Central District of California
Press releases recorded for this federal judicial district.
Former Owner of Long Beach Hospital Charged in Health Care Fraud Scheme That Paid Tens of Millions of Dollars in Kickbacks for Referrals for Spinal Surgeries Billed to Workers’ Comp ProgramsRead the Press Release
Santa Ana, California – The former owner of Pacific Hospital in Long Beach was charged today in a long-running health care fraud scheme that involved tens of millions of dollars in illegal kickbacks in exchange for referrals of thousands of patients who received spinal surgeries. The referrals to the hospital led to more than $500 million in bills being fraudulently submitted during last five years of the scheme, much of which was paid by the California worker’s compensation system.
Michael D. Drobot, 69, of Corona Del Mar, was charged this morning in a criminal information with orchestrating a wide-ranging conspiracy and with paying illegal kickbacks.
In a plea agreement also filed this morning, Drobot agreed to plead guilty to the two counts which could send him to federal prison for as long as 10 years.
From 1997 to 2013, Drobot, who owned Pacific Hospital until late last year, ran a scheme in which he billed workers’ compensation insurers hundreds of millions of dollars for spinal surgeries performed on patients who had been referred by dozens of doctors, chiropractors and others who were paid illegal kickbacks. For referrals for spinal surgeries, Drobot typically paid a kickback of $15,000 per lumbar fusion surgery and $10,000 per cervical fusion surgery. Some of the patients lived as much as hundreds of miles away from Pacific Hospital, and closer to other qualified medical facilities. The patients were not informed that the medical professionals had been offered kickbacks to induce them to refer the surgeries to Pacific Hospital.
Drobot and his co-conspirators concealed the kickback payments by entering into bogus contracts with the doctors, chiropractors, and others who received kickbacks. In reality, the contracts merely provided a cover story for the kickback payments.
The kickbacks were financed largely by money generated from inflated prices for medical devices implanted into state workers’ comp patients during spinal surgeries. Drobot set up a scheme that exploited a now-repealed California law known as the spinal “pass-through” legislation, which permitted hospitals to pass on to workers’ comp insurers the full cost of medical devices implanted in spinal surgery patients. Specifically, Drobot used shell companies to inflate the costs of those devices and then billed the insurers at the inflated rates.
“The spinal pass-through, the provision of California law that allowed Pacific Hospital to fraudulently inflate the cost of the medical hardware used during spinal surgeries, was a vital component of defendant Drobot’s ability to pay kickbacks to the doctors, chiropractors, marketers, and others who had referred patients to Pacific Hospital for surgeries and other medical services,” according to the charging document filed today.
As part of the health care fraud scheme, Drobot admitted in his plea agreement that he paid bribes to California State Senator Ronald Calderon in exchange for Calderon performing official acts to keep the spinal pass-through law on the books. Calderon was indicted on federal charges yesterday for allegedly accepting bribes from Drobot, as well as undercover FBI agents seeking official acts in relation to other matters.
As part of his plea agreement, Drobot has agreed to cooperate in the government’s ongoing investigation of the health care fraud scheme, which has been dubbed Operation “Spinal Cap.” Drobot has also agreed to cooperate in the government’s prosecution of Ronald Calderon and his brother, who was also indicted yesterday.
“Drobot has agreed to plead guilty in the health care fraud scheme, and as part of this agreement, he admits paying bribes to Ron Calderon in exchange for the senator’s help in keeping alive a law that brought massive profits to Drobot’s companies,” said United States Attorney André Birotte Jr. “Drobot also paid kickbacks, which are illegal under both California and federal law because they corrupt the doctor-patient relationship and may encourage medical professionals to recommend procedures that are not necessary, not in the patients’ best interest or actually harmful to the patient.”
Drobot has agreed to surrender and be arraigned in this case in United States District Court in Santa Ana on March 31.
“The charges allege that the defendant used kickbacks and other tactics to ensure the system worked to his advantage,” said Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The insurance scheme victimized multiple sectors of society, including insurance companies, the taxpayers and spinal patients.”
California Insurance Commissioner Dave Jones said: “Insurance fraud is a multi-billion dollar drain on California’s economy, which results in higher insurance premiums for California businesses and consumers. The co-conspirators lined their pockets by ripping off insurance companies to the tune of hundreds of millions of dollars. This is one of the largest workers’ compensation fraud cases in the history of the Department of Insurance – our successful investigation of this complex criminal scheme underscores our commitment to bring law breakers to justice regardless of who they are.”
Tom Frost, Special Agent in Charge with the Postal Service Office of Inspector General, stated: “We are committed to preserving Postal Service resources by vigorously investigating allegations of fraud and corruption. We are grateful for the efforts of the U.S. Attorney’s Office and our State and Federal partners in this investigation.”
The ongoing investigation into abuses involving the spinal pass-through law and kickbacks paid for spinal surgery patients is being conducted by the Federal Bureau of Investigation; IRS – Criminal Investigation; the California Department of Insurance; and the United States Postal Service, Office of Inspector General.
Release No. 14-025
California State Senator Ronald Calderon Charged with Taking Bribes in Exchange for Official Acts on Behalf of Hospital Owner and Independent Film Studio That Was Actually an FBI FrontRead the Press Release
LOS ANGELES – Ronald Calderon, a member of the California State Senate, has agreed to surrendered to federal authorities on Monday after being named in a federal grand jury indictment that accuses him of taking tens of thousands of dollars in bribes from a businessman and from people who were associated with a Hollywood film studio, but who were in actuality undercover FBI agents.
Ronald S. Calderon, 56, of Montebello, is charged in a 24-count indictment that was returned late yesterday by a federal grand jury with mail fraud, wire fraud, honest services fraud, bribery, conspiracy to commit money laundering, money laundering and aiding in the filing of false tax returns.
The indictment also charges Thomas M. Calderon, 59, also of Montebello, who is Ronald’s brother and a former member of the California State Assembly. Along with his brother, Thomas Calderon is charged in the money laundering conspiracy and with seven substantive counts of money laundering.
Tom Calderon self-surrendered this morning after being informed of the indictment and is expected to be arraigned this afternoon in United States District Court.
Ron Calderon is travelling and has agreed to surrender Monday morning. Ron Calderon’s arraignment will be Monday afternoon.
The indictment describes a scheme in which Ron Calderon allegedly solicited and accepted approximately $100,000 in cash bribes – as well as plane trips, gourmet dinners and trips to golf resorts – in exchange for official acts, such as supporting legislation that would be favorable to those who paid the bribes and opposing legislation that would be harmful to them. The indictment further alleges that Ron Calderon attempted to convince other public officials to support and oppose legislation.
“Public corruption is a betrayal of the public trust that threatens the integrity of our democratic institutions,” said United States Attorney André Birotte Jr. “Senator Calderon is accused of accepting tens of thousands of dollars in bribes and using the powers of his elected office to enrich himself and his brother Tom, rather than for the benefit of the public he was sworn to serve.”
Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office, stated: “Corruption victimizes each and every one of us. The indictment alleges Mr. Calderon traded influence for cash in the 30th District and beyond. In addition to robbing us of taxpayer money, corrupt practices rob us of trust in government.”
In the first part of the bribery scheme, Ron Calderon allegedly took bribes from Michael Drobot, the former owner of Pacific Hospital in Long Beach, a major provider of spinal surgeries that were often paid by workers’ compensation programs. California law allowed the hospital to pass on to insurance companies the full cost it had paid for medical hardware it used during spinal surgeries. In another case filed this morning, Drobot admitted that his hospital exploited this law, which was often called the “spinal pass-through,” by using hardware that had been purchased at highly inflated prices from companies that Drobot controlled and passing this cost along to insurance providers. Drobot allegedly bribed Ron Calderon so that he would use his public office to preserve this law that helped Drobot maintain a long-running and lucrative health care fraud scheme.
While the corruption indictment does not implicate Ron Calderon in the health care fraud scheme, Ron Calderon is charged with taking bribes from Drobot to preserve the spinal pass-through law. The indictment specifically alleges that Drobot bribed Ron Calderon by hiring Calderon’s college-age son to work as a file clerk at his company and paying him approximately $30,000 over the course of three summers. Ron Calderon’s son showed up for only about 15 days of work each summer, according to the indictment, which also accused Ron Calderon of accepting plane trips, golf outings and expensive dinners from Drobot. Ron Calderon allegedly arranged meetings between Drobot and other public officials and helped Drobot attempt to persuade the other legislators to keep the spinal pass-through law in effect.
In another case filed this morning in United States District Court, Drobot has agreed to plead guilty to charges of conspiracy and paying illegal kickbacks. In his plea agreement, Drobot admits paying bribes to Ron Calderon.
In another part of the bribery scheme, Ron Calderon allegedly solicited and accepted bribes from people he thought were associated with an independent film studio, but who were in fact undercover FBI agents. Ron Calderon solicited and accepted bribes in exchange for supporting an expansion of a state law that gave tax credits to studios that produced independent films in California. The Film Tax Credit applied to productions of at least $1 million, but, in exchange for bribes, Ron Calderon agreed to support new legislation to reduce this threshold to $750,000, according to the indictment. The indictment specifically alleges that Ron Calderon agreed to support the new Film Tax Credit legislation in exchange for his daughter being paid $3,000 a month for a job he knew she simply did not perform.
According to the indictment, Ron Calderon took several official actions with respect to reducing the threshold for the Film Tax Credit. Ron Calderon signed an official letter indicating that he supported a lower threshold, he met with other state senators to discuss the benefits of lowering the threshold, and he “caused legislation to be introduced in the Senate, which he intended to use as a vehicle to create a separate tax credit,” according to the indictment.
In addition to the nearly $40,000 paid to his daughter, Ron Calderon allegedly solicited from the undercover FBI agents payments that included $5,000 for his son’s college tuition and $25,000 to Californians for Diversity, a non-profit political organization operated by Tom Calderon.
Both Calderons face money laundering charges for allegedly funneling bribe money through Californians for Diversity and Tom Calderon’s consulting firm, some of which went to Ron Calderon and his daughter.
Ron Calderon faces two tax fraud charges for allegedly helping in the preparation of false tax returns that fraudulently claimed business expense deductions in relation to the money his son received from Drobot.
Joel P. Garland, the Acting Special Agent in Charge for IRS Criminal Investigation’s Los Angeles Field Office, commented: “Ronald and Thomas Calderon were granted the privilege of political office to better the lives of the citizens they represented, but instead Ronald Calderon used his office to commit bribery, tax and other crimes for their own selfish benefit. Today’s actions reaffirm our commitment to this joint agency task force and our pursuit of justice. Public officials hold a position of trust and those who commit bribery, tax fraud and other crimes, take note.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
If Ron Calderon were to be convicted of the 24 charges in the indictment, he would face a statutory maximum sentence of 396 years in federal prison.
If Tom Calderon is convicted of the money laundering charges alleged in the indictment, he would face a statutory maximum sentence of 160 years in prison.
The investigation into the Calderons was conducted by the Federal Bureau of Investigation and IRS-Criminal Investigation.
Release No. 14-026
Six Indicted in Fraud Cases Related to Telemarketing Operations That Solicited Millions to Fund Fake MoviesRead the Press Release
LOS ANGELES – Four people were arrested today on federal fraud charges stemming from telemarketing operations that allegedly solicited investments in movies with false promises of high returns with little risk.
Today’s arrests are the result of two federal grand jury indictments unsealed this morning. The indictments charge a total of six defendants who allegedly participated in separate fundraising schemes related to bogus film projects. While one movie script was written, no movies were ever actually produced. The indictments allege that the defendants executed the schemes to defraud victims around the nation and collectively caused losses of several million dollars.
The first case is contained in a 29-count indictment relating to two companies -- Mutual Entertainment LLC and Film Shoot LLC. Four defendants related to this scheme are charged with mail fraud, wire fraud, attempted wire fraud and making false statements.
The defendants are:
Samuel Braslau, 53, of Mar Vista, an attorney and co-founder of the companies, who was arrested this morning;
Rand Jay Chortkoff, 64, of Encino, a co-founder of the companies, who was arrested this morning;
Stuart Rawitt, 47, of West Hollywood, a salesperson, who was arrested this morning;
Robert Matias, 50, of Granada Hills, a salesperson who is a fugitive.
The three arrested this morning are expected to be arraigned this afternoon in United States District Court in Los Angeles.Also today, the Securities and Exchange Commission filed a civil lawsuit that alleges Braslau, Chortkoff and Rawiit defrauded investors (see: http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370540815507)
In the second case, the operators of another company – C22 in the San Fernando Valley -- were named in a 19-count indictment that accuses them of mail fraud, wire fraud, and attempted wire fraud. The two named in an indictment focusing on a company known under several permutations of C22 are:
Mack Machen, 70, of Sunland, the president of C22, who has agreed to self-surrender and be arraigned this afternoon; and
Anthony David Millan, 37, of Chula Vista, the CEO of C22, who was arrested this morning and is expected to make his first court appearance this afternoon in United States District Court in Santa Ana.
The first indictment focuses on the activities of a company called Mutual Entertainment LLC and later renamed Film Shoot LLC, which allegedly bilked investors in a motion picture called “Marcel” and later renamed “The Smuggler.”
The indictment alleges that the defendants raised money for the film through boiler room telemarketing operations. The telemarketers allegedly made fraudulent pitches to investors after first representing themselves to be independent “surveyors” from a national research firm. Victims were falsely told that 64 percent of investor money would be used to produce the film, and that investors would be first in line to receive any revenue generated by the movie, according to the indictment, which states that the defendants also falsely claimed to have contracted with well-known actors to appear in “The Smuggler.”
During the course of the Mutual Entertainment/Film Shoot scheme, the defendants allegedly persuaded more than 60 investors across the nation to invest a total of $1.8 million in the movie that was never produced.
In 2011, the Alabama Securities Commission filed an administrative order against the company and one of the defendants, concluding that the defendants in that action had failed to comply with many provisions of the Code of Alabama 1975 pertaining to the offer and sale of investments. As alleged in the indictment, following the issuance of this order, two other defendants changed the name of the company from Mutual Entertainment to Film Shoot, and the name of the movie from “Marcel” to “The Smuggler,” in an attempt to hide the Alabama Order from potential investors.
The second indictment unsealed today focuses on C22 Capital, Inc. and C22 LLC, Inc. This indictment alleges that telemarketers for C22 fraudulently induced investments to fund a movie titled “Beyond the Mat.”
According to the indictment, the C22 defendants and their telemarketers made cold-calls to potential investors and told the victims that their money would be used to provide short-term “bridge loans.” Later, the defendants began soliciting money for investment in “Beyond the Mat.” The indictment alleges that the defendants issued promissory notes and promised returns of up to 13 percent per year.
Approximately 80 victims were fraudulently induced to invest in C22, and during the course of the scheme they lost more than $3 million, according to the indictment.
In late 2011, the California Department of Corporations issued a Desist and Refrain order the directed C22 LLC, Inc. to stop doing business due to its fraudulent practices. The indictment alleges that the defendants continued to conduct their business under a different name.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
The wire fraud and mail charges each carry a statutory maximum penalty of 20 years in federal prison.
The criminal investigation is being investigated by the Federal Bureau of Investigation.
Release No. 14-024
Three Found Guilty for Roles in $20 Million Health Care Fraud Scheme Involving Bogus Prescriptions for Expensive Anti-Psychotic DrugsRead the Press Release
LOS ANGELES – Three people linked to a Glendale medical clinic – including a doctor who took money to let his name be used thousands times on bogus prescriptions – were found guilty today of federal fraud charges related to a $20 million scheme to defraud Medicare and Medi-Cal by, among other things, fraudulently prescribing expensive anti-psychotic medications and then re-billing the government for those drugs over and over.
Today’s convictions stem from the first case in the nation alleging an organized scheme to defraud government health care programs through fraudulent claims for anti-psychotic medications. The evidence presented at trial showed how the operators of Manor Medical Imaging in Glendale operated a clinic authorized to make claims to Medicare and Medi-Cal, employed an unlicensed medical practitioner to write bogus prescriptions using an American doctor’s name and license number, and had close relationships with pharmacies and a fraudulent drug wholesale company that were used to funnel prescription drugs back to the pharmacies participating in the scheme.
In the largest case of its kind in Southern California brought against defendants who bilked Medicare Part D, prosecutors showed a federal jury how employees of Manor Medical generated thousands of prescriptions for identify theft victims – such as elderly Vietnamese beneficiaries of Medicare or Medi-Cal, military veterans who were recruited from drug rehab programs, and denizens of Skid Row. Members of the conspiracy created or doctored patient files to make it falsely appear the drugs were necessary and the patients were legitimately treated. After the prescriptions were filled at pharmacies and paid for by Medicare and Medi-Cal, they were sold on the black market and redistributed to pharmacies, where the drugs would be subject to new claims made to Medicare and Medi-Cal as though they were new bottles of drugs.
The scheme generated fraudulent billings of more than $20 million dollars, of which Medi-Cal and Medicare actually paid more than $8 million.
“The defendants took advantage of this nation’s most vulnerable citizens and took millions of dollars from public health care programs that are designed to help the disadvantaged,” said United States Attorney André Birotte Jr. “Members of this scheme caused thousands of bottles of dangerous prescription drugs to be diverted to the black market. This case is an example of how operators of health care fraud schemes will be brought to justice, whether they be doctors who enable the fraud or those on the street who recruit patients and divert prescription drugs to the black market.”
The three defendants convicted today are:
Dr. Kenneth Johnson, 47, of Ladera Heights, who served as the face of Manor with pharmacists and auditors from Medicare and Medi-Cal, and who pre-signed thousands of blank prescriptions that were filled out by co-conspirators;
Nuritsa Grigoryan, 49, of Glendale, who holds an Armenian medical license and who pretended to be an American doctor when she saw homeless “patients” at the clinic and filled out the bogus prescriptions pre-signed by Dr. Johnson; and
Artak Ovsepian, 32, of Tujunga, one of the leaders of the conspiracy who oversaw the acquisition of drugs at pharmacies using the bogus prescriptions.
The three defendants were convicted of health care fraud conspiracy, aggravated identity theft, conspiracy to misbrand pharmaceutical drugs, false statements to the federal government, and conspiracy to use other persons’ identification documents in furtherance of fraud.
Following the reading of the verdicts, United States District Judge S. James Otero, who presided over the three-week trial, said, “The scope of the fraud was breathtaking.” Judge Otero said the defendants “preyed upon the poor [and] used them as pawns.”
Judge Otero is scheduled to sentence Grigoryan and Ovsepian on June 9. Johnson is scheduled to be sentenced on June 30. At sentencing, all three defendants will face a mandatory sentence of two years in federal prison for committing aggravated identity theft. In addition to the two-year terms, Johnson and Grigoryan statutory maximum sentences of 30 years in federal prison, while Ovsepian will face an additional sentence of up to 35 years.
A fourth defendant who went to trial – Artyom Yeghiazaryan, a driver who took beneficiaries to pharmacies – was acquitted by the jury.
With today’s verdicts, a total of 16 defendants charged in 2011 (see: http://www.justice.gov/archive/usao/cac/Pressroom/2011/157.html) have now been convicted of various charges related to the health care fraud scheme. A total of 18 defendants were indicted in relation to the scheme centering on Manor Medical, but also involving pharmacies in and around the San Gabriel Valley. The conspiracy was essentially a “prescription harvesting” scheme in which Medicare and Medi-Cal beneficiaries were recruited or had their identities stolen, the beneficiary information was used to bill Medicare and Medi-Cal for millions of dollars of illegitimate medical services and prescriptions, and the drugs that were dispensed by the pharmacies were diverted to black market wholesalers and back to the pharmacies so the drugs could be used to submit new bills to Medicare and/or Medi-Cal as though the drugs had never been dispensed.
“This scheme to defraud federal and state governments endangered the public’s health by putting adulterated medicines onto the U.S. market,” said John Roth, Director, FDA’s Office of Criminal Investigations. “We will continue to bring to justice those who put profits above health and safety.”
IRS Criminal Investigation Special Agent in Charge Joel P. Garland said, “Using the identities of the most vulnerable members of society to defraud government health care programs is a despicable crime. It depletes scarce taxpayer dollars and will not be tolerated. Law enforcement officers will respond to it using every legal resource at our disposal. Let this conviction serve as a warning to those who are considering similar conduct.”
The primary pharmacy involved in the case, Huntington Pharmacy in San Marino, was operated by a Pasadena couple whose business grew dramatically due its affiliation with Manor Medical, including Medi-Cal claims that jumped from $50,000 in 2009 to approximately $1.5 million in 2010. One of the owners of the pharmacy, Phic Lim, is scheduled for trial on August 19. His wife, Theana Khou, previously pleaded guilty as part of a joint resolution with another case filed against her and her husband.
“As today's verdicts make clear, federal and state law enforcement will crack down hard on these organized Medicare and Medi-Cal drug benefit fraud schemes,” said Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General Los Angeles region. “This case, involving very expensive brand name anti-psychotic drugs, is the largest of its kind here in Southern California.”
The investigation in this case, which was called Operation “Psyched Out,” was conducted by the San Marino Police Department; the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; the United States Food and Drug Administration, Office of Criminal Investigations; IRS-Criminal Investigation; the United States Department of Health and Human Services, Office of the Inspector General; U.S. Immigration and Customs Enforcement; the Glendale Police Department, Organized Crime Team; and the California Department of Health Care Services, Audits and Investigations Branch.
Release No. 14-023
Task Force Investigation into PCP Trafficking Leads to Federal Charges Against Producers and Distributors of the Dangerous DrugRead the Press Release
LOS ANGELES – Federal, state and local authorities this morning arrested 20 individuals who are named in two federal indictments that target manufacturers and distributors of Phencyclidine – commonly known as PCP or “angel dust” – a dangerous narcotic with deep ties to the violent Grape Street Crips and other South Los Angeles street gangs.
Following this morning’s takedown, federal prosecutors unsealed two indictments that charge a total of 40 defendants linked to laboratories where PCP is manufactured and the networks that distribute the drug across the nation. In addition to the 20 people arrested this morning, three defendants were already in custody, and 17 are fugitives or have not yet been fully identified.
Thirty-eight of the defendants are named in a 29-count indictment that outlines how precursor chemicals are obtained and used in the manufacturing process, which poses serious risks to public health and the environment. The indictment discusses how the prepared PCP is then stored and distributed around the nation.
“Historically, the principal location in the United States where PCP is manufactured is the Southern California area,” according to the indictment. “After PCP is manufactured, PCP traffickers typically distribute and transport PCP both within the Southern California area and to other regions in the United States, where PCP can be sold at higher prices and for greater profit.”
The indictment details the seizure of several PCP laboratories and how members of the narcotics-trafficking conspiracy distributed upwards of several thousand gallons of PCP. During the course of this investigation, authorities seized approximately 100 gallons of the drug and precursor chemicals that could have been used to manufacture thousands of gallons of the drug. A gallon of PCP contains approximately 76,800 doses of the highly addictive narcotic.
“PCP producers and suppliers deal a toxic poison that destroys minds and contaminates our neighborhoods,” said United States Attorney André Birotte Jr. “Today’s operation breaks the grip that these drug makers and dealers have held on the neighborhoods of Watts and South Los Angeles by targeting the highest levels of PCP traffickers and those responsible for manufacture and distribution of this deadly drug.”
In conjunction with this morning’s multi-agency effort against the Grape Street Crips, Los Angeles City Attorney Mike Feuer today announced his office will seek injunctions to curb gang activity at three properties, two of which are located on the same block of an early education center and an elementary school. The properties are known for gang-related narcotics dealing, PCP manufacturing, possession of firearms and other criminal activity, according to the City Attorney’s office.
The indictments unsealed today follow an investigation that concluded nearly six years ago after targeting PCP trafficking in South Los Angeles and illuminating the links between the drug and the Grape Street Crips. That earlier investigation resulted in federal charges against 12 defendants, two of whom received life sentences for their roles in manufacturing and distributing PCP.
The present investigation, which was conducted by the HIDTA and L.A. IMPACT task forces and the DEA, revealed a wide network of PCP manufacturers and distributors connected to the Grape Street and other South Los Angeles gangs. Investigators discovered that this network routinely delivered PCP, via couriers and mail, to other parts of the country, including Texas, Maryland, North Carolina, Oklahoma and New York.
The narcotics trafficking conspiracy allegedly was led by Anthony Dwight Bracken, a San Bernardino County-based PCP manufacturer, with strong ties to South Los Angeles. Other key players charged in the conspiracy include distributors Andre Brown, Anthony Wilson and Eligin Gary Hawkins, all of South Los Angeles.
All 38 defendants in the indictment are charged with conspiracy
to manufacture, distribute and possess with the intent to distribute PCP, and to illegally possess a listed chemical. Because of the quantity of narcotics and precursor chemicals involved in this case, all of the defendants potentially face sentences of life without parole in federal prison.The indictment further charges various defendants with distribution and possession with intent to distribute PCP, illegal possession of a listed chemical, maintaining drug-involved premises, possession of a firearm in furtherance of a drug trafficking crime, and being a felon in possession of a firearm/ammunition.
A second indictment unsealed this morning charges two additional defendants in a conspiracy to distribute PCP.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The investigation into the PCP manufacturing and distribution network was conducted by the L.A. IMPACT Task Force (Los Angeles Interagency Metropolitan Police Apprehension Crime Task Force), the HIDTA Task Force (High-Intensity Drug Trafficking Area Task Force) and the Drug Enforcement Administration. The Los Angeles City Attorney’s Office is partnering to take file civil “abatement” lawsuits at properties linked to criminal activity uncovered during this investigation. Los Angeles County Child Protective Services assisted during this morning’s takedown.
Release No. 14-021
Riverside County Art Dealer Arrested in Federal Cyberstalking CaseRead the Press Release
LOS ANGELES – The owner of a Temecula art gallery who allegedly stalked, harassed and attempted to extort several art world professionals was arrested today on federal cyberstalking charges.
Jason White, 43, of Temecula, was arrested this morning without incident by special agents with the FBI.
White’s arrest comes after federal prosecutors yesterday filed a criminal complaint that charges White with stalking, a crime that carries a potential penalty of five years in federal prison. White is expected to make his initial appearance this afternoon in United States District Court in downtown Los Angeles.
According to the complaint, White engaged in a stalking and extortion scheme that targeted several 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. According to the complaint, White repeatedly made extortionate demands through harassing text messages and emails, and when his demands were not met, he threatened violence.
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 the complaint, 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, according to the complaint, 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.” During this time, according to the complaint, White continued to demand payment in exchange for taking down the websites he had created, and made it known to these victims that their business reputation would be ruined and that his websites would forever show up anytime anyone searched for their name on the internet.
Late last month, White allegedly went to the Facebook page of a well-known artist represented by the art publisher and posted a picture of himself, along with a statement that he was focusing on the artist’s wife and child. White allegedly wrote that he would be waiting in the bushes to “knee cap a child.” Through the Facebook message, White told the artist, “your children are my end game.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
The case against White is being investigated by the Federal Bureau of Investigation, Art Crime Team.
Release No. 14-022
Two Men Sentenced for Federal Hate Crime Charges Resulting from 2012 New Year's Eve Attack on African-American YouthsRead the Press Release
LOS ANGELES – Two Latino men associated with the Compton 155 street gang were sentenced to federal prison today for their racially-motivated attack on African-American juveniles at a residence in Compton on New Year’s Eve 2012.
Jeffrey Aguilar, also known as “Terco”, 19, and Efren Marquez Jr., also known as “Stretch” and “Junior,” 21, were each sentenced to serve 21 months in prison.
The two defendants were sentenced by United States District Judge Terry J. Hatter Jr., who also ordered them to serve three years of supervised release after they complete their prison sentences.
Aguilar and Marquez pleaded guilty on October 17, 2013 to violating the Matthew Shepard-James Byrd Jr. Hate Crime Prevention Act after admitting their involvement in the assault.
“Hate-based crimes have no place in America,” said United States Attorney André Birotte Jr. “The defendants’ attempt to rid their neighborhood of African-Americans serves as a sickening reminder that racial intolerance still exists in some segments of our community. For this egregious conduct, the defendants have received well-deserved prison terms.”
Aguilar and another individual physically attacked a 17-year-old African-American, who was walking down a street in the city of Compton. Aguilar chased down and struck the victim in the head with a metal pipe. During the incident, Marquez threatened to shoot another African-American juvenile who was present. Both Aguilar and Marquez admitted when they pleaded guilty that the attack on the 17-year-old victim was motivated by the race and color of the victim.
“Despite the substantial progress made, violent acts of hate committed because of someone’s race continue to occur to this day, and the department will continue to use every available tool to identify and prosecute hate crimes whenever and wherever they occur," said Acting Assistant Attorney General Jocelyn Samuels for the Justice Department’s Civil Rights Division.
“The FBI is committed to the protection of civil rights and will continue to investigate allegations of crime motivated by hate,” said Assistant Director in Charge Bill L. Lewis for the FBI’s Los Angeles Field Office. “I’m hopeful that this sentencing will clarify the serious consequences for anyone contemplating senseless violence against the innocent due to their religion, race, disability, ethnic origin or sexual orientation.”
“Law enforcement is dedicated to protecting the civil rights of all members of our community and the outcome of this case is a great example of the close cooperation between all agencies involved to ensure that goal,” said Interim Sheriff John L. Scott of the Los Angeles County Sheriff’s Department.
This case is the result of an investigation conducted by the FBI and the Los Angeles County Sheriff’s Department.
Release No. 14-020
Former San Bernardino Teacher Sentenced to 120 Months for Enticement of A MinorRead the Press Release
LOS ANGELES – A former teacher at Arrowview Middle School in San Bernardino was sentenced this morning to 120 months in federal prison for attempting to entice a 13-year old girl in New Jersey to engage in sexual activity.
Eugene Ballantyne, 30, of Running Springs, California, pleaded guilty in July 2012 to one count of attempting to entice a minor to engage in illicit sexual activity. Ballantyne met the 13-year old New Jersey minor over the internet and began soliciting child pornography images from the minor. Acting with a federal search warrant, authorities seized Ballantyne’s computer, which revealed that Ballantyne had online relationships with several minors in which he obtained child pornography from them. One of these minors was Ballantyne’s former student. According to prosecutors, Ballantyne posed as an 18-year old in order to convince the 15-year old student to send him sexually explicit photographs. Ballantyne also admitted to traveling to Blythe, California to have sexual intercourse with a 17-year old minor that he met on the internet.
During the sentencing hearing, Chief Judge George H. King stated that Ballantyne committed the acts in a "callous manner" and described the need for the sentence to deter other internet predators.
This case is the result of an investigation by the Federal Bureau of Investigation, with significant assistance from the South Brunswick, New Jersey, Police Department. The San Bernardino County Unified School District also cooperated with the investigation.
Release No. 14-018
Former Guatemalan Special Forces Officer Sentenced to 10 Years in Prison for Lying About Role in 1982 Massacre to Get U.S. CitizenshipRead the Press Release
RIVERSIDE, California – A former Guatemalan Special Forces officer was sentenced today to serve 10 years in federal prison for covering up his involvement in the 1982 massacre of nearly everyone in the village of Dos Erres, Guatemala.
Jorge Sosa, 55, of Moreno Valley, received the statutory maximum sentence of 120 months in prison from United States District Judge Virginia A. Phillips.
Sosa was convicted by a federal jury on October 1 of one count of making false statements in immigration proceedings and one count of unlawful procurement of naturalized U.S. citizenship.
At today’s sentencing hearing, Judge Phillips also revoked Sosa’s U.S. citizenship that he was given after failing to disclose his role in the massacre of at least 162 men, women and children.
“Southern California is fortunate to be home to immigrants from all over the globe, some of whom have fled persecution in their native lands,” said U.S. Attorney André Birotte Jr. “But Mr. Sosa fled his native country after being a persecutor who played a direct role in the massacre of an entire village in Guatemala. Because he is responsible for war crimes and for failing to disclose his role in a human rights offense, Mr. Sosa will be incarcerated for a lengthy period of time and will no longer be welcome in our country.”
The evidence presented during last year’s trial showed that Sosa became an officer in the Guatemalan Army in 1976, was part of Guatemala’s elite Special Forces division called the Kaibiles and was an instructor at the Kaibil School. During this time, the Guatemalan Army was engaged in armed conflict with anti-government forces referred to as the “guerillas.” In early 1982, Sosa and other Kaibil instructors were chosen to be part of the Special Patrol, a small unit formed to combat guerilla forces. In early December 1982, the Special Patrol, including Sosa, was deployed along with approximately 40 other Kaibil soldiers to the village of Dos Erres to recover military rifles that had purportedly been stolen during a guerilla ambush of Guatemalan soldiers. When the Special Patrol entered Dos Erres, the rifles were not found and there was no evidence of guerilla soldiers in the area.
According to the evidence at trial, while at Dos Erres, members of the Special Patrol then removed the villagers from their homes, separated the men from the women and children, and raped some of the young girls. To cover up the rapes, all of the villagers were brought to the center of the village, where the Special Patrol members systematically killed the men, women and children by, among other methods, bludgeoning them on the head with a sledgehammer, shooting them or throwing them into the village well while still alive.
Testimony from two Kaibiles who participated in the massacre revealed that Sosa supervised the Special Patrol soldiers as they filled the well with Dos Erres villagers. The evidence also showed that at some point during the massacre, a villager screamed out at Sosa from the well, and Sosa responded by cursing and shooting his assault weapon and throwing a grenade into the well.
Approximately 12 years after the massacre at Dos Erres, the Argentine Forensic Anthropology Team (Equipo Argentino de Antropologia Forense, or EAAF) exhumed the 40-foot well. At trial, a member of EAAF testified that the team found 162 skeletons in the well. Of those skeletons, 67 appeared to be those of children under the age of 12.
The evidence further showed that after Sosa became aware he was being investigated for unlawfully procuring citizenship, he fled the United States to Mexico and eventually traveled to Canada. Sosa was arrested in Canada and extradited to the United States to face these charges.
The jury found that when Sosa applied for lawful permanent residence in 1997 and naturalized U.S. citizenship in 2007, he knowingly omitted the fact that he was a member of the Guatemalan military and that he had committed a crime for which he had not been arrested. During the trial, a United States immigration official testified that had Sosa been truthful about his past, his applications for permanent residence and citizenship would have been summarily denied.
“Jorge Sosa helped orchestrate the ruthless massacre of innocent villagers, including dozens of young children, and then lied about his past to obtain refuge in the United States,” said Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division. “And, today, he has been sentenced to serve 10 years in a U.S. prison. This prosecution demonstrates our resolve to deny safe haven to human rights violators and to ensure that these criminals are held accountable.”
Acting Director John Sandweg of U.S. Immigration and Customs Enforcement (ICE), stated: “ICE is dedicated to identifying and investigating alleged human rights violators hiding in the United States. Today’s sentencing reaffirms our commitment to ensuring that the United States not be used as a safe haven by those who have committed atrocities against mankind.”
Members of the public who have information about foreign nationals suspected of engaging in human rights abuses or war crimes are urged to call the toll-free ICE Homeland Security Investigations (HSI) tip line at 1-866-DHS-2-ICE or to complete its online tip form. Both are staffed around the clock. To learn more about the assistance available to victims in these cases, the public should contact HIS’s confidential victim-witness toll-free number at 1-866-872-4973. Tips may be provided anonymously.
The case was prosecuted by the United States Attorney’s Office for the Central District of California and Department of Justice, Criminal Division’s Human Rights and Special Prosecutions Section. The Criminal Division’s Office of International Affairs provided assistance.
The case was investigated by U.S. Immigration and Customs Enforcement’s Human Rights Violator and War Crimes Unit and Homeland Security Investigations.
Release No. 14-019
New Indictment Stemming from Civil Rights Investigation into L.A. County Sheriff’s Department Alleges Two Deputies Abused InmateRead the Press Release
LOS ANGELES – Two Los Angeles Sheriff’s deputies who were assigned to the Men’s Central Jail have been indicted on federal civil rights charges that accuse them of illegally using force against an inmate, and then attempting to cover up the incident with false reports that formed the basis of a false prosecution initiated against the victim.
A federal grand jury late yesterday returned a four-count indictment against two deputies who were assigned to the 3000 floor of the jail.
The indictment charges Joey Aguiar, 26, and Mariano Ramirez, 38. Both men will be issued summonses directing them appear in federal court for arraignments on March 6.
According to the indictment, Aguiar and Ramirez illegally used force against the victim – who is identified in the indictment as “BP” – during an incident in the jail on February 11, 2009. While the victim was handcuffed and secured with a “waist chain,” the deputies allegedly punched and kicked the victim before using pepper spray on him. The defendants also are accused of striking him with flashlight.
Soon after the attack, the deputies allegedly wrote false reports designed to cover up the illegal use of force. Those bogus reports formed the basis of a referral to the Los Angeles County District Attorney’s Office for potential criminal prosecution of the victim.
The indictment charges both defendants with conspiring to violate civil rights and with deprivation of rights under color of law that caused bodily injury. Each of these charges carry a statutory maximum penalty of 10 years in federal prison.
The indictment also charges Aguiar with one count of falsification of records for submitted a report that allegedly “falsely stated, among other things, that victim-inmate BP had attempted to head butt deputy Aguiar’s face and that victim-inmate BP violently kicked at deputy Aguiar” when the victim had done neither. Ramirez is also charged with falsification of records for submitting a report that falsely stated the victim had “viciously kicked his legs at deputies.” The charge of falsification of records carries a statutory maximum penalty of 20 years in prison.
Previously in this investigation, 18 current and former Los Angeles County Sheriff’s Deputies were indicted on various corruption and civil rights offenses (see: http://www.justice.gov/usao/cac/Pressroom/2013/143.html). All of those previously charged have pleaded not guilty and are scheduled for trial later this year.
The investigation into the Los Angeles County Sheriff’s Department, which is ongoing, is being conducted by the Federal Bureau of Investigation.
Release No. 14-017
Florida Man Charged in Federal Counterfeit Case for Trafficking Bogus Automotive Devices ‘Reverse Engineered’ in ChinaRead the Press Release
LOS ANGELES – A Florida man was charged today with trafficking in counterfeit electronic engine control devices manufactured and marketed by a Southern California company for use in modified Honda and Acura vehicles.
Marc Heera, 24, of Sunrise, Florida, was charged with one count of trafficking in counterfeit goods, an offense that carries a statutory maximum penalty of 10 years in federal prison. The charge is contained in a criminal information filed this morning in United States District Court.
Federal prosecutors today also filed a plea agreement in which Heera agreed to plead guilty to the felony offense of selling counterfeit circuit boards that are installed in engine control units to boost performance. In the plea agreement, Heera admits that he reverse-engineered, manufactured, advertised and sold approximately 86 counterfeit Hondata “K-Pro” and “S300” devices, which are aftermarket devices manufactured and sold by the Torrance-based Hondata, Inc.
In the plea agreement, Heera admits that, beginning in 2009, he arranged for Hondata’s K-Pro and S300 devices to be reverse-engineered. Investigators believe that Heera had the devices reverse engineered in China and he then paid an unknown Chinese company to build some of the devices. Heera also manufactured counterfeit circuit boards at his workplace, which contained Hondata’s proprietary software. The counterfeit devices bore Hondata’s trademarked name, as well as counterfeit serial numbers. Heera also admitted creating counterfeit packaging, labels, instructions and compact discs for the devices.
Heera, using the online screen name “Maddman7887,” then advertised and sold the counterfeit K-Pro and S300 devices over the Internet, he admitted in the plea agreement. To avoid detection, Heera installed the counterfeit K-Pro devices into used ECUs or instructed the customers to send their ECU’s to him for installation. Heera specifically admitted selling 62 counterfeit K-Pro devices and 24 counterfeit S300 devices, generating approximately $58,000 in income. If the products had been genuine, they would have had a retail value of approximately $74,000.
Heera has agreed to appear in federal court in Los Angeles for an arraignment on March 24.
The investigation in this matter was conducted by the Federal Bureau of Investigation.
Release No. 14-015
Two Men Convicted of Federal Charges in Killing of Coast Guard Officer During Operation Targeting Drug Smuggling BoatRead the Press Release
LOS ANGELES -- Two Mexican nationals were found guilty today of federal charges related to the death of a Coast Guard officer who was fatally injured in late 2012 when he was thrown from a Coast Guard vessel that was rammed by a “panga” boat operated by defendants.
Following a seven-day trial, a federal jury convicted one of the defendants of second-degree murder in the death of Chief Petty Officer Terrell Horne III, who died while his boat was attempting to interdict the panga boat near Santa Cruz Island in the Channel Islands National Park.
The two men found guilty today are:
Jose Meija-Leyva, 42, of Ensenada, who was found guilty of murder, 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 also was convicted in the 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 are scheduled to be sentenced by United States District Judge Gary A. Feess on May 12.
When he is sentenced, Meija-Leyva will face a statutory maximum sentence of life in federal prison. At sentencing,
Beltran-Higuera will face a statutory maximum sentence of 60 years.Chief Petty Officer Horne, a 34-year-old Redondo Beach resident, was the first Coast Guard officer murdered while on duty since 1927.
“We are pleased with the verdict and that those responsible for Senior Chief Horne’s death will be held accountable,” said Admiral Robert J. Papp, Jr., Commandant of the Coast Guard. “While the conviction of Senior Chief Horne’s killers cannot make up for the loss of a family member, friend and shipmate, we do hope that the conclusion of this case provides some level of comfort and closure to his loved ones. The Coast Guard will continue to honor the legacy Senior Chief Horne and his selfless service to our nation.”
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 crew members 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 Chief Petty Officer Horne and another officer into the water. 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 approximately 20 miles north of the Mexico-United States border. Meija and Beltran were arrested at this point.
The investigation in this case was being 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. 14-014
Founders of Bankrupt Real Estate Investment Firm Indicted in Wide-Ranging Scheme That Led to over $110 Million in LossesRead the Press Release
SANTA ANA, California – The owners of a now-defunct Southern California real estate investment firm were arrested today for allegedly perpetrating a Ponzi scheme that ended with the bankruptcy of their company and caused private investors and banks collectively to lose well over $110 million when the scheme collapsed.
Michael Stewart, 66, of Phoenix, and John Packard, 63, of Long Beach, California, were arrested this morning without incident by special agents with the FBI. The two men were named last month in a 16-count indictment returned by a federal grand jury. The two men each face 11 counts of mail fraud, three counts of bank fraud, and two counts of bankruptcy fraud.
Stewart and Packard owned and were the chief executives of Pacific Property Assets (PPA), which had offices in Long Beach and Irvine. The two men created PPA in 1999 to purchase, renovate, operate, and resell or refinance apartment complexes in Southern California and Arizona. Typically, PPA financed property acquisitions through mortgages, and it raised money from private investors to pay for renovations to the properties. After several years, PPA would usually refinance (or sometimes sell) each property.
Although PPA’s apartment rental operations were not profitable, it was able to raise cash through refinancing. As real estate values were generally increasing until approximately 2007, the properties were refinanced at ever-higher values, which enabled PPA to use the extra refinancing proceeds to not only pay off the original mortgages, but also to make payments on other loans, make payments to investors, to pay other business expenses, and to pay Stewart and Packard. In its 10 years of operations, PPA acquired more than 100 real estate properties and raised tens of millions of dollars from hundreds of investors. Stewart and Packard paid themselves annual salaries of $400,000 to $750,000, and each received millions of dollars in additional payments.
According to the indictment, by the end of 2007, when the real estate market began to decline and credit became scarce, PPA’s business model was no longer feasible. As the value of PPA’s properties was falling, PPA could no longer raise money by refinancing its properties with increasingly large mortgages. Furthermore, PPA faced large debt payments to its mortgage lenders and private investors, while it was continuing to lose money in its business operations.
To keep PPA afloat, from late 2007 through April 2009, Stewart and Packard allegedly continued to raise tens of millions of dollars from new investors. The defendants are accused of using these new funds to pay earlier investors, mortgage lenders, other company expenses, and Stewart and Packard themselves.
The indictment alleges that during the course of this continued fundraising effort, Stewart and Packard misrepresented PPA’s financial condition, claiming that its business model was still working, and that PPA was still financially stable and able to raise money through refinancing. Stewart and Packard allegedly concealed from investors the fact that the business had effectively become a Ponzi scheme, using new investors’ funds to pay back earlier investors. Moreover, following PPA’s final investor offering in 2009, virtually none of the investors’ funds were used to invest in new property purchases, as had been promised to investors; instead, the money was used to pay earlier investors and banks, to pay Stewart and Packard, and to pay PPA’s bankruptcy attorney.
The indictment also charges that PPA provided false financial information to at least one of its bank lenders – Vineyard Bank – in order to obtain loans and to maintain its line of credit with that bank. In particular, PPA allegedly substantially overstated its income (including its rental revenue) and assets (including its cash position), concealing the fact that its operations were unprofitable and it had limited liquidity.
PPA and a group of related companies filed for bankruptcy in June 2009. When the bankruptcy was filed, PPA owed 647 private investors more than $91 million, and it owed banks approximately $100 million. In the bankruptcy proceeding, the private investors received nothing, while banks lost an estimated $24 million.
The indictment further charges that Stewart and Packard committed fraud in connection with the bankruptcy process. After PPA had retained bankruptcy attorneys and shortly before it filed for bankruptcy, Stewart and Packard allegedly transferred $165,000 from PPA to Packard’s personal bank account, ensuring that those funds were not available to PPA’s creditors through the bankruptcy process. The indictment also charges that after PPA entered bankruptcy, Stewart and Packard arranged for $131,000 in funds due to PPA to be transferred to outside accounts and then to Stewart, Packard, and their personal attorneys, thus circumventing the bankruptcy process.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
Stewart is expected to make his initial court appearance later today in federal court in Phoenix. Packard is expected to be arraigned on the indictment this afternoon in United States District Court in Santa Ana.
If they are convicted of all 16 counts in the indictment, both Stewart and Packard each would face a statutory maximum sentence of 320 years in federal prison and millions of dollars in fines.
This investigation was conducted by the Federal Bureau of Investigation, which received assistance from the United States Trustee’s Office.
In May 2012, the Securities & Exchange Commission filed a complaint against Stewart and Packard, charging them with securities fraud and other violations of securities fraud (see: http://www.sec.gov/litigation/litreleases/2012/lr22365.htm). The SEC’s complaint alleged that, shortly after PPA entered bankruptcy, Stewart and Packard formed a new company, Apartments America, which was intended to replicate PPA’s business model. The complaint also alleged that Stewart and Packard made misleading statements to prospective investors about their track record and that of Apartments America, in an attempt to raise money for the new company. The SEC case has been partially settled, with Stewart and Packard agreeing to an injunction against committing further fraud and selling unregistered securities. The SEC is continuing to seek civil penalties.
Release No. 14-012
Two Mexican Mafia Members Guilty of Federal Racketeering Charges in Crackdown Targeting Ontario Street GangRead the Press Release
RICO Case Has Led to Conviction of 59 Linked to Black Angels Gang, including the gang’s enforcers, female associates and drug dealers who were paying ‘rent’
LOS ANGELES – Two members of the Mexican Mafia prison gang were found guilty this afternoon of federal racketeering charges for overseeing the conduct of the main street gang in Ontario, a criminal enterprise that was responsible for numerous violent crimes and widespread drug trafficking.
The convictions of the two leaders of the Black Angels gang stem from an indictment that charged violations of the Racketeer Influenced Corrupt Organizations (RICO) Act. In addition to the RICO charges, the indictment alleges violent crimes in aid of racketeering, conspiracies to distribute heroin and methamphetamine, and firearms violations.
Following a nine-day trial, a federal jury convicted the lead defendant in the racketeering case – Armando “Mando” Barajas, a 50-year-old Mexican Mafia member who resides in Pomona. Barajas controlled the gang’s activities, including the narcotics distribution activities in the gang's territory.
Another Mexican Mafia member – Juan “Nito” Gil, 43, who was serving a 10-year prison term when he was indicted in 2010 – was also found guilty today by a jury that determined he exercised control of gang activities by communicating directions through others linked to the gang.
“Gang violence takes a heavy toll on too many of our neighborhoods,” said United States Attorney André Birotte Jr. “Today’s verdicts demonstrate once again that the gang leaders and shot-callers responsible for that violence will be held accountable for their criminal conduct. The United States Attorney’s Office will continue to work with our federal and local partners to protect the residents Southern California and make our communities safe.”
The Black Angels is a multi-generational Latino street gang that claimed a portion of city of Ontario as its turf. The Black Angels’ main criminal activity is the distribution of narcotics, specifically methamphetamine and heroin. Leaders of the gang extorted drug dealers, who, in exchange for paying “taxes” or “rent,” were allowed to operate in gang-controlled territory. The gang’s drug trafficking activities extended to smuggling narcotics into prisons for use by incarcerated Mexican Mafia and Black Angels members.
Ontario Police Department’s Chief Eric Hopley said he was “extremely pleased” when informed of today’s guilty verdicts. “This was a huge case for us that involved scores of investigators and hundreds of man hours. The guilty verdicts are good news for both law enforcement and the citizens of Ontario. This investigation is another example of the success that can be accomplished when federal and local law enforcement agencies work together to reach a common goal.”
This case is the result of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation conducted by the Drug Enforcement Administration and the Ontario Police Department. The Inland Empire-based task force operates within the High-Intensity Drug Trafficking Area (HIDTA) program, and includes agents and officers from DEA, IRS-Criminal Investigation, U.S. Immigration and Customs Enforcement, the San Bernardino Sheriff’s Department, the Riverside Sheriff’s Department, and the Riverside Police Department.
Release No. 14-011
International Law Enforcement Efforts Result in Charges Around the World Against Operators and Customers of Email Hacking WebsitesRead the Press Release
LOS ANGELES – As part of an international law enforcement operation involving Romania, India and China, federal prosecutors have charged two operators of a United States-based email hacking website, as well as three customers of other hacking websites based in other nations, with computer fraud offenses.
In a series of cases filed in Los Angeles earlier this week, prosecutors charged all five domestic defendants with obtaining unauthorized access to email accounts. All five defendants are expected to plead guilty in the coming weeks.
The domestic cases were announced today after authorities in Romania, India and the People's Republic of China arrested six defendants on various computer hacking charges.
The five domestic defendants were charged in four cases filed earlier this week in Los Angeles. One Los Angeles-based defendant is scheduled to make his first appearance in United States District Court this afternoon.
In the first case, Mark Anthony Townsend, 45, of Cedarville, Arkansas; and Joshua Alan Tabor, 29, of Prairie Grove, Arkansas, who operated the email hacking website needapassword.com, each were charged with a felony violation that carries a potential prison sentence of five years. According to court documents, customers of the website operated by Townsend and Tabor provided names of email accounts, and Townsend and Tabor would obtain the passwords to those accounts. The customers made payments into PayPal accounts and nearly 6,000 email accounts were affected by the scheme.
The other three defendants charged this week each face misdemeanor offenses for hiring computer hackers. These customers, who face up to one year in federal prison, are:
John Ross Jesensky, 30, of Northridge, California, who paid $21,675 to a Chinese website to get email account passwords and who is expected to be in federal court in Los Angeles this afternoon;
Laith Nona, 31, of Troy, Michigan, who paid approximately $1,081 to get email account passwords; and
Arthur Drake, 55, of Bronx, New York, who paid approximately $1,011 to get email account passwords.
These charges are the product of an international investigation coordinated by the Federal Bureau of Investigation, which received the assistance of the United States Air Force/Office of Special Investigations and the Naval Criminal Investigative Service. During the investigation, the FBI coordinated with the Directorate for Investigating Organized Crime and Terrorism (DIIOCT) and Directorate for Combating Organized Crime (DCCO) of Romania, the Central Bureau of Investigation (CBI) of the Republic of India, and the Ministry of Public Security (MPS) in the People's Republic of China.
In Romania, the DCCO, under the authority of DIICOT, has conducted searches of three residences associated with individuals operating the websites zhackgroup.com, spyhackgroup.com, rajahackers.com, clickhack.com, ghostgroup.org and email-hackers.com. Four individuals have been charged and detained in connection with the operation of those websites.
Approximately 1,600 email accounts were affected by the scheme operated by the subjects in Romania between February of 2011 and October of 2012.The Central Bureau of Investigation in India has arrested Amit Tiwari for operating the websites www.hirehacker.net and www.anonymiti.com and conducted searches of the residences of Tiwari and his associates. Operators of the two websites are responsible for obtaining unauthorized access to approximately 935 email accounts (of which 171 belonged to victims in India) between February of 2011 and February of 2013.
The MPS in China has arrested Ying Liu (劉颖), also known as “Brent Liu,” for operating website hiretohack.net. Liu is responsible for obtaining unauthorized access to approximately 300 email accounts between January of 2012 and March of 2013.
Release No. 14-010
Two California Men Arrested for Email Hacking Scheme That Yielded Nude Photos That Were Posted on 'Revenge Porn' WebsiteRead the Press Release
LOS ANGELES – The FBI arrested two men this morning for allegedly conspiring to hack into victims’ e-mail accounts to steal nude photos that were later posted on the “revenge porn” website isanyoneup.com.
Hunter Moore, 27, of Woodland, who operated isanyoneup.com, and Charles Evens, 25, of Studio City, were arrested without incident by special agents with the FBI. Both men are expected to make initial court appearances this afternoon – Moore in federal court in Sacramento, and Evens in United States District Court in Los Angeles.
Moore and Evens are charged in a 15-count indictment unsealed after they were arrested this morning. The indictment charges both men with conspiracy, seven counts of unauthorized access to a protected computer to obtain information and seven counts of aggravated identity theft.
According to the indictment, Moore operated the website http://isanyoneup.com, where he posted, among other things, nude or sexually explicit photos of victims. The pictures were submitted without the victim’s permission for purposes of revenge. However, to obtain more photos to populate the site, Moore allegedly instructed Evens to gain unauthorized access to – in other words, to hack into – victims’ e-mail accounts. Moore sent payments to Evens in exchange for nude photos obtained unlawfully from the victims’ accounts. Moore then posted the illegally obtained photos on his website, without the victims’ consent. The indictment alleges that Evens hacked into email accounts belonging to hundreds of victims.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
If convicted, Moore and Evens face up to five years in federal prison for each of the conspiracy and computer hacking counts. The charge of aggravated identity theft carries a mandatory two-year sentence to run consecutive to any other sentence imposed in the case.
The investigation that led to this morning’s arrest of Moore and Evens was conducted by the Federal Bureau of Investigation.Release No. 14-008
Denver Man Who Promoted Credit Services Scheme to Fraudulently Obtain Business Lines of Credit Sentenced to Federal PrisonRead the Press Release
LOS ANGELES – A Denver man who billed himself as “The Credit Line Millionaire” was sentenced today to 21 months in federal prison as a result of his role in a scheme to obtain lines of credit worth hundreds of thousands of dollars through a host of misrepresentations and falsified documents.
Christopher Robert Wise, 35, was sentenced today by United States District Court Judge John Kronstadt in Los Angeles. Wise has been in federal custody since his arrest by the United States Secret Service at Los Angeles International Airport last August after he arrived on a flight from Mexico.
Wise pled guilty in October to conspiracy to commit bank fraud, admitting that he conspired to fraudulently obtain lines of credit from Wells Fargo Bank, Union Bank and City National Bank.
According to prosecutors, Wise maintained a significant online presence, which included his websites www.creditlinemillionaire.com and http://chriswise.com/, and he billed himself as a credit guru who could help clients obtain loans for their small- and medium-size businesses. Wise referred his clients to several co-conspirators who controlled Inland Empire companies and who promised to help acquire financing.
As part of his guilty plea, Wise admitted attempting to obtain business lines of credit for himself through loan applications submitted to the victim banks on behalf of one of his companies. Wise also admitted he used a co-conspirator as a “credit partner” to pose as a “personal guarantor” for the loans – in essence, using a “straw borrower” to apply for loans in exchange for giving the credit partner a percentage of the loan proceeds.
At sentencing, prosecutors relied on an online video of defendant speaking at one of his seminars where he summarized his scam, saying, among other things:
“My credit is messed up. I’m getting over a million dollars. I have leveraged over a million dollars in the past. I’m getting ready to get another million dollars in one shot . . . My business doesn’t qualify for the revenue documentation, because as a business owner I like to write everything off. Right, that is one of the advantages of being a business owner. And so when you go to the bank and you show them everything is written off, they don’t really like to see that. So my business doesn’t qualify. And so by leveraging other people’s credit and by leveraging other people’s entities, I’m now in the process of getting a million dollars line of credit.”
Previously in this investigation, five co-conspirators pleaded guilty, four of whom are pending sentencing. Last month, Avedis Abraham Hagopian was sentenced to two years in federal prison for his role in the scheme.
This case is the result of an investigation by the United States Secret Service.
Release No. 14-009
Three Men Charged in Federal Court for Starting Illegal Campfire in Angeles National Forest That Became Colby FireRead the Press Release
LOS ANGELES, California – Three men were charged this afternoon in United States District Court with illegally setting a campfire above Glendora that erupted in Santa Ana winds last week to become a destructive wildfire called the Colby Fire.
Federal prosecutors filed a criminal complaint that charges the three men with unlawfully setting timber afire, a felony offense that carries a possible five-year prison term.The three men named in the criminal complaint are:
Clifford Eugene Henry Jr, 22, of Glendora;
Steven Robert Aguirre, 21, a transient; and
Jonathan Carl Jarrell, 24, also a transient.
The three men were taken into custody by local officials last Thursday after the fire started. Henry, Aguirre and Jarrell are expected to be turned over to federal authorities this afternoon. The defendants are expected to make their first appearance in federal court tomorrow, possibly as early as 11:00 a.m.
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, 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, according to the affidavit in support of the criminal complaint.
A United States Forest Service fire investigator has determined that the origin of the Colby Fire was at a point near a fire ring built by Henry, Aguirre and Jarrell; the cause of the fire was embers from the campfire that set dry grass adjacent to the campfire ring afire; and both the campfire ring and the origin of the fire are clearly located on federal lands within the Angeles National Forest.
The investigation is being conducted by the United States Forest Service, the Glendora Police Department and the Los Angeles County Fire Department.
Release No. 14-007
San Fernando Valley Pastor Arrested for Running A Fraudulent Investment Scheme That Targeted Spanish-Speaking InvestorsRead the Press Release
LOS ANGELES – A Chatsworth man was arrested this morning by the U.S. Postal Inspection Service and the Federal Bureau of Investigation after being named in a federal grand jury indictment that charges him with running a multi-million dollar Ponzi scheme that targeted Latino victims.
Luis Alonso Serna, 61, who operated Architects of the Future Investments, which he purported to be a foreign currency investment company, was arrested this morning on federal charges that allege he ran a Ponzi scheme that lured more than 70 victims into investing almost $4 million.
“The Ponzi scheme is a century-old concept, but it remains a clear and present danger to the investing public,” said United States Attorney André Birotte Jr. “Cases like the one against Mr. Serna demonstrate the accuracy of the old adage that if it sounds too good to be true, it almost certainly is.”
Serna, the pastor of Zion Living Word Christian Center (formerly Amistad Cristiana) in San Fernando, was named in a superseding indictment returned on January 10. The indictment charges him with two counts of mail fraud, two counts of wire fraud and two counts of money laundering. Serna is expected to be arraigned on the indictment this afternoon in United States District Court in Los Angeles.
“The Postal Inspection Service has no shortage of Ponzi schemes to investigate, and this is another sad example of greed overcoming honest business practices,” said B. Bernard Ferguson, Inspector in Charge for the Los Angeles Division. “Relying on a reputation or relationship is not enough -- investors must still verify information, especially if there are claims of outperforming the market.”
According to the indictment, Serna claimed to be a successful investor, but he in fact operated a Ponzi scheme by soliciting funds from investors with false claims that their money would be used to purchase foreign currency. Serna allegedly promised to pay the victims monthly returns of up 20 percent. Serna and people working with him sometimes convinced victims to take liens on their homes to invest, according to prosecutors, who noted that many of those victims lost their homes and some declared bankruptcy.
Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office, said: “The FBI is committed to pursuing criminals who prey upon the investing public through various methods, including sophisticated affinity-fraud schemes such as the one we're announcing today. Justice for the victims in this case can be attributed to the collaborative efforts of federal law enforcement.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
If he is convicted, Serna would face a statutory maximum penalty of 20 years in federal prison for each of the four fraud charges and up to 10 years in prison for both of the money laundering counts.
This case was investigated by the United States Postal Inspection Service and the Federal Bureau of Investigation.
Release No. 14-005
Man Who Conspired with Female Friend to Solicit ‘Hit Man’ to Kill Her Daughter’s Boyfriend Sentenced to 7 Years in Federal PrisonRead the Press Release
SANTA ANA, California – A Hawthorne man who pleaded guilty in a murder-for-hire scheme targeting a man who was dating the daughter of his co-conspirator was sentenced today to seven years in federal prison.
Antonio Quevedo, 35, was sentenced by United States District Judge Josephine L. Staton.
The second defendant in the case – Adelina Cristobal, 56, of Lawndale, who also pleaded guilty last year to conspiracy to use interstate commerce facilities in the commission of murder-for-hire – is scheduled to be sentenced by Judge Staton on January 31.
The murder-for-hire scheme was uncovered during an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Los Angeles Police Department. Investigators initiated the investigation after receiving information that the two defendants were attempting to solicit someone to commit a murder on their behalf. An undercover officer posing as the hired “hit man” met with the defendants, who offered the undercover officer $6,500 to kill the intended victim. Cristobal was to pay Quevedo an additional $500 for arranging the meeting with the “hit man.”
Quevedo conspired with Cristobal to hire someone to murder the boyfriend of Cristobal’s daughter, prosecutors wrote in a sentencing memorandum that noted “Had the government not been able to infiltrate the conspiracy, [Quevedo] may well have found a willing assassin to murder the victim and successfully collected his broker’s fee.”
Release No. 14-006
Los Angeles-Area Gang Member Pleads Guilty to Sex Trafficking of Minors by ForceRead the Press Release
Lynwood Man Becomes Eighth Convicted of Sex Trafficking Charges for Prostituting Teenage Girls Recruited from Inland Empire Schools
Conviction is the Latest in a String of Human Trafficking Prosecutions
Recently Brought by the United States Attorney’s OfficeRIVERSIDE, California – On the day a jury was expected to hear opening statements in his trial, a Lynwood gang member pleaded guilty on Tuesday to federal sex trafficking charges, admitting that he used force, fraud and coercion to recruit teen-age girls who worked as prostitutes across Southern California.
Paul Edward Bell, 29, an alleged member of the Rolling 60s Crips street gang, pleaded guilty on Monday pursuant to a plea agreement that calls for a sentence of 30 years in federal prison.
Bell, who used multiple monikers, including J-Roc, pleaded guilty before United States District Judge Virginia A. Phillips, who is scheduled to determine whether to accept the 30 year binding plea agreement and sentence the defendant to that term of imprisonment on March 31, 2014.
Bell is the eighth and final defendant convicted after a federal grand jury returned an indictment in August 2012 that 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.
In court documents previously filed in this case, prosecutors said that Bell and his co-defendants used minors as prostitutes for their own financial gain. They preyed on vulnerable victims, convinced them to become prostitutes, and verbally and physically abused them when they did not perform as required, according to various court documents.
In a plea agreement filed yesterday, Bell specifically admitted that in 2011 he recruited and harbored four minor victims (ages 15 to 17) that he forced to work as prostitutes in Lynwood and Compton. Bell admitted physically abusing one victim “for not performing as a prostitute and for acting up,” according to the plea agreement.
“Sex trafficking is an abominable crime that condemns its victims to physical and psychological trauma, hardship and abuse,” said United States Attorney André Birotte Jr. "Mr. Bell and his cohorts coldly and brutally victimized young women and juveniles, subjecting them to treatment that can only be described as inhumane. Bell exploited his victims for profit and now he will be held accountable and punished for his predatory conduct."
“The defendants in this case lured minor victims from school with false promises of a glamorous lifestyle only to sexually exploit and abuse them in furtherance of the gang, and for their own financial gain,” said Bill Lewis, the Assistant Director of the FBI’s Los Angeles Field Office. “January is Human Trafficking Awareness Month and today’s announcement should send a message to those with similar intentions of targeting minors that the FBI and our task force partners are committed to investigating allegations of sex trafficking and sending them to prison.”
The other defendants in this case who previously pleaded guilty are:
Samuel Rogers, also known as Bone, 23, of Moreno Valley, another alleged member of the Rolling 60s, who pleaded guilty to sex trafficking of a minor;
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;
Christopher Weldon, who is also known by several names, including C-Roc, 24, of Compton, the fourth alleged Rolling 60s member named in the indictment and Bell’s half-brother, 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 as 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;
Kimberly Alberti, 20, of Riverside, who was the lead prostitute for Samuel Rogers, who pleaded guilty to one count of conspiracy to engage in sex trafficking;
Kristy Harrell, 21, of Riverside, who was Gary Rogers’ lead prostitute, who pleaded guilty to interstate transportation in the aid of racketeering; and
Su Yan, 31, of Rosemead, a Chinese national who assisted Bell with his prostitution business and pleaded guilty to interstate transportation in the aid of racketeering.
The defendants who have not been sentenced will also be sentenced later this year by Judge Phillips.
The investigation in this case began in January of 2011, when the Riverside County Sheriff’s Department learned that teenage 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 by Bell and the Rogers brothers at hotels on and near Long Beach Boulevard or at Bell's apartment.
The United States Attorney’s Office worked with the Justice Department’s Child Exploitation and Obscenity Section to prosecute this case.
The case being announced today was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Fighting human trafficking has been, and will remain, a priority for the Central District of California. The convictions announced today are the latest in a string of human trafficking cases that the United States Attorney’s Office, working in partnership with federal and local law enforcement, has brought in the past year. Over the past year, the United States Attorney’s Office has also prosecuted the following matters, among others:
United States v. Letha Montemayor Tucker, CR No. 13-78-ABC. On March 12, 2013, a federal grand jury returned a first superseding indictment charging Letha Montemayor Tucker with conspiracy to produce child pornography, production of child pornography, conspiracy to engage in sex trafficking of a child, and sex trafficking of a child. Tucker was arrested last year after tips from members of the public to the U.S. Immigration and Customs Enforcement’s Homeland Security Investigation agency helped identify her as a woman allegedly seen molesting a pre-teen victim in a series of child photography images that had been widely-distributed over the Internet. The jury trial in this case is set for April 8, 2014. Tucker faces a mandatory minimum sentence of 15 years and a statutory maximum of life imprisonment if convicted.
United States v. Roshaun Nakia Porter and Marquis Monte Horn, CR No. 12-97(A)-JLS. On March 27, 2013, a federal grand jury returned a first superseding indictment charging Roshaun Nakia Porter and Marquis Monte Horn with conspiring to engage in sex trafficking and sex trafficking by force, fraud, and coercion. According to court documents filed in this case, Horn allegedly recruited victims to work in a prostitution organization through a website and by claiming that he and Porter were running an upscale escort service in which women could make $500 per day. Prosecutors allege that this was merely a ruse; and that Horn, Porter, and others used various coercive tactics -- including developing purportedly romantic relationships with the victims, falsely promising financial assistance to the victims and their families, falsely promising to help obtain lawful immigration status in the United States for their victims, and isolating some of the victims from their families and friends -- all to induce these victims into engaging in prostitution. Both Horn and Porter face a mandatory minimum sentence of 15 years and a statutory maximum of life imprisonment if convicted. Their trial is set for February 18, 2014.
United States v. William Earl Flavors, CR No. 13-143-JLS. On August 7, 2013, a federal grand jury returned an indictment charging William Earl Flavors, aka “Andre,” with sex trafficking by force, fraud, or coercion, and transportation in interstate commerce for purposes of prostitution. On December 5, 2013, Flavors pleaded guilty to transportation in interstate commerce for purposes of prostitution, admitting, among other things, 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. Flavors’ conviction in this case marks the second time Flavors has been convicted in federal court of trafficking women across state lines and forcing them to work as prostitutes. Pursuant to the parties’ plea agreement, Flavors and the government agreed to recommend the statutory maximum sentence of 10 years’ imprisonment. Sentencing is set for May 9, 2014.
United States v. Joshua Jerome Davis & Sharilyn Kae Anderson, CR No. 13-589-CAS. On August 22, 2013, a federal grand jury returned an indictment charging Joshua Jerome Davis with sex trafficking of a child, coercion and enticement to travel in interstate commerce to engage in prostitution, and transportation of a child for purposes of prostitution. As detailed in the criminal complaint filed in this case, Davis is accused of prostituting a 16-year-old girl in Southern California and transporting her across state lines to engage in commercial sex in Las Vegas casinos. The Department of Homeland Security and the Long Beach Police Department began investigating this case after the victim’s father reported her missing and discovered that his daughter was being featured in an on-line prostitution ad. The indictment also charged Davis’ mother, Sharilyn Kae Anderson, with aiding and abetting the child sex trafficking offenses committed by her son. A jury trial in this case is set for April 22, 2014. Both defendants face a mandatory minimum sentence of 15 years and a statutory maximum of life imprisonment if convicted.
United States v. Tabitha Samaria Walls and Kenyati Jakeen Rahh-Potts, CR No. 13-637-MWF. On September 4, 2013, a federal grand jury returned an indictment charging Tabitha Samaria Walls and Kenyati Jakeen Rahh-Potts with sex trafficking of a child and transportation of a minor for purposes of prostitution. According to the criminal complaint filed in this matter, Walls and Rahh-Potts allegedly forced the child victim in this case to accompany them from Las Vegas to California, where they forced her to engage in acts of prostitution in Los Angeles, Hollywood, Pomona, and Ontario. It is further alleged in the criminal complaint that the child victim was forced to surrender all of the money that she earned as a prostitute to Walls and Rahh-Potts, that Rahh-Potts beat her on one occasion when she lost the money she earned as a prostitute, and that Rahh-Potts told two individuals who attempted to rescue the child victim from Walls and Rahh-Potts that he had killed the child victim and left her body on the side of the road along the Interstate 15 freeway. The trial in this case is scheduled for June 17, 2014. Both Walls and Rahh-Potts face a mandatory minimum sentence of 15 years and a statutory maximum of life imprisonment if convicted.
United States v. Curtis Maurice Canady, Jr., CR No. 13-165-DOC. On September 4, 2013, a federal grand jury returned an indictment charging Curtis Maurice Canady Jr. with sex trafficking of children and transportation of children for purposes of prostitution. Canady pleaded guilty on November 19, 2013, to transportation of children for purposes of prostitution. As detailed in court documents filed in this case, Canady drove his victims, including two girls who were 15 and 16, from a motel in Los Angeles to locations in Anaheim where he had them work as prostitutes; transported his victims, including a minor victim, to Las Vegas for the purpose of engaging in prostitution; and engaged in on-line advertising aimed at attracting customers for his victims. At sentencing, Canady faces a statutory maximum sentence of life imprisonment.
United States v. Vincent Earl Jordan, 13-657(A)-BRO. On October 29, 2013, a federal grand jury returned a first superseding indictment charging Vincent Earl Jordan, aka “Vinnie Mac,” with sex trafficking of a minor, sexual exploitation of a child, possession of child pornography, transportation of a child for purposes of prostitution, and coercion and enticement to travel in interstate commerce to engage in prostitution. As detailed in court documents filed in this matter, this case began when Long Beach Police Department detectives encountered a 17-year-old girl engaged in acts of prostitution who had a moniker, “Vinnie,” tattooed across her stomach. The documents allege that, after this child victim identified Jordan as her pimp, the police found a second victim who also alleged that Jordan had threatened and coerced her to travel from Texas to California to work as a prostitute. The indictment further alleges that Jordan produced and possessed child pornography of his 17-year-old victim. The jury trial in this case is set for February 25, 2014. Jordan faces a statutory minimum sentence of 15 years and a statutory maximum of life imprisonment if convicted.
United States v. Samuel Gonzalez, CR No.11-193-AG. On November 15, 2013, Samuel Gonzalez pleaded guilty pursuant to a plea agreement to arranging and facilitating travel of minors for prostitution. As detailed in court documents filed in this case, Gonzalez lured three teenage girls from Texas to California under the guise that he wanted to take them “to the beach.” Once in California, Gonzalez induced these minor victims to work as prostitutes, until the family of one of the teenage victims reported the victims missing and Gonzalez was apprehended. As a result of this guilty plea, Gonzalez faces a maximum sentence of 30 years’ imprisonment. Sentencing is set for February 24, 2014.
United States v. Eric Lamar Wells and Tonisha Alecia Moore, CR No. 12-120-CJC. On May 23, 2012, a federal grand jury returned an indictment charging Eric Lamar Wells and Tonisha Alecia Moore with conspiracy to engage in sex trafficking of minors, sex trafficking of minors, and transportation of minors into prostitution. As detailed in court documents filed in this case, Wells recruited a 14-year-old girl and a 17-year-old girl to work as prostitutes for him. Wells and Moore then transported these girls from Las Vegas, Nevada, to Phoenix, California, and finally to Anaheim, California, so that they could engage in commercial sex acts and give the money they made to Wells. Wells also posted on-line ads to find men who would pay to engage in sex acts with the minor victims. Following their guilty pleas, on June 26, 2013, the court sentenced Wells to 10 years’ imprisonment and Moore to 70 months’ imprisonment.
United States v. Kawaum Marquez Scott and Nekeyia Necole Weatherspoon, CR No. 13-116-VAP. On November 27, 2013, a federal grand jury returned an indictment charging defendants Kawaum Marquez Scott and Nekeyia Necole Weatherspoon with conspiracy to engage in sex trafficking of a child and sex trafficking of a child. Jury trial is set for April 29, 2014. In the criminal complaint filed in this case, it is alleged that Scott and Weatherspoon befriended a 14-year-old victim who lived at a residence located on the same property where Scott and Weatherspoon lived; forced this 14-year-old victim to engage in prostitution, pocketing for themselves all of the money this victim made; and utilized the Internet to advertise this child victim as a prostitute. Defendants face a statutory minimum sentence of 15 years and a statutory maximum of life imprisonment if convicted.
United States v. Ralph Allen Jackson, Jr., CR No. 13-476(A)-BRO. On December 16, 2013, Ralph Allen Jackson, Jr., 41, also known as “Mac Wimp,” pleaded guilty to conspiracy to engage in sex trafficking of a minor. In his plea agreement, Jackson admitted that he trafficked four victims – including a 17-year-old girl – in the Long Beach area in June 2013. As detailed in court documents filed in this matter, Jackson drove his victims to known areas for prostitution, instructed them to engage in sex acts for money, gave them quotas that they were required to meet each day, and engaged in acts of coercion to insure that his victims continued to work for him as prostitutes. When law enforcement first encountered the minor victim in this case, she was branded with the words “Mac Wimp’s bitch” tattooed across her chest. Pursuant to the terms of the plea agreement, Jackson has agreed to recommend that he serve a sentence of no less than five years’ imprisonment, and the government agreed to recommend a sentence of no more than ten years’ imprisonment. Sentencing is set for March 10, 2014.
An indictment or complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
January 2014 has been proclaimed National Slavery and Human Trafficking Prevention Month by President Obama (see: http://www.whitehouse.gov/the-press-office/2013/12/31/presidential-proclamation-national-slavery-and-human-trafficking-prevent). In addition to efforts to investigate and prosecute human trafficking violations, law enforcement has also been proactive with respect to outreach, education and prevention efforts in local communities. To that end, on Saturday, January 11, the United States Attorney’s Office for the Central District of California and the Los Angeles Field Office of the FBI co-hosted an Anti-Human Trafficking Summit to assist local prevention efforts and help raise awareness about the many facets of human trafficking. The all-day Summit was held at the National Council of Jewish Woman/Los Angeles (NCJWLA) in Los Angeles and featured presenters and participants from federal and local law enforcement, as well as local community stakeholders and victims’ services organizations. Presenters included prosecutors, investigators, subject matter experts, victims’ advocates and victims who were survivors of human trafficking. United States Attorney André Birotte Jr. and FBI Assistant Director in Charge Bill Lewis also participated. Volunteers from the Expediente Rojo Project, Inc. (http://www.expedienterojo.org/) and NCJWLA assisted in all facets of the Summit.
Release No. 14-004
El Salvadoran National Sentenced to 15 Years in Federal Prison in Credit Card Fraud CaseRead the Press Release
LOS ANGELES – An El Salvadoran national who was convicted of credit card fraud, trafficking in counterfeit goods and identity theft has been sentenced to 15 years in federal prison for causing victims to suffer losses of over $100,000.
Jose Rolando Renderos, 39, who last resided in Montebello, but has been in federal custody since February 1, 2013, was sentenced yesterday afternoon by United States District Judge Audrey B. Collins. In October 2013, a federal jury convicted Renderos of various federal charges related to a credit card manufacturing scheme.
Renderos was apprehended on February 1, 2013, after receiving a box of more than 3,000 counterfeit credit cards imported from China and then leading law enforcement on a high-speed chase through the San Gabriel Valley. All told, authorities seized more than 100,000 counterfeit credit cards and numbers in packages imported from China and at a credit card manufacturing plant that Renderos had operated in Montebello, California.
“Credit card fraud and identity theft impact the financial security, privacy, and emotional well-being of millions of Americans every year,” said United States Attorney André Birotte Jr. “Mr. Renderos is a repeat offender who callously disregarded the effect that his schemes had on the lives of his unfortunate victims and now he will be serving a lengthy and richly deserved sentence in federal prison.”
“Identity theft and credit card fraud are growing at an alarming rate, posing a real threat to consumers and financial institutions nationwide,” said Claude Arnold, special agent in charge for HSI Los Angeles. “As this sentencing shows, those who perpetrate such schemes face serious consequences. HSI will continue to work closely with its federal law enforcement partners to aggressively target those who seek to undermine the integrity of our financial system and compromise our quality of life.”
At trial, federal prosecutors presented evidence that Renderos had lived a luxurious lifestyle that had been financed by credit card fraud. The ill-gotten gains paid for cosmetic surgery for himself and his girlfriend, VIP tickets to Lakers and Clippers games, and designer handbags and shoes.
“Our success in this case and other similar investigations is a result of our close work with our law enforcement partners,” said Joseph Beaty, Special Agent in Charge of the U.S. Secret Service Los Angeles Field Office. “The Secret Service worked closely with the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations to share information and resources that ultimately brought Jose Rolando Renderos to justice.”
During the investigation, authorities learned that Renderos obtained valid credit card numbers by installing “skimmers” inside gas station pumps throughout Southern California. Renderos used others to block cameras and distract gas station employees while he did the installation. Six other defendants were also prosecuted as part of the scheme, including his girlfriend, his 18 year-old son, his brother, and others who purchased products for Renderos using the counterfeit credit cards.
Renderos was previously convicted of credit card fraud in the California courts. When he was arrested last year, Renderos was a fugitive wanted by federal authorities after he absconded from supervised release imposed after he was convicted of interstate transportation of a stolen vehicle. Renderos was also wanted by local authorities because he absconded while being prosecuted in Los Angeles County on credit card fraud charges. While a fugitive, Renderos had assumed the identities of several Puerto Rican men to hide from authorities.
The case was investigated by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the United States Secret Service with substantial assistance provided by U.S Customs and Border Protection.
Release No. 14-003
San Fernando Valley Woman Pleads Guilty to Federal Charges in $25 Million Health Care Fraud CaseRead the Press Release
LOS ANGELES -- A North Hollywood woman who worked in the health care industry pleaded guilty today to federal charges for orchestrating a scheme that submitted nearly $25 million in fraudulent bills to Medicare for services and supplies, including power wheelchairs and diagnostic tests 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, pleaded guilty this afternoon before United States District Judge Margaret M. Morrow. Artsruni, who often used the names “Mary” and “Rose,” pleaded guilty to one count of health care fraud and one count of money laundering.
In a plea agreement filed last year 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. Further, 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 $9.2 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. Artrsuni 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 (United States v. Artsruni, CR08-209-CAS). 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.
As a result of today's guilty pleas, Artsruni faces a statutory maximum sentence of 30 years in federal prison. Judge Morrow is scheduled to sentence Artsruni on April 14.
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, is scheduled to go on trial before Judge Morrow on April 8.
The case against Artsruni and Kotey is the product of an investigation by the Federal Bureau of Investigation; the U.S. Department of Health and Human Services, Office of Inspector General; and IRS - Criminal Investigation.
Release No. 14-002
Santa Barbara Doctor Known as ‘Candy Man’ Pleads Guilty to Illegally Writing Prescriptions for Huge Quantities of Dangerous NarcoticsRead the Press Release
SANTA ANA, California – A Santa Barbara physician was remanded into custody this morning after he pleaded guilty to 11 federal drug trafficking charges for writing prescriptions for powerful painkillers for “patients” who were drug addicts.
Julio Gabriel Diaz, 65, who operated the Family Medical Clinic in Santa Barbara prior to his arrest two years ago, pleaded guilty to 10 counts of distributing controlled substances without a legitimate medical purpose and one count of distributing controlled substances to a minor (which, under federal law, is a person under 21).
Diaz pleaded guilty before United States District Judge Cormac J. Carney, who is scheduled to sentence the defendant on June 2. Diaz, who will be held in jail until his sentencing, faces a maximum statutory sentence of 200 years in federal prison and fines of up to $10 million.
“Dr. Diaz was, quite simply, acting as a common drug dealer,” said United States Attorney André Birotte Jr. “The diversion of powerful painkillers from legitimate medical uses to the hands of drug abusers is a dangerous practice that fuels addiction and causes overdoses. Far too many of the illegal prescription drugs that find their way to street users come from doctors who, like Julio Diaz, choose to betray their Hippocratic oath.”
In a plea agreement filed last year in United States District Court, Diaz admitted distributing narcotics such as oxycodone, methadone, hydrocodone, alprazolam, fentanyl and hydromorphone in 2009 and 2010. Diaz admitted that he distributed or dispensed the narcotics “while acting and intending to act outside the usual course of professional practice and without a legitimate medical purpose.”
Court documents previously filed in this case, as well as civil lawsuits, link Diaz to fatal drug overdoses. However, he was not specifically charged with causing any deaths, nor did he specifically admit causing any deaths during today’s hearing.
The investigation into Diaz was conducted by the Drug Enforcement Administration and the Santa Barbara Police Department, which received the assistance of the California Medical Board.
Release No. 14-001
Southern California Man Pleads Guilty to Attempting to Assist Al-Qai'da by Providing Weapons Training to Fighters in PakistanRead the Press Release
LOS ANGELES -- An Orange County man pleaded guilty this morning to a federal terrorism offense, admitting that he intended to assist al-Qai'da by traveling to Pakistan, where he would provide weapons training to members of the terrorist group.
Sinh Vinh Ngo Nguyen, 24, of Garden Grove, California, pleaded guilty this morning to one count of attempting to provide material support to a designated foreign terrorist organization.
Nguyen, who also used the name Hasan Abu Omar Ghannoum, pleaded guilty this morning before United States District Judge John F. Walter, who is scheduled to sentence the defendant on March 21. At the time of sentencing, Nguyen faces a statutory maximum penalty of 15 years in federal prison.
In a plea agreement filed last Friday in United States District Court, Nguyen admitted that approximately one year ago he travelled to Syria where he joined opposition forces. Using a social network site during a four-month period he was in Syria, Nguyen told people that he was fighting against the Assad regime and that he had had a "confirmed kill." After he returned to the United States, Nguyen told associates that he had offered to train al-Qai'da forces in Syria, but his offer had been turned down.
Between August 3 and October 11, Nguyen met with a man he thought was an al-Qai'da recruiter, but who in fact was working with the FBI. Within the first few minutes of their first meetings, Nguyen began questioning the man to determine if he was a fellow jihadist, according to the plea agreement. Nguyen told the man about his exploits in Syria and said he wanted to return to jihad because "this was what he was born to do."
During their meetings, Nguyen and the man he thought was an al-Qai'da recruiter discussed how Nguyen could travel to Pakistan under a fraudulently obtained United States passport. After Nguyen gave the purported recruiter a photo of himself and a passport application with bogus information, Nguyen agreed to travel to Pakistan, where he would train 30 al-Qai'da fighters for 5 or 6 weeks to prepare them "for a guerilla warfare ambush attack on coalition forces" that would take place this month, according to the plea agreement.
With the intention to travel to Pakistan to train al-Qai'da forces for the ambush, Nguyen on October 1 purchased a plane ticket to travel from Mexico to Peshawar, Pakistan, he admitted in the plea agreement. On October 11, Nguyen went to a bus station in Santa Ana where he purchased a ticket to Mexico. On this date he was arrested by FBI agents. When he was taken into custody, Nguyen had in his possession the false passport and a computer hard drive that contained "over 180 training videos on shooting firearms."
Nguyen has been in federal custody since his arrest.
The case against Nguyen is the product of an investigation by the Federal Bureau of Investigation.
Release No. 13-152
Jury Finds Pueblo Bishop Gang Member Guilty in RICO Murder Case for Ambush Killing of Father in Front of His 2-Year-Old SonRead the Press Release
LOS ANGELES -- A member of the Pueblo Bishop Bloods street gang was convicted by a federal jury today for the murder of a young man with no gang affiliation who was executed in front of his 2-year-old son.
Rondale Young, also known as “P-Grump,” 30, of South Los Angeles, was convicted on several counts after a two-week jury trial before United States District Judge S. James Otero. Young was found guilty of violating the federal Racketeer Influenced and Corrupt Organizations Act (RICO) in relation to the murder of 23-year-old Francisco Cornelio.
In addition to the RICO offense, Young was convicted of witness intimidation related to Young’s conduct after he was arrested for the murder. The jury also found Young guilty of conspiring to murder Mr. Cornelio, as well as the actual murder, both of which were done in furtherance of the Pueblo Bishop criminal enterprise. In addition, Young was convicted of using a gun that resulted in murder. Based on these convictions, Young faces a mandatory minimum term of life in federal prisonment, plus ten years.
Young is scheduled to be sentenced by Judge Otero on May 26.
The federal convictions come after Young had been acquitted in Los Angeles Superior Court on murder charges related to the slaying of Mr. Cornelio. After the acquittal in state court, the FBI’s Los Angeles Metropolitan Task Force on Violent Gangs re-investigated the case and uncovered additional evidence related to the murder and Young’s involvement with the Pueblo Bishops.
The evidence presented at trial showed that Young drove his car, which contained other armed gang members, into rival gang territory early on the morning of August 2, 2009. The Pueblo Bishops were seeking retaliation after an earlier shooting against their gang. The Pueblo Bishops targeted Mr. Cornelio because he appeared to be Hispanic and was in rival gang territory. According to witnesses who testified, two Pueblo Bishops, who were armed with shotguns, got out of Young’s vehicle and ambushed an unsuspecting Mr. Cornelio, who was washing his car. The gang members shot him once in the back without saying a word, while the victim’s son sat in the back seat of the car. There was no evidence that Cornelio had any gang ties.
The murder was unsolved prior to a federal racketeering indictment that was unsealed in August 2010. http://www.justice.gov/archive/usao/cac/Pressroom/pr2010/122.html). The federal indictment charged that Young and his co-defendants were members of a criminal enterprise that engaged in murder, drug dealing, firearms trafficking, witness intimidation and armed robbery as part of the gang’s efforts to control and terrorize the Pueblo Del Rio Housing Projects in South Los Angeles.
Young is the third person to be convicted in federal court in relation to the murder of Mr. Cornelio. In a prior trial, a federal jury determined that Anthony “Bandit” Gabrourel was also part of the plot by Pueblo Bishop members to murder Mr. Cornelio. At that trial, the evidence showed that Gabourel was one of two Pueblo Bishops who exited Young’s car with shotguns and fatally shot Mr. Cornelio. Gabrourel was sentenced earlier this year by Judge Otero to 40 years in federal prison. The third person conviction in relation to the murder was sentenced to five years in prison for hiding the murder weapon after the slaying.
As a result of the federal investigation into the racketeering activity of the Pueblo Bishop Bloods, a total of 45 defendants were charged in federal indictments. Prosecutors have secured convictions against 41 of those defendants. Two defendants are in state custody after receiving lengthy sentences for violent gang crimes, and two are fugitives.
The investigation into the Pueblo Bishop Bloods was conducted by the Federal Bureau of Investigation; the Los Angeles Police Department, Newton Division; the United States Department of Housing and Urban Development, Office of Inspector General; and the Los Angeles County District Attorney’s Office.
Release No. 13-151
Seven High Desert Residents Arrested by Members of Federal-State Task Force for Allegedly Selling MethamphetamineRead the Press Release
RIVERSIDE, California – An investigation by the High Desert Gang Impact Team this morning resulted in the arrest of seven defendants who face charges in federal and state court for distributing methamphetamine in the High Desert region.
The arrests this morning mark the culmination of a two-year investigation by the High Desert Gang Impact Team, which is made up of agents and deputies with the Federal Bureau of Investigation and the San Bernardino County Sheriff’s Department. Task Force members are continuing to search for two defendants who face federal charges.
A federal grand jury on November 27th returned five indictments in United States District Court that charge a total of six defendants. The federal indictments charge these defendants with distributing, and conspiring to distribute, methamphetamine.
The federal defendants, three of whom are expected to be arraigned this afternoon in United States District Court in Riverside, are:
- Christian Alejandro Navarro, 29, of Hesperia;
- Aldo Serna-Avila, 28, of Apple Valley;
- Johnnie Zuniga, 37, of Apple Valley;
- Candelario Vasquez, 49, of Apple Valley; who is in state custody on an unrelated charge;
- Jessica Enriquez, 29, of Apple Valley, who is currently a fugitive; and
- Virginia Gomez, 46, of Apple Valley, who is also being sought by authorities.
The federal defendants arrested today are expected to make their initial court appearances this afternoon in the United States District Court in Riverside. The six federal defendants, if convicted, each face a five-year mandatory minimum sentence and a statutory maximum sentence of 40 years.
Three defendants were charged by the San Bernardino County District Attorney’s Office with state narcotics offenses. The three defendants facing state charges are:
- Sally Oporto, 35, of Apple Valley;
- Nelly Rodriguez, 76, of Apple Valley; and
- Lucia Martinez, 46, of Victorville.
An indictment or complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
FBI agents with the Victorville resident agency; sheriff’s deputies from the Victorville, Apple Valley, Hesperia, and Adelanto sheriff’s stations; and officers from the San Bernardino County Probation Department participated in the execution of arrest warrants this morning.
Release No. 13-150
Westside Man Arrested on Money Laundering Charges Related to Alleged Embezzlement of Nearly $370,000 from Girl ScoutsRead the Press Release
LOS ANGELES – A Marina Del Rey man is expected to make his first court appearance this afternoon after being arrested yesterday by FBI agents on federal charges of laundering $50,000 out of approximately $370,000 he allegedly embezzled from the Girl Scouts.
Channing Smack, 51, who was a senior property manager of the Girl Scouts of Greater Los Angeles (GSGLA), was arrested yesterday without incident. Smack is named in a criminal complaint that was also filed late yesterday charging him with money laundering, a federal offense that carries a maximum sentence of 10 years in federal prison.
Smack was arrested after being interviewed by FBI agents about the alleged embezzlement and one day after he withdrew $64,500 from accounts believed to contain proceeds of the scheme.
According to the affidavit in support of the complaint, Smack was responsible for managing the GSGLA’s 22 properties in the Los Angeles area. Over the past year and a half, Smack approved invoices for services purportedly provided by a firm called ZB Land Maintenance & Engineering, which is registered under the name of Smack’s deceased brother. Between August 2012 and October 2013, allegedly at Smack’s direction, GSGLA issued 23 checks to ZB that totaled $368,278. The evidence uncovered by the FBI shows that most of the checks to ZB were then deposited into one of two bank accounts opened under the names of the company and Smack’s deceased brother. According to the affidavit, bank surveillance photographs show an individual who looks like Smack either depositing or withdrawing funds into or from these bank accounts.
This past Monday, federal prosecutors served federal seizure warrants on three bank accounts believed to contain embezzled funds – the ZB account and two personal accounts in Smack’s name into which he is believed to have transferred funds derived from the GSGLA checks.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.
The criminal complaint against Smack is the product of an ongoing investigation by the Federal Bureau of Investigation.
Release No. 13-148
Bay Area Woman Guilty in Investment Scam That Caused over $9 Million in LossesRead the Press Release
SANTA ANA, California -- A San Jose woman was convicted today of a federal fraud charge for running a Ponzi scheme that bilked more than 250 victims out of approximately $9.5 million.
Bich Quyen Nguyen, 59, was found guilty conspiring to commit wire fraud, a crime that carries a possible penalty of 20 years in federal prison.
Nguyen was found guilty by a jury before United States District Judge Josephine L. Staton, who remanded Nguyen into custody after the jury’s verdict was returned. Judge Staton is scheduled to sentence Nguyen on March 13.
The evidence presented during a six-day trial showed that Nguyen told victims that she was the chief executive officer of a Swedish credit union that offered guaranteed returns as high as 46.2 percent on one-year certificates of deposit involving at least $1 million. Nguyen told victims that she used “trading platforms” and made trades at a high frequency and velocity to achieve the high rates of return. Nguyen told victims that their investments were safe because the victims’ money would be in “blocked” accounts. Nguyen told victims that she had prepared for the 2008 financial crisis so their returns were still protected and guaranteed.
To get the rates that Nguyen fraudulently promised, victims from southern California and Nevada organized private investment clubs to pool the required $1 million. Several of the victim investment clubs were located in Anaheim and Rialto. During the second half of 2008, Nguyen and co-conspirators made presentations to victims across the region, with some of the presentations taking place at churches.
In the Spring of 2009, the Securities and Exchange Commission obtained orders from United States District Judge David O. Carter that prevented Nguyen and her co-conspirators from continuing to offer these investments. Following the issuance of the injunctions, a receiver and forensic accountant reviewed records and determined that the victims’ money was never “safe,” in part because it was commingled with other victims’ money; some of the victims’ money was used to make Ponzi payments to other investors; and the promised investments were never made. Despite Judge Carter’s orders, Nguyen in May and July 2009 continued to offer investments in Las Vegas and overseas.
Previously in this case, another member of the conspiracy – Johnny Edward Johnson, 70, a former Bay Area resident who was arrested earlier this year while traveling in Central America – pleaded guilty to conspiracy to commit wire fraud. Johnson, who also faces a statutory maximum sentence of 20 years in federal prison, is scheduled to be sentenced by Judge Staton on March 28.
The investigation of Nguyen and Johnson was conducted by the Federal Bureau of Investigation. The SEC provided substantial assistance.
Release No. 13-149
Federal Grand Jury Charges San Fernando Valley Man with First-Degree Murder in Fatal Shooting of TSA Officer at LAXRead the Press Release
LOS ANGELES – A federal grand jury this afternoon returned an 11-count indictment that charges Paul Anthony Ciancia with first-degree murder in the fatal shooting of a Transportation Security Administration Officer during a shooting spree at Los Angeles International Airport last month.
Ciancia is charged with murdering Gerardo Hernandez, an officer and employee of the United States, while Officer Hernandez was engaged in his official duties on November 1.
The indictment also charges Ciancia with attempted murder for shooting TSA Officers Tony Leroy Grigsby and James Maurice Speer. The indictment alleges that Ciancia used a Smith & Wesson 5.56-millimeter M&P15 semiautomatic rifle to shoot the three TSA Officers.
Ciancia, 23, who at the time of the shooting resided in Sun Valley, also is charged with using the rifle to commit acts of violence against persons at an international airport, including Brian Donovan Ludmer, a civilian who was wounded during the rampage.
The indictment contains one count alleging that Ciancia knowingly used a firearm to murder and cause death, and three counts alleging that he did “knowingly carry, brandish, discharge and use a firearm” when he shot the three surviving victims.
The indictment is a charging document that replaces the criminal complaint filed soon after the shooting incident. The indictment was filed this afternoon in United States District Court after the grand jury determined that there was “probable cause” to find that Ciancia committed the 11 felony offenses. Ciancia is scheduled to be arraigned on the indictment on December 26.
The three charges based on the killing of Officer Hernandez – first-degree murder, violence at an international airport that resulted in death, and using a firearm to murder and cause death – each carry possible sentences of life in federal prison or the death penalty. The indictment contains a series of allegations that would support a possible sentence of death, including premeditation and the murder of a federal law enforcement officer. At this time, the government has not made a decision on seeking the death penalty if Ciancia is convicted of any of these charges.
The two attempted-murder charges and each of the three charges based on violence against the surviving victims all carry a statutory maximum penalty of 20 years in federal prison. The three counts alleging the use of a firearm each carry a mandatory minimum sentence of 10 years that would be served consecutively to any other sentences that are imposed.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.This case is the product of an investigation by members of the Los Angeles Joint Terrorism Task Force (JTTF), which is led by the Federal Bureau of Investigation and includes agents and officers from 45 other local, state and federal agencies.
The following agencies provided considerable assistance during the investigation: the Los Angeles World Airports Police Department; the Los Angeles Police Department; the Los Angeles County Sheriff's Department; the Transportation Security Administration; the Federal Air Marshal Service; the Los Angeles Port Police; the Long Beach Police Department; the Air Force Office of Special Investigations; the Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Customs and Border Protection; the United States Secret Service; the Los Angeles Fire Department; Los Angeles International Airport Operations; the United States Marshals Service; the United States Postal Inspection Service; the Ronald Reagan UCLA Medical Center; and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Release No. 13-147
Former Chief Administrative Officer for City of Bell Agrees to Plead Guilty to Conspiracy and Tax Charges in Plot to Avoid Income TaxesRead the Press Release
LOS ANGELES -- Robert A. Rizzo, who for years was the top administrator in the City of Bell and who became a symbol of municipal corruption, has agreed to plead guilty to federal charges in a scheme that resulted in hundreds of thousands of dollars in unpaid federal income tax.
In a plea agreement filed today in United States District Court, the 59-year-old Rizzo agreed to plead guilty to two felony charges: conspiracy and filing a false federal income tax return with the Internal Revenue Service. In the plea agreement, the Torrance resident 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.
According to the plea agreement and the information, which is the charging document in the case and was also filed this morning, 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 $409,731 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.
“It is regrettable that some public officials believe they are above the law,” said Richard Weber, Chief, IRS Criminal Investigation. “Instead of filing accurate tax returns, Mr. Rizzo claimed bogus corporate losses on his income tax return to illegally reduce his tax liability. Pursuing public servants who corruptly endeavor to circumvent the tax laws to fund their lavish lifestyles is a top priority for IRS Criminal Investigation.”
As part of his plea agreement Rizzo agreed to file amended individual and S Corporation tax returns for the years 2006 through 2010 that will correctly report all income and expenses. He also agreed to pay all additional taxes and penalties, including the 75 percent fraud penalty.
As a result of their actions, Rizzo and his co-conspirators caused the IRS to suffer losses of more than $300,000 for the 2006 through 2010 years.
Rizzo will be summoned to appear in federal court for an arraignment in this case. Once he pleads guilty to the two felony charges, Rizzo will face a maximum statutory sentence of eight years in federal prison.
Melcher, who as a result of his guilty plea faces a sentence of up to three years in prison, is scheduled to be sentenced next year by United States District Judge George H. 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. 13-145a
Doctor Pleads Guilty to Tax Offense Related to Health Care Fraud Scheme Involving People Recruited from ‘Skid Row’Read the Press Release
LOS ANGELES – In the first case filed in relation to the second major investigation into the illegal recruitment of “Skid Row” denizens for unnecessary medical procedures, a La Mirada doctor pleaded guilty this afternoon to federal tax charges and admitted participating in a large-scale scheme to defraud Medicare and Medi-Cal.
Dr. Ovid Mercene, 61, of La Mirada, pled guilty today to subscribing to a false tax return. Mercene pleaded guilty before United States District Judge R. Gary Klausner, who is scheduled to sentence the defendant on July 21.
From 2008 and 2012, while Mercene worked at a Los Angeles-area hospital, he admitted patients, the vast majority of whom were homeless, who had been referred from a purported “care consortium.” The patients, many of whom did not require hospitalization, were admitted for the purpose of defrauding taxpayer-funded health programs such as Medicare, Mercene admitted in court today.
Mercene admitted the “patients” after watching them being transported by van from Skid Row to the hospital, where they were often kept on a special floor away from the hospital’s “regular” patients. These “patients” also were given smoking breaks while in the hospital, even though many of them supposedly suffered from respiratory diseases. After a short hospital stay where numerous unnecessary tests were typically performed, Mercene discharged the “patients” to skilled nursing facilities, even though they did not require such care.
Mercene billed Medicare and Medi-Cal more than $1.8 million for medically unnecessary services provided to the Skid Row patients while in the hospital or at a skilled nursing facility.
Mercene received nearly $700,000 in cash kickbacks for admitting “patients” to skilled nursing facilities -- income he did not report on his tax returns.
The case against Mercene is part of an ongoing investigation into the recruitment of Skid Row patients being conducted by the U.S. Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; IRS-Criminal Investigation; and the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse.
Release No. 13-145
Former San Luis Obispo Police Officer Sentenced to 18 Months in Federal Prison in Corruption CaseRead the Press Release
LOS ANGELES -- A former detective with the San Luis Obispo Police Department has been sentenced to 18 months in federal prison for extorting sources he cultivated while working on a narcotics task force.
Cory Pierce, 40, of Arroyo Grande, was sentenced Monday afternoon by United States District Judge Margaret M. Morrow. In addition to the prison term, Judge Morrow sentenced Pierce to three years of supervised release and ordered him to pay $5,500 in restitution. Pierce was ordered to begin serving his sentence by January 27.
Pierce, who served with the San Luis Obispo Police Department for six years, pleaded guilty in June to a federal extortion charge. When he pleaded guilty, Pierce admitted that while assigned to a narcotics task force, he cultivated as sources an individual who had been arrested for heroin possession, and the man's girlfriend. Pierce obtained painkillers from the sources in exchange for providing them with placebo oxycodone pills that they could sell.
As part of the plea agreement, Pierce admitted to using his position as a police officer to obtain $11,000 from someone who he thought was a drug dealer in exchange for the placebo pills.
The investigation was conducted by the Federal Bureau of Investigation.
Release No. 13-144
Orange County Criminal Defense Attorney Sentenced to A Year in Prison in Federal Bribery CaseRead the Press Release
SANTA ANA, CALIFORNIA – An Orange County criminal defense attorney, who was convicted by a jury of executing a bribery scheme to obtain dismissal of a state criminal case against one of his clients, was sentenced today to 12 months and one day in federal prison.
Lawrence Anthony Witsoe, age 70, a resident of Mission Viejo, CA, was sentenced by United States District Judge Andrew J. Guilford. In September, Witsoe’s co-defendant, Aaron Scott Vigil, who was a police officer with the Rialto Police Department and a Task Force Officer with the U.S. Drug Enforcement Administration (“DEA”), was sentenced to 33 months in prison for his role in the bribery scheme.
In addition to his prison sentence, Witsoe’s license to practice law was suspended on August 12, 2013 as a result of his conviction in this case, according to State Bar records.
Earlier this year, a federal jury convicted both Witsoe and Vigil of conspiring to solicit a $2,500 bribe from one of Witsoe’s clients, who was charged with assault in a state criminal case, in exchange for having Officer Vigil falsely represent to the Orange County District Attorney’s Office that Witsoe’s client had been cooperating with Officer Vigil and the DEA in connection with drug investigations. In addition to the conspiracy count, Witsoe was also found guilty of two other counts, namely, soliciting the bribe payment from his client and offering and giving the bribe payment to Officer Vigil.
Release No. 13-143a
Glendale Man Who Admitted Hacking into Hundreds of Computers in ‘Sextortion’ Case Sentenced to Five Years in Federal PrisonRead the Press Release
LOS ANGELES – A Glendale man who hacked into hundreds of online accounts and victims’ computers, using extortion to coerce women into showing their naked bodies, was sentenced today to 60 months in federal prison.
Karen “Gary” Kazaryan, 27, was sentenced by United States District Judge George H. King, who said the defendant was a “cyber-terrorist.” Judge King remanded Kazaryan into custody at the conclusion of the sentencing hearing.
Kazaryan pleaded guilty in July to felony counts of computer hacking and aggravated identity theft.
In sentencing papers that recommended a six-year prison term, prosecutors wrote: “Kazaryan is a sexual cyber terrorist. He hacked into hundreds of victims’ email, Facebook, and Skype accounts using their usernames and passwords or password reset questions. He then methodically searched their accounts for naked pictures, passwords, and the contact information of their friends. He had two goals every time that he accessed these accounts: get more naked pictures in any way he could, and get more victims.”
According to court documents, Kazaryan gained unauthorized access to – meaning he hacked into – online accounts. In some cases, he obtained naked pictures from those accounts and then extorted the victims to provide additional photos and videos. If they refused, he posted the original pictures on the Internet. In other cases, Kazaryan posed as young women and asked their friends to provide naked photos.
“His victims were devastated and felt like they had been raped,” according to the sentencing memorandum. “They continue to be thoroughly traumatized by his criminal conduct.”
The investigation was conducted by the Federal Bureau of Investigation.
“Sextortion” is a type of extortion or blackmail of a victim who is usually asked for a nude image. The perpetrator typically threatens to publicly release a nude image unless a victim performs a sexual act or complies with other demands. To avoid become a victim, 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. 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 webcam when it’s not in use.
Release No. 13-142
18 Charged as Result of Federal Investigation into Corruption and Civil Rights Abuses by Members of L.A. County Sheriff’s DepartmentRead the Press Release
Current and Former Deputies Charged with Federal Crimes, including Illegal Beatings of Jail Inmates and Obstruction of Justice
LOS ANGELES – Five criminal cases that charge a total of 18 current or one-time deputy sheriffs of various ranks were unsealed today as part of ongoing and wide-ranging FBI investigation into allegations of civil rights violations and corruption involving members of the Los Angeles County Sheriff’s Department. Four grand jury indictments and one criminal complaint allege crimes that include unjustified beatings of jail inmates and visitors at downtown Los Angeles jail facilities, unjustified detentions and a conspiracy to obstruct a federal investigation into misconduct at the Men’s Central Jail.
Federal authorities announced the charges after 16 of the defendants were taken into custody earlier today. Those defendants are expected to be arraigned on the charges this afternoon in United States District Court in Los Angeles.
“The five cases allege a wide scope of illegal conduct,” said United States Attorney André Birotte Jr. “This investigation started by focusing on misconduct in county jails, and we uncovered examples of civil rights violations that included excessive force and unlawful arrests.
“Our investigation also found that these incidents did not take place in a vacuum – in fact, they demonstrated behavior that had become institutionalized. The pattern of activity alleged in the obstruction of justice case shows how some members of the Sheriff’s Department considered themselves to be above the law. Instead of cooperating with the federal investigation to ensure that corrupt law enforcement officers would be brought to justice, the defendants in this case are accused of taking affirmative steps designed to ensure that light would not shine on illegal conduct that violated basic constitutional rights.”
Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office, commented: “The defendants charged in this case are facing serious allegations, including violating the trust of the public they were sworn to serve. It is equally as important to point out that these charges should not reflect on the thousands of men and women of the Sheriff’s Department who proudly serve the citizens of Los Angeles County, and who partner with the FBI in a variety of crime areas.”
This morning, FBI agents took into custody 16 of the 18 defendants named in four indictments and one criminal complaint. Most of the defendants were arrested at various LASD facilities.
The five cases, which are part of an ongoing investigation, were unsealed this morning.
United States v. Brunsting and Branum, CR13-573
Two deputy sheriffs – Bryan Brunsting and Jason Branum – are charged in a six-count indictment with civil rights violations and making false statements in reports. Brunsting, who was a training officer, is charged in relation to an incident in which an inmate allegedly was assaulted and suffered bodily injury. Both Brunsting and Branum are charged in another assault. The victims were inmates at the Twin Towers Correctional Facility, where both deputies worked. Following the two incidents, the indictment alleges that Brunsting used deputies he was training to file reports that covered up the abuse.
United States v. Gonzalez, et al., CR13-574
This indictment charges a sergeant and four deputies with civil rights violations that allege they arrested or detained five victims – including the Austrian consul general – when they arrived to visit inmates at the Men’s Central Jail (MCJ) in 2010 and 2011.
The lead defendant in this indictment – Sergeant Eric Gonzalez, who was a supervisor in the MCJ visiting center, but no longer works for LASD – fostered an atmosphere “that encouraged and tolerated abuses of the law, including through the use of unjustified force and unreasonable searches and seizures by deputy sheriffs he supervised,” according to the indictment.
Each of the four deputies – Sussie Ayala, Fernando Luviano, Pantamitr Zunggeemoge and Noel Womack – is charged with participating in at least one of the four incidents in which victims allegedly suffered civil rights violations. In one incident, a man suffered a broken arm and a dislocated shoulder that has left him permanently disabled. In another incident, the Austrian consul general and her husband were handcuffed and detained.United States v. Thompson, et al., CR13-819
This six-count indictment that alleges a broad conspiracy to obstruct justice charges seven sworn members of the LASD. This case developed when deputies assigned to the Men’s Central Jail – including Lieutenant Gregory Thompson, who oversaw LASD’s Operation Safe Jails Program, and Lieutenant Stephen Leavins, who was assigned to the LASD’s Internal Criminal Investigations Bureau – learned that an inmate was an FBI informant and was acting as a cooperator in the FBI’s corruption and civil rights investigation.
After learning that the inmate received a cellular phone from a deputy sheriff who took a bribe and that the inmate was part of a civil rights investigation, those allegedly involved in the obstruction scheme took affirmative steps to hide the cooperator from the FBI and the United States Marshals Service, which was attempting to bring the inmate to testify before a federal grand jury in response to an order issued by a federal judge. As part of the conspiracy, the deputies allegedly altered records to make it appear that the cooperator had been released. They then re-booked the inmate under a different name, and then told the cooperator that he had been abandoned by the FBI.
Over the course of several weeks, the deputy sheriffs allegedly also attempted to obtain an order from a Los Angeles Superior Court judge that would have compelled the FBI to turn over information about its investigation to LASD. After the judge refused to issue such an order, according to the indictment, two LASD sergeants who are charged in this case nevertheless confronted an FBI special agent at her residence in an attempt to intimidate her into providing details about the investigation. The sergeants falsely told the special agent and her supervisor that they were obtaining a warrant for her arrest, according to the indictment.
Thompson no longer works for LASD. The other deputies named in this indictment are Gerard Smith, Mickey Manzo, and James Sexton, who were assigned to the Operation Safe Jails Program; and Scott Craig and Maricella Long, who were LASD sergeants within the Internal Criminal Investigations Bureau.
United States v. Piquette, CR13-821
Deputy Richard Piquette is charged in the fourth indictment with illegally building and possessing an assault rifle. The indictment charges Piquette with possessing an unregistered Noveske Rifleworks N-4 .223 caliber rifle with a barrel length of less than 16 inches. The second count in the indictment charges Piquette with manufacturing the Noveske rifle. Piquette, who is currently on leave with LASD, was previously assigned to the Twin Towers Correctional Facility. The investigation in this case was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives.
United States v. Khounthavong, et al., 13-3105M
The fifth case unsealed today is a criminal complaint that charges three LASD deputies, all of whom are brothers, with conspiracy to make false statements to two banks in connection with a “buy-and-bail” mortgage fraud scheme. The complaint alleges that the three deputies – Billy Khounthavong, Benny Khounthavong, and Johnny Khounthavong – made false statements and reports to Flagstar Bank to purchase a 3,900-square-foot residence in Corona. The brothers then made additional false statements and reports to Bank of America in relation to another large residence they owned. The brothers walked away from – or “bailed” on – that home in which they were “under water,” meaning they owed substantially more than the residence was worth. As a result of the scheme, the brothers allegedly avoided more than $340,000 of unpaid mortgage debt. Benny Khounthavong and Johnny Khounthavong are assigned to LASD jail facilities.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
The five cases announced today are part of an ongoing investigation being conducted by the Federal Bureau of Investigation.
Release No. 13-143
Members of Family Who Manufactured Homemade ‘Male Enhancement’ Drug Sentenced in Federal Conspiracy CaseRead the Press Release
LOS ANGELES – Three members of a Rowland Heights family involved in a home-based enterprise that manufactured a “male enhancement” drug that sold on the Internet and in retails stores nationwide have been sentenced for unlawfully importing tadalafil, the same active ingredient in the prescription drug Cialis.
Won Bae Kim, 61, was sentenced on Wednesday to 11 months in federal prison.
Two sons, Jong Ik Kim, 35, and Jong Heon Kim, 34, each were sentenced to one year probation, which will include six months of home detention.
The Kims were sentenced on Wednesday by United States District Judge Dean D. Pregerson, who also ordered Won Bae Kim to pay a $10,000 fine.
According to court documents, Won Bae Kim started a business named Kawa Health and imported pounds of tadalafil from China, which were used to manufacture a male enhancement drug that Kawa Health marketed under the name “Xzen 1200.” The tadalafil packages were delivered to commercial mailbox facilities, where the Kims were able to pick them up. After the Xzen 1200 pills were manufactured, Jong Ik Kim and Jong Heon Kim sold the drugs across the country, including to adult book stores. The packaging for the drugs did not disclose that tadalafil was an ingredient, which prompted the U.S. Food and Drug Administration to issue a warning about the product earlier this year. The investigation revealed that the Kims generated sales of more than $300,000 over a one-year period.
The operation was disrupted when U.S. Customs and Border Protection officials found that overseas packages intended for one of the mailboxes contained tadalafil. Agents of Department of Homeland Security’s Homeland Security Investigations then followed the delivery of the packages to a mailbox, when Won Bae Kim picked them up. Agents followed him back to his home and executed a search warrant, where they discovered large amounts of pills and packaging material for the Xzen product, as well as $13,000 in cash, which has been forfeited.
Release No. 13-139
Leader of Quarter-Billion Dollar Tax Fraud Scheme, Already Sentenced to 14 Years, Ordered to Pay $2.9 Million in RestitutionRead the Press Release
During Past 2 Years, 43 Defendants Linked to Inland Empire’s Old Quest Foundation Have Been Convicted, Including Attorney and 7 Tax Return Preparers.
SANTA ANA, California – Concluding sentencing proceedings in which he was already previously to serve a 14-year prison term, the former leader of the Fontana-based Old Quest Foundation was ordered this afternoon to pay $2,925,620 in restitution in relation to a tax fraud scheme that resulted in more than 400 fraudulent federal income tax returns being filed with the IRS that cumulatively sought more than $250 million in fraudulent refunds.
Arturo S. Ruiz, 55, of Moreno Valley, was sentenced by United States District Judge Josephine L. Staton, who issued the 168-month prison sentence on September 20.
The scheme run out of Old Quest was the largest tax refund fraud in history involving misuse of Original Issue Discount tax forms. The case against Ruiz and the other Old Quest defendants stems from Operation Stolen Treasures, an investigation conducted by Special Agents with IRS Criminal Investigation that led to 55 people being indicted by a federal grand jury in the fall of 2011.
Ruiz, who was the chief executive officer of Old Quest, was convicted at trial in January 2013 of one count of conspiracy to defraud the United States and 41 counts of filing false claims against the United States, including four of his own false federal tax returns. Old Quest’s president and second-in-command, Francisco J. Mendoza, also was convicted during the January trial, but died shortly before he was scheduled to be sentenced in November 2013.
Old Quest promoter Arturo Villarreal-Alba, 45, of Whittier, who was previously sentenced to eight years in prison, was ordered today to pay $462,239 in restitution to the IRS.
Also sentenced today was Old Quest promoter Ricardo Bonilla, 52, of Fontana , who received a prison term of 33 months.
The evidence presented at Ruiz and Mendoza’s trial and in court documents showed that Ruiz fraudulently told Old Quest customers they each could receive hundreds of thousands of dollars in tax refunds by accessing “secret government accounts” through a process that included the filing of IRS Forms 1099-OID. During presentations made across Southern California, members of the Old Quest conspiracy promoted the secret account theory and other “tax defier” arguments. In an attempt to give legitimacy to the scheme, Ruiz falsely told customers who attended seminars that Old Quest had employees who were attorneys, accountants, CPAs, and former IRS employees. Taxpayers who signed up were required to pay Old Quest fees as high as $10,000, and they were required to promise to “donate” to Old Quest 25 percent of any tax refunds they received.
In exchange for the payments, Old Quest prepared and filed false income tax returns, which routinely sought hundreds of thousands of dollars – and sometimes millions of dollars – in income tax refunds. In some cases, Old Quest filed multiple false tax returns on behalf of customers. During a search warrant executed at Old Quest’s offices, special agents with IRS Criminal Investigation seized several unfiled tax returns, including one signed tax return that falsely reported $10,500,106 in federal income tax had been withheld and fraudulently claimed a $6,868,675 tax refund. Although the IRS stopped most of the false refunds before they issued, several very large refunds issued, including one for $1,192,653.
Bank records and other evidence showed that Old Quest received approximately $2 million from customers who used the fraudulent OID scheme, as well as from tax refunds erroneously issued by the IRS. The evidence also showed that while IRS agents were searching Old Quest’s offices, Mendoza emptied more than $250,000 from one of Old Quest’s bank accounts, and then Ruiz hid those funds from authorities by depositing them into another bank account in a different name.
When customers received IRS letters warning that their tax returns were frivolous, Old Quest employees assured customers that the IRS sent letters only to “intimidate” them because the “IRS did not want to pay.” After several refund checks were erroneously issued and the IRS froze the bank accounts of the customers who had received them, Ruiz instructed their employees to open new accounts for customers at different banks in an attempt to avoid further IRS scrutiny. The IRS search of the Old Quest offices and computers in September 2009 revealed numerous emails and printouts of IRS publications warning of the exact same scheme that Ruiz was promoting.
Prior to the tax refund scheme, Ruiz had promoted a “land patent” program to many of the same customers, according to the evidence introduced at his trial. Under this fraudulent program, Ruiz promised to eliminate the customers’ mortgages through an obscure and mysterious process, again in exchange for substantial fees. The land patent program quickly failed, and dozens of customers lost their homes to foreclosure.
In addition to selling the fraudulent schemes to customers across the Southland, Ruiz and Mendoza failed to report hundreds of thousands of dollars of their own income, and Ruiz filed several false federal income tax returns for himself that fraudulently sought refunds. The evidence at trial showed that Ruiz bragged about not paying taxes for more than 25 years.Of the 55 defendants indicted as part of Operation Stolen Treasures, seven have been convicted at trial (which includes Mendoza), 36 have pleaded guilty, two have agreed to plead guilty, and eight are pending trial. One defendant remains a fugitive, and one defendant was acquitted.
Release No. 13-140
For Second Time in Federal Court, Long Beach Man Guilty of Transporting Women Across State Lines to Work as ProstitutesRead the Press Release
SANTA ANA, California – A Long Beach man with a long history of forcing women into the sex trade pleaded guilty this morning in a sex trafficking case and is expected to be sent to prison for another decade.
William Earl Flavors, also known as “Andre,” 40, who formerly resided in Seattle, pleaded guilty this morning to a charge of transportation into prostitution.
Flavors pleaded guilty before United States District Judge Josephine L. Staton, who scheduled a sentencing hearing for May 9. While Judge Staton will make the final decision, prosecutors and Flavors agree that the appropriate sentence in this case is the statutory maximum sentence of 10 years in federal prison. The 10-year sentence is much longer than the sentence that would be expected for this crime under the United States Sentencing Guidelines, and this 10-year sentence would run consecutive to a four-year sentence he is currently serving in relation to the same conduct.
In court this morning, Flavors admitted that he transported two victims in 2012 from Long Beach to Las Vegas, where they were forced or coerced to work as prostitutes. Flavors also admitted he used coercion and force – including physical abuse and threats of additional physical abuse – to make one of the victims work for him as a prostitute for an eight-month period in 2012.
In a previous case, Flavors was prosecuted by the United States Attorney’s Office and received a 14-year prison sentence in May 2000. In that case, Flavors admitted transporting two teen age girls from Washington and forcing them to work as prostitutes in Orange County.
Flavors completed his sentence in late 2011 and was on supervised release until October 2012, when he was arrested by Long Beach police after a woman reported being attacked by Flavors. Flavors pleaded guilty in state court last year to pimping in relation to his activities in 2012, and he was sentenced to four years in state prison.
Earlier this year, United States District Judge Cormac J. Carney found Flavors to be in violation of his supervised release in the prior federal court case. Judge Carney revoked his supervised release and sentenced Flavors to a four-year prison term, which he is currently serving.
The sentencing that Flavors will receive from Judge Staton in relation to today’s guilty plea will run consecutive to the sentence that he is currently serving.
The current case against Flavors was investigated by the Federal Bureau of Investigation and the Long Beach Police Department.
Release No. 13-138
Operators of Loan Modification Scam That Targeted Struggling Homeowners Arrested in $12 Million SchemeRead the Press Release
SANTA ANA, California – An attorney this morning became the third defendant taken into custody in relation to a scheme that offered bogus loan modification assistance to struggling homeowners.
Ronald Rodis, 49, of Irvine, surrendered this morning to federal agents on charges alleging that he participated in, and lent his name and the law license he formerly possessed to, the fraudulent operation. Rodis lost his license to practice law in California when he resigned from the State Bar in 2009.
Federal agents yesterday arrested Bryan D’Antonio, 47, of Brea, and Charles Wayne Farris, 53, of Aliso Viejo, for their roles in the operation of the Rodis Law Group and America’s Law Group, businesses that allegedly offered bogus loan modification assistance.
All three defendants were named in a federal indictment unsealed yesterday following an investigation by the FBI and IRS-Criminal Investigation.
As a result of the scheme, more than 1,800 financially distressed homeowners cumulatively lost at least $12 million in fees they paid to the companies, the indictment alleges. Many homeowners also lost their homes to foreclosure.
During a nine-month period that began in October 2008, the Rodis Law Group and America’s Law Group allegedly defrauded distressed homeowners by making false promises and guarantees regarding the companies’ ability to negotiate loan modifications from the homeowners’ mortgage lenders, falsely representing that a “team of attorneys” would represent the homeowners and advising homeowners to cease making their mortgage payments.
“Posing as successful lawyers, these defendants offered struggling homeowners false hopes and bogus promises of quality legal representation,” said United States Attorney André Birotte Jr. “The market offering loan modifications is rife with fraud, which is why we have redoubled our efforts to investigate and prosecute those who engage in financial crimes that target distressed homeowners.”
Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office, said: “The unconscionable act of scamming homeowners already facing foreclosure is far too common. This indictment should send a clear message to anyone contemplating similar crimes, and should also remind potential victims to be cautious before paying fees to those offering financial rescue, regardless of whether the solicitor holds a law degree.”
The Rodis Law Group, and its successor company, America’s Law Group, allegedly advertised loan modification assistance on radio stations nationwide. According to the indictment, many of these radio advertisements featured Rodis’ voice telling homeowners that a team of experienced attorneys who were “highly skilled in negotiating lower interest rates and even lowering your principal balance” would negotiate with mortgage lenders. Farris and D’Antonio hired and trained salespeople who allegedly told homeowners that Rodis Law Group was “100% successful,” “routinely lowered monthly payments,” and obtained reduced principal balances. According to the indictment, once the defendants and their co-conspirators convinced homeowners to pay a fee of several thousand dollars, little to no effort was made to obtain loan modifications. After making their payments, homeowners who tried to get updates on the status of their cases were often unable to contact anyone at either company.
“These arrests send a strong message to those who would prey on vulnerable homeowners during these tough financial times,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “If you defraud homeowners, you will be found and brought to justice.”
The indictment further alleges that D’Antonio committed these crimes after having been convicted of mail and wire fraud in 2003 for his role in a previous telemarketing scheme. The previous scheme resulted in a civil case by the Federal Trade Commission and ultimately a 2001 court order that permanently banned D’Antonio from participating in future telemarketing operations. The indictment in this case alleges that D’Antonio committed criminal contempt of court by directing the telemarketing activities of Rodis Law Group and America’s Law Group and by misrepresenting the services they provided.
“The defendants found a way to defraud financially distressed homeowners out of $12 million in fees from their loan modification scam,” said Joel P. Garland, Acting Special Agent in Charge for IRS Criminal Investigation’s Los Angeles Field Office. “Be assured that IRS Criminal Investigation, together with our partners and the U.S. Attorney’s Office, will hold those who engage in similar behavior fully accountable.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.
D’Antonio, Farris and Rodis are each charged with 10 felony counts – nine counts of wire fraud and one count of conspiracy. Each of these counts carries a statutory maximum penalty of 20 years in federal prison. In addition, D’Antonio is charged with 13 counts of criminal contempt for violating the 2001 court order. Criminal contempt of court has no statutory maximum penalty.
Rodis is expected to be arraigned on the indictment this afternoon in United States District Court in Santa Ana.
Following their arrests yesterday, D’Antonio and Farris were arraigned and entered not guilty pleas. A trial for both men was scheduled for January 28 before United States District Judge David O. Carter. At yesterday’s hearing, D’Antonio was ordered detained (held without bond), and Farris was released on a $60,000 bond.
This indictment was brought as part of the President’s Financial Fraud Enforcement Task Force’s Mortgage Fraud Working Group. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. For more information on the task force, please visit www.StopFraud.gov.
Release No. 13-137
Former Supplier of Beef to National School Lunch Program Settle Allegations of Improper Practices and Mistreating CowsRead the Press Release
LOS ANGELES -- Several California companies and individuals that formerly supplied beef to the National School Lunch Program have agreed to settle allegations of inhumane handling of cattle, circumventing appropriate inspection of nonambulatory disabled (“downer”) cattle and false representations regarding their eligibility to process beef, the Justice Department announced today. The announcement follows approval of the last of these settlements by a California probate court.
The settlements will conclude a lawsuit initiated by the Humane Society of the United States (HSUS) under the whistleblower provisions of the False Claims Act (FCA) after an HSUS investigator videotaped alleged inhumane cattle handling and improper downer cattle inspection practices at the slaughterhouse and meat processing facility of Westland Meat Co. and Hallmark Meat Packing Co. in Chino. The government later joined the lawsuit and brought additional claims that the defendants concealed their ineligibility to process beef because a convicted felon, Aaron “Arnie” Magidow, was a partner in and otherwise responsibly connected with the facility’s operations. U.S. Department of Agriculture (USDA) regulations applicable to suppliers of the National School Lunch Program prohibit the inhumane handling of cattle, require the proper inspection and disposition of downer cattle and require suppliers to identify convicted felons who are responsibly connected to the suppliers’ operations.
“The contractors who supply beef and other meat products to schools and child-care facilities have a responsibility to provide our nation’s young people with products that come only from healthy and humanely handled animals,” said United States Attorney André Birotte Jr. “This settlement holds accountable businesses that mistreated cows on a regular basis and routinely evaded a critically important USDA inspection procedure that allowed ‘downer cows’ to be processed into food.”
Stuart F. Delery, the Assistant Attorney General for the Justice Department’s Civil Division, said: “Children across the country depend on the National School Lunch Program to provide them with a healthy meal each day, so we all depend on companies providing food to the program to follow the rules designed to ensure those meals are safe to eat. The Justice Department will pursue aggressively anyone whose unlawful conduct puts the safety of our food at risk.”
The National School Lunch Program, administered by the USDA, is a federally assisted meal program operating in public and nonprofit private schools and residential child-care institutions. The program provides nutritionally balanced, low-cost or free lunches to children each school day. All ground beef containing the defendants’ products was recalled as of Feb. 16, 2008, and the defendants no longer supply beef to the National School Lunch Program.
“A top priority for USDA’s Office of Inspector General (OIG) is protecting the integrity of America’s food supply by investigating violations of the Federal Meat Inspection Act,” said USDA-OIG Western Region Special Agent in Charge Lori Chan. “Agents from OIG’s Diamond Bar office conducted an extensive investigation of the Hallmark/Westland facility, which supplied ground beef to schools through USDA’s National School Lunch Program. The government’s joint investigation led to one of the largest civil settlements in OIG’s history.”
Under the settlements, Westland Meat Co., based in Corona Del Mar, and its owner, Steve Mendell, will pay $240,000, and Westland will enter into a consent judgment for $155.68 million. M&M Management, also based in Corona Del Mar; Cattleman’s Choice, based in Commerce; the estate of Cattleman’s deceased owner, Arnie Magidow; and Magidow’s surviving spouse will pay a total of approximately $2.45 million. Magidow’s surviving spouse was named in the lawsuit as a successor in interest to Magidow and is not alleged to have engaged in any wrongdoing. In October 2012, defendants Donald R. Hallmark and Donald W. Hallmark settled allegations for $304,130.
The FCA’s whistleblower provisions, under which HSUS filed the lawsuit, permit a private entity to bring a lawsuit on behalf of the government and to share in any proceeds from the suit. The FCA also allows the government to intervene in the lawsuit, as it has done in this case. As a result of the settlements announced today, HSUS will receive approximately $600,000.
The case was handled by the U.S. Attorney’s Office for the Central District of California and the Justice Department’s Civil Division, Commercial Litigation Branch; in cooperation with the USDA Office of Inspector General. The claims resolved by the settlement are allegations only; there has been no determination of liability.
Release No. 13-136
Former United Airlines Flight Attendant Sentenced to Federal Prison for Making Bogus Bomb Threats Aimed at His Former EmployerRead the Press Release
LOS ANGELES -- A German national who used to work for United Airlines was sentenced today to 18 months in federal prison for making false bomb threats against flights operated by the international air carrier.
Patrick Cau, who is also known as Patrick Kaiser, 40, of Dallas, was sentenced by United States District Judge Otis D. Wright II.
Cau pleaded guilty in August to one count of false information and hoaxes. While Cau pleaded guilty to one felony count, in a plea agreement filed in federal court, he admitted making eight bomb threats against United from October 2012 through January 2013.
In the first phone call, on October 4, 2012, Cau used a pay phone near his home to call an internal United crew scheduling number and state that a United flight from London to Los Angeles would be bombed later that day. Cau made the subsequent calls to 911 from pay phones in Los Angeles, New York City, Las Vegas and Seattle, with all of the calls stating that a specific United flight would be bombed.
As a result of the hoaxes, multiple law enforcement agencies were forced to respond to the bomb threats made by Cau. These law enforcement responses included evacuating people from the targeted airplanes; towing the aircraft to a safe area; searching and re-screening passengers, baggage and cargo; and searching the aircraft by human, canine and other detection methods.
As a direct result of Cau’s threats, United experienced substantial disruption to its business operations and services, including cancellation of and delays to flights, transfer of aircraft, and significant inconveniences to United passengers. Judge Wright today ordered Cau to pay $304,495 in restitution to United and $8,838 to reimburse the Los Angeles Police Department for expenses incurred as a result its response to the bomb threats.
The case against Cau was investigated by the Federal Bureau of Investigation; U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the Los Angeles Airport Police.
Release No. 13-135
Pomona Resident Previously Convicted in Child Exploitation Case Indicted for Illegally Possessing Weapons CacheRead the Press Release
LOS ANGELES -- An Army veteran who was convicted of possessing child pornography after a court martial was indicted today on federal charges of being a felon in possession of firearms and ammunition.
Ky Cheng, 43, of Pomona, was named in a one-count indictment that charges him with illegally possessing a cache of weapons. If he is convicted of the charge, he would face a maximum statutory penalty of 10 years in federal prison.
The case stems from a probation search of Cheng’s residence on August 14, 2013. Law enforcement officials from the Pomona Police Department, the United States Marshals Service, the Los Angeles County Probation Department, the Los Angeles County District Attorney’s Office, and the California Department of Corrections and Rehabilitation conducted the search and found weapons that prompted the Sheriff’s Department Bomb Squad to respond. As a result of the weapons discovered during the search, the FBI San Gabriel Valley Safe Streets Gang Task Force was brought in to investigate.
The indictment alleges that Cheng illegally possessed eight .45-caliber handguns, two 12-gauge shotguns, one .308-caliber rifle, 46 high-capacity ammunition magazines and approximately 1,200 rounds ammunition.
Cheng was convicted of possession of child pornography in 2007, and he was convicted in Los Angeles Superior Court of failing to register as a sex offender in 2010.
Cheng is currently in the Los Angeles County Jail serving a three-year sentence imposed for violating the terms of his probation in the 2010 case.Release No. 13-134a
Two Men Who Operated Credit Card Fraud Rings Based in San Gabriel Valley Sentenced to Federal PrisonRead the Press Release
LOS ANGELES – A San Gabriel Valley man involved in credit card fraud was sentenced this morning to 87 months in federal prison for heading a credit card fraud ring that used stolen credit card numbers from around the world to buy hundreds of thousands of dollars of luxury goods, cosmetics, electronics and other merchandise at retail stores.
With the 7¼-year sentence, Zhanghang Wu (吳章航) becomes the second man this month sentenced to prison in federal court in Los Angeles for operating a fraudulent credit card ring.
Wu, 38, who at the time of the offenses was residing in Alhambra, was sentenced by United States District Judge John A. Kronstadt. Wu, who was also known as "Leo Han," pleaded guilty in December 2012 to conspiracy and credit card fraud.
The second credit card scammer, Xiaoliang Chen (陳曉亮), 27, of Monterey Park, was sentenced on November 4 to 51 months in federal prison for leading a similar operation that used stolen credit card numbers and counterfeit cards to bilk financial institutions from around the world.
The operations involving Wu and Chen involved losses that are estimated to be approximately $1.5 million, with Wu being responsible for just over $1 million of those losses.
Wu and Chen each led rings that received credit card numbers that had been stolen from bank customers around the world. That stolen information was used to manufacture counterfeit credit cards that bore the names of “runners” -- co-conspirators who went to retails stores, including Nordstrom, Macy’s, Apple, and Abercrombie & Fitch -- who used the fake cards to make fraudulent transactions. After the runners purchased items with the counterfeit credit cards, they either returned the goods for credit, or the goods were sold to other parties.
An investigation into fraudulent credit card use in the San Gabriel Valley led by the United States Secret Service generated information that Wu and Chen may be involved in organized fraud rings. Wu had earlier been associated with a credit card fraud operation that had been uncovered during an investigation by Chinese authorities. In March 2012, Secret Service agents searched the homes of Wu and Chen, where they discovered machines for making credit cards and computers containing credit card information.
In July 2012, Secret Service agents arrested Wu in Las Vegas, Nevada, where he had fled after the search of his residence and where he continued to engage in credit card fraud. Wu had been living in casino hotels for several weeks, and at the time of his arrest was in the process of sending a group of runners to Chicago to continue the scheme.
Chen was arrested in August 2012, also in Las Vegas, by Secret Service agents.
During the course of the investigation, the Secret Service received information from the Chinese Ministry of Public Security, Economic Crimes Investigation Division, about their investigation of credit card fraud in China.
Joseph Beaty, the special agent in charge of the United States Secret Service, Los Angeles District, acknowledged the cooperation provided by the Chinese Ministry of Public Security and the People’s Republic of China. Without the assistance of the Chinese authorities, the complete investigation and prosecution of this case would not have been possible, Beaty said.
This case is the product of an investigation by the U.S. Secret Service, which also received assistance from the United States Postal Inspection Service.
Release No. 13-133a
Man Who Arranged Sham Marriages Between Nigerians and U.S. Citizens Found Guilty of Immigration FraudRead the Press Release
LOS ANGELES – A Los Angeles man was found guilty today of six felony immigration-related offenses for illegally arranging sham marriages that allowed Nigerian nationals to fraudulently obtain legal permanent residency in the United States.
Alake “Terry” Ilegbameh, 46, a resident of the Baldwin Hills district of Los Angeles, was found guilty of six counts of conspiracy to violate immigration laws.
Ilegbameh was convicted by a federal jury following a six-day trial before United States District Judge Michael W. Fitzgerald, who is scheduled to sentence the defendant on February 24. At sentencing, Ilegbameh faces a statutory maximum penalty of 30 years in federal prison.
Prosecutors proved at trial that Ilegbameh arranged sham marriages for the purpose of obtaining permanent resident status for six Nigerian immigrants. Ilegbameh recruited American citizens who agreed to marry an African immigrant for money – typically offering the U.S. citizens $1,000 or more – and Ilegbameh actively participated in schemes to make the resulting marriages appear legitimate to immigration officials.
As part of the scheme, Ilegbameh instructed the Nigerians and the Americans in the sham marriages how to make their relationships appear genuine by opening joint bank accounts or other accounts, obtaining identification with matching addresses, and taking photographs together. Ilegbameh made arrangements for the couples to see immigrations attorneys, who would file visa petitions and applications for adjustment of status containing false statements to U.S. Citizenship and Immigration Services (USCIS). After Ilegbameh concluded that federal agents were conducting an investigation, he instructed some of the Americans involved in the marriages to lie to investigators and he threatened them that they would go to jail if they withdrew from the sham marriages.
“Hollywood likes to glamorize marriage fraud, but as this defendant discovered, in real life these schemes don’t have happy endings,” said Claude Arnold, special agent in charge for Homeland Security Investigations (HSI) Los Angeles. “Immigration benefit fraud is a serious crime. Not only do these activities undermine the integrity of our nation’s legal immigration system, they also pose a significant security vulnerability.”
The investigation into Ilegbameh’s activities was conducted by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
Release No. 13-134
17 Ventura County Gang Members Linked to Mexican Mafia Charged for Roles in Mexican-Based Drug Trafficking Organization Operation “SuperNova” Targeted Gang-Related Drug TraffickingRead the Press Release
LOS ANGELES – In the third phase of Operation “SuperNova,” a multi-agency task force investigation that targeted Mexican Mafia-affiliated street gangs in Ventura County, 17 people have been charged following an investigation by a task force comprised of the FBI, the Ventura Police Department and the Oxnard Police Department. Following arrests this morning, 14 of 17 defendants named in a federal criminal complaint unsealed this morning are now in custody.
Several teams of police officers and federal agents executed arrest and search warrants early this morning and took six defendants into custody without incident. Eight of the 17 defendants charged were already in custody based on unrelated charges and soon will be brought into federal custody. The remaining three defendants charged in the complaint are fugitives, some believed to be residing in Mexico, where they allegedly direct the narcotics-trafficking activity alleged in the complaint.
The criminal complaint details a year-long undercover investigation and outlines a series of narcotics transactions that led to the seizure of more than two pounds of methamphetamine and quantities of heroin that were being sold on the streets of Ventura County. The complaint alleges that the drugs were supplied by a Mexican drug trafficking organization controlled by Mexican Mafia member Martin Madrigal-Cazares. Local street gangs allegedly communicated with the head of the organization in Mexico, while controlling narcotics sales and collecting “taxes” on behalf of the Mexican Mafia in Ventura County.
This case targeted the "shotcallers" of Ventura County and Oxnard street gangs -- including Lemonwood, Surtown and Ventura Avenue Gangsters -- whose members control the drug trade in their respective territories. The defendants charged in the complaint (with the exception of Cazares) are residents of Ventura, Oxnard, Camarillo and Moorpark. Those named are:
David Acosta, 33, in custody;Daniel Armendariz, 38, arrested today;
Pedro Arrieta, 42, arrested today
Robert De La Cerda, 35, in custody
Lina Fuentes, 35, fugitive;
Daniel Gonzales, 40, in custody;
Philip Guerra, 28, arrested today;
Ruben Hernandez, 20, in custody;
Alejandro Herrera, 38, in custody;
David Leal, David, 44, arrested today;
Martin Madrigal-Cazares, 38, a fugitive believed to be residing in Mexico;
Dillon Mansell, 21, in custody;
Armando Molina, 30, arrested today;
Edwin Mora, 29, in custody;
Librado Navarrete, 27, a fugitive;
Frank Ruiz, 32, arrested today; and
Javier Tamayo, 35, in custody
As a result of the first phase of Operation Supernova in 2011(see: http://www.justice.gov/usao/cac/pressroom/pr2011/018.html), 11 defendants were convicted and received sentences of up to 25 years in prison. In the second phase of Operation Supernova in 2012 (see: http://www.fbi.gov/losangeles/press-releases/2011/oxnard-gang-members-arrested-on-federal-drug-and-gun-trafficking-charges-in-second-part-of-operation-supernova), six defendants were charged in connection with conspiracy to distribute methamphetamine and illegally sell firearms. The total seizure for the three-phase operation totals 18 pounds of methaphetamine, five kilograms of cocaine, six pounds of heroin and 46 firearms.
The defendants named in the complaint are charged conspiring to distribute methamphetamine and, if they are convicted, each would face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life in prison.
The defendants arrested today will make their initial appearances this afternoon in United States District Court in Los Angeles. The federal defendants will be prosecuted by the United States Attorney’s Office.
The investigation was conducted jointly by the Ventura Police Department; the Oxnard Police Department; and the FBI.
The Ventura Gang Task Force is one of many FBI Safe Streets Task Forces throughout the United States, funded for the purpose of assisting local police in identifying and addressing violent crime in America.
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 a court of law.
Release No. 13-133
Nursing Home Operator Agrees to Pay $48 Million to Resolve Allegations That Six SoCal Facilities Billed for Unnecessary TherapyRead the Press Release
LOS ANGELES – A Mission Viejo-based corporation that operates nursing homes across the western United States has agreed to pay $48 million to resolve allegations that it knowingly submitted inflated bills to Medicare for therapy services that were medically unnecessary or were never provided to elderly patients at six of its Southern California skilled nursing facilities.
The settlement comes in a case against The Ensign Group, Inc. that was unsealed late Monday by a federal judge in Los Angeles.
The Ensign Group operated skilled nursing facilities that allegedly submitted false claims to Medicare. Between January 1, 1999, and August 31, 2011, the six Ensign facilities allegedly submitted false claims to the government for physical, occupational and speech therapy services provided to Medicare beneficiaries that were not medically necessary. The government alleged that certain patients were kept in these facilities for periods of time that exceeded what was medically necessary for the treatment of their conditions.
The six Ensign facilities named in two federal “whistleblower” lawsuits are the Atlantic Memorial Healthcare Center in Long Beach, Panorama Gardens in Panorama City, Orchard Post Acute Care (commonly called Royal Court) in Whittier, Sea Cliff Healthcare Center in Huntington Beach, Southland in Norwalk, and Victoria Care Center in Ventura.
The lawsuit specifically alleged that Ensign improperly incentivized therapists and others to increase the amount of therapy provided to patients to meet planned targets for Medicare revenue, which were set without regard to patients' individual therapy needs and could only be achieved by billing at the highest reimbursement levels.
The six facilities also allegedly submitted claims for services that were not provided.
“The case against The Ensign Group involves a company that regularly bilked Medicare by submitting inflated bills that, in some cases, sought money for services that simply were never provided to patients,” said United States Attorney André Birotte Jr. “This settlement – one of the largest of its kind in United States history – demonstrates our commitment to protecting taxpayers who fund important programs that benefit millions of Americans, but don’t want to see their hard-earned money wasted on fraud or abuse.”
Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the Office of Inspector General of the U.S. Department of Health and Human Services. “Billing Medicare for costly, unnecessary skilled nursing services – as the government alleged here – inflates health care costs borne by taxpayers,” said “This settlement again puts on notice those who would consider defrauding federally funded health care programs.”
Ensign has entered into a Corporate Integrity Agreement with the HHS Inspector General’s Office.
“Skilled nursing facilities that place their own financial interests above the needs of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division, Stuart F. Delery. “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”
The settlement resolves lawsuits filed by two former Ensign employees under the qui tam, – or whistleblower – provisions of the False Claims Act, which allow private citizens to bring suit on behalf of the government and share in any recovery. It has yet to be determined how much money the whistleblowers in this case, Gloria Patterson and Carol Sanchez, will receive in United States of America ex rel. Gloria Patterson v. Ensign Group, Inc., SACV 06-6956-CJC (Central District of California) and United States of America ex rel. Carol Sanchez v. Ensign Group, Inc., SACV 06-0643-CJC (Central District of California).
The case was resolved by the United States Attorney’s Office, with assistance from the Commercial Litigation Branch, Civil Division, U.S. Department of Justice; and the U.S. Department of Health and Human Services’ Office of Inspector General.
In settling these cases, Ensign did not admit liability.
Release No. 13-131
Former Animal Planet Television Network Host Pleads Guilty to Federal Charge of Selling Endangered WildlifeRead the Press Release
LOS ANGELES -- Donald Schultz, the former host of Animal Planet’s “Wild Recon” television show, pleaded guilty today in federal court to one count of violating the Endangered Species Act for selling two desert monitor lizards (Varanus griseus).
Schultz, 35, of Playa Vista, admitted in court that on July 29, 2010, he sold the two live desert monitor lizards to an undercover agent with the U.S. Fish and Wildlife Service who was posing as a prospective buyer. After meeting with the undercover agent at his residence to finalize the deal, Schultz agreed to ship the two live desert monitors from Los Angeles to Buffalo, New York, via airplane A federal agent then received the monitors in New York and took them into custody.
Schultz had never been issued a permit to sell the two lizards. Desert monitor lizards are listed as endangered under the Endangered Species Act.
Schultz is scheduled to be sentenced by United States Magistrate Judge Victor B. Kenton on January 28.
Pursuant to the plea agreement, Schultz has agreed to serve two years of probation, pay a $6,000 fine, pay restitution of $3,000, and perform 200 hours of community service.
This case was investigated by the U.S. Fish and Wildlife Service.
Release No. 13-132
Pomona Gang Member Pleads Guilty to Federal Weapons and Drug Offenses in Deal Expected to Bring Sentence of up to 17½ YearsRead the Press Release
LOS ANGELES – A Pomona man pleaded guilty today to a federal drug trafficking charge for possessing more than one-half pound of methamphetamine that he was planning to distribute.
Raymond Anthony Montanez, 24, pleaded guilty today to possession with intent to distribute methamphetamine and being a felon in possession of a firearm.
Montanez pleaded guilty before United States District Judge Philip S. Gutierrez, who is scheduled to sentence the defendant on February 10. As part of the plea agreement that led to this morning’s guilty pleas, prosecutors and Montanez agree that he will be sentenced to at least 10 years in federal prison and up to 17½ years in custody. The actual sentence will be determined by Judge Gutierrez next year.
Authorities recovered 243.7 grams of methamphetamine from Montanez’s residence on July 29, 2012 after he had shot himself in the leg and was brought to the hospital for treatment. Pomona Police Officers investigating the incident responded to his residence, recovered the weapon that Montanez used to shoot himself, found two other firearms, and discovered the narcotics.
The firearms charge relates to Montanez’s possession of a firearm on July 4, 2012. He prohibited from possessing any guns because was previously convicted of a felony in 2008 in state court of carrying a loaded handgun.
The case against Montanez is the result of an investigation by the San Gabriel Valley Safe Streets Gang Task Force, which is made up of agents and officers from the Federal Bureau of Investigation; the Pomona Police Department; the Drug Enforcement Administration; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Los Angeles County Sheriff’s Department; and the California Department of Corrections and Rehabilitation.
Release No. 13-129
Orange County Ambulance Company Pays More Than $3 Million to Settle Allegations That It Overbilled Federal Health Care ProgramsRead the Press Release
SANTA ANA, California – An Orange County-based ambulance company has paid the United States more than $3 million to settle a lawsuit alleging it received overpayments from the Medicare program and other federal healthcare programs for transporting patients who were not eligible for ambulance transports, United States Attorney André Birotte Jr. announced today.
A federal judge in Santa Ana on Friday unsealed a lawsuit filed under the False Claims Act against ambulance transport company FILYN Corporation, which does business under the name Lynch Ambulance and is based in Anaheim. Lynch Ambulance and two of its principals named in the lawsuit settled the case. On November 7 Lynch Ambulance paid $3.05 million to the United States to resolve allegations that from 2001 through 2007 it regularly billed Medicare and other federal healthcare programs for transporting patients who were not “bed-confined” or whose transports otherwise were not medically necessary. The federal health care programs that paid claims for medically unnecessary transports were Medicare, TRICARE and the Federal Employees Health Benefits Program.
The settlement resolves a lawsuit filed under the qui tam – or “whistleblower” – provisions of the federal False Claims Act, which allow private citizens with knowledge of fraud to bring civil actions on behalf of the United States and to share in any recovery. The lawsuit -- which was filled by two former Lynch Ambulance employees, Jamie Weatherly and Dawn Lucero -- was unsealed after the United States elected to take over part of the case and negotiated the settlement.
Lynch Ambulance has also entered into a Corporate Integrity Agreement with the Department of Health and Human Services. Glenn R. Ferry, Special Agent in Charge for the Los Angeles Region of the Office of Inspector General for the Department of Health of Human Services, said: “Taxpayers shouldn't be on the hook for these expensive and medically unnecessary ambulance trips. Count on federal law enforcement to aggressively investigate and prosecute such actions.”
Lynch Ambulance and its principals have resolved this case without admitting any wrongdoing.
The settlement with Lynch Ambulance is the result of an investigation by the United States Department of Health and Human Services, Office of the Inspector General; the Department of Defense, Office of the Inspector General; the Office of Personnel Management, Office of the Inspector General; and the Federal Bureau of Investigation.
Release No. 13-130