Central District of California
Press releases recorded for this federal judicial district.
SoCal Doctor Agrees to Plead Guilty to Distributing Addictive Painkiller and Laundering Proceeds of His Drug TraffickingRead the Press Release
LOS ANGELES – In a plea agreement filed late this afternoon, a Los Angeles-area doctor has agreed to plead guilty to a federal drug trafficking charge for illegally distributing the powerful painkiller best known by the brand names Vicodin and Norco.
Dr. Andrew Sun, 78, of La Mirada, has agreed to plead guilty to one count of distribution of hydrocodone and one count of money laundering.
While Sun has agreed to plead guilty to distributing hydrocodone, he admits in his plea agreement that he also illegally prescribed and distributed other drugs, including those best known by the brand names Xanax and Soma. Sun admits that he prescribed these drugs from the beginning on 2011 through June 2012 and that he did so “outside the usual course of professional practice and without a legitimate medical purpose.”
Sun, who operated medical clinics in San Gabriel and East Los Angeles, was named in an indictment that was returned by a federal grand jury about three months ago. In his plea agreement, Sun acknowledges that he issued a dozen prescriptions to “patients” who were undercover law enforcement officers who made cash payments and who “did not have a legitimate medical need for the drugs.”
Sun admitted that, between January 2011 and May 2012, he received approximately $554,070 in cash payments from patients, which he deposited into a personal account “for the purpose of disguising the source and nature of the funds, and which (as defendant knew) represented the proceeds from defendant’s issuance of prescriptions for controlled substances.”
As part of his agreement to plead guilty to the two felony charges, Sun agreed to forfeit to the government the proceeds that he earned from his illegal medical practice, including approximately $342,000 seized from his accounts in July 2012.
Sun’s case is pending before United States District Judge Manuel Real, who has not yet scheduled a hearing for Sun to enter his guilty pleas.
The drug trafficking count carries a statutory maximum penalty of 10 years in federal prison, and the money laundering count carries a maximum penalty of 20 years in custody.
Sun also agreed to pay $86,975 in restitution to the California Medical Board, which participated in the investigation into the doctor’s illegal activities. Sun also agreed to cooperate in any action taken by the Medical Board to revoke his medical license.
The investigation into Sun was conducted by the Drug Enforcement Administration, IRS - Criminal Investigation, the California Medical Board, the California Department of Health Care Services and the Monterey Park Police Department.
Release No. 14-076
72 Linked to Broadway Gangster Crips Criminal Street Gang Charged in Federal Racketeering Indictment That Alleges Murders, Robberies and Drug Sales in South Los AngelesRead the Press Release
LOS ANGELES – More than 1,300 FBI agents and LAPD officers this morning arrested 50 people associated with the Five Deuce Broadway Gangster Crips, a street gang that claims control of a South Los Angeles neighborhood and drug sales in an area just west of the “Skid Row” district of Los Angeles. Those taken into custody are among 72 defendants named in a 213-page racketeering indictment that outlines two decades of criminal conduct, including murders, robberies, extortion, witness intimidation and narcotics trafficking.
The investigation into the Broadway Crips was called Operation “Gremlin Riderz,” because authorities focused on a particularly violent “clique” – or subset of the gang – called the Gremlin Riderz. According to the 112-count indictment that was unsealed this morning, the Broadway Crips, which has an estimated 200 members, operated as a criminal enterprise that used violence and intimidation to control an area centering on the intersection of 52nd Street and South Broadway in South Los Angeles. The gang was formed in the 1970s to confront other African-American street gangs, according to the indictment, which alleges that the enterprise has grown into a violent and criminal enterprise that conducts annual meetings and enforces a strict set of rules.
“Criminal street gangs make their livelihood by ruthlessly preying on the innocent people that live in the neighborhoods they claim as territory,” said United States Attorney André Birotte Jr. “What makes the conduct of this gang particularly insidious is not only the violent crimes alleged, but also the exploitation of Skid Row drug users who are already living in difficult circumstances.”
The defendants named in the federal indictment face various charges, including conspiracy to engage in racketeering activity in violation of the federal Racketeer Influenced and Corrupt Organizations Act; violent crimes in aid of racketeering; conspiracy to interfere with commerce by conducting a series of robberies that targeted bank customers; weapons offenses; and various drug trafficking activities involving crack cocaine, cocaine, methamphetamine, phencyclidine (PCP), Ecstasy, marijuana and codeine.
The indictment specifically alleges that members of the gang:
committed four murders, dating back to 1987, that include fatal shootings of unarmed men with no gang affiliations in 2003 and 2012;
threatened a surviving victim of the 2003 shooting, which followed a concert at the House of Blues on the Sunset Strip;
conspired to murder a fellow gang member who had provided a statement to law enforcement in relation to the 2012 murder incident in which a total of four people with no gang ties were shot, including a 10-year-old girl on a bicycle;
fired shots at California Highway Patrol Officers who were pursuing gang members two years ago;
engaged in a series of violent, “follow-home” robberies that targeted customers of South Bay banks; and
participated in numerous narcotics sales near schools and playgrounds.
In addition to committing crimes in its claimed territory east of the Harbor Freeway, the indictment alleges that the Broadway Crips sell drugs near the Skid Row section of downtown Los Angeles. “This area is desirable to the gang because it is close to Skid Row, where there is a large and vulnerable customer base of drug addicts and mentally ill persons,” according to the indictment.
Out of 72 defendants named in the federal indictment, 48 were arrested this morning. Two more people were arrested on local charges, meaning that a total of 50 were arrested today. Seventeen defendants named in the grand jury indictment were already in custody on unrelated charges. Authorities are continuing to search for eight defendants, including one who faces local charges.
All 72 defendants named in the racketeering indictment face mandatory minimum sentences of 10 years in federal prison if they are convicted. Many of the defendants face potential sentences of life without parole.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
The investigation into the Broadway Crips was conducted by agents and officers with the Federal Bureau of Investigation and the Los Angeles Police Department. Considerable assistance was provided during this investigation by the California Department of Corrections and Rehabilitation, the Torrance Police Department, the Buena Park Police Department, the El Segundo Police Department, the San Bernardino Police Department and the Los Angeles City Attorney’s Office.
Additionally, several agencies provided substantial assistance during this morning’s takedown, including the Los Angeles Sheriff’s Department, the Hawthorne Police Department, the Pasadena Police Department, the Inglewood Police Department and the Los Angeles Fire Department.
Operation Gremlin Riderz is a result of a partnership between the FBI and the Los Angeles Police Department under the auspices of the FBI’s Task Force on Violent Crime in the City of Los Angeles. This task force is one of dozens of such partnerships throughout the United States, known as Safe Streets Task Forces, funded for the purpose of assisting local police in identifying and addressing violent crime in America.
Release No. 14-075
2 O.C. Men Arrested in Multimillion Dollar Synthetic Drug RingRead the Press Release
Federal Indictment is First in Southern California Involving Narcotic ‘Analogues’
SANTA ANA, California – Two Orange County men were arrested this morning on federal drug trafficking charges that allege they were part of a far-reaching conspiracy to smuggle, manufacture and distribute millions of dollars’ worth of analogue drugs commonly called “spice” and “bath salts.”
The men were taken into custody pursuant to a 16-count grand jury indictment – the first in Southern California alleging violations of the Controlled Substances Analogue Enforcement Act. This federal law makes it illegal to manufacture or possess chemicals intended for human consumption that are similar to controlled substances – such as Ecstasy and marijuana – and have effects similar to these narcotics.
Sean Libbert, 38, of Newport Coast, and Kyle Kledzik, 26, of Dana Point, were arrested by federal agents associated with the Los Angeles HIDTA (High-Intensity Drug Trafficking Area) Southern California Drug Task Force. Those involved in the investigation include special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Drug Enforcement Administration and IRS - Criminal Investigation.
Libbert and Kledzik are expected to be arraigned on the indictment this afternoon in United States District Court in Santa Ana.
The case against Libbert, Kledzik and four Chinese nationals focuses on the smuggling and distribution of cannabinoids, which include synthetic marijuana or “spice,” and synthetic cathinones, otherwise known as “bath salts. The indictment charges a series of criminal violations, including conspiracy to manufacture, possession with the intent to distribute, and distribution of controlled substance analogues. The indictment also alleges that the defendants smuggled chemical products and engaged in money laundering. Additionally, Libbert – who has prior convictions that include narcotics offenses – is accused of being a felon in possession of firearms and ammunition.
The charges are the result of a nearly three-year HIDTA investigation that targeted an organization allegedly headed by Libbert. Authorities believe Libbert’s organization was one of the nation’s largest importers and shippers of synthetic narcotics. According to the indictment, from March 2010 until July 2012, Libbert and his coconspirators smuggled more than 300 kilograms of chemicals into the U.S. at a cost of more than $1.4 million. The organization also allegedly purchased more than 300 kilograms of chemicals from domestic sources.
As part of the scheme, the defendants allegedly formed a company called “RCS Labs” and used various Internet websites to sell more than $12 million worth of chemical products and analogue substances to people across the United States, including other distributors and individual users. The ring is also accused of manufacturing its own synthetic marijuana, which they marketed and sold under the brand “Da Kine Blend.”
According to the indictment, one customer who purchased approximately six grams of cannabinoids from the organization nearly died after ingesting the drug. Due to his prior criminal history, Libbert could face a mandatory minimum life sentence if convicted on this count.
The indictment also charges four Chinese nationals who allegedly served as Libbert’s suppliers. Three of the defendants reside in China and their full identities are unknown at this time. The fourth Chinese defendant, Jin Liu, 30, is in federal custody in Jacksonville, Florida, on unrelated narcotics charges.
Previously in this investigation, federal charges were filed against three other individuals tied to the ring. Those cases are pending in federal court in Santa Ana.
“This groundbreaking investigation identified a complex scheme to import into Southern California large quantities of chemicals that are used to manufacture designer drugs such as spice,” said DEA Special Agent in Charge Anthony D. Williams. “Today’s arrests demonstrate law enforcement’s intolerance for those who place the public at risk by manufacturing and distributing these extremely dangerous synthetic substances.”
In July 2012, HIDTA investigators executed multiple federal search warrants in connection with the case, resulting in the seizure of several luxury vehicles, hundreds of pounds of analogues, firearms and ammunition.
“These substances may have benign names like ‘spice’ and ‘bath salts,’ but they’ve been linked to serious health complications and even death,” said Claude Arnold, special agent in charge for HSI Los Angeles. “Compounding the concern is the fact that the distributors of these dangerous synthetic drugs are packaging and marketing them to appeal to young people. For that reason, those involved in this emerging side of the illicit drug trade should be on notice, this may be the first federal prosecution of its kind in the greater Los Angeles area, but it will not be the last.”
In addition to the drug and firearms charges, Libbert is accused of laundering the profits of drug sales through various bank transactions and spending the proceeds to buy luxury vehicles, vacations and a $1.4 million home in San Juan Capistrano. As part of the indictment, the government is seeking the forfeiture of property and proceeds related to the scheme. So far, investigators have seized more than $1.1 million in assets connected to the case, including more than $700,000 in profits from the sale of Libbert’s former San Juan Capistrano home.
“The use and distribution of synthetic drugs cause irreparable harm to our society,” said IRS - Criminal Investigation Special Agent in Charge Erick Martinez. “The magnitude and complexity of this particular ring required multi-agency cooperation to take down. IRS pursued financial leads in this investigation to attack the group's ability to further profit from their illegal activity and to hold them accountable for their actions.”
Release No. 14-074
Camarillo Woman Sentenced to 97 Months for Involvement in Mortgage Fraud SchemeRead the Press Release
LOS ANGELES – Rosa Fernandez, 38, of Camarillo, was sentenced earlier today by United States District Court Judge John A. Kronstadt to 97 months in federal prison for her involvement in a mortgage fraud scheme.
Fernandez was arrested in June 2010 and charged along with nine other individuals in a federal indictment with scheming to defraud banks by falsifying loan applications and using bogus tax letters to vouch for borrowers. Fernandez originated numerous loans and earned substantial commissions. She pleaded guilty in February 2012 to three counts of bank fraud.
While pending sentencing, Fernandez defrauded another lender in connection with seeking a loan modification for one of her several properties and she pleaded guilty to that offense as well. The two cases were consolidated for sentencing.
The District Court found that Fernandez was the leader and organizer of the bank fraud scheme and that she had obstructed justice by committing the loan modification fraud while on pretrial, post-conviction release in the mortgage fraud case. She was also ordered to pay restitution in the amount of $3,646,485.
The case was investigated by the FBI Ventura Resident Agency and the Ventura County District Attorney’s Office, with assistance from the IRS – Criminal Investigation, the U.S. Department of Housing and Urban Development – Office of the Inspector General, the Federal Housing and Finance Administration – Office of the Inspector General, the U.S. Secret Service, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Release No. 14-073
Justice Department Concludes That Los Angeles County Jail System Continues to Violate Constitutional Rights of Prisoners with Mental Illness and Fails to Provide Adequate Suicide PreventionRead the Press Release
LOS ANGELES – The Justice Department today released its latest assessment of mental health services at the Los Angeles County jails, which concludes that, despite progress in some areas, the County of Los Angeles fails to provide sufficient suicide-prevention practices to protect prisoners from self-harm. The department also found that other serious deficiencies in the mental health care delivery system remain and combine with inadequate supervision and deplorable environmental conditions to deprive prisoners of constitutionally-required mental health care.
The comprehensive assessment sent to the county on Wednesday and released today confirms that certain conditions and practices continue to violate the constitutional rights of prisoners with mental illness. There have been 15 suicides at the jails in less than 30 months, and the Justice Department concluded that some of the deaths may have been preventable with proper suicide prevention practices.
The Justice Department’s assessment also reveals widespread lapses with regard to basic supervision of prisoners at risk; deficient mental health care for prisoners with clearly demonstrated needs; deplorable environmental conditions, most acutely at Men’s Central Jail; and a suicide review process that often includes inaccurate information and fails to remedy evident and repeated problems in order to prevent similar incidents in the future.
The Los Angeles County jail system is the largest in the country, housing approximately 19,000 pre-sentenced and sentenced prisoners in seven facilities throughout the county. The Los Angeles Sheriff’s Department operates the jails system and supports the delivery of mental health services within the jails by the county’s Department of Mental Health.
In 2002, the Justice Department entered into a Memorandum of Agreement with the county to resolve a long-standing civil investigation into conditions of confinement at the jails under the Civil Rights of Institutionalized Persons Act (CRIPA). The MOA gives the Justice Department access to personnel, documents and prisoners to evaluate the county’s compliance with the MOA. The Justice Department is assisted by expert consultants in correctional mental health care and suicide prevention, and provides ongoing technical assistance as part of its monitoring activities. The county has cooperated fully and openly with the Justice Department.
While significant lapses were found, the Justice Department’s assessment reveals that the county has achieved substantial compliance with certain aspects of the MOA. For example, the county has implemented nearly all provisions related to mental health screening at intake, developed a robust electronic medical records system, increased the number of clinical and support staff, and ensured that custodial staff receive initial and ongoing training in the identification and custodial care of prisoners with mental illness. The county has demonstrated a sustained level of acceptable performance and improvement in these areas, which will no longer be subject to evaluation under the MOA.
The Justice Department intends to enter into discussions with officials from the Los Angeles County Sheriff’s Department and the county’s Department of Mental Health to address the results of the evaluation. The Justice Department expects that those MOA requirements that are in substantial compliance will terminate and no longer be subject to monitoring. The Justice Department will propose additional corrective action in the form of a court-enforceable agreement to address the remaining areas with serious deficiencies that violate prisoners’ constitutional rights. This week’s compliance letter includes a comprehensive list of recommended remedial measures that are designed to ensure adequate mental health treatment, supervision, suicide prevention and conditions of confinement for prisoners throughout the jails.
The challenges that the county faces in providing constitutionally adequate mental health services at the jail are driven in part by a rapid increase in the number of prisoners who are seriously mentally ill. The county has begun to take steps to expand diversion programs that will provide community supervision and treatment in a manner consistent with public safety. The department applauds these efforts.
CRIPA was enacted in 1980 to eradicate egregious and harmful conditions that result in a pattern or practice of civil rights violations in jails, prisons, juvenile justice facilities and other public institutions. CRIPA authorizes the Justice Department to investigate and, if necessary, initiate a civil action to guarantee the federal and constitutional rights of institutionalized persons.
The MOA is enforced by the Special Litigation Section of the Civil Rights Division and the United States Attorney’s Office in Los Angeles.
Release No. 14-072
Four Charged in $22 Million Movie Investment SchemeRead the Press Release
LOS ANGELES – Three men were arrested today for their roles in a scheme involving a company called Gigapix that allegedly defrauded hundreds of victims by promising large returns on movie investments and a production company’s imminent public offering, announced United States Attorney André Birotte Jr. and Bill L. Lewis, Assistant Director in Charge of the FBI in Los Angeles.
Two defendants were arrested this morning – Gregory Pusateri, 49, of Woodland Hills, and David Pritchard, 66, of Malibu, who has recently been staying with a friend in Hollywood – and are scheduled to be arraigned this afternoon in United States District Court.
A third defendant in the case – Christopher Blauvelt, 58, of Woodland Hills – was arrested this afternoon in Goleta, California. He is expected to be arraigned tomorrow in federal court in Los Angeles.
The fourth defendant in the case – Cheri Brown, 65, of Studio City – has agreed to surrender to authorities.
The four defendants were charged in a 36-count indictment returned under seal by a federal grand jury on May 15th. The indictment, which was unsealed this morning, accuses the defendants of mail fraud, wire fraud, attempted wire fraud and offering for sale unregistered securities.
The case centers on a company called Gigapix that was founded by Blauvelt in 2002 and took on Pritchard as a partner in 2006. The indictment alleges that between 2006 and 2012, Blauvelt and Pritchard hired telemarketers to solicit potential investors, who were told that Gigpix was an animation company similar to Pixar Animation Studios, and that Gigapix was developing projects expected to generate large profits when the company went public. Brown and Pusateri were among the top salespeople for Gigapix, according to the indictment.
The indictment alleges that telemarketers – known as “fronters” – used lead lists purchased by the defendants to find potential investors and then used scripts touting the supposed merits of Gigapix. When investors expressed an interest, materials about the investment were mailed to them. At that time, the potential investor was turned over to Brown and Pusateri – who were known as “closers” – to collect their money.
In or around 2008, the defendants allegedly shifted their focus to raise funds to produce a movie titled “OZ3D,” while continuing to solicit funds for Gigapix. In soliciting money for Gigapix and “OZ3D,” the indictment alleges that the defendants made numerous misrepresentations to potential investors and withheld material facts. For example, the indictment alleges that investors were told that Gigapix was a financially successful company, that they would receive high returns on their investments in less than 18 months, and that the investments carried little or no risk. Investors were also told there was an urgency to invest in Gigapix and “OZ3D” because the window of opportunity to invest and the number of shares available were limited.
Investors were told that a minimum of 65 percent of the money investesd in “OZ3D” would be used to produce and distribute the movie, and that only a small percentage of investor money would be used to pay commissions and finder’s fees. However, the indictment alleges that less than 5 percent of the investors’ money was used to finance the film. The indictment alleges that of the millions raised for the Gigapix investment, less than 20 percent of those funds were spent on the production of movies or television shows. The majority of the money raised from investors was spent on salaries, commissions and overhead, according to the indictment.
Approximately 750 victims lost virtually all of the money – approximately $22.6 million – that they invested in Gigapix and “OZ3D,” according to the indictment.
If convicted, the defendants would face decades in federal prison. The mail fraud and wire fraud counts, for example, carry statutory maximum penalties of 20 years in prison for each count.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
This investigation was conducted by the Federal Bureau of Investigation.
Release No. 14-071
Former Hollywood Business Figure Arrested in Tax ConspiracyRead the Press Release
Indictment Alleges that Millions Were Diverted from Leading Payroll Company
LOS ANGELES – The former CEO of Axium International, Inc., which was a leading Hollywood payroll services company until its collapse in 2008, has been arrested on federal tax charges that allege he took millions of dollars of company funds and failed to report the income to the IRS.
John Visconti, 71, of Beverly Hills, was arrested Monday without incident by special agents with IRS - Criminal Investigation at a Los Angeles Superior Court facility where he had gone to appear on an unrelated matter.
Visconti was arraigned and the three-count indictment against him was unsealed during a hearing late Monday afternoon in United States District Court. Visconti entered a not guilty plea to the charges, and a trial was scheduled for July 29.
Axium was one of the largest payroll services companies serving the entertainment industry, at its height processing hundreds of millions of dollars in payroll for its clients. As the payroll services provider and employer of record for its clients, Axium regularly submitted payroll tax returns to the IRS and the tax authorities of several states. The filing of the tax returns regularly generated tax refunds. Axium collapsed in 2008, after revelations that it owed tens of millions of dollars in payroll taxes, which led to Axium’s lender foreclosing on its bank accounts. A Chapter 11 bankruptcy case for Axium, filed in January 2008, remains an active case.
According to the indictment, which was returned by a federal grand jury on May 28, Visconti and another Axium officer used a variety of mechanisms to divert millions from Axium. In some cases, Visconti and his co-conspirator allegedly pocketed tax refunds that should have gone to to Axium and its subsidiaries. The indictment alleges that Visconti and his co-conspirator opened secret bank accounts in the names of Axium and its subsidiaries in which to deposit the purloined refund checks.
The indictment further alleges that, for more than two years, Visconti and his co-conspirator took weekly cash payments from Axium that averaged $8,000. Furthermore, Visconti and his co-conspirator allegedly formed a construction consulting company that billed Axium for $570,000 worth of services and they concealed from Axium that they were profiting from the arrangement. And, Visconti arranged for about half of the net salary paid to a purported Axium employee – approximately $82,000 – to be cycled back to a bank account controlled by Visconti.
Despite diverting millions of dollars from Axium, Visconti reported none of the diverted funds on his federal income tax returns, the indictment alleges.
The indictment charges Visconti with conspiracy, tax evasion and filing a false tax return. If convicted of the three counts, Visconti would face a statutory maximum sentence of 13 years in federal prison.
During Monday’s hearing, a United States Magistrate Judge ordered Visconti freed on a $100,000 bond, but he will be subject to electronic monitoring during his pre-trial release.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
The investigation into Visconti was conducted by IRS - Criminal Investigation.
Release No. 14-069
Ex-Controller of Court Services Firm Admits Embezzling $3.3 MillionRead 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 pleaded guilty today to federal charges of embezzling well over $3 million from the company over the course of two years.
Steven A. Hagstrom, 37, of Anaheim, who was an accountant and then controller of the Irvine-based Sentinel Offender Services, LLC, pleaded guilty this afternoon to one count of embezzlement before United States District Judge David O. Carter.
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.
Judge Carter is scheduled to sentence Hagstrom on September 29. The embezzlement count carries a statutory maximum sentence of 10 years in federal prison. About half of the embezzled money has already been returned to Sentinel, and Hagstrom has agreed to make full restitution to his former employer.
The investigation into Hagstrom was conducted by the Federal Bureau of Investigation and IRS - Criminal Investigation.
Release No. 14-070
Former Riverside County Deputy Public Defender Gets Year in Prison for Collecting Her Dead Grandmother’s Social Security BenefitsRead the Press Release
RIVERSIDE, California – An Upland attorney was sentenced today to one year and one day in federal prison for stealing $129,795 from the Social Security Administration (SSA) after her grandmother died in 2000.
Audrey Owens, 61, who until she retired in September was a deputy public defender for Riverside County, was sentenced today by United States District Judge Virginia A. Phillips.
Owens pleaded guilty on March 3 to two counts of theft of government property, admitting that she bilked the government for 12 years.
According to court documents, from June 2000 through August 2012, Owens fraudulently obtained social security benefits intended for her grandmother, who died in May 2000. After her grandmother’s death, Owens changed the address of a joint account she shared with her grandmother and continued to receive the dead woman’s social security payments.
Owens “devised and executed a plan to illicitly obtain significant amounts of SSA benefits intended for her deceased grandmother,” prosecutors wrote in a sentencing memo filed with the court. “Indeed, within just one week of her grandmother’s death, [Owens] sprang her plan into action by immediately removing her father’s name off of the [grandmother’s] Kansas City account and changing the address of record to her own address in Upland. This allowed her to continue to receive SSA benefits, undetected, for over 12 years, totaling over $129,000. She was only stopped when SSA began to suspect fraud – otherwise, the theft would have likely continued indefinitely and resulted in even greater losses.”
The investigation in this case was conducted by the Social Security Administration, Office of the Inspector General, Office of Investigations.
Release No. 14-068
Former San Bernardino Police Officer Found Guilty of Federal Civil Rights Charges Stemming from Sexual Assaults of ProstitutesRead the Press Release
RIVERSIDE, California – A former officer with the San Bernardino Police Department was convicted today of federal civil rights charges for forcing two prostitutes to perform sex acts while he was in uniform.
Jose Jesus Perez, 46, of Menifee, was found guilty this morning of two felony counts of deprivation of rights under color of law for sexually assaulting two victims in 2011. The jury determined that both offenses involved aggravated sexual abuse, and that one attack involved a kidnapping and bodily injury.
Perez is scheduled to be sentenced by United States District Judge Virginia A. Phillips on August 18, at which time he faces a potential sentence of life in federal prison.
Perez has been in custody since he was arrested last September in Texas. The arrest was the result of a federal grand jury indictment that alleged Perez forcibly had sex with two women who told investigators that they engaged in the sex acts demanded by Perez out of fear because he was a police officer.
The evidence presented during a week-long trial showed that Perez groped a woman and caused her to perform oral sex by using force against her on April 25, 2011.
The jury also found that Perez had unlawful sexual intercourse with another woman on two occasions in August 2011.
The two victims testified about Perez forcing them to have sex in vehicles and hotel rooms. A third woman testified that Perez had aggressively solicited sex from her while he was in uniform. The three women each testified that they feared repercussions if they did not comply with Perez’s demands.
The jury in the case also convicted Perez of one misdemeanor civil rights offense related to the second time he demanded sex from the second victim in August 2011. Additionally, Perez was acquitted of one misdemeanor offense related to allegations that he forced the second woman to have sex in September 2011.
Perez became a police officer in 1997, when he was hired by the Los Angeles Police Department. Perez worked for the LAPD until 2008, when he went to work for the San Bernardino Police Department. Perez was released from employment by SBPD in December 2012.
The investigation into Perez was conducted by the San Bernardino Police Department and the FBI.
Release No. 14-067
Three Men Guilty of Federal Felony Charges for Starting Illegal Campfire in Angeles National Forest That Became Colby FireRead the Press Release
LOS ANGELES – The third man involved in an illegal campfire above Glendora that erupted out of control to become the destructive Colby Fire was found guilty this afternoon of federal criminal charges.
Jonathan Carl Jarrell, 24, was found guilty of a felony offense of unlawfully setting timber afire. After a three-day trial, a jury also convicted Jarrell of a misdemeanor offense of illegally starting a fire. (The jury was unable to reach a unanimous verdict on two other misdemeanor fire-related charges.)
Two other defendants – Clifford Eugene Henry Jr, 22, of Glendora, and Steven Robert Aguirre, 21 – were each found guilty last Friday of four charges (one felony and three misdemeanors) related to the fire.
The Colby Fire started on the morning of January 16. By that evening, the fire had consumed more than 1,700 acres of federal, state, local and private lands. The fire had also destroyed five residences, damaged 17 additional structures, and resulted in injuries to one civilian and two firefighters.
Henry, Aguirre and Jarrell were detained by Glendora Police Officers after they were seen escaping the fire. During interviews with Glendora Police and personnel with the Los Angeles County Fire Department’s Arson Investigations Unit – interviews that the jury heard during the two trials – all three defendants admitted playing a role in the starting of a campfire that started the Colby Fire after wind blew burning paper into the brush in the hills above Glendora.
A United States Forest Service fire investigator determined that the origin of the Colby Fire was at a point near a fire ring built by the three men at a location on federal lands within the Angeles National Forest.
As a result of today’s guilty verdicts, Jarrell faces up to 5½ year in federal prison when he is sentenced by United States District Judge George H. Wu on July 31.
Henry and Aguirre are scheduled to be sentenced by Judge Wu on August 4. They each face a statutory maximum penalty of 6½ years in prison.
The investigation in this case was conducted by the United States Forest Service, the Glendora Police Department and the Los Angeles County Fire Department.
Release No. 14-065
Antelope Valley Man Pleads Guilty to Federal Charge of Producing Child Pornography Related to Molestation of RelativeRead the Press Release
LOS ANGELES – An Antelope Valley man pleaded guilty this morning to a federal charge of producing child pornography, admitted that he used his camera phone to make videos while he molested a 3-month-old relative.
Robert Dale Schrader, 33, of Littlerock, pleaded guilty to charge before United States District Judge Gary A. Feess, who scheduled a sentencing hearing for August 18.
At sentencing, Schrader faces a mandatory minimum sentence of 15 years in federal prison, and he could be ordered to serve up to 30 years in custody.
According to court documents, authorities began investigating Schrader in January after he communicated via email with an undercover law enforcement officer based in England. In those emails, Schrader sent sexually explicit images of an infant , and data embedded in those images led authorities to Schrader’s Littlerock home.
On January 29, investigators executed a federal search warrant at Schrader’s residence, where they rescued the infant who had been molested. Authorities discovered approximately 200 child pornography images and videos depicting the baby.
The case against Schrader is the result of an investigation by the Child Exploitation Investigations Group, a task force based in Long Beach and spearheaded by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Other agencies actively involved in the group include the Los Angeles Police Department, the FBI and the Los Angeles County Department of Children and Family Services (DCFS).
Release No. 14-064
San Gabriel Valley Teacher Who Pleaded Guilty to Child Exploitation Offenses and Admitted Molestation Sentenced to over 23 YearsRead the Press Release
LOS ANGELES – A former teacher and athletic coach at Royal Oak Middle School in Covina, who pleaded guilty to producing child pornography and using the Internet to entice a minor to engage in sex, was sentenced today to 282 months in federal prison.
John David Boyle, 52, of Glendora, received the 23½-year sentence from United States District Judge Stephen V. Wilson.
At today's hearing, Judge Wilson said Boyle’s crimes were “horrendous” and that “the damage done to the victims is incalculable.”
Boyle, who in addition to teaching was also an athletic coach, pleaded guilty in March to enticement of a minor to engage in criminal sexual activity, admitting that he molested a 14-year-old boy who he met online. Boyle also pleaded guilty to production of child pornography, distribution of child pornography, and possession of child pornography.
Boyle “spent years collecting child pornography from the Internet, traded child pornography over e-mail, participated in sexually explicit conversations in Internet chat rooms in which he enticed underage boys to engage in sexually explicit conduct, and personally molested multiple underage boys,” prosecutors wrote in a sentencing brief filed with the court.
During the course of the investigation, Boyle engaged in online chats with an undercover agent, believing that the undercover agent shared his sexual interest in young boys, according to court documents. Boyle set up an in-person meeting with the undercover agent in his classroom at the school on a Sunday, believing that the purpose of the meeting was to engage in sexual activity while watching child pornography together.
After being confronted by authorities in June 2013, Boyle allowed them to access several of his online accounts. Investigators then discovered that Boyle had used one of his accounts to distribute child pornography. Following Boyle’s arrest, further investigation by agents revealed that Boyle had abused at least one other underage victim in the late 1980s.
“Simply put, defendant is a sexual predator, who has avoided detection by law enforcement for many years and poses an extreme danger not just to the community, but also to the most vulnerable in it – namely, young children,” prosecutors stated in their sentencing brief.
The investigation into Boyle was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the Internet Crimes Against Children Task Force (ICAC).
Release No. 14-063
Former Atascadero Real Estate Developer Pleads Guilty to Defrauding Investors in Central Coast-Based Real Estate Fraud SchemeRead the Press Release
LOS ANGELES – A real estate developer who formerly resided in Atascadero pleaded guilty today to federal fraud and money laundering charges for bilking investors who put money into Central Coast real estate projects.
Kelly Gearhart, 53, who currently resides in Wadsworth, Ohio, pleaded guilty this morning to two counts of wire fraud and one count of money laundering. Gearhart pleaded guilty before United States District Judge Otis D. Wright II.
In a plea agreement filed late yesterday, Gearhart admitted that he knowingly and intentionally made misrepresentations and omissions relating to the Vista Del Hombre real estate development project to induce victims to part with their money.
Gearhart was initially charged in a 16-count indictment returned by a federal grand jury in 2012. The indictment alleged that Gearhart told investors that their investments – which he called loans and promised would be paid back with interest – were secured by specific lots. However, Gearhart admitted in court today that he sold lots associated with the Vista Del Hombre real estate development project, even though those lots were being used to secure others’ loans. Gearhart further admitted that he used those same lots to obtain bank financing. The plea agreement allows prosecutors to prove at sentencing that Gearhart made additional misrepresentations as part of the scheme.
Gearhart is scheduled to be sentenced by Judge Wright on December 29. The wire fraud charges each carry a statutory maximum penalty of 20 years in federal prison. The money laundering count carries a statutory maximum penalty of 10 years in federal prison. During this morning’s court hearing, prosecutors said they intend to seek a sentence of 135 months in federal prison, while Gearhart’s attorney said he will not seek a sentence below 57 months. However, Judge Wright is free to sentence Gearhart up to the statutory maximum of 50 years in federal prison.
The plea agreement permits prosecutors to seek restitution for victims of the Vista Del Hombre real estate development project, as well as any other project in which there was fraud, a figure that may be as high as $20 million. It is unclear if there is any money available to repay victims.
The case against Gearhart is related to a case against James Hurst Miller Jr., the former president of the Atascadero-based Hurst Financial Corporation. Miller, who previously pleaded guilty to fraud and money laundering charges, is scheduled to be sentenced by Judge Wright on September 8.
The cases against Gearhart and Miller are the result of an investigation by the Federal Bureau of Investigation and IRS - Criminal Investigation.
Release No. 14-061
15 Charged in ‘Bustout’ Scheme That Cost Victim Banks $15+ MillionRead the Press Release
LOS ANGELES – Authorities this morning arrested 12 people and are seeking the whereabouts of three others who are charged in a large-scale, bank account “bustout” scheme that victimized major financial institutions across Southern California, costing banks at least $15 million.
This morning’s arrests are the result of “Operation Check Kkang,” a multi-agency investigation into a bustout scheme that victimized financial institutions such as Bank of America, JPMorgan Chase, U.S. Bank and Wells Fargo Bank. Check Kkang refers to a Korean term that describes check kiting.
The investigation was jointly conducted by special agents with the Federal Bureau of Investigation and IRS - Criminal Investigation, and officers with the Pomona Police Department. Other law enforcement agencies provided substantial assistance.
Those arrested this morning are among 15 defendants named in a 26-count indictment that describes a bustout scheme in which the members of the conspiracy deposited bogus checks and immediately withdrew funds from the account. Once the financial institution realized that the check is fraudulent and dishonored the deposit, the account was “busted.”
The indictment, which was returned by a federal grand jury on May 7 and unsealed this morning, describes a scheme that allegedly started in February 2010 and continued until last October 2013. Those named in the indictment are:
Jae Ho Chung, 44, of Los Angeles (Westwood);
Michael Yeon Cho, 30, of Pacific Palisades;
Roger Lee, 48, of Cerritos;
Kun Young Lee, 51, of Los Angeles (Koreatown);
Jeong Gu Kim, 53, of Los Angeles;
Hak Soo Shim, 40, of Newport Beach;
Renling “Mark Ling” Chao, 50, of Los Angeles (Brentwood);
Il Hwan Jae, 60, of Los Angeles (Koreatown);
Erick Palafox, 28, of ; of Lynwood
Jae Kwon An, 42, of Riverside;
Joonie Yeon Cho, 42, of Los Angeles (Koreatown);
Eun Ah Kim, aka Eun Ae Kim, 39, of Los Angeles;
Hye Ran Lee, 30, of Irvine;
Hee Jung Lee, 41, of Riverside; and
Woo Chang Lim, 36, of Ventura.
Twelve of the defendants were arrested today. Jae Ho Chung, Roger Lee, and Hye Ran Lee are considered fugitives. Those taken into custody are expected to be arraigned on the indictment this afternoon. The arraignments will take place in federal courthouses in Los Angeles, Riverside and Santa Ana, with locations for specific hearings to be determined by where an individual defendant was arrested.According to the indictment, Chung and Cho were “processors” who fabricated or hired others to make fictitious checks for the purpose of conducting bustouts. The bogus checks ranged in amounts from $2,300 to more than $28,000.
Defendants R. Lee, K.Y. Lee, J.G. Kim, and Shim were “brokers,” according to the indictment that accuses them of soliciting people with legitimate bank accounts who would lend their accounts to be busted-out in exchange for a fee. The brokers allegedly found bank customers by placing advertisements in Korean-language newspapers,
Defendants Chao, Jae, Palafox, An, J.Y. Cho, E.A. Kim, H.R. Lee, H.J, Lee, and Lim were “runners” or “washers” who allegedly deposited fictitious checks into, and then withdraw funds from, the account to be busted-out. Runners and washers used funds from the bustouts to purchase goods, services and gift cards, according to the indictment.
All 15 defendants are charged with conspiracy to commit bank fraud and bank fraud. The indictment also contains an asset forfeiture allegation in which the government will seek to forfeit any property derived from the proceeds of the scheme in the event of any defendant’s conviction. If convicted of the two counts in the indictment, each defendant would face a statutory maximum penalty of 60 years in federal prison.
The Check Kkang investigation was conducted jointly by the FBI; IRS - Criminal Investigation, and the Pomona Police Department.
The following agencies provided assistance: U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the United States Secret Service, the Los Angeles Police Department, the United States Postal Inspection Service, the Social Security Administration, the Los Angeles County Sheriff’s Department, the Ventura County Sheriff’s Department, the Riverside County Sheriff’s Department, the Glendale Police Department, the Burbank Police Department, the Beverly Hills Police Department, the Santa Ana Police Department, and the Los Angeles County Department of Child and Family Services.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
Release No. 14-062
Men Convicted in Murder of Coast Guard Officer Sentenced to Prison; Pilot of Drug Smuggling Boat Receives Life Without ParoleRead the Press Release
LOS ANGELES – Two Mexican nationals who were found guilty of federal charges stemming from an incident in which a Coast Guard officer was killed when his vessel was rammed by a “panga” boat were sentenced today.
The operator of the panga boat was ordered to spend the rest of his life in federal custody after a jury earlier this year convicted him of second-degree murder in the death of Senior Chief Petty Officer Terrell Horne III, who died in late 2012 while his boat was attempting to interdict the panga boat near Santa Cruz Island in the Channel Islands National Park.
The two men sentenced today are:
Jose Mejia-Leyva, 42, of Ensenada, who was sentenced to life without parole for his murder conviction, as well as two counts of failure to heave to and four counts of assaulting federal officers with a deadly and dangerous weapon; and
Manuel Beltran-Higuera, 44, of Ensenada, who was sentenced to 10 years in federal prison after a jury found him guilty of two counts of failure to heave to (as an accessory after the fact in one count and as an aider and abettor in the second count) and in the four counts of assault (as an accessory after the fact).
Both defendants were sentenced by United States District Judge Gary A. Feess. Senior Chief Petty Officer Horne, a 34-year-old Redondo Beach resident, was the first Coast Guard officer murdered while in the line of duty by smugglers since 1927.
Senior Chief Petty Officer Horne was killed during a law enforcement operation that began late on December 1, 2012 when a Coast Guard airplane identified a suspicious boat about one mile off Santa Cruz Island. After Coast Guard personnel on the Coast Guard cutter Halibut boarded the boat, the airplane identified another suspicious vessel nearby in Smuggler’s Cove on Santa Cruz Island. The airplane reported that the suspicious vessel in Smuggler’s Cove was an approximately 30-foot-long open bowed fishing vessel, commonly referred to as a panga boat.
Coast Guard officers aboard the Halibut launched the Halibut’s small, inflatable boat with four officers aboard. The Coast Guard small boat crew located the panga boat approximately 200 yards from the eastern shore of Santa Cruz Island at approximately 1:20 a.m. on December 2. As the Coast Guard’s small boat approached the panga boat, the officers activated the boat’s police lights and identified themselves as law enforcement. The driver of the panga boat then throttled the engines and steered the panga boat toward the small boat. As the panga boat rapidly approached the Coast Guard’s small boat, the officer at the helm attempted to avoid a collision by steering the small boat out of the path of the panga boat.
Despite these efforts, the panga boat rammed into the Coast Guard’s small boat, ejecting Senior Chief Petty Officer Horne and another officer into the water. Senior Chief Petty Officer Horne was struck by a propeller in the head and sustained a fatal injury. The other officer sustained a laceration to his knee.After striking the Coast Guard’s small boat, the panga boat crew fled the scene. Coast Guard aircraft followed the panga boat until it was intercepted by a Coast Guard vessel about four hours later as it approached the Mexico-United States border. Mejia-Leyva and Beltran-Higuera were arrested at this point.
Prosecutors argued for the life sentence for Mejia-Leyva, noting in court papers that he was previously convicted in the United States of smuggling aliens and was twice convicted in Mexico of narcotics offenses. “The seriousness of defendant’s conduct and his criminal history demonstrates that he is an established recidivist whose pattern of smuggling and narcotics trafficking only aggravates the seriousness of the crime of murder,” prosecutors wrote of Mejia-Leyva.
The investigation in this case was conducted by the Coast Guard Investigative Service (CGIS) with the assistance of the Los Angeles Border Enforcement Security Task Force (LA BEST) in San Pedro.
Release No. 14-060
Longtime Pimp Sentenced to 10 Years in Federal Prison for Taking SoCal Woman to Las Vegas to Work as ProstituteRead the Press Release
SANTA ANA, California – A man previously convicted and sentenced to 14 years in federal prison for transporting minors to work as prostitutes today received what is effectively another 14-year sentence for engaging in the same conduct involving a 19-year-old victim almost immediately after he was released from custody in the first case.
William Earl Flavors, aka “Andre,” 40, who most recently resided in Long Beach, was sentenced this morning to 10 years in federal prison. United States District Judge Josephine L. Staton ordered that this sentence run consecutive to a four-year prison term he received last year based on related conduct for violating his supervised release on his prior federal conviction, meaning that Flavors has been ordered to serve 14 years in prison for acting as a pimp for girls in 2012.
At today’s sentencing hearing, Judge Staton discussed a letter that Flavors wrote to the Court in which he blamed the judicial system and the probation department for his current “predicament” and that he “not given a fair chance.” Judge Staton noted “beating women and forcing them into prostitution is not a ‘predicament,’ but a choice – a choice that defendant made.”
Flavors pleaded guilty in December to transportation in interstate commerce for purposes of prostitution. Flavors specifically admitted that he transported his victims between Long Beach to Las Vegas, forced or coerced them to work as prostitutes in Las Vegas, and used physical abuse and threats of additional physical abuse to make one of his victims work for him as a prostitute.
“In order to coerce and force [the victim] into continuing to engage in prostitution, defendant physically abused her, threatened her with additional physical abuse, and did not allow her to leave him,” according to a sentencing memo filed by prosecutors. The sentencing memo also details the physical abuse defendant carried out on his victim, including “beating her with his fists and on one occasion burning her legs with a lit cigarette.”
Today’s sentencing concludes the second case in which Flavors has been convicted in federal court of trafficking women across state lines and forcing them to work as prostitutes. In December 1999, he pleaded guilty to transportation of a
15-year-old girl and a 17-year-old girl in interstate commerce for prostitution. In addition to transporting these minors from Washington to California, Flavors beat, raped and forced these girls into prostitution on his behalf, according to court documents.In the 1999 case, Flavors’ “depravity towards his victims included, among other acts: breaking one victim’s nose from beating her; and beating another victim with clothes hangers, burning her with curling irons, and forcing her to drink cups of urine and cigarette butts,” prosecutors wrote in a sentencing memo.
The case against Flavors was investigated by Federal Bureau of Investigation.Release No. 14-059
Importers of Fake Brand Name Goods That Were Illegally Counterfeited in China Are Sentenced to Federal PrisonRead the Press Release
LOS ANGELES – A San Gabriel Valley businessman who coordinated the importation of 11 containers of counterfeit apparel – including Nike, Gucci and Coach products worth more than $2.3 million – was sentenced today to 31 months in federal prison.
Today’s sentencing is the second in the past two weeks in which a smuggling operation resulted in a federal prison term. Last week, a Glendale man who brought bogus AMG wheels into the country received a one-year prison sentence.
Both defendants previously pleaded guilty to trafficking in counterfeit goods.
In today’s sentencing, Kevin “Peter” Wang, 54, of Rosemead, was sentenced to 31 months by United States District Judge John A. Kronstadt. In addition to the prison term, Judge Kronstadt ordered Wang to serve an additional six months of home detention and to pay a $10,000 fine and $50,000 in restitution.
Wang helped Chinese exporters bring counterfeit goods – including fake Nike shoes (labeled as “garment hangers”); counterfeit Coach, Gucci, and Louis Vuitton handbags (labeled as “toilet paper”); and bogus NFL, NBA, and NHL jerseys – into the United States. According to court documents, from 2008 to 2012, the counterfeit goods were smuggled in shipping containers through the ports of Los Angeles and Long Beach.
In the second case that led to a prison term, Hamlet Ayvazyan, 37, of Glendale, was sentenced on Monday, April 28, to one year and one day in federal prison. Ayvazyan was sentenced by United States District Judge Margaret M. Morrow, who also ordered the defendant to pay a $4,000 fine.
Ayvazyan, the owner of Speedvision Motorsport in Glendale, imported wheel rims from a Chinese business known as "Shandong Chiping Xinfa Aluminous Product Co., Ltd.," which had offered wheels for brands that purported to be “Audi,” “BMW,” “Mercedes Benz,” “Land Rover,” “Porsche” and “Cadillac."
U.S. Customs and Border Protection officials discovered Ayvazyan's imports in January 2012 when they inspected an ocean container that contained 430 wheels that bore counterfeit Mercedes Benz “AMG” logos, with Ayvazyan and Speedvision as consignee. Undercover agents with Homeland Security Investigations posed as customers and met with Ayvazyan at Speedvision, where Ayvazyan sold to the agents a wheel with an “AMG” logo and placed a center cap “Mercedes” decal on the wheel.
In February 2012, agents executed a search warrant at Speedvision and found 189 additional wheels bearing counterfeit “AMG” marks. Although Ayvazyan claimed that the goods were “replicas,” the marks on the wheels were unauthorized copies of the registered “AMG” trademark. Ayvazyan also kept 2,100 adhesive logos and wheel center caps that bore marks such as “Mercedes Benz” and “BMW.”
Ayvazyan paid approximately $100 for each wheel and sold them for $200, which was substantially less than the manufacturer’s price for legitimate wheels, which was as much as $2,000.
The cases against Wang and Ayvazyan were investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).
“Trafficking in counterfeit merchandise is a multi-billion dollar global business that robs governments of vital revenues and the industry of its due profits,” said Claude Arnold, special agent in charge of HSI Los Angeles. “HSI is committed to dismantling these schemes because the profits from such illegal ventures often go to fund more criminal enterprises.”
Release No. 14-058
Top Players in South L.A. Gang Controlled by Incarcerated Mexican Mafia Member Plead Guilty to Federal Racketeering ChargesRead the Press Release
LOS ANGELES – The “shotcaller” of a South Los Angeles street gang pleaded guilty today to federal racketeering and drug trafficking charges for his role in orchestrating the day-to-day activities of the gang that is controlled by an incarcerated member of the Mexican Mafia.
Today’s guilty pleas by Manuel Valencia come one week after the daughter of the Mexican Mafia member admitted to acting as her father’s voice to convey orders to the Harpys street gang.
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 controlled by Mexican Mafia member Danny Roman, who is serving a life-without-parole sentence at Pelican Bay State Prison and was not charged in the federal RICO case.
Roman’s daughter, Vianna Roman, 37, of Los Angeles, pleaded guilty on May 1 to racketeering, narcotics and weapons offenses pursuant to a plea agreement that contemplates a sentence of approximately 20 years in federal prison but could lead to a life prison term if the sentencing judge determines this is appropriate. When she pleaded guilty, Vianna Roman admitted that she acted as a conduit for her father’s orders as he exercised control over the Harpys gang.
The shotcaller of the Harpys gang – the man who imposed the orders from Danny Roman – pleaded guilty today to violating the federal RICO statute and to engaging in a continuing criminal enterprise connected to drug trafficking. Manuel Valencia, 38, of Walnut, admitted that he oversaw and participated in gang activities, which included collecting “taxes” from drug dealers who were allowed to operate in gang territory, retaliating against people who ran afoul of the gang, and engaging in drug trafficking. Valencia, who as a result of his guilty pleas also faces a maximum of life in federal prison, agreed in his plea agreement to serve a 27-year prison term.
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 South Los Angeles 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 pass 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.
Vianna Roman and Valencia pleaded guilty before United States District Judge R. Gary Klausner, who is scheduled to sentence Roman on July 28 and Valencia on September 8.
With the guilty pleas of Vianna Roman and Valencia – and two others that were entered on Monday – a total of 24 defendants charged two years ago in a federal racketeering indictment have now pleaded guilty. Out of the 29 defendants named in the indictment, one is still pending trial, three 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 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.
Two other defendants, who were scheduled to go on trial in two weeks, pleaded guilty on Monday.
Jaime Montano, 34, of Los Angeles, who is linked to the East Side Trece gang, pleaded guilty to two racketeering offenses that could send him to prison for as long as 30 years. In his plea agreement, Montano admitted leading a conspiracy to murder a man who testified at trial against another gang member.
Edgar Gonzalez, 30, also linked to the East Side Trece gang, pleaded guilty engaging in a racketeering conspiracy, admitting that he conducted Harpys business and represented Danny Roman while incarcerated in an Arizona state prison. Gonzalez faces up to 20 years in federal prison.
Montano and Gonzalez are scheduled to be sentenced by Judge Klausner, respectively, on July 28 and August 4.
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. 14-055
SoCal Immigration Consultants Sentenced to Prison in Scheme That Filed Bogus Asylum Applications for Hundreds of Chinese AliensRead the Press Release
SANTA ANA, California – The owner of a San Gabriel immigration consulting business and one of his employees have been sentenced to federal prison for participating in a long-running scheme to prepare and file fraudulent asylum applications that made phony claims of religious persecution on behalf of hundreds of Chinese nationals.
Haoren Ma, 50, of San Gabriel, the owner of New Arrival Immigration Service, was sentenced April 28 to 4½ years in federal prison after pleading guilty to conspiracy, immigration document fraud and aggravated identity theft. Ma’s employee, Minghan Dong, 49, of San Gabriel, was sentenced on Monday, May 5 to one year and one day in prison for conspiracy to commit immigration document fraud. Both men were sentenced by United States District Judge Cormac J. Carney.
According to court documents, Ma and Dong charged as much as $6,500 to prepare and file fraudulent asylum applications on behalf of Chinese nationals. Ma and Dong falsely claimed that their clients fled China after being persecuted for their Christian beliefs, even in situations where the clients said they were Buddhists.
Federal authorities founds that many of the asylum applications prepared by the defendants contained nearly identical accounts of purported persecution, including descriptions of underground church meetings that led to arrests and torture by Chinese authorities. As part of the scheme, Ma and Dong provided their clients with detailed written materials and audio tapes on Christianity to help them prepare for their asylum interviews.
Suspicions about New Arrival Immigration Service first arose in January 2009 when U.S. Customs and Border Protection officers intercepted a package containing a stuffed animal that contained five fraudulent Chinese passports. The package was being shipped to an address used as a mail drop by New Arrival Immigration Service.
During a search of New Arrival Immigration Service and related offices, investigators seized stacks of partially completed asylum applications, counterfeit Chinese consular and embassy embossing seals, financial records and counterfeit identity documents. Ma and Dong were arrested in September 2011 by special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) following the execution of the federal search warrants.
“As this sentence makes clear, those who corrupt the integrity of our nation’s legal immigration system by exploiting our country’s generous asylum laws must understand there are serious consequences for those actions,” said Claude Arnold, special agent in charge for HSI Los Angeles. “As a country, we’re committed to providing refuge for those fleeing persecution, but there will be no such protections for people who manipulate this system for profit and put our nation’s security at risk in the process.”
As the investigation unfolded, HSI worked closely with U.S. Citizenship and Immigration Service’s (USCIS) Los Angeles Asylum Office in Anaheim to identify potentially fraudulent asylum applications submitted by the defendants.
“We are very pleased with this outcome,” said David Radel, Acting L.A. Asylum Office Director with USCIS. “It is an excellent example of federal agencies working together to combat fraud and maintain the integrity of our immigration system. USCIS is committed to identifying those who may have illegally obtained asylum through this fraudulent scheme and providing this information to our investigative colleagues.”
Based upon queries of databases maintained by the immigration courts, HSI investigators linked the defendants to more than 800 asylum applications filed since 2000, making it one of the largest asylum fraud cases uncovered in the Los Angeles area in recent years.
Release No. 14-057
Inland Empire Couple Pleads Guilty to Federal Charges Involving Sex Trafficking of A Child Who Worked as Prostitute in HemetRead the Press Release
RIVERSIDE, California – Two Inland Empire residents have pleaded guilty to federal sex trafficking charging, admitting that they forced a 14-year-old girl to work as a prostitute in 2012.
Kawaum Marquez Scott, 24, of Quail Valley, and Nekeyia Necole Weatherspoon, who also used the name “Keey Bee,” 22, of Perris, pleaded guilty yesterday in United States District Court.
Scott pleaded guilty to two counts of sex trafficking of a child, and Weatherspoon pleaded guilty to one count of conspiracy to engage in child sex trafficking
According to court documents, Scott and Weatherspoon forced the 14-year-old victim into prostitution. The defendants, who took photos of the victims and used the pictures to advertise services on the Internet, drove the victim to destinations in Hemet to engage in prostitution, made her use an alias, and advised her to tell male customers that she was 18 years old. Scott and Weatherspoon took all the money paid to the girl for the sex acts.
According to an affidavit filed in this case, on one occasion in October 2012, Scott and Weatherspoon brought the victim to a motel in Hemet, where she engaged in sex with multiple men over a two-day period, and received approximately $2,500 in payment, all of which went to the defendants.
In plea agreements filed in court, prosecutors and the defense agreed that Scott should receive a sentence of 210 months and Weatherspoon should be sentenced to
between 84 and 168 months in federal prisonUnited States District Judge Virginia A. Phillips will review a presentence report prior to accepting the agreed-upon sentences in this case. A sentencing hearing is scheduled for July 21.
The investigation in this case was conducted by the Riverside County Sheriff’s Department and the Federal Bureau of Investigation, which are members of the Inland Child Exploitation Task Force (ICEP), a multi-agency effort that investigates matters of child exploitation, primarily the sexual trafficking of minors.
Release No. 14-056
O.C. Man Whose Company Provided Military Support Services in Iraq Pleads Guilty to Tax Offenses for Failing to Report Millions in IncomeRead the Press Release
SANTA ANA, California – The owner of a Huntington Beach-based military contractor has pleaded guilty to federal tax charges for failing to report to the Internal Revenue Service millions of dollars his company received for providing services to the military at Baghdad International Airport.
Nadim “Nick” Saifan Jr., 48, who resides in Huntington Beach, pleaded guilty late yesterday to two counts of attempted tax evasion. Saifan pleaded guilty to two of the five counts contained in an indictment returned by a federal grand jury in 2011.
Saifan specifically pleaded guilty to substantially underreporting income on his company’s 2005 corporate tax return and his personal tax return for 2006.
Saifan was the owner and operator of Defense Logistical Support & Services Corporation (DLSS), which provided services to the military and some civilian companies in Iraq. From August 2004 through October 2007, DLSS received nearly $16 million from the United States military alone for services in Iraq, according to court documents that state Saifan reported only a small fraction of this income on DLSS’s corporate tax returns filed with the IRS.
In addition to failing to report millions of dollars of corporate income, Saifan also used DLSS funds to pay for personal expenses without reporting this money as personal income. Federal prosecutors alleged in court papers that defendant used corporate money to make approximately $880,000 in down payments on real estate and approximately $292,000 in payments towards vehicles that included a Ferrari and a Rolls-Royce.
Prosecutors preparing for trial wrote that Saifan owes at least $4.5 million in unpaid corporate and personal taxes for the several years charged in the indictment, and that he caused a total tax loss to the government of at least $7 million.
Saifan pleaded guilty before United States District Judge Cormac J. Carney, who is scheduled to sentence the defendant on August 18. At sentencing, Saifan will face a statutory maximum sentence of 10 years in federal prison.
After Saifan pleaded guilty yesterday, Judge Carney revoked Saifan’s bond and remanded him into federal custody pending his sentencing.
The case against Saifan was investigated by the Defense Criminal Investigative Service and IRS – Criminal Investigation.
Release No. 14-054
Desert Hot Springs Man Who Planted Pipe Bombs Near Ex-Girlfriend’s Residence in Palm Springs Pleads Guilty to Explosives ChargeRead the Press Release
RIVERSIDE, California – A man who left pipe bombs in a residential neighborhood in Palm Springs near the residence of an ex-girlfriend – and who became a fugitive after escaping from custody in a related case – pleaded guilty today to a federal charge of possession of an unregistered destructive device.
Edward Allen Costa, 49, who resided in Desert Hot Springs but was a fugitive for a time last year, pleaded guilty to the felony charge before United States District Judge Virginia A. Phillips.
Costa pleaded guilty in 2012 to being a felon in possession of a firearm. He was sentenced to a year in prison and was finishing his sentence at a halfway house in Rubidoux when he walked away from the facility in August 2013. The fugitive was taken into custody in November by the Banning Police Department and the FBI.
While a fugitive last year, Costa was indicted for possessing six pipes bombs that were left in a Palm Springs neighborhood from May 8 through May 12 of 2012. Prior to being indicted for the pipe bombs, Costa was charged with being a convicted felon in possession of a .357-magnum revolver, as well as 106 rounds of ammunition.
The Federal Bureau of Investigation and the Bureau of Alcohol, Tobacco, Firearms, and Explosives investigated the case involving the pipe bombs. The Palm Springs Police Department and the Riverside County Sheriff’s Department provided substantial assistance.
As a result of today’s guilty plea, Costa faces a statutory maximum penalty of 10 years in federal prison. Judge Phillips is scheduled to sentence Costa on July 14.
Release No. 14-053a
FBI Arrests Moorpark Man in ‘Sextortion’ Case That Targeted Fans of Teen Music Acts Such as One Direction and Justin BieberRead the Press Release
LOS ANGELES – A Moorpark man accused of using social networking websites to trick and extort more than a dozen girls and boys into sending him naked photos and videos was arrested today on federal child pornography charges.
Jeremy Brendan Sears, 23, was arrested this morning without incident by the Ventura Sexual Assault Felony Enforcement Task Force (the Ventura S.A.F.E. Team), which is made up of agents and officers with the FBI and Ventura County Sheriff's Office.
Sears, who was named in a two-count criminal complaint filed yesterday, made his initial appearance this afternoon in United States District Court.
According to the affidavit in support of the complaint, Sears approached many 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 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.
On other occasions, 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. In one case, Sears gained access to a victim’s Facebook account and posted naked photos of her on her own profile page, where they could be seen by her friends and schoolmates. Once Sears had photos of a victim, he commonly used the threat of further harassment and distribution to extort more images.
The federal criminal complaint unsealed at Sears’ court appearance this afternoon charges him with two counts of producing child pornography. During today’s hearing, United States Magistrate Judge Alka Sagar ordered Sears detained (held without bond) and scheduled an arraignment for May 20. Sears was not asked to enter a plea.
According to the affidavit, Sears is also the subject of an ongoing investigation by the Ventura County Sheriff’s Office. The Ventura County District Attorney’s Office last year charged Sears for targeting a Ventura County teenage boy by claiming to be a teenage girl, encouraging the boy to send him naked images, and then insisting that they meet in a park so that he could take the boy to a non-existent girl. Sears was arrested and released on bail in that case in August, but investigators recently determined that he continued to solicit and receive naked images from at least one teenager after that time, according to the affidavit.
Investigators believe that Sears victimized several dozen teenagers — many in Southern California, and some are believed to be overseas — but authorities have not identified all of the victims. Anyone who believes they may have been a victim in this case should contact the FBI in Ventura at (805) 642-3995 or the Ventura County Sheriff's Department at (805) 654-9511.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
The charge of producing child pornography carries a mandatory minimum sentence of 15 years in federal prison and a statutory maximum penalty of 30 years.
The investigation was conducted by the Federal Bureau of Investigation and the Ventura County Sheriff’s Office.
Release No. 14-053
German Company Ordered to Pay $1.25 Million After Failing to Report Hazardous Condition on A Cargo Ship in the Port of Long BeachRead the Press Release
LOS ANGELES – A German company has been sentenced to pay a $1 million fine and another $250,000 to support environmental causes after pleading guilty to two felony environmental charges related to a cargo ship that entered the Port of Long Beach last year with an open crack in its hull that may have caused oil to leak into the port.
The company – Herm. Dauelsberg GmbH & Co. KG – pleaded guilty yesterday morning and was sentenced immediately by United States District Judge George H. Wu. The company pleaded guilty to a felony count of failing to maintain accurate records relating to the overboard disposal of fuel oil and to a felony count of failing to report a hazardous condition aboard the M/V Bellavia to the United States Coast Guard.
This case was initiated after four members of the M/V Bellavia crew provided significant information to the United States Coast Guard, including pictures and videos of discharges from a fuel tank into the ocean. Using a federal law that allows a federal judge to award up to half of any criminal fine to “whistleblowers” who provide information concerning certain environmental crimes aboard vessels, Judge Wu ordered that the four crewmembers receive a total of $500,000 from the fine amount.
The M/V Bellavia is a 960-foot-long, Panamax-size ship that normally transports cargo between European, Central American and North American ports. In 2011, the M/V Bellavia sustained cracks in the ship’s hull while transiting through the Panama Canal. On an unknown number of occasions over the past three years, the hull cracks opened to such an extent that seawater could enter one of the ship’s fuel tanks. As a result of the damage, bunker fuel – a heavy, thick fuel oil – could have been released from the fuel tank into the sea.
Herm. Dauelsberg admitted that the M/V Bellavia hit the side of the Panama Canal again last September and sustained a crack that passed through the ship’s hull into a fuel tank. The company also admitted that, after sustaining the crack, the ship’s crew used one of the ship’s pumps to discharge nearly 120,000 gallons of oil-contaminated seawater from the ship’s fuel tank directly into the ocean. That discharge was not done using the ship’s oil-water separator, which is supposed to be used to filter oil out of water that is pumped overboard. The ship’s crew then failed to properly record the discharge in the ship’s records and did not disclose it to the Coast Guard, both of which are required by federal law, when the ship arrived in the Port of Long Beach in October 2013. In addition, the company admitted that it failed to notify the Coast Guard about the hazardous condition aboard the M/V Bellavia, namely, the crack that passed through the ship’s hull into the fuel tank.
After accepting the guilty pleas, Judge Wu sentenced the company to the statutory maximum fine of $1 million and ordered the company to make an additional community service payment of $250,000 to the Channel Islands Natural Resources Protection Fund, which is administered by the National Park Foundation. The community service payment will be used to fund environmental projects, enforcement efforts, and initiatives designed for the enforcement of environmental and public safety regulations.
This case is the result of an investigation by the United States Coast Guard’s Marine Safety Office, the Coast Guard Investigative Service, and the United States Environmental Protection Agency’s Criminal Investigation Division.
Release No. 14-052
Two San Gabriel Valley Men Who Participated in ‘Black Market Peso Exchange’ That Moved Money Out of U.S. Sentenced to Federal PrisonRead the Press Release
LOS ANGELES – Two men and the South El Monte import-export company they used to move millions of dollars linked to illegal activity from the United States to Mexico were sentenced today for operating an unlicensed money transmitting business. The three defendants received large sums of cash – often hidden in duffel bags – and they worked with “peso brokers” in Mexico to illegally convert the dollars to pesos.
The three defendants sentenced today by United States District Judge John A. Kronstadt are:Peace & Rich Import, Inc., a wholesale distributor of silk flowers and other goods, which was sentenced to pay a $75,000 fine and to be on probation for four years with stringent conditions;
Chaur Hwan “Kenny” Lin, 67, of Temple City, the president and co-owner of Peace & Rich, who was sentenced to one year in federal prison and ordered to pay a $6,000 fine; and
Antonio Pareja, 54, of San Gabriel, the manager of Peace & Rich, who was sentenced to one year and one day in prison.
Judge Kronstadt also ordered Peace & Rich and Lin to forfeit more than $2 million of funds related to the crime.
Lin and Pareja ran Peace & Rich as an informal money transfer system that was involved in the transfer of money outside of the conventional financial institutions system. An investigation by the Drug Enforcement Administration in Los Angeles determined that Lin and Pareja used Peace & Rich to receive large amounts of cash derived from illegal activity. The cash – as much as hundreds of thousands of dollars – was typically delivered by couriers working in conjunction with a peso broker in Mexico.
In a Black Market Peso Exchange scheme, a peso broker works with an individual engaged in illegal activity, such as a drug trafficker, who has United States currency in the United States that he needs to bring to Mexico and convert to pesos. The peso broker finds business owners in Mexico who buy goods from vendors in the United States, such as Peace & Rich, and need dollars to pay for those goods. The peso broker arranges for the illegally obtained dollars in the United States to be delivered to the United States-based vendors, such as Peace & Rich, where they are used to pay for the goods purchased by the Mexico based customers. Once the goods are shipped to Mexico and sold by the Mexico based business owner for pesos, the pesos are turned over to the peso broker, who then pays the drug trafficker in Mexico.
Peace & Rich took in large amounts of cash and conducted transactions without being registered as a money transmitting business and without filing Currency Transaction Reports (CTRs), which are required when a business accepts cash payments of more than $10,000. Lin and Pareja disbursed cash as directed by a peso broker in Mexico to couriers for delivery to other United States based businesses on behalf of their Mexico based customers. Additionally, Lin “structured” cash deposits – or, made a series of deposits that were less than $10,000 – to avoid the filing of CTRs by the financial institutions where the deposits were made.
Release No. 14-050
Gang Member Found Guilty of Supplying Firearms to Armenian PowerRead the Press Release
LOS ANGELES – A long-time street gang member and associate of the Armenian Power has been convicted at trial for his role in supplying firearms to a leader of the organized crime group.
Miguel Ramirez, 38, of Los Angeles, was found guilty yesterday afternoon of possession of a firearm by a convicted felon.
According to the evidence presented during a brief trial, Ramirez sold and distributed at least three firearms, including a loaded Intratec model Tec-22 semi-automatic with a threaded barrel, a large-capacity magazine and a laser sight. These firearms were discovered by officers on November 23, 2009.
Ramirez sold and distributed these firearms to Mher “Capone” Darbinyan, a powerful Armenian Power gang leader, who was himself convicted at trial last week for crimes including racketeering conspiracy, extortion, bank fraud and firearms offenses (see: http://www.justice.gov/usao/cac/Pressroom/2014/047.html). The evidence showed that Ramirez had repeatedly offered Darbinyan other firearms and ammunition, including expanding ammunition designed for use on human targets
Ramirez is scheduled to be sentenced by United States District Judge R. Gary Klausner on July 14, at which time he faces a statutory maximum sentence of 10 years in federal prison.
Out of the 90 defendants charged in the two indictments targeting Armenian Power, 86 have now been convicted. One defendant is scheduled to go on trial on July 15, two defendants are fugitives and prosecutors dismissed charges against one defendant.
The case was investigated by the Eurasian Organized Crime Task Force, which is composed of the FBI, the Glendale Police Department, the Los Angeles Police Department, the Burbank Police Department, the Los Angeles Sheriff’s Department, IRS – Criminal Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the U.S. Secret Service. The Huntington Beach Police Department and the Beverly Hills Police Department provided assistance.
Release No. 14-051
Former Senior Partner at KPMG Who Provided Confidential Client Information That Was Used to Make Stock Trades That Generated More Than $1.25 Million in Illegal Profits Sentenced to Federal PrisonRead the Press Release
LOS ANGELES -- A former senior partner at the accounting firm KPMG LLP was sentenced today to 14 months in federal prison for his involvement in an insider trading scheme in which he provided confidential information about publicly traded clients to a man who paid him with cash bribes and luxury items.
Scott London, 51, of Agoura Hills, who oversaw KPMG’s audit practice for the Pacific Southwest until he was terminated last year after 29 years at the firm, was sentenced by United States District Judge George H. Wu.
In addition to the prison term, which London was ordered to begin serving on July 18, Judge Wu ordered him to pay a $100,000 fine.
London pleaded guilty last July to one count of securities fraud through insider trading.
According to court documents, London provided confidential information about KPMG clients to Bryan Shaw, a close friend of his, over a period of several years. Shaw then used this information to make highly profitable securities trades that allowed Shaw to realize more than $1.27 million in illegal proceeds.
London was a senior partner at KPMG who supervised more than 500 accounting professionals at the firm and personally handled audits for major KPMG clients, including Herbalife Ltd. and Skechers USA, Inc. As a result of his position, London had access to confidential information about KPMGs clients before that information was disclosed to the public. In his plea agreement, London admitted that he disclosed inside information to Shaw regarding at least 14 separate earnings announcements or acquisitions for KPMG clients.
Shaw admitted that he gave London approximately $70,000 in cash and luxury items in exchange for the inside information about KPMG’s clients. According to court documents, Shaw also said that he typically arranged to meet London on a side street near Shaws business so that he could give London bags containing $100 bills wrapped in $10,000 bundles. Shaw also said that he gave London a $12,000 Rolex watch, as well as jewelry and concert tickets, in exchange for the confidential information.
On two occasions in early 2013, acting at the direction of the Federal Bureau of Investigation, Shaw met with London and gave him cash as supposed payment for confidential information about KPMG clients, according to court documents. In the first instance, London met with Shaw on a street corner in Encino and accepted a bag with $5,000 in cash as payment for confidential information about Herbalife’s earnings announcement in February 2013. London later met with Shaw in a parking lot in Woodland Hills and accepted another bag with $5,000 in cash, which was supposedly London’s share of the illegal profits from trades based on confidential information about Decker’s February 2013 earnings announcement.
Shaw pleaded guilty to a conspiracy charge in May 2013. Judge Wu is scheduled to sentence Shaw on May 19.
The criminal investigation into the insider trading scheme was conducted by the Federal Bureau of Investigation.
In a separate action filed last year, the U.S. Securities and Exchange Commission filed a civil lawsuit against London and Shaw (see: http://www.sec.gov/litigation/litreleases/2013/lr22670.htm).
Release No. 14-048
Bay Area Man Pleads Guilty to Securities Fraud by Insider Trading in the Walt Disney Company’s Acquisition of Marvel Entertainment in August 2009Read the Press Release
LOS ANGELES – A San Francisco man who made approximately $192,000 in profits by purchasing Marvel Entertainment, Inc. stock options immediately prior to its acquisition by The Walt Disney Company in August 2009 pleaded guilty this morning to a federal securities fraud charge.
Toby G. Scammell, 29, pleaded guilty today to one count of securities fraud before United States District Judge S. James Otero.
According to a plea agreement filed in federal court, Scammell learned that Disney planned to acquire another company “that people would recognize right away” from his then-girlfriend, who was an extern at Disney in the summer of 2009 and who worked on the deal to acquire Marvel. Scammell later learned from a supervisor at his then-employer -- which had periodically provided corporate consulting services to Disney and had confidentiality obligations to Disney -- that Disney had previously been interested in acquiring Marvel. Scammell admitted that he learned the planned acquisition by Disney was estimated to close by Labor Day 2009, based on his observations of his girlfriend’s work schedule at Disney and their own travel plans at the time.
Scammell used the information that he learned from his girlfriend to acquire 659 call options to purchase Marvel stock for $5,465. He purchased more than half of the options in his brother's account. Scammell did not tell his girlfriend or his brother about the purchases of the Marvel call options.
Marvel’s stock rose approximately 25 percent after the deal with Disney was announced on August 31, 2009. After the acquisition was publicly disclosed by Disney, Scammell immediately sold his options, realizing more than $192,000 in profits. Scammell transferred $100,000 of the profits out of his brother's account to conceal the trading and profits from his brother.
As a result of the guilty plea, Scammell faces a maximum statutory sentence of 25 years in federal prison when he is sentenced by Judge Otero on July 28, 2014.
Today's guilty plea resolves a case filed in October 2013 when a federal grand jury returned an indictment that named Scammell.
Scammell was previously charged with securities fraud by the Securities and Exchange Commission in a civil lawsuit filed in August 2011. He was later ordered to disgorge his trading profits and pay civil penalties and interest totaling $800,985 in that case.
This case was investigated by the Federal Bureau of Investigation, which received assistance from the Securities and Exchange Commission.
Release No. 14-048
Former Long-Time Treasurer of Fullerton Teamsters Pleads Guilty to Embezzlement from Union and Filing False Tax ReturnRead the Press Release
SANTA ANA, California – The former treasurer of the Fullerton-based International Brotherhood of Teamsters, Graphic Communications Conference, District Council Number 2, has pleaded guilty to embezzlement from the union and filing a false tax return.
Fred W. Correll, 79, of Fullerton, who was the secretary-treasurer of the union since 1970, pleaded guilty to the two felony counts on Tuesday afternoon.
When he pleaded guilty, Correll admitted that during 2009 he embezzled $10,000 from the union for his personal use. Correll also admitted that he filed a false tax return for himself in 2009 when he failed to report that income on the 2009 tax return that he filed with the Internal Revenue Service.
Correll resigned from the union three years ago.
Correll is scheduled to be sentenced on August 4 by United States District Judge James V. Selna. At sentencing, Correll faces a statutory maximum penalty of eight years in federal prison and a fine of up to $500,000.
Correll’s son-in-law, Ryan W. Sherard, the former President of the union, is scheduled to plead guilty to filing a false Labor form on Wednesday, April 23. Sherard, 43, of Fullerton, has agreed to plead guilty to making a false statement in a financial report of a labor union, a misdemeanor offense that carries up to one year in prison. In his plea agreement, Sherard admits he failed to report money – approximately $9,600 – that he received from the union.
This case was investigated by the Department of Labor – Office of the Inspector General and IRS – Criminal Investigation.Release No. 14-046
Former CEO of Simi Valley Company Guilty of Bilking Navy by Selling $2.6 Million in Knock-Off Batteries Used on Aircraft Carriers and SubsRead the Press Release
LOS ANGELES – A federal jury has convicted the former CEO of the Simi Valley-based battery distributor Powerline Inc. of defrauding the government by selling more than $2.6 million in cheap, knock-off batteries to the U.S. Department of Defense.
Didier De Nier, 63, who lived in Simi Valley until he fled the United States nearly two years ago, was found guilty yesterday of five counts of wire fraud and one count of conspiracy to defraud the United States.
From 2004 to 2011, Powerline, which also did business as Birdman Distribution Corp, sold more than 80,000 batteries and battery assemblies that the Navy used for emergency back-up power aboard nuclear aircraft carriers, minesweepers and ballistic submarines. The batteries were installed on numerous Naval vessels.
According to the evidence presented during a six-day trial, De Nier and his employees disguised the bogus nature of the batteries by affixing counterfeit labels that falsely identified the batteries as originating from approved manufacturers. Powerline employees also used chemicals to remove “Made in China” markings from the knock-off batteries.
De Nier’s ex-wife Lisa De Nier, who had served for decades as Powerline’s vice president of sales, previously pleaded guilty in this case to conspiracy to defraud the government.
De Nier is scheduled to be sentenced by United States District Judge Dolly M. Gee on August 18. At sentencing, De Nier faces a statutory maximum sentence of 110 years in federal prison.
Lisa De Nier faces up to 10 in prison. She is expected to be sentenced by Judge Gee later this year.
Shortly after federal agents searched Powerline’s offices in July 2012, De Nier fled the Los Angeles area to live aboard his yacht near the Caribbean island of St. Martin, a French territory. In October 2013, federal agents arrested De Nier, a dual French-U.S. citizen, after he had sailed on his yacht to the U.S. Virgin Islands.The investigation in this case was conducted by the Defense Criminal Investigative Service and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. The Defense Logistics Agency and the Defense Contract Audit Agency provided significant support to this investigation.
Release No. 14-045
Armenian Power Gang Leaders Convicted in Federal RICO CaseRead the Press Release
LOS ANGELES – Two leaders of the Armenian Power gang were convicted today of participating in a racketeering conspiracy that included extortion, firearms offenses, bank fraud and identity theft targeting elderly bank customers, as well as a sophisticated credit and debit card skimming scheme that stole account numbers and personal identification numbers (PINs) from thousands of people who used their cards at 99 Cents Only Stores across Southern California.
Concluding a four-week trial, a federal jury returned guilty verdicts against Armenian Power leaders Mher “Capone” Darbinyan and Arman “Horse” Sharopetrosian. Rafael Parsadanyan, an associate of the gang, was also convicted for his role in the 99 Cents Only Stores skimming scheme.
The convictions today in United States District Court in Los Angeles were announced by United States Attorney André Birotte Jr., Acting Assistant Attorney General David O’Neil of the Justice Department’s Criminal Division, and Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office.
Darbinyan, 38, of Valencia, was found guilty of 57 criminal counts, including racketeering conspiracy, extortion conspiracy, extortion, bank fraud, access device fraud conspiracy, aggravated identity theft, and possession of a firearm by a convicted felon. According to the evidence presented at trial, Darbinyan was a leader of Armenian Power who participated in extortions, firearms offenses, frauds, and identity theft, and repeatedly engaged in criminal activities with members of the Mexican Mafia prison gang. Among other things, Darbinyan operated a sophisticated bank fraud scheme that used middlemen and runners to deposit and cash hundreds of thousands of dollars in fraudulent checks drawn on the accounts of elderly bank customers and businesses. Separately, Darbinyan also organized and operated a sophisticated debit card skimming operation targeting customers of the discount chain 99 Cents Only Stores. This expansive scheme involved installation of skimmers in stores that were used to steal customers’ debit card numbers and PIN codes. The scheme targeted stores across Southern California, and involved the bank accounts of thousands of customers of the discount store. Darbinyan also conspired to extort and extorted funds from a member of the Armenian community using threats of violence against the victim and his family members. Darbinyan, on two separate occasions, possessed firearms and ammunition after having previously been convicted of felony grand theft for his role in a 2004 debit card fraud scheme. At sentencing, Darbinyan will face a statutory maximum penalty of 973½ years in federal prison.
Sharopetrosian, 35, was convicted of three counts – racketeering conspiracy, extortion conspiracy, and extortion. The evidence at trial showed that while Sharopetrosian was incarcerated in Avenal State Prison in 2009, he used smuggled cell phones to direct the extortion of a member of the Armenian community. Sharopetrosian worked together with Darbinyan and others to carry out the extortion over a period of six months, at one point even arranging the kidnapping at gunpoint of the victim in order to hasten the extortion payments. Sharopetrosian, at different times, threatened to kill and kidnap the victim in order to coerce the victim into paying him more than $100,000. As a result of today’s guilty verdicts, Sharopetrosian faces a statutory maximum sentence of 60 years in federal prison.
Parsadanyan, 29, of Los Angeles, was convicted of 14 counts of bank fraud for his role in the 99 Cents Only Store scheme. The evidence at trial showed that Parsadanyan assisted Darbinyan by, among other things, collecting and storing proceeds of the fraud scheme, including delivering approximately $34,000 in criminal proceeds to a co-schemer. Each count of bank fraud carries a statutory maximum sentence of 30 years in federal prison.
Darbinyan, Sharopetrosian, and Parsadanyan were convicted after a jury trial before United States District Judge R. Gary Klausner. Darbinyan is scheduled to be sentenced on July 21. Sharopetrosian is scheduled to be sentenced on September 15. Parsadanyan is scheduled to be sentenced on July 14.
Darbinyan, Sharopetrosian, and Parsadanyan were among 90 individuals charged in 2011 in two indictments targeting Armenian Power. One indictment accused 29 defendants, including Darbinyan and Sharopetrosian, of participating in the Armenian Power racketeering conspiracy that involved a host of illegal activities such as sophisticated bank fraud schemes, identity theft, debit card skimming, manufacturing counterfeit checks. Some defendants in the case were charged with participating in a variety of violent crimes, such as kidnapping, extortion and firearms offenses.
According to court documents, the Armenian Power street gang formed in the East Hollywood area of Los Angeles in the 1980s. The gang’s membership consisted primarily of individuals of Armenian descent, as well as of other countries within the former Soviet bloc. Armenian Power has more than 250 documented members, as well as hundreds of associates. According to court documents, Armenian Power members and associates regularly carry out violent criminal acts, including murders, attempted murders, kidnappings, robberies, extortions, and witness intimidation to enrich its members and associates and preserve and enhance the power of the criminal enterprise.
The evidence also showed that Armenian Power leaders worked closely with powerful organized crime figures in Russia and Armenia, known as “thieves-in-law,” to commit criminal activities in the Los Angeles area and elsewhere.
Out of the 90 defendants charged in the two indictments, 85 have now been been convicted. Two of the defendants are still pending trial, two defendants are fugitives, and prosecutors dismissed charges against one defendant. The charges contained in the indictments are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case was investigated by the Eurasian Organized Crime Task Force, which is comprised of the FBI, the Glendale Police Department, the Los Angeles Police Department, the Burbank Police Department, the Los Angeles Sheriff’s Department, IRS – Criminal Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and the U.S. Secret Service. The Huntington Beach Police Department and the Beverly Hills Police Department provided assistance.
The case is being prosecuted by Assistant United States Attorneys E. Martin Estrada and Elizabeth Yang of the Central District of California and Trial Attorney Andrew Creighton of the Criminal Division’s Organized Crime and Gang Section.Release No. 14-047
S.F. Valley Woman Who Orchestrated Health Care Fraud Scheme That Submitted Nearly $25 Million in Bogus Bills Sentenced to over 7 YearsRead the Press Release
LOS ANGELES – A North Hollywood woman who worked in the health care industry was sentenced this afternoon to 76 months in federal prison for orchestrating a scheme that submitted nearly $25 million in fraudulent bills to Medicare for services and supplies that were medically unnecessary and sometimes were never provided.
Susanna Artsruni, 46, who formerly owned a durable medical equipment (DME) company and worked at a number of medical clinics in Los Angeles, was sentenced by United States District Judge Margaret M. Morrow.
Artsruni, who often used the names “Mary” and “Rose,” was sentenced after pleading guilty earlier this year to one count of health care fraud and one count of money laundering. In addition to the prison term, Judge Morrow ordered Artsruni to pay $9,624,556 in restitution to the Medicare program.
In a plea agreement filed in United States District Court, Artsruni admitted that she defrauded Medicare in a number of ways. In one part of the scheme, Artsruni had physician’s assistants at three Los Angeles medical clinics sign prescriptions and orders for medically unnecessary DME and diagnostic tests that were later referred to other Medicare providers that billed for the equipment and tests. Artsruni also caused the three clinics to bill Medicare for medically unnecessary services.
Artsruni fraudulently billed Medicare on behalf of her own DME supply company, Midvalley Medical Supply in Van Nuys, for medically unnecessary DME based on referrals from one of the three medical clinics.
In total, Artsruni caused more than $24.8 million in fraudulent claims to be submitted to Medicare, which paid more than $9.6 million on the bogus bills.
Artsruni also admitted that she wrote checks totaling more than $35,000 from the Midvalley bank account to three corporations that had no connection to the medical industry and apparently had not provided any legitimate business services to Midvalley. Artsruni admitted that she wrote these checks to conceal the nature of the funds as the proceeds of health care fraud and used the three corporations to launder these funds.
At the time that she worked at two of the clinics and wrote one of the checks to launder the proceeds of her fraud, Artsruni was free on bond in another health care fraud case. Although the terms of her pre-trial release in the 2008 case dictated that she not commit crimes and forbid her from working at medical facilities, Artsruni concealed her activities from her Pre-Trial Services Officer and engaged in the fraudulent conduct that led to most of the losses suffered by Medicare in the second case.
A second defendant in the case, Erasmus Kotey, a physician's assistant who worked with Artsruni in a medical clinic on North Vermont Avenue in Los Angeles, has pleaded guilty (see: http://www.justice.gov/usao/cac/Pressroom/2014/038.html) and is scheduled to be sentenced by Judge Morrow on September 8.
Charges also have been filed against three others associated with the money laundering and health care fraud schemes (see: http://www.justice.gov/usao/cac/Pressroom/2014/040.html). The three defendants in this case have pleaded not guilty and are scheduled to go on trial in early 2015.
All of these cases are the products of an investigation by the Federal Bureau of Investigation; the U.S. Department of Health and Human Services, Office of Inspector General; and IRS - Criminal Investigation.
The cases were brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.
Release No. 14-043
Former Chief Administrative Officer for City of Bell Sentenced to Federal Prison for Cheating IRS to Avoid Taxes on Corrupt ActivitiesRead the Press Release
LOS ANGELES – Robert A. Rizzo, the former top administrator in the City of Bell who has admitted his role in a widespread municipal corruption scandal, was sentenced today to 33 months in federal prison in a tax fraud scheme designed to hide part of the massive income he was bilking from the small Los Angeles County city.
Rizzo was sentenced today by United States District Judge George H. King, who said Rizzo’s activities demonstrated “greed in cheating the taxpayers of the United States after cheating the citizens of Bell.” In issuing the 33-month prison term, Judge King ordered that it run consecutive to a prison term Rizzo is expected to receive Wednesday when he is sentenced in Los Angeles Superior Court in his corruption case.
Rizzo, 60, of Torrance, pleaded guilty in January to federal charges – conspiracy and filing a false federal income tax return with the Internal Revenue Service – in a scheme that resulted in hundreds of thousands of dollars in unpaid federal income tax. At today’s sentencing hearing, Judge King ordered Rizzo to pay $255,984 in restitution, a figure that equals the amount of unpaid taxes directly attributable to the defendant.
In his plea agreement, Rizzo admitted that he created a corporation to fraudulently claim losses on his income tax return, which served to illegally reduce his tax liability on the significant income he was receiving from the City of Bell. Rizzo also admitted claiming personal expenses as business deductions.
Rizzo’s “conduct can only be described as corrupt,” prosecutors wrote in a sentencing memo filed with the court. Not only did Rizzo fleece the City of Bell and its residents, he also bilked the Internal Revenue Service “in an extraordinary display of greed.”
According to court documents, Rizzo, sometime in 2002, created an S Corporation that he called R.A. Rizzo Incorporated (RARI). Rizzo was assisted in the scheme by co-conspirators that included his tax preparer, Robert J. Melcher, who has pleaded guilty to aiding and abetting the filing of a false tax return.
Rizzo used RARI to claim bogus losses in relation to a purported rental property in Auburn, Washington. RARI’s corporate tax return fraudulently deducted more than $571,530 in losses for the years 2006 through 2009.
Rizzo also admitted in his plea agreement that he used a RARI account to pay for more than $80,000 in personal expenses in 2009 and $120,000 in construction work on his residence in Huntington Beach in 2010. RARI’s tax returns falsely claimed that these expenses were related to rental property.
Rizzo “abused his position to fleece the City of Bell of hundreds of thousands of dollars that he paid to himself in excessive salary – monies that could have been spent for the benefit of the people he served,” according to the government’s sentencing memorandum. “But not satisfied with betraying the trust place in him by the city and its residents, in an extraordinary display of greed, [Rizzo] also found it necessary to cheat the IRS.”
Melcher, who as a result of his guilty plea faces a sentence of up to three years in prison, is scheduled to be sentenced on May 12 by Judge King.
The cases against Rizzo and Melcher are part of an ongoing investigation being conducted by special agents with IRS - Criminal Investigation and the Federal Bureau of Investigation.
Release No. 14-042a
SoCal Doctor Charged with Illegally Writing Prescriptions for Addictive Narcotics and Laundering Proceeds of His Drug DealingRead the Press Release
LOS ANGELES – A Los Angeles-area doctor surrendered this morning to federal authorities after being indicted on federal drug trafficking charges for allegedly illegally distributing drugs, including powerful and addictive painkillers.
Dr. Andrew Sun, 78, of La Mirada, surrendered this morning at the United States Courthouse, where he is expected to be arraigned this afternoon.
Sun, who operated medical clinics in San Gabriel and East Los Angeles, is named in an indictment that was returned by a federal grand jury on March 18. The indictment specifically charges Sun with 24 counts of illegally prescribing controlled substances including hydrocodone (a powerful narcotic painkiller commonly known by the brand names Vicodin and Norco), alprazolam (commonly known by the brand name Xanax), carisoprodol (best known as Soma), diazepam (the generic form of the brand name product Valium), and promethazine with codeine (a Schedule V cough syrup). The indictment also charges Sun with four counts of laundering the proceeds generated by his illegal prescriptions.
Sun issued nearly 5,000 prescriptions for controlled substances in a one-year period that ended in July 2010, according to an affidavit in support of a search warrant executed at Sun’s residence and two medical offices on July 11, 2012. During the investigation detailed in the affidavit, Sun prescribed drugs, including hydrocodone, to undercover agents on 13 separate occasions, each time in exchange for $150 cash.
The affidavit quotes Sun telling one undercover agent: “So if you want to insist on getting such a strong medicine, I’ll give it to you. I’m just a doctor, I’m not God, okay, so I cannot say no to something that you want to do… I only advise you not to, but, if you want to do it I can’t do, I can’t say no.”
The affidavit details another instance in which Sun encouraged an undercover agent to provide a fraudulent justification for the “maximum” allowable number of extra-strength Vicodin pills.
Based on review of the undercover recordings and other materials from the investigation, Dr. Rick Chavez, an expert in pain treatment, concluded that Sun’s interactions with each of the undercover agents “was insufficient, inappropriate, and inadequate,” according to the affidavit. Chavez concluded: “there is not only strong, but irrefutable evidence for inappropriate prescribing of controlled medications” by Sun.
An investigation by IRS - Criminal Investigation showed that Sun and his wife controlled 44 bank accounts, and that Sun deposited more than $1.1 million in cash into his accounts between 2008 and July 2012. The indictment charges Sun with laundering cash on four specific occasions when he deposited thousands of dollars in cash on dates that undercover agents met with him and received prescriptions.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
If convicted of the 28 counts in the indictment, Sun would face a statutory maximum sentence of 248 years in federal prison.
The investigation into Sun was conducted by the Drug Enforcement Administration, IRS - Criminal Investigation, the California Medical Board, the California Department of Health Care Services and the Monterey Park Police Department.
Release No. 14-042
Third Defendant Pleads Guilty in Bribery Scheme Related to Projects at Spotlight 29 Casino Operated by Coachella Valley Indian TribeRead the Press Release
LOS ANGELES – A Central California man who was hired to advise the Twenty-Nine Palms Band of Mission Indians has become the third person to plead guilty to participating in a kickback scheme that defrauded the Coachella Valley tribe.
David Alan Heslop, 76, of Templeton, who was hired by the tribe to oversee some tribal business, pleaded guilty yesterday to conspiracy to commit bribery. Heslop admitted that he paid hundreds of thousands of dollars to bribe Gary Edward Kovall, an attorney acting as general counsel for the tribe.
Kovall, 67, of Ely, Minnesota, pleaded guilty last month to conspiracy to commit bribery.
A third defendant in the case – Paul Phillip Bardos, 58, a general contractor from Rancho Cucamonga – pleaded guilty last month to tax evasion.
As outlined in a 20-page factual basis filed in relation to Heslop’s plea agreement, Kovall and Heslop formed companies, and Kovall convinced the tribe to award construction and consulting work to those companies. To disguise Kovall’s interest in those companies, Heslop paid Kovall’s share to Peggy Anne Shambaugh, who at the time was Kovall’s girlfriend (and is now his wife). Over of period of about 18 months that ended in mid-2008, the tribe paid these companies approximately $2.8 million. Heslop, in turn, paid Shambaugh approximately $300,000 to influence and reward Kovall.
Bardos performed and subcontracted much of the work awarded by the tribe. He admitted to depositing income he earned into his personal checking account, concealing this money from his accountant, and not reporting it on his tax returns.
Heslop is scheduled to be sentenced on June 30 by United States District Judge Michael W. Fitzgerald. At sentencing, Heslop faces up to five years in federal prison.
Kovall and Bardos both are scheduled to be sentenced by Judge Fitzgerald on September 29, at which time each defendant faces up to five years in prison.
Shambaugh, who was also indicted in this case, is being evaluated for pretrial diversion. If found suitable for the diversion program, Shambaugh will be supervised by a court officer for a specific period of time. If she complies with the program, the charges against her will be dismissed.
This case was investigated by IRS - Criminal Investigation and the Federal Bureau of Investigation.
Release No. 14-041
Three Arrested After Being Named in New Indictment That Alleges Money Laundering, Health Care Fraud and Tax Fraud SchemesRead the Press Release
LOS ANGELES – Three people who were recently named in a superseding indictment that adds health care fraud charges to money laundering and tax fraud schemes were arrested this morning by federal authorities.
Edgar Hakobyan, 30, of Glendale; Karen Sarkissian, 43, of Glendale; and L’Tanya Smith, 57, of Ladera Park, were taken into custody without incident and are scheduled to be arraigned on the indictment this afternoon in United States District Court. These three defendants were named in a superseding indictment returned by a federal grand jury on March 27.
Previously in this case, two defendants were named in the original indictment that alleged a conspiracy to launder the proceeds of health care fraud through five sham corporations they owned and operated. Glendale residents Khachatour Hakobyan, 46, and Aram Aramyan, 59, have pleaded not guilty to charges that allege they
deposited millions in fraudulent proceeds into bank accounts for the bogus companies and then wrote checks from these corporations to themselves and their relatives, including Edgar Hakobyan. Khachatour Hakobyan and Aramyan have each been charged with five counts of filing false tax returns based on their failure to report all of their income from those corporations between 2007 and 2011. Khachatour Hakobyan and Aramyan are scheduled to go on trial on January 27, 2015, before United States District Judge Margaret M. Morrow.Two of the defendants arrested today are charged with health care fraud related to a clinic on Sunset Boulevard in Echo Park. The clinic was operated by Sarkissian and employed Smith, a physician’s assistant. Between July 2009 and March 2010, Smith allegedly prescribed or ordered medically unnecessary tests and services, some of which were never provided to the patients. Those prescriptions and orders led to more than $11 million in fraudulent claims to Medicare. Sarkissian is also charged as a part of the money laundering conspiracy based on his involvement in laundering the fraudulent proceeds generated through the Sunset Clinic through the corporations set up by Khachatour Hakobyan and Aramyan.
Edgar Hakobyan is charged with conspiracy to commit money laundering and money laundering based on his involvement in receiving checks from the sham corporations, which he either cashed or deposited in his own bank accounts.
Special Agent in Charge Erick Martinez of IRS Criminal Investigation's Los Angeles Field Office stated, “The defendants have allegedly laundered millions of dollars of fraudulently obtained Medicare funds through their businesses, failing to report it as income. IRS Criminal Investigation will not stand still while criminals line their pockets with illicit proceeds obtained from publically funded health care programs.”
If they are convicted of the charges in the superseding indictment, the five defendants would face sentences of as much as 395 years in federal prison.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
As part of this investigation, charges have previously been filed against others associated with the money laundering and health care fraud schemes. Susanna Artsruni, of North Hollywood, has pleaded guilty and admitted she caused $25 million in fraudulent claims to be submitted to Medicare through three medical clinics and her own durable medical equipment company (see: http://www.justice.gov/usao/cac/Pressroom/2014/002.html). Earlier this week, Erasmus Kotey, 77, of Montebello, pleaded guilty to health care fraud in relation to one of the clinics operated by Artsruni and a second unrelated clinic (see: http://www.justice.gov/usao/cac/Pressroom/2014/038.html).
All of these cases are the products of an investigation by the Federal Bureau of Investigation; the U.S. Department of Health and Human Services, Office of Inspector General; and IRS - Criminal Investigation.
The cases were brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.
Release No. 14-040
Mexican Police Officer to Be Arraigned Today on Federal Drug Trafficking Charges Involving About 20 Pounds of NarcoticsRead the Press Release
RIVERSIDE, California – A Tijuana municipal police officer is expected to appear in United States District Court this afternoon to be arraigned on federal indictment that accuses him of illegally transporting more than 13 pounds of heroin and over six pounds of methamphetamine.
Noe Raygoza-Garcia, 33, a Mexican national, was indicted on March 27 on one count of possession with intent to distribute heroin and methamphetamine.
Raygoza was arrested on March 13 after federal officials saw him driving erratically on Interstate 15 near the Border Patrol checkpoint north of Temecula. After he was stopped by authorities and gave answers that aroused suspicion, a drug-detecting canine alerted to the vehicle, where Border Patrol agents found narcotics hidden in the rear seat, according to court documents.
If he is convicted of the one count in the indictment, Raygoza would face a mandatory minimum sentence of 10 years in federal prison and a maximum possible penalty of life.
Raygoza is currently being held without bond.
The case against Raygoza was investigated by the United States Border Patrol.
Release No. 14-039
Riverside County Art Dealer Pleads Guilty in Federal Cyberstalking Case, Admitting He Extorted Victims with Threats of AttackRead the Press Release
LOS ANGELES – The owner of a Temecula art gallery who stalked, harassed and attempted to extort as much as $300,000 from art world professionals pleaded guilty today to two federal stalking charges.
Jason White, 43, of Temecula, pleaded guilty today in the cyberstalking case before United States District Judge Stephen V. Wilson.
As a result of today’s guilty pleas, White faces a maximum statutory sentence of 10 years in federal prison when he is sentenced on June 9.
White was arrested by the FBI on February 12 after engaging in a six-month stalking and extortion scheme that targeted art world professionals with whom he had had business relationships. When those business relationships ended, White posted derogatory information about his former associates on websites he had created, and then used threatening emails to demand hundreds of thousands of dollars in exchange for taking the websites down. White repeatedly made extortionate demands through harassing text messages and emails, and when his demands were not met, he threatened violence against the victim families.
In one part of the scheme, White targeted his former employer, an art publisher, as well as his supervisor at the art publisher’s company. After creating derogatory websites in the art publisher’s name, White allegedly sent threatening text messages to the art publisher, the publisher’s son, and his former supervisor, according to court documents. In a text message to his former supervisor, he threatened to find her family and make her pay with “fear, anguish, and pain.” On several occasions, White obtained pictures of her child and sent pictures of the child to the victim with comments such as “it will be very unfortunate if something was to happen to him.”
The case against White was investigated by the Federal Bureau of Investigation, Art Crime Team.
Release No. 14-037
Los Angeles-Area Gang Member Who Trafficked Teens as Prostitutes Sentenced to 30 Years in Federal PrisonRead the Press Release
RIVERSIDE, California – A Lynwood gang member who pleaded guilty to federal sex trafficking charges – admitting that he used force, fraud and coercion to cause teen-age girls to work as prostitutes across Southern California – was sentenced this morning to 360 months in federal prison.
Paul Edward Bell, 30, a member of the Rolling 60s Crips street gang, was sentenced by United States District Judge Virginia A. Phillips.
Bell “not only used his fists, a cane, a shoe, and other objects against the females, he also pepper sprayed one of the victims in her face,” prosecutors wrote in a sentencing brief filed with the court. “He also threatened the victims with physical abuse, put a gun to the head of one of the victims, and locked at least two of the victims in his apartment. The physical and mental abuse and anguish suffered by the victims at the hands of defendant has and will continue to deeply affect the victims and their families.”
The sentencing brief notes that Bell was previously convicted in two prior state court cases with crimes related to sex trafficking.
Bell is among eight defendants convicted in the case stemming from a federal grand jury indictment filed in August 2012.
Bell and his co-defendants used minors as prostitutes for their own financial gain. Bell was the leader of the organization that preyed on vulnerable victims, convinced them to become prostitutes, and verbally and physically abused them when they did not perform as required. Bell specifically admitted that in 2011 he forced at least four minor victims – aged 15 to 17 – to work as prostitutes in Lynwood and Compton.The other seven defendants in this case who previously pleaded guilty are:
Samuel Rogers, also known as Bone, 24, of Moreno Valley, another alleged member of the Rolling 60s, who pleaded guilty to sex trafficking of a minor and is currently scheduled to be sentenced on April 14;
Gary Rogers, who used monikers such as G Man, 25, of Moreno Valley, another alleged member of the street gang and Samuel Rogers’ brother, who pleaded guilty to conspiracy to engage in sex trafficking and is scheduled to be sentenced on April 11;
Christopher Weldon, Bell’s half-brother, who is also known by several names, including Chris Roc, of Compton, who pleaded guilty to one count of conspiracy to engage in sex trafficking and received a six-year prison sentence;
Javiya Brooks, who is also known by several permutations of Shady Blue, 21, of Lynwood, who was the lead prostitute for Bell, who pleaded guilty to one count of conspiracy to engage in sex trafficking and is scheduled to be sentenced on April 21;
Kimberly Alberti, 21, of Riverside, who was the lead prostitute for Samuel Rogers, who pleaded guilty to one count of conspiracy to engage in sex trafficking and received a two-year sentence;
Kristy Harrell, 22, of Riverside, who was Gary Rogers’ lead prostitute, who pleaded guilty to interstate transportation in the aid of racketeering and is scheduled to be sentenced on April 28; and
Su Yan, 32, of Rosemead, a Chinese national who allegedly assisted Bell with his prostitution business, who pleaded guilty to interstate transportation in the aid of racketeering and was sentenced to 18 months in prison.
This case resulted from an investigation by the Inland Child Exploitation/Prostitution Task Force, which is comprised of agents, deputies and officers with the Federal Bureau of Investigation, the Riverside County Sheriff’s Department, the Riverside Police Department, the San Bernardino Police Department, the Pomona Police Department, and the Ontario Police Department.
The investigation in this case began in January of 2011, when the Riverside County Sheriff’s Department learned that teen-age girls attending schools in the Inland Empire were being recruited to work as prostitutes. The investigation later revealed that Alberti attended one of the schools and recruited underage females by “grooming them” – or gaining their trust and telling them that they could make large sums of money by working as prostitutes for Alberti's pimp. The girls who were successfully recruited to work as prostitutes were brought to the Los Angeles area, where they were housed at hotels or at the pimps’ apartments. Some of the victims were housed at Bell's apartment. The Rogers brothers and Bell also often housed the victim prostitutes at motels located in the Los Angeles area.
The United States Attorney’s Office is working with the Justice Department’s Child Exploitation and Obscenity Section to prosecute this case.
Release No. 14-036
L.A.-Area Physician Assistant Pleads Guilty in Medicare Fraud CasesRead the Press Release
LOS ANGELES – A physician assistant pleaded guilty today to defrauding Medicare by signing fraudulent prescriptions for durable medical equipment while working at two Los Angeles-area medical clinics.
Erasmus Kotey, 77, of Montebello, pleaded guilty before United States District Judge Margaret M. Morrow to one count of health care fraud and one count of conspiracy to commit health care fraud.
Judge Morrow is scheduled to sentence Kotey on September 8, at which time he faces a statutory maximum sentence of 20 years in federal prison.
According to court documents, Kotey was a physician assistant who worked at Los Angeles County medical clinics. From approximately November 2007 through February 2008, Kotey engaged in a scheme to commit health care fraud through his work at a clinic located at 866 North Vermont Avenue in Los Angeles.
(The scheme involving the clinic on North Vermont Avenue also involved Susanna Artsruni, a North Hollywood woman who has pleaded guilty and admitted she caused $25 million in fraudulent claims to be submitted to Medicare, see: http://www.justice.gov/usao/cac/Pressroom/2014/002.html.)
In addition, Kotey engaged in a conspiracy to commit health care fraud from approximately April 2008 through December 2008, through his work at a clinic at 943 South Atlantic Boulevard in Monterey Park.
At both clinics, Kotey signed prescriptions and other medical documents for medically unnecessary diagnostic tests, power wheelchairs and other durable medical equipment (DME). Co-conspirators then sold the prescriptions, knowing that the prescriptions were fraudulent. Based on these fraudulent prescriptions, the testing facilities and DME supply companies then submitted false and fraudulent claims to Medicare.
In the two cases combined, fraudulent prescriptions from Kotey were responsible for approximately $7 million in false and fraudulent claims to Medicare, and Medicare paid approximately $3.5 million on those claims.
The cases against Kotey are the product of an investigation by the Federal Bureau of Investigation; the U.S. Department of Health and Human Services, Office of Inspector General; and IRS - Criminal Investigation.
The cases were brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to Health Care Fraud Unit.
Release No. 14-038
O.C. Firm Pays $500,000 to Resolve Allegations It Violated the Buy American Act by Selling Foreign-Made Medical Devices to ArmyRead the Press Release
LOS ANGELES – Prosthetics supplier Ossur Americas, Inc. today paid the United States $500,000 to resolve allegations that the Orange County company supplied the Army with hundreds of foreign-made prosthetic, bracing and support products –while falsely certifying that all of its products were manufactured in the United States as required by federal law and its contracts with the military.
Ossur, which is headquartered in Foothill Ranch, paid the money today pursuant to a settlement agreement that resolves allegations that it had violated the federal False Claims Act by falsely certifying compliance with the Buy American Act. The alleged conduct took place in 2005 and 2006 and involved prosthetic components for wounded soldiers.
The Buy American Act generally prohibits federal government agencies from purchasing foreign-made products, and Ossur’s compliance with the Act was expressly required by its contracts with the Army.
Ossur became aware that it had made the prohibited sales in early 2006, and entered the Department of Defense’s Voluntary Disclosure Program in December 2006. The government subsequently investigated Ossur’s disclosure. In conjunction with Ossur’s voluntary disclosure, the company instituted a series of compliance measures, including distribution of instruction sheets to sales representatives and training for management officials, to ensure future compliance with the Buy American Act.
This matter was investigated by the Defense Criminal Investigative Service.
Release No. 14-033a
Two Medical Product Companies Pay More Than $1 Million to Resolve False Claims Lawsuit That Alleged They Overbilled Federal AgenciesRead the Press Release
LOS ANGELES – The publicly traded Stryker Corporation and the privately held Alliant Enterprises have paid the United States a total of $1.05 million to resolve a “whistleblower” lawsuit that alleged a failure to disclose complete information about projected government sales, allowing them to avoid heightened scrutiny of a government contract.
The case was resolved when a federal judge dismissed and unsealed the case on March 13.
The lawsuit alleged that Stryker and Alliant failed to disclose to government negotiators complete pricing information, which resulted in higher costs to government agencies that purchased medical products from the Federal Supply Schedule contract awarded by the Department of Veterans Affairs to Alliant. As a result of the conduct by Stryker and Alliant, the VA and other government agencies allegedly purchased products at inflated prices.
The two companies paid the settlement in December. Stryker paid the United States $911,219, and Alliant paid $151,215.
Stryker Corporation is a Fortune 500 medical technology and equipment company with several divisions, including Stryker Medical, which manufactures medical equipment. Stryker sold certain medical equipment – including critical care hospital beds, medical-surgical hospital beds and stretchers – to government purchasers through the Federal Supply Schedule pursuant to modifications to a contract that the VA had previously awarded to Alliant. The lawsuit alleged that because Alliant was used to sell the Stryker-manufactured products, the defendants provided none of Stryker’s commercial pricing history to the VA for price comparison purposes, and that Alliant understated expected sales of the products, which allegedly allowed the defendants to avoid scrutiny and overcharge the VA.
The lawsuit was filed in United States District Court in Los Angeles in 2008 by a former Stryker employee under the qui tam – or “whistleblower” – provisions of the federal False Claims Act, which allow individuals to bring lawsuits on behalf of the United States and to receive a portion of the proceeds of a settlement or judgment awarded against a defendant.
Stryker and Alliant have resolved this action without admitting any wrongdoing.
This settlement was reached by the U.S. Attorney’s Office for the Central District of California and the Department of Justice Civil Division’s Commercial Litigation Branch. The matter was investigated by the Department of Veterans Affairs’ Office of Inspector General.
Release No. 14-032a
Former L.A. City Building Inspector Sentenced to 2½ Years in Federal Prison for Taking Tens of Thousands of Dollars in Bribe PaymentsRead the Press Release
LOS ANGELES – A former inspector with the Los Angeles Department of Building and Safety (LADBS) was sentenced today to 30 months in federal prison for taking more than $30,000 in bribes in relation to at least a dozen properties in and around the Koreatown District of Los Angeles.
Samuel In, 66, of Glendale, a 37-year veteran of LADBS, pleaded guilty just over one year ago to one count of bribery. According to court documents, In took bribe payments – which he described to some victims as “fees” – from 2007 through the end of 2010. In admitted that he solicited and accepted bribery payments totaling more than $30,000 in connection with his official duties in relation to at least a dozen Koreatown properties.
Federal prosecutors asked United States District Judge Dean D. Pregerson to impose a 30-month prison term, reasoning that In took bribes as part of a “deliberate, long-running pattern of corruption.”
In a sentencing memo filed with the court, prosecutor wrote: “This recommended sentence appropriately accounts for the serious nature of defendant’s illegal course of conduct — abusing his position as a senior building inspector over a number of years to solicit and take bribes in return for approving numerous building projects that may or may not have been safe.”
The case against In is the result of an investigation by the Federal Bureau of Investigation.
The FBI urges anyone with information about building inspectors or other officials accepting bribes to contact the FBI by calling its Los Angeles Field Office at its toll-free corruption hotline – 855-5-BRIBES (855-527-4237) – or sending an e mail to the [email protected].
Release No. 14-033
Temecula Student Sentenced to Federal Prison in ‘Sextortion’ CaseRead the Press Release
SANTA ANA, California – A Temecula college student who hacked into as many as 150 online accounts to extort young females into sending him nude photos and video – or submitting to Skype sessions in which he convinced two teens to undress – was sentenced today to 18 months in federal prison, concluding the latest in a series of federal “sextortion” cases in Southern California.
Jared James Abrahams, 20, was sentenced this morning by United States District Judge James V. Selna.
After being arrested last year by special agents with the FBI, Abrahams pleaded guilty on November 12 to one count of computer hacking and three counts of extortion.
Abrahams targeted young women he knew, and he identified other victims after hacking into Facebook pages. Using hacking software, Abrahams took control of victims’ email accounts, social media accounts and even their computers – which allowed him to remotely turn on web cameras and occasionally take pictures of naked victims.
Abrahams used the nude photos to extort victims by threatening to publicly post the compromising photos or videos to the victims’ social media accounts – unless the victim either sent more nude photos or videos, or engaged in a Skype session with him and did what he said for five minutes.
Several teens and women in their early 20s were victimized when Abrahams posted nude photos to their social media accounts. At least two victims consented to the Skype sessions proposed by Abrahams to keep their photos off the Internet.
“As digital devices, email accounts, and social media accounts now contain the most intimate details of the public’s daily lives, the impact of this type of hacking and extortion becomes more pronounced, troubling, and far-reaching,” prosecutors wrote in a sentencing memo filed with the court. “In some cases, this type of criminal behavior can be life-changing for the victims – especially for vulnerable victims who may feel it is impossible to rebuild their tarnished reputations. Stated differently, individuals like defendant have the ability to affect a person’s life in frightening ways by using the broad reach of the Internet.”
To avoid become a victim of sextortion, everyone should be prudent when posting images online or to any wireless communication (computer, phone, tablet), especially if the images have private or compromising content. Victims who receive extortionate threats or whose personal accounts have been compromised are urged to contact a parent, trusted adult, or law enforcement, since the situation will only worsen. The FBI was able to quickly identify Abrahams after a victim quickly reported his extortion attempts. As always, computer users are warned to ensure their passwords are difficult for others to guess, avoid opening unverified attachments, and use reliable anti-virus software with updated definitions. Lastly, computer users should cover their webcams when they are not in use.
In previous sextortion cases investigated by the FBI and prosecuted by the United States Attorney's Office, a Glendale man was sentenced in December to five years in prison (see: http://www.justice.gov/usao/cac/Pressroom/2013/142.html), and an Orange County man received a six-year prison term in 2011 (see: http://www.justice.gov/usao/cac/Pressroom/2011/123.html).
Release No. 14-031
Former Bank Employee and Ex-Boyfriend Guilty in Bank Robbery That Yielded over $500,000 with Staged Kidnapping and Fake BombRead the Press Release
LOS ANGELES – The former assistant manager of a Bank of America branch in East Los Angeles and her onetime boyfriend were convicted today of plotting a heist in which the woman wore a fake bomb to simulate a kidnapping to steal approximately $565,000 from the bank.
Following a one-week trial in United States District Court, the couple was found guilty today of conspiracy to commit bank robbery and bank robbery in the September 5, 2012 heist.
Reyes “Ray” Vega, 34, of Bell, and Aurora Barrera, 33, who now resides in Downey, each face up to 30 years in federal prison when they are sentenced on May 19 by United States District Judge Manuel Real.
During the robbery, Barrera walked into the bank with what appeared to be an explosive device taped to her body, convinced a co-worker that she had been kidnapped that morning by two black men, told the co-worker that they had to open the vault and place money outside the bank or else the kidnappers would harm them.
Barrera and her co-worker placed $565,500 of the bank’s money into bags and then threw the bags out the bank’s side door. One of Vega’s longtime friends, Richard Menchaca, picked up the money and drove it away from the bank. Menchaca met up with another accomplice, Bryan Perez, and they moved the money to a safe location. The device attached to Barrera’s body turned out to be a hoax when the Los Angeles Sheriff’s Department Bomb Squad arrived and disabled it using a robot.
Menchaca and Perez were also charged in this case, but they pleaded guilty and testified at the trial of Vega and Barrera.
According to testimony, Vega and Barrera were dating at the time of the robbery. Barrera testified at trial that she planned to marry Vega and move to Dubai, where Vega claimed to have employment opportunities. However, Barrera said she ended the relationship after learning that Vega was dating several other women at the time and that he had been charged with orchestrating the robbery. Several of Vega’s former friends also testified at trial about how he asked for help in planning the robbery and how he bragged about it afterwards.
Although a small portion of the money has been recovered, the majority remains outstanding. The FBI, which led the investigation, continues to pursue leads to recover the remainder of the stolen money.
The investigation in this case was conducted by the Federal Bureau of Investigation and the Huntington Park Police Department.
Release No. 14-032
O.C. Woman Sentenced to over 3 Years in Prison for Defrauding NunsRead the Press Release
SANTA ANA, California – An Irvine woman was sentenced today to 37 months in federal prison for defrauding a group of Roman Catholic Sisters out of $285,000, which she misappropriated and spent for her own use after promising to use the money to help the nuns purchase a retirement home.
Linda Rose Gagnon, 59, was sentenced by United States District Judge Andrew J. Guilford, who presided over Gagnon’s trial last year.
Gagnon was found guilty of three counts of wire fraud in November for defrauding the U.S. Province of the Religious of Jesus & Mary (RJM), an order of nuns devoted to educational and charitable work. The evidence presented at trial showed that Gagnon promised to use RJM funds to purchase a retirement home for the Sisters. Instead, Gagnon used the funds to pay for her personal expenses and to fund the unprofitable operations of her real estate finance company – burning through the entire $285,000 in only 64 days. Gagnon used the funds to pay for personal expenses, including travel, lingerie, groceries, manicures, hair dressing, restaurants, lease payments for an Audi TT sports car, and valet pet-sitting services for her dog.
In addition to the prison term, which Gagnon was ordered to begin serving by June 13, Judge Guilford said he would order the defendant to pay full restitution to the victim nuns. The amount of restitution will include at least the $285,000 that Gagnon stole from RJM, but the court may order her to pay RJM for other related losses.
This case was investigated by the FBI.
Release No. 14-030
Real Estate Professional Pleads Guilty to Federal Bank Fraud Charges for Illegally Flipping Central Coast Residential PropertiesRead the Press Release
LOS ANGELES – A former San Luis Obispo real estate broker pleaded guilty today to orchestrating a property “flipping” scheme in which he purchased houses in short sales at artificially low prices and immediately resold the properties at their true market value.
Timothy William Barnes, 37, who now resides in San Francisco, pleaded guilty to one count of bank fraud, a federal offense that carries a statutory maximum penalty of 30 years in federal prison.
Barnes owned and operated Apex Properties Real Estate Brokerage, Inc. in San Luis Obispo. Between January 2010 and September 2012, Barnes purchased properties after banks gave approval for short sales. In short sales, banks agree to accept less money than the outstanding balance on a mortgage, usually because the property is “under water,” meaning that the value of the property has fallen below the amount remaining on the mortgage. The lenders authorized the short sales after Barnes minimized the value of the houses and concealed higher offers he had already received. To carry out his scheme, Barnes made false statements about the fair market value of the properties in the documents he submitted to the banks.
Barnes admitted that, in many cases, he had already negotiated the resale at the higher price while he was simultaneously negotiating the short sale of the property at the lower price.
Barnes used this scheme to flip properties in San Luis Obispo, Paso Robles, Pismo Beach and other cities on the Central Coast, earning profits of more than $500,000.
Barnes is scheduled to be sentenced by United States District Judge Stephen V. Wilson on June 16.
This case was investigated by the Federal Bureau of Investigation and the Federal Housing Finance Agency, Office of Inspector General.
Release No. 14-029
Inland Empire Attorney Pleads Guilty to Ripping Off Social SecurityRead the Press Release
RIVERSIDE, California – A deputy public defender for Riverside County pleaded guilty today to two felony counts of stealing social security benefits.
Audrey Owens, 60, of Upland, pleaded guilty to two counts of theft of government property before United States District Judge Virginia A. Phillips.
Owens pleaded guilty one week before she was scheduled to go on trial to two of the five counts contained in an indictment returned by a federal grand jury in July. There was no plea agreement in this case.
According to documents filed in United States District Court, Owens diverted social security benefits intended for her deceased grandmother, who died in May 2000. The scheme started soon after Owens’ grandmother died and continued until
August 2012.After her grandmother’s death, Owens changed the address of a joint account she shared with her grandmother and continued to receive social security payments intended for her grandmother. She transferred some of the social security payments into her own personal account to pay bills. She also used some of the social security payments to directly pay for her personal expenses, including contributions to the Riverside County Employee Campaign.
Owens illegally received more than $129,000 during the course of the scheme.
Judge Phillips scheduled a sentencing hearing for June 2. At that time, Owens will face a statutory maximum sentence of 20 years in federal prison.
The case against Owens was investigated by the Social Security Administration – Office of Inspector General.
Release No. 14-028
Ex-Marine Receives 210-Year Federal Prison Sentence for Drugging and Raping Girls in CambodiaRead the Press Release
LOS ANGELES – A retired Marine Corps captain who was convicted of drugging and sexually abusing girls in Cambodia was sentenced today to 210 years in federal prison.
Michael Joseph Pepe, 60, of Oxnard, was convicted by a jury in May 2008 of seven felony counts for traveling to Cambodia to engage in illicit sexual conduct with minors.
Pepe was sentenced by United States District Judge Dale S. Fischer, who also ordered the defendant to pay $247,000 in restitution to his victims.
At today’s sentencing hearing, Judge Fischer said what is essentially a life sentence is appropriate for a defendant who has shown no remorse for his crime. “Monstrous does not begin to capture the horror of the crime or the impact on the victims,” Judge Fischer said.
During the trial, prosecutors presented testimony from six of the seven girls Pepe sexually abused. The girls, who were between the ages of 9 and 13 at the time of the abuse, testified that Pepe drugged, bound, beat and raped them. Several victims testified that Pepe required them to give him sexual massages and perform oral sex on him on a daily basis.
“Predators cannot hide in foreign nations to conceal their deviant sexual desires,” said United States Attorney André Birotte Jr. “Our efforts to coordinate with law enforcement around the world have resulted in the identification and prosecution of Americans who are exploiting the children in other countries. This lengthy sentence should serve as a stern warning to other pedophiles.”
In addition to the victims’ testimony, prosecutors presented corroborating evidence seized by the Cambodian National Police from Pepe’s Phnom Penh residence, including rope and cloth strips used to restrain the victims, Rohypnol and other sedatives, and homemade child pornography. The investigation was led by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
“This sentence should serve as a sobering warning to every sexual predator who thinks they can hide from the law by violating the innocence of children overseas,” said Claude Arnold, special agent in charge of HSI Los Angeles. “This defendant abused and exploited young people in a distant land who had no means to escape and no way to fight back. It’s entirely fitting that Mr. Pepe will spend the rest of his life behind bars, since his victims will likely bear the emotional scars of his abuse for the remainder of theirs.”
The prostitute who acted as Pepe’s broker testified on videotape about bringing young victims to his residence. Pepe paid the broker and the victims’ families for unlimited access to the girls.
“This sentence clearly demonstrates to the Cambodian people that the United States will not tolerate this type of abuse,” said William E. Todd, the United States Ambassador to Cambodia. “This sentence not only signals to the Cambodian victims our commitment to justice, but it will also act as a powerful deterrent for those individuals who are contemplating traveling to Cambodia to engage in illegal sexual activity with minors.”
HSI received substantial assistance in the investigation from the Department of State’s Diplomatic Security Service and the Cambodian National Police.
Pepe was prosecuted under the provisions of the PROTECT Act, which took effect in 2003. The act substantially strengthened federal laws against predatory crimes involving children outside the United States by adding new crimes and increasing sentences.
Release No. 14-027