Central District of California
Press releases recorded for this federal judicial district.
Federal Racketeering Indictment Targets Mexican Mafia-Orchestrated Coalition of Three Latino Street Gangs in Northeast Los AngelesRead the Press Release
LOS ANGELES – Federal, state and local authorities this morning arrested 15 defendants named in a federal racketeering indictment that describes the development and implementation of a coalition of three criminal street gangs in the Northeast Los Angeles area that were brought together under a truce ordered by a Mexican Mafia member for the purpose of controlling criminal activity in the neighborhoods where the trio of gangs operated
Unlike previous federal racketeering cases in this region that targeted long-established street gangs, the indictment that was returned yesterday by a federal grand jury outlines how Mexican Mafia member Arnold Gonzales created a criminal enterprise by unifying three gangs that had traditionally been rivals. According to the 27-count indictment, the “peace treaty” imposed by Arnold Gonzales brought together the Frogtown, Toonerville and Rascals gangs, which then worked “in concert to control the narcotics trafficking and other illicit activities committed in their territories,” which run along the Los Angeles River from Elysian Park nearly to Burbank.
The indictment alleges a conspiracy to violate the Racketeer-Influenced and Corrupt Organizations Act (RICO) and accuses a total of 22 defendants of being “members and associates of a criminal organization engaged in, amongst other things, conspiracy to traffic in narcotics, narcotics trafficking, extortion, and crimes of violence, including conspiracy to commit murder, murder, attempted murder, and robbery.”
Exploiting a power vacuum created by previous federal RICO cases targeting Northeast Los Angeles gangs and the Mexican Mafia members who controlled them, Arnold Gonzales allegedly assumed control of the three street gangs in the fall of 2010. Because he was incarcerated in Pelican Bay State Prison after being convicted of murder, Arnold Gonzales anointed another Frogtown member – Jorge Grey, also known as “Bouncer” – to be his emissary on the streets, according to the indictment. Acting as the so-called shotcaller, Grey convened a meeting of representatives of Northeast Los Angeles gangs in September 2010. At this meeting, Grey informed the gang representatives that he was Arnold Gonzales’s “mouthpiece” and that he had orders to broker a truce among the rival gangs of Frogtown, Toonerville, and the Rascals so that they could work together to control illegal activities in the area on behalf of, and for the benefit of, Arnold Gonzales.
The investigation showed that nearly two years after its formation, the criminal organization had achieved its goal of unifying the three longstanding rival gangs into a single criminal enterprise. Less than two years after Arnold Gonzales imposed the truce on the gangs, one of the Toonerville shot-callers, Manuel Vallejo, was talking about the “United Nations,” “New World Order” and “United Neighborhoods,” which he said was the “game plan.” Just a few months ago, Vallejo was boasting about the execution of that “game plan,” noting that he was part of something that had ended more than 50 years of fighting between Frogtown, Toonerville and the Rascals.
“For the past two decades, federal authorities have been fighting the influence of the Mexican Mafia both inside prison facilities and on the streets of Southern California,” said Assistant United States Attorney Robert Dugdale, Chief of the office’s Criminal Division. “We sought to ensure that being a shotcaller in such a gang is a job whose only reward will be many, many years in federal custody. The indictment announced today is the latest salvo in this battle, and we will continue our crackdown on criminal organizations like the Mexican Mafia and street gangs that do its bidding as long as they threaten our communities.”
The RICO indictment targeting the Arnold Gonzales Organization is the result of Operation “Gig ‘em,” which was a 2½-year investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, Violent Crime Impact Team; the California Department of Corrections and Rehabilitation, Office of Correctional Safety, Special Service Unit; the Glendale Police Department; and the Los Angeles Police Department.
This morning, authorities arrested 14 of the defendants named in the RICO indictment. Four other defendants were already in custody, and law enforcement continues to search for three defendants, including Grey. (Two other individuals named in separate one-defendant, one-count drug trafficking indictments were also arrested this morning.)
ATF Special Agent in Charge Carlos A. Canino said, “Many of these defendants are previously convicted felons. We will continue to send the message, continued engagement in gang violence and violent crime has no place in our community.”
The investigation centered on Arnold Gonzales taking control of the three gangs; exercising his authority through Grey and his criminal associates; and generating revenue through extortion, specifically the imposition of taxes on the gangs and others who distributed narcotics in the territory controlled by the criminal enterprise. Members of the racketeering conspiracy allegedly implemented the orders of Arnold Gonzales, imposed discipline on those who attempted to violate the orders or contest the power of the enterprise, and collected firearms that were used to enforce their authority. The indictment details numerous transactions involving narcotics and firearms, and also contains charges related to two shootings, one allegedly perpetrated by Vallejo against a fellow Toonerville gang member whom he believed was attempting to wrest control of the enterprise, and another shooting of a neighborhood drug dealer ordered by Grey due to his failure to pay “taxes” to Arnold Gonzales.
“There is a path of lives ruined, and families devastated by the violence, extortion, and addictions that were created by this gang alliance,” said Bill Kunz, Special Agent in Charge, California Department of Corrections and Rehabilitation, Office of Correctional Safety. “So, those who join with the Mexican mafia should be on notice: law enforcement is also banded together. We will track you down, and take you down.”
Glendale Police Chief Chief Rob Castro stated, “The Glendale Police Department recognizes that gang crimes have no borders and the City of Glendale is not immune to the impact of gang violence. Our participation in a multi-jurisdictional operation such as this ensures the safety of our community.”
Members of the organization also implemented plans to expand operations into the greater Lancaster, California area, where they hoped to engage in drug trafficking and collect “taxes” on behalf of, and for the benefit, of Arnold Gonzales.
As part of the scheme, several participants in the enterprise allegedly deposited money into Arnold Gonzales’s prison account, with one individual depositing over $133,000 on her own.
The indictment alleges that Grey and other members of the enterprise engaged in narcotics and weapons transactions at Homeboy Industries, and one defendant allegedly planned to use Homeboy Industries as an “alibi” if he was accused of associating with other gang members in violation of a gang injunction.
In addition to the RICO charge in the indictment, various defendants are charged with narcotics and weapons offenses, including, in one instance, the possession of a machinegun.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
If they are convicted of charges contained in the indictment, all of the defendants would face potential sentences of decades in federal prison.
Release No. 15-062
Inland Empire Siblings Plead Guilty to Stealing of Hundreds of Identities from Escrow Company and Fraudulently Obtaining CreditRead the Press Release
RIVERSIDE, California – A brother and sister from the Inland Empire have pleaded guilty to federal charges of conspiring to steal identities of hundreds of would-be homeowners from North American Title Company and using those stolen identities to obtain credit cards from major national retailers.
Charlie Rickie Jackson III, 43, of Corona, and Bridgette Lenet Jackson, 45, of Riverside, both pleaded guilty yesterday to conspiracy to commit access device fraud. Charlie Jackson also pled guilty to possession of 15 or more unauthorized access devices (credit cards).
In late 2013, Bridgette Jackson was a temporary employee at North American Title Company’s office in Temecula, where she was responsible for processing escrow documents and copying loan documents. Simply put, Bridgette Jackson allowed Charlie Jackson to come and take documents from the office when no other employees were around. According to court documents, the Jacksons stole personal identifying information belonging to well over 250 would-be homebuyers that was found in the North American Title Company documents.
Using the would-be homeowners’ personal identification information – including social security numbers, dates of birth, and bank account numbers – Charlie Jackson opened credit card accounts from major national retailers, and he used the unauthorized access devices to purchase goods online. Jackson then pawned the purchased items in exchange for cash, netting him tens of thousands of dollars.
During the course of the investigation, Charlie Jackson twice was caught in possession of hundreds of stolen identities, according to his plea agreement. The first time, in February 2014, he had hundreds of title documents from North American Title Company, sensitive medical documents containing personal identifying information, and credit cards he opened in the names of victims. In July 2014 he was caught with scanned copies of the stolen North American Title Company documents as well as a spiral notebook with personal identification information of other victims.
North American Title Company provides real estate settlement services and is a subsidiary of Lennar Homes, a national home builder. Lennar Homes has sustained thousands of dollars in losses due to the payout claims for victim homebuyers who experienced identity theft due to the breach of the secure documents.
The Jacksons pleaded guilty yesterday before United States District Judge Jesus G. Bernal, who is scheduled to sentence both defendants on August 31.
As a result of their guilty pleas, Charlie Jackson faces a statutory maximum sentence of 15 years in federal prison and Bridgette Jackson faces a statutory maximum sentence of 5 years in federal prison
“Mr. Jackson’s activity paints a disturbing picture in which confidential information was compromised for personal greed at the expense of the public,” said Robert Wemyss, Postal Inspector in Charge of the Los Angeles Division.
This investigation in this case was conducted by the United States Postal Inspection Service.
Release No. 15-061
Former DEA Agent Arrested at LAX on Fraud and Passport ChargesRead the Press Release
RIVERSIDE, California – A former special agent with the Drug Enforcement Administration has been arrested on federal fraud charges for allegedly posing as an active FBI agent and helping a man who posed as a former federal prosecutor to defraud a man who enlisted their help in recovering money lost in two fraudulent investment schemes.
David Garcia Herrera, 70, of Torrance, was arrested last night at Los Angeles International Airport by special agents with the Federal Bureau of Investigation. Herrera, who is expected to be arraigned on a nine-count indictment this afternoon in United States District Court in Riverside, was arrested as he returned from a trip abroad.
Herrera is one of two defendants charged in an indictment that was returned by a federal grand jury on June 5 with two counts of conspiracy to commit wire fraud, six counts of wire fraud and one count making false statements in a passport application.
The second defendant in the case – Jerome Arthur Whittington, 65, of La Quinta, who allegedly posed as a successful attorney and told at least one victim that he was a former federal prosecutor – is currently in custody after being indicted in June 2014 in relation to two other fraud schemes.
In the indictment filed last week, Whittington and Herrera allegedly joined forces to defraud two victims, one of whom lost money in fraudulent investments, and another who was trying to obtain immigration benefits for his wife.
In the first scheme, Whittington posed as an attorney and Herrera pretended to be an FBI special agent as they falsely promised the victim they could help him recover losses in fraudulent schemes related to two companies, Pacific Property Assets and Medical Capital Corporation. Whittington and Herrera told the victim that they were able to seize assets from the two fraudulent companies, but the victim needed to provide money that would be used to “post bonds” that were required prior to seizing the assets. After Whittington claimed that he had obtained a $4 million judgment, Whittington told the victim that representatives from the companies and other victims were very angry and that he should leave the country to avoid confrontations and harassment.
The victim paid Whittington approximately $290,000 for help in recovering his losses, but Whittington simply used the money for his own person expenses, which included making payments to other victims of his scheme and to Herrera.
In the second scheme discussed in this month’s indictment, Whittington also posed as an attorney. Herrera told the victim in this second scheme that he was an investigator with the FBI and that Whittington was a former federal prosecutor. Based on these and other false statements and promises, the victim retained Whittington and paid approximately $8,500 for assistance in his wife’s immigration case – help that was never provided.
Whittington and Herrera are also charged with making false statements on a passport application. In relation to this count, Herrera allegedly falsely stated that he had been a personal friend of Whittington for seven years.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
If they are convicted of the nine counts in the indictments, both defendants would face a statutory maximum penalty of 170 years in federal prison.
Whittington also faces two counts of wire fraud contained in an indictment filed just over one year ago. That indictment alleges that Whittington used lies and misrepresentations – including pretending to be an attorney – to convince one victim to invest in a real estate deal and another to put money into a business venture involving an Internet browser, both of which were fraudulent. As a result of the two schemes outlined in this indictment, the two victims lost approximately $165,000.
The cases against Whittington and Herrera are part of an ongoing investigation being conducted by the FBI and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). The Bossier Parish Sheriff’s Office in Bossier City, Louisiana, and the Ventura County Sheriff’s Department have provided substantial assistance.
Release No. 15-060
3 Involved in Inland Empire Loan Modification Scam That Targeted Financially Distressed Homeowners Guilty of Federal Fraud ChargesRead the Press Release
RIVERSIDE, California – A federal jury today convicted three defendants who worked at a Rancho Cucamonga business that offered bogus loan modification programs to thousands of financially distressed homeowners who lost more than $7 million when they paid for services, including loan modifications, that were never provided.
The three Southland residents found guilty today of federal fraud charges were associated with 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 found guilty today are:
Christopher Paul George, 45, Rancho Cucamonga, a co-owner of 21th Century, who was found guilty of one count of mail fraud affecting a financial institution, three counts of wire fraud, two counts of wire fraud affecting a financial institution, and one count of conspiracy to commit mail and wire fraud;
Crystal Taiwana Buck, 40, of Long Beach, a sales “closer,” who was convicted of three counts of mail fraud; and
Albert DiRoberto, 62, of Fullerton, who handled both sales and marketing – which included making a commercial for 21th Century and preparing talking points to respond to negative publicity – and who was found guilty of one count of mail fraud affecting a financial institution and two counts of wire fraud affecting a financial institution.
As a result of today’s guilty verdicts, George faces a statutory maximum sentence of 170 years in federal prison, Buck faces a statutory maximum sentence of 60 years in federal prison, and DiRoberto faces a statutory maximum sentence of 90 years in federal prison. All three defendants are scheduled to be sentenced on August 31 by United States District Judge Virginia A. Phillips.
With today’s guilty verdicts, 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 an 18-month period that began in the middle of 2008, a Rancho Cucamonga woman – Andrea Ramirez, 47, who previously pleaded guilty to conspiracy to commit mail fraud and wire fraud – 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.
George was a co-owner of 21st Century who acted as a sales manager for the company, and 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. “Members of the conspiracy preyed upon homeowners who were in desperate financial straits by making promises they had no intention of keeping,” said Acting United States Attorney Stephanie Yonekura. “The impact on victim homeowners across the country was severe, and it’s gratifying to see justice served in this case.”
Ramirez, 21st Century co-owner George and the other 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, according to the evidence presented at trial, Ramirez and other 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. Ramirez and other 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, Ramirez and other 21st Century employees would tell homeowners that 21st Century was using the fees paid by the homeowner to make mortgage payments, when in fact Ramirez, George and their co-defendants simply were pocketing the homeowners’ money.
“George, the owner of 21st Century, and his co-conspirators were convicted today following a five-week jury trial for swindling more than 5,000 struggling homeowners out of approximately $7 million using deceit and lies to obtain money for loan modifications which were represented as being affiliated with federal housing aid programs,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “The defendants’ sole goal was getting money from homeowners, and they did and said whatever it took to make that happen. SIGTARP and our law enforcement partners will put an end to schemes that prey on struggling homeowners by falsely claiming to be associated with TARP’s housing programs, and perpetrators of such schemes will be brought to justice for their crimes.”
David Bowdich, Assistant Director in Charge of the FBI’s Los Angeles Field Office, commented: “Today’s conviction is a significant step in our effort to bring justice to victims of mortgage fraud. Mr. George and his co-conspirators were solely motivated by profit and preyed on financially distressed homeowners, in an effort to line their own pockets. This should serve as a reminder that no one is above the laws of this country, and the FBI and our law enforcement partners will continue to root out fraud wherever it is found.”
Erick Martinez, Special Agent in Charge of IRS - Criminal Investigation’s Los Angeles Field Office said, “Using the guise of a federally sponsored loan modification program, the defendants preyed on financially desperate homeowners struggling to keep a roof over their head. As today’s verdicts show, those who find ways to fraudulently benefit from government programs meant to help distressed homeowners keep their homes will be brought to justice.”
Robert Wemyss, Inspector in Charge of the U.S. Postal Inspection Service – Los Angeles Division, stated: “Fraudulent mortgage fraud schemes affect consumers at the most basic level, jeopardizing their ability to retain ownership of their homes. The U.S. Postal Inspection Service will continue to investigate these crimes to protect consumers and our nation's mail system from being used for illegal or dangerous purposes."
The jury that returned guilty verdicts today also acquitted George of four counts, and Buck and DiRoberto were found not guilty of eight counts.
In addition to Ramirez and the three found guilty today, seven other defendants previously pleaded guilty. They are:
Michael Bruce Bates, 64, of Moreno Valley;
Michael Lewis Parker, 37, of Pomona;
Catalina Deleon, 38, of Glendora;
Hamid Reza Shalviri, 53, of Montebello;
Yadira Garcia Padilla, 38, of Rancho Cucamonga;
Mindy Sue Holt, 55, of San Bernardino; and
Iris Melissa Pelayo, 45, of Upland.
Ramirez and the other defendants who previously pleaded guilty are scheduled to be sentenced by Judge Phillips over the coming months.
Release No. 15-057
San Diego Man Who Ran Investment Scam That Promised ‘Reverse Life Insurance’ Policies Sentenced to over 10 Years in Federal PrisonRead the Press Release
SANTA ANA, California – The founder and chief executive officer of a firm that solicited more than $5 million from victims who thought they were investing in “reverse life insurance” policies has been sentenced to 121 months in prison.
Daniel Christian Stanley Powell, 34, of San Diego, was sentenced on Friday by United States District Judge Josephine L. Staton. In addition to the prison term, Judge Staton ordered the defendant to pay $4,447,290 in restitution to 59 victims.
In imposing the sentence, Judge Staton cited the impact on the victims: “Many [victims] were devastated financially and emotionally, and robbed of their futures and their children’s futures.”
Following a three-week jury trial last November, Powell was convicted of five counts of mail fraud, five counts of wire fraud and three counts of obstruction of justice.
According to the evidence presented at trial, Powell, the founder and operator of the Los Angeles-based Christian Stanley, Inc., told investors that he would use their money to purchase life insurance policies from insured individuals, at which point the company would pay the monthly premiums and become the beneficiaries to the policies. Powell claimed that Christian Stanley would profit by collecting the death benefits when the insureds died or by selling the policies on the life settlement market.
Powell trademarked the phrase “reverse life insurance” and indicated he would take company public by filing documents with the Securities and Exchange Commission.
Powell claimed that investments with Christian Stanley were safe because his company already owned $1.9 billion in reverse life insurance policies in a mutual fund. Contrary to his promises, however, the evidence demonstrated that Christian Stanley did not own any life insurance policies and had earned only $31,250 in revenue since its inception.
As part of the scheme, Powell also told some victims that their money would be invested in gold mines, but Christian Stanley had no interest in any gold mines.
At the sentencing hearing, Powell apologized to his victims. “I did a lot of wrong to a lot of people,” Powell said. “What I am going through is what I deserve.”
In total, approximately 60 victims invested approximately $5.2 million with Christian Stanley. The victims, who were located throughout the United States, invested directly through Powell, other representatives of Christian Stanley, or their own financial advisors. Victims lost approximately $4.4 million as a result of the scheme, which included funds that had been invested through individual retirement accounts.
Powell used victims’ money to make Ponzi-scheme payments to some investors, to pay commissions to representatives who recruited investors, and to create promotional materials, which gave the appearance that Christian Stanley was a legitimate and successful business.
Powell also spent victims’ funds on a luxury apartment on the west side of Los Angeles, Ferrari and Porsche automobiles, and a $35,000 donation to Usher’s New Look foundation, which got him a photograph with former President Bill Clinton that was used as part of Christian Stanley’s promotional materials.
The U.S. Securities and Exchange Commission filed a civil complaint against Powell and his firm in 2011 (www.sec.gov/litigation/litreleases/2011/lr22082.htm). The evidence at the criminal trial showed that Powell knowingly drafted false affidavits to use in his defense to the SEC case and that he lied to the victims about his assets and promised to return their money if they signed the false affidavits. This criminal conduct led to the convictions on the obstruction of justice charges.
The case against Powell is the result of an investigation by the Federal Bureau of Investigation. The Los Angeles Regional Office of the U.S. Securities and Exchange Commission provided assistance in the investigation.
Release No. 15-057
Owner of Fashion District Clothing Company Pleads Guilty to Customs, Immigration and Money Laundering OffensesRead the Press Release
Chinese Immigrant to Lose U.S. Citizenship as a Result of His Illegal Behavior
LOS ANGELES – The owner of a Fashion District import-export business pleaded guilty late Friday afternoon to federal charges stemming from an investigation into “Black Market Peso Exchange” schemes that are used by international drug cartels to launder and send narcotics proceeds out of the United States.
The owner of businesses known as Yili Underwear and Gayima Underwear pleaded guilty in United States District Court pursuant to a plea agreement that requires him to forfeit hundreds of thousands of dollars in assets and will result in the loss of his United States citizenship.
Xilin Chen (陳喜林), 55, of Temple City, pleaded guilty to three felony counts – knowingly passing false documents through a customhouse of the United States, conspiracy to launder money, and unlawful procurement of citizenship.
In a plea agreement filed with the court last week, Xilin Chen acknowledged that he received bulk cash at his business that he had good reason to believe was from illegal activity, specifically drug trafficking. Xilin Chen further acknowledged that he deliberately avoided learning the truth about the bulk cash that was being delivered to his businesses.
The investigation into Chen’s companies was part of a larger investigation into Black Market Peso Exchange (BMPE) schemes in the Fashion District. In a BMPE scheme, operatives for a drug trafficking organization use money derived from the sale of narcotics to purchase goods, typically using large sums of cash. The goods are shipped to another country, where they are sold, and the funds are delivered to the drug trafficking organization. These BMPE schemes – which is a type of trade-based money laundering – are often used by Mexico-based drug trafficking organizations to collect proceeds from their drug sales in the United States without having to take the risk of smuggling large amounts of U.S. currency across the Mexican border and without having to wire the funds through financial institutions, both of which carry the threat of authorities detecting the illegal source of the money.
Xilin Chen pleaded guilty to a customs offense related to a form he filed with U.S. Customs and Border Protection in which he claimed merchandise imported from China was worth $86,635, even though the true value of the clothing was $175,535. In the plea agreement, Xilin Chen admitted that the purpose of undervaluing the merchandise was to defraud the United States out of the proper duty owed on the merchandise. Because the clothing was then sold for prices lower than if the true and correct duty had been paid, the proceeds of the sales were illegal and depositing the proceeds into U.S. banks and then wire transferring some of the funds to China to pay for additional merchandise constituted money laundering.
In his plea agreement, Xilin Chen further acknowledged that on three occasions he accepted bulk cash as payment for clothing from an undercover agent posing as someone using the proceeds of narcotics trafficking to purchase merchandise. Xilin admitted the he was aware, or should have been aware, of the high probability that he was accepting money derived from narcotics trafficking, but he “deliberately avoided asking questions or confirming the truth,” according to the plea agreement.
Xilin Chen also pleaded guilty to illegally procuring citizenship in 2012 when he declared he was not involved in criminal activity, even though he was involved in customs fraud and money laundering.
Xilin Chen’s son – Chuang Feng Chen (aka “Tom” and 陳創鋒), 25, also of Temple City – also pleaded guilty Friday afternoon to conspiracy to pass false documents through a customhouse of the United States.
The Chens pleaded guilty before United States District Judge Percy Anderson, who is scheduled to sentence the defendants on August 24.
As part of this case, the Chens have agreed to forfeit to the United States proceeds from the sales of the building that houses the underwear company, two residences in Temple City and more than $435,000 that was seized during the execution of search warrants and seizure warrants last fall.
As part of the agreement with the Chens, prosecutors have asked Judge Anderson to dismiss charges against Aixia Chen, who is Xilin Chen’s daughter.
The case involving the Chens was investigated by the Drug Enforcement Administration and IRS – Criminal Investigation under the auspices of the Southwest Border Initiative.
Release No. 15-056
Former Member of Moreno Valley City Council Sentenced to Five Years in Federal Prison for Taking $2.3 Million Cash BribeRead the Press Release
RIVERSIDE, California – In a case stemming from what is believed to be the largest bribe ever accepted by a public official in an undercover operation, a former member of the Moreno Valley City Council was sentenced this afternoon to 60 months in federal prison for taking a $2.36 million cash bribe from an undercover operative posing as a real estate broker.
Marcelo Co, 64, was sentenced this afternoon by United States District Judge Jesus G. Bernal. Co pleaded guilty last year to one bribery count and one count of filing a false corporate tax return.
The case against Co was the result of an investigation by the Inland Regional Corruption Task Force, which is comprised of prosecutors, agents and investigators from the Federal Bureau of Investigation, IRS – Criminal Investigation, the Riverside County District Attorney’s Office and the United States Attorney’s Office.
Co was elected to the Moreno Valley City Council in November 2010 and resigned from his seat in August 2013 after being charged in state court in an unrelated case. Court documents filed in the federal case outline a bribery scheme in which Co told a businessman and an undercover FBI operative posing as a real estate broker that he would control a voting majority of the Moreno Valley City Council and would be able to guarantee land use decisions that would benefit the businessman and the land
broker. Co also promised to always vote in favor of land use decisions that would benefit the real estate broker.Co solicited campaign donations from the FBI undercover operative and the
businessman, who was cooperating with the investigation. Co eventually received payments of $5,000 and $10,000 that he said were to be used to finance the campaigns of individuals who would vote with him on land use issues.
In the fall of 2012, Co met with the undercover operative to discuss a multimillion dollar sale of a 30-acre parcel that he owned. Co told the real estate broker that once he
had control of the City Council, he could change the zoning of the property and the land
value would dramatically increase. With the City Council election in November 2012, Co told the undercover investigator that he had the votes to alter the zoning and increase the value of Co’s 30-acre parcel, which had been appraised at $710,000. Co proposed that the undercover operative purchase the property for $5.36 million, which would include a cash payment of $2.36 million.At a meeting on January 30, 2013, Co agreed to sell the property for $5.36 million, but that the publicly filed documents would reflect a sale price of only $3 million. At this meeting, Co accepted $2.36 million in cash.
The tax charge concerns a federal Corporation Income Tax Return (Form 1120) that Co filed for his company, Qwik Pack Systems, for tax year 2010. In that filing with the IRS, Co failed to report well over $100,000 in income. This tax charge is not related to the bribery scheme.
Co must surrender himself to authorities on October 30 to begin serving his sentence.
Release No. 15-057
Moorpark Man Who Pleaded Guilty to Producing Child Pornography in ‘Sextortion’ Case Sentenced to 15 Years in Federal PrisonRead the Press Release
LOS ANGELES – A Moorpark man who used social networking websites to trick, extort or threaten more than a dozen girls and boys into sending him naked photos and videos was sentenced today to 15 years in federal prison for producing child pornography.
Jeremy Brendan Sears, 24, was sentenced this morning by United States District Judge John F. Walter.
Once Sears finishes his prison term, Judge Walter ordered that he will be on supervised released for the rest of his life.
Sears pleaded guilty in January to one count of production of child pornography in a binding plea agreement that called for a sentence of at least 15 years.
According to court documents, Sears set up fake profiles on Facebook, Meetme, and other social networking websites that appeared to be from teenage boys and girls. Sears allegedly used the bogus profiles to communicate with real-life teenagers, sometimes beginning online romantic relationships with the real-life teens and then encouraging them to send him sexually explicit videos and photos of themselves. Sears “used false online identities to persuade teenage victims to send defendant sexually explicit photos or to engage in sexually explicit video webchats that defendant recorded,” prosecutors wrote in a sentencing memorandum filed with the court.
In some cases, Sears threatened to harm the real-life teens or their loved-ones unless they sent him naked images. In some cases, after receiving the images of the underage victims, Sears would distribute those images, along with the victims’ names and personal information, to other members of his online social networking groups or to publicly accessible websites.
“Other times, [Sears] would make physical threats against his minor victims, threatening that the victims would be raped, tortured, or killed if they did not give defendant a thing of value — namely, nude and sexually explicit images of themselves,” Sears admitted in his plea agreement.
Sears approached some of his victims after finding them active in social-networking groups for fans of music acts popular with young teenagers, such as Justin Bieber or One Direction. Sears harassed victims by making online accusations about their sexual activity, insulting them, or repeatedly insulting people the victims liked, according to the plea agreement filed in this case. “Defendant would then offer to stop the harassment if his victims would send him sexually explicit images or would transmit to him live depictions of themselves engaging in sexually explicit conduct.”
The investigation was conducted by the Federal Bureau of Investigation and the Ventura County Sheriff’s Office.
Release No. 15-054
High Desert Woman Charged with Stealing Identities from Elderly Victims as Part of Unemployment Insurance Fraud SchemeRead the Press Release
Victims Gave Personal Data in Hopes of Being Cast in Remakes of Movies
LOS ANGELES, California – A federal grand jury this afternoon charged an Antelope Valley woman in an identity theft scheme that used personal data from elderly victims to defraud California’s unemployment insurance program out of hundreds of thousands of dollars.
Dena Peterman, 32, of Littlerock, was named in an eight-count indictment that charges her with conspiracy, aggravated identity theft and six counts of mail fraud.
Over the course of two years, Peterman and her co-conspirators allegedly stole social security numbers and other personal identifying information that was used to commit unemployment insurance fraud. According to court documents, 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 the 1985 movie “Cocoon” and the 1981 film “On Golden Pond.”
Once they had obtained the personal information, Peterman and her co-conspirators allegedly created bogus companies supposedly related to the movie industry, submitted false wage information for the elderly victims and other individuals whom they falsely claimed worked for these companies, and submitted bogus unemployment insurance claims in the names of these individuals. The California Employment Development Department (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, investigators believe that the EDD suffered losses of approximately $500,000.
Peterman was arrested on May 18 pursuant to a criminal complaint that had been filed in federal court. A United States Magistrate Judge ordered the Peterman be held without bond. She is scheduled to be arraigned on the indictment on June 5.
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, Peterman would face a statutory maximum penalty of five years in federal prison on the conspiracy, up to 20 years for each mail fraud count, and a mandatory consecutive two-year sentence for the identity theft count.
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.
Release No. 15-055
Valley Duo That Bilked Medicare by Billing Nearly $2 Million for Unneeded Power Wheelchairs Found Guilty of Federal Fraud ChargesRead the Press Release
LOS ANGELES – A Los Angeles-area woman and man who were responsible for more than $1.8 million in fraudulent Medicare billings – almost entirely for medically unnecessary power wheelchairs – have been found guilty of health care fraud.
Queen Anieze-Smith, 53, of Woodland Hills, and Abdul King Garba, 49, of Van Nuys, each were convicted Tuesday afternoon of five counts of health care fraud. The guilty verdicts concluded a nine-day trial before United States District Judge Dolly M. Gee.
Anieze-Smith and Garba, who operated ITC Medical Supply in Van Nuys, were found guilty of submitting fraudulent claims to the Medicare program. The duo billed Medicare for durable medical equipment – mostly power wheelchairs – for beneficiaries who were often recruited off the street, who were mobile and did not need a power wheelchair, and who could not use the power wheelchairs in their homes. As part of their scheme, Anieze-Smith and Garba’s falsified paperwork required by Medicare and sometimes failed to deliver the power wheelchairs altogether. Anieze-Smith and Garba submitted more than $1.8 million in fraudulent claims to Medicare, and they received nearly $900,000 for those claims.
As a result of the guilty verdicts, Anieze-Smith and Garba each face a statutory maximum sentence of 50 years when they are sentenced by Judge Gee this fall.
The investigation into Anieze-Smith and Garba was conducted by the Federal Bureau of Investigation and U.S. Department of Health and Human Services - Office of the Inspector General.Release No. 15-051
Los Angeles Businessman Pleads Guilty to Operating an Unlicensed Business That Transferred over $17 Million Between U.S. and IranRead the Press Release
LOS ANGELES – The owner of a Los Angeles-based international food distribution company pleaded guilty this afternoon to a federal charge of operating an unlicensed money transmittal business through which more than $17 million was transferred between Iran and the United States.
Ali Amin, a 57-year-old resident of the Bel-Air district of Los Angeles, also pleaded guilty today to tax fraud and failing to disclose to the Internal Revenue Service bank accounts in Switzerland.
Amin owns Primex International Trading Company, Inc. (Pitco), a producer and distributor of dried fruit and nut products to domestic and international markets that is based near Los Angeles International Airport. Since 2007, Amin has also owned a 50 percent interest in Amin Padidar Limited, a processor and distributor of pistachios that is based in Tehran, Iran.
According to court documents, from 2007 through 2011, Amin used bank accounts of Amin Padidar in Tehran, an account in Switzerland, an Amin Padidar affiliate, and Pitco in the United States, to transfer money from persons in Iran to persons in the United States designated to receive the money. To effect the transfers, people in Iran, typically Amin’s friends and family members, first deposited Iranian rials with Amin Padidar in Iran. Upon confirmation of the receipt of those funds, Amin directed Pitco to transfer an equivalent amount of money from domestic Pitco accounts to the United States-based bank account of people designated to receive the funds. Amin would also use a bank account in Switzerland to transfer funds from Iran to the United States for family members of Amin.
When he pleaded guilty today, Amin also admitted that he failed to disclose to the IRS an account at HypoSwiss Private Bank in Switzerland that he controlled. Amin also pleaded guilty to subscribing to a false tax return, admitting that he failed to disclose approximately $3.4 million in income to the IRS from 2007 to 2011.
Amin pleaded guilty before United States District Judge Dean D. Pregerson, who is scheduled to sentence the defendant on January 25, 2016.
As a result of his pleading guilty to the three felony charges, Amin faces a maximum statutory sentence of 18 years in federal prison.
The investigation into Amin was conducted by the Federal Bureau of Investigation and IRS - Criminal Investigation.
Release No. 15-053
Convicted Sex Offender on Parole Charged in Federal Court with Distributing Child PornographyRead the Press Release
RIVERSIDE, California – A convicted sex offender who is on parole for having unlawful sexual intercourse with a minor has been charged in federal court for allegedly distributing child pornography over the Internet.
Andrew Harrison Fowler, 25, of Murrieta, was named in a criminal complaint filed yesterday in United States District Court. Fowler, who was free on bail in a related case filed by the Riverside County District Attorney, was arrested by federal authorities yesterday afternoon, and he is expected to make his initial appearance in federal court this afternoon.
The affidavit in support of the federal complaint describes how Fowler’s employer in Corona suspected he was accessing child pornography and contacted Fowler’s parole officer. Investigators assigned to the Riverside County District Attorney’s Office Sexual Assault and Felony Enforcement Team (SAFE Team)/Internet Crimes Against Children Unit executed a search warrant to obtain information about Fowler’s Hotmail account, and discovered that he had sent emails containing child pornography. The investigation revealed that Fowler exchanged numerous images of child pornography with two other individuals and was actively soliciting sexual encounters on Craigslist. Investigators also discovered Fowler used aliases to disguise his true identity and avoid detection of his online activities by his parole agent.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
If he is convicted of the crime of distributing child pornography, Fowler, as a result of his prior conviction, would face a mandatory minimum sentence of 15 years in federal prison and a maximum sentence of 40 years.
The investigation of Fowler is a joint effort between the Riverside County District Attorney’s Office and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Fowler is currently on parole after serving a prison term resulting from a case prosecuted by the San Diego County District Attorney’s Office in which he was convicted of three counts of having unlawful sexual intercourse with girls between the ages of 13 and 17.
Release No. 15-052
Two Orange County Men Arrested on Federal Charges of Conspiring to Provide Material Support to ISILRead the Press Release
SANTA ANA, California – Two Orange County men, one of whom attempted to travel to the Middle East to allegedly join ISIL, have been arrested on federal charges of conspiring to provide material support to the designated foreign terrorist group the Islamic State of Iraq and the Levant (ISIL).
Muhanad Badawi, 24, and Nader Elhuzayel, 24, both of Anaheim, were arrested Thursday evening by special agents with the FBI.
Badawi and Elhuzayel were charged in a criminal complaint filed this morning in United States District Court in Santa Ana, and both me are expected to make their initial court appearances this afternoon.
The affidavit in support of the criminal complaint outlines 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.
According to the affidavit, on May 3, Elhuzayel saw a tweet from Elton Simpson, one of the two gunmen who were killed trying to attack a conference in Garland, Texas. In this tweet, Simpson stated that he and his “bro” had pledged allegiance to the leader of ISIL. In response, Elhuzayel tweeted his support for the attempted attack and praised Simpson as a “martyr.”
In recorded conversations last month, 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. When Badawi expressed concerns about ISIL struggling due to airstrikes by Coalition forces, Elhuzayel responded that they had to be patient and “can you imagine when al-Qaeda joins with Islamic State”? According to the affidavit, Badawi responded: “We will be huge.” The two men also discussed local Muslim leaders and Elhuzayel complained that these leaders were not “legitimate” because they believed in democracy and were not fighting for an Islamic State.
The men discussed where in the Middle East they would rather be, and Elhuzayel said he wanted to fight and did not want to be in the United States, according to the conversations recounted in the affidavit.
On May 7, Badawi allowed Elhuzayel to use his credit card to purchase a one-way airline ticket for travel from Los Angeles to Tel Aviv, Israel, via Istanbul, Turkey, on a Turkish Airlines flight scheduled to depart on May 21. Badawi indicated that he would be traveling to the Middle East in the future, according to the affidavit.
Elhuzayel was arrested at Los Angeles International Airport. According to the allegations in the complaint, Elhuzayel admitted after being read his Miranda rights that he planned to disembark in Istanbul to join ISIL and did not intend to travel on to Israel.
If convicted of the charge in the criminal complaint, Badawi and Elhuzayel each would face a statutory maximum sentence of 15 years in prison for conspiring to provide material support to ISIL.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The 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.
Release No. 15-050
O.C. Man Who Hawked Bogus Investments in Treatments for Common Ailments Sentenced to over 12 Years in Federal PrisonRead the Press Release
SANTA ANA, California – An Irvine man who ran a fraud scheme that raised well over $3 million from victims who thought they were investing in products that would treat childhood obesity and Type II diabetes was sentenced today to 151 months in federal prison.
Charles M. “Chuck” Davis, 57, was sentenced by United States District Judge Andrew Guilford. In addition to the prison term, Judge Guilford ordered Davis to pay $3,468,934 in restitution to 66 victims.
Following a seven-day last June, a federal jury found Davis guilty of two counts of mail fraud, seven counts of wire fraud and four counts of money laundering.
The evidence presented during the trial showed that Davis operated an investment scam involving the Newport Beach-based LifeRight Holdings, Inc. According to promises made by Davis, LifeRight was going to develop and use infomercials to market a product to combat child obesity. Davis promised investors a 15 percent return in only 13 months, as well as royalties on products sold and an option to convert the investment into shares of LifeRight stock when the company began selling product. Davis took in approximately $2.5 million from 45 investors, who lost all of their money.
The second scheme involved a company called DT2, which purportedly offered a product to treat Type II diabetes. From 2009 until Davis was jailed in 2011, Davis raised approximately $900,000 from about 21 DT2 investors. Similar to the LifeRight scam, Davis diverted the investor funds to other companies and, instead of spending the money on DT2 business, Davis used the money to pay for high-end restaurants, expenses sustained by several girlfriends, spa treatments, cash withdrawals, and his civil and criminal defense attorneys. The victims in the DT2 also lost all of their money.
In both schemes, Davis never had a real product.
Davis has been in custody since September 2011, when his bond in this case was revoked after a judge found he was improperly soliciting money in the DT2 scheme.
The case against Davis was investigated by the Federal Bureau of Investigation.
Release No. 15-049
Los Angeles Man Who Produced Child Pornography by Photographing Girl While in Philippines Sentenced to Life in Federal PrisonRead the Press Release
LOS ANGELES – A Los Angeles man who was convicted of producing child pornography in the Philippines while being required to register as a sex offender due to his prior conviction for raping a 14-year-old girl was sentenced today to life without parole in federal prison.
Stanley Dan Reczko III, 50, who resided in the Koreatown District of Los Angeles, was sentenced today by United States District Judge George H. King, who in March found the defendant guilty of producing child pornography while being required to register as a sex offender.
“This defendant has a life-long history of violent behavior,” said Acting United States Attorney Stephanie Yonekura. “He has received treatment and counseling, but in light of this case, the help offered to him appears to have had no effect. Even though he has previously served prison time for the rape of a minor, this punishment did not deter his behavior. In light of his recidivism, the life prison sentence is richly deserved.”
In the first part of a bifurcated trial, a federal jury in February found Reczko guilty of sexual exploitation by producing child pornography in the Philippines.
Reczko received the life sentence for the sexual exploitation charge, and he received a consecutive 10-year term for producing child pornography while being required to register as a sex offender.
Reczko has been in custody since 2007, when he was arrested after returning to the United States by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
“This sentence should serve as a warning to sexual predators who mistakenly believe they can escape justice by exploiting children overseas,” said Mark Selby, deputy special agent in charge for 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. Fortunately, the sentence imposed today virtually assures that no additional children will be harmed by this defendant.”
Authorities began investigating Reczko in May 2007 after the minor victim handed over a CD containing child pornography to the International Justice Mission (IJM), a non-governmental organization working in the Philippines. IJM provided the CD, along with other evidence, to law enforcement officers working out of the U.S. Embassy in Manila. The evidence showed that Reczko had used the minor to produce eight series of child pornography, which included images of him and the victim engaging in sexual intercourse.
Reczko sexually, physically, emotionally, and mentally abused the victim for three years, according to prosecutors.
Release No. 15-047
Georgia Man Sentenced to Prison in Wire Fraud Scheme That Bilked Airlines by Obtaining Free ‘Non-Rev’ Tickets for Non-EmployeesRead the Press Release
LOS ANGELES – A Georgia man who fraudulently booked airline reservations by pretending to be a flight crew member was sentenced today to six months in federal prison, as well as six months of home detention.
Gilbert Myers Jr., 38, of Atlanta, was sentenced this afternoon in Los Angeles by United States District Judge Dean D. Pregerson.
In addition to the prison term, Judge Pregerson ordered Myers to pay $91,660 in restitution to the victim airlines.
Myers pleaded guilty in January to conspiracy to commit wire fraud, admitting that he orchestrated a scheme to defraud air carriers by having travelers illegally board aircrafts while pretending to be employees of other airlines. In exchange for arranging their travel as “non-rev” employee travelers, Myers typically charged approximately $2,000 for one year of unlimited free flights.
Myers fraudulently booked hundreds of flights on victim airlines that include AirTran Airways, JetBlue, Spirit Airlines, Sun Country Airlines and United Airlines.
The fraudulent travelers utilized Myers’ services to fly in and out of Los Angeles County airports by pretending to be in-flight crew members employed by other airlines. To obtain boarding passes and stand-by tickets (for which airline employees pay little or nothing, hence non-revenue), Myers called the victim airline’s reservation call center and gave the victim airline’s representative the name of a traveler, the airline he supposedly worked for, a bogus employee identification number, and a date of hire. Myers typically lied to the victim airline and said he worked on a flight crew for another airline, according to court documents.
Myers advised the fraudulent travelers to avoid detection by dressing appropriately and responding to questions about their employment at another airline. With the fraudulently obtained boarding pass and their real photo identification, the fraudulent traveler went through Transportation Security Administration security screening. The fraudulent travelers boarded planes listed as employees of other airlines. All of the travelers were subject to full security screenings by the Transportation Security Administration.
In the plea agreement, Myers admitted to several specific, fraudulent booking calls. As part of the conspiracy, Myers acknowledges that he “fraudulently booked these and hundreds of other flights with victim airlines.”
The fair market value of the fraudulently obtained plane tickets was more than $277,000, and attorneys in the case agreed that the applicable amount of restitution is approximately $91,660.
All of the victim airlines fully cooperated in the investigation.
Myers was arrested in July 2014 without incident at a Beverly Hills hotel after agreeing to meet a potential traveler who was actually an undercover FBI agent.
The case against Myers is the result of an investigation by the FBI’s Joint Terrorism Task Force.
Release No. 15-048
Attorney Representing Witnesses in 'Chinese Birthing House' Investigation Charged with Attempted Witness TamperingRead the Press Release
Irvine Lawyer Arrested after Accepting $6,000 to Smuggle a Witness Out of U.S.
SANTA ANA, California – An Irvine-based immigration attorney has been arrested and charged with attempted witness tampering after agreeing to help a Chinese national flee from the United States after the woman had been designated as a “material witness” in a criminal investigation into “birthing houses” operating in Southern California.
Ken Zhiyi Liang, 38, of Irvine, was arrested Friday afternoon after accepting $6,000 from the witness in exchange for assisting her abscond to China. In a criminal complaint filed Saturday, Liang was charged with attempted witness tampering, a charge that carries a statutory maximum penalty of 20 years in federal prison. Liang is scheduled to make his initial court appearance this afternoon in United States District Court.
The Chinese national had been designated as a material witness in the federal investigation, meaning she was subject to a court order preventing her from leaving the United States without authorization from the government or court. Liang had represented the witness in the matter until the court removed him as attorney of record, over his objections, on April 17.
The federal investigation, which became known when authorities executed dozens of search warrants in early March, focuses on so-called birthing houses that “provided services to Chinese nationals, who travelled into the United States from China, for the purpose of giving birth to children so that the children could obtain United States citizenship,” according to the affidavit in support of the criminal complaint against Liang.
The affidavit, which was written by a special agent with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, recounts several video- and audio-recorded calls and meetings between Liang and the witness. During these conversations, Liang outlined a plan in which he would assist the witness by having her board a commercial airliner in the United States without travel documentation, so she could escape to China undetected by federal authorities. At one of the meetings, Liang told the witness that he could guarantee her safe return to China in exchange for a $6,000 fee for himself, and up to $3,000 to pay for help provided by three others.
During the meetings detailed in the affidavit, Liang refused to provide a written contract to the witness and requested that she pay him in cash, delete text messages and call logs, and begin using a prepaid cellular phone for all future communications.
Unbeknownst to Liang, the witness was cooperating with federal agents, who were monitoring the conversations between Liang and the witness. Liang was arrested by federal authorities as he was walking with the witness towards his car, supposedly to begin a trip to a coffee shop in Corona, where he was going to introduce the witness to the co-conspirators, who are not identified in the affidavit. After his arrest, Liang led agents back to his office, where he returned the $6,000 he had accepted from the witness.
According to the affidavit in Liang’s case, the attorney provided assistance to two other material witnesses – LongJing Yi, and her husband, Jun Xiao – who fled to the U.S. on April 4 and were subsequently charged in relation to their flight from the U.S. (see: http://www.justice.gov/usao/cac/Pressroom/2015/040.html). Another material witness who allegedly received help from Liang was intercepted at Los Angeles International Airport on April 15.
The investigation into the birthing houses is being conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and IRS – Criminal Investigation.
Release No. 15-046
Central Coast Company Pays $1 Million to Resolve Allegations of Lying to Obtain Service-Disabled Veteran ContractsRead the Press Release
LOS ANGELES – A Santa Maria company has paid $1 million to resolve allegations that it falsely claimed it was a Service-Disabled Veteran-Owned Small Business (SDVOSB) in order to obtain landscaping and cemetery restoration contracts with the U.S. Department of Veterans Affairs that were set aside for SDVOSBs.
The government’s settlement with Veterans of the Land, Inc. (VOTL), which was finalized on May 6, resolves an investigation into allegations that the company violated the federal civil False Claims Act by falsely representing that it was an SDVOSB, when it was actually controlled by a non-veteran.
The $1 million payment, which was made on May 11, represents virtually all of VOTL’s assets. VOTL has no further contracts with the VA and, as part of the settlement, has agreed to dissolve as a corporation.
From 2008 to 2013, VOTL obtained contracts with the VA under the SDVOSB program to provide landscaping and cemetery restoration services at various U.S. National Cemeteries, including Riverside National Cemetery. There is no allegation that the services provided by the company were improperly performed.
The VA started investigating VOTL after a routine audit of SDVOSB contractors raised concerns about the company. To qualify as an SDVOSB, the veteran must actually control the company. VOTL’s co-owner, Robert Laurel, allegedly recruited a relative, Enrique Escamilla, who is a service-disabled veteran, to partner in the company. But Escamilla lived in Hawaii, allegedly spent much of his time there, and Laurel allegedly made all important corporate decisions, including leasing equipment from another company that he owned.
“This settlement vindicates and protects the interests of legitimate Service-Disabled Veteran-Owned Small Businesses by ensuring the integrity of the VA’s contracting program that supports these businesses,” said Acting United States Attorney Stephanie Yonekura. “Veterans who contract with the government must be assured that there is a fair playing field.”
Douglas J. Carver, Special Agent in Charge of the U.S. Department of Veterans Affairs, Office of Inspector General (OIG), Western Field Office, stated: “This settlement demonstrates the OIG’s continued commitment to aggressively pursue individuals and companies that misrepresent themselves as Service-Disabled Veteran-Owned Small Businesses and deny legitimate disabled veterans of the opportunity to compete for VA contracts. The VA OIG will continue to work these complex cases in order to protect the integrity of this program.”
Release No. 15-045
Former Number Two of Los Angeles Sheriff’s Department Charged with Obstructing Federal Investigation into Misconduct at County JailsRead the Press Release
Paul Tanaka, 56, who was the second in command of the Los Angeles Sheriff’s Department (LASD) and William Thomas Carey, 56, who oversaw internal criminal investigations at the LASD, have been indicted on obstruction of justice charges for allegedly directing efforts to quash a federal investigation into corruption and civil rights violations by sheriff’s deputies at two downtown jail complexes.
A federal grand jury yesterday returned a five-count indictment against Tanaka and Carey, who allegedly participated in a broad conspiracy to obstruct the investigation, a scheme that started when the sheriff’s department learned that an inmate at the Men’s Central Jail (MCJ) was an informant for the Federal Bureau of Investigations (FBI). Tanaka and Carey allegedly directed, oversaw and participated in a conspiracy that last year resulted in the conviction of seven other former LASD deputies.
The obstruction of justice case was announced at a news conference this morning by Acting U.S. Attorney Stephanie Yonekura for the Central District of California and Assistant Director in Charge David Bowdich for the FBI’s Los Angeles Field Office.
Tanaka and Carey are charged with conspiracy to obstruct justice and each is named in one count of obstruction of justice. Carey is charged with two counts of making false declarations for perjuring himself last year during the trials of co-conspirators.
Tanaka was the undersheriff, the number two in the LASD, until 2013 and he ran an unsuccessful campaign for sheriff last year. Carey left LASD after reaching the rank of captain and heading the Internal Criminal Investigations Bureau.
Tanaka and Carey surrendered themselves to the FBI early this morning and the two men are expected to be arraigned on the indictment this afternoon in U.S. District Court.
According to the indictment, the two defendants were well aware of “problem deputies” at the jails, “allegations of rampant abuse of inmates” and “insufficient internal investigations” into deputy misconduct. But against this backdrop, Tanaka allegedly told deputies assigned to the jails to work in a “gray area” and that he thought that the LASD Internal Affairs Bureau should be reduced from 45 investigators to just one.
The scheme to thwart the federal investigation allegedly started when deputies in August 2011 recovered a mobile phone from an inmate in MCJ, linked the phone to the FBI and determined that the inmate was an informant for the FBI who was cooperating in a federal corruption civil rights investigation. The phone was given to the inmate by a corrupt deputy, who subsequently pleaded guilty to federal bribery charges.
Alarmed by the federal investigation, members of the conspiracy, guided by Tanaka and Carey, took affirmative steps to hide the cooperator from the FBI and the U.S. Marshals Service, which was attempting to bring the inmate to testify before a federal grand jury in response to an order issued by a federal judge. The indictment alleges that as part of the conspiracy, the deputies altered records to make it appear that the cooperator had been released. They then re-booked the inmate under a different name, moved him to secure locations, prohibited FBI access to the informant and then told the cooperator that he had been abandoned by the FBI.
Over the course of several weeks, members of the conspiracy allegedly attempted to obtain an order from a Los Angeles Superior Court judge that would have compelled the FBI to turn over information about its investigation to LASD. After the judge refused to issue such an order because he had no jurisdiction over the federal law enforcement agency and even though it was clear that the FBI was properly acting in the course of a lawful investigation, Tanaka and Carey met to discuss having two sergeants approach the lead FBI case agent. Soon thereafter, the sergeants confronted the agent at her residence in an attempt to intimidate her. The sergeants threatened the agent with arrest and later reiterated this threat to her supervisor, stating that the agent’s arrest was imminent.
“As the allegations demonstrate, Tanaka had a large role in institutionalizing certain illegal behavior within the sheriff’s department,” said Acting U.S. Attorney Yonekura. “This case also illustrates how leaders who foster and then try to hide a corrupt culture, will be held accountable, just like their subordinates.”
The indictment also alleges that Tanaka and Carey oversaw co-conspirators who told fellow deputies not to cooperate in the federal investigation. Members of the conspiracy allegedly engaged in witness tampering by telling fellow deputies that the FBI would lie, threaten, manipulate and blackmail them to obtain information about the sheriff’s department.
“The allegations in the indictment include cover-ups, diversionary tactics, retribution and a culture generally reserved for Hollywood scripts,” said Assistant Director in Charge Bowdich. “The public held the defendants to the highest standard, but, instead, they spent their time and energy setting a tone which minimized the value of their oath and dishonored the badge they wore.”
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 conspiracy count carries a statutory maximum sentence of five years in federal prison and the obstruction of justice charges carry a maximum penalty of ten years. The two false declaration counts against Carey each carry a potential penalty of five years.
As a result of this investigation, a total of 21 defendants who held various ranks in the LASD have been charged, including the deputy who took the bribe to smuggle the phone and seven co-conspirators in the scheme to obstruct justice (see, for example: http://www.justice.gov/usao/cac/Pressroom/2014/161.html).
The investigation into corruption, civil rights abuses and obstruction of justice related to the Los Angeles County jails is being conducted by the FBI.
Former No. 2 of Los Angeles Sheriff’s Department Charged with Obstructing Federal Investigation into Misconduct at County JailsRead the Press Release
Former Head of LASD Criminal Investigation Unit also Accused of Obstructing Justice and Perjuring Himself during Trial Testimony of Co-Conspirators
LOS ANGELES – Paul Tanaka, who was the second in command of the Los Angeles Sheriff’s Department, and William Thomas Carey, who oversaw internal criminal investigations at the LASD, have been indicted on obstruction of justice charges for allegedly directing efforts to quash a federal investigation into corruption and civil rights violations by sheriff’s deputies at two downtown jail complexes.
A federal grand jury yesterday returned a five-count indictment against Tanaka and Carey, who allegedly participated in a broad conspiracy to obstruct the investigation, a scheme that started when the Sheriff’s Department learned that an inmate at the Men’s Central Jail (MCJ) was an FBI informant. Tanaka and Carey allegedly directed, oversaw and participated in a conspiracy that last year resulted in the conviction of seven other former LASD deputies.
The obstruction of justice case was announced at a news conference this morning by Acting United States Attorney Stephanie Yonekura and FBI Assistant Director in Charge David Bowdich.
Tanaka and Carey, both 56, are charged with conspiracy to obstruct justice, and each is named in one count of obstruction of justice. Carey is charged with two counts of making false declarations for perjuring himself last year during the trials of co-conspirators.
Tanaka was the undersheriff – the number 2 in the LASD – until 2013, and he ran an unsuccessful campaign for sheriff last year. Carey left the LASD after reaching the rank of captain and heading the Internal Criminal Investigations Bureau.
Tanaka and Carey surrendered themselves to the FBI early this morning, and the two men are expected to be arraigned on the indictment this afternoon in United States District Court.
According to the indictment that was unsealed this morning, the two defendants were well aware of “problem deputies” at the jails, “allegations of rampant abuse of inmates,” and “insufficient internal investigations” into deputy misconduct. But against this backdrop, Tanaka allegedly told deputies assigned to the jails to work in a “gray area” and that he thought that the LASD Internal Affairs Bureau should be reduced from 45 investigators to just one.
The scheme to thwart the federal investigation allegedly started when deputies in August 2011 recovered a mobile phone from an inmate in MCJ, linked the phone to the FBI, and determined that the inmate was an informant for the FBI and was cooperating in a federal corruption civil rights investigation. The phone was given to the inmate by a corrupt deputy, who subsequently pleaded guilty to federal bribery charges.
Alarmed by the federal investigation, members of the conspiracy, guided by Tanaka and Carey, took affirmative steps to hide the cooperator from the FBI and the United States Marshals Service, which was attempting to bring the inmate to testify before a federal grand jury in response to an order issued by a federal judge. The indictment alleges that as part of the conspiracy, the deputies altered records to make it appear that the cooperator had been released. They then re-booked the inmate under a different name, moved him to secure locations, prohibited FBI access to the informant, and then told the cooperator that he had been abandoned by the FBI.
Over the course of several weeks, members of the conspiracy allegedly sought an order from a Los Angeles Superior Court judge that would have compelled the FBI to turn over information about its investigation to the LASD. After the judge refused to issue the order because he had no jurisdiction over the federal law enforcement agency, and even though it was clear that the FBI was properly acting in the course of a lawful investigation, Tanaka and Carey met to discuss having two sergeants approach the lead FBI case agent. Soon thereafter, the sergeants confronted the agent at her residence in an attempt to intimidate her. The sergeants threatened the agent with arrest and later reiterated this threat to her supervisor, stating that the agent’s arrest was imminent.
“As the allegations demonstrate, Tanaka had a large role in institutionalizing certain illegal behavior within the Sheriff’s Department,” said Acting United States Attorney Stephanie Yonekura. “This case also illustrates how leaders who foster and then try to hide a corrupt culture, will be held accountable, just like their subordinates.”
The indictment also alleges that Tanaka and Carey oversaw co-conspirators who told fellow deputies not to cooperate in the federal investigation. Members of the conspiracy allegedly engaged in witness tampering by telling fellow deputies that the FBI would lie, threaten, manipulate and blackmail them to obtain information about the Sheriff’s Department.
“The allegations in the indictment include cover-ups, diversionary tactics, retribution and a culture generally reserved for Hollywood scripts,” said David Bowdich, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The public held the defendants to the highest standard, but, instead, they spent their time and energy setting a tone which minimized the value of their oath and dishonored the badge they wore.”
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 conspiracy count carries a statutory maximum sentence of five years in federal prison, and the obstruction of justice charges carry a maximum penalty of 10 years. The two false declaration counts against Carey each carry a potential penalty of five years.
As a result of this investigation, a total of 21 defendants who held various ranks in the LASD have been charged, including the deputy who took the bribe to smuggle the phone and seven co-conspirators in the scheme to obstruct justice (see, for example: http://www.justice.gov/usao/cac/Pressroom/2014/161.html).
The investigation into corruption, civil rights abuses and obstruction of justice related to the Los Angeles County jails is being conducted by the Federal Bureau of Investigation.
Release No. 15-044
O.C. Firefighter Pleads Guilty to Child Pornography Charges for Sending Money Abroad to Produce Explicit Photos of Young GirlsRead the Press Release
SANTA ANA, California – A commercial firefighter who resides in Huntington Beach pleaded guilty this morning to a federal charge of attempting to produce child pornography after sending money to what he thought was a young girl in the Philippines to purchase a camera to take sexually explicit photos of herself and an 11-year-old friend.
John McArthur, 57, pleaded guilty before United States District Judge Josephine Staton.
An investigation revealed that in January 2012 McArthur had online conversations with a person he believed was a 13-year-old girl in the Philippines. During those online conversations, McArthur agreed to send money for the purchase of a camera that would be used to take sexually explicit photographs of the girl and an 11-year-old friend. McArthur later went to a Western Union agent to transfer the money to the 13-year-old minor.
Unbeknownst to McArthur at the time, the person posing as the 13-year-old girl was Robert Oliver Clark, 75, a United States citizen residing in the Philippines. Clark was arrested in September 2014 in a related case, and he has agreed to plead guilty to possession of child pornography. In a plea agreement recently filed in United States District Court, Clark admitted that he “possessed, in his computer hard drive and in his email accounts, 5,443 images and 53 videos of child pornography, including 43 images and 1 video portraying sadistic or masochistic conduct and 16 images portraying toddlers.” Clark, who resided in Texas prior to moving to the Philippines, is scheduled to enter his guilty plea on May 21 in United States District Court in Los Angeles.
During this investigation, law enforcement authorities discovered that McArthur received hundreds of images and several videos of child pornography through his email accounts.
McArthur is scheduled to be sentenced by Judge Staton on August 21, at which time he faces a statutory maximum sentence of 30 years in federal prison.
The investigation into McArthur and Clark was headed by the United States Postal Inspection Service, which received substantial assistance from the U.S. Department of State, Diplomatic Security Service; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and the Los Angeles Joint Regional Intelligence Center.
“Protecting children from crimes of sexual abuse and exploitation is a priority for the U.S. Postal Inspection Service,” stated Robert Wemyss, Inspector in Charge for the Los Angeles Division. “I'm proud of the work of the Postal Inspection Service and our investigative partners to bring child predators to justice. U.S. Postal Inspectors have investigated these crimes for more than a century. While the predators’ use of technology has evolved, the core harm has not changed: a child's lost innocence. We will not lose sight of this, and remain steadfast in our efforts to investigate, apprehend, and assist in the prosecution of those who seek to exploit children via the U.S. Mail, wherever in the world they may be.”
Release No. 15-043
Former Head of San Fernando Valley Brokerage Firm Pleads Guilty to Wire Fraud and Tax Charges in Real Estate Investment ScamRead the Press Release
LOS ANGELES – The former president and CEO of the Sherman Oaks-based Morgan Peabody, Inc. brokerage and investment firm has pleaded guilty to federal wire fraud charges stemming from a real estate investment scam that resulted in about five dozen investors losing nearly $4 million.
David Williams, 54, of Studio City, a licensed securities dealer and investment adviser, pleaded guilty yesterday before United States District Judge Dale S. Fischer. Williams pleaded guilty in the midst of a jury trial to three counts of wire fraud and two counts of tax evasion.
In a plea agreement filed with the court yesterday, Williams admitted that he directed Morgan Peabody representatives to sell securities in a fund that Williams personally had created, purportedly to invest in real estate. The Sherwood Secured Investment Fund, LLC, a Studio City business that Williams owned, offered a 9 percent annual return on investments.
However, as he admitted in the plea agreement, Williams used the majority of investor money from the Sherwood Fund to pay for personal expenses, including a lease on a $6 million residence in Toluca Lake.
Between June 2007 and April 2008, Williams fraudulently obtained more than $3.75 million from approximately 60 investors as a result of the Sherwood Fund offering.
In his plea agreement, Williams admitted that he used investor money for personal purposes and committed tax evasion by failing to file returns with the IRS for tax years 2007 and 2008, and failing to report the more than $2.3 million in income he received. Williams has agreed to pay additional taxes of $777,881 for those tax years, as well as the civil fraud penalty and interest.
Williams is scheduled to be sentenced by Judge Fisher on September 28. At sentencing, Williams faces a statutory maximum sentence of 70 years in federal prison.
The investigation into Williams’ scheme was conducted by special agents with the Federal Bureau of Investigation and IRS - Criminal Investigation.
Release No. 15-042
Ex-Controller of Court Services Firm Who Embezzled More Than $3.3 Million Sentenced to over Three Years in Federal PrisonRead the Press Release
SANTA ANA, California – The former controller of a company that provides supervision services, including electronic monitoring programs, to courts and probation departments was sentenced today to 37 months in federal prison for embezzling well over $3 million from the company over the course of two years.
Steven A. Hagstrom, 38, of Anaheim, who was an accountant and then controller of the Irvine-based Sentinel Offender Services, LLC, was sentenced this afternoon by United States District Judge David O. Carter.
In addition to the prison term, Judge Carter ordered Hagstrom to pay $2,127,932 in restitution, a figure less than the amount of money embezzled because Sentinel previously was able to recover some of the money.
Hagstrom pleaded guilty last June to one count of embezzlement.
As controller of Sentinel, Hagstrom had access to Sentinel’s bank accounts where fines, court fees and restitution payments from criminal defendants were held in trust. The accounts also held money paid to Sentinel for services provided to state and federal court systems. Beginning in early 2012 and continuing until April 2013, Hagstrom transferred approximately $3,338,197 from Sentinel’s bank accounts to bank accounts he controlled, where they could be used for his own benefit.
“Hagstrom’s theft of such funds jeopardized the proper operation of the criminal justice system,” prosecutors wrote in a sentencing memorandum filed with the court. “Beyond just losing the money, Sentinel might have lost contracts with the government
agencies that retained Sentinel due to its failure to safeguard their funds.”The investigation into Hagstrom was conducted by the Federal Bureau of Investigation and IRS - Criminal Investigation.
Release No. 15-041
Ten Chinese Nationals Charged with Violating Court Orders to Remain in U.S. as Witnesses for ‘Maternity House’ InvestigationsRead the Press Release
A Total of 11 who Fled U.S. Face Charges that include Obstruction of Justice, Lying on Visa Applications, and Violating ‘Material Witness’ Court Orders
SANTA ANA, California – Ten Chinese nationals who fled the United States earlier this month were charged today with violating federal court orders to remain in the country during investigations into “Chinese maternity houses” that allegedly helped women come to the U.S. on fraudulent visas so they could give birth to children who would become U.S. citizens.
Criminal complaints filed in United States District Court this afternoon accuse 10 of the defendants with obstruction of justice and contempt of court for leaving the United States after being ordered to remain in the country and provide information in an investigation into businesses that allegedly helped mainly Chinese women come to the U.S. to give birth.
In addition to the charges related to the alleged violations of the court orders designating them as material witnesses, 10 of the defendants are also charged with making false statements on visa applications for allegedly lying to federal immigration authorities about the true purpose of their trips to the United States.
An eleventh defendant who had not been formally ordered to remain in the United States as a material witness is charged only with visa fraud.
All but one of the defendants were customers of Chinese maternity house operations in Southern California who paid up to $50,000 to obtain temporary visitor’s visas for authorization to travel to the United States by fraudulently claiming their stay was only for several days, according to court documents.
Ten of the defendants are among 29 individuals who were designated by United States Magistrate Judges as material witnesses after they were encountered by federal law enforcement authorities who executed 37 federal search warrants in March across Orange, Los Angeles, and San Bernardino counties. As detailed in the affidavits in support of those search warrants, federal agents are investigating multiple Chinese maternity operations in Southern California for suspected immigration fraud and tax fraud, as well as failing to report foreign bank accounts in China and Hong Kong.
Federal arrest warrants have been issued for all 11 defendants named in the criminal complaints filed today. All but one of the defendants are charged with obstruction of justice and criminal contempt of court, and 10 of them are also charged with making a false statement on a visa application.
The defendants charged today are:
Dongjiang He (贺东江), 46, who last resided in Rancho Cucamonga, allegedly fled with his wife on April 16. On his visa application, Dongjiang He listed his occupation as “Government” and his position as “Project Manager and Secretary General” for the China Nonferrous Metals Techno Economic Research Institute, which is located in the Haidian District in Beijing.
He’s wife, Zhichan Yu (余芝婵), 40, who last resided in Rancho Cucamonga, is a graduate of the Beijing University of Chinese Medicine who allegedly made a false statement on her visa application when she listed that she would be visiting Hawaii for only 15 days, when she actually intended to be in Southern California for several months and give birth.
Jun Xiao (肖俊), 30, and LongJing Yi (易珑静), 30, who last resided in Irvine, allegedly fled on April 4. According to the affidavit in support of the criminal complaint against them, Xiao and Yi made false statements on their visa applications, namely that they would be staying in the United States for only 15 days. Moreover, Xiao and Yi paid only $4,600 of the $32,291 in hospital charges from Yi’s giving birth at an area hospital, according to court documents. In this case, Yi is charged only with visa fraud as she had not yet appeared before a judge in relation to the government’s application to have her designated as a material witness.
Jia Luo (罗佳), 30, who last resided in Rancho Cucamonga, allegedly fled on April 12. According to the affidavit written by a special agent with IRS - Criminal Investigation in support of the criminal complaint against Luo, Luo lied on her visa application and lied to U.S. customs officers in Hawaii when asked her if she was planning on having a baby in the United States.
Renlong Chen (陈人龙), 34, and his wife Wei Wang (王伟), 33, who last resided in Rancho Cucamonga, allegedly fled on April 12. Chen and Wang are accused of making false statements on their visa applications by stating they would be visiting the United States for only eight days, when they actually made arrangements to stay at a Chinese maternity house for three months so that Wang could give birth in the United States.
Jie He (何洁), 29, who last resided in Rancho Cucamonga, allegedly fled on April 13. Jie He allegedly made false statements on her visa application, including that she planned to stay in the United States for only 20 days, when she actually entered into a contract to pay approximately $50,000 to obtain a visa and stay in the United States for several months to give birth. According to the affidavit in this case, Jie He told investigators that she flew into Las Vegas, rather than Los Angeles, because the Chinese maternity operator had advised her that it was easier to enter through Las Vegas, according to an affidavit in the case.
Eryun Zhang (张尔芸), 25; her husband, Liang Ni (倪梁), 25; and her mother, Ji Xu (徐激), 50, who last resided in Rancho Cucamonga, allegedly fled on April 14. According to the criminal complaint, Ni admitted that during an interview conducted at the U.S. Consulate in China, he falsely stated that the purpose of their trip was for their honeymoon, rather than the true reason, which was for Zhang to give birth in the United States. Xu is charged with violating the court’s order to remain in the U.S., but she is not charged with visa fraud.
All of the defendants are fugitives and are believe to be in China at this time.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If convicted, the defendants face statutory maximum sentences of 25 years in federal prison for the charge of false statement on a visa application and five years in federal prison for the charge of obstruction of justice. There is no maximum penalty for the charge of criminal contempt of court.
These cases are the product of a joint investigation conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and IRS - Criminal Investigation.
Release No. 15-040
Hawthorne Woman Sentenced to 6½ Years in Federal Prison for Running Wheelchair Scam That Cost Medicare Nearly $3.5 MillionRead the Press Release
LOS ANGELES – A Hawthorne woman who ran a company that submitted more than $7 million in fraudulent claims to Medicare – primarily for power wheelchairs that were not needed by patients – and caused the government health insurance program to lose nearly $3.5 million has been sentenced to 78 months in federal prison.
Adeline Ekwebelem, 51, was sentenced yesterday afternoon by United States District Court Judge Michael W. Fitzgerald, who also ordered the defendant to pay $3.45 million in restitution to the Medicare program.
Following a seven-day trial last September, a federal jury found Ekwebelem guilty of 16 counts of conspiracy to commit health care fraud, health care fraud and payment of illegal kickbacks.
The evidence presented at the trial showed that Ekwebelem’s Gardena-based durable medical equipment (DME) supply company, Adelco Medical Distributors, Inc., billed Medicare for medically unnecessary DME – primarily power wheelchairs – for beneficiaries often recruited off the street. As part of the scheme, which ran from January 2007 through December 2011, Ekwebelem illegally paid kickbacks to “marketers” who recruited those beneficiaries and then paid kickbacks to a handful of complicit doctors in exchange for fraudulent prescriptions for DME.
Those doctors included Dr. Charles Okoye, who was sentenced to two years in federal prison after he pled guilty to conspiring with Ekwebelem to commit health care fraud, and Dr. Uche Chukwudi, who fled a month before trial and remains a fugitive. Three of Adelco’s marketers – Romie Tucker, Cindy Santana and Maritza Hernandez – have also received sentences of up to two years in prison for their roles in the scheme.
During the course of the scheme, Ekwebelem submitted more than $7 million in fraudulent claims to Medicare and received nearly $3.5 million. As the evidence at trial showed, Ekwebelem did more than cause substantial losses to Medicare – she also caused harm to Medicare beneficiaries. Medicare will only pay for one wheelchair every five years. On at least one occasion, Ekwebelem submitted a fraudulent claim to Medicare for a power wheelchair that she did not even let the beneficiary keep, which later prevented the beneficiary from getting a wheelchair when it was actually needed.
As prosecutors wrote in a sentencing memorandum filed with the court: “In addition to exploiting Medicare’s honor system, defendant’s scheme also took advantage of the beneficiaries’ unfamiliarity with the English language and the Medicare system, forcing them to provide their personal Medicare information and sign forms shifting liability for the power wheelchairs to them, even though the forms were neither translated nor explained to the beneficiaries. In some cases, defendant’s conduct even prevented beneficiaries from getting medical care they later needed.”
The investigation into Ekwebelem and Adelco was conducted by the U.S. Department of Health and Human Services, Office of the Inspector General, and the Federal Bureau of Investigation.
Release No. 15-038
Chief of Los Angeles Port Police Named in Federal Corruption CaseRead the Press Release
Indictment Alleges that Chief Failed to Disclose Economic Interest in Smartphone App Being Developed for Use at Port and Failed to Report Taxable Income to IRS
LOS ANGELES – A federal grand jury today indicted the chief of police for the Port of Los Angeles on corruption and tax charges. The corruption charges in the indictment relate to a scheme in which the chief stood to financially benefit from the development of a social networking program that would become the official smartphone app for the Port and would then be marketed to other law enforcement agencies.
Ronald Jerome Boyd, 57, of Torrance, who in January was named as chief of public safety and emergency management at the port, was charged in a 16-count indictment returned by a grand jury. The indictment accuses Boyd of corruption, lying to FBI agents, failing to file federal corporate tax returns for a private security company he created, and tax evasion.
At the center of the case are four “honest services” wire fraud charges that accuse Boyd of executing “a scheme to defraud the citizens of the City of Los Angeles and the Harbor Department for the City of Los Angeles of their right to the honest services of defendant Boyd by means of bribery and kickbacks, materially false and fraudulent pretenses and representations, and the concealment of material facts.” The corruption scheme centers on a program called Portwatch, which was developed to provide information to the public and to allow citizens to report criminal activity at the port.
In 2011, Boyd and two business partners formed BDB Digital Communications, a company that entered into a revenue-sharing agreement with the unnamed company developing Portwatch. The parties involved with BDB intended to generate revenues by marketing and selling a similar app – called Metrowatch – to other government agencies. “Under the terms of this agreement, defendant Boyd would receive approximately 13.33 percent of all gross revenues generated by the sale of the Metrowatch application throughout the United States,” according to the indictment.
The revenue-sharing agreement was contingent upon Boyd’s assistance in securing the Portwatch contract for the unnamed company. Over the course of a year beginning in October 2011, Boyd took steps to benefit the unnamed company with respect to the Portwatch contract. The indictment alleges that his actions included hosting a private meeting with the unnamed company for the purpose of disclosing confidential information, meeting with Los Angeles officials that included the city attorney and the mayor, editing the scope of work for the Portwatch contract so that he could personally monitor the Portwatch app’s development, and urging the Port to expedite a press release to announce the implementation of the Portwatch app.
The indictment goes on to allege that Boyd, who was interviewed by special agents with the FBI last October, lied to the investigators when he denied having any financial interest in Metrowatch. The indictment alleges that Boyd falsely stated that BDB was created to sell body armor, and that he was unaware of the revenue-sharing agreement between the unnamed company and BDB. In relation to these alleged misrepresentations, Boyd faces three counts of making false statements.
Counts 8 through 16 of the indictment allege tax violations. Boyd is specifically charged with four counts of failing to file tax returns for the years 2008 through 2011 for his security business, At Close Range. He is also charged with five counts of tax evasion for the tax years 2007 through 2011 for failing to report income that was “substantially greater than the amount stated on the return,” according to the indictment.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If he is convicted of all 16 counts in the indictment, Boyd would face a statutory maximum sentence of 124 years in federal prison.
Boyd is expected to surrender to federal authorities next week on a date to be determined.
The case against Boyd is the product of an investigation by the Federal Bureau of Investigation and IRS – Criminal Investigation.
Release No. 15-039
Leader of Oxnard Gang and Mexican Mafia Associate Sentenced to Life Without Parole in Federal Prison for Drug and Gun OffensesRead the Press Release
LOS ANGELES –– The leader of the Oxnard-based Colonia Chiques street gang was sentenced this afternoon to life without parole in federal prison, plus an additional 55-year consecutive term, for his conviction on a host of narcotics and weapons offenses, including leading a continuing criminal enterprise (CCE).
Luis Manuel Tapia, 39, of Ojai, the leader of the Colonia Chiques and a validated associate of the Mexican Mafia prison gang, was sentenced by United States District Judge Otis D. Wright II.
At the conclusion of a trial in September, Tapia was found guilty of each of the 26 federal charges filed against him.
Tapia had previously sustained two narcotics convictions – one involving cocaine, and the second involving methamphetamine – in Ventura County Superior Court. Under federal law, the third drug trafficking conviction last year in federal court brought a mandatory life sentence. The CCE count – in conjunction with special findings made by the jury, such as the fact that the enterprise involved at least a kilogram of actual methamphetamine and that defendant was the organization’s principal leader – also carried a mandatory life sentence.
Tapia was the leader of the Colonia Chiques and was one of Ventura County’s most notorious criminals, according to a sentencing memorandum filed by federal prosecutors. Tapia “was a prolific and versatile poly-drug (methamphetamine, heroin, cocaine) trafficker [who] owed a significant part of his authority to his direct connection to the Mexican Mafia,” according to the court document that discusses Tapia’s importation of high-quality narcotics from Mexico that allowed him to engage in transactions worth as much as $1 million.
The evidence presented during a two-week trial in federal court in Los Angeles showed that Tapia was deeply involved in the business of running the Colonia Chiques and was personally involved in the sale of firearms and narcotics. During a series of secretly recorded meetings with Tapia, he described himself as the “CEO” of his enterprise, comparing it to Walmart because he supplied a wide array of contraband and always guaranteed his product’s quality. In October 2011, Tapia orchestrated a $200,000 drug transaction that involved approximately 10 pounds of nearly pure methamphetamine.
During the investigation, authorities conducted an undercover operation in Las Vegas in which an undercover FBI agent posed as a senior member of the Italian mob and negotiated to have Tapia supply the Las Vegas syndicate of the Italian mob with up to 20 pounds of highly pure methamphetamine every month.
The jury also heard Tapia, in a video recording, bragging that his heroin was so strong that it had “killed six people” – and that this was a “good advertisement” for his drug operation. Tapia also explained how his high-quality methamphetamine – which lab results confirmed was often 100 percent pure – was obtained from Mexican drug cartels. In another video recording, Tapia was heard directing a large assembly of younger Colonia Chiques gang members to monopolize their drug selling territory, to seek out and kill informants – something Tapia had bragged he had previously done personally – and to heed the directives of the Mexican Mafia.
Tapia was specifically found guilty of leading a continuing criminal enterprise that distributed at least 1,000 grams of methamphetamine, conspiracy to distribute controlled substances, conspiracy to engage in the business of dealing in firearms without a license, 10 substantive counts of drug distribution (involving heroin, methamphetamine, and cocaine), three counts of possession of a firearm in furtherance of a drug trafficking crime, seven counts of being a felon in possession of a firearm, and the illegal transfer of a fully-automatic machinegun. Counting the machinegun, investigators seized 19 firearms from Tapia, including an AR-15 assault rifle, a custom built AK-47 with a bayonet, and a pistol grip sawed-off shotgun.
Four of Tapia’s co-defendants – Diana Zamora, Edgar Aguilar, Roger Armendariz and Jaime Cardenas – pleaded guilty to conspiring traffic narcotics and/or firearms and were sentenced to up to 10 years in federal prison. An unknown male, known only as “Pancho,” who allegedly supplied narcotics to Tapia, is a fugitive believed to be in Mexico.
Tapia’s sentencing concludes the second phase of a three-phase investigation called Operation “Supernova,” which was conducted by the Ventura County Federal Violent Crimes Task Force – made up of agents with the Federal Bureau of Investigation and officers with the Oxnard Police Department.
Release No. 15-037
Federal Judge Permanently Shuts Down Tax Preparer Who Operated Inland Empire Tax ServiceRead the Press Release
LOS ANGELES – A federal court has permanently barred a woman who operated a Moreno Valley tax preparation service from preparing tax returns for others, the United States Attorney’s Office announced today.
Nancy L. Hilton, 69, who also used the name Nancy L. Olson, was ordered to never again prepare tax returns for others in a permanent injunction that was signed by United States District Judge Michael W. Fitzgerald on April 22.
The permanent injunction concludes a lawsuit filed one week ago that alleged Hilton prepared fraudulent tax returns and supervised the preparation of fraudulent tax returns by at least five others who knew they were preparing false income tax returns. The fraudulent tax returns were prepared at Hilton’s business, Nancy Olson & Associates.
The suit alleged that Hilton obtained the names, dates of birth and social security numbers of numerous people, and that Hilton used this information to file fraudulent tax returns in the names of those people. Hilton would keep a portion – typically 50 percent – of the illicit refunds which resulted from the filing of the fraudulent returns. When Hilton learned of the government’s investigation into her tax preparation business, she intentionally deleted data from business computers in an attempt to impede and obstruct the government’s investigation, according to the government’s lawsuit.
Last month, Hilton pleaded guilty to criminal conspiracy and identity theft charges for preparing and overseeing the preparation of bogus tax returns (see: http://www.irs.gov/pub/foia/ig/ci/LAFO-2015-10.pdf). Hilton faces up to 30 years in federal prison when she is sentenced on July 6 by United States District Judge Dean D. Pregerson.
Release No. 15-036
Nevada Man Pleads Guilty to Wire Fraud Charge for Operating A Ponzi Scheme Involving E-mini S&P Futures and Lying to the SECRead the Press Release
LOS ANGELES – The architect of a fraudulent investment scheme pleaded guilty today to federal wire fraud and false statement charges related to a Ponzi scheme that bilked victims out of millions of dollars.
Gordon Driver, 58, of Henderson, Nevada, pleaded guilty to the two felony counts before United States District Judge John A. Kronstadt.
In a plea agreement filed in United States District Court, Driver falsely told victims that he was producing profits of 1 percent to 5 percent a week through a commodity futures trading program involving E-mini S&P 500 futures contracts. Driver also told victims that he had never sustained a monthly net loss as a result of his trading.
In reality, his trading activity was overwhelmingly unprofitable, causing him to lose nearly almost all the money that he used to trade commodities.
Investigators believe that Driver took in at least $15 million and that investors – including several Southland residents and people in Canada – collectively lost at least $9 million as a result of the scheme.
Driver solicited investments through Nevada-based companies with names like Axcess Automation LLC, which was under investigation by the Securities and Exchange Commission in 2009 when Driver testified under oath. During this testimony, which was given under penalty of perjury, Driver said that he did not have a monthly negative return during the second half of 2007 – a statement that was false and which forms the basis of the second charge to which he pleaded guilty.
As a result of today’s guilty pleas, Driver faces a statutory maximum sentence of 25 years in federal prison when he is sentenced by Judge Kronstadt.
The criminal case against Driver is the result of a joint investigation by the Federal Bureau of Investigation and the United States Postal Inspection Service, both of which received assistance from the Commodities Futures Trading Commission, the SEC, the Attorney General of Ontario (Canada), and the Ontario Securities Commission.
Release No. 15-035
Member of Hacking Group Sentenced to 3 Years in Prison for Intrusions into Corporate and Governmental Computer SystemsRead the Press Release
LOS ANGELES – A member of the SwaggSec hacking group was sentenced today to three years in federal prison for participating in a series of computer attacks that compromised computer systems at DirecTV, Farmers Insurance and the Los Angeles Department of Public Works.
Mario Patrick Chuisano, 32, of Staten Island, New York, who used the online monikers “fame” and “infam0us,” was sentenced this morning in Los Angeles by United States District Judge S. James Otero.In addition to the prison term, Judge Otero ordered Chuisano to pay $2,662,438.80 in restitution to the three victims.
Chuisano pleaded guilty in June 2014 to conspiracy to intentionally cause damage to a protected computer, as well as to possession of an unregistered firearm, namely a sawed-off shotgun. In addition to the sawed-off shotgun that was discovered in Chuisano’s residence during the execution of a search warrant, agents from the Federal Bureau of Investigation recovered an unregistered handgun, brass knuckles, and equipment that could be used to manufacture counterfeit credit and debit cards, according to court documents.
During 2012 and 2013, SwaggSec, or “Swagg Security,” carried out a series of computer attacks and released some of the information stolen from the compromised systems through an eponymous social media account.
When he pleaded guilty last year, Chuisano, a self-taught “hacker,” admitted that he installed a Remote Access Trojan (R.A.T.) installed on the computer of an insurance agent and that he used the R.A.T. to gain access to the computer and steal reports and documents related to sales agents, as well as thousands of sent and received e-mails and passwords from Farmers Insurance.
“The theft and release of passwords is particularly disturbing because many people use the same passwords for activities of daily Internet life, such as banking and device access,” prosecutors wrote in a sentencing memo filed in relation to today’s hearing. “Publishing stolen passwords accompanied by other identifying information about individuals invites ‘follow-on’ victimization. Moreover, even the naked passwords absent other identifying information can be used by criminals to increase password databases used in brute-force password cracking programs.”
In relation to the attack against the Los Angeles Department of Public Works, hackers, including Chuisano, exploited vulnerability in Adobe’s ColdFusion platform to steal e-mails and personal identifying and health information for more than 3,000 people.
SwaggSec is believed to have patterned itself after the similarly named LulzSec, a group of computer hackers who carried out a series of high-profile computer attacks in 2011. Two members of LulzSec – Raynaldo Rivera, also known as “neuron,” and Cody Andrew Kretsinger, also known as “recursion” – were prosecuted by the United States Attorney’s Office in Los Angeles and received prison time for their roles in the attacks (See: http://www.justice.gov/usao/cac/Pressroom/2013/102.html).
This investigation into SwaggSec was conducted by the Federal Bureau of Investigation, Los Angeles Field Office, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Field Division.
Release No. 15-034
Former UPS Driver Who Stole Shipments of Guns, Jewelry and Phones Is Sentenced to 41 Months in Federal PrisonRead the Press Release
RIVERSIDE, California – A former United Parcel Service driver who was convicted of federal gun trafficking charges for stealing dozens of guns going through the shipping company’s Ontario hub and providing them to another man who sold the weapons on the street was sentenced today to 41 months in federal prison.
Curtis Ivory Hays II, 37, of Rancho Cucamonga, was sentenced by United States District Judge Virginia A. Phillips. During the time of the offenses, Hays was a package truck driver for UPS who made deliveries in the Rancho Cucamonga area.
Hays was found guilty in January of 15 counts – conspiracy, six counts of theft of firearms, six counts of receipt and possession of stolen firearms, and two counts of theft of interstate shipments.
The associate who allegedly sold some of the firearms – Dennis Dell White Jr., 35, of Moreno Valley – pleaded guilty last year to one count of theft of firearms. White is scheduled to be sentenced by Judge Phillips on May 4, at which time he faces a statutory maximum sentence of 10 years in federal prison.
According to the evidence presented during a six-day trial, Hays stole a series of packages containing guns that were supposed to be delivered to Turner’s Outdoorsman in Rancho Cucamonga. From May through October of 2012, Hays stole six shipments containing a total of 72 firearms.
Hays gave the stolen firearms to White, who illegally sold the weapons to other individuals, and some of the guns then were sold to others. The firearms included 12-gauge shotguns and .45-caliber handguns.
In a sentencing memorandum filed with the court, prosecutors illustrated the danger Hays’ conduct posed to public safety by noting that one of the stolen firearms made its way to Isaac Arriaga, who used the .22-caliber handgun to shoot at three police officers at the conclusion of a high-speed chase in Baldwin Park in 2012.
“By sheer luck no officers or civilians were hurt during Arriaga’s pursuit,” prosecutors wrote. “But individuals like Arriaga would not be able to pose such an extreme threat to the community if they did not have access to black market firearms. [Hays] not only stole the firearms in this case, which [was] reprehensible enough, but he partnered with White to supply the black market and directly contributed to
Arriaga’s actions.”Hays also stole shipments containing jewelry and mobile phones that were supposed to be delivered to Costco in Rancho Cucamonga, and this merchandise also was given to White.
The investigation into the stolen firearms was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives in conjunction with the Ontario Police Department and the Riverside County Sheriff’s Department. Substantial assistance was provided by the San Bernardino County District Attorney’s Office.
Release No. 15-033
Manager of Clothing Factory Indicted for Offering Bribe to Federal Labor Investigator in Exchange for Closing Wage InvestigationRead the Press Release
LOS ANGELES – A federal grand jury today indicted the general manager of a La Puente garment factory on charges of offering to pay bribes to an investigator with the United States Department of Labor in exchange for the investigator closing an investigation into wage violations.
Howard Quoc Trinh, 41, of Arcadia, the manager of Seven-Bros Enterprises, is accused in the indictment of bribery of a public official.
The indictment charges Trinh with offering to pay $10,000 in bribes to a Department of Labor Wage and Hour investigator.
The indictment also alleges that Trinh offered the bribe last month to secure the release of a hold known as a “Hot Goods” objection that had been placed on a shipment by the investigator.
As part of the bribery scheme, Trinh actually paid the investigator $3,000, according to a criminal complaint previously filed in this case.
According to the affidavit in support of that complaint, the investigator was investigating Seven-Bros for violating the Fair Labor Standards Act (FLSA), which sets standards for minimum wage and overtime pay. The Labor Department Wage and Hour investigator led a team that conducted an unannounced visit to Seven-Bros on March 10. The investigation into wage violations covered a period from May 2012 through March 10, 2015, and found that Seven-Bros owed approximately $100,000 to compensate employees for FLSA violations over that period. According to the affidavit, the investigator returned to Seven-Bros on March 18, at which time Trinh said he did not owe his employees any back wages and that he wanted to “take care” of the investigator.
In response to Trinh’s statements, the Labor Department’s Office of Investigator General (OIG) initiated an investigation and outfitted the investigator with recording equipment. On the evening of March 18, during a recorded meeting, Trinh allegedly offered the investigator $10,000 to close out the investigation without finding any violations and to life the Hot Goods objection.
The next day, during another recorded meeting, Trinh gave the investigator an initial payment of $3,000 in a manila envelope, according to the affidavit.
The criminal complaint was filed on March 20, and Trinh was arrested by OIG special agents. At his initial court appearance, Trinh was ordered released on a $200,000 bond and was ordered to appear for an arraignment on April 17.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
If he is convicted of the bribery count in the indictment, Trinh would face a statutory maximum sentence of 15 years in federal prison.
The investigation in this case was conducted by the United States Department of Labor, Office of Investigator General, Office of Labor Racketeering and Fraud Investigations.
Release No. 15-032
7 Charged in Scheme to Pay Hundreds of Thousands of Dollars in Kickbacks to Boeing Official to Secure Contracts Related to SatellitesRead the Press Release
LOS ANGELES – Seven defendants have been charged in a scheme to pay hundreds of thousands of dollars in kickbacks to a procurement official at a subsidiary of the Boeing Company that supplies satellites and satellite parts to federal government entities, including NASA.
A series of cases related to the kickback scheme were announced today after prosecutors learned that a federal judge unsealed documents related to four of the defendants who previously pleaded guilty in under seal proceedings.
At the center of the scheme is an executive at a San Gabriel Valley metal company that was a subcontractor to Boeing Space and Intelligence Systems (BSIS), which supplies satellites and satellite parts to NASA, the Department of Defense, the National Reconnaissance Office and the United States Air Force. That executive – Alfred Henderson, 60, of Pico Rivera, who is the vice president of A&A Fabrication and Polishing, Inc., which operates in Whittier and Montebello – was arrested on Monday and arraigned on a 15-count grand jury indictment that was unsealed after his arrest. A&A is also charged in the indictment.
Henderson pleaded not guilty on Monday, was released on a $25,000 bond, and was ordered to stand trial on May 26. Representatives of A&A will appear on behalf of the company in federal court on April 13.
A&A is a company that specializes in machining, welding and producing sheet metal for industries that include aerospace. A&A manufactured tooling parts that Boeing used to manufacture satellites.
The indictment alleges that Henderson and A&A paid kickbacks to Mark Allen, 60, of Fresno, who was a procurement officer at BSIS in El Segundo. The kickbacks were paid to Allen through an outside sales representative, Raymond Joseph, 66, of Los Angeles, related to purchase orders to A&A for tooling parts used to manufacture satellites that were sold to the U.S. Government. The indictment alleges that Allen provided Henderson with confidential information that gave A&A an improper advantage in bidding and ensured that A&A would receive purchase orders from BSIS.
The indictment also alleges that, after Boeing decided to stop doing business with A&A due to work quality and performance issues, Henderson devised a scheme to do business through a “front” company, Nace Sheet Metal Company, which was owned and operated by Cesar Soto, 47, of Chino. The indictment against Henderson alleges that Soto and an A&A employee, Randy Mitchell, 62, of Whittier, misrepresented that A&A’s facility was actually operated by Nace and that Henderson unlawfully used Soto’s name on price quotes to Boeing. The indictment further alleges that Henderson and A&A issued false tax forms to Joseph, which he used to understate his taxable income to the Internal Revenue Service.
“As part of the conspiracy, defendant Henderson and defendant A&A paid approximately $650,000 to Joseph and approximately $100,000 to Allen,” according to the indictment against Henderson, which further states that “Allen awarded defendant A&A approximately $4.5 million in BSIS purchase orders between 2005 and February 2012.”
“Pay-to-play schemes undermine the integrity of the competitive bidding process and, in this case, compromised the quality of products used to manufacture satellites for scientific exploration and national defense,” said Acting United States Attorney Stephanie Yonekura.
Chris D. Hendrickson, Special Agent in Charge of the Defense Criminal Investigative Service, stated: “Corruption in government contracting is always reprehensible. The indictment handed down by the grand jury and the arrest of Alfred Henderson is yet another example of the continued dedication by the Defense Criminal Investigative Service and its law enforcement partners to identify and prosecute those individuals who engage in corrupt business practices.”
Erick Martinez, Special Agent in Charge of IRS Criminal Investigation’s Los Angeles Field Office, commented: “The individuals charged in this scheme allegedly undermined the process of fair and open competition by paying kickbacks to a Boeing procurement officer in exchange for securing lucrative contracts. Through a potent synthesis of global teamwork and our dynamic financial investigative talents, CI is committed to maintaining fair competition, free
of corrupt practices.”In a court order filed late Tuesday, United States District Judge Otis D. Wright II, unsealed criminal cases against Mark Allen, Raymond Joseph, Cesar Soto, and Randy Mitchell. All four previously pleaded guilty and are pending sentencing.
The United States Attorney’s Office on Monday filed a criminal information against the seventh defendant in this scheme – Noberto Martinez, 53, of Alhambra, who owns and controls Zenitram Engineering and Manufacturing, Inc. The information charges Martinez with conspiring to pay kickbacks to Allen and issuing false tax forms to Joseph. Martinez has signed a plea agreement and is scheduled to make his first court appearance on April 13.
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 cases are the result of investigations by the Defense Criminal Investigative Service, NASA’s Office of Inspector General, and IRS - Criminal Investigation. The National Reconnaissance Office and the U.S. Air Force’s Office of Special Investigations also participated in the investigation. Boeing cooperated fully in the investigation.
Release No. 15-031
Pueblo Bishop Gang Member Sentenced to Life in Federal Prison in RICO Case for Ambush Slaying of Man in Front of His 2-Year-Old SonRead the Press Release
LOS ANGELES – A member of the Pueblo Bishop Bloods street gang was sentenced this afternoon to life (plus 10 years) in federal prison for his conviction on racketeering offenses that included the execution of a man in front of his 2-year-old son.
Rondale Young, also known as “Pueblo-Grump,” 31, of South Los Angeles, was sentenced by United States District Judge S. James Otero.
A federal jury convicted Young in December 2013 of violating the federal Racketeer Influenced and Corrupt Organizations Act (RICO) in relation to the murder of 23-year-old Francisco Cornelio, a 23-year-old man who had no gang affiliation and who was shot point-blank in front on his young child.
The jury also found Young guilty of conspiring to murder Mr. Cornelio, as well as the actual murder in 2009, both of which were done in furtherance of the Pueblo Bishop criminal enterprise. In addition, Young was found guilty of a firearms offense based on a co-conspirator’s use of pistol grip shotgun that resulted in murder. Young was also convicted of witness intimidation.
In court documents filed in relation to the sentencing, prosecutors wrote, “The seriousness of defendant’s offense is among the most egregious in the federal code, among the few punishable by death. The ultimate consequences of the murder that resulted from defendant’s conduct were to: rob a young wife of her husband; rob a young son of his father and of his childhood; and to further inflame racial and gang tensions in combustible South Los Angeles, thereby putting the entire community at risk.”
The federal convictions came after Young was acquitted in Los Angeles Superior Court on murder charges related to the slaying of Mr. Cornelio. After the acquittal in state court, the FBI’s Los Angeles Metropolitan Task Force on Violent Gangs re-investigated the case, with the help of LAPD’s Newton Homicide Division, and uncovered additional evidence related to the murder and Young’s involvement with the Pueblo Bishops.
Young is the third person to be convicted in federal court in relation to the murder of Mr. Cornelio. In another trial, a federal jury determined that Anthony “Bandit” Gabrourel, was also part of the plot to murder Mr. Cornelio. At that trial, the evidence showed that Gabourel was one of two Pueblo Bishops who exited Young’s car with shotguns and fatally shot Mr. Cornelio. Gabrourel was sentenced earlier this year by Judge Otero to 40 years in federal prison. The third person conviction in relation to the murder was sentenced to five years in prison for hiding the murder weapon after the slaying.
The evidence presented at Young’s trial showed that Young drove his car, which contained other armed gang members, into rival gang territory early on the morning of August 2, 2009. The Pueblo Bishops were seeking retaliation after an earlier shooting against their gang. The Pueblo Bishops targeted Mr. Cornelio because he was of Hispanic descent and in rival gang territory.
According to witnesses who testified, two Pueblo Bishops, who were armed with shotguns, got out of Young’s vehicle and ambushed an unsuspecting victim, who was washing his car. The gang members shot him once in the back without saying a word, while the young Cornelio sat in the back seat of the car. There was no evidence that Cornelio had any gang ties.
The murder was unsolved prior to a federal racketeering indictment that was unsealed in August 2010. That indictment charged that Young and other members of the gang were members of a criminal enterprise that engaged in drug dealing, firearms trafficking, murder, witness intimidation and armed robbery as part of the gang’s efforts to control and terrorize the Pueblo Del Rio Housing Projects in South Los Angeles.
As a result of the federal investigation into the racketeering activity of the Pueblo Bishop Bloods, a total of 45 defendants were charged in federal indictments. Prosecutors have secured convictions against 41 of those defendants. Two defendants are in state custody after receiving lengthy sentences for violent gang crimes, and two are fugitives.
The investigation into the Pueblo Bishop Bloods was conducted by the Federal Bureau of Investigation; the Los Angeles Police Department, Newton Division; the United States Department of Housing and Urban Development, Office of Inspector General; and the Los Angeles County District Attorney’s Office.
Release No. 15-029
Leaders of South L.A. Gang Controlled by Incarcerated Mexican Mafia Member Sentenced to Prison in Federal Racketeering CaseRead the Press Release
LOS ANGELES – The daughter of a Mexican Mafia member who acted as the conduit between her father and South Los Angeles street gangs he controlled from state prison was sentenced today to 15 years in federal prison on racketeering charges.
Vianna Roman, 39, of South Los Angeles, received a 180-month prison term from United States District Judge R. Gary Klausner after she pleaded guilty last year in a RICO case targeting the Harpys street gang.
Roman, who is the daughter of Mexican Mafia member Danny Roman, pleaded guilty last May to racketeering, narcotics, and weapons offenses, while admitting that she acted as the street-level proxy for her father, carrying out his orders as he exercised control over Harpys and other street gangs. Danny Roman is serving a life-without-parole sentence at Pelican Bay State Prison and was not charged in the federal RICO case.
The “shotcaller” of the Harpys gang – Manuel Valencia, 38, of Walnut – was sentenced on March 2 to 27 years in federal prison. Valencia pleaded guilty last May to racketeering and drug trafficking charges for his role in orchestrating the day-to-day activities of the gang. Valencia specifically admitted that he oversaw and participated in gang activities, which included conspiracy to murder and violent retaliation against the gang’s rivals, issuing orders to gang members regarding violence such as drive-by shootings, collecting “taxes” from drug dealers who were allowed to operate in gang territory, and engaging in drug trafficking.
The Harpys gang, which claims territory southwest of downtown Los Angeles and north of the University of Southern California, is one of more than a dozen Latino gangs across a wide swath of South Los Angeles that was overseen by Vianna Roman on behalf of her father.
According to court documents, Vianna Roman and Valencia orchestrated a scheme that allowed Danny Roman to continue to continue to control the activities of the street gangs from the Special Housing Unit of Pelican Bay State Prison. Vianna Roman used coded language to pass information to and received orders from her father during trips to the Pelican Bay prison in Northern California. Vianna Roman passed the orders to Valencia and other high-ranking members of Harpys, who oversaw violent conduct and drug trafficking within both Harpys territory and the broader area controlled by Danny Roman. Valencia controlled and enforced the collection of tax payments from Latino gangs under Danny Roman’s control and issued orders to other gangs regarding drug sales and the use of violence.
Today’s sentencing of Vianna Roman concludes a federal case targeting the Harpys gangs that was brought under the federal Racketeer-Influences and Corrupt Organizations Act. The RICO case charged a total of 29 defendants, 25 of whom have now been convicted and sentenced. Three of the charged defendants are fugitives, and charges against one were dismissed following his conviction of first-degree murder in Los Angeles Superior Court.
According to court documents, Danny Roman oversaw gang activity by giving orders that directed gang members to engage in criminal conduct, including the murder of rival gang and Mexican Mafia members, and the extortion of businesses and gangs to generate income that was funneled back to Danny Roman in state prison. The Harpys gang collected taxes and other extortionate payments through threats of violence, including murder. Acting under Danny Roman’s authority, Vianna Roman and Valencia orchestrated the extortion of vendors at the Alameda Swap Meet, which is outside of Harpys territory but within the area controlled by Danny Roman. The Alameda Swap Meet was in territory controlled by the 38th Street gang, another gang under the control of Danny Roman.
In addition to outlining Danny Roman’s control of the Harpys and of other gangs in South Los Angeles, the RICO indictment charged specific criminal acts, including the distribution of methamphetamine, cocaine, crack cocaine and heroin; the murder of a gang member over a drug debt; robberies against residents and rival gang members; and conspiracies to commit murder, including a plot to kill a witness in a state court case against a member of another gang.
The investigation into members of the Harpys and the other street gangs was called Operation “Roman Empire” and was conducted by the Los Angeles High Intensity Drug Trafficking Area (HIDTA) Task Force, which is comprised of officers with the Los Angeles Police Department and agents with the Drug Enforcement Administration.
Release No. 15-029
Fugitive Chinese Official and Former Wife Named in Grand Jury Indictment Charging Immigration Fraud and Money LaunderingRead the Press Release
LOS ANGELES – The ex-wife of a former Chinese official was arrested today in Newcastle, Washington, on charges that she and her former husband fraudulently obtained visas to enter the United States through the immigrant investor program and laundered money to purchase property in Washington state.
Shilan Zhao (趙世蘭), 51, of Newcastle, Washington, and her ex-husband Jianjun Qiao (喬建軍), 51, are charged in a federal grand jury indictment unsealed today with conspiracy to commit immigration fraud and international transport of stolen funds, as well as conspiracy to commit money laundering. Zhao is additionally charged with one count of immigration fraud.
The divorced couple’s scheme involved falsely portraying themselves as still married and lying about the source of Zhao's foreign investment, which was required under the EB-5 immigrant investor program to obtain U.S. immigrant visas, according to the indictment. Zhao allegedly stated under oath on documents submitted to U.S. Citizenship and Immigration Services that she had an ownership interest in the companies providing the $500,000 minimum investment, which investigators later learned she did not.
The indictment also states the divorced couple purchased a residence in the Seattle suburb of Newcastle with laundered money related to fraudulent transactions from a grain storehouse in Zhoukou City, Henan Province, China where Qiao served as director from 1998 to 2011.
As part of the indictment, the federal government is seeking the forfeiture of property obtained through the proceeds of the scheme, including the house in Newcastle, Washington. The indictment also alleges that Qiao engaged in fraudulent grain transactions while serving as the grain storehouse director, and Qiao and Zhao had money transferred out of China, with approximately $500,000 being used to purchase the Newcastle property.
Zhao appeared this afternoon in federal court in Seattle, Washington, where the indictment was unsealed. At the government’s request, Zhao was ordered detained (held without bond) and is scheduled to be back in court in Seattle on Friday.
Qiao remains at large and is being sought by U.S. authorities.
If convicted, Zhao faces statutory maximum sentences of five years in federal prison for the charges of conspiracy to commit international transport of stolen funds and immigration fraud, 10 years for the immigration fraud charge, and 20 years for the money laundering conspiracy charge.
This case is the product of a joint investigation conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and Internal Revenue Service - Criminal Investigation, which received assistance from U.S. Citizenship and Immigration Services. Investigators also acknowledge the assistance provided by the Supreme People's Procuratorate and Ministry of Public Security of the People's Republic of China.
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.
Release No. 15-028
Exide Technologies Admits Role in Major Hazardous Waste Case and Agrees to Permanently Close Battery Recycling Facility in VernonRead the Press Release
Facility that has Polluted East L.A. for over 90 Years will be Cleaned Up Pursuant to Agreement Designed to Allow Exide to Emerge from Bankruptcy
LOS ANGELES – The United States and Exide Technologies have reached an agreement that calls for the battery manufacturing company to immediately and forever close a battery recycling facility in Vernon and to pay $50 million to clean-up the site and surrounding neighborhoods, which have been affected by environmental toxins for close to a century.
The agreement approved late yesterday calls for Exide to permanently close the plant which, the company admits, produces a host of hazardous wastes, including lead, cadmium, arsenic and volatile organic compounds.
“The reign of toxic lead ends today,” said Acting United States Attorney Stephanie Yonekura. “After more than nine decades of ongoing lead contamination in the City of Vernon, neighborhoods can now start to breathe easier.”
Exide had planned to resume operations at the recycling facility as early as next month, but the agreement calls for the facility to be shuttered, demolished and cleaned up. Exide is also required to make expedited payments that will complete funding of a $9 million trust fund that will be used to clean up 216 nearby residences in the Boyle Heights neighborhood and the City of Maywood.
The deal to close the recycling facility is contained in a Non-Prosecution Agreement (NPA) that was finalized late last night. The agreement calls for the immediate closure of the battery recycling facility and estimates that Exide’s direct costs of compliance are well in excess of $100 million, costs that include the company walking away from recent improvements to the facility and incurring new costs for lead and plastic that must now be purchased to manufacture new batteries.
The United States Attorney’s Office entered into the NPA because negotiations with the bankrupt company revealed that even the threat of a criminal prosecution would almost certainly force the liquidation of the company. The NPA opens the door to new funding for the company, which employs thousands of workers in the United States and around the world, and ensures that money will be available to pay for the clean-up of the Vernon site and several other toxic sites around the United States. Without the NPA, prosecutors believe, Exide would cease to exist as a viable company and responsibility to clean up toxic sites like the recycling plant in Vernon would revert to governmental agencies.
“The agreement with Exide ensures that the Vernon site will be permanently closed, while guaranteeing that the company will survive to adequately finance the clean-up of this long-suffering community,” Yonekura said.
Jared Blumenfeld, EPA’s Regional Administrator for the Pacific Southwest, stated: “The closure of this facility is a victory for the residents of Vernon who have suffered from decades of toxic pollution. This historic action was made possible because of the tireless efforts of local community members, including parents, environmental groups and religious leaders. Today’s announcement shows that companies who fail to meet federal environmental laws will face serious consequences.”
In addition to the commitments to close the Vernon facility and pay for associated clean-up costs, Exide has acknowledged criminal conduct, including the illegal storage, illegal disposal, illegal shipment and illegal transportation of hazardous waste. For example, in the NPA “Exide admits that it knowingly and willfully caused the shipment of hazardous waste contaminated with lead and corrosive acid in leaking van trailers owned by Wiley Sanders Truck Line, Inc. and operated by Lutrel Trucking, Inc. and KW Plastics of California, Inc., from the [Vernon] facility to Bakersfield, California, a significant number of times over the past two decades, in violation of federal law. Each incident could be charged as a felony violation of the federal Hazardous Materials Transportation Act.”
The admissions of criminal violations is important because Exide agreed that it could be prosecuted for the felony environmental offenses it previously committed at any time over the next 10 years if it fails to abide by the terms of the NPA. A violation would include failing to adequate finance clean-up efforts at the recycling facility, a program that will be overseen by the California Department of Toxic Substances Control (DTSC).
The NPA with Exide is the result of an investigation by the United States Environmental Protection Agency – Criminal Investigations Division and the United States Department of Transportation – Office of the Inspector General.
Release No. 15-027
Three Indicted for Operating ‘Pay-To-Stay’ Schools That Allegedly Enabled Foreign Nationals to Remain in U.S. as Foreign ‘Students’Read the Press Release
LOS ANGELES – Three Los Angeles-area residents responsible for operating a network of four schools were arrested this morning on federal charges for allegedly helping hundreds of foreign nationals remain in the United States as foreign students, even though they never attended classes.
The three defendants allegedly ran a “pay-to-stay” scheme through three schools in Koreatown – Prodee University/Neo-America Language School; Walter Jay M.D. Institute, an Educational Center (WJMD); and the American College of Forensic Studies (ACFS) – and a fourth school currently operating in Alhambra, Likie Fashion and Technology College.
The three defendants are named in a 21-count indictment returned yesterday by a federal grand jury. The indictment alleges a conspiracy to commit immigration fraud, a host of immigration offenses and money laundering.
The indictment also contains an allegation that would require the defendants to forfeit property and proceeds derived from the fraud scheme, which investigators estimate took in as much as $6 million a year in “tuition” payments.
“Immigration fraud schemes potentially compromise national security and cheat foreign nationals who play by the rules,” said Acting United States Attorney Stephanie Yonekura. “In this case, officials at several schools allegedly abused their responsibility to ensure that only legitimate foreign students were allowed to the stay in the country. This type of fraud against the United States will be thoroughly examined to bring those responsible to justice and to protect the integrity of our immigration system.”
Those named in the indictment unsealed today are:
Hee Sun Shim (also known as Leonard Shim and Leo Shim), 51, of Beverly Hills, the owner and manager of the schools;
Hyung Chan Moon (also known as Steve Moon), 39, of Los Angeles, who assisted with the operation and management of the schools; and
Eun Young Choi (also known as Jamie Choi), 35, of Los Angeles, a former employee who assisted with the operation and management of the schools.
The defendants, who were taken into custody by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI),
are expected to be arraigned on the indictment tomorrow in United States District Court.“Given the implications for national security and public safety, we will move aggressively to target individuals who compromise the integrity of our nation’s immigration system out of greed and self-interest,” said Claude Arnold, special agent in charge for HSI Los Angeles. “Simply put, those who exploit the benefits of the student visa program can expect to get a lesson in criminal justice.”
The investigation in this case began in 2011 after a compliance team from HSI’s Student and Exchange Visitor Program (SEVP) paid an unannounced visit to Prodee University’s main campus on Wilshire Boulevard. During the visit, the team observed only one English language class with three students in attendance, even though records for the Student and Exchange Visitor Information System (SEVIS) showed more than 900 foreign students were enrolled at Prodee’s two campuses. That same day, the SEVP team made an unannounced visit to ACFS where they found only one religion class in session with a single student present. At the time, SEVIS records indicated that ACFS had more than 300 foreign students in active status.
During the ensuing investigation, HSI special agents identified several dozen foreign nationals, primarily from South Korea and China, who originally entered the U.S. as F-1 non-immigrant students to attend other SEVP authorized schools, but subsequently transferred to schools in the Prodee network. These students lived across the nation, indicating that they were not actually attending classes at Prodee or the other schools.
As detailed in the indictment, Prodee and its affiliated schools were authorized to issue a document that certified a foreign national had been accepted to a school and would be a full-time student. The document – “Certificate of Eligibility for Nonimmigrant (F-1) Student Status - for Academic and Language Students,” which is commonly called a Form I-20 – made a student eligible to obtain an F-1 student visa that would allow the student to enter and remain in the United States while the student was making normal progress toward completing a full course of study.
The indictment alleges that Prodee and the other schools issued Form I-20s to foreign nationals who were not bona fide students, had no intention of attending the schools and lived outside of California. As part of the conspiracy, Shim and Choi allegedly were involved in the creation of bogus student records, including transcripts, for some of the students for the purpose of deceiving immigration authorities. The indictment further alleges that Shim would transfer a purported student from one school to another to avoid arousing the suspicion of immigration authorities about “students” who had been in the United States for lengthy periods of time.
In exchange for the Form I-20, a student would make “tuition” payments of as much as $1,800 to “enroll” for six months in one of the schools, according to the indictment.
The indictment charges Shim, Moon and Choi with conspiring to commit immigration fraud. Shim is charged with 13 counts of use or possession of an immigration document procured by fraud; and Moon and Choi are each charged with one count of the same offense. Shim is charged with three counts of encouraging illegal residence, as well as two counts of money laundering.
The conspiracy count carries a statutory maximum sentence of five years in federal prison. The substantive immigration fraud charges each carry up to 10 years in prison. The money laundering charges carry a potential penalty of 20 years.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
Effective immediately, Prodee and its affiliated schools will no longer be able to access SEVIS, and HSI will be seeking to withdraw the schools’ SEVP certification, which will bar the institutions from enrolling foreign students. Foreign students who are currently enrolled at any of these schools should contact SEVP representatives for further instructions at (703) 603-3400 weekdays between 7 a.m. and 8 p.m. EDT. Additional information for affected students has also been posted on the SEVP Web page on ICE’s website, http://www.ice.gov/sevis/whats-new.
SEVP monitors approximately 1 million international students who are pursuing studies in the U.S. on F and M visas. It also certifies schools that enroll these students and manages the SEVIS database, which houses information on international students, exchange visitors and their dependents. In addition to unannounced site visits to SEVP-certified schools, SEVP’s compliance unit has implemented a number of measures to ensure only bona fide U.S. schools can enroll international students, including the use of a risk assessment tool, requirements for regular recertification, and the deployment of field representatives to visit certified schools twice yearly.
The HSI-led investigation into Prodee is ongoing. HSI has received substantial assistance with the case from U.S. Citizenship and Immigration Services’ Fraud Detection and National Security Division.
Release No. 15-026
Los Angeles Man Convicted of Federal Charge of Producing Child Pornography by Photographing Girl While in PhilippinesRead the Press Release
LOS ANGELES – Concluding a two-part trial, a Los Angeles man was convicted today of producing child pornography in the Philippines while being required to register as a sex offender due to his prior conviction for raping a 14-year-old girl.
Stanley Dan Reczko III, 50, who resided in the Koreatown District of Los Angeles, was found guilty of the charge by United States District Judge George H. King, who issued his ruling this afternoon from the bench.
In the first part of the trial, a jury on February 20 found Reczko guilty of sexual exploitation of a minor by producing child pornography in the Philippines.
As a result of his conviction on the sexual exploitation charge, and because he has a prior conviction, Reczko faces a mandatory minimum sentence of 25 years in federal prison. The second charge of producing child pornography while being required to register as a sex offender carries a mandatory consecutive 10-year prison term. Therefore, Reczko faces a minimum sentence of 35 years in prison – and he could be sentenced to as much as life without parole in prison – when he is sentence by Judge King on May 18.
Authorities began investigating Reczko in May 2007 after the minor victim handed over a CD containing child pornography to the International Justice Mission (IJM), a non-governmental organization working in the Philippines. IJM provided the CD, along with other evidence, to law enforcement officers working out of the U.S. Embassy in Manila. The evidence showed that Reczko had used the minor to produce eight series of child pornography, which included images of him and the victim engaging in sexual intercourse.
Reczko has been in custody since he was arrested after returning to the United States from the Philippines in 2007.
The case against Reczko is the result of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
Release No. 15-025
Two Found Guilty in Scheme That Bilked Insurance Plans for More Than $50 Million of Unneeded Medical ProceduresRead the Press Release
SANTA ANA, California –A federal jury has convicted two Southern California residents in connection with a scheme to defraud union and private health insurance programs by submitting bills for more than $71 million – and receiving over $50 million in payments – for medically unnecessary procedures performed on insurance beneficiaries who received free or discounted cosmetic surgeries.
A large number of the fraudulent claims were submitted to the International Longshore and Warehouse Union and Operating Engineers Union health insurance plans. Other victim insurers included Aetna and Anthem.
The two defendants found guilty yesterday are:
Theresa Fisher, 45, of Tustin, who was found guilty of five counts of mail fraud; and
Lindsay Hardgraves, 30, of San Pedro, who was found guilty of two counts of mail fraud.
The evidence presented during a six-day trial showed that members of the scheme lured insured “patients” to a surgery center in Orange with promises that they could use their union or PPO health insurance plans to pay for cosmetic surgeries, which are generally not covered by insurance. The surgery center was known at various times as Princess Cosmetic Surgery, Vista Surgical Center, and Empire Surgical Center.
Marketers such as Hardgraves referred “patients” to the surgery center, where they were told 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. Fisher was a consultant at the surgery center who scheduled procedures after telling the “patients” about the free cosmetic procedures they could receive and coaching them to fabricate or exaggerate symptoms so that their medical procedures would be covered by their insurance.
The unnecessary procedures typically performed on the “patients” were endoscopies (usually sophagogastroduodenoscopies, 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. In some cases, the surgery center simply billed cosmetic procedures (such as tummy tucks) as if they were medically necessary procedures (such as hernia surgeries).
Fisher and Hardgraves are scheduled to be sentenced by United States District Judge Josephine L. Staton on May 29.
A third defendant in this case – Vi Nguyen, 31, of Placentia, another consultant at the surgery center – pleaded guilty in January to four counts of mail fraud and faces sentencing before Judge Staton on July 10.
At sentencing, each defendant faces a statutory maximum sentence of 20 years in federal prison for each count of mail fraud.
This case is the product of an ongoing investigation by the Federal Bureau of Investigation, the United States Department of Labor – Office of Inspector General, the United States Department of Labor – Employee Benefits Security Administration, and the Office of Personnel Management – Office of Inspector General.
Release No. 15-023
Owner of Pico Rivera Nightclub Charged by Federal Grand Jury with Laundering Money for Mexican Drug OrganizationRead the Press Release
LOS ANGELES – The owner of El Rodeo nightclub in Pico Rivera was named today in a federal grand jury indictment that charges him with using his bar and another one he controlled in Moreno Valley to launder drug proceeds on behalf of Mexican drug traffickers.
Edgar De Dios Fragoso, 38, of Hacienda Heights, was named today in an eight-count indictment that charges him with conspiracy to launder money and seven counts of money laundering.
Fragoso was arrested on a criminal complaint that charged him with money laundering on February 23, and he was subsequently freed on a $100,000 bond.
Today’s indictment alleges that Fragoso conspired to launder drug proceeds through the two El Rodeo locations for an unnamed trafficker who imported methamphetamine into the United States. According to court documents, the drug trafficker funneled the cash collected from methamphetamine sales to Fragoso, who delivered the money to the drug organization under the guise that the payments were for business and financial services.
In addition to money laundering conspiracy, Fragoso is charged in seven substantive counts of money laundering for allegedly issuing more than $200,000 in checks to a fictitious drug trafficking organization. The bogus drug operation was set up by the Drug Enforcement Administration and IRS – Criminal Investigation in an undercover operation.
Fragoso is scheduled to be arraigned on March 13. If he is convicted, Fragoso would face a statutory maximum sentence of 20 years for each of the eight charges in the indictment.
Release No. 15-024
Orange County Man Who Tried to Travel to Syria in Support of Isil Charged in New Indictment with Attempting to Provide Material Support to Terrorist OrganizationRead the Press Release
SANTA ANA, California – An Orange County man who attempted to travel to Syria last year has been indicted on a series of federal offenses, including attempting to provide material support to the terrorist group, the Islamic State of Iraq and the Levant (ISIL).
Adam Dandach, 21, of Orange, Calif., was named in a superseding indictment returned today by a federal grand jury in Santa Ana. Dandach, a United States citizen also known as “Fadi Fadi Dandach,” is charged in the indictment with one count of attempting to provide material support and resources to a designated foreign terrorist organization, two counts of making a false statement on a passport application obtained in order to facilitate international terrorism, and one count of obstruction of justice for attempting to destroy records after his arrest last July
Dandach was arrested on July 3, 2014 and initially charged in a federal criminal complaint with making false statements on a passport application. The complaint alleged that Dandach lied in order to replace his passport so that he could travel without being stopped by a family member in possession of the original. At that time, Dandach was attempting to travel from Orange County’s John Wayne Airport to Istanbul, Turkey, with the intention of traveling to Syria. Dandach told FBI Agents that he was traveling to Syria for the purpose of pledging his alliance and assistance to ISIL, and that he believed the killings of American soldiers are justified, according to court documents.
On July 16, Dandach was indicted by a federal grand jury for making the false statements on a passport application. He entered a plea of not guilty in July, and
he has been held in federal custody without bond since that time.According to the first superseding indictment returned today, Dandach knowingly attempted to provide material support and resources, namely himself, to work under the direction and control of the Islamic State of Iraq and the Levant (ISIL), also known as the Islamic State of Iraq, al-Qa’ida in Iraq, and the Islamic State, according to the indictment, which notes that ISIL has been continuously designated by the United States State Department as a foreign terrorist organization since 2004. The indictment further alleges that Dandach, in order to facilitate an act of international terrorism, lied when applying for a replacement passport and then presented the passport to an airline employee for the purpose of traveling to Istanbul, Turkey. The indictment further alleges that Dandach attempted to obstruct the investigation by instructing a website administrator to delete his post history.
Dandach is scheduled to be arraigned on the indictment on March 16.
If convicted of all the charges in the indictment, Dandach would face a statutory maximum sentence of 15 years in federal prison for the material support charge, up to 25 years for each of the two passport fraud charges, and a statutory maximum of 25 years for obstruction of justice offense.
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 in this case was conducted by the FBI’s Joint Terrorism Task Force in Orange County.
Release No. 15-022
Man Who Operated ‘Revenge Porn’ Website Pleads Guilty in Hacking Scheme That Yielded Nude Photos from Google Email AccountsRead the Press Release
LOS ANGELES – A Northern California man who operated the Internet’s best-known “revenge porn” website pleaded guilty late this afternoon to federal computer hacking and identity theft charges for hiring another man to hack into e-mail accounts to steal nude photos that were later posted on his website.
Hunter Moore, 28, of Woodland, California, who operated the now-defunct isanyoneup.com, pleaded guilty today 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.
As a result of his guilty pleas, Moore faces a statutory maximum sentence of seven years in federal prison, and a mandatory minimum sentence of two years.
Moore pleaded guilty before United States District Judge Dolly M. Gee, who is scheduled to sentence the defendant on June 24.
The alleged hacker – Charles Evens, 26, of Studio City, California – still faces a host of federal charges and is scheduled to go on trial before Judge Gee on March 17.
Evens faces charges contained in a 15-count grand jury indictment that accuses him of conspiracy, seven counts of unauthorized access to a protected computer to obtain information and seven counts of aggravated identity theft.Moore operated the website http://isanyoneup.com, where he posted, among other things, nude or sexually explicit photos of victims. The pictures were submitted by individuals, without the victim’s permission, for purposes of revenge, Moore admitted in court. However, to obtain more photos for the website, Moore instructed Evens to gain unauthorized access to – in other words, to hack into – Google e-mail accounts, according to Moore’s plea agreement. 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, he admitted in the plea agreement.
The plea agreement discusses one specific incident in late 2011 when 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 to defendant Evens using Paypal. One of the nude photos was posted on isnayoneup.com on December 29, 2011, according to the plea agreement.
The indictment alleges that Evens hacked into email accounts belonging to hundreds of victims.
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 in this case was conducted by the Federal Bureau of Investigation.
Release No. 15-021
Corona Woman Who Ran High-End Denim Jean Company Pleads Guilty in $15 Million Scheme That Defrauded Union BankRead the Press Release
LOS ANGELES – A Corona woman who was the chief executive officer of a high-end jean company that outfitted Hollywood celebrities pleaded guilty today in federal court to bank fraud and bankruptcy fraud offenses.
Carolyn Marie Jones, 51, pleaded guilty in federal court to one count of bank fraud and one count of concealing assets in a bankruptcy proceeding.
Jones pleaded guilty before United States District Judge Michael W. Fitzgerald, who is scheduled to sentence the defendant on May 11. At sentencing, Jones will face a statutory maximum sentence of 35 years in federal prison and a fine of $1.25 million.
According to a plea agreement filed late yesterday, Jones defrauded Union Bank of California in a scheme related to her company, DDI (sometimes known as Diamond Decisions, Inc.), which sold jeans under the labels Privacywear and PRVCY Premium. Union Bank issued an $8.5 million line of credit – which was later increased to $15 million – to Jones in late 2008, but Jones had filed a fraudulent loan application that used another person’s social security number, bogus tax returns that had never been filed with the Internal Revenue Service and false financial statements for DDI that grossly overstated the company’s profits.
Jones also admitted in the plea agreement that the accounting firm she claimed had audited her financial statements was a sham company. Jones also admitted she lied to Union Bank employees, including the loan officer. In court today, she apologized to the identity theft victim whose information was used on the fraudulent loan documents.
Jones soon defaulted on the $15 million loan, and Union Bank filed a civil lawsuit against DDI in state court. When the court issued an order authorizing Union Bank to seize the company’s assets, Jones filed a Chapter 11 bankruptcy petition in February 2010 that listed the bank as the sole creditor. In the following months, Jones concealed DDI assets, specifically about $120,000 that she had received from DDI customers.
As part of the plea, Jones agreed to pay $15 million in restitution to Union Bank and $124,000 in restitution to victims who invested in another scheme.
Jones pleaded guilty in relation to two cases that were the result of an investigation conducted by the United States Secret Service and IRS - Criminal Investigation. The United States Trustee’s Office provided valuable assistance during the investigation.
Release No. 15-020
Dutch National Indicted on Computer Hacking and Identity Theft Charges Related to Theft of Digital Versions of 3 Hollywood MoviesRead the Press Release
LOS ANGELES – A federal grand jury today indicted a Dutch national on federal computer hacking and identity theft charges related to the theft of digital versions of three motion pictures.
Joey Vogelaar, who used the online monikers of “TyPeR” and “neXus,” was named in a two-count indictment that alleges unauthorized access to a protected computer and aggravated identity theft.
Vogelaar, 28, a resident of Delft, the Netherlands, allegedly stole pre-release digital copies of the Sony Pictures Entertainment film “How Do You Know” and the Paramount production “Rango,” as well as the Dreamworks movie “Megamind,” which at the time of the alleged theft was in theatrical release.
In 2010, Vegelaar allegedly used a username and password belonging to another person to access a computer system where the films were located. The compromised computer system was located at a company outside of the studios that was involved in the production process.
The computer hacking charge carries a statutory maximum sentence of five years in federal prison. The charge of aggravated identity theft carries a mandatory two-year sentence to run consecutive to any other sentence imposed in the case.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
This case was investigated by the Federal Bureau of Investigation.
Release No. 15-019
Two Men Who Provided Material Support to Terrorists and Plotted to Kill Americans in Afghanistan Receive 25-Year Prison TermsRead the Press Release
RIVERSIDE, California – Two men with ties to the Inland Empire were each sentenced today to 300 months in federal prison for participating in plots to provide material support to terrorists and to kill American personnel.
The two men sentenced today by United States District Judge Virginia A. Phillips are:
Sohiel Omar Kabir, 37, a naturalized United States citizen who was born in Afghanistan and who until late 2011 resided in Pomona; and
Ralph Deleon, 26, of Ontario, a lawful permanent resident and citizen of the Philippines.
The sentencings follow a 6½-week trial last summer in which a federal jury convicted Kabir and Deleon for their role in a plot to travel overseas to fight against U.S. and Allied forces in Afghanistan and elsewhere. Specifically, the jury convicted Kabir and Deleon of conspiring to provide material support to terrorists and conspiring to murder United States military and government personnel.
The jury also found Kabir guilty of conspiring to provide material support to a designated foreign terrorist organization, namely Al-Qa’ida, and conspiring to receive military-type training from Al-Qa’ida. In addition, the jury convicted Deleon of conspiring to murder, maim or kindap overseas.
Two other defendants in the case – Miguel Alejandro Santana Vidriales and Arifeen David Gojali – previously pleaded guilty and are scheduled to be sentenced by Judge Phillips on March 16.
“This case demonstrates the need for vigilance and swift action to counter the false allure of violent extremism,” said United States Attorney Stephanie Yonekura. “When confronted with young Americans who succumbed to the empty promises of violent extremism and sought to assist a terrorist group in killing American soldiers abroad, law enforcement acted swiftly to eliminate the threat.”
David Bowdich, the Assistant Director in Charge of the FBI,s Los Angeles Field Office, commented: “The defendants betrayed the citizens of the United States by supporting terror and conspiring to murder military members serving overseas. The lengthy prison sentences handed to Mr. Kabir and Mr. DeLeon should send a clear message to those who support terror groups that the FBI and our partners are committed to preventing deadly plots hatched either at home or abroad targeting the United States.”
The evidence presented at trial showed Kabir introduced Deleon and Santana to radical Islamic ideology in 2010. Kabir left the United States in the final days of 2011, arriving in Afghanistan in July 2012. While in Afghanistan, Kabir continued to communicate with Deleon and others, encouraging them to join him in Afghanistan. Kabir told the group that he had contacts with terrorist organizations and that, when they arrived, he and the group would join “the Students” – referring to the Taliban – and later “the Professors” – referring to Al-Qa’ida.
Deleon, Kabir, and others involved in the plot were heavily influenced by the doctrine of now-deceased Al-Qa’ida in the Arabian Peninsula spokesman Anwar Al-Awlaki and other advocates of violent jihad, whose teachings they frequently invoked during their planning and preparation in this case.
In September 2012, Deleon recruited Gojali to join the plot to travel overseas to engage in violent jihad. As part of their planning and preparation, Deleon led Santana and Gojali in training activities in Southern California, including participating in paintball activities and traveling to firearms ranges to fire AK-47s and other assault weapons, which they expected to use in future fighting.
The men made plans to rejoin Kabir, who had relocated to Kabul, Afghanistan. In effort to avoid detection by law enforcement, Deleon and the others planned to cross the border into Mexico by land and from there to travel to the Middle East by air. In November 2012, Deleon purchased airline tickets for the group. On November 16, 2012, the FBI arrested Deleon, Santana and Gojali as they departed a Chino apartment in a car driven by one of Deleon’s associates intending to drive to Mexico. Kabir was taken into custody by American military personnel in Afghanistan.
The investigation of this terrorist plot was conducted by the Joint Terrorism Task Force (JTTF) in Riverside, California. The Riverside JTTF is comprised of members from the Riverside County Sheriff’s Office, the Riverside Police Department, the San Bernardino Sheriff’s Department, the Beaumont Police Department, the Ontario Police Department, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the United States Attorney’s Office, and the Federal Bureau of Investigation.
Release No. 15-018
Huntington Beach Woman Sentenced to over 5 Years in Federal Prison for Embezzling Millions of Dollars from Her EmployerRead the Press Release
SANTA ANA, California – A Huntington Beach woman was sentenced today to 63 months in federal prison for embezzling nearly $3.5 million from her former employer, a warehouse and trucking-services company.
Patricia A. Francisco, 62, was sentenced today by United States District Judge Cormac J. Carney after the defendant pleaded guilty in August to four counts of wire fraud.
In addition to the prison term, Judge Carney ordered Francisco to pay $3,474,199 in restitution to her former employer, California Multimodal, LLC (CM), which is based in Long Beach.
For more than 15 years, Francisco stole money from CM, where she worked as a bookkeeper. According to court documents, Francisco used three basic means to misappropriate company funds: she stole company checks, which she made out to “cash;” she caused checks to be written to legitimate vendors, which she then stole and deposited into her bank accounts; and she created bogus expense vouchers for other employees, which allowed to obtain checks that she deposited into her own accounts. As part of her scheme, Francisco used a signature stamp belonging to her boss to sign the checks.
Francisco used the money to finance personal expenses, such as a $300,000 down payment on her house, a down payment on a condominium, a $40,000 Cadillac Escalade, approximately $100,000 worth of jewelry, and numerous trips to locations like Hawaii. Francisco told investigators that she stole the money “because she wanted a better life,” prosecutors wrote in a sentencing memorandum filed with the court that cited a simple motive for the crimes: “greed – she wanted to live a more luxurious lifestyle.”
This case was investigated by the Federal Bureau of Investigation.
Release No. 15-017
Seal Beach Woman Sentenced to Nearly Three Years in Federal Prison for Operating Real Estate Scheme in Orange CountyRead the Press Release
SANTA ANA, California – A Seal Beach woman was sentenced today to 35 months in federal prison for operating a $1.4 million fraud scheme that bilked clients who paid money in response to false promises of ownership in commercial real estate.
Karen Hanover, 48, was sentenced by United States District Judge Josephine Staton, who scheduled a May 8 hearing to determine how much restitution should be paid to approximately 45 victims.
Hanover pleaded guilty last year to one count of mail fraud related to the scheme she ran out of two Long Beach companies – Commercial Investment Education LLC and Kharmic Life Strategies Inc. Hanover pitched her “Fast Track” investment program to investors who attended seminars in Southern California, Dallas and Las Vegas, Nevada.
Victims were induced to invest between $19,000 and $29,000 in the real estate scam. In her pitches, Hanover “falsely represented to the ‘Fast Trackers’ that she would partner with them in real estate deals, they would receive 100 percent returns on their investments, and she would provide a 100 percent refund if they did not obtain a commercial property within a year,” according to court documents that noted these promises were false.
In sentencing papers filed with the court, prosecutors described how some victims invested borrowed money or all of their savings based on Hanover’s purported “guarantees.” When victims demanded the return of their money, Hanover engaged in “bullying and intimidation” – tactics that Judge Staton noted during today’s hearing when she said Hanover caused substantial harm, which was aggravated by threatening victims with jail time if they reported her.
Previously in this investigation, Hanover was found guilty at trial in October 2011 of impersonating an FBI agent for contacting the victims of her fraud scheme, using a telephone number designed to appear to be associated with the FBI and threatening them with arrest if they told others about her fraudulent conduct (for background see: http://www.fbi.gov/losangeles/press-releases/2011/la021011.htm). As a result of this separate case, Hanover was sentenced to six months in prison and ordered to pay a $5,000 fine.
This investigation was conducted by the FBI.
Release No. 15-016
Long Beach Man Who Ran Sex Trafficking Ring That Prostituted Young Women Sentenced to 20 Years in Federal PrisonRead the Press Release
LOS ANGELES – A Long Beach man was sentenced this morning to 20 years in federal prison for running a sex trafficking operation that victimized young women who he forced to work as prostitutes.
Roshaun Nakia Porter, 39, was sentenced today by U.S. District Judge Josephine L. Staton to a sentence of 240 months in prison, which will be followed by 10 years of supervised release.
In addition to the prison term, Judge Staton ordered Porter to pay $866,244 in restitution to 10 victims.
“Porter was the mastermind of a criminal enterprise who compelled numerous vulnerable women to surrender their bodies for considerable profit and personal sexual gratification,” federal prosecutors wrote in a sentencing memorandum filed with the court. “Porter’s callous and calculated conduct robbed his victims of their freedom, dignity and the proceeds of the illicit activities he compelled them to perform. For a period of almost two years, Porter engaged in calculated profiteering by enslaving and prostituting his victims.”
Porter pleaded guilty in July 2014 to conspiracy to engage in sex trafficking by force, fraud and coercion.
Porter’s co-defendant and protégé in the operation – Marquis Monte Horn, 40, also of Long Beach – was sentenced in October by Judge Staton to 78 months in prison after he pleaded guilty to conspiracy to engage in sex trafficking. Judge Staton also ordered Horn to pay $69,719 in restitution to one victim of the sex trafficking operation.
“Porter masterminded a reprehensible sex trafficking enterprise that caused extreme trauma and lasting injury to victims,” said Acting United States Attorney Stephanie Yonekura. “Over the course of nearly two years, Porter victimized young women with flagrant lies, bogus romantic overtures and acts of violence as he forced them to give up their bodies for his profit. This conduct is intolerable and warrants the lengthy sentence issued today by the court.”
David Bowdich, the Assistant Director in Charge of the FBI's Los Angeles Field Office, stated: “The defendant recruited unsuspecting victims as sex slaves through fraudulent promises of wealth and a better life. He then held them hostage by imposing physical beatings and issuing death threats while he cashed in on their suffering. The FBI is committed to protecting the civil rights of trafficking victims by identifying violent sexual offenders and pimps operating in our communities, and building federal cases to ensure they go to prison."
According to court documents and admissions in court, between 2010 and April 2012, Porter masterminded a scheme in which he exploited young women, including foreign nationals and U.S. citizens, by prostituting them in Orange County. Using various deceptive means – including false online personal advertisements posted on www.craigslist.com, www.modelmayhem.com and www.seekingarrangements.com – and fraudulent promises of legitimate employment, Porter reaped substantial illicit profits by luring his victims into personal relationships with him and, thereafter, compelling them to prostitute and provide him the proceeds from their commercial sex acts. To compel the victims into compliance, Porter used physical violence, psychological abuse, threats to harm the victims’ family members and other coercive means.
Horn admitted that between December 2010 and April 2012, he conspired to recruit and entice victims into Porter’s prostitution ring.
“The Department of Justice is steadfast in its commitment to prosecuting those who seek to profit from enslaving and exploiting others.” said Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division. “We will continue our unrelenting work to end the scourge of human trafficking and obtain justice on behalf of victims of these heinous crimes.”
Two other defendants pleaded guilty in connection with this case and are scheduled to be sentenced in the coming weeks.
This matter was investigated by the Federal Bureau of Investigation.
The case was prosecuted by the United States Attorney’s Office for the Central District of California and United States Department of Justice, Civil Rights Division, Human Trafficking Prosecution Unit.
Owner of San Gabriel Valley Surrogacy Agency Pleads Guilty to 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 pleaded guilty late this afternoon to a federal wire fraud charge and admitted defrauding would-be parents, egg donors and surrogates over the course of more than three years.
Allison Layton, a 38-year-old resident of Star, Idaho, pleaded guilty before United States District Court Judge George H. Wu.
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 thousands of dollars for egg donation and surrogacy services that Miracles promised to coordinate. Layton took money – often tens of thousands of dollars – 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 or to cover unpaid costs related to other clients.
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.
As a result of her pleading guilty to wire fraud, Layton faces a maximum statutory sentence of 20 years in federal prison. Layton is scheduled to be sentenced by Judge Wu on May 28.
The investigation into Layton was conducted by the Federal Bureau of Investigation.
Release No. 15-014