held in federal custody without bond since that time.
Both men were arrested on May 21, 2015, when Elhuzayel attempted to board a plane at Los Angeles International Airport to travel to Turkey to join ISIL. The affidavit in support of the criminal complaint, filed on May 22, outlined a scheme in which Badawi and Elhuzayel used social media to discuss ISIL and terrorist attacks, expressed a desire to die as martyrs, and made arrangements for Elhuzayel to leave the United States to join ISIL. In recorded conversations, Badawi and Elhuzayel “discussed how it would be a blessing to fight for the cause of Allah, and to die in the battlefield,” and they referred to ISIL as “we,” according to the complaint affidavit.
If convicted on the charges in the first superseding indictment, Elhuzayel faces a statutory maximum sentence of 30 years imprisonment on each bank fraud count, Badawi faces a statutory maximum sentence of 5 years imprisonment on the financial aid fraud count, and both men each face a statutory maximum sentence of 15 years in prison on each count of providing material support to ISIL.
Trial is scheduled for June 7, 2016, before the Honorable David O. Carter, United States District Judge, at the United States Courthouse in Santa Ana, California.
The investigation in this case was conducted by the FBI’s Joint Terrorism Task Force in Orange County, which includes the following agencies: the Anaheim Police Department, the California Highway Patrol, the Orange County Sheriff’s Department, the Orange County Intelligence Assessment Center, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the United States Secret Service, IRS – Criminal Investigation, the City of Orange Police Department, the Irvine Police Department, and the Buena Park Police Department.
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.
Eight People Charged in a Bank Fraud Scheme that Allegedly Used Information Stolen by Wells Fargo Employees to Access AccountsRead the Press Release
LOS ANGELES – Special agents with the FBI and the U.S. Secret Service have arrested the lead defendant in a bank fraud case, an Inglewood man who allegedly orchestrated a scheme in which Wells Fargo Bank employees stole customer account information, and other conspirators used that information to impersonate customers and steal money from their accounts.
Ronald Reed is among eight defendants who were charged in two indictments returned by a federal grand jury last week. Three of the defendants have not yet been identified, and authorities are seeking the public’s help in identifying and apprehending the currently unknown individuals.
Reed was arrested yesterday, and two former bank employees surrendered to federal authorities this morning. All three defendants are expected to be arraigned this afternoon in United States District Court.
The indictments charge Reed, four former bank employees and the three unknown individuals in a scheme that caused Wells Fargo to suffer losses of approximately $1.4 million. The scheme detailed in the indictments alleges that Reed recruited four bank employees in 2013 and 2014, asked them to access the bank’s computer records, and then purchased personal identifying information belonging to bank customers, including dates of birth, account numbers, driver’s license numbers and social security numbers. With this information, the currently unidentified “runners” used fake IDs to impersonate bank customers and made substantial cash withdrawals from the customers’ accounts. In some cases, the runners also used the customer’s account to deposit worthless checks and receive cash back. The fraudulent transactions were made at bank branches across Southern California and in other states, including Minnesota and Nevada.
The defendants charged in the indictments are:
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Ronald Reed, also known as “Disco Ronnie,” 69;
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Michael Hester, 35, of Los Angeles, a former Wells Fargo employee;
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Jamal Hurley, 39, of Garden Grove, a former Wells Fargo employee;
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Garrick James Davis-Looney, 22, of Torrance, a former Wells Fargo employee;
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Jonathan Lawrence Cobbs, Jr., 35, of Los Angeles, a former Wells Fargo employee; and
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three defendants identified in the indictment as FNU LNU (First Name Unknown, Last Name Unknown).
All of these defendants are charged with conspiracy to commit bank fraud, as well as various substantive counts of bank fraud, each of which carry a statutory maximum penalty of 30 years in federal prison. Additionally, each of the defendants is charged with at least one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison.
This matter was jointly investigated by the Federal Bureau of Investigation and the United States Secret Service. Wells Fargo Bank fully cooperated during the investigation.
Members of the public who have information about the three runners who have not yet been identified are asked to call the Federal Bureau of Investigation at (310) 477-6565.
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Australian Man, Who Ran Third Largest Car Dealership in the United States and Was Fugitive for 24 Years, Pleads Guilty in $50 Million Scheme that Defrauded Multiple Banks in the 1980sRead the Press Release
LOS ANGELES – An Australian man, who ran the third largest car dealership in the United States before he fled the country 27 years ago, pleaded guilty late yesterday afternoon to federal charges for bank fraud and lying to banks.
Eminiano “Jun” Reodica, Jr., 71, ran a fraud scheme that caused nearly $50 million in loss to the banks in the 1980s. At that time Reodica was the President of the Grand Wilshire Group of Companies, which included Grand Chevrolet, then the third largest car dealership in the country. The Grand Wilshire Group was headquartered in Glendora, California.
In his guilty plea yesterday, Reodica admitted to engaging in schemes to defraud and making false statements to at least five banks, including Union Bank, Imperial Savings, First Los Angeles Bank, Manilabank, and First Central Bank, from 1984 to 1988. Specifically, Reodica admitted to promising the same car contract as collateral to two different banks at the same time. This scheme involved directing employees to forge customer signatures on car contracts and then promising the forged contract to a second bank. The fraudulent conduct also involved repossessing and reselling cars without telling the banks. Reodica also admitted to hiding from the banks that customers were delinquent on their car loans. Reodica admitted that he made his employees sign for car loans for cars that they were not really buying so that Reodica could put more money into his businesses.
As a result of Reodica’s fraud and false statements, the Grand Wilshire Group and Grand Chevrolet collapsed into bankruptcy in August of 1988 while Reodica fled the United States to his native Philippines. He was missing for over 24 years until FBI agents arrested him at Los Angeles International Airport in November of 2012. At the time of his arrest, Reodica was traveling using an Australian Passport in the name of Roberto Coscolluela.
“The guilty pleas by this defendant should be a warning to all fugitives facing charges in federal court that the United States Department of Justice and the United States Attorney’s Office have a very long memory,” said United States Attorney Eileen M. Decker of the Central District of California.
Reodica pleaded guilty before United States District Judge S. James Otero, who is scheduled to sentence the defendant on February 1, 2016. At sentencing, Reodica will face a statutory maximum sentence of 79 years in federal prison and a fine of $6,500,000 or twice the loss resulting from his offenses.
The charges in the indictment are the result of an investigation conducted by the Federal Bureau of Investigation (FBI) in the late 1980s and early 1990s as well as investigation conducted by the FBI in the last three years.
Whittier Woman Sentenced to Nearly 6 Years in Prison for Having Duped 400 Victim Homeowners – Many Spanish Speakers – of Nearly $4 Million with False Promises of Eliminating Their MortgagesRead the Press Release
LOS ANGELES—A Whittier woman was sentenced today to nearly 6 years in prison for her lead role in a scheme that falsely promised to eliminate mortgage debts for approximately 400 distressed homeowners who each paid a $15,000 fee, totaling nearly $4 million in victim payments. Instead of working on behalf of the homeowners, the woman simply sent worthless “Sovereign Citizen” paperwork to lenders—paperwork that did nothing to affect the mortgage of a single homeowner.
Maria Marcela Gonzalez, 45, was sentenced by Judge Stephen V. Wilson in United States District Court in Los Angeles, for two counts of making a false bankruptcy declaration. In rejecting her request for a probationary sentence and imposing the 70-month sentence, Judge Wilson said that the defendant’s actions were “callous and in gross disregard of the law.”
Gonzalez, who pled guilty in July of this year, started the Crown Point Education Inc. scheme in early 2010 and operated from offices in Montebello. She admitted in her plea agreement that she spoke at seminars to recruit distressed homeowners and salespersons in the Crown Point program and ran the day-to-day operations of the scheme. Many of the victims were primarily or exclusively Spanish speakers.
In her plea agreement, Gonzalez admitted that she and others promised distressed homeowners at these seminars that, in exchange for fees that were generally $15,000 per property, Crown Point would eliminate the homeowners’ mortgages within six to eight months through a secret process that involved sending packets of documents to lenders. Even though she told victims that she could eliminate their mortgage woes, Gonzalez admitted in her plea agreement that the process had never been successful. Gonzalez failed to tell distressed homeowners that earlier Crown Point clients had lost their houses to foreclosure and been evicted from their houses.
In the plea agreement, Gonzalez admitted that she worked with co-schemer Jude Lopez, who was also convicted and sentenced to a probationary term, and Ernesto Diaz, who was charged but failed to appear and is currently a fugitive. Lopez admitted in his plea agreement that he filed bankruptcy documents in the names of Crown Point clients to delay foreclosure and eviction. Diaz admitted in his plea agreement that Crown Point filed many bankruptcy documents without the knowledge of the company’s clients and that signatures of debtors and notaries were forged on many documents filed with the bankruptcy court.
The claims made to distressed homeowners were based on discredited Sovereign Citizen claims that mortgages are invalid because the banks did not actually lend the money used to fund mortgages, and the notes were securitized.
The case against Gonzalez, Diaz, and Lopez was conducted by the Federal Bureau of Investigation.
Canadian Man Charged in Scheme to Launder Money for Drug Rings, including the Sinaloa Cartel, Arrives in L.A. to Face ChargesRead the Press Release
LOS ANGELES – The leader of an international money laundering organization is scheduled to be arraigned this afternoon on federal charges that allege he moved millions of dollars in drug money for organizations that included the Sinaloa Cartel.
Gurkaran Singh Isshpunani was arrested on September 14 in Buffalo, New York as he attempted to enter the United States from Canada. A federal magistrate ordered Isshpunani held without bond and directed that he be transported to Los Angeles, where he arrived last night.
Isshpunani is the lead defendant in a grand jury indictment that charges 22 defendants with money laundering and operating unlicensed money remitting businesses violations. The illegal scheme allegedly spanned the world and involved operatives in Canada, India, the United States and Mexico who laundered drug trafficking proceeds generated from multi-kilogram and multi-pound sales of narcotics in Canada and the United States for and on behalf of the Sinaloa Cartel and their affiliated drug trafficking organizations. The laundered money is alleged to have either been transported to the Sinaloa Cartel as profits or reinvested in additional narcotics to be sold and distributed in the United States and Canada.
The indictment accuses Isshpunani of being the leader of an international “hawala” ring that transferred narcotics proceeds for the Sinaloa drug cartel and other drug trafficking organizations. Isshpunani, 34, who is believed to reside in the Canadian province of Ontario, will be arraigned this afternoon on a three-count indictment that charges him and 21 other defendants with conspiracy to launder money, conspiracy to operate an unlicensed money transmitting business (a hawala), and a substantive count of operating an unlicensed money transmitting business.
Previously in this case, 14 other defendants have been arrested and arraigned. The indictment charges seven defendants who are currently fugitives.
The indictment specifically alleges that the hawala network transferred more than $4.5 million in narcotics proceeds and was involved in the trafficking of 29 kilograms of cocaine and approximately 90 pounds of methamphetamine.
However, during the course of a four-year federal wiretap investigation by the Drug Enforcement Administration’s LA Strike Force and IRS - Criminal Investigation, authorities seized a total of $15,467,293 in bulk United States currency, 321 kilograms of cocaine, 98 pounds of methamphetamine, 11 kilograms of MDMA (“ecstasy”) and nine kilograms of heroin.
Isshpunani and the others are charged in a 36-page indictment that outlines the workings of a “hawala,” which is an alternative form or method of money remittance which operates outside of traditional banking or financial systems. Through hawala transactions, only the value of the money is transferred, not the money itself. The hawala system transfers money via a network of brokers known as “hawaladars.” According to the indictment, Isshpunani is a hawaladar who is a part of a network of Indian men who move money based on a trust system.
The indictment explains that, in its most basic form, a hawala needs at least two brokers who are typically located in separate countries (but can be located in different cities within one country). The transfer of monetary value occurs between the brokers based solely upon the trust that exists between the brokers. Thus, there are no promissory instruments or any legally binding features of the hawala system. The necessary trust and long-established connections between brokers are typically based on familial, ethnic, religious, regional and/or cultural grounds. Often, a given hawala network consists of many brokers operating in multiple countries around the world in which all brokers are in contact with each other and money movements can occur in a variety of directions from one country to another.
“Drug traffickers in Canada would generate drug proceeds from multi-kilogram and multi-pound sales and distributions of drugs provided by Mexican cartels, including the Sinaloa Cartel,” the indictment alleges. The Canadian-based drug traffickers coordinated money transfers to their counterparts in Mexico by instructing Isshpunani and other alleged hawaladars in Canada to deliver specified amounts of money to couriers in the U.S. who were working on behalf of the cartels. The Canadian-based hawaladars, once in possession of the drug traffickers’ bulk Canadian currency, would contact U.S.-based hawaladars and authorize the release of the equivalent amounts of U.S. currency to the couriers operating in the Los Angeles area. A number of co-defendants named in the indictment served as U.S.-based couriers, picking up and subsequently delivering bulk U.S. currency in the Los Angeles area in exchange for narcotics that were to be transported back to Canada for sales and distribution.
The indictment in this case was returned under seal by a federal grand jury in Los Angeles in November 2014. Authorities began arresting defendants several months ago. In addition to Isshpunani, 14 defendants have been taken into custody and have been arraigned in Los Angeles.
Those previously arrested, and who have pleaded not guilty, are:
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Miguel Melendrez Gastelum, 35, of Coachella, California, who surrendered to federal authorities on September 16;
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Shannon Aubut, 30, a resident of the province of Ontario, who was arrested on August 14 at the Camplain, New York Port of Entry;
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Paul Alan Jacobs, 42, of Venice, California, who surrendered to authorities on August 13;
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Jose De Jesus Montenegro, 49, of Coachella, who was arrested at the Tecate, California Port of Entry;
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Breidi Alberto Espinoza, 28, of Corona, California, who was arrested on July 10 at the Otay Mesa Port of Entry;
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Alberto Diaz, 28, of San Diego, who was arrested on July 4 at the San Ysidro Port of Entry;
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Christopher Fagon, 37, a resident of the province of Ontario, who was arrested on June 28 at Los Angeles International Airport;
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Jose Luis Barraza, 47, of Coachella, who was arrested on June 27 at Calexico Port of Entry;
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Bradley John Martin, 54, of Carlsbad, California, who was arrested on June 12 at San Ysidro Port of Entry;
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Ramesh Singh, 46, of Alhambra, California, who surrendered to authorities on June 2;
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Sanjeev Wadhwa, 36, an Indian national, who was arrested on May 30 at LAX;
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Sucha Singh, 51, of Arleta, California, who was arrested at his residence on May 30;
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Harinder Singh, 30, of Monrovia, California, who was arrested on May 30; and
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Harmeet Singh, 54, of Chino Hills, California, who was arrested at his residence on May 30.
A trial date for the defendants who have been arraigned in Los Angeles has been scheduled for May 24, 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.
The money laundering conspiracy charge carries a statutory maximum sentence of 20 years in federal prison. Each of the two counts related to the alleged unlicensed money transmitting business carries a maximum sentence of five years.
The seven fugitives named in the indictment are:
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Sanjeev Bhola, of India;
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Balwat Bhola, of India;
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Bakshish Sidhu, of India;
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Jason Robert Carey, 37, a resident of the province of Ontario;
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Jesus Manuel Perez Rios, 33, of Coachella, who authorities believe fled to Mexico;
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Tina Pham, 25, of Montreal; and
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a Canadian man known only as “Buddy.”
The investigation in this case is being conducted by the Drug Enforcement Administration and IRS – Criminal Investigation. These agencies received assistance and support from the Santa Ana Police Department, the Beverly Hills Police Department and the Pomona Police Department.
Isshpunani was apprehended last month by U.S. Customs and Border Patrol while attempting to enter the United States from Canada at the Buffalo, New York Port of Entry.
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West L.A. Pharmacy Owners Arrested on Drug Trafficking and Money Laundering Charges for Diverting Prescription Drugs to Black MarketRead the Press Release
LOS ANGELES – Two brothers were arrested today on federal drug trafficking and money laundering charges that allege they used a bogus pharmacy to obtain and distribute large quantities of prescription narcotics, including OxyContin, to black-market customers.
The two Brentwood men are charged in a 40-count indictment that alleges the operators of Global Compounding Pharmacy in West Los Angeles also illegally imported large quantities of anabolic steroids.
The two men arrested this morning are Berry Kabov, 44, and his brother, Dalibor Kabov (also known as “Dabo”), 32. The indictment that charges the Kabovs, which was unsealed this morning, also names Global Compounding, LLC, as a defendant.
Berry and Dalibor Kabov are expected to be arraigned on the indictment this afternoon in United States District Court in Los Angeles.
A search warrant also unsealed today details how the Kabov brothers used Los Angeles as a base to sell bulk shipments of prescription drugs – including oxycodone, which is commonly sold under the brand name OxyContin – to black market customers across the country. Investigators seized parcels containing thousands of hidden oxycodone pills that the Kabov brothers attempted to ship to customers in and around Columbus, Ohio, according to the search warrant affidavit, which states that the customers in turn made cash deposits into Kabov-controlled bank accounts or simply shipped bulk cash to the brothers in Southern California. During recorded calls with an informant that are described in the affidavit, Berry Kabov coordinated the shipments and explained that he could sell oxycodone in New York for as much as $50 per pill.
The court documents unsealed today allege that the Kabov brothers operated Global Compounding as a bogus pharmacy to facilitate the acquisition of prescription drugs from the wholesale market. DEA administrative records show that, between June 2012 and January 2014, the Kabov brothers purchased massive quantities of drugs, including nearly 100,000 in oxycodone pills, as well as tens of thousands of pills of hydrocodone (commonly sold under the brand name Vicodin) and hydromorphone (commonly sold under the brand name Dilaudid) .
DEA administrative records show that Global Compounding was the top purchaser of oxycodone among all pharmacies in the Los Angeles area in 2014, and that it ordered three times more oxycodone than the second-largest purchaser. Surveillance of Global Compounding has shown that few, if any, people who appear to be customers ever go the pharmacy.
The affidavit also described an inspection at Global Compounding by the California Board of Pharmacy in January 2014 that led investigators to conclude “that Global Compounding is not a legitimate pharmacy and in fact is a façade for a drug trafficking operation.” In coming to this conclusion, the state investigators noted a lack of over-the-counter drug products ordinarily carried by legitimate pharmacies and records indicating that many of the prescriptions purportedly being filled by the pharmacy were for patients outside of the Los Angeles area, according to the affidavit.
The indictment also alleges that the brothers engaged in money laundering and the structuring of cash transactions to avoid federal reporting requirements. The search warrant identifies more than $1.5 million in structured cash deposits into multiple bank accounts controlled by the Kabov brothers. The affidavit details extravagant expenditures, including private jets from the Los Angeles area to Las Vegas and other luxury items.
In addition to the charges related to oxycodone, the indictment alleges that the brothers illegally imported anabolic steroids purchased from a wholesale drug distributor located in Hubei, China. The indictment details how the brothers used the pharmacy to illegally order bulk quantities of testosterone, oxandrolone and nandrolone.
If convicted of the charges in the indictment, Berry Kabov and Dalibor Kabov each would face a statutory maximum sentence of 430 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The investigation into the Kabov brothers and Global Compounding is being conducted by the Drug Enforcement Administration, the United States Postal Inspection Service, the Los Angeles Police Department and the California Board of Pharmacy.
Owner of San Gabriel Valley Surrogacy Agency Sentenced to Federal Prison for Ripping Off Would-Be Parents who Paid for Egg DonationsRead the Press Release
LOS ANGELES – The owner of a Glendora egg donation and surrogacy company who admitted defrauding would-be parents, egg donors and surrogate mothers over the course of more than three years was sentenced this morning to 18 months in federal prison.
Allison Layton, a 38-year-old resident of Star, Idaho, was sentenced by United States District Court Judge George H. Wu, who ordered that the defendant serve three years of supervised released after completing the prison term.
Layton, who owned and operated Miracles Egg Donation and sometimes used the name Allison Jarvie, lived in Glendora during the course of the scheme.
Between August 2008 and January 2012, would-be parents – who in the surrogacy and egg donation world are known as intended parents – paid tens of thousands of dollars for egg donation and surrogacy services that Miracles promised to coordinate. Layton took money from the intended parents, but, instead of putting the funds into escrow accounts to be withdrawn only for certain costs related to the surrogacy or egg donation, Layton used the money for her own personal expenses (including a wedding that cost $60,000 and other costs that supported a lavish lifestyle) or to cover unpaid costs related to other clients. When confronted by victims, Layton lied about why payments had not been made and refunds not issued and strung victims along, leading them to believe they might soon be paid, when, in fact, many were not.
As a result of Layton’s misappropriation of client funds, egg donors, surrogates, attorneys and others often were not paid for all the services they provided and intended parents often did not receive all the services for which they had paid. At least one investor in Miracles also lost money.
When the donors, surrogates and intended parents sought to recover their money and costs, Layton would lull them into believing they would be repaid through false assurances that payments had already been made or would be made soon.
As a result of the fraud scheme, more than 40 victims lost more than $270,000. Judge Wu scheduled a restitution hearing for October 22.
Layton “took advantage of dozens of individuals at a time when they were particularly vulnerable: when they were working to conceive,” prosecutors wrote in a sentencing memo filed with the court. “In light of the significant harm she caused – in some cases, effectively preventing victims from ever having children – and the risk she still poses to the community, a significant custodial sentence is warranted.”
Three victims spoke at this morning’s hearing, including a couple who said that Layton’s fraud denied them the chance of ever having children.
The investigation into Layton was conducted by the Federal Bureau of Investigation.
Lancaster Man Sentenced to Nearly Seven Years in Prison for Defrauding State’s Unemployment Insurance System and Tax FraudRead the Press Release
LOS ANGELES – A Lancaster man was sentenced today to 80 months in federal prison on fraud charges related to a scheme to defraud the state’s unemployment insurance program and a related scheme to obtain fraudulent federal tax refunds.
Carl Artis, 55, was sentenced by United States District Judge George Wu, who also ordered the defendant to pay $598,000 in restitution.
Artis pleaded guilty in February to one count of mail fraud and one count of making false claims against the United States government.
According to the plea agreement filed in the case, from at least August 2010 through August 2014, Artis operated a scheme to defraud the California Employment Development Department (EDD) of unemployment insurance benefits. To execute the scheme, Artis registered fictitious companies with the EDD, submitted false wage information for individuals whom he falsely claimed worked for these companies, and then fraudulently applied for and obtained unemployment insurance benefits in the names of these individuals.
In addition, from at least April 2011 until July 2013, Artis engaged in a scheme to defraud the Internal Revenue Service by submitting fraudulent tax returns that sought tax refunds. In the tax fraud scheme, Artis used the identities of many of the same individuals and businesses used in the EDD scheme.
Artis, who had served time in the California state prison system, used names of other prisoners to file the false claims with the EDD and the IRS.
“Today’s sentencing highlights that EDD has zero tolerance for fraud against the Unemployment Insurance Program,” said EDD Director Patrick W. Henning Jr. “I applaud EDD’s Investigation Division, the U.S. Attorney, and our other law enforcement partners for protecting taxpayers, businesses and unemployed Californians.”
The case against Artis is the result of an investigation by the California Employment Development Department, the United States Department of Labor – Office of Inspector General, and IRS - Criminal Investigation.
“Today's sentencing sends a powerful message that combating unemployment insurance fraud remains a high priority for the Office of Inspector General,” stated Abel Salinas, Special Agent-in-Charge, U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations in Los Angeles. “We will continue to work with our law enforcement partners to safeguard unemployment insurance benefits from illicit enrichment schemes and conspiracies carried out against Department of Labor programs."
Ex-San Fernando Valley Man Extradited from Mexico to Face Wildlife Trafficking Charges Related to Illegal Export of South American FishRead the Press Release
LOS ANGELES – Mexico has extradited an American citizen who formerly lived in West Hills to face federal charges related to the illegal trafficking of the world’s largest freshwater fish, a South American species known as Arapaima gigas.
Isaac Zimerman, 66, is expected to appear this afternoon in United States District Court in downtown Los Angeles. He was extradited last week and arrived in the United States on September 24.
Zimerman was charged in a 13-count indictment with using his company, the Hawthorne-based River Wonders LLC, to import piranhas and river stingrays into the United States. Zimerman allegedly possessed those fish in California, and then they were advertised for sale, sold to customers, and shipped to states outside of California. The indictment also contains allegations that Zimerman engaged in additional criminal conduct related to the falsification of documents, obstruction of proceedings, false statements, and smuggling of protected Arapaima gigas from the United States while on pre-trial release.
Zimerman was initially charged in 2009, along with his company and his wife, Leonor Catalina Zimerman. While Leonor Zimerman pleaded guilty to a misdemeanor offense in 2010, Isaac Zimerman fled the United States that same year after prosecutors filed additional charges alleging that he continued to illegally export fish while on bond. Special agents with the United States Fish & Wildlife Service (FWS) tracked Zimerman’s movements through Europe, to Israel and eventually to Mexico.
On March 3, 2015, concluding a four-year manhunt, Zimerman was arrested near Metepec, Mexico. During his flight to avoid prosecution, Zimerman changed his appearance and took other steps to avoid detection and arrest.
The Mexican government permitted Zimerman to be extradited to the United States on two of the felony charges related to the illegal exportation of Arapaima gigas.
If he is convicted of the two charges in the indictment that were the subject of the extradition, Zimerman would face a statutory maximum sentence of 20 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
Leonor Zimerman pleaded guilty in 2010 to a misdemeanor count of illegal fish trafficking. She was sentenced by United States District Judge Valerie Baker Fairbank in January 2011 to 21 months of probation and was ordered to pay a $1,500 fine.
The arrest of Isaac Zimerman concluded a four-year manhunt led by FWS, which received assistance from the Mexico City attaché of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, U.S. Customs and Border Protection, the FWS Intel Unit, Interpol, the U.S. Department of Justice’s Environment and Natural Resources Division, and the U.S. Department of Justice’s Office of International Affairs.
City of Compton Becomes Part of Justice Department-Sponsored Violence Reduction NetworkRead the Press Release
LOS ANGELES – United States Attorney Eileen M. Decker and Los Angeles Sheriff Jim McDonnell today announced that the City of Compton has been selected to become part of the Violence Reduction Network, a Justice Department program that focuses on providing effective assistance to cities most affected by chronic violence.
Compton becomes part of the second group of cities to become part of VRN, which was launched last year to create opportunities for cities to directly engage with the United States Department of Justice in developing strategies to combat chronic, violent crime. The two-year program will enable Sheriff’s Department officials at the Compton Station to work closely with the Department of Justice and city officials to address 12 key areas, including gang violence and prevention, human trafficking, mental illness and homelessness, at-risk youth and trust-building in the community.
“This initiative presents a unique opportunity to work in partnership with the United States Attorney’s Office, our federal law enforcement partners, community leaders, and the City of Compton as we work together to develop enhanced strategies for violence reduction” said Sheriff McDonnell. “While we have made many great strides over the years in addressing violent crime in the Compton community, we know all too well that challenges remain and we owe it to the men, women and children of Compton to develop new thinking that will enable us to be doing more on their behalf. I am confident that today’s launch will not simply improve public safety in the City of Compton, but also make crime reduction strategies in Compton a model for other cities around the nation.”
United States Attorney Decker commented: “For decades, Compton has been deeply affected by violence linked to gangs and other criminal activity. The residents of Compton deserve safe neighborhoods and parks where their children can play. We are committed to helping city officials and Sheriff McDonnell make meaningful and long-lasting improvements to the daily lives of Compton residents.”
Compton is one of five cities selected today by the Justice Department as partners in the fight against chronic violence (see: http://go.usa.gov/3zbtR).
As part of the Violence Reduction Network, an Assistant United States Attorney has been designated to work out of the Sheriff’s Department’s Compton Station to coordinate resources. The United States Attorney’s Office also will work closely with the Los Angeles County District Attorney’s Office to coordinate criminal prosecutions in federal and state courts.
Four Justice Department agencies have committed significant resources and will work closely with the Sheriff’s Department. Those agencies are the Federal Bureau of Investigation; the United States Marshals Service; the Drug Enforcement Administration; and the Bureau of Alcohol, Tobacco, Firearms and Explosives.
The Violence Reduction Network will provide the Sheriff’s Department with technical assistance and access to resources as part of a robust violent crime strategy that will be supported by federal law enforcement agencies. The Justice Department program seeks to maximize resources to ensure that cities dealing with chronic violence have a strategic way to access resources such as training and exposure to evidence-based best practices across the country. Compton was selected to be part of VRN, in part, because of LASD Sheriff McDonnell’s recognition of the value and benefits presented by this unique opportunity, as well as the deep commitment of LASD and local government officials to partnerships and civic engagement aimed at crime reduction.
For the next two years, the Sheriff’s Department and the City of Compton will benefit in a number of ways. The core components of the Violence Reduction Network include expedited access to subject matter experts who can provide training and insight into the critical issues – such as use of force, community trust-building and information sharing with peer-to-peer exchanges – that can provide a more thorough understanding of what drives violent crime and what solutions have worked in other cities.
In addition to access to training and evidence-based solutions to community-building and crime reduction, the Violence Reduction Network also enables Compton Station’s gang enforcement, narcotics detectives and cyber-crimes teams to strategically partner with Justice Department components on intelligence gathering, sharing, warrants service and major operations.
4 Involved in Inland Empire Loan Modification Scam that Targeted Financially Distressed Homeowners Sentenced to Federal PrisonRead the Press Release
RIVERSIDE, California – Four people who worked at a Rancho Cucamonga business that offered bogus loan modification programs to thousands of financially distressed homeowners – victims who lost more than $7 million when they paid for services that were never provided – were sentenced today to federal prison, with one of the leaders of the scheme being ordered to spend 20 years in custody.
The Southland residents sentenced today were convicted of federal fraud charges for their roles in a telemarketing operation known under a series of names – including 21st Century Legal Services, Inc. – that bilked more than 4,000 homeowners across the nation, many of whom lost their homes to foreclosure.
The defendants sentenced today by United States District Judge Virginia A. Phillips were:
• Christopher Paul George, 45, of Rancho Cucamonga, a co-owner of 21st Century, who was sentenced to 20 years in federal prison;
• Crystal Taiwana Buck, 40, of Long Beach, a sales “closer” who persuaded numerous victims to pay fees to 21st Century, who received a sentence of five years;
• Albert DiRoberto, 62, of Fullerton, who handled both sales and marketing – which included making a commercial for 21st Century and preparing talking points to respond to negative publicity – was sentenced to five years in prison; and
• Yadira Garcia Padilla, 38, of Rancho Cucamonga – who handled client complaints and refund requests, and who posted bogus positive reviews about 21st Century on the Internet – was sentenced to four years in prison.
George, Buck and DiRoberto were sentenced after being found guilty by a federal jury in June on various fraud charges. Padilla pleaded guilty in 2013.
In addition to the prison term, Judge Phillips today ordered George to pay $7,065,117 in restitution to victims of the scam. Buck, DiRoberto and Padilla were ordered to return to court next month for restitution hearings.
A total of 11 defendants linked to 21st Century have been convicted of federal fraud charges as a result of an investigation conducted by the Federal Bureau of Investigation; IRS - Criminal Investigation; the United States Postal Inspection Service; the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and the Federal Housing Finance Agency, Office of Inspector General.
During a 15-month period that began in the middle of 2008, a Rancho Cucamonga woman – Andrea Ramirez, 47, who previously pleaded guilty to fraud charges and is scheduled to be sentenced by Judge Phillips of November 15 – operated 21st Century, which defrauded financially distressed homeowners by making false promises and guarantees regarding 21st Century’s ability to negotiate loan modifications for homeowners. Employees of 21st Century made numerous misrepresentations to victims during the course of the scheme, including falsely telling victims that 21st Century was operating a loan modification program sponsored by the United States government. Victims were generally instructed to stop communicating with their mortgage lenders and to cease making their mortgage payments.
In addition to being a co-owner of 21st Century, George acted as a sales manager, and he ran his own sales office there for several months. George instructed 21st Century employees to make misrepresentations to distressed homeowners, including guaranteeing that 21st Century would obtain loan modifications and telling homeowners that payments made to 21st Century would go towards homeowners’ mortgages.
21st Century employees contacted distressed homeowners through cold calls, newspaper ads and mailings, and the company controlled websites that advertised loan modification services. Once they contacted the distressed homeowners, 21st Century employees often falsely told clients that the company was operating through a federal government program, that they would be able to obtain new mortgages with specific interest rates and reduced payments, and that attorneys would negotiate loan modifications with their lenders. 21st Century employees regularly instructed financially distressed homeowners to cease making mortgage payments to their lenders and to cut off all contact with their lenders because they were being represented by 21st Century. On some occasions, 21st Century employees told homeowners that 21st Century was using the fees paid by the homeowner to make mortgage payments, when Ramirez, George and their co-defendants simply were pocketing the homeowners’ money.
In addition to Ramirez and the four sentenced today, six other defendants previously pleaded guilty. They are:
• Michael Bruce Bates, of Moreno Valley, who is scheduled to be sentenced on October 19;
• Michael Lewis Parker, of Pomona, who is scheduled to be sentenced on November 19;
• Catalina Deleon, of Glendora, who is scheduled to be sentenced on December 14;
• Hamid Reza Shalviri, of Montebello, who is scheduled to be sentenced on December 7;
• Mindy Sue Holt, of San Bernardino, who is scheduled to be sentenced on October 26; and
• Iris Melissa Pelayo, of Upland, who has been sentenced to four years in federal prison.
Fugitive Who Operated San Fernando Valley Chiropractic Clinic Indicted on Federal Health Care Fraud and Identity Theft ChargesRead the Press Release
LOS ANGELES – A federal grand jury has named an Encino-based chiropractor in a 15-count indictment that accuses him defrauding health care programs by submitting more than $300,000 in fraudulent bills for office visits that never took place and for medical equipment that was never provided.
Yoav Stein, 39, who until about a year ago resided in Encino, was indicted yesterday in a scheme that allegedly defrauded several health care plans, including the National Railroad Passenger Corporation’s (Amtrak) health care plan.
According to the indictment, Stein participated in corporate health care fairs, where he induced employees to provide insurance information by offering Transcutaneous Electrical Nerve Stimulus units for no “out-of-pocket costs.” Armed with the employees’ insurance information, Stein allegedly submitted fraudulent claims to health care plans.
The indictment charges Stein with 13 counts of health care fraud and two counts of aggravated identity theft.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in a court.
Stein is currently a fugitive believed to be in Israel.
If he were to be convicted of the charges in the indictment, Stein would face up to 10 years in federal prison for each of the health care fraud counts, as well as a mandatory two-year consecutive sentence for aggravated identity theft.
This case is a product of an investigation by the Amtrak Office of Inspector General and United States Department of Labor, Employee Benefits Security Administration.
$1.5 Million Grant Will Establish Human Trafficking Task Force to be Led by U.S. Attorney’s Office and L.A. County Sheriff’s DepartmentRead the Press Release
LOS ANGELES – The Justice Department today announced that the Los Angeles Sheriff’s Department will receive a $1.5 million grant to fund the establishment of a multi-agency Los Angeles Human Trafficking Task Force that will jointly be led by the United States Attorney’s Office and the Los Angeles County Sheriff’s Department (LASD). The Task Force will investigate high-priority trafficking crimes – particularly the sex trafficking of minors – while also bringing together federal, state and local leaders to address the needs of trafficking victims.
Combatting human trafficking is one of the top priorities of the Department of Justice, United States Attorney Eileen M. Decker and Los Angeles County Sheriff Jim McDonnell. The Task Force and the grant award represent the latest effort by Sheriff McDonnell to enhance LASD capacity in this vitally important area, while also leveraging the resources and expertise of multiple agencies and justice system partners in a strategic and comprehensive regional focus on human trafficking.
The grant announced this morning by Attorney General Loretta Lynch, which received the strong support of the United States Attorney’s Office, will fund an expansion of the LASD’s Human Exploitation and Trafficking Team. The grant is part of $44 million in federal grant funding going to 16 sites around the nation to fund anti-trafficking task forces (see: http://go.usa.gov/3t7gJ).
The Task Force will be based on a model that emphasizes bringing prosecutors, investigators, justice system partners, service agencies and victim advocates together to provide wraparound care to victims while ensuring strong investigations and prosecutions. Using a collaborative, victim-centered model, these professionals will work together from the beginning of each case to ensure the best possible outcomes for victims and the strongest possible prosecutions of traffickers. With the establishment of the Task Force, the United States Attorney’s Office will be expanding its own human trafficking program with the addition of several prosecutors who will specialize in trafficking cases.
“The devastating crime of human trafficking often is hidden behind the locked doors of a sweatshop or the supposedly ‘victimless’ crime of prostitution,” said United States Attorney Decker. “Law enforcement in Los Angeles is now redoubling efforts to combat this horrific offense with additional resources, improved training and a growing awareness that perpetrators are often victimizing children. I am fully committed to working with Sheriff Jim McDonnell – a national leader in this arena – to seeing that perpetrators of these offenses are brought to justice.”
“As those who commit this horrible crime and prey on trafficking victims become more sophisticated, we must work together to find new and comprehensive strategies,” said Sheriff McDonnell. “If we are to truly make a difference in combatting human trafficking, we must do more than simply prosecute the wrong-doers. We need a regional, multi-disciplinary approach that enables us to cross jurisdictional and agency lines. Working with other justice system and community partners, we will be able to amplify our ability to rescue and address the needs of the victim; investigate, effectively punish and proactively prevent criminal misconduct; and address the demand side by recognizing that buyers of sex with minors should be viewed as child molesters and prosecuted to the fullest extent of the law.”
Human trafficking – which encompasses a wide variety of criminal conduct involving the exploitation of minor and adult victims who are compelled to engage in sex and labor – is a top priority for federal, state and local law enforcement agencies across the nation. The Los Angeles Human Trafficking Task Force is intended to be a model for the nation in the development of comprehensive, proactive and interdisciplinary strategies.
In recent years, the United States Attorney’s Office has brought a series of cases targeting human trafficking, most of which have targeted the sex trafficking of minors. Earlier this year, for example, a Long Beach man was sentenced to 20 years in federal prison for running a sex trafficking operation that victimized young women who he forced to work as prostitutes (see: http://go.usa.gov/3tpHw). The establishment of the task force will allow for a more concentrated effort to develop prosecutions in this area.
Under Sheriff McDonnell’s leadership, LASD is in the process of dramatically expanding its Human Exploitation and Trafficking Team to more than 50 LASD personnel. The Task Force will be based at the LASD facility in Monterey Park and is expected to be operational in the coming weeks. In addition to Assistant United States Attorneys and LASD investigators, the Task Force will include the Federal Bureau of Investigations, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), state parole authorities, the Los Angeles County Department of Children and Family Services, the Los Angeles County Probation Department, the Los Angeles County District Attorneys’ office and local participating police agencies.
The $1.5 million dollar grant is effective from October 1, 2015 through September 30, 2018 and will include significant resources for a partnership with the Coalition to Abolish Slavery and Trafficking (CAST). Sheriff McDonnell noted that “CAST is an integral partner in this endeavor and will be a vital part of addressing the needs of young trafficking victims and ensuring that we are adopting a comprehensive approach to this troubling issue that addresses the needs of the trafficked child, effective prosecution of the trafficker, and strategies for reducing demand by potential trafficking buyers.”
“As a direct victim service provider, we know first-hand the incredible value of a strong partnership between the community and law enforcement to deliver justice and support to survivors of labor and sex trafficking throughout L.A. County,” said Kay Buck, CEO of CAST. “This task force is a new day for Los Angeles that will bring the necessary leadership and resources to our important collaboration – a partnership that will serve survivors and our community.”
In the Los Angeles region, the Justice Department and other law enforcement agencies have made significant commitments to developing training programs aimed at combating trafficking. This week, the Justice Department and HSI are co-sponsoring human trafficking training for four of the task forces that operate in the greater Los Angeles region. Next month, the United States Attorney’s Office will host a computer forensics training seminar to address technological issues that arise in all child exploitation investigations, including human trafficking cases. And in late October, the United States Attorney’s Office and the LASD will co-host a training program for federal, state and local law enforcement officers on complex human trafficking investigations.
Gang Member Admits Executing Person Who Was Ordered Killed for Violating Mexican Mafia Rules on ‘Taxation’ of Drug DealersRead the Press Release
LOS ANGELES – A Baldwin Park man and former 18th Street gang member pleaded guilty today to a federal drug trafficking offense and admitted that he was the triggerman in the previously unsolved 2006 murder of a person who had failed to pay “taxes” to a member of the Mexican Mafia.
Eddie “Criminal” Garcia, 39, pleaded guilty to participating in a conspiracy to distribute methamphetamine in relation to a case that targeted the San Gabriel Valley-based Puente-13 gang. In addition to participating in drug trafficking activities that include collecting “taxes” or “rent” on behalf of the Mexican Mafia member who controlled Puente-13, Garcia admitted that he murdered another gang member who failed to pay to make those extortion payments.
In his plea agreement, Garcia admitted that in 2006 he and two members of Puente-13 lured another gang member to an apartment complex, where Garcia “shot the victim…in the head with a pistol,” an execution that constituted pre-meditated first-degree murder. Garcia was acting at the behest of leaders of Puente-13, who targeted the victim, a Valinda man named David Dragna, because Dragna was suspected of taking drug money that was intended for the Mexican Mafia.
Garcia’s guilty plea is pursuant to an agreement in which federal prosecutors have agreed with the defense to jointly seek a sentence of between 18 years and 24 years in federal prison.
Garcia pleaded guilty today before United States District Judge Michael W. Fitzgerald, who is scheduled to sentence the defendant on January 25, 2016.
Two members of Puente-13 have previously been convicted of participating in Dragna’s murder. Angel “Smiley” Torres, 39, and Steven “Flaco” Nunez, 36, each pleaded guilty in federal court. Torres was sentenced to 186 months in prison, and Nunez was sentenced to 10 years. The Dragna murder was unsolved prior to a federal racketeering indictment that was unsealed in June 2010.
The Mexican Mafia member who controlled the Puente-13 gang and his brother were sentenced in 2013 to life in federal prison after being convicted at trial for their roles in leading a wide-ranging Puente-13 drug and murder conspiracy (see: http://go.usa.gov/3eyKj).
The investigation into the Puente-13 criminal enterprise and the murder of Dragna was conducted by the Drug Enforcement Administration and the Los Angeles County Sherriff’s Department.
Four Indicted on Federal Charges Related to Ventura County-Based Scheme to Obtain Unemployment Benefits through Sham CompaniesRead the Press Release
LOS ANGELES – Four men have been indicted on mail fraud and other federal charges for participating in a scheme that allegedly used dozens of bogus companies to collect millions of dollars in unemployment benefits for “employees” who never did any work at the sham entities. Two of the four defendants were arrested this morning and are due in federal court this afternoon.
The defendants were charged in a 22-count indictment that was returned yesterday afternoon by a federal grand jury. The indictment alleges an overarching conspiracy to create fictitious companies that supposedly employed scores of workers who then sought unemployment insurance benefits by claiming to have been laid off. The indictment also alleges substantive counts of mail fraud, use of unauthorized access devices (debit cards) and aggravated identity theft.
The two defendants taken into custody today are Jack Benjamin Hessiani, also known as “Jack Herrera,” 37, of Camarillo, and Hessiani’s cousin, Eduardo Josue Garcia, 24, also of Camarillo.
Hessiani and Garcia are expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.
The other two defendants in the case – Hessiani’s brother, James Manuel Herrera, 27, also of Camarillo; and Daniel Ayala-Mora, another cousin of Hessiani and Herrera, 25, who recently moved from Camarillo to Las Vegas – are currently being sought be authorities.
According to the indictment, Hessiani and Herrera created numerous fictitious companies for the sole purpose of defrauding the state Employment Development Department (EDD), the agency that administers the federal unemployment insurance program in California. After filing documents with EDD that showed fictitious earnings for “workers,” Hessiani and Herrera allegedly filed and caused to be filed unemployment claims for purported laid-off “employees,” who were actually people who had agreed to provide their personal identifying information in exchange for a portion of the unemployment benefits. The unemployment benefits, in the form of checks and debit cards, were sent to “mail drops” that Hessiani and Herrera had established in the names of others. Once EDD began issuing unemployment benefits, Hessiani and Herrera saw that documents were filed that claimed the laid-off “workers” were still unemployed, and later they sought “extended benefits” to obtain unemployment insurance beyond the normal six-months, according to the indictment.
All four defendants allegedly sought unemployment insurance benefits for themselves based on their own “work” at the fictitious companies. Investigators believe that the scheme involved more than 40 fictitious businesses in Ventura County. Most of the fake companies had names that made them appear to be involved in marketing and networking services.
Hessiani and Herrara allegedly kept enlarging their scheme by inducing “workers” to act as recruiters of other “workers” and would pay referral fees for each new “worker” brought into the scheme.
As a result of this scheme, investigators believe that members of the conspiracy sought approximately $6.7 million in fraudulent unemployment insurance benefits, and that EDD and the United States Treasury suffered combined actual losses of approximately $4.8 million.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
The conspiracy and 12 substantive mail fraud charges in the indictment each carry a statutory maximum penalty of 20 years in federal prison. The charge of using an unauthorized access device carries a prison term of up to 10 years. The charge of aggravated identity theft carries a mandatory consecutive sentence of two years. Therefore, if they are convicted of the charges in the indictment, Hessiani and Herrera, who are charged in most of the counts, each would face potential sentences of decades in federal prison.
The investigation in this case was conducted by the United States Department of Labor, Office of Inspector General; the United States Secret Service, U.S. Immigration and Customs Enforcement, Homeland Security Investigations; and the California Employment Development Department.
Imposter Attorney, Two Others Charged in Marriage Fraud SchemeRead the Press Release
LOS ANGELES — A Santa Fe Springs man who posed as an attorney and his daughter were arrested this morning for allegedly orchestrating an elaborate immigration fraud scheme in which Chinese nationals paid tens of thousands of dollars to be “married” to United States citizens.
A federal criminal complaint filed yesterday alleges that Chinese nationals paid up to $50,000 to enter into sham marriages in the hopes of obtaining lawful permanent resident cards – often referred to as “Green Cards” – that would allow them to legally reside in the United States. The affidavit in support of the complaint outlines a scheme in which the purported attorney and his daughter lined up U.S. citizen “spouses” for their clients, coached the couples on how to make the marriages appear genuine when questioned by immigration authorities, prepared and filed immigration petitions, and created fraudulent paper trails for the “couples” — including phony apartment leases, wedding photos, bank statements and income tax returns.
The two defendants arrested this morning are:
• Jason Shiao, also known as “Jason Zheng” and “Zheng Yi Xiao,” 65, who allegedly posed as an immigration lawyer; and
• Shiao’s daughter, Lynn Leung, also known as “Linda,” 43, of Pasadena.
A third defendant charged in the case, Shannon Mendoza, 48, of Pacoima, remains at large and is still being sought.
The two arrested this morning were taken into custody by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
Shiao and Leung are expected to make their initial appearances this afternoon in United States District Court in downtown Los Angeles.
“Marriage fraud presents a serious threat to the integrity of our immigration system by undermining programs designed to allow foreign nationals to come to the United States in a fair and orderly fashion,” said United States Attorney Eileen M. Decker.
While Shiao and Leung served as brokers by allegedly arranging the sham marriages and filing immigration applications, Mendoza acted as a recruiter by finding U.S. citizens who were willing to enter into sham marriages in exchange for payments of up to $10,000. According to the affidavit, however, most of the nearly two dozen “spouses” interviewed by investigators never received the amount they were promised. Mendoza allegedly sought out prospective United States citizen “spouses” who were in dire financial straits and then arranged for them to meet Shiao and Leung.
The affidavit describes how the defendants went to considerable lengths to make the unions appear real. For example, Shiao and Leung allegedly paid for one “couple” to visit the Wynn Hotel in Las Vegas for a purported “honeymoon,” and they allegedly held an actual marriage ceremony at the Dynasty Wedding Studio in Temple City.
“Hollywood may portray marriage fraud as a romantic farce, but it’s a serious crime with serious implications,” said Claude Arnold, special agent in charge for HSI Los Angeles. “Schemes like this not only undermine the integrity of our nation’s legal immigration system, they pose a security vulnerability and potentially rob deserving immigrants of benefits they rightfully deserve.”
As part of Wednesday’s enforcement action, HSI special agents executed a search warrant at Jason Shiao’s Pasadena business, Zhengyi and Associates, formerly known as Jason (USA) International Law Corporation. During the search, authorities seized computers, electronic storage devices and documents thought to be related to the alleged marriage fraud scheme.
The investigation in this case began in September 2012 based on information provided by an anonymous caller who contacted HSI’s toll-free tip line. To date, investigators have identified more than 70 fraudulent immigration applications associated with the defendants, with some dating as far back as October 2006 and others filed as recently as two months ago. Authorities believe the defendants’ clients learned about the service through word of mouth or from advertisements in Chinese newspapers.
USCIS is committed to ensuring the integrity and security of our nation’s immigration system,” said USCIS Los Angeles District Director, Susan M. Curda. “USCIS is vigilant in addressing all cases involved in an immigration fraud and revoking or rescinding benefits that have been obtained unlawfully, while at the same time ensuring that individuals who are eligible for benefits are not harmed by the unscrupulous actions of others.”
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The charge of conspiracy to commit visa fraud carries a statutory maximum penalty of five years in prison. In addition to prison time, if convicted, Shiao and Leung – who are dual citizens of China and Australia, and themselves lawful permanent residents of the United States – face possible deportation.
This case is the result of a three-year undercover probe by the Los Angeles Document and Benefit Fraud Task Force, which includes HSI, the U.S. Department of State’s Diplomatic Security Service, and U.S. Citizenship and Immigration Services’ (USCIS) Fraud Detection and National Security unit.
Members of the public who have information regarding defendant Shannon Mendoza, who at this time is considered to be a fugitive, are urged to contact HSI’s toll-free tip line at 1-866-DHS-2ICE (866-347-2423).
Eight Indicted in Fraud Case that Alleges $50 Million in Bogus Claims for Student Substance Abuse CounselingRead the Press Release
LOS ANGELES – Eight people have been indicted for allegedly participating in a scheme that submitted more than $50 million in fraudulent bills to a California state program for alcohol and drug treatment services for high school and middle school students that, in many instances, were not provided or were provided to students who did not have substance abuse problems.
Six of the defendants who worked at the Long Beach-based Atlantic Health Services (formerly known as Atlantic Recovery Services, or ARS) were arrested this morning by federal authorities.
The indictment, which charges the defendants with health care fraud and aggravated identity theft, alleges that ARS received more than $46 million from California’s Drug Medi-Cal program after ARS submitted false and fraudulent claims for group and individual substance abuse counseling services.
“The defendants named in the indictment are accused of exploiting a program that was set up to help a particularly vulnerable population – young people who are confronting drug and alcohol abuse,” said United States Attorney Eileen M. Decker. “According to the indictment, ARS and its employees engaged in a long-running fraud scheme to steal tens of millions of dollars from a program with limited resources that was designed to help underprivileged youth in recovery. In the process, the defendants and ARS branded many innocent young people as substance abusers and addicts in order to boost enrollment numbers and billings.”
The defendants named in the indictment are:
- Lori Renee Miller, 54, of Lakewood, the program manager at ARS who supervised substance abuse recovery managers and counselors;
- Nguyet Galaz, 41, of Montclair, who oversaw services provided at approximately 11 schools in Los Angeles County;
- Angela Frances Micklo, 56, of Palmdale, who managed counselors at approximately nine schools in Los Angeles County, including several in the Antelope Valley;
- Maribel Navarro, 48, of Pico Rivera, who managed counselors at approximately 10 schools in Los Angeles County;
- Carrenda Jeffery, 64, of the Mid-City District of Los Angeles, who managed counselors at approximately three schools;
- LaLonnie Egans, 57, of Bellflower, who managed counselors at three schools;
- Tina Lynn St. Julian, 51, of Compton, who worked as a counselor at two schools; and
- Shyrie Womack, 33, Egans’ daughter, also of Bellflower, who worked as a counselor at three schools.
Galaz and Micklo are expected to self-surrender in the coming weeks. The six other defendants were taken into custody without incident this morning and are scheduled to be arraigned on the indictment this afternoon in United States District Court.
Today’s arrests are the result of a 40-count indictment that was returned by a federal grand jury on August 26 and unsealed this morning.
The eight defendants are all former employees of ARS, which received contracts to provide substance abuse treatment services through the Drug Medi-Cal program to students in schools in Los Angeles County. The schools included various sites operated by Soledad Enrichment Action, and public schools in Montebello, Bell Gardens, Lakewood, and the Antelope Valley.
ARS allegedly submitted bogus claims for payment to the Drug Medi-Cal program for a decade, according to the indictment. ARS shut down in April 2013, when California suspended payments to the company.
According to the indictment, the claims submitted to the Drug Medi-Cal program were false and fraudulent for a number of reasons, including:
- ARS billed for services provided to students who did not have substance abuse disorders or addictions and therefore did not qualify to receive Drug Medi-Cal services;
- ARS billed for counseling sessions that were not conducted at all;
- ARS billed for counseling services that were not conducted in accordance with Drug Medi-Cal regulations regarding length, number of students, content and setting;
- ARS personnel falsified documents, including treatment plans, group counseling sign-in sheets, progress notes and update logs (which listed the dates and times of counseling sessions); and
- ARS personnel forged student signatures on documents.
“For counselors and supervisors to risk stigmatizing students as substance abusers, as alleged in this case, just to enrich themselves at taxpayer expense is outrageous,” said Special Agent in Charge Christian Schrank, U.S. Department of Health and Human Services, Office of the Inspector General. “This decade-long conspiracy to defraud Medi-Cal while disregarding the true health care needs of children will not be tolerated.”
Previously, 11 other defendants pleaded guilty to health care fraud charges stemming from the ARS scheme. Those defendants are former ARS managers Cathy Fernandez, 53, of Downey; Erin Hoover, 37, of Long Beach; Elizabeth Black, 51, of Long Beach; Helsa Casillas, 44, of El Sereno; and Sandra Lopez, 41, of Huntington Park; and former ARS counselors Tamara Diaz, 45 of East Los Angeles; Margarita Lopez, 40, of Paramount; Irma Talavera, 27, of Paramount; Laura Vasquez, 52, of Pico Rivera; Cindy Leticia Ortiz, 29, of Norwalk; and Arthur Dominguez, 63, of Glendale.
Another defendant – Dr. Leland Whitson, 75, of Redondo Beach, the former Medical/Clinical Director of ARS – previously pleaded guilty to making a false statement affecting a health care program.
The dozen defendants who have already pleaded guilty are pending sentencing by United States District Judge Philip S. Gutierrez.
Each of the eight defendants named in the indictment unsealed today potentially faces decades in federal prison if convicted. For example, if convicted, Miller faces a statutory maximum sentence of 324 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The cases against the 20 defendants are the result of an investigation by the U.S. Department of Health and Human Services, Office of Inspector General; the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; and IRS - Criminal Investigation.
Eight Indicted in Fraud Case That Alleges $50 Million in Bogus Claims for Student Substance Abuse CounselingRead the Press Release
Six Linked to Long Beach Treatment Program Taken into Custody Today
Eight people have been indicted for allegedly participating in a scheme that submitted more than $50 million in fraudulent bills to a California state program for alcohol and drug treatment services for high school and middle school students that, in many instances, were not provided or were provided to students who did not have substance abuse problems.
Six of the defendants who worked at the Long Beach-based Atlantic Health Services, formerly known as Atlantic Recovery Services (ARS), were arrested this morning by federal authorities.
The indictment, which charges the defendants with health care fraud and aggravated identity theft, alleges that ARS received more than $46 million from California’s Drug Medi-Cal program after ARS submitted false and fraudulent claims for group and individual substance abuse counseling services.
“The defendants named in the indictment are accused of exploiting a program that was set up to help a particularly vulnerable population – young people who are confronting drug and alcohol abuse,” said U.S. Attorney Eileen M. Decker for the Central District of California. “According to the indictment, ARS and its employees engaged in a long-running fraud scheme to steal tens of millions of dollars from a program with limited resources that was designed to help underprivileged youth in recovery. In the process, the defendants and ARS branded many innocent young people as substance abusers and addicts in order to boost enrollment numbers and billings.”
The defendants named in the indictment are:
- Lori Renee Miller, 54, of Lakewood, California, the program manager at ARS who supervised substance abuse recovery managers and counselors;
- Nguyet Galaz, 41, of Montclair, California, who oversaw services provided at approximately 11 schools in Los Angeles County;
- Angela Frances Micklo, 56, of Palmdale, California, who managed counselors at approximately nine schools in Los Angeles County, including several in the Antelope Valley;
- Maribel Navarro, 48, of Pico Rivera, California, who managed counselors at approximately ten schools in Los Angeles County;
- Carrenda Jeffery, 64, of the Mid-City District of Los Angeles, who managed counselors at approximately three schools;
- LaLonnie Egans, 57, of Bellflower, California, who managed counselors at three schools;
- Tina Lynn St. Julian, 51, of Compton, California, who worked as a counselor at two schools; and
- Shyrie Womack, 33, Egans’ daughter, also of Bellflower, who worked as a counselor at three schools.
Galaz and Micklo are expected to self-surrender in the coming weeks. The six other defendants were taken into custody without incident this morning and are scheduled to be arraigned on the indictment this afternoon in U.S. District Court.
Today’s arrests are the result of a 40-count indictment that was returned by a federal grand jury on August 26 and unsealed this morning.
The eight defendants are all former employees of ARS, which received contracts to provide substance abuse treatment services through the Drug Medi-Cal program to students in schools in Los Angeles County. The schools included various sites operated by Soledad Enrichment Action and public schools in Montebello, California, Bell Gardens,
Californina, Lakewood, and the Antelope Valley.ARS allegedly submitted bogus claims for payment to the Drug Medi-Cal program for a decade, according to the indictment. ARS shut down in April 2013, when California suspended payments to the company.
According to the indictment, the claims submitted to the Drug Medi-Cal program were false and fraudulent for a number of reasons, including:
- ARS billed for services provided to students who did not have substance abuse disorders or addictions and therefore did not qualify to receive Drug Medi-Cal services;
- ARS billed for counseling sessions that were not conducted at all;
- ARS billed for counseling services that were not conducted in accordance with Drug Medi-Cal regulations regarding length, number of students, content and setting;
- ARS personnel falsified documents, including treatment plans, group counseling sign-in sheets, progress notes and update logs (which listed the dates and times of counseling sessions); and
- ARS personnel forged student signatures on documents.
“For counselors and supervisors to risk stigmatizing students as substance abusers, as alleged in this case, just to enrich themselves at taxpayer expense is outrageous,” said Special Agent in Charge Christian Schrank for the Office of the Inspector General of the Department of Health and Human Services. “This decade-long conspiracy to defraud Medi-Cal while disregarding the true health care needs of children will not be tolerated.”
Previously, 11 other defendants pleaded guilty to health care fraud charges stemming from the ARS scheme. Those defendants are former ARS managers Cathy Fernandez, 53, of Downey, California; Erin Hoover, 37, of Long Beach, California; Elizabeth Black, 51, of Long Beach; Helsa Casillas, 44, of El Sereno, California; and Sandra Lopez, 41, of Huntington Park, California; and former ARS counselors Tamara Diaz, 45 of East Los Angeles, California; Margarita Lopez, 40, of Paramount, California; Irma Talavera, 27, of Paramount; Laura Vasquez, 52, of Pico Rivera; Cindy Leticia Ortiz, 29, of Norwalk, California; and Arthur Dominguez, 63, of Glendale, California.
Another defendant, Dr. Leland Whitson, 75, of Redondo Beach, California, the former Medical/Clinical Director of ARS, previously pleaded guilty to making a false statement affecting a health care program.
The dozen defendants who have already pleaded guilty are pending sentencing by U.S. District Judge Philip S. Gutierrez.
Each of the eight defendants named in the indictment unsealed today potentially faces decades in federal prison if convicted. For example, if convicted, Miller faces a statutory maximum sentence of 324 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The cases against the 20 defendants are the result of an investigation by the Office of Inspector General of the Department of Health and Human Services; the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; and IRS - Criminal Investigation.
- Lori Renee Miller, 54, of Lakewood, California, the program manager at ARS who supervised substance abuse recovery managers and counselors;
Orange County Attorney Charged with Fraud and Money Laundering in Scheme Related to Real Estate Purchases and Other InvestmentsRead the Press Release
LOS ANGELES – An attorney who allegedly took several million dollars in investment capital from clients and used the funds for personal expenses and luxury items was indicted today by a federal grand jury.
Stephen Young Kang, 46, of Newport Beach, was named in a 25-count indictment filed in United States District Court in Los Angeles. The indictment charges Kang with 20 counts of wire fraud and five counts of money laundering.
The indictment comes after Kang was arrested by special agents with the FBI and IRS – Criminal Investigation on August 10 at Los Angeles International Airport as he attempted to board a flight to Seoul, Korea. Kang is currently free on a $750,000 secured bond.
According to the indictment, Kang defrauded a Gardena-based food distribution company, Ottogi America, Inc., whose representatives hired the attorney to help the company purchase additional properties near its distribution center. Between October 2012 and March 2014, Ottogi wire transferred approximately $3.7 million to a trust account in Houston, Texas, to be used for the purchase of the properties. But Kang allegedly did not use the money to invest in properties. Rather, Kang allegedly caused the vast majority of the funds to be transferred to other accounts that he controlled, and then used a substantial portion of Ottogi’s money to pay for personal expenses and business ventures, as well as to make partial payment to other victims.
Kang is also alleged to have defrauded other victims. According to the indictment, Kang agreed to provide legal and investment services to a married couple who wanted to invest money that would help them obtain EB-5 visas, which requires the applicant to invest at least $500,000 in a commercial enterprise that creates or preserves at least 10 permanent, full-time jobs. The indictment alleges that these victims wired more than $1 million to Kang in 2011, but Kang failed to invest the money as promised. Instead, Kang used the funds for personal and business expenses, as well as to pay other individuals who previously invested money with him. When the victims demanded the return of their investment, Kang allegedly concealed the fraud by using money he received from other clients, including Ottogi, to repay a portion of their investment.
Kang is scheduled to be arraigned on the indictment on September 8.
If convicted of the charges in the indictment, Kang faces a statutory maximum penalty of 20 years in federal prison for each of the wire fraud charges and up to 10 years in prison for each of the money laundering offenses.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
Based on the evidence in this case, investigators believe Kang may have victimized others in locations where he practiced law or resided, including California, Texas, and Seoul, Korea. Anyone who believes they may have been victimized by Kang should contact the FBI’s Los Angeles Field Office at (310) 477-6565.
The case against Kang is the product of an ongoing investigation by the Federal Bureau of Investigation and IRS – Criminal Investigation.
Santa Barbara Doctor Found Guilty of 79 Federal Charges for Writing Prescriptions for Huge Quantities of Dangerous NarcoticsRead the Press Release
SANTA ANA, California – A Santa Barbara-area physician who wrote numerous prescriptions for powerful painkillers, such as OxyContin, for “patients” – many of whom were drug addicts, and some of whom died from drug overdoses – was convicted today of 79 drug trafficking charges.
Julio Gabriel Diaz, 67, a Goleta resident who operated the Family Medical Clinic in Santa Barbara, was found guilty following a 2½-week trial in United States District Court.
Diaz, who was known to some “patients” as the “Candyman,” was a prolific writer of prescriptions for highly addictive and dangerous drugs. In 2011, for example, Diaz wrote prescriptions for more than 1.7 million doses of painkillers. His “patients” typically paid cash, waited hours for a 10-minute visit with Diaz, and received prescriptions for powerful drugs that included opioids, anti-anxiety medications and muscle relaxants. Several doctors and pharmacists who testified during the trial said that they had never seen any doctor prescribe the combination and quantity of drugs prescribed by Diaz.
Diaz was found guilty of 79 counts of distribution of a controlled substance. Twenty-six of the charges relate to oxycodone (a drug often sold under the brand name OxyContin), 10 of the charges relate to methadone, seven of the counts relate to hydromorphone (a drug commonly sold under the brand name Dilaudid), 10 of the charges relate to fentanyl, 11 of the charges relate to hydrocodone (a drug often sold under the brand names Vicodin and Norco), 10 of the charges relate to alprazolam (a drug often sold under brand name Xanax), and five of the charges related to the distribution of various controlled substances to a minor. In relation to all 79 counts, the jury found that Diaz distributed the drugs outside of the usual course of professional practice and without a legitimate medical purpose.
As a result of today’s verdicts, Diaz will face a maximum possible sentence of 1,360 years in federal prison, although the actual sentence will likely be less under the United States Sentencing Guidelines.
Diaz is scheduled to be sentenced by United States District Judge Cormac J. Carney on December 14.
According to the evidence presented at trial, doctors, nurses and other personnel with Santa Barbara Cottage Hospital wrote to the Medical Board of California and gave statements to investigators to complain about Diaz. Cottage Hospital doctors believed that Diaz posed such a threat that they prepared a spreadsheet documenting emergency room visits by patients who had been prescribed narcotics by Diaz.
Diaz was arrested in this case in January 2012. After his arrest, the state of California revoked his license after finding that he provided incompetent and grossly negligent care.
The investigation into Diaz was conducted by the Drug Enforcement Administration and the Santa Barbara Police Department, which received the assistance of the California Medical Board.
CONTACT: Assistant United States Attorneys Ann Luotto Wolf (714) 338-3533 and Bilal Essayli (213) 894-2303
Five Indicted on Federal Fraud Charges Related to Multi-Million Dollar Pyramid Scheme that Targeted Chinese-American VictimsRead the Press Release
LOS ANGELES – A federal grand jury returned a 14-count indictment late yesterday that charges five defendants with participating in a fraud scheme that generated tens of 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.
Members of the conspiracy allegedly made false promises about the company, including claims that it generated substantial revenues from the sale of courses, that investments could be quickly liquidated for significant returns, and that they planned to take the company public through an IPO. In fact, according to the indictment, “the only way for investors to earn any meaningful returns was for them to actively recruit new investors.” The defendants promoted the company through YouTube videos and other postings on the Internet, as well as through meetings with prospective investors and live presentations about the purported investment opportunity.
The indictment alleges that the defendants solicited investments primarily from members of the Chinese-American communities in Los Angeles, San Francisco and New York City.
The five defendants charged in the indictment are:
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Cheong Wha “Heywood” Chang, 47, formerly of Hacienda Heights and most recently a resident of Taiwan;
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Chang’s wife, Toni Chen, 46;
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Wen Chen “Wendy” Lee, 53, of Roland Heights;
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Daliang “David” Guo, 53, of Hyde Park, New York; and
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Chih Hsuan “Kiki” Lin, 50, of Los Angeles and Las Vegas.
Kiki Lin will be arraigned on September 4, and the other four are scheduled to be arraigned on different dates the following week.
The five defendants were arrested earlier this month pursuant to a sealed criminal complaint. Lin was ordered detained (held without bond), and the other four were released after posting bonds ranging from $250,000 to $500,000.
During the course of the scheme, which ran from spring 2011 until about a year ago, the defendants were involved 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 purportedly generated substantial profits from the sale of web-based children’s educational courses.
The defendants solicited investments in increments of $1,380, which gave investors “Profit Reward Points” they claimed were worth $750 in cash, would increase in value, and were analogous to per-IPO shares of CKB, according to the indictment.
The indictment alleges that the claims made about these investments were fraudulent because:
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CKB earned little, if any, money from the sale of the children’s educational courses and the overwhelming majority of revenues came from new investors;
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there was no real way for investors to profit from holding the “Profit Reward Points,” and the only way for investors to obtain any significant returns was to recruit new investors;
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the CKB entities and their securities were not registered with the U.S. Securities and Exchange Commission; and
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the CKB entities could not have gone public because they did not have sufficient legitimate revenue to support an IPO.
The indictment alleges that, after the SEC filed a civil enforcement action against them, the defendants attempted to conceal their fraud by preventing the SEC from obtaining relevant documents and information. The indictment also alleges that Kiki Lin made threats to victims she had solicited in order to collect funds from those victims and to dissuade them from making reports to authorities.
The indictment alleges that the defendants collected approximately $30 million from CKB investors. The indictment alleges that the defendants collectively kept approximately $6.5 million of these funds and transferred the rest to others involved in the scheme.
The indictment charges each of the five defendants with one count of conspiracy and 13 counts of wire fraud.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If convicted of the charges in the indictment, each defendant would face a statutory maximum sentence of five years in federal prison for the conspiracy count and up to 20 years in prison for each of the wire fraud charges.
This case is the result of an investigation by the Federal Bureau of Investigation.
The Securities and Exchange Commission provided valuable assistance. The SEC previously filed a civil action against the CKB entities and several individual defendants in the United States District Court for the Eastern District of New York (see: https://www.sec.gov/litigation/litreleases/2013/lr22846.htm).
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Four Men Named in Federal Child Pornography Indictment that Alleges Filming of 15-Year-Old Girl Engaged in Sex ActsRead the Press Release
LOS ANGELES – Three men were taken into custody this morning after being indicted by a federal grand jury on a host of federal charges related to the sexual exploitation of a 15-year-old girl. A fourth defendant named in the indictment is expected to be taken into custody later today.
The indictment alleges that the defendants participated in the production of child pornography involving the 15-year-old victim. The three arrested this morning are:
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Darrius Marques Sutton, also known as “Biz,” 25, of Compton;
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Darius Dajohn Burks, 26, of Los Angeles;
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Edwin Donnell Franklin, 28, of Bellflower.
These defendants are expected to be arraigned on the federal charges this afternoon in United States District Court.
The fourth defendant – Leprinceton Dewon Burks, also known as “Dapper P” and “Pete Williams,” 31, of Carson – is expected to be taken into custody later this afternoon and to be arraigned tomorrow afternoon in federal court.
The indictment alleges four counts of conspiracy to produce child pornography. Those charges relate to four incidents:
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Sutton and Franklin are charged in a conspiracy to produce child pornography of the victim on July 18, 2011 in an incident in which both men “directed” and engaged in sex acts with the victim that were recorded;
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All four defendants are charged in a conspiracy count in which all four of them filmed the victim participating in various sex acts on July 25, 2011;
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Sutton and Darius Burks are charged in a third conspiracy in relation to an incident the night of August 16, 2011 in which they filmed “themselves and each other performing sexual acts on [the] intoxicated and unconscious [victim],” which included an act that involved an empty liquor bottle; and
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All four defendants are charged in a conspiracy to produce child pornography related to the filming of sexually explicit conduct involving the victim on August 20, 2011.
The indictment also alleges 12 substantive counts of producing child pornography involving the 15-year-old victim. Each of the four defendants is charged in at least two of these substantive counts.
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 child pornography production charges alleged in the first 16 counts of the indictment each carry a mandatory minimum penalty of 15 years in federal prison and a maximum sentence of 30 years in prison.
In addition, Sutton and Leprinceton Burks are each charged with one count of possession of child pornography, an offense that carries a potential penalty of 10 years in federal prison.
The indictment follows a state court prosecution of the men, who were convicted of charges that include conspiracy to pimp a minor, sexually assaulting an unconscious victim and statutory rape. They previously received sentences of up to four years and four months in state prison.
This case was investigated by the FBI’s Innocence Lost Task Force and the Los Angeles Police Department Detective Support and Vice Division, Human Trafficking Unit.
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Arrowhead Regional Medical Center Agrees to Comply with Federal Law by Improving Access for People Who are Deaf or Hard of HearingRead the Press Release
Arrowhead Regional Medical Center (ARMC) in Colton, California, has entered into an agreement with the United States to resolve allegations that the hospital violated the Americans with Disabilities Act (ADA) by failing to provide qualified interpreters and other services to persons who are deaf or hard of hearing. Under the voluntary compliance agreement, ARMC will provide equipment and services to ensure that people who are deaf or hard of hearing have equal access to medical services, which includes giving them the ability to effectively communicate with hospital staff.
“Ensuring equal access to hospital services for individuals with disabilities, including those who are deaf or hard of hearing, is a priority of the Civil Rights Division,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “We are proud to partner with and support the U.S. Attorney's important work in this area.”
“People who are deaf or hard of hearing have a right to clear and effective communication with physicians, nurses and all hospital staff members in order to ensure that they and their loved ones receive the same medical care that is available to every other person,” said U.S. Attorney Eileen M. Decker of the Central District of California. “This settlement is the latest step in the Justice Department's ongoing efforts to eliminate discriminatory barriers of all kinds.”
ARMC, which is operated by San Bernardino County, California, is a 456-bed general medical and surgical hospital that includes a burn center, a primary stroke center, a behavioral health center and four primary care centers. The hospital’s emergency room saw more than 116,000 patient visits in 2014.
The department received a complaint in 2012 from a deaf woman who alleged that ARMC personnel failed to provide a qualified sign language interpreter when necessary to ensure effective communication with her while her husband was a patient at ARMC.
Subsequently, the U.S. Attorney’s Office of the Central District of California received a complaint from a deaf patient who alleged that ARMC failed to provide her with a sign language interpreter while she was a patient. The office opened an investigation and, following extensive discussions with the hospital, ARMC agreed to voluntarily resolve the allegations.
Under the settlement, ARMC must take steps to ensure that it provides effective communication to persons who are deaf or hard of hearing. For example, ARMC will set up Video Remote Interpreting (VRI) equipment within 20 minutes of a request for VRI, or will provide an in-person interpreter within two hours of an emergency, if possible.
ARMC has also agreed to:
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provide auxiliary aids necessary for effective communication;
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designate an employee as an ADA coordinator;
- revise its policy on the provision of effective communication to issue clear direction to its staff and physicians regarding the need to provide auxiliary aids to deaf and hard-of-hearing persons;
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modify its patient intake form;
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train its staff and physicians on relevant ADA matters;
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monitor the effectiveness of contract interpreters; and
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provide reports to the U.S. Attorney's Office so it can assess compliance with the ADA.
The people who made complaints to the department about ARMC’s violations of the ADA filed a lawsuit that also was settled this week. As part of that settlement, ARMC will pay a total of $100,000 and the hospital will comply with the terms of the settlement with the U.S. Attorney’s Office.
The settlement with ARMC is part of the nationwide Barrier-Free Health Care Initiative (BFHCI), a partnership of the Civil Rights Division and U.S. Attorney’s Offices around the country to ensure that people with disabilities have equal access to medical services. This is the first settlement under the BFHCI involving a health care provider in San Bernardino County.
The agreement with ARMC is the second settlement with a health care provider under the BFHCI in the Central District of California. The U.S. Attorney’s Office entered into a settlement last month with Integrated Healthcare Medical Group Inc. (IHMG), a family practice with medical offices in Redondo Beach and Westwood. Pursuant to the agreement, IHMG agreed to implement an ADA policy for effective communication; provide auxiliary aids and services to the deaf and hard of hearing when necessary for effective communication; train its doctors and staff on the provision of such auxiliary aids and services; provide notice to patients that such aids and services are available; and provide certifications to the U.S. Attorney’s Office.
For more information on the ADA, visit www.ada.gov or call the department’s toll-free ADA Information Line at 1-800-514-0301 or 1-800-514-0383 (TTY).
CONTACT: Assistant U.S. Attorney Monica L. Miller
U.S. Attorney’s Office for the Central District of California
Civil Division
(213) 894-4061
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Arrowhead Regional Medical Center Agrees to Comply with Federal Law by Improving Access for People Who Are Deaf or Hard of HearingRead the Press Release
LOS ANGELES – Arrowhead Regional Medical Center (ARMC) in Colton has entered into an agreement with the United States to resolve allegations that the hospital violated the Americans with Disabilities Act (ADA) by failing to provide qualified interpreters and other services to persons who are deaf or hard of hearing. Under the voluntary compliance agreement, ARMC will provide equipment and services to ensure that people who are deaf or hard of hearing have equal access to medical services, which includes giving them the ability to effectively communicate with hospital staff.
“People who are deaf or hard of hearing have a right to clear and effective communication with physicians, nurses, and all hospital staff members in order to ensure that they and their loved ones receive the same medical care that is available to every other person,” said United States Attorney Eileen M. Decker. “This settlement is the latest step in the Justice Department's ongoing efforts to eliminate discriminatory barriers of all kinds.”
ARMC, which is operated by San Bernardino County, is a 456-bed general medical and surgical hospital that includes a burn center, a primary stroke center, a behavioral health center and four primary care centers. The hospital’s emergency room saw more than 116,000 patient visits in 2014.
The Department of Justice received a complaint in 2012 from a deaf woman who alleged that ARMC personnel failed to provide a qualified sign language interpreter when necessary to ensure effective communication with her while her husband was a patient at ARMC. Subsequently, the United States Attorney’s Office received a complaint from a deaf patient who alleged that ARMC failed to provide her with a sign language interpreter while she was a patient. The United States Attorney’s Office opened an investigation and, following extensive discussions with the hospital, ARMC agreed to voluntarily resolve the allegations.
Under the settlement announced today, ARMC must take steps to ensure that it provides effective communication to persons who are deaf or hard of hearing. For example, ARMC will set up Video Remote Interpreting (VRI) equipment within 20 minutes after a request for VRI, or will provide an in-person interpreter within two hours (if possible) of an emergency.
ARMC also has agreed to:
• provide auxiliary aids necessary for effective communication;
• designate an employee as an ADA Coordinator;
• revise its policy on the provision of effective communication to issue clear direction to its staff and physicians regarding the need to provide auxiliary aids to deaf and hard-of-hearing persons;
• modify its patient intake form;
• train its staff and physicians on relevant ADA matters;
• monitor the effectiveness of contract interpreters; and
• provide reports to the United States Attorney’s Office so it can assess compliance with the ADA.
The people who made complaints to the Justice Department about ARMC’s violations of the ADA filed a lawsuit that also was settled this week. As part of that settlement, ARMC will pay a total of $100,000 and the hospital will comply with the terms of the settlement with the United States Attorney’s Office.
The settlement with ARMC is part of the nationwide Barrier-Free Health Care Initiative (BFHCI), a partnership of the Department of Justice’s Civil Rights Division and United States Attorney’s Offices around the country to ensure that people with disabilities have equal access to medical services. This is the first settlement under the BFHCI involving a health care provider in San Bernardino County.
“Ensuring equal access to hospital services for individuals with disabilities, including those who are deaf or hard of hearing, is a priority of the Civil Rights Division,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “We are proud to partner with and support the U.S. Attorney's important work in this area.”
The agreement with ARMC is the second settlement with a health care provider under the BFHCI in the Central District of California. The United States Attorney’s Office entered into a settlement last month with Integrated Healthcare Medical Group, Inc. (IHMG), a family practice with medical offices in Redondo Beach and Westwood. Pursuant to the agreement, IHMG agreed to implement an ADA policy for effective communication, provide auxiliary aids and services to the deaf and hard of hearing when necessary for effective communication, train its doctors and staff on the provision of such auxiliary aids and services, provide notice to patients that such aids and services are available, and provide certifications to the United States Attorney’s Office.
For more information on the ADA, visit www.ada.gov or call the Justice Department’s toll-free ADA Information Line at 1-800-514-0301 or 1-800-514-0383 (TTY).
Former Investment Banking Analyst with J.P. Morgan Securities and Two Friends Charged in $600,000 Insider Trading SchemeRead the Press Release
LOS ANGELES – An analyst with J.P. Morgan Securities and two longtime friends were taken into custody this morning after being charged in a federal grand jury indictment that alleges they participated in an insider trading scheme that netted more than $600,000 in illicit profits.
Ashish Aggarwal, 27, of San Francisco; Shahriyar Bolandian, 26, of the Palms District in Los Angeles; and Kevan Sadigh, 28, of Encino, are named in an indictment that was unsealed this morning.
The indictment charges each defendant with one count of conspiracy to commit securities and tender offer fraud, 13 substantive counts of securities fraud, 13 substantive counts of tender offer fraud and three substantive counts of wire fraud. Bolandian also is charged with one count of money laundering.
The defendants surrendered to the FBI this morning, and are scheduled to be arraigned this afternoon in United States District Court in downtown Los Angeles.
Between June 2011 and June 2013, Aggarwal was employed by J.P. Morgan Securities, LLC as an investment banking analyst in its San Francisco office. According to the indictment, through his employment, Aggarwal allegedly obtained material, non-public (inside) information about upcoming mergers and acquisitions involving publicly-traded companies. The indictment alleges that Aggarwal disclosed inside information to his friend Bolandian, who, in turn, shared the information with Sadigh, who is also a friend of Bolandian.
Bolandian and Sadigh allegedly used the inside information to trade in advance of the public announcements of Integrated Device Technology Inc.’s April 2012 planned acquisition of PLX Technology Inc., and Salesforce.com Inc.’s June 2013 acquisition of ExactTarget Inc. Through this scheme, Aggarwal, Bolandian and Sadigh allegedly netted more than $600,000 in illicit profits, which the defendants allegedly used to, among other things, cover previous trading losses and to repay liabilities incurred by Aggarwal and Bolandian. After being confronted by special agents with the FBI about their trading in early 2015, Bolandian and Sadigh provided false explanations of the basis of their trading decisions, according to the indictment.
“Every professional with access to inside information has a duty and responsibility to protect that information so no one gains an unfair advantage in the securities markets,” said United States Attorney Eileen M. Decker. “Insider trading corrodes the integrity of the markets and undermines confidence among those who choose to trade. We will bring to justice anyone who illegally uses or shares confidential business information that can be used to manipulate the system.”
David Bowdich, the Assistant Director in Charge of the FBI’s Los Angeles Field Office, stated: “The defendants utilized material non-public information relative to stocks for personal gain without regard for the integrity of the marketplace in which they functioned. Today’s arrests make it clear that greed is not good, and also illustrate the FBI's commitment to identifying and rooting out corrupt trading practices.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If they are convicted of the crimes alleged in the indictment, the three defendants would face statutory maximum sentences of five years in federal prison for the conspiracy count and 20 years for each of the substantive fraud counts. Additionally, Bolandian could be sentenced to as much as 10 years in prison if he is convicted of the money laundering offense.
This case is being prosecuted by Assistant United States Attorney Paul G. Stern, along with Trial Attorneys Thomas B.W. Hall and Alexander F. Porter of the Fraud Section in the Criminal Division at the Department of Justice.
The insider trading scheme was investigated by the FBI.
The Securities and Exchange Commission provided valuable assistance. The SEC filed a related civil action this morning that alleges Aggarwal illegally disclosed nonpublic information (see: http://www.sec.gov/news/pressrelease/2015-174.html).
Former Investment Banking Analyst and Two Friends Charged in Insider Trading SchemeRead the Press Release
An analyst with J.P. Morgan Securities and two longtime friends were taken into custody this morning after being charged in a federal grand jury indictment that alleges they participated in an insider trading scheme that netted more than $600,000 in illicit profits.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Division made the announcement.
Ashish Aggarwal, 27, of San Francisco; Shahriyar Bolandian, 26, of Los Angeles; and Kevan Sadigh, 28, of Los Angeles, are named in an indictment that was unsealed this morning and charges each defendant with one count of conspiracy to commit securities and tender offer fraud, 13 substantive counts of securities fraud, 13 substantive counts of tender offer fraud and three substantive counts of wire fraud. Bolandian also is charged with one count of money laundering.
The defendants surrendered to the FBI this morning, and are scheduled to be arraigned this afternoon before U.S. Magistrate Judge Patrick J. Walsh of the Central District of California.
Between June 2011 and June 2013, Aggarwal was employed by J.P. Morgan Securities, LLC (JPMS) as an investment banking analyst in its San Francisco office. According to the indictment, through his employment, Aggarwal allegedly obtained material, non-public (inside) information about upcoming mergers and acquisitions involving publicly-traded companies. The indictment alleges that Aggarwal disclosed this information to his friend Bolandian who, in turn, shared the information with Sadigh, who is also a friend of Bolandian. Bolandian and Sadigh then allegedly used the inside information to trade in advance of the public announcements of Integrated Device Technology Inc.’s April 2012 planned acquisition of PLX Technology Inc., and Salesforce.com Inc.’s June 2013 acquisition of ExactTarget Inc. According to the indictment, through this scheme, Aggarwal, Bolandian and Sadigh netted more than $600,000 in illicit profits, which the defendants allegedly used to, among other things, cover previous trading losses and to repay liabilities incurred by Aggarwal and Bolandian.
The case was investigated by the FBI. The case is being prosecuted by Trial Attorneys Thomas B.W. Hall and Alexander F. Porter of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Paul Stern of the Central District of California. The Securities and Exchange Commission provided valuable assistance.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Aggarwal et al Indictment
Orange County Man Pleads Guilty in Two-Pronged Ponzi Scheme that Cause Scores of Investors to Lose More Than $14 MillionRead the Press Release
LOS ANGELES – An Orange County man who operated a Ponzi scheme that featured false promises of large returns to victims who invested in debt obligations and distressed real estate pleaded guilty today to federal mail fraud and wire fraud charges.
William Donnelly Yotty, 69, who currently resides in Monarch Beach, but during the course of the scheme lived in Lodi, California, pleaded guilty to the two felony counts before United States District Judge Margaret M. Morrow.
Yotty, who has been held without bond since being arrested in this case in May 2014, faces a statutory maximum sentence of 40 years in federal prison when he is sentenced by Judge Morrow on November 23.
In a plea agreement filed last week in United States District Court, Yotty admitted that he ran several Lodi-based companies that offered bogus investments in corporate debt obligations and in distressed real estate that he and his salespeople said could be “flipped” for substantial profit.
In the first scheme, which ran from the spring of 2007 through 2009, Yotty and his associates “offered victims investments in convertible debentures (CDs), promissory notes and other financial instruments that defendant falsely and fraudulently represented and promised were safe and secure and would pay substantial interest,” according to the plea agreement. Using companies he operated under the names Global Capital Associates, Inc.; Infostar Systems, Inc.; Pacific Financial Solutions, Inc.; and The Money People, Inc., Yotty solicited money from victims by promising annual interest rates as high as 25 percent. Yotty and salesmen working for him told prospective investors that the companies issuing the debt had sufficient income to pay the promised interest on the investments, and that the capital investment would be returned when the notes matured.
“In fact, as defendant then well knew, the returns were not guaranteed and the investors’ principal was not secure because the only way defendant could fund the ‘interest’ payments he promised to investors was with other investors’ money,” Yotty admitted in his plea agreement.
In the second scheme, which was run through a company he called Fortuno, Inc. and took place during roughly the same time at the first scheme, Yotty offered victims the opportunity to purchase foreclosed real estate at below-market prices, which would allow them to resell, or “flip,” the properties at two or three times their purchase price. In fact, Yotty himself was flipping the properties to the investors at substantial profits for himself. Yotty concealed from the investors that the price they were paying for the properties was double or triple what Fortuno had paid, and that this inflated price would prevent the victims from realizing any profit of their own. As a further inducement to invest in Fortuno, Yotty and his salespeople also falsely promised victims that the properties were in livable condition and that Fortuno would manage the properties until the promised resale.
Yotty and others involved in the scheme raised more than $10 million in the debt obligation scheme, and more than $6 million in the real estate flipping scheme. When the schemes collapsed, approximately 240 investors lost over $14 million.
The investigation into Yotty’s Ponzi scheme was conducted by the Federal Bureau of Investigation.
Catholic Priest who Sexually Assaulted Female Passenger on Cross-Country Flight Sentenced to Federal PrisonRead the Press Release
LOS ANGELES – A Catholic priest who touched a woman’s breast, inner thigh and groin on an overnight cross-country airplane flight was sentenced today to one year – a term that will include six months in federal prison and six months of home confinement.
Marcelo De Jesumaria, 46, formerly of Lake Arrowhead and who currently resides in the high desert community of Valyermo, was sentenced this morning by United States District Judge Beverly Reid O’Connell.
Judge O’Connell, who also ordered the defendant to register as a sex offender, noted the “devastatingly negative impact” the crime had on the victim.
De Jesumaria was found guilty in May by a federal jury of abusive sexual contact, a federal felony offense that carries a statutory maximum sentence of two years in prison.
The evidence at trial showed that De Jesumaria was on a US Airways flight from Philadelphia to Los Angeles on August 17, 2014 when he moved to the last row of the aircraft after asking a flight attendant if could “sit next to his wife.” De Jesumaria took the middle seat, between a male in the window seat and the victim in the aisle seat. The victim slept through much of the flight, but she was awakened when she felt De Jesumaria’s hand on the top of her left leg near her groin, and then she felt him wrap his arm around her body and grab her breast. For a period of time, De Jesumaria had a tight grip on the woman, but when the grip relaxed, she got up and went to the bathroom. The victim used a call button to summon a flight attendant and reported that De Jesumaria had been touching her inappropriately.
The flight crew reseated De Jesumaria in the front of the plane in a seat between two male passengers, according to the testimony at trial. The captain of the airplane requested law enforcement meet the plane after it landed at Los Angeles International Airport. FBI agents subsequently interviewed De Jesumaria, who admitted that he enjoyed “cozy flights” with women.
The victim spoke at today’s sentencing hearing and described the “fear, frustration and anxiety” that the crime has caused. She said she is reminded of the “ordeal” every day, in part because she must regularly travel on airplanes for her job.
In papers filed in relation to today’s sentencing, prosecutors wrote that De Jesumaria’s “testimony at trial provided numerous bizarre explanations for his conduct and blamed the victim.” They wrote that De Jesumaria testified that he considered his touching of the victim was “consensual because she did not reject his touches and he interpreted her silence, because she was asleep, as ‘coyness.’”
The case against De Jesumaria was investigated by the Federal Bureau of Investigation.
Career Drug Trafficker Tied to 170 Pounds of Cocaine and $1.5 Million in Illicit Proceeds Sentenced to 20 Years in Federal PrisonRead the Press Release
LOS ANGELES – One of the principal cocaine traffickers associated with an international narcotics ring was sentenced this morning to 20 years in federal prison after law enforcement seized more than 170 pounds of cocaine and $1.5 million in drug-tainted cash linked to his narcotics-trafficking activities.
Zaid Wakil, 43, of Winston Salem, North Carolina, was sentenced by United States District Judge George H. Wu for his drug trafficking activities in which he acquired cocaine from Los Angeles-area traffickers with the intent to distribute the narcotics on the East Coast.
In a sentencing memorandum filed with the court, federal prosecutors said that Wakil “participated in an extensive scheme to traffic in extraordinary quantities of cocaine.” They argued that Wakil “willfully pursued a criminal lifestyle” as reflected in his 20 prior criminal convictions over the course of more than two decades on charges that included drug trafficking, forgery and burglary.
Following a jury trial in February at which Wakil represented himself, he was found guilty of participating in a drug trafficking conspiracy and three counts of possessing cocaine with intent to distribute. The three narcotics-possession counts were the result of three seizures between May and July of 2011 in which more than 170 pounds of cocaine was seized. Authorities in Arizona and seized nearly 70 pounds during two traffic stops, and investigators were able to intercept a 105-pound shipment that Wakil attempted to send to the East Coast via FedEx.
The first cocaine seizure in this case came during a May 2011 traffic stop of Wakil’s car in Flagstaff, Arizona by officers with the Arizona Department of Public Safety. After he was released from custody less than two months later, Wakil contacted his Los Angeles-based supplier and stated that he was “still moving,” despite the law enforcement seizures of his drugs and money. According to wiretapped phone calls played at his trial, Wakil told his supplier at that time: “Let’s make the profits bigger.”
Wakil engaged in “sophisticated means to conceal his activities,” according to prosecutors, who noted that he operated a “shell business” in Santa Clarita – a purported trucking company that he used to conceal his cocaine shipments and to make his drug proceeds appear to be legitimate.
In 2010 and 2011, law enforcement in the San Fernando Valley, Ohio and Maryland made three seizures of cash totaling more than $1.5 million from vehicles that Wakil was driving. “[O]n each occasion, a trained narcotics detection canine gave a positive alert on the seized money,” according to the government’s sentencing brief.
Wakil was one of 22 defendants charged in June 2012 in two grand jury indictments with participating in a large-scale conspiracy to traffic cocaine. The conspiracy involved a drug-trafficking partnership between operatives in Mexico, Canada and the United States. Fourteen of the 22 defendants named in those indictments now have been convicted.
Both of the Los Angeles-based leaders of the conspiracy – Ichiro Tomatani-Guzman and Eduardo Olivares – pleaded guilty and each received 10-year prison terms. The leader of the Canadian nexus of the conspiracy – John Darrell Krokos – pleaded guilty and received a 138-month prison sentence.
Eight of the defendants charged in this case remain fugitives. They are:
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Jesus Esteban Felix Leon, 43, of Culiacan, Mexico;
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Jesus Felix Alvarez, 23, of Culiacan, Mexico;
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a man known only as “96”;
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Inocencio Aispuro-Lizarraga, 66, of Mexico;
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Rigoberto Ortega-Guzman, 60, of Downey;
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Fausto Medina, 42, of Lynwood;
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Mauricio Leon-Torres, 41, of Los Angeles; and
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Luis Cazarez-Beltran, 51, of Downey.
The investigation in this case, which was called Operation Odysseus, was conducted by the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Arizona Department of Public Safety, the Pomona Police Department, the Glendale Police Department, the San Luis Obispo County Sheriff's Department, and the Los Angeles Interagency Metropolitan Police Apprehension Crime Task Force (LA IMPACT).
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O.C. Woman Who Allegedly Defrauding Anaheim Computer Business by Stealing Apple Products Arraigned on Federal ChargesRead the Press Release
SANTA ANA, California – An Orange County woman who worked at a family-owned computer business in Anaheim pleaded not guilty this afternoon to federal wire fraud charges that allege she sold Apple products that belonged to her employer.
Cecilia L. Litonjua-Moore, 44, of Costa Mesa, was arrested this morning by FBI agents without incident after being charged by a federal grand jury in a three-count indictment filed Wednesday.
Litonjua-Moore was arraigned this afternoon, at which time she entered a not guilty plea and was ordered to stand trial on October 6. The defendant was ordered released on a $50,000 bond.
Litonjua-Moore was an executive assistant at L.A. Computer Company, a family-owned computer store that sold Apple products, until she was dismissed in February 2014. According to the indictment, the company used a point-of-sale system that tracked its inventory, customers and invoices, among other details. Litonjua-Moore had access to this system and the authority to make adjustments to the inventory and to create invoices. She also had authority to access the owner’s computer when he was away, and to use his signature stamp for company business.
Beginning in 2011, Litonjua-Moore allegedly began stealing inventory from the company’s warehouse in order to ship products to customers she found on eBay. The indictment alleges she sold the products at 20 percent to 40 percent below what L.A. Computer paid Apple for the products. The fraud was discovered in late 2013 by the owner of the company, who determined the company’s loss to be $732,517.
To disguise the misappropriation of the Apple products, Litonjua-Moore altered L.A. Computer’s inventory list. In cases where the company did not have products in stock that were necessary for the defendant’s customers on eBay, Litonjua-Moore allegedly created false invoices to order the products and ship them to her customers. She then allegedly deleted the orders from the computer system so the company would not see any outstanding orders, according to the indictment.
The indictment alleges that the defendant used the proceeds from the fraud to fund a gambling habit and to pay for personal expenses, including shopping and meals at restaurants.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
If convicted of the three counts in the indictment, Litonjua-Moore faces a statutory maximum sentence of 60 years in federal prison.
The investigation in this case was conducted by the Federal Bureau of Investigation, which received assistance from U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Immigration Consultant and Former Federal Government Official Convicted in Scheme to Pay Bribes to Obtain Benefits for ImmigrantsRead the Press Release
LOS ANGELES – A former official with U.S. Customs and Border Protection (CBP), who went on to operate an immigration consulting service, has been found guilty of participating in a scheme to pay bribes to current government employees to obtain “Green Cards” and citizenship for immigrants.
George Wu, 62, of Pico Rivera, who worked as a CBP officer until early 2012, and then operated Great Eastern Immigration Services, was found guilty on Thursday of paying bribes in an effort to obtain citizenship and legal permanent resident status for several immigrants.
Following a seven-day trial before United States District Judge Michael W. Fitzgerald, Wu was found guilty 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.
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.
The five substantive bribery counts that resulted in guilty verdicts relate to three cases. In the first case, an attorney who also works as an immigration consultant paid Wu $15,000, and Wu subsequently paid Bui $10,000, to secure assistance with a citizenship application. In the second case, Wu paid the attorney a total of $15,000 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.
Wu is scheduled to be sentenced by Judge Fitzgerald on November 30. Wu faces a statutory maximum sentence of five years in prison for the conspiracy count and up to 15 years in prison for each of the five bribery charges.
Bui pleaded guilty in May to conspiracy and bribery, and he is scheduled to be sentenced by Judge Fitzgerald on November 2.
The case against Wu and Bui is 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:
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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;
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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
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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.
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Orange County Man Pleads Guilty to Providing Material Support to ISIL and Making False Statements in Passport ApplicationRead the Press Release
SANTA ANA, California – A resident of the City of Orange pleaded guilty today to federal charges of attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL) and making a false statement in a passport application.
Adam Dandach, 21, pleaded guilty before United States District Judge James V. Selna.
In a plea agreement filed today in federal court, Dandach admitted that, beginning in approximately November 2013 and continuing until July 2, 2014, he attempted to travel to Syria to join ISIL with the purpose of providing material support to the designated foreign terrorist organization. He further admitted that he knew that ISIL was a designated foreign terrorist organization that engaged in terrorist activity and terrorism.
“This case demonstrates the need for continued vigilance and swift action to fight the false allure of foreign terrorist organizations that threaten the security of the United States,” said United States Attorney Eileen M. Decker. “As Mr. Dandach succumbed to ISIL’s online recruiting efforts, the Joint Terrorism Task Force was able to uncover his plan before he left the United States, which prevented this young man from becoming a foreign fighter. As a result of today’s guilty pleas, Mr. Dandach now faces a lengthy term in federal prison.”
David Bowdich, the Assistant Director in Charge of the FBI'S Los Angeles Field Office, stated: “Mr. Dandach acknowledged his support for the Islamic State, a terrorist organization whose members are known for the torture and murder of innocent victims. The FBI and our Joint Terrorism Task Force partners are committed to disrupting the increasing trend concerning individuals who travel, or attempt to travel, from the United States to train with terrorists, and who thereby pose a potential threat of returning to commit attacks on U.S. soil.”
According to court documents, on July 1, 2014, Dandach purchased a ticket to fly from Santa Ana to Istanbul. The FBI intercepted Dandach at the John Wayne International Airport the following day. Dandach told FBI special agents that his ultimate destination was Syria and that he intended to pledge allegiance to ISIL’s leader, Abu Bakr al-Baghdadi. He explained that he wished to live under the control of ISIL and intended to undergo weapons training.
Dandach also admitted that he made a false statement in a passport application, namely that he had lost his previous passport. In fact, a family member had taken Dandach’s passport from him during the previous year when he expressed an interest in traveling to Syria.
“Adam Dandach attempted to travel to Syria to provide material support to ISIL, and lied in his passport application in order to do so,” said Assistant Attorney General for National Security John P. Carlin. “One of the National Security Division’s top priorities remains stemming the flow of foreign fighters and bringing to justice those who seek to provide material support to foreign designated terrorist organizations.”
Judge Selna is scheduled to sentence Dandach on January 11, 2016. At that time, the defendant will face a statutory maximum sentence of 15 years in federal prison for providing material support to a designated foreign terrorist organization and a statutory maximum sentence of 10 years for making a false statement in a passport application.
The investigation in this case was conducted by the FBI’s Joint Terrorism Task Force in Orange County.
The case is being prosecuted by Assistant U.S. Attorney Celeste Corlett of the Santa Ana branch office and Trial Attorney Annamartine Salick of the National Security Division’s Counterterrorism Section. Trial Attorneys Jolie Zimmerman and Kelly Harris of the National Security Division’s Counterterrorism Section are assisting in the prosecution.
California Resident Pleads Guilty to Providing Material Support to ISIL and Making False StatementsRead the Press Release
Adam Dandach, 21, of Orange, California, pleaded guilty today to a two-count second superseding information charging him with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL) and making a false statement in a passport application.
The guilty plea was announced today by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Eileen M. Decker of the Central District of California and Assistant Director in Charge David Bowdich of the FBI's Los Angeles Field Office. Dandach pleaded guilty before U.S. District Judge James V. Selna of the Central District of California.
“Adam Dandach attempted to travel to Syria to provide material support to ISIL, and lied in his passport application in order to do so,” said Assistant Attorney General Carlin. “One of the National Security Division’s top priorities remains stemming the flow of foreign fighters and bringing to justice those who seek to provide material support to foreign designated terrorist organizations.”
“This case demonstrates the need for continued vigilance and swift action to fight the false allure of foreign terrorist organizations that threaten the security of the United States,” said U.S. Attorney Decker. “As Mr. Dandach succumbed to ISIL’s online recruiting efforts, the Joint Terrorism Task Force was able to uncover his plan before he left the United States, which prevented this young man from becoming a foreign fighter. As a result of today’s guilty pleas, Mr. Dandach now faces a lengthy term in federal prison.”
“Mr. Dandach acknowledged his support for the Islamic State, a terrorist organization whose members are known for the torture and murder of innocent victims,” said Assistant Director in Charge Bowdich. “The FBI and our Joint Terrorism Task Force partners are committed to disrupting the increasing trend concerning individuals who travel, or attempt to travel, from the United States to train with terrorists, and who thereby pose a potential threat of returning to commit attacks on U.S. soil.”
Dandach admitted, pursuant to court documents, that beginning in approximately November 2013 and continuing until July 2, 2014, he attempted to travel to Syria to join ISIL with the purpose of providing material support to the designated foreign terrorist organization. He further admitted that he knew that ISIL was a designated foreign terrorist organization that engaged in terrorist activity and terrorism.
According to court documents, on July 1, 2014, Dandach purchased a ticket to fly from Santa Ana, California, to Istanbul. The FBI intercepted Dandach at the John Wayne International Airport the following day. Dandach told FBI special agents that his ultimate destination was Syria and that he intended to pledge allegiance to ISIL’s leader, Abu Bakr al-Baghdadi. He explained that he wished to live under the control of ISIL and intended to undergo weapons training.
Dandach also admitted that he made a false statement in a passport application, namely that he had lost his previous passport. In fact, a family member had taken Dandach’s passport from him during the previous year when he expressed an interest in traveling to Syria.
Dandach faces a statutory maximum sentence of 15 years for providing material support to a designated foreign terrorist organization and a statutory maximum sentence of 10 years for making a false statement in a passport application. A sentencing hearing is scheduled for Jan. 11, 2016.
The investigation was conducted by the FBI’s Joint Terrorism Task Force in Orange County, California. The case was prosecuted by Assistant U.S. Attorney Celeste Corlett of the Central District of California and Trial Attorney Annamartine Salick of the National Security Division’s Counterterrorism Section, with assistance from Trial Attorneys Jolie Zimmerman and Kelly Harris of the National Security Division’s Counterterrorism Section.
Dandach Plea Agreement
Owner of Orange County Real Estate Investment Firm Found Guilty in Fraud Scheme that Ended in $169 Million BankruptcyRead the Press Release
SANTA ANA, California – The CEO of a now-defunct Southern California real estate investment firm was convicted this afternoon of federal fraud charges for perpetrating a scheme that ended with the bankruptcy of the company and hundreds of investors collectively losing as much as $169 million.
Michael J. Stewart, 68, who currently resides in San Clemente, was found guilty of 11 counts of mail fraud following a nine-day jury trial before United States District Judge Cormac J. Carney.
Stewart owned and was the chief executive of Pacific Property Assets (PPA), which had offices in Long Beach and Irvine. Along with co-defendant John Packard, Stewart created PPA in 1999 to purchase, renovate, operate, and resell or refinance apartment complexes in Southern California and Arizona. Typically, PPA financed property acquisitions through mortgages, and it raised money from private investors to pay for renovations to the properties. After several years, PPA would refinance (or sometimes sell) each property.
Although PPA’s apartment rental operations were not profitable, it was able to raise cash through refinancing and selling properties. As real estate values were generally increasing until approximately 2007, the properties were refinanced at ever-higher values, which enabled PPA to use the extra refinancing proceeds to not only pay off the original mortgages, but also to make payments on other loans, make payments to investors, to pay other business expenses, and to pay Stewart and Packard. In its 10 years of operations, PPA acquired more than 100 real estate properties and raised hundreds of millions of dollars from hundreds of investors. As Stewart told prospective investors, from 2004 to 2007, PPA was named three times to Inc. magazine’s list of the fastest growing privately held companies in the United States, was a regional finalist in Ernst & Young’s Entrepreneur of the Year Program, and was listed by the Orange County Business Journal as one of fastest growing businesses in Orange County.
But as the government argued at trial, by the end of 2007, when the real estate market began to decline and credit became scarce, PPA’s business model was no longer feasible. As the value of PPA’s properties was falling, PPA could no longer raise money by refinancing its properties with increasingly large mortgages or selling properties at a profit. Furthermore, PPA faced large debt payments to its mortgage lenders and private investors, while it was continuing to lose money in its business operations. In May 2008, PPA’s Controller warned Stewart and Packard that without a new source of funds, PPA faced losing as much as $2 million dollars per month, and emails between the owners revealed that they projected that trend to continue.
To keep PPA afloat, from early 2008 through April 2009, Stewart and Packard raised more than $34 million dollars from new investors, many of them elderly and retired persons investing their retirement funds in the company. For example, one 74-year-old investor testified at trial that in early 2009, shortly after her husband passed away, Stewart’s staff persuaded her to invest virtually all her retirement savings in PPA. The defendants used those new funds to pay earlier investors, mortgage lenders, other company expenses, and Stewart and Packard themselves – including annual salaries for the two co-owners of $750,000 and hundreds of thousands of dollars in additional compensation. Packard testified at trial that in 2008, he and Stewart knew that PPA was dependent on these investor loans to make its monthly debt payments and continue operating, and was unable to raise money through other means. PPA’s former Director of Investor Relations further testified that during that period, Stewart began to pressure her and others to raise more money from investors.
Evidence introduced at trial also showed that Stewart misrepresented PPA’s financial condition, claiming that its business model was still working, and that PPA was still financially stable and able to raise money through refinancing. In particular, Stewart created and provided to investors fraudulent financial statements, claiming that PPA had made millions of dollars in income in the first half of 2008 (it had actually lost millions), and Stewart arranged with Packard to temporarily deposit $2 million dollars into a company bank account to make the company’s cash position look stronger for investors, then quickly withdrew the funds from the account without reflecting the withdrawal in the balance sheet given to investors. Stewart and Packard also concealed from investors the fact that the business had effectively become a Ponzi scheme, using funds from new investors to pay back earlier investors.
In the last investor offering in early 2009, known as the Opportunity Fund, Stewart told investors that their funds would be used to purchase new real estate properties. In fact, none of the over $9 million raised was used for that purpose. Instead, the money was used to pay earlier investors and banks, to pay Stewart and Packard, and to pay PPA’s bankruptcy attorney. Stewart continued to raise money from investors until late April 2009, when he abruptly informed investors that PPA was suspending their monthly interest payments. Several investors testified at trial that even in mid-April 2009, after PPA had begun to default on some of its bank and investor loans, Stewart personally solicited investments from them in the Opportunity Fund, claiming that PPA was financially sound and their funds would be used for new real estate projects.
PPA and a group of related companies filed for bankruptcy in June 2009. When the bankruptcy was filed, PPA stated that it owed 647 private investors more than $91 million, and it owed banks approximately $100 million. The Chapter 11 trustee appointed in the bankruptcy case later estimated the total investor losses at $169 million, and predicted that investors would receive, at best, “pennies on the dollar” through the bankruptcy process.
Stewart, who was remanded into custody following today’s verdicts, faces a statutory maximum sentence of 220 years in federal prison when he is sentenced by Judge Carney on November 2.
PPA co-owner Packard pleaded guilty to one count of mail fraud in November 2014 and is scheduled to be sentenced by Judge Carney on November 9.
This investigation was conducted by the Federal Bureau of Investigation, which received assistance from the United States Trustee’s Office and the Securities & Exchange Commission.
Justice Department Reaches Agreement with Los Angeles County to Implement Sweeping Reforms on Mental Health Care and Use of Force throughout the County Jail SystemRead the Press Release
LOS ANGELES – The Justice Department has reached a comprehensive settlement agreement with the County of Los Angeles and the Los Angeles County Sheriff to protect prisoners from serious suicide risks and excessive force in the Los Angeles County jails, United States Attorney Eileen M. Decker and Deputy Assistant Attorney General Mark J. Kappelhoff announced today.
The settlement agreement was filed this morning, along with a complaint that alleges a pattern or practice of inadequate mental health care and excessive force at the jails in violation of prisoners’ federal constitutional rights. The Justice Department, together with the county and the Sheriff, has requested that the District Court enter the settlement agreement as an order to bring court oversight to the reforms, to ensure that the reforms are implemented fully and transparently, and to strengthen public confidence in the jails.
Today’s settlement resolves claims stemming from the Justice Department’s long-standing civil investigation into mental health care at the jails, which found a pattern of constitutionally deficient mental health care for prisoners, including inadequate suicide prevention practices. In addition, the settlement agreement includes remedial measures to address a separate civil investigation into use of force by jails staff.
The Justice Department’s investigations involved an in-depth review of thousands of pages of documents and other records, on-site visits and interviews with numerous jails staff members, prisoners and others. The Justice Department was assisted by subject matter experts in the fields of mental health care, suicide prevention and correctional practices.
The County and the Sheriff cooperated with the civil investigations and have begun to implement many of the negotiated reforms in the settlement agreement, which was negotiated by attorneys with the United States Attorney’s Office and the Justice Department’s Civil Rights Division.
“The Justice Department will continue to vigorously protect the federal civil rights of all individuals, including those who are imprisoned and who must depend on jail officials for their most basic needs and safety,” said United States Attorney Decker. “The settlement agreement avoids protracted litigation and provides a blue print for durable reform that will foster continued collaboration among sheriff deputies, healthcare professionals and other stakeholders. We commend the County and Sheriff McDonnell for their cooperation and for their commitment to make this historic settlement agreement possible.”
“This historic settlement represents a renewed commitment by the county and Sheriff McDonnell to provide constitutionally adequate care for prisoners with serious mental illness,” said Deputy Assistant Attorney General Kappelhoff. “The agreement also puts in place a structure that will help turn around a persistent culture in which the use of excessive force on prisoners was sometimes tolerated. I want to thank the sheriff and county for their cooperation and leadership. Their efforts are critical to the long-term success of this agreement.”
Under the settlement agreement filed today, the County and the Sheriff have agreed to implement comprehensive reforms to ensure constitutional conditions in the jails and restore public trust. The settlement agreement will be court-enforceable once approved by the District Court and will be overseen by an independent monitor and a team of mental health and corrections experts. The settlement agreement is designed to prevent and respond more effectively to suicides and self-inflicted injuries through measures that include:
• additional steps to recognize, assess and treat prisoners with mental illness, from intake to discharge;
• significant new training on crisis intervention and interacting with prisoners with mental illness for new and existing custody staff;
• improved documentation in prisoners’ medical and mental health records to ensure continuity of care;
• improved communication between custody and mental health staff and increased supervision of mentally ill and suicidal prisoners;
• steps to mitigate suicide risks within the jails;
• increased access to out-of-cell time for mentally ill prisoners; and
• improved investigation and critical self-analysis of suicides, suicide attempts and other critical events.
With respect to use of force, the settlement agreement expands critical reforms agreed to by the County and the Sheriff in Rosas v. McDonnell to cover all facilities within the jail system. These reforms include:
• enhanced leadership and executive staff engagement;
• significant revisions to use-of-force policies, which should significantly reduce the use of excessive force, with added protections for use of force against prisoners with mental illness;
• enhanced training for custody and mental health staff;
• enhanced data collection and analysis;
• enhanced accountability measures, including use-of-force reporting, use-of-force reviews and discipline; and
• enhanced grievance procedures.
The Justice Department’s investigation was originally opened in 1996, under the Civil Rights of Institutionalized Persons Act (CRIPA). The Justice Department found constitutional deficiencies in mental health care, suicide prevention and the use of excessive force against prisoners with mental illness. In 2002, the Justice Department entered into a memorandum of agreement with the County and the Sheriff to address these concerns. Despite considerable progress over the years of monitoring the memorandum of agreement, the Justice Department concluded in 2014 that the jails were failing to provide adequate mental health care, including suicide prevention, and that conditions under which prisoners with mental illness were housed exacerbated the risk of suicide.
In addition, in 2013, the Justice Department initiated a separate civil investigation into allegations of use of excessive force by jails staff under both CRIPA and the Violent Crime Control and Law Enforcement Act of 1994. While the use-of-force investigation was ongoing, the County and the Sheriff settled the Rosas v. McDonnell class-action lawsuit, which alleged excessive force by jails deputies in three downtown facilities. The settlement agreement incorporates all of the reforms in Rosas and extends them to all county jail facilities to cover prisoners throughout the jails system.
The civil investigations were conducted by attorneys and staff from the Civil Division of the United States Attorney’s Office and the Civil Rights Division’s Special Litigation Section.
Israeli Organized Crime Figure Sentenced to 32 Years in Federal Prison for Drug Trafficking, Money Laundering and ExtortionRead the Press Release
LOS ANGELES – A man linked to one of the most notorious organized crime rings in Israel and who on his own operated “a vast international criminal conspiracy engaged in drug trafficking and money laundering” was sentenced today to 384 months in federal prison.
Moshe Matsri, 48, of Tarzana, was sentenced this morning by United States District Judge S. James Otero.
Matsri was found guilty by a federal jury last October of conspiracy to commit money laundering, conspiracy to distribute at least five kilograms of cocaine, eight counts of money laundering, attempted distribution of at least five kilograms of cocaine, attempted possession with intent to distribute at least five kilograms of cocaine and conspiracy to commit extortion. He was convicted pursuant to a grand jury indictment that outlined Matsri’s role as leader of an organized crime enterprise that engaged in a wide-range of criminal behavior, including laundering money for narcotics traffickers by moving money around the world.
Matsri, who is also known as “Moshe the Religious,” is a well-known crime figure in the San Fernando Valley, and he has significant ties to the Abergil organized crime family, which is based in Israel and also operates internationally.
Matsri was found guilty following a two-week trial that also led to the conviction of Shay Paniry, 36, of Studio City, on drug trafficking, money laundering and extortion charges. “In this criminal corporation, [Paniry] was middle management, taking orders directly from Matsri and making sure the dirty work was done, whether he did it himself or recruited others to do it for him,” prosecutors wrote in a sentencing memo for Paniry.
In a hearing yesterday, Judge Otero sentenced Paniry to 210 months in federal prison.
Matsri and Paniry have been in custody since July 12, 2013, when they and several co-defendants were arrested as the result of an investigation by the Drug Enforcement Administration, the Federal Bureau of Investigation and the Los Angeles Police Department.
Matsri “was the leader of a vast international criminal conspiracy engaged in drug trafficking and money laundering across multiple continents,” prosecutors wrote in a sentencing memorandum filed with the court. “As CEO of this multi-faceted criminal business, [Matsri] used his extensive, sophisticated network to move over $660,000 in cash he believed were drug proceeds across international borders and across the United States, in exchange for over $57,000 in commissions.”
Matsri and his co-defendants “conducted complex, layered transactions to wire money through shell accounts in locations as far-flung as the Marshall Islands, Cyprus, and Gibraltar,” according to the sentencing memo that also outlines how Matsri “used a network of trusted individuals to bypass the financial system entirely, using ‘hawala’ transactions to move cash instantaneously from New York to Los Angeles, and from Vancouver to Los Angeles.”
The evidence presented at trial showed that Matsri agreed to help two undercover agents – he thought they were a Colombian drug trafficker and his Los Angeles-based associate – transport what he believed to be cocaine from Los Angeles to Utah in a car with a hidden trap compartment, and collect what believed to be a $40,000 drug debt using vandalism and threats of violence. Matsri also developed a plan to ship 20 kilograms of cocaine from Panama to Israel, and he paid $79,500 in cash for his share of the deal. Furthermore, Matsri proposed a deal to purchase 100 kilograms of cocaine on credit in Los Angeles for sale in New York, a deal that culminated in his arrest nearly two years ago.
In addition to Matsri and Paniry, the indictment names several co-defendants:
• Youval Geringer-Ganor, 62, of Los Angeles, who is scheduled to go to trial on September 1;
• Yaron Cohen, 45, of Amsterdam, who is scheduled to go to trial on April 12, 2016;
• Ibrahim Oter, 64, of Brussels, who is scheduled to go to September 12;
• Nisim Sabag, 38, of Los Angeles, who pled guilty to extortion and was sentenced to 355 days in jail; and
• Hector Miguel Gomez-Navarro, 25, of Cudahay, who pled guilty to charges of conspiracy to distribute at least five kilograms of cocaine and extortion and was sentenced to 41 months in prison.
Second Man Linked to Medicare Fraud Scheme Pleads Guilty to Federal Money Laundering and Tax OffensesRead the Press Release
LOS ANGELES – A Glendale man pleaded guilty today to federal money laundering and tax charges related to a scheme in which he helped launder $1.1 million generated by a health care fraud scheme.
Khachatour Hakobyan, 47, pleaded guilty today to conspiracy to commit money laundering and filing a false tax return.
A second defendant in this case – Aram Aramyan, 59, also of Glendale – pleaded guilty on July 13 to the same two felony offenses.
In plea agreements filed in United States District Court, Hakobyan and Aramyan admitted that they deposited over $1.1 million in proceeds derived from a health care fraud scheme into bank accounts in the names of bogus corporations they established “primarily to launder money.” Once the proceeds were deposited, Hakobyan and Aramyan wrote checks from these corporations to themselves and their associates. Hakobyan and Aramyan further admitted that they cashed some of the checks – and directed their associates to cash others – and returned the cash to the medical entities, typically after deducting a 10 percent commission. In some cases, they deposited the checks into their personal accounts and used the money to pay personal expenses, such as mortgage payments, rent and home remodeling costs.
As part of their guilty pleas, Hakobyan and Aramyan each admitted that they failed to report all of their income from the corporations in their 2009 tax returns and have agreed to pay, respectively, $606,681 and $353,669 in back taxes for tax years 2007 through 2011.
Hakobyan and Aramyan pleaded guilty before United States District Judge Margaret M. Morrow.
As a result of their guilty pleas, Hakobyan and Aramyan each face a statutory maximum sentence of 23 years in federal prison. Judge Morrow is scheduled to sentence Hakobyan on November 16, and Aramyan on November 2.
There are three remaining defendants in this case: Edgar Hakobyan, Karen Sarkissian and L’Tanya Smith (see: http://www.justice.gov/usao-cdca/pr/three-arrested-after-being-named-new-indictment-alleges-money-laundering-health-care). They are currently scheduled to go on trial before Judge Morrow on February 2, 2016.
The investigation in this case was conducted by the Federal Bureau of Investigation; the U.S. Department of Health and Human Services, Office of Inspector General; and IRS - Criminal Investigation.
Key Member of Scheme that Illegally Sought $20 Million Worth of Expensive Anti-Psychotic Drugs Sentenced to 15 Years in PrisonRead the Press Release
LOS ANGELES – One of the leaders of a conspiracy linked to a sham Glendale medical clinic was sentenced today to 15 years in federal prison for his role in a $20 million scheme to defraud Medicare and Medi-Cal by, among other things, fraudulently prescribing expensive anti-psychotic medications and then re-billing the government for those drugs over and over.
Artak Ovsepian, 33, of Tujunga, one of the leaders of the conspiracy who oversaw the acquisition of drugs with bogus prescriptions, was sentenced by United States District Judge S. James Otero.
Calling the offense “despicable” and “horrific,” Judge Otero noted that the scheme “preyed on some of those most vulnerable members of society, from the mentally ill, to down-and-out veterans, to elderly victims whose identities were stolen, which then interfered with their ability to obtain medical treatment” that they truly needed.
Following a jury trial before Judge Otero in February 2014, Ovsepian was found guilty of conspiracy to commit health care fraud, aggravated identity theft, conspiracy to misbrand pharmaceutical drugs, false statements to the federal government, and conspiracy to use other persons’ identification documents in furtherance of fraud.
Ovsepian was one of three people found guilty at trial, and one of 16 who have been convicted in relation to the scheme run out of Manor Medical Imaging in Glendale.
The operators of Manor Medical employed an unlicensed medical practitioner to write bogus prescriptions using an American doctor’s name and license number, and had close relationships with pharmacies and a fraudulent drug wholesale company that were used to funnel prescription drugs back to the pharmacies participating in the scheme.
Employees of Manor Medical generated thousands of prescriptions for identify theft victims – such as elderly Vietnamese beneficiaries of Medicare and Medi-Cal, military veterans who were recruited from drug rehab programs, and denizens of Skid Row. Members of the conspiracy created or doctored patient files to make it falsely appear the drugs were necessary and the patients were legitimately treated. After the prescriptions were filled at pharmacies and paid for by Medicare and Medi-Cal, the drugs were sold on the black market and redistributed to pharmacies, where the drugs would be subject to new claims made to Medicare and Medi-Cal as though they were new bottles of drugs.
The case was the first in the nation involving an organized scheme to defraud government health care programs through fraudulent claims for expensive anti-psychotic medications. Judge Otero noted that the conspiracy was “particularly devious” because the participants believed they targeted “under-the-radar” drugs in an effort to evade the attention of law enforcement.
Ovsepian “held a leadership role in a complex and pervasive scheme to manipulate and steal the identities of the poor and vulnerable, to defraud essential government programs of more than $20 million, and to cover up those crimes through systematic lies and deception,” federal prosecutors wrote in a sentencing memorandum previously filed with the court.
The scheme generated fraudulent billings of more than $20 million, of which Medi-Cal and Medicare actually paid more than $9 million.
Previously in this case, another leader of the conspiracy – Lianna “Lili” Ovsepian, 34, of Tujunga, the manager and owner of Manor Medical – was sentenced to eight years in prison after pleading guilty to health care fraud charges (see: http://www.justice.gov/usao/cac/Pressroom/2014/107.html).
Following last year’s trial at which Artak Ovsepian was found guilty, Judge Otero said, “The scope of the fraud was breathtaking.” The Judge added that the defendants “preyed upon the poor [and] used them as pawns.”
At last year’s trial, Artak Ovsepian was one of three people that were found guilty. The other two were:
Dr. Kenneth Johnson, 48, of Ladera Heights – who served as the face of Manor Medical with pharmacists and auditors from Medicare and Medi-Cal, and who pre-signed thousands of blank prescriptions that were filled out by co-conspirators – who is scheduled to be sentenced by Judge Otero on November 5; and
Nuritsa Grigoryan, 49, of Glendale – who holds an Armenian medical license and who pretended to be an American doctor when she saw homeless “patients” at the clinic and filled out the bogus prescriptions pre-signed by Dr. Johnson – who fled the United States after being found guilty and remains a fugitive.
The scheme centering on Manor Medical also involved pharmacies in and around the San Gabriel Valley. The conspiracy was essentially a “prescription harvesting” scheme in which Medicare and Medi-Cal beneficiaries were recruited or had their identities stolen, the beneficiary information was used to bill Medicare and Medi-Cal for millions of dollars of illegitimate medical services and prescriptions, and the drugs that were dispensed by the pharmacies were diverted to black market wholesalers and back to the pharmacies so the drugs could be used to submit new bills to Medicare and/or Medi-Cal as though the drugs had never been dispensed.
The primary pharmacy involved in the case, Huntington Pharmacy in San Marino, was operated by a Pasadena couple whose business grew dramatically due its affiliation with Manor Medical, including Medi-Cal claims that jumped from $50,000 in 2009 to approximately $1.5 million in 2010. One of the owners of the pharmacy, Phic Lim, is scheduled for trial on September 29. His wife, Theana Khou, previously pleaded guilty as part of a joint resolution with another case filed against her and her husband.
The investigation in this case, which was called Operation “Psyched Out,” was conducted by the San Marino Police Department; the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; the United States Food and Drug Administration, Office of Criminal Investigations; IRS-Criminal Investigation; the United States Department of Health and Human Services, Office of the Inspector General; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the Glendale Police Department, Organized Crime Team; and the California Department of Health Care Services, Audits and Investigations Branch.
U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the Glendale Police Department, Organized Crime Team; and the California Department of Health Care Services, Audits and Investigations Branch.
Three Charged in Investment Schemes that Victimized over 20 and Caused Losses Totaling more than $2 MillionRead the Press Release
RIVERSIDE, California – Three people, including a Coachella Valley man who allegedly posed as a war hero and a successful attorney, have been charged by a federal grand jury for their roles in a variety of fraudulent schemes that victimized at least 20 investors and caused losses of more than $2 million.
The case was announced today by United States Attorney Eileen M. Decker; David Bowdich, the Assistant Director in Charge of the FBI’s Los Angeles Field Office; and Norm Embry, Special Agent in Charge of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
The three defendants were charged in a superseding indictment filed on July 8, and one of the defendants was arrested this week. The 24-count indictment alleges that they lied to investors in a series of schemes, and then used investor money for personal expenses rather than investing the funds as promised. The defendants named in the indictment are:
• Jerome Whittington, 65, of La Quinta, California, who was initially charged in June 2014 in this case, and who is charged in a separate case with posing as a former federal prosecutor in a case involving a former DEA agent (see: http://www.justice.gov/usao-cdca/pr/former-dea-agent-arrested-lax-fraud-and-passport-charges);
• Patricia Torres Zavala, 42, of Benicia, California, who was arrested on Tuesday in Northern California, subsequently released on bond, and ordered to appear for an arraignment in federal court in Southern California on August 4; and
• Kathleen Moore, 68, of Olympia, Washington, who has agreed to surrender to federal authorities on August 5.
The superseding indictment alleges that Whittington and his two codefendants made false statements and misrepresentations to induce victims to invest money in various business ventures and real estate purchases. Among other misrepresentations detailed in the indictment, Whittington falsely claimed to be a wealthy real estate investor, a Purple Heart recipient and an attorney to gain the admiration of victims and add legitimacy to the scheme. In one instance, Whittington told a victim he owned a private jet and movie company as he solicited an investment in a company known as “Sesma.” Whittington claimed Sesma had developed an Internet browser that was being used in China, and while Whittington told the victim his investment would be used to purchase stock in Sesma, he instead used the money for personal expenses.
In another scheme, Zavala, a former Bank of America employee, purported to be a short-sales expert working with Whittington in order to help victims obtain real estate properties at very low rates, according to the indictment. Zavala, who allegedly used her position at the bank to coerce victims to send money, was paid by Whittington from the proceeds of the fraud.
Moore purported to be Whittington’s accountant and, in that capacity, handled all finances and received money from various victims. The indictment alleges that Moore promised investors returns of up to $25 for every $2 invested in Sesma.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
If convicted of the charges in the indictment, Whittington faces a statutory maximum penalty of 480 years in federal prison. If convicted, Moore faces a maximum of 240 years, and Torres faces up to 200 years. The government will also seek forfeiture of real estate and money derived from the scheme if the defendants are convicted. This investigation was conducted by the Federal Bureau of Investigation and SIGTARP, with the assistance of the Bossier Parish Sheriff’s Office in Bossier City, Louisiana, and the Ventura County Sheriff’s Department. During Tuesday’s arrest of Zavala, SIGTARP agents were assisted by the Federal Housing and Finance Agency and the Benicia Police Department.
Justice Department and Consumer Financial Protection Bureau Reach Groundbreaking Settlement to Resolve Allegations of Auto Lending Discrimination by HondaRead the Press Release
The Department of Justice and the Consumer Financial Protection Bureau (CFPB) announced today a groundbreaking settlement to resolve allegations that American Honda Finance Corporation (Honda) engaged in a pattern or practice of discrimination against African-American, Hispanic and Asian/Pacific Islander borrowers in auto lending. Honda is based in Torrance, California.
The settlement is especially noteworthy because of the company’s commitment to significantly limit the discretion of car dealers to charge interest rate markups on Honda loans. Specifically, Honda has agreed to change the way it prices its loans by limiting dealer markup to 125 basis points (or 1.25 percentage points) for loans of 60 months or less, and to 100 basis points (or 1 percentage point) for loans greater than 60 months. The settlement also provides $24 million in compensation for alleged victims of past discrimination by the nation’s ninth largest auto lender.
“We commend Honda for its leadership in agreeing to impose lower caps on discretionary markups and for its commitment to treating all of its customers fairly without regard to race or national origin,” said Vanita Gupta, head of the Civil Rights Division. “We recognize that dealerships perform a valuable service in connecting customers with lenders and that they should be fairly compensated for that service. We believe that Honda’s new compensation system balances fair compensation for dealers and fair lending for consumers. We hope that Honda’s leadership will spur the rest of the industry to constrain dealer markup to address discriminatory pricing.”
The coordinated investigations by the department and the CFPB that preceded today’s settlement determined this system of subjective and unguided pricing discretion directly results in Honda’s qualified African-American, Hispanic and Asian/Pacific Islander borrowers paying more than qualified non-Hispanic white borrowers. The department and CFPB anticipate that Honda’s new caps on discretionary markups will substantially reduce or eliminate these disparities.
Honda is known as an “indirect” auto lender because, rather than taking applications directly from consumers, the company makes most of its loans through car dealers nationwide who help their customers pay for their new or used car by submitting their loan application to Honda. Honda’s business practice, like most other major auto lenders, allows car dealers discretion to vary a loan’s interest rate from the price Honda initially sets based on the borrower’s objective credit-related factors. Dealers receive greater payments from Honda on loans that include a higher interest rate markup.
The settlement resolves claims by the department and the CFPB that Honda discriminated by charging thousands of African-American, Hispanic and Asian/Pacific Islander borrowers higher interest rates than non-Hispanic white borrowers. The agencies claim that Honda charged borrowers higher interest rates because of their race or national origin, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk. The United States’ complaint alleges that the average African-American victim was obligated to pay over $250 more during the term of the loan because of discrimination, the average Hispanic victim was obligated to pay over $200 more during the term of the loan because of discrimination and the average Asian/Pacific Islander victim was obligated to pay over $150 more during the term of the loan because of discrimination. The Equal Credit Opportunity Act (ECOA) prohibits such discrimination in all forms of lending, including auto lending. Honda’s settlement with the Justice Department, which is subject to court approval, was filed today in the U.S. District Court of the Central District of California in conjunction with the Justice Department’s complaint. Honda resolved the CFPB’s claims by entering into a public administrative settlement.
“The CFPB is committed to creating a fair marketplace for all consumers, and other auto lenders should take note of today’s action,” said Director Richard Cordray of the Consumer Financial Protection Bureau. “Honda’s proactive decision to move to a new pricing and compensation system demonstrates industry leadership and represents a significant step towards protecting consumers from discrimination.”
“Honda’s financing practices that allowed dealerships to mark up individual loans resulted in illegal discrimination, with minority car buyers paying more for their loans than non-minority buyers with similar credit histories,” said U.S. Attorney Eileen M. Decker of the Central District of California. “This settlement provides for Honda to contribute $24 million to a settlement fund to provide redress for thousands of minority borrowers, not only in this district, where Honda’s United States operations are based, but throughout the country. It sends the clear message that discrimination of any kind is intolerable, and that other auto companies should follow Honda’s lead in taking steps to ensure that their sale and financing practices do not result in discrimination.”
In addition to the $24 million in payments for its past conduct, under the Justice Department consent order, Honda will also pay $1 million to fund a consumer financial education program focused on consumer auto finance that is designed to benefit African-American, Hispanic and Asian/Pacific Islander populations.
The settlement also requires Honda to improve its monitoring and compliance systems. The settlement allows the lender to experiment with different approaches toward lessening discrimination and requires it to regularly report to the department and the CFPB on the results of its efforts as well as discuss potential ways to improve results. The department commends Honda for working cooperatively to reach an appropriate resolution of this case.
The settlement provides for an administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department and the CFPB identify as victims of Honda’s discrimination. The department and the CFPB will make a public announcement and post information on their websites once more details about the compensation process become available. Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department or the CFPB at this time.
The Civil Rights Division, the U.S. Attorney’s Office of the Central District of California and the CFPB are members of the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
The department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Rights Division. Since the Fair Lending Unit was established in February 2010, it has filed or resolved 40 lending matters under the Fair Housing Act, ECOA and the Servicemembers Civil Relief Act. The settlements in these matters provide for a total of at least $1.2 billion in monetary relief for impacted communities. The Attorney General’s annual reports to Congress subject to ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications.
El Departamento de Justicia y la Oficina para la Protección Financiera del Consumidor Realizan Acuerdo Conciliatorio Innovador en Resolución de Alegatos de Discriminación en Créditos para Automoviles por parte de HondaRead the Press Release
WASHINGTON – El Departamento de Justicia [Department of Justice (DOJ)] y la Oficina para la Protección Financiera del Consumidor [Consumer Financial Protection Bureau (CFPB)] anunciaron hoy un acuerdo conciliatorio innovador para resolver alegatos de que American Honda Finance Corporation (Honda) mantuvo un patrón o práctica de discriminación contra prestatarios afroestadounidenses, hispanos y asiáticos/isleños del Pacífico en préstamos automóviles. Honda tiene sede en Torrance, California.
El acuerdo conciliatorio es especialmente destacable debido al compromiso de la compañía de limitar significativamente la libertad de criterio de los concesionarios de automóviles para cobrar sobreprecios en las tasas de interés en préstamos de Honda. Específicamente, Honda aceptó cambiar la manera en que establece el precio de sus préstamos limitando los márgenes de ganancias de los vendedores a 125 puntos base (o 1.25%) para préstamos de 60 meses o menos y a 100 puntos base (o 1%) para préstamos de más de 60 meses. El acuerdo conciliatorio también establece 24 millones de dólares en compensación para supuestas víctimas de discriminación pasada por parte del noveno mayor prestamista automotor del país.
“Felicitamos a Honda por su liderazgo en aceptar imponer límites inferiores a los márgenes de ganancias discrecionales y por su compromiso de tratar de manera justa a todos sus clientes sin importar su raza u origen nacional”, dijo la Secretaria de Justicia Auxiliar Adjunta Principal Vanita Gupta de la División de Derechos Civiles. “Reconocemos que los concesionarios brindan un servicio valioso al conectar a los clientes con los prestamistas, y que deben ser compensados de manera justa por ese servicio. Creemos que el nuevo sistema de compensación de Honda logra el equilibrio entre una compensación justa para los vendedores y préstamos justos para los consumidores. Esperamos que el liderazgo de Honda incentive al resto de la industria a restringir los márgenes de ganancias de los vendedores para abordar el tema de la fijación de precios discriminatorios”.
Las investigaciones coordinadas por parte del departamento y la CFPB que precedieron al acuerdo conciliatorio de hoy establecieron que este sistema de determinación subjetiva y libre de los precios hace que prestatarios calificados afroestadounidenses, hispanos y asiáticos/isleños del Pacífico de Honda terminen pagando más que los prestatarios blancos no hispanos calificados. El Departamento y la CFPB preveen que los nuevos límites de Honda respecto a los márgenes de ganancias discresionales reducirán o eliminarán substancialmente estas disparidades.
Honda es conocida como prestamista automotriz “indirecta” porque, en vez de recibir solicitudes directamente de los consumidores, la compañía realiza la mayoría de sus préstamos a través de concesionarios de todo el país que ayudan a sus clientes a pagar por su automóvil nuevo o usado presentando su solicitud de préstamo a Honda. La práctica comercial de Honda, como la de la mayoría de las grandes sociedades de préstamo automotores, permite que los concesionarios varíen la tasa de interés de un préstamo respecto de la tasa inicialmente establecida por Honda según factores crediticios objetivos del prestatario. Los concesionarios reciben pagos más altos de Honda por préstamos que incluyan una tasa de interés más alta.
El acuerdo conciliatorio resuelve alegatos del Departamento y la CFPB de que Honda discriminó por cobrar a miles de prestatarios afoestadounidenses, hispanos y asiáticos/isleños del Pacífico mayores tasas de interés que a prestatarios blancos no hispanos. Las agencias alegan que Honda les cobraba mayores tasas de interés a los prestatarios debido a su raza u origen nacional, y no debido a su solvencia u otros criterios objetivos relacionados con el riesgo crediticio. La demanda de los Estados Unidos alega que la víctima afroestadounidense promedio fue obligada a pagar más de 250 dólares más durante el préstamo por discriminación, la víctima hispana promedio fue obligada a pagar más de 200 dólares más durante el préstamo por discriminación y la víctima asiática/isleña del Pacífico promedio fue obligada a pagar más de 150 dólares más durante el préstamo por discriminación. La Ley de Igualdad de Oportunidades de Crédito [Equal Credit Opportunity Act (ECOA)] prohibe esta clase de discriminación en todos los tipos de préstamos, entre ellos los préstamos automotores. El acuerdo conciliatorio de Honda con el DOJ, que está sujeto a la aprobación del tribunal, fue presentado hoy en el Tribunal Federal de Distrito del Distrito Central de California junto con la demanda del DOJ. Honda resolvió los alegatos de la CFPB firmando un acuerdo conciliatorio administrativo público.
“El CFPB está comprometido a crear un mercado justo para todos los consumidores, y otros prestamistas automotores deberían tener en cuenta la acción de hoy”, dijo el Director Richard Cordray de la CFPB. “El nuevo sistema de fijación de precios y compensación de Honda demuestra liderazgo en la industria y representa un paso significativo en la protección de los consumidores contra la discriminación”.
“Las prácticas de financiamiento de Honda que permitían a los concesionarios poner sobreprecios en préstamos individuales trajeron como resultado discriminación ilegal, ya que compradores de autos minoritarios pagaron más por sus préstamos que compradores no pertenecientes a minorías con historiales crediticios similares”, dijo la Fiscal Federal Eileen M. Decker del Distrito Central de California. “Este acuerdo conciliatorio establece que Honda aportará 24 millones de dólares a un fondo del acuerdo conciliatorio para ofrecer un desagravio a miles de prestatarios minoritarios, no solo en este distrito, donde tienen sede las operaciones en Estados Unidos de Honda, sino en todo el país. Esto envía un mensaje claro de que no se tolerará ningún tipo de discriminación, y de que las demás empresas automotrices deberían seguir el camino de Honda y tomar medidas para asegurarse de que sus prácticas de venta y financiación no traigan como resultado actos de discrminación”.
Además de los 24 millones de dólares en pagos por su conducta en el pasado, bajo la orden por consentimiento del DOJ, Honda también deberá pagar 1 millón de dólares para financiar un programa de educación financiera al consumidor enfocado en la financiación automotriz para clientes que está diseñado para beneficiar a poblaciones afroestadounidenses, hispanas y asiáticas/isleñas del Pacífico.
El acuerdo conciliatorio también exige que Honda mejore sus sistemas de monitoreo y cumplimiento. El acuerdo conciliatorio permite que el prestamista experimente con diferentes enfoques para reducir la discriminación y requiere que informe periódicamente al departamento y la CFPB sobre los resultados de sus iniciativas, así como también comente maneras potenciales de mejorar los resultados. El departamento felicita a Honda por trabajar de manera cooperativa para llegar a una resolución adecuada de este caso.
El acuerdo conciliatorio establece la existencia de un administrador para ubicar a las víctimas y distribuir los pagos de compensación sin costo para los prestatarios a los que el departamento y la CFPB identifiquen como víctimas de discriminación de Honda. El departamento y la CFPB realizarán un anuncio público y publicarán información en sus portales una vez que existan más detalles sobre el proceso de compensación. El administrador del acuerdo se comunicará con los prestatarios que son elegibles para recibir compensación bajo el acuerdo conciliatorio y no es necesario que se comuniquen con el departamento o la CFPB por el momento.
La División de Derechos Civiles, la Fiscalía Federal para el Distrito Central de California y la CFPB son miembros de la Fuerza de Tarea de Coacción contra el Fraude Financiero. El Presidente Obama fundó la Fuerza de Tarea de Coacción contra el Fraude Financiero para generar una iniciativa enérgica, coordinada y proactiva para investigar y enjuiciar los delitos financieros. La fuerza de tarea incluye a representantes de una amplia gama de agencias federales, autoridades regulatorias, inspectores generales y fuerzas del orden público estatales y locales quienes, trabajando juntos, implementan un conjunto poderoso de recursos de coacción penal y civil. La fuerza de tarea está trabajando para mejorar las iniciativas en todo el poder ejecutivo federal y, junto con asociados estatales y locales, investigar y enjuiciar delitos financieros importantes, garantizar un castigo justo y eficaz para quienes cometen delitos financieros, combatir la discriminación en los mercados de préstamos y financieros, y recuperar ganancias para las víctimas de delitos financieros.
La coacción asociada a las leyes de otorgamiento justo de préstamos por parte del departamento es llevada a cabo por la Unidad de Préstamos Justos de la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles. Desde que se estableció la Unidad de Préstamos Justos en febrero de 2010, entabló o resolvió 40 casos de préstamos bajo la Ley de Vivienda Justa, la ECOA y la Ley de Alivio Civil para los Miembros de las Fuerzas Armadas [Servicemembers Civil Relief Act]. Los acuerdos en estos casos proveen un total de al menos 1,200 millones de dólares en asistencia monetaria para comunidades afectadas. Los informes anuales del Secretario de Justicia de EE.UU. al Congreso sujetos a ECOA destacan los logros del Departamento en el otorgamiento de préstamos justos y están disponibles en www.justice.gov/crt/publications.
L.A. Man Who Hacked into Email Accounts and Obtained Nude Photos for ‘Revenge Porn’ Website Pleads Guilty in Hacking SchemeRead the Press Release
LOS ANGELES – A San Fernando Valley man who hacked into e-mail accounts to steal nude photos that were later posted on a notorious “revenge porn” website has pleaded guilty to federal computer crime and identity theft charges.
Charles Evens, 26, of Studio City, pleaded guilty late Wednesday afternoon to one count of unauthorized access to a protected computer to obtain information for purposes of private financial gain and one count of aggravated identity theft.
Appearing before United States District Judge Dolly M. Gee, Evens pleaded guilty to the two felony charges and admitted that he obtained nude pictures that were posted on the revenge porn website, http://isanyoneup.com. The operator of that website – Hunter Moore, 29, of Woodland, California – pleaded guilty in February to the same two offenses that Evens admitted to yesterday.
On his website, Moore posted nude and sexually explicit photos that had been submitted without the permission of victims. To obtain more photos for the website, Evens gained unauthorized access – in other words, hacked into – Google e-mail accounts. Moore sent payments to Evens in exchange for nude photos unlawfully obtained from the victims’ accounts. Moore then posted the illegally obtained photos on his website, without the victims’ consent, as both men have now admitted in court.
In late 2011, Moore sent an email to Evens that stated Moore would like as many nude pictures from hacked emails accounts as possible. In response, Evens accessed a victim’s e-mail account without authorization and obtained pictures. Evens provided the pictures to Moore, and Moore paid $145.70. One of the photos – a topless picture of a female victim – was posted on isanyoneup.com on December 29, 2011.
When he pleaded guilty yesterday, Evens admitted that he hacked into email accounts belonging to hundreds of victims.
As a result of the guilty pleas entered yesterday, Evens faces a statutory maximum sentence of seven years in federal prison, which includes a mandatory two-year term for the aggravated identity theft charge.
Evens is scheduled to be sentenced by Judge Gee on November 16.
Judge Gee is scheduled to sentence Moore on August 12, at which time he also faces a maximum possible penalty of seven years in federal prison, and a mandatory minimum sentence of two years.
The investigation in this case was conducted by the Federal Bureau of Investigation.
Central Coast Real Estate Developer Sentenced to 14 Years in Federal Prison for Scam that Cost Victims Millions in Lost InvestmentsRead the Press Release
LOS ANGELES – A former Central Coast real estate developer was sentenced this morning to 168 months in federal prison for his conviction on fraud and money laundering charges after bilking investors who put millions of dollars into Central Coast real estate projects.
Kelly Gearhart, 54, who previously lived in Atascadero and currently resides in Wadsworth, Ohio, was sentenced today by United States District Judge Otis D. Wright II. Gearhart was remanded into custody at the close of the sentencing hearing.
Gearhart, who was named Atascadero’s “Citizen of the Year” in 2006, pleaded guilty last year to two counts of wire fraud and one count of money laundering. When he pleaded guilty, Gearhart admitted that he knowingly and intentionally made misrepresentations and omissions relating to his Vista Del Hombre real estate development project to induce victims to part with their money. Gearhart admitted that he sold lots that were part of the Vista Del Hombre project in Paso Robles, even though those lots were being used to secure others’ loans. Gearhart admitted that he then used those same lots to obtain bank loans.
At sentencing, prosecutors introduced evidence that Gearhart also told investors that their investments – which he called “loans,” promising repayment with interest – would be used to develop the Vista Del Hombre project.
Judge Wright is scheduled to hold a restitution hearing on October 20. The plea agreement permits prosecutors to seek restitution for victims of the Vista Del Hombre real estate development project, as well as any other fraudulent conduct in which Gearhart may have been involved – a figure that may be as high as $20 million. However, it is unclear if there is any money available to repay victims.
The case against Gearhart is related to a case against James Hurst Miller Jr., the former president of the Atascadero-based Hurst Financial Corporation. Miller, who previously pleaded guilty to fraud and money laundering charges, is scheduled to be sentenced by Judge Wright on October 19.
The cases against Gearhart and Miller are the result of an investigation by the Federal Bureau of Investigation and IRS - Criminal Investigation. The San Luis County District Attorney’s Office provided assistance in the investigation.
Eileen M. Decker Sworn in as United States AttorneyRead the Press Release
LOS ANGELES – Eileen M. Decker was sworn in today in a private ceremony as the United States Attorney for the Central District of California.
Decker was sworn in by United States District Judge Beverly Reid O’Connell in her courtroom in the United States Courthouse.
Decker now leads the largest United States Attorney’s Office outside of the District of Columbia. The office, which currently employs approximately 250 attorneys, serves more than 19 million residents in the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo.
“It is a great honor to lead the United States Attorney’s Office,” Decker said today. “It is an office with a great legacy of prosecuting some of the most significant and difficult cases in the nation, and I look forward to building on that legacy in the years to come. I also look forward to working in close partnership with our federal, state and local law enforcement partners in achieving greater public safety throughout the district.”
After being unanimously confirmed by the United States Senate on June 11, Decker was given a four-year appointment by President Barack Obama. Decker succeeds United States Attorney André Birotte Jr., who resigned to become a United States District Judge in August 2014.
Prior to becoming the United States Attorney, Decker was the Deputy Mayor for Homeland Security and Public Safety for the City of Los Angeles, and served in the administrations of Mayor Eric Garcetti and Mayor Antonio Villaraigosa. As Deputy Mayor, Decker was responsible for matters related to the police department, fire department and emergency management department. In addition, she was the principle government liaison to all federal law enforcement agencies for the City of Los Angeles.
Decker was an Assistant United States Attorney from 1995 until 2009, during which time she prosecuted cases in the office’s national security, fraud and violent crime sections. For most of her nearly 15 years as an Assistant United States Attorney, Decker acted as a supervisor, serving as the Chief of the National Security Section (2007 - 2009), Deputy Chief of the Organized Crime and Terrorism Section (2002 – 2007), and Deputy Chief of the Organized Crime Strike Force (1999 – 2002).
From 1990 to 1991, and again from 1992 until 1995, Decker worked in private practice in Los Angeles at the law firm of Gibson, Dunn & Crutcher. From 1991 until 1992, she served as a law clerk to U.S. District Judge Gary L. Taylor in the Central District of California.
Decker received her undergraduate and law degrees from New York University. She also received a Master’s Degree in Homeland Security Studies from the Naval Postgraduate School.
Accountant Who Solicited Sexually Explicit Photos from Girls in the Philippines Sentenced to 20 Years in Federal PrisonRead the Press Release
LOS ANGELES – A Simi Valley man was sentenced today to 20 years in federal prison after pleading guilty to child pornography charges and admitting he used social media to solicit girls in the Philippines and Vietnam to send him sexually explicit images of themselves.
Ronald Carey Shirley, 64, of Simi Valley, a CPA who served as the chief financial officer for the California Angels baseball team in the 1990s, was sentenced by United States District Judge John F. Walter. In addition to the 20-year sentence, Shirley will be subject to a lifetime of supervised release after he finishes his prison term.
Shirley pleaded guilty in April to two counts of attempted receipt of child pornography. He was arrested in February by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) at Los Angeles International Airport as he prepared to depart for Vietnam to visit minor girls he had communicated with on social media.
As today’s sentencing hearing, Judge Walter found that Shirley travelled to Philippines last November for the purpose of having sex with minors, that he was leaving for Vietnam for the same purpose when he was arrested, and that he had planned to return to the Philippines the coming November for the purpose of having sex with minor girls.
During today’s hearing, Judge Walter quoted from a prosecutor’s sentencing memorandum when he said Shirley is “a modern-day parent’s worst nightmare” who is “a sexual predator who indiscriminately uses the Internet to target his victims.”
The investigation into Shirley began after HSI received a lead from the National Center for Missing and Exploited Children (NCMEC) about suspected child sexual exploitation activity linked to a social media account belonging to Shirley. According to court documents, Shirley had online exchanges of a sexual nature with at least three girls over the course of at least seven months. In an exchange with a 16-year-old victim in the Philippines, Shirley told her he wanted to have sex with her and wired her money in exchange for sending him sexually explicit images of herself.
“This sentence should serve as a sobering warning to every sexual predator who thinks they can hide from the law by violating the innocence of children overseas,” said Claude Arnold, special agent in charge of HSI Los Angeles. “There can be no place for the abuse of foreign children by our citizens, and HSI will seek to vindicate the rights of those victims no matter how far they live from our shores.”
The investigation into Shirley was conducted by HSI, which received substantial assistance from HSI’s attaché offices in Manila and Vietnam, the Philippine National Police and the Vietnamese Ministry of Public Security.
CONTACT: Assistant United States Attorney Jennifer Y. Chou (213) 894-6482
2 Sentenced to Prison for Defrauding Union and PPO Insurance Plans by Seeking Millions of Dollars for Unneeded Medical ProceduresRead the Press Release
SANTA ANA, California – Two Southern California residents were sentenced today to federal prison in connection with a scheme to defraud union and PPO health insurance programs by submitting bills for more than $71 million in medical procedures performed on insurance beneficiaries who received free or discounted cosmetic surgery.
An investigation into the fraudulent scheme – which was run out of a surgery center in Orange known at various times as Princess Cosmetic Surgery, Vista Surgical Center and Empire Surgical Center – showed that many of the bills were for unneeded medical procedures. At today’s sentencing, prosecutors took a very conservative position, based on a careful medical review of only some of the claims, that the documented loss figure related to unnecessary medical procedures was at least $2.6 million.
The two defendants sentenced today by United States District Judge Josephine L. Staton are:
Theresa Fisher, 45, of Tustin, who was sentenced to 41 months in federal prison and ordered to pay $2.6 million in restitution; and
Lindsay Hardgraves, 30, of San Pedro, who was sentenced to five months in prison and ordered to pay restitution in the amount of $85,000.
Following a jury trial in March, Fisher was found guilty of five counts of mail fraud, and Hardgraves was convicted of two counts of mail fraud.
The evidence at trial showed that marketers, who are sometimes known as cappers, lured patients to the surgery center. When patients came to the surgery center for a consultation, they were told that they could receive free or discounted cosmetic surgeries if they underwent multiple, medically unnecessary procedures that would be billed to their union or PPO health care benefit program. The unnecessary procedures typically performed on the “patients” were endoscopies (usually esophagogastroduodenoscopies, or EGDs), colonoscopies and cystoscopies. Once the health care benefit program paid the claims, the patients were given free or discounted cosmetic surgeries, including “tummy tucks,” breast augmentations, and liposuction. Further, tummy tucks were billed as hernia repair surgeries.
A large number of the fraudulent claims were submitted to the International Longshore and Warehouse Union and Operating Engineers Union health insurance plans.
Fisher was a consultant at the surgery center, and Hardgraves was a marketer.
A third defendant in the case – Vi Nguyen, 31, of Placentia, who also worked as a consultant at the surgery center – pleaded guilty to four counts of mail fraud on January 16. Nguyen is scheduled to be sentenced by Judge Staton on July 10.
This case is the product of an investigation by the Federal Bureau of Investigation, the United States Department of Labor – Office of Inspector General, United States Department of Labor – Employee Benefits Security Administration, and the Office of Personnel Management – Office of Inspector General.
Three Deputy Sheriffs Found Guilty of Federal Civil Rights Offense in Beating of Visitor at Downtown Los Angeles JailRead the Press Release
LOS ANGELES – A federal jury this afternoon returned guilty verdicts against three deputies with the Los Angeles Sheriff’s Department who violated the civil rights of a visitor to the Men’s Central Jail by beating him while he was restrained with handcuffs.
Concluding a one-week trial, the jury determined that Deputies Fernando Luviano and Sussie Ayala, as well as former Sergeant Eric Gonzalez, violated the civil rights of the victim in 2011 when they beat the man and caused bodily injury. The jury also determined that all three defendants falsified records when they prepared reports about the incident.
Ayala and Gonzalez were additionally convicted of conspiring to violate the victim’s civil rights by using unreasonable force.
Two other defendants who were named in a federal grand jury indictment in late 2013 – Pantamitr Zunggeemoge and Noel Womack – previously pleaded guilty and are pending sentencing.
The evidence presented at trial showed that the victim and his girlfriend went to the jail to visit the woman’s incarcerated brother on February 26, 2011. Both visitors were in the possession of cell phones, which is prohibited under jail rules. When the phones were discovered, the victim was handcuffed and brought into an employee break room, where he was beaten and sprayed with a burning agent similar to pepper spray. The victim was later transferred to the hospital by paramedics.
Following the incident, Gonzalez instructed Zunggeemoge how to write a report that falsely described how the victim swung his left elbow and struck Zunggeemoge, which prompted the use of force against the victim. Subsequent reports by other defendants also falsely described how the victim attempted to escape from the break room.
As a result of today’s convictions, Ayala and Gonzalez face a statutory maximum sentence of 40 years in federal prison, and Luviano faces up to 30 years. United States District Judge George H. King, who presided over the trial, is scheduled to sentence the three defendants on November 2.
This case is the result of an investigation by the FBI, and is one in a series of cases resulting from investigation into corruption and civil rights abuses at county jails in downtown Los Angeles. With today’s verdicts, 14 current or former members of the Los Angeles Sheriff’s Department have now been convicted of federal charges.
Former Gulfstream Executive Sentenced to over 11 Years in Federal Prison for Embezzling over $10 Million from the Aerospace CompanyRead the Press Release
LOS ANGELES – The former director of finance and accounting at Gulfstream Aerospace Corporation’s Long Beach facility was sentenced today to 135 months in federal prison for embezzling more than $10 million from his employer over a 13-year period.
Marvin Jay Caukin, 66, of Calabasas, was sentenced this morning by United States District Judge John F. Walter, who remanded the defendant into custody at the conclusion of the sentencing hearing.
In addition to the prison term, Judge Walter ordered the defendant to pay $10.25 million in restitution, and to forfeit to the government his interest of at least $2.4 million in properties in Calabasas and Toluca Lake.
Caukin pleaded guilty in January to conspiracy to commit mail fraud, admitting then that he participated in a long-running scheme to defraud Gulfstream by submitting fictitious business invoices to the aerospace company. According to court documents, the invoices were from bogus companies that had been set up by Caukin’s relatives and associates, and had names that were similar to actual businesses involved in the aerospace industry. Once Gulfstream issued checks in response to the invoices from the bogus vendors, Caukin used the funds to pay for range of personal expenses, including his mortgage, car payments, credit cards and professional escorts.
The scheme ran from soon after he was hired by Gulfstream in the fall of 2000 until approximately May 2013, when he was terminated by the company for failing to disclose a prior embezzlement conviction in federal court and lying about a job he supposedly had while he was actually in prison.
Caukin “proved that short prison sentences do not deter him when he resumed embezzling just after being released from a combined 39-month sentence,” prosecutors wrote in a sentencing memo filed with the court.
“[F]rom 1994 until 2013, when defendant was fired [from Gulfstream], the only years defendant was not continually committing fraud were those in which he was incarcerated.”
The investigation into Caukin’s scheme was conducted by the Federal Bureau of Investigation and the United States Postal Inspection Service.
Release No. 15-063