Central District of California
Press releases recorded for this federal judicial district.
Diamond Bar Man Pleads Guilty to Federal Fraud Charges for Running Day-Trading Ponzi That Raised $49 Million from InvestorsRead the Press Release
LOS ANGELES – The CEO and co-owner of a Diamond Bar investment company pleaded guilty this afternoon to two federal felony counts arising from his scheme to defraud investors who put $49 million into his bogus day-trading venture.
Syed Qaisar Madad pleaded guilty to wire fraud and tax fraud, admitting in court today that investors lost more than $31 million when his scheme collapsed in March 2011.
Starting in 2005, Madad collected money from investors who believed he generated consistent, substantial profits, and that their money would be safe and available upon request. During the 5½-year life of the scheme, Madad received more than $49 million from investors.
Madad, 66, a resident of Diamond Bar who ran his scheme through a company called Technology for Telecommunication and Multimedia, Inc. (TTM), portrayed himself as a successful investor who had not lost money in a single day of trading – except one day in 2006. Madad, who was profiled and interviewed in media serving the Pakistani-American community, told reporters and potential investors that he had developed a day-trading technique that was always profitable.
Over the course of the scheme, Madad sent victims monthly account statements that always showed gains in their accounts, and some victims gave Madad additional funds based solely on these account statements. Madad admitted today that the balances shown on these statements were false, and that, in fact, he lost more than $15 million in unsuccessful trading.
While Madad promised that he would not take any fees or compensation for managing the invested funds, Madad admitted today that he spent well over $15 million of investors’ money on personal expenses, including real estate, jewelry for his wife and daughters, vehicles and cash disbursements to himself and family members.
Although Madad returned approximately $17.7 million to investors, many of the payments he made were Ponzi payments, meaning that the money came from funds entrusted to him by other investors, rather than from profits or interest he had earned.
Madad also admitted today that he under-reported his income for tax year 2009 by approximately $4.9 million on tax returns filed with the Internal Revenue Service.
Madad’s scheme originally came to light two years ago when he was sued by one of his investors.
Prior to and following Madad’s arrest in October 2012, pursuant to court-authorized warrants, the government seized a Mercedes-Benz C63, numerous pieces of diamond and other precious gemstone jewelry, and funds that were traceable to investor money. As part of his agreement with the goverment, Madad has agreed to forfeit his Diamond Bar mansion, the Mercedez-Benz, 68 pieces of jewelry, and other luxury items, including silk and wool handmade oriental carpets. Madad also agreed to pay the IRS approximately $5 million in unpaid taxes for tax years 2006 through 2010.
Madad is scheduled to be sentenced by United States District Judge Percy Anderson on June 24. As a result of today’s guilty pleas, Madad faces a statutory maximum sentence of 23 years in federal prison.
The case against Madad is the result of an investigation by the Federal Bureau of Investigation and IRS - Criminal Investigation.
Release No. 13-026
Former California Assemblyman Admits Defrauding Banks Out of $193,661 by Falsely Claiming to Be Identity Theft VictimRead the Press Release
LOS ANGELES – Carl Edward Washington, a former California Assemblyman who represented the state’s 52nd district, has agreed to plead guilty to federal bank fraud charges, admitting that he bilked financial institutions by falsely claiming to be the victim of identity theft.
As part of a plea agreement filed yesterday in United States District Court, Washington agreed to plead guilty to three counts of bank fraud for causing losses of $193,661 to financial institutions that include Farmers and Merchants Bank, First City Credit Union, and LA Financial Credit Union.
Washington, 47, a resident of Paramount who currently is employed as a division chief with the Los Angeles County Probation Department, admitted in the plea agreement that during a lengthy scheme that ran through the summer of 2011, he defrauded the three banks by concealing several unpaid debts – debts that he simply stopped paying – and his overall lack of creditworthiness.
Washington was able to hide his bad debts by filing a series of bogus police reports with the Los Angeles County Sheriff’s Department in which he falsely claimed to be the victim of identity theft. After filing the false police reports, Washington sent copies of the reports to the credit reporting agency Experian and demanded that the information relating to the bad debts be removed from his credit report. Once Experian removed this data from his credit report, Washington submitted applications for new credit cards to the victim banks, applications that failed to disclose all of his outstanding debts and the fact that he had negative information reported by other financial institutions removed from his credit report. Once the victim banks issued new credit cards to Washington, he purchased goods and services. But, after making several payments, Washington contacted Experian and, claiming that he was the victim of identity theft, requested that information related to the new credit cards be removed from his credit report. Washington admitted filing five false police reports with LASD.
Washington’s scheme was exposed when he attempted to refinance two auto loans through LA Financial. When the credit union examined Washington’s credit report, it discovered that the auto loans it had previously issued were not showing up on his credit report. LA Financial subsequently learned from Experian that Washington disputed he had earlier sought to refinance his auto loans and that he claimed to be a victim of identity theft. Because LA Financial knew Washington’s claims were false, it froze Washington’s credit card account and reported him to authorities.
Washington was elected to the California legislature in 1996, and he served in the Assembly until 2002. Washington later went to work for the Los Angeles County Probation Department, where he ran a unit called Intergovernmental Relations and Legislative Affairs. Washington has been on administrative leave from the Probation Department since his arrest in this case in September.
Washington is scheduled to enter his guilty pleas on Monday before United States District Judge S. James Otero. Once he pleads guilty, Washington will face a statutory maximum penalty of 30 years in federal prison for each of the three bank fraud counts. However, the parties have agreed that the United States Sentencing Guidelines call for a term of imprisonment of one year to 18 months. The actual sentence will be determined by Judge Otero later this year.
The case against Washington was investigated by the Federal Bureau of Investigation’s Public Corruption Squad.
Release No. 13-025
14 Arrested in Market Manipulation Schemes That Caused Thousands of Investors to Lose More Than $30 MillionRead the Press Release
Two Federal Indictments Charge 15 Defendants in Plots that Fraudulently Inflated Stock Values and Laundered Profits through Offshore Accounts
LOS ANGELES – Federal authorities have arrested 14 people named in two federal indictments that allege long-term schemes to manipulate stock prices that led to more than 20,000 investors losing over $30 million when artificially inflated stock prices collapsed. As one defendant described his scheme during a wiretapped phone call: “What I do is turn stock into money.”
The arrests were made yesterday pursuant to two grand jury indictments that were unsealed yesterday. The indictments detail two separate, large-scale fraud schemes in which conspirators:
gained control of the majority of the stock of publicly traded companies, often co-opting company management to assist in these efforts;concealed their control of the stock by purchasing and transferring shares to offshore accounts and to nominee entities with names such as “Dojo,” “Picasso,” and “Big Dog”;
fraudulently inflated the prices and trading volumes of the companies’ stocks through slick marketing campaigns, misleading press releases, payments to stock promoters, and “cross-trading” among co-conspirators that made it appear the stocks were being actively traded;
coordinated the sale of the companies’ shares at the peak of the fraudulently manipulated market; and
hid profits in nominee and offshore accounts.
According to court documents, the defendants are serial market manipulators who carried out several fraudulent deals each year, each of which generated several million dollars. The defendants generally targeted marginal companies operating in areas they believed could easily be touted as generating breakthroughs or deals that would explain sudden increases in trading volume and price, including companies purportedly involved in pharmaceuticals, hair restoration, green technologies, entertainment, oil and gas development, and e-commerce websites. The indictments allege that increased trading volume and higher stock prices were actually the result of the defendants’ fraudulent actions. A company CEO brought into one of the schemes summed up a typical deal during a wiretapped call: “There's nothing in there, there’s nothing to the company. It’s monkey business.”
The indictments allege that the schemes collectively engaged in five specific deals that defrauded more than 20,000 investors around the world and generated more than $30 million in illegal profits.
“This case has dismantled a far-reaching stock market manipulation scheme run with ruthless efficiency and operated with one goal in mind – to steal money from the investing public,” said United States Attorney André Birotte Jr. “This type of predatory behavior cheats the average investor, erodes overall confidence in the markets, and has a devastating impact on companies and their employees.”
One indictment alleges a scheme led by Sherman Mazur and his nephew, Ari Kaplan, charging that they “perpetrated a multimillion-dollar scheme to fraudulently inflate the prices and trading volumes of public company stocks and then sell millions of shares of those companies at the fraudulently inflated prices to the investing public for substantial profits.” The indictment alleges that the scheme involved a number of companies, but focuses on deals involving two businesses – GenMed, which purported to develop, manufacture and distribute generic pharmaceuticals; and Biostem, which purported to develop and license regenerative stem cell treatments, including hair regrowth technology.
The 32-count Mazur indictment charges nine defendants, all of whom were taken into custody yesterday morning. They are:
Sherman Mazur, 63, of the Westwood district of Los Angeles, who controlled a company called the London Finance Group, Ltd.;
Ari Kaplan, 40 of Venice, who is Mazur’s nephew and was his partner in the London Finance Group, as well as in a series of other business endeavors;
Grover Henry Colin Nix IV (who generally used the name “Colin Nix”), 39, of the Los Feliz district of Los Angeles, who controlled the Santa Monica-based Calbridge Capital, LLC, which purported to be a “boutique investment banking firm”;
Regis Possino, 65, of the Pacific Palisades district of Los Angeles, a now-disbarred attorney who was Nix’s partner at Calbridge Capital;
Edon Moyal, 32, of Carlsbad, California, who controlled a company called 8 Sounds, Inc. and while allegedly involved in this scheme was free on bond pending trial in a criminal case filed in federal court in San Diego;
Mark Harris, 56, of Scottsdale, Arizona, a stock promoter who controlled Apache Capital, LLC, an investor relations firm in Scottsdale, Arizona;
Joey Davis, 46, of the Los Feliz district of Los Angeles, who controlled Scripted Consulting Group, a public relations firm in Los Angeles, and who was allegedly involved in this scheme while free on bond pending trial in a criminal case filed in federal court in Los Angeles;
Curtis Platt, who turned 51 today, of Sarasota, Florida, who controlled Big Dog International, LLC; and
Dwight Brunoehler, 62, of Maitland, Florida, who is the CEO of Biostem, a company based in Clearwater, Florida.
The Mazur indictment alleges that the nine defendants conspired to commit securities fraud and wire fraud. The indictment alleges that members of the scheme generated at least $13 million in illegal proceeds when they sold their shares of manipulated companies, a figure that includes at least $2.1 million in illegal proceeds from the manipulation campaign for Genmed, as well as $500,000 in illegal proceeds from the ongoing manipulation campaign for Biostem. The indictment further alleges that Mazur, Kaplan, Nix, Possino and Harris engaged in money laundering, using funds transferred from offshore accounts to promote their fraudulent scheme.
“The defendants’ alleged combination of celebrities, press releases, gimmicks and lies was similar to a how a magician deceives unsuspecting believers into an illusion,” said Bill Lewis, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “While operating the schemes alleged in the indictments, the defendants kept their audience captive until stock prices peaked, while investor money vanished into defendants bank accounts.”
Release No. 13-024
United States Attorney’s Office Sponsors 'We Love Wildlife' Campaign as Part of Ongoing Efforts to Protect Endangered SpeciesRead the Press Release
LOS ANGELES – United States Attorney André Birotte Jr. today announced the launch of the “We Love Wildlife” campaign – a public education campaign to promote awareness about the international black market for threatened and endangered species and how United States laws are used to protect those species.
Mr. Birotte said the campaign is designed to deter criminal conduct through education and community outreach. Federal prosecutors, including Mr. Birotte, will participate in a series of events beginning Monday, February 11. Each day next week, the United States Attorney’s Office will host a “Lunch and Learn about Wildlife” meeting. For a list of upcoming events, including next week’s brown bag lunches, please see: http://www.justice.gov/usao-cdca/recent-events.
The United States is a large consumer of wildlife products illegally poached and smuggled from other countries. Many American do not know that it is illegal to sell or offer to sell endangered wildlife or wildlife parts in interstate commerce. Other examples of illegal wildlife trafficking include:
selling marine mammal parts, such as whale bones or seal skins (unless the parts will be used for a public display, scientific research or enhancing the survival of a species);
importing or exporting rhino horns without a permit;
offering to sell migratory bird species, such as the Western Scrub Jay; and
failing to declare to the proper authorities any flora or fauna brought into the United States.
Illegal purchases of protected wildlife lead directly to the poaching and decimation of endangered species in the wild.
The prosecution of crimes involving wildlife is an important part of the mission of the United States Attorney’s Office in Los Angeles, which is one of only two U.S. Attorney’s Offices in the nation to have an Environmental Crimes Section.
In partnership with the United States Department of Justice’s Environment and Natural Resource Division, as well as federal and state law enforcement agencies, Assistant United States Attorneys based in Los Angeles have successfully prosecuted cases under smuggling statutes, the Endangered Species Act, the Lacey Act (the first federal law that protected wildlife), the Marine Mammal Protection Act, the Bald Eagle Protection Act, and the Migratory Bird Treaty Act.
The United States Attorney’s Office has partnered with the Humane Society of the United States in the “We Love Wildlife” campaign to help spread the message and educate the public about wildlife protection statutes through a series of public events.
During the week of February 11, the United States Attorney’s Office will host a series of brown bag lunches to discuss the important work being done to protect and conserve wildlife in the United States and abroad.
During the week of February 15, members of the United States Attorney’s Office and its law enforcement partner agencies will participate in the Cool Cats Program at the San Diego Zoo. The outreach effort will emphasize not buying or selling protected wildlife and their parts.
On Saturday, February 23, federal prosecutors and agents from investigating agencies will be part of the Safari Safety Program at the Los Angeles Zoo, where participants will be able to learn about careers in wildlife protection and enforcement.
On Sunday, February 24, representatives from the United States Attorney’s Office will participate in the African Heritage Festival at the Aquarium of the Pacific in Long Beach, where they will offer information about efforts to stop global wildlife trafficking, prevent the introduction of invasive species, and protect fish and marine mammals.
The “We Love Wildlife” campaign is being coordinated by the United States Attorney’s Office, in close collaboration with the Humane Society of the United States, the United States Fish and Wildlife Service, the National Oceanic and Atmospheric Administration, the United States Coast Guard, the United States Forest Service, the Animal and Plant Health Inspection Service, the California Department of Fish and Wildlife, the San Diego Zoo, the Los Angeles Zoo, the California Wild Center, and the Animal Advocates.
All inquiries on the “We Love Wildlife” campaign should be directed to Assistant United States Attorney Amanda M. Bettinelli of the Environmental Crimes Section at (213) 894-0470.
Release No. 13-wildlife
Two Compton Men Indicted in Federal Hate Crime Case Stemming from New Year's Eve Attack on African-American YouthsRead the Press Release
LOS ANGELES – A federal grand jury has indicted two members of the Compton 155 street gang on federal hate crime charges related to a racially motivated attack on four African-American juveniles at a residence in the City of Compton on New Year’s Eve.
Jeffrey Aguilar, who uses the moniker “Terco,” 19, and Efren Marquez Jr., who is also known as “Stretch” and “Junior,” 21, were named in a five-count indictment returned late yesterday by the grand jury.
The indictment specifically charges Aguilar and Marquez with one count of conspiracy to interfere with housing rights and four counts of interfering with housing rights. The indictment alleges that they attempted to intimidate African-Americans from living in Compton.
Aguilar and Marquez allegedly are members of the Compton 155 street gang, which uses violence and threats of violence in an effort to drive African-Americans out of their “territory” on the west side of Compton. According to the indictment, members of the Compton 155 gang often refer to themselves as “NK” or “N***** Killers.” To instill fear in African-Americans, members of the gang tag their gang moniker and “NK” throughout their “territory.”
“Hate-fueled crimes have no place in our society,” said United States Attorney Andre Birotte Jr. “No one should have to look over their shoulder in fear because of who they are. Incidents like the one described in the federal indictment prove that we must remain vigilant to ensure that the rights of every single American resident are protected at all times.”
Thomas E. Perez, the Assistant Attorney General for the Civil Rights Division of the Department of Justice, stated: “The Civil Rights Division will continue to protect the right of every person who lives in this country to do so free of racially-based violence and intimidation. The Justice Department will not tolerate those individuals or gangs who would prevent a family from living in a particular neighborhood simply because of their race or the color of their skin.”
The indictment specifically alleges that on December 31, 2012, Aguilar, Marquez and a co-conspirator confronted an African-American juvenile, who was walking on a street in Compton, and threatened him by referring to themselves as “NKs.” The 17-year-old victim ran to his girlfriend’s house, where three other African-American juveniles were located. Aguilar and Marquez followed the 17-year-old victim to the home, yelled racial slurs at the four juveniles at the residence, and demanded that the African-Americans get out of the neighborhood. Aguilar and Marquez then allegedly assaulted the 17-year-old victim with a metal pipe and threatened another juvenile with a gun.
After the juveniles managed to escape and run into the house, the indictment alleges that Aguilar and Marquez left the scene and informed other gang members that the African-American juveniles lived in their “territory.” Shortly thereafter, Aguilar and approximately 15 other gang members went to the victims’ home and threatened them by yelling racial slurs and warning the juveniles that they did not belong in the neighborhood. During this time, a member of the gang smashed one of the windows of the house.
“The FBI is committed to the protection of civil liberties,” said Bill Lewis, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “No one should tolerate violence based on the color of their skin or live in fear based on the hatred of others.”
Sheriff Lee Baca commented: “Hate crimes seriously threaten our society’s democratic principles and affect the entire community We had one hate crime in Compton for 2012, but one is too many. Tolerance is the key element of democracy.”
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
Aguilar and Marquez had been in state custody on unrelated charges. They were transferred to federal custody early this morning and are expected to be arraigned on the indictment this afternoon in United States District Court.
If convicted, Aguilar and Marquez each would face a statutory maximum penalty of 10 years in prison for each of the five civil rights charges alleged in the indictment.
The case against Aguilar and Marquez is the result of an ongoing investigation being conducted by the Federal Bureau of Investigation and the Los Angeles County Sheriff’s Department.
The case is being prosecuted by Assistant United States Attorney Reema El-Amamy of the Violent and Organized Crime Section of the United States Attorney’s Office and Trial Attorney Saeed Mody of the Civil Rights Division of the Department of Justice.
Release No. 13-023
Former L.A. City Building Inspector Agrees to Plead Guilty to Federal Charges of Taking Tens of Thousands of Dollars in Bribe PaymentsRead the Press Release
Ex-inspector solicited and received bribes primarily from Koreatown businesses
LOS ANGELES – A former inspector with the Los Angeles Department of Building and Safety (LADBS) has been named in a federal bribery case that alleges he took more than $30,000 in bribes in relation to at least a dozen properties in and around the Koreatown District of Los Angeles.
Samuel In, 66, of Glendale, a 37-year veteran of LADBS, agreed in documents filed late yesterday to plead guilty to one count of soliciting and receiving monetary payments that In described to victims as “fees.”
According to a criminal information and a plea agreement filed yesterday afternoon in United States District Court, In admitted taking bribe payments from 2007 through the end of 2010.“Corruption by any official corrodes public confidence in governmental institutions,” said United States Attorney André Birotte Jr. “In this case, a government employee directly threatened the safety of the public by exploiting his position to line his own pockets. The victims were all the more vulnerable because they had limited abilities in English and depended on Mr. In to help them navigate through the inspection processes.”
In one example described in court documents, a victim identified as T.C., who wanted to open a retail store in Los Angeles in 2008, paid $5,000 to In. To open the store, the victim needed to convert office space in a process that required a building permit. The victim had limited English language ability and had a difficult time completing the LADBS paperwork. During one of the victim’s visits to LADBS’ offices, In assisted the victim in the Korean language, informing him that he was a senior inspector at LADBS, and advising the victim about construction plans.
The victim followed In’s advice and received a building permit from LADBS. Following the issuance of the permit, In went to the victim’s business and said he would take care of the inspections and other procedures through the final inspection of the retail store, if the victim paid In $4,000 in “fees.” In later increased the amount of his “fees” to $5,000, asked that any payments by check be made with the payee line left blank, and advised that checks made payable to LADBS would not be useful. The victim ultimately made several cash payments totaling $5,000.
As part of his plea agreement, In admitted that he solicited and accepted bribery payments totaling more than $30,000 in connection with his official duties in relation to at least 11 other Koreatown properties.
“Mr. In took advantage of Koreatown residents by taking their money under false pretenses, but also by deluding victims into a false understanding of how city business is conducted,” said Bill Lewis, Assistant Director in Charge of the FBI in Los Angeles. “The defendant’s decision to plead guilty is another step forward in restoring honest government to the city of Los Angeles.”
In will be summoned to make an initial appearance in United States District Court later this month.
The FBI began an undercover investigation of LADBS inspectors in the summer of 2010, after an informant reported that LADBS inspectors took cash bribes in exchange for necessary permit approvals on residential construction projects. Two former inspectors pleaded guilty to accepting bribe payments and were sentenced to federal prison (see: http://www.justice.gov/archive/usao/cac/Pressroom/2011/141.html).
The charge of bribery carries a statutory maximum sentence of 10 years in federal prison and a fine of $250,000.The case against In is the result of an investigation by the Federal Bureau of Investigation.
The FBI urges anyone with information about building inspectors or other officials accepting bribes to contact the FBI by calling its Los Angeles Field Office at (310) 477-6565, or by sending an e-mail to the dedicated anti-corruption address: [email protected].
Release No. 13-022
Woman Initially Charged as ‘Jane Doe’ in Child Pornography Production Case Named in Federal Grand Jury IndictmentRead the Press Release
Letha Montemayor Tucker now also charged with child sex trafficking
LOS ANGELES – The North Hills woman identified last month as one of two suspects sought in connection with a child pornography case tied to the San Fernando Valley was indicted this afternoon on federal charges of producing child pornography, as well as child sex trafficking.
Letha Montemayor Tucker, who uses the nickname “Butterfly,” 52, was named in a four-count indictment returned by a federal grand jury. The indictment accuses Tucker of conspiracy to produce child pornography, production of child pornography, conspiracy to engage in child sex trafficking, and sex trafficking of children.
If she is convicted of all four charges in the indictment, Tucker would face a mandatory minimum prison sentence of 10 years and could be sentenced to as much as life in federal prison.
The indictment comes one month after tips provided by the public resulted in the identification of Tucker as one of two individuals allegedly involved in the production of a widely circulated series of child pornography images taken about 11 years ago. The pictures show an adult man, “John Doe,” and a woman, now believed to be Tucker, sexually molesting a girl whom investigators have now confirmed was between 11 and 13 at the time the images were taken.
“The sex trafficking of minors is unconscionable under any circumstances,” said United States Attorney André Birotte Jr. “As this case demonstrates, we will spare no effort in locating and prosecuting those who seek to take advantage of young, vulnerable victims.”
According to the indictment, between 2000 and 2001, both Tucker and the victim lived in a residential hotel in the Los Angeles area. The indictment alleges that Tucker worked as a prostitute, provided the victim with crack cocaine and, on multiple occasions, directed the child to engage in sexual acts with Tucker’s male clients. In or about May 2001, the indictment states Tucker contacted “John Doe” and asked whether he would be interested in having sex with the victim in exchange for money. Subsequently, Tucker brought the victim to “John Doe’s” residence. There the defendant and “John Doe” engaged in sexual acts with the victim and photographed the encounter.
Based upon forensic analysis conducted by the National Center for Missing & Exploited Children (NCMEC), investigators believe that the images were produced in the Los Angeles area, specifically in the San Fernando Valley. The child pornography images were first discovered by HSI special agents in Chicago in 2007. The material was submitted to NCMEC’s Child Victim Identification Program, which determined the victim had not yet been identified and was not linked with other known child pornography images.
As a result of leads provided by the public, special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) located the victim within a week after the case was announced on January 3. She is safe and is cooperating with the ongoing investigation.
“The victim in this case was devastated when she learned from investigators that these sexually explicit images had been distributed over the Internet,” said ICE Director John Morton. “The reality is, every time such images are viewed, the children shown are exploited yet again. That is why we owe it to these young victims to vigorously pursue these cases and hold the perpetrators accountable for their reprehensible crimes.”
While Tucker and the victim were quickly found, the identity and whereabouts of “John Doe” remain unknown. In the images in the child pornography series, “John Doe’s” face has been purposely obscured, but he appears to be a 40- to 50-year-old white male, would now be approximately 11 years older. HSI agents continue to pursue several leads, but they are appealing again for the public’s help. Anyone with information or tips that can assist in the ongoing investigation is encouraged to call 1-866-DHS-2ICE or visit http://www.ice.gov/exec/forms/hsi-tips/tips.asp.
Tucker, who is currently being held without bond, is scheduled to be arraigned on the indictment in United States District Court on February 13.
Release No. 13-021
San Luis Obispo Police Officer Arrested on Federal Bribery ChargesRead the Press Release
LOS ANGELES – A detective with the San Luis Obispo Police Department was arrested this morning after being charged in a bribery scheme in which he allegedly took cash and narcotics from two individuals. In return, the police officer allegedly provided these “cooperating witnesses” with narcotics for their own use, as well as fake drugs to sell to drug dealers.
Cory Pierce, 39, of Arroyo Grande, was taken into custody this morning without incident by agents with the Federal Bureau of Investigation. Pierce was charged with one count of bribery in a criminal complaint filed yesterday in United States District Court in Los Angeles.
According to the affidavit in support of the complaint, Pierce is a six-year veteran of the San Luis Obispo Police Department who was most recently assigned to a narcotics task force with the San Luis Obispo County Sheriff’s Office. The complaint describes how Pierce cultivated two sources – identified in the complaint only as “CW1” and “CW2” – who have since cooperated with the FBI’s investigation.
After CW2 was arrested for heroin possession in 2011, CW2 and his girlfriend, CW1, agreed to cooperate with Pierce. But soon after they agreed to work with the police officer, Pierce made unusual requests for the informants to bring him narcotics. As the requests continued, Pierce allegedly provided placebo pain pills and real narcotics to CW1 and CW2. Pierce exchanged those pills and drugs for cash and various narcotics brought to him by the CWs, including oxycodone, heroin and drugs that treat opiate addition, according to the complaint, which goes on to state that Pierce on several occasions provided CW1 with methamphetamine that was still in police evidence bags. The complaint alleges that CW1 obtained prescriptions for pain pills from her doctor and from emergency rooms to give to Pierce, and that Pierce would provide her with money to purchase the prescriptions.
The complaint alleges that Pierce used his position as a police officer to influence CW2’s probation officer to perform little or no supervision of CW2 and informed CW2 that he could “work off” his heroin possession charge by cooperating with Pierce. The complaint goes on to allege that Pierce informed the CWs about ongoing police investigations, including where best to purchase narcotics and which drug houses to stay away from, so that they would not be caught purchasing drugs.
Pierce allegedly had the CWs set up a meeting with a drug dealer, and, following the meeting, Pierce pulled over the dealer’s vehicle over at gunpoint, seized morphine pills and let the dealer go without making an arrest.
When the CWs advised Pierce that the drug dealers to whom they had sold the placebo pills realized they had received a deceptive product and wanted revenge, Pierce asked for their identities and indicated he would “take care of it.”
Last month, CW2 began cooperating with a federal investigation and recorded multiple conversations with Pierce. During those recorded conversations, Pierce allegedly instructed CW2 to sell placebo pills to a drug dealer for $11,000, money that was to be split between Pierce and CW2. On multiple occasions, Pierce asked CW2 for Suboxone, which is used treat opiate addictions, indicating that he was personally using the drug, according to the complaint affidavit.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
Pierce will have an initial appearance before a United States Magistrate Judge later this afternoon in United States District Court in Los Angeles.
If convicted of the bribery charge alleged in the criminal complaint, Pierce would face a statutory maximum penalty of 10 years in federal prison.
This ongoing investigation was conducted by the FBI with the assistance of the San Luis Obispo Police Department and the San Luis Obispo Sheriff's Department.
Release No. 13-020
Leader of Inland Empire-Based Drug Traffickin Organization Ssentenced to 168 MonthsRead the Press Release
RIVERSIDE, California – The leader of a drug trafficking organization based in the Inland Empire was sentenced today to 168 months of imprisonment by United States District Judge Virginia A. Phillips.
Salvador Gonzalez-Chavez, 32, Fontana, was convicted last September of conspiracy to distribute, and possess with intent to distribute, heroin.
According to the sentencing memorandum filed by prosecutors, Gonzalez-Chavez was the leader of a drug trafficking organization involving at least 19 other co-conspirators, and his organization imported primarily heroin, as well as cocaine, from Mexico and distributed it to residents in the Inland Empire.
In 2011, local and federal authorities began investigating the organization after the City of Redlands and surrounding communities experienced a dramatic increase in heroin overdoses and other heroin-related incidents.
During the sentencing, government lawyers argued that the extreme dangers and addictiveness of heroin were best illustrated by an intercepted phone call that occurred on August 31, 2011 between a prospective buyer and a co-conspirator working for Gonzalez-Chavez's drug-trafficking organization. The prospective buyer tried to gain the co-conspirator's trust so that the co-conspirator would sell heroin to the buyer. To achieve this, the prospective buyer told the co-conspirator that the buyer was a friend of a certain individual -- an individual whom authorities knew had died of a heroin overdose on April 5, 2011 in Redlands at the buyer's house. At that point, the co-conspirator's concerns were alleviated, and the two agreed to meet up to conduct the heroin transaction.
The case against Gonzalez-Chavez is the result of an investigation by the Drug Enforcement Administration, with substantial assistance from the Redlands Police Department.Release No. 13-019
Grand Jury Indicts Santa Monica Restaurant and Sushi Chefs on Federal Charges Related to Sale of Protected Whale MeatRead the Press Release
LOS ANGELES – A federal grand jury has returned a nine-count indictment that charges a now-shuttered Santa Monica sushi restaurant and two men who worked there as chefs with selling meat from Sei whales, which are protected under the Marine Mammal Protection Act.
The indictment, which was filed yesterday afternoon charges:
Typhoon Restaurant, Inc., which is the parent company of the now-closed The Hump Restaurant, which was located at the Santa Monica Airport;Kiyoshiro Yamamoto, 48, of Culver City; and
Susumu Ueda, 39, of Lawndale.
The indictment accuses the three defendants of conspiring to import and sell whale meat, specifically meat from Sei whales, which are listed as an endangered species.
Yamamoto and Ueda allegedly ordered the whale meat from Ginichi Ohira, a Japanese national who previously pleaded guilty to a misdemeanor charge of illegally selling a marine mammal product. Once Ohira received the whale meat in the United States, he prepared an invoice that incorrectly described the meat as fatty tuna and delivered the whale meat to The Hump, according to the indictment that describes a conspiracy that last from 2007 into 2010.
According to the indictment and documents previously filed in this matter, The Hump sold whale sushi to informants posing as customers on three specific occasions in the fall of 2009 and in early 2010. The meat sold as “whale” on two of the occasions was examined by scientists, who tested the DNA of the meat and determined it was Sei whale, and receipts given to the informants who went to The Hump indicated that they had purchased “whale,” according to an affidavit previously filed.
It is illegal to sell any kind of whale meat in the United States. Sei whales are protected under the Marine Mammal Protection Act of 1972 and they are listed as endangered in the Endangered Species Act of 1973.
In addition to the conspiracy charge, The Hump is charged with smuggling and Yamamoto is charged with two counts of smuggling.
The Hump is also charged with a misdemeanor count of the sale of a marine mammal product for an unauthorized purpose, and Yamamoto is charged with two misdemeanor counts of sale of a marine mammal product for an unauthorized purpose.
Yamamoto is additionally charged with obstructing an official proceeding. Contained in that charges is an allegation that Yamamoto instructed other sushi chefs at The Hump to lie about the source of the whale meat.
Ueda is additionally charged with making a false statement to federal investigators about the source of the whale meat.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
If they are convicted of the charges against them in the indictment, Yamamoto would face a statutory maximum penalty of 67 years in federal prison, and Ueda would face a statutory maximum sentence of 10 years.
If it is convicted, Typhoon Restaurant, Inc. would face fines totaling $1.2 million.
Yamamoto, Ueda and representatives of The Hump will be summoned to appear for arraignments in United States District Court in the coming weeks.
The investigation into The Hump and Yamamoto was conducted by the National Oceanic and Atmospheric Administration, Office of Law Enforcement. NOAA investigators received assistance from the United States Fish and Wildlife Service, the California Department of Fish & Game, and U.S. Customs and Border Protection.
The investigation into The Hump was started after members of the general public brought information to NOAA. Anyone with information about the illegal sale of marine mammals is encouraged to call the NOAA Law Enforcement hotline at (800) 853-1964.
Release No. 13-018
Two Men Convicted of Orchestrating Tax Fraud Scheme That Illegally Sought Quarter Billion Dollars in Fraudulent Tax RefundsRead the Press Release
SANTA ANA, California – Two Inland Empire men who ran the Fontana-based Old Quest Foundation have been convicted of running 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, who was the chief executive officer of Old Quest, was found guilty yesterday 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 federal tax returns.
Francisco J. Mendoza, 51, of San Bernardino, who was the president of Old Quest, was also found guilty yesterday of one count of conspiracy to defraud the United States and 37 counts of filing false claims against the United States.
The two defendants, both of whom are currently being held without bond, are scheduled to be sentenced by United States District Judge Josephine Staton Tucker on May 10. As a result of this week’s convictions, Ruiz faces a statutory maximum sentence of 215 years in federal prison, and Mendoza faces a statutory maximum sentence of 195 years in federal prison.
The case against Ruiz and Mendoza 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 (see: http://www.justice.gov/archive/usao/cac/Pressroom/2011/140.html). Ruiz and Mendoza were the lead defendants in a 19-defendant indictment that was at the center of Operation Stolen Treasures.
The evidence presented during a two-week trial showed that Ruiz and Mendoza fraudulently told Old Quest clients they each could receive tax refunds of hundreds of thousands of dollars by accessing “secret government accounts” through a process that included the filing of IRS Forms 1099 OID. During presentations made across the Southland, 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 and Mendoza falsely told clients 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 clients. 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.
Bank records introduced as evidence showed that Old Quest received approximately $1.9 million from clients who used the fraudulent OID scheme, a figure that includes kickbacks 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 that Ruiz hid the 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 and Mendoza 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 and Mendoza were promoting.
Prior to the tax refund scheme, Ruiz and Mendoza had promoted a “land patent” program to many of the same clients, according to the evidence at trial. Under this program, Ruiz and Mendoza promised to eliminate the clients’ mortgages through an obscure and mysterious process, again in exchange for substantial fees. The land patent program quickly failed, and dozens of clients lost their homes to foreclosure.
In addition to selling the fraudulent schemes to customers across the Southland, Ruiz and Mendoza failed to report to the IRS hundreds of thousands of dollars of their own income, and they filed their own false federal income tax returns that fraudulently sought refunds. The evidence at trial showed that Ruiz bragged about not paying taxes for more than 25 years.
A total of 55 defendants were indicted as part of Operation Stolen Treasures, and with this week’s convictions of Ruiz and Mendoza 19 people now have been convicted.
Release No. 13-017
FBI Arrests Glendale Man in ‘Sextortion’ CaseRead the Press Release
Defendant Allegedly Coerced Young Women to Expose Themselves on Internet
LOS ANGELES – A Glendale man accused of hacking into hundreds of Facebook, Skype and email accounts and extorting women into showing him their naked bodies was arrested today on federal computer hacking charges.
Karen “Gary” Kazaryan, 27, was arrested this morning without incident by special agents with the FBI. Kazaryan, who was named in a 30-count indictment returned last Friday by a federal grand jury, is being arraigned this afternoon in United States District Court.
According to the indictment, Kazaryan gained unauthorized access to – in other words, hacked into – the victims’ accounts, and changed the passwords, which locked victims out of their own online accounts. Once he controlled the accounts, Kazaryan searched emails or other files for naked or semi-naked pictures of the victims, as well as other information, such as passwords and the names of their friends. Using that information, Kazaryan posed online as women, sent instant messages to their friends, and persuaded the friends to remove their clothing so that he could view and take pictures of them.
When the victims discovered that they were not speaking with their friends, Kazaryan often extorted them again, using the photos he had fraudulently obtained to again coerce the victims to remove their clothing on camera.
The indictment charges Kazaryan with 15 counts of computer intrusion and 15 counts of aggravated identity theft.
According to a search warrant executed in 2011 and unsealed today, Kazaryan repeatedly contacted victims to demand that they expose their breasts to him on Skype, and used their email and Facebook accounts to make contact with other victims. Kazaryan allegedly posted nude photos of some victims on their Facebook pages when they failed to comply with his demands.
Investigators estimate that Kazaryan victimized more than 350 women, but they have not identified all of the victims whose accounts were hacked. Authorities found approximately 3,000 pictures of nude or semi-nude women – some of which were taken from their online accounts, and some of which were taken by Kazaryan on Skype – on Kazaryan’s computer. Anyone who believes they may have been a victim in this case should contact the FBI’s Los Angeles Field Office at (310) 477-6565.
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 on all counts, Kazaryan faces a statutory maximum penalty of 105 years in federal prison.
The investigation was conducted by the Federal Bureau of Investigation.
Release No. 13-016
Two Charged in Bribery Scheme Involving Orange County Company That Sold Components to Panasonic for Use in Personal ComputersRead the Press Release
SANTA ANA, California – Federal prosecutors today filed criminal charges against the chief executive of an Irvine company who for years paid kickbacks to ensure contracts for his firm, as well as an official with Panasonic’s American subsidiary who accepted the bribes from the Californian supplier of electronic components.
The two men who were charged today with “honest services” wire fraud are:
William McMahon, 47, of Norco, California, the CEO and co-owner of Trustin Technology, andSean Volin, 38, of Oakland, New Jersey, a manager with the Panasonic Corporation of North America in Secaucus, New Jersey.
In addition to criminal informations filed in United States District Court, prosecutors filed plea agreements in which both men admit their criminal conduct and agree to cooperated with investigators in their ongoing probe.
According to the court documents, for the past decade Trustin sold random access memory modules and then hard drives to Panasonic for use in at least one line of laptop computers. Panasonic was Trustin’s largest and most important customer.
Approximately 10 years ago, Volin approached the then-CEO of Trustin to discuss a price reduction for hard drives Trustin was supplying to Panasonic. In response, the then-CEO proposed a kickback scheme in which Panasonic would continue to pay the same price for hard drives, but Trustin would give Volin half of the proposed price reduction for each unit sold. Volin “agreed with [the CEO’s] proposal, did not obtain a price reduction for Panasonic, and a stream of illicit payments between Trustin and [Volin] began,” according to Volin’s plea agreement.
McMahon became CEO of Trustin in 2005, and he learned of the kickback arrangement that had already brought more than $100,000 to Volin. The payments stopped under McMahon’s watch for a period of time, but the payments resumed as McMahon developed a relationship with Volin. Instead of paying a kickback for each hard drive sold to Panasonic, McMahon made regular payments in exchange for Volin “looking out for Trustin’s interests and [as] a reward for defendant’s prior assistance to Trustin,” according to Volin’s plea agreement.
From November 2005 through the end of 2011, McMahon oversaw payments of more than $555,000 that went to a company Volin had established to accept the illicit payments from Trustin. In total, Volin was paid more than $664,900 by Trustin. Volin and McMahon also admit in the court documents that the Panasonic employee received other benefits, including trips to the Kentucky Derby and Napa Valley.
“In exchange for this stream payments, and acting with the intent to defraud Panasonic of [Volin’s] duty of honest services, [Volin] continued to assist Trustin in obtaining additional business from Panasonic, including Panasonic’s designating Trustin a ‘Master Vendor,’” according to court documents, which say that as a result of the scheme “Trustin was able to obtain tens of millions of dollars of business from Panasonic.”
The wire fraud charge alleged in the two cases filed today carries a statutory maximum penalty of 20 years in federal prison.
McMahon and Volin will be summoned to appear in federal court in Orange County in February.
The cases are the result of an ongoing investigation being conducted by U.S. Immigrations and Customs Enforcement’s Homeland Security Investigations and the Federal Bureau of Investigation.
Panasonic Corporation of North America fully cooperated with the government’s investigation.
Release No. 13-014
Puerto Rican Man Sentenced to Two Years in Prison for Distributing Counterfeit, Chinese-Made Pharmaceuticals Across United StatesRead the Press Release
LOS ANGELES – A Puerto Rican man was sentenced today to two years in federal prison for being a key member of an organization that distributed large quantities of Chinese-made, counterfeit pharmaceuticals across the United States.
Francis Ortiz Gonzalez, 36, was sentenced late this morning by United States District Judge George H. Wu, who also ordered the defendant to pay $324,530 in restitution to the pharmaceutical companies that manufacture brand name products such as Lipitor, Viagra, Xanax and Cialis.
In September 2009, federal agents executed a search warrant at Ortiz Gonzalez’s residence in Trujillo Alto, a suburb of San Juan, Puerto Rico. Inside the home, investigators found more than 100,000 pills that resembled a variety of popular prescription medications made by companies such as Pfizer Inc. and Eli Lilly and Company. Investigators developed evidence that Ortiz Gonzalez obtained the counterfeit pills from China and had shipped more than 140,000 of them to individuals throughout the United States. If the drugs had been authentic, the retail value of the pills shipped throughout the United States by Ortiz Gonzalez and possessed in his home would be more than $1 million.
After a six-day trial last summer, Ortiz Gonzalez was convicted on one count of conspiracy and seven counts of trafficking in counterfeit pharmaceuticals. Ortiz Gonzalez was acquitted on three charges. His wife, Ideliz Aleman-Valentin, was acquitted on all charges.
Ortiz Gonzalez packaged and shipped more than 140,000 counterfeit tablets during a seven-month period in 2009 while working as a “dropshipper” for a counterfeit drug ring allegedly headed by Bo Jiang, 34, a Chinese national whose last known residence was in New Zealand. In January 2011, Jiang was taken into custody on a provisional arrest warrant by New Zealand law enforcement authorities, but he fled shortly after being released on bond. Jiang remains a fugitive.
In a related case before Judge Wu, a North Hollywood man was found guilty on January 11 of federal charges involving the trafficking of counterfeit pharmaceuticals.
Edward Alarcon, 44, was convicted of two counts of trafficking in counterfeit OxyContin and Cialis (he was acquitted on two other counts). The evidence presented during a three-day jury trial showed that Alarcon had purchased the counterfeit OxyContin from
Bo Jiang, the same man who allegedly supplied Ortiz Gonzalez. On November 10, 2009, federal agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) found approximately 237 counterfeit OxyContin pills and approximately 1,592 counterfeit Cialis pills in Alarcon’s car and house. Investigators also found hundreds of other counterfeit pills, including Viagra and Levitra. Only a month before the federal search, Alarcon had been convicted in state court on counterfeit drug charges for selling counterfeit Cialis to an undercover Los Angeles Police Department officer in 2008.
Alarcon is scheduled to be sentenced by Judge Wu on April 4. At that time, Alarcon faces a statutory maximum sentence of 20 years in federal prison.
The cases against Ortiz Gonzalez and Alarcon are the result of investigations by HSI; the Food and Drug Administration, Office of Criminal Investigations; and the United States Postal Inspection Service.Release No. 13-013
Former President of SEIU Local Found Guilty of Stealing Tens of Thousands of Dollars from Union and Failing to Report IncomeRead the Press Release
LOS ANGELES – Tyrone Ricky Freeman, the former president of Service Employees International Union (SEIU) Locals 6434 and 434-B, was convicted late this afternoon of federal charges of embezzling tens of thousands of dollars from the union that represents home healthcare workers.
Freeman, 43, who is currently residing in Pittsburgh, Pennsylvania, was found guilty of four counts of mail fraud, seven counts of embezzlement and/or theft of labor union assets, one count of making a false statement to a federally insured financial institution, and two counts of subscribing to a false tax return.
The evidence presented during a 10-day jury trial showed that Freeman pilfered money from SEIU Locals 6434 and 434-B by diverting reimbursement payments from a public-sector union that had close ties to the SEIU locals. Freeman collected $2,500 per month from Local 6434 and the California United Homecare Workers (CUHW), which was established in 2005 by SEIU and the American Federation of State, County, and Municipal Employees to represent public sector employees working in the homecare industry in California. From the beginning of 2007 through the summer of 2008, Freeman concealed from the Local 6434 Executive Board and the CUHW Executive Board that he was receiving payments of $2,500 per month in addition to the regular salary that he received from Local 6434.
Freeman also used a Local 434-B credit card to pay $8,105 in personal expenses he incurred during a 2006 trip to Honolulu, Hawaii, which included expenses related to Freeman’s wedding ceremony.
Freeman also stole money from Local 6434 by routing funds through another entity closely aligned with the union – the Long Term Care Housing Corporation (LTCHC), which was a not-for-profit corporation organized in 2004 for the purpose of developing affordable housing for members of Locals 6434 and Local 434-B. The indictment alleges that Freeman took nearly $17,000 from Local 6434 in June 2008 by requesting the Local 6434 Executive Board to make payments to LTCHC without disclosing to the Executive Board that Freeman would then divert those funds to himself.
The false statement charges relate to lies that Freeman told to Countrywide Bank when he told a bank representative that Local 6434 paid for his personal American Express credit card debt and the monthly lease payments for his Land Rover.
Freeman was also found guilty of subscribing to false tax returns in 2006 and 2007 when he failed to report approximately $63,000 in income he received during those tax years.
“This was a case about abuse and betrayal,” said United States Attorney André Birotte Jr. “Freeman abused his position as leader of the SEIU, and he betrayed the hardworking people whose interests he was supposed to represent.”
Each count of mail fraud carries a statutory maximum sentence of 20 years in federal prison. Each count of making a false statement to a federal insured financial institution carries a statutory maximum sentence of 30 years in federal prison. Each count of embezzlement and/or theft of labor union assets carries a statutory maximum penalty of 10 years in prison. The charge of subscribing to a false tax return carries a statutory maximum penalty of three years in prison.
Freeman is scheduled to be sentenced by United States District Judge Audrey B. Collins on April 22.
The case against Freeman was investigated by the U.S. Department of Labor, Office of Inspector General; the U.S. Department of Labor, Office of Labor Management Standards; the U.S. Department of Labor, Employee Benefits Security Administration; the Federal Bureau of Investigation; and IRS - Criminal Investigation.
Release No. 13-015
Former Mayor of Cudahy Sentenced to Federal Prison for Taking Bribes from ‘Medical Marijuana’ BusinessmanRead the Press Release
LOS ANGELES – The former mayor of the City of Cudahy was sentenced this afternoon to one year in federal prison for taking cash bribes in exchange for supporting the opening of a “medical marijuana” store in the city.
David Silva, 62, the then-mayor of Cudahy and an elected member of the city council, was sentenced to 12 months in federal prison by United States District Judge Manuel Real.
“Mr. Silva sold the integrity and authority of the mayor’s office for his own personal gain,” said United States Attorney André Birotte Jr. “Elected officials are expected to obey the law. When they don’t, those officials should expect to go to prison.”
Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Office, stated: “Today’s sentencing serves as evidence that corrupt practices by public officials who use their power to get rich quick and abuse the trust of their constituents will not be tolerated. The FBI will continue to investigate alleged corrupt offenders and work toward restoring reliable services to the citizens they’re expected to serve.”
Angel Perales, 44, who ran the Code Enforcement Division of the Cudahy Community Services Department and who was involved in the bribery scheme, was sentenced by Judge Real two weeks ago to probation.
A third person who took bribes from an FBI informant – Osvaldo Conde, 51, who was a member of the Cudahy City Council, and who accepted two separate bribe payments – is scheduled to be sentenced by Judge Real on February 25.
According to an affidavit filed in this case: “On the afternoon of February 28, 2012, following weeks of bribe solicitations and related discussions, made during recorded meetings and telephone calls, Conde, Silva and Perales met an FBI confidential informant at the El Potrero nightclub in Cudahy, California. The three Cudahy city officials accepted a total of $15,000 cash as bribe payments. Later that evening, Conde met the confidential informant to receive an additional $2,000 cash as a bribe.”
The 143-page affidavit describes an investigation in which federal law enforcement agents recorded a number of conversations in which the Cudahy city officials explain that the Cudahy City Council planned to approve only one or two permits for marijuana stores in Cudahy. According to the affidavit, Perales sought to broker an arrangement between an FBI informant and city officials in which the informant would make cash payments in exchange for the officials supporting a request for one of the permits.
Prior to a meeting with Conde and Silva at a Pico Rivera restaurant, Perales instructed the informant how he should broach the topic of paying the bribes, and later instructed the informant on how to present the bribes, specifying that the payments should be in cash only, according to the affidavit.
“A government official’s use of political power for illegitimate personal financial gain undermines public confidence in government generally and fosters a belief that those elected to govern – and privileged to serve – are above the law,” prosecutors wrote in a sentencing memo filed in Silva’s case. “This is particularly true when an abuse of power is committed a high-ranking public official such as defendant.”
This case was investigated by the Federal Bureau of Investigation.
Release No. 13-012
Singer in Rock Band Charged in Multi-Million Dollar Loan Fraud CaseRead the Press Release
LOS ANGELES – The frontman of a Los Angeles-based rock band called Lights Over Paris has been charged with submitting false documents to banks to fraudulently obtain millions of dollars worth of loans, money that he allegedly used to fund his band and his lavish lifestyle.
Robert Brandon Mawhinney, who turns 30 today and who authorities believe currently resides in the luxury WaterMarke Tower in downtown Los Angeles, was ordered detained yesterday afternoon by a federal judge.
During the hearing yesterday afternoon in United States District Court, United States Magistrate Judge Charles F. Eick ordered Mawhinney held without bond after determining that he posed a flight risk, given Mawhinney’s frequent travel abroad, conflicting information about his finances and the fact that he had sent hundreds of thousands of dollars to Cyprus.
Mawhinney, who uses the stage name Robb “TaLLLLL” University, was arrested at Miami International Airport earlier this month after he returned from a trip to Buenos Aires. He was subsequently transported to Los Angeles by the United States Marshals Service. Mawhinney was arrested pursuant to a criminal complaint that alleges he applied for loans by submitting phony brokerage statements that falsely showed that he had almost $8 million in assets. The phony statements were altered versions of real statements that showed less than $10,000 in the brokerage accounts.
According to the affidavit in support of the criminal complaint, between August 2009 and April 2011, Mawhinney obtained four loans from Comerica Bank totaling approximately $6.25 million. Mawhinney defaulted on the loans, causing Comerica to suffer losses of approximately $6 million.
Mawhinney allegedly told bank officials that he needed the money to fund his music business and to purchase recording equipment. According to investigators, Mawhinney used the money from the Comerica loans and loans from other banks to pay for travel, entertainment and a luxury tour bus that cost well over $750,000.
The other banks that issued loans to Mawhinney and suffered losses were JP Morgan Chase, Zions Bank and Bank of America, according to court documents.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
Mawhinney is charged with making a false statement in a loan application. If he is convicted of the charge in the criminal complaint, Mawhinney would face a maximum statutory penalty of 30 years in federal prison. Mawhinney is scheduled to be arraigned in this case on February 11.
In a related case that was unsealed late yesterday, two former Mawhinney associates were charged with conspiracy to commit loan fraud. Matt Salazar, 29, of Valley Village, and his brother, Jason Salazar, 28, of Grover Beach and Fresno, have agreed to plead guilty.
The Salazar brothers, who are co-owners of the Burbank-based Matt Salazar Recording Productions and part-owners of LA Sound Gallery, also based in Burbank, admitted in court documents that they provided false documents to Bank of America, Greystone Bank and Huntington National Bank to obtain about $1.7 million in loans for their music business.
Mawhinney also used the Salazars’ studio to bolster his own fraudulent loan applications. Mawhinney met with a Comerica loan officer at their recording studio and falsely claimed to be an owner of the studio.
The case against the Salazars has been assigned to United States District Judge Judge Cormac J. Carney, who will schedule a hearing for the brothers to enter their guilty pleas. Once they plead guilty, each of the Salazar brothers will face a statutory maximum penalty of five years in federal prison.
The cases against Mawhinney and the Salazar brothers are the product of an investigation by the Federal Bureau of Investigation and IRS - Criminal Investigation.
Release No. 13-011
San Fernando Valley Doctor Pleads Guilty in Multi-Million Dollar Medicare Fraud Case Involving Treatments Never PerformedRead the Press Release
LOS ANGELES – A medical doctor who owns a clinic in the Winnetka district of the San Fernando Valley pleaded guilty today to federal fraud charges for bilking Medicare out of more than $3 million by submitting bills for procedures never performed, sometimes involving patients he never met.
Pezhman Ebrahimzadeh, who uses the name “Pez Abrahams,” 50, of Calabasas, pleaded guilty today to one count of health care fraud before United States District Judge George H. Wu.
Ebrahimzadeh owns the Winnetka Medical Group, a cosmetic health care clinic that operates under the name Health & Beauty Clinic. At his clinic, Ebrahimzadeh provides cosmetic treatments that involve radiofrequency lasers and liposuction. As some of his patients were Medicare beneficiaries, Ebrahimzadeh obtained their beneficiary information, which was used to bill Medicare for procedures he did not perform. Ebrahimzadeh also obtained beneficiary information for patients he never treated, and he used that information to submit other fraudulent bills to Medicare.
In relation to the bogus bills submitted to Medicare, Ebrahimzadeh typically claimed he had performed three expensive procedures: revascularization, ablation of a bone tumor, or the placement of a radiotherapy catheter in a breast. Ebrahimzadeh made these claims, even though he lacked the equipment needed to perform revascularizations or the placement of radiotherapy catheters. On at least one occasion, Ebrahimzadeh admitted in court today, he billed Medicare for performing these procedures, even though the purported patient was dead.
Between September 2008 and April 2012, Ebrahimzadeh submitted $7.5 million in bogus claims, and Medicare paid just over $3 million.
Judge Wu is scheduled to sentence Ebrahimzadeh on May 20. At sentencing, Ebrahimzadeh faces a statutory maximum penalty of 10 years in federal prison. The plea agreement contemplates a sentence of approximately four to five years, but Judge Wu will make the final determination as to the actual sentence that will be imposed in this case. In the plea agreement, Ebrahimzadeh agreed to repay the millions of dollars he stole from Medicare.
The case against Ebrahimzadeh was investigated by the U.S. Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; and the California Department of Justice, Bureau of Medi-Cal Fraud & Elder Abuse.
Release No. 13-009
Agoura Hills Man Sentenced to Seven Years in Federal Prison for Defrauding Investors in Advertising Ponzi SchemeRead the Press Release
LOS ANGELES – An Agoura Hills man who used his business to defraud dozens of victims in a multi-million dollar investment scheme has been sentenced to seven years in federal prison.
Dean P. Gross, 50, was sentenced yesterday afternoon by United States District Judge Stephen V. Wilson, who also ordered the defendant to pay restitution of approximately $15.4 million.
The sentencing of Gross was announced today by United States Attorney André Birotte Jr. and Bill Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office.
Gross, who was charged with operating the investment scheme between 2006 and 2009, pleaded guilty to one count of wire fraud on August 6, 2012. While running the scheme, Gross collected more than $35.8 million from approximately 39 investors.
Gross operated the scheme through his home business, which he called Bridon Entertainment. When recruiting investors, Gross falsely represented to victims that he was a veteran of the advertising industry and, therefore, had significant connections that allowed him to purchase advertising time and space at discounted rates. Gross falsely advised investors that he would then resell the discounted advertising to large, well-known corporations at a substantial profit. Gross told investors that if they invested in Bridon Entertainment, their money would be used to purchase the advertising time and space and that investment returns would be generated by the profitable resale of that advertising.
The investigation revealed that Gross never used investors’ money to buy or sell advertising and that he did not have relationships with the well-known corporations he said would buy the ads.
In classic Ponzi-style fashion, investors were paid with money from new investors, and none of their returns were generated from advertising sales. The investigation indicated that 29 of the investors suffered $15.4 million in losses.
The investigation also revealed that Gross used millions of dollars in investor money to pay for personal expenses, including the construction of a vacation house.
This case was investigated by the Federal Bureau of Investigation.
Release No. 13-009
Los Angeles Check Cashing Store, Head Manager and Compliance Officer Sentenced for Violating Anti-Money Laundering LawsRead the Press Release
Sentences Handed Down in Enforcement Initiative Aimed at Check Cashers that Violated the Bank Secrecy Act
LOS ANGELES – A Los Angeles check cashing store, its head manager and its designated anti-money laundering compliance officer were sentenced today for failing to follow federal reporting and anti-money laundering requirements in relation to more than $8 million in transactions.
G&A Check Cashing, a business located in the Westlake section of Los Angeles; its manager, Karen Gasparian; and its compliance officer, Humberto Sanchez, were sentenced today by United States District Judge John F. Walter for violating the Bank Secrecy Act (BSA).
Judge Walter sentenced Gasparian, 31, of Canyon Country, to five years in federal prison. In sentencing Gasparian, Judge Walter rejected the defendant’s arguments that he had simply failed to comply with complicated regulatory schemes. “It’s obvious he knew exactly what he was doing – laundering money,” Judge Walter said.
Sanchez, 51, of Alhambra, was sentenced to eight months in prison. And G&A was ordered to pay a fine of $962,932 as part of two-year period of probation. In addition, Gasparian and G&A were ordered to forfeit $240,733, which represents the profits they earned on funds going through G&A for which currency transaction reports (CTRs) were not filed.
G&A pleaded guilty in October to one count of conspiring to fail to file CTRs on transand one count of failing to have an effective anti-money laundering program. Gasparian pleaded guilty in September to the same charges. Sanchez pleaded guilty in October to one count of failing to have an effective anti-money laundering program.
The BSA is a set of laws and regulations enacted by Congress to address an increase in criminal money laundering through financial institutions, which includes check cashing businesses. Check cashers enable people to cash checks without having to go to a bank or maintain a bank account.
Under the BSA, financial institutions, including check cashers, are required to file a CTR with the Department of Treasury for any transaction involving more than $10,000 in currency. As part of the CTR, the check casher is required to verify and accurately record the name and address of the individual who conducted the currency transaction, the individual on whose behalf the transaction was conducted, as well as the amount and date of the transaction. CTRs are important law enforcement tools for uncovering criminal activity.
The BSA also requires financial institutions, including check cashing businesses, to maintain an effective anti-money laundering program. Check-cashing businesses are required to have written policies and procedures regarding CTR filings, records maintenance and responses to law enforcement.
G&A, Gasparian and Sanchez failed to, among other things, create or retain required records, verify customer identification and file required reports such as CTRs. As a result, G&A and Gasparian engaged in multiple transactions involving $8,024,446, in which required CTRs were not filed.
According to court documents, check-cashing businesses are a common venue for individuals who want to anonymously cash large numbers of checks to facilitate fraud and money laundering schemes, precisely because they often fail to file required reports and to have effective anti-money laundering programs. The use of check cashers to launder money is particularly prevalent in the area of health care fraud, where fraudulent health care businesses commonly convert the proceeds of their fraud into cash by presenting checks to check cashers who they know will not ask for proof of the identity and will either not file CTRs or file false CTRs, according to the documents.
Aaron Krkasharyan, 48, of Los Angeles, pleaded guilty last year in a related case for making false statements to federal law enforcement officials investigating BSA violations at G&A. Last Monday, Judge Walter sentenced Krkasharyan to three years probation, which included a six-month term in a residential reentry center, and ordered him to pay a $10,000 fine.
The indictment filed in the G&A case was one of four indictments unsealed on June 14, 2012, that charged several individuals and check cashing businesses in Los Angeles, Brooklyn and Philadelphia with failing to file CTRs or falsely filing CTRs, as well as failing to have effective AML programs.
In another Los Angeles case included in this prosecution, AAA Cash Advance and its manager, Diana Brigitt, pleaded guilty in federal court in Los Angeles last September to various BSA violations. Brigitt pleaded guilty to eight counts of failing to file CTRs and one count of failing to maintain an effective anti-money laundering program. AAA pleaded guilty to one count of failing to maintain an effective anti-money laundering program. AAA, which agreed to shut down, was sentenced in October to a statutory maximum term of five years probation and was also ordered to pay a fine. At sentencing later this year, Brigitt faces a statutory maximum sentence of 45 years in prison and a fine of $2.25 million.
The G&A case was prosecuted by the United States Attorney’s Office in Los Angeles and the Money Laundering and Bank Integrity Unit of the Justice Department’s Asset Forfeiture and Money Laundering Section.
The case was investigated by the Federal Bureau of Investigation, IRS Criminal Investigation and the U.S. Department of Health and Human Services’ Office of Inspector General (Los Angeles region). The Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) provided substantial assistance.
Release No. 13-008
Leader of Azusa Street Gang Involved in Drug Trafficking and Hate Crimes Targeting African-Americans Sentenced to Nearly 20 YearsRead the Press Release
LOS ANGELES – A “keyholder” who oversaw the criminal activities of the Azusa 13 street gang and its long-running plot to violate the civil rights of African-Americans in the City of Azusa was sentenced late this afternoon to 235 months in federal prison
Santiago Rios, also known as “Chico,” 48, was sentenced this afternoon by United States District Judge Gary A. Feess.
Rios was the lead defendant in a federal racketeering indictment that targeted the Azusa 13 criminal enterprise. In June 2011, a federal grand jury returned a 24-count indictment that charged a total of 51 defendants with a host of crimes, including conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) and conspiracy to violate the civil rights of African-Americans. Rios, who was the keyholder – or ultimate leader – of the gang in 2008 and 2009, pleaded guilty in May 2012 to both conspiracy charges.
“The sentencing of the gang’s ‘keyholder’ is another giant step forward for the residents of an area who lived for too long under the specter of gang violence and racial animosity,” said United States Attorney André Birotte Jr. “Together with the Azusa Police Department and our partners in federal law enforcement, we took action to protect the civil rights of all the residents of Asuza, and we will continue to aggressively defend those rights, and those residents, from harm.”
In the early 1990s, the Azusa 13 gang adopted a racist principle “that members of the gang will harass and use violence to drive African-Americans out of the City of Azusa and would use violence in order to prevent African-Americans from moving into the City,” according to the indictment. When he pleaded guilty, Rios admitted that the gang had the goal of the cleansing Azusa of African-Americans. Rios also admitted that, in order to drive African-Americans out of the city, he and other members of the gang threatened, intimidated and attacked African-Americans at their residences, on the streets, at convenience stores and elsewhere, because of their race.
Rios confirmed in court that members of the Azusa 13 gang “tagged” racial slurs, including the “n-word,” on street signs, walls and buildings to intimidate law-abiding African-Americans in Azusa. In relation to the gang’s goal of cleansing the City of Azusa of African-Americans, Rios said that newly recruited members of the gang, often using dangerous weapons, participated in attacks on African-Americans as a way of proving themselves as members of the gang and to enhance their position in the gang.
Six of the defendants named in the indictment, including Rios, were charged in and pleaded guilty to the civil rights conspiracy, which alleged a series of incidents in which African-Americans were harassed through racist graffiti and subjected to attacks that included beatings and robberies. The racist incidents alleged in the indictment spanned a period from 1992 until May 2010, when an African-American high school student was beaten as he walked home from school.
The other five defendants who pleaded guilty to the civil rights conspiracy and admitted the gang’s racist conduct were:
George Salazar, also known as “Danger,” 30, who also served as a “keyholder,” was sentenced by Judge Feess in August 2012 to 174 months in prison;Josue Alfaro, also known as “Negro,” 40, who is alleged to have also served as a “keyholder,” is scheduled to be sentenced by Judge Feess on February 25, at which time he faces a statutory maximum sentence of 30 years;
Raul Aguirre, also known as “Solo,” 36, was sentenced by Judge Feess in August 2012 to 102 months in prison;
Marty Michaels, also known as “Casper,” 32, who is scheduled to be sentenced on February 4, at which time he faces a sentence of up to 30 years; and
Manuel Jimenez, 21, who was sentenced this afternoon to 78 months in prison.
Of the 51 members and associates of the Azusa 13 gang charged in the indictment, 49 defendants have pleaded guilty to racketeering and narcotics charges (with six of the 49 also pleading guilty to the civil rights charge). There are two fugitives who are charged with being narcotics traffickers, but they are not alleged to have been members of the gang. In addition to the defendants who pleaded guilty in the civil rights conspiracy, several members of the Azusa 13 gang acknowledged participating in the gang’s racist conduct, including:
Anthony Moreno, also known as “Flaco,” 42, who received a sentence of 210 months from Judge Fees on November 19; and
Louie Rios, who is Santiago Rios’ son and is also known as “Lil’ Chico,” 22, who was sentenced today to 10 years in prison.
“This case stands out as a huge victory for the community, the victims that the gang targeted, and the Azusa Police Department,” said Azusa Police Chief Sam Gonzalez. “The investigation and today’s sentencings send a loud and clear message that hate and gang crimes will not be tolerated, and will be prosecuted to the fullest extent of the law. The Azusa Police Department remains committed to ensuring that all people are safe in the community, and we will continue to pursue all investigative avenues to make that a certainty. This case is an excellent example of how local and federal agencies can work together for the betterment of society.”
In addition to the RICO charge and the civil rights conspiracy count, the indictment alleges a long-running conspiracy to distribute narcotics, specifically heroin, methamphetamine and cocaine. The Azusa 13 gang developed a “business plan” that outlined methods by which the gang would control the narcotics business in Azusa, according to court documents. Under the business plan, members of Azusa 13 sought to “monopolize the entire drug market in the city of Azusa” through several means, including maintaining “top of the line artillery” and being prepared to kidnap relatives of wayward drug dealers.
Drug Enforcement Administration Special Agent in Charge Anthony D. Williams stated: “Today’s sentencing is an affirmative step to reducing the impact of gang violence and illegal drugs in the Azusa area. This task force investigation exemplifies the partnership between local, state and federal agencies in combating violent gang activities in our communities.”
As part of its narcotics operation, the gang extorted payments from street-level drug dealers in exchange for authorization to conduct business in Azusa 13 territory. Rios admitted that the Azusa 13 gang controlled the drug trafficking activity that occurred within the City of Azusa, and that members of the Azusa 13 gang would permit narcotics traffickers to distribute narcotics in exchange for a percentage of any narcotics proceeds that were generated in the gang’s territory. These payments of drug proceeds – known as “rent” or “tax” – were funneled to members of the Mexican Mafia who exerted control over the gang. According to Rios, members of the Azusa 13 gang would not permit a narcotics trafficker to distribute narcotics in the City of Azusa if that individual did not give a portion of their narcotics distribution proceeds to the gang.
N. Dawn Mertz, the Acting Special Agent in Charge of the Los Angeles Field Office of IRS Criminal Investigation (CI), commented: “The flow of money through the Azuza 13 Gang supported the gang structure and allowed it to thrive. IRS CI targeted the profit and financial gains by following the payments extorted from street-level drug dealers, payments known as “rent” or “tax.” IRS CI will continue to contribute our financial expertise to the investigation of gang organizations in an effort to bring their members to justice.”
The case against Azusa 13 is the result of an investigation that was conducted by the Los Angeles HIDTA Task Force, a federally funded group made up of federal and local law enforcement agencies, including the DEA and IRS Criminal Investigation. The Azusa Police Department worked in conjunction with the Task Force during this investigation, which started in early 2008.
While several federal indictments targeting Los Angeles-area gangs have made allegations of crimes against African-Americans, the case against Azusa 13 is the first in the history of the Department of Justice to use federal civil rights statutes in conjunction with federal racketeering and narcotics laws to address racist gang-related activity, and to successfully dismantle a violent criminal organization.
Release No. 13-007
Five Arrested in Orange County-Based ‘Builder Bailout’ Mortgage Fraud Scheme That Fraudulently Purchased CondosRead the Press Release
Santa Ana, California – Federal authorities have arrested five people allegedly involved in a “builder bailout” real estate scheme that fraudulently purchased more than 100 condominium units around the country with mortgages that mostly went into default, resulting in foreclosures and millions of dollars in losses.
The scheme, which was operated out of Excel Investments and related companies that were based in Irvine and then Santa Ana, allegedly identified new condominium developments in which the builder-owners were struggling to sell units, and arranged with the builders to sell the units in return for large commissions. The builders benefitted by making it appear that their condos were selling and maintaining their value, while those involved with the fraudulent sale of the units financially benefitted from the hefty commissions that were concealed from the mortgage lenders. The defendants recruited a number of straw buyers to purchase the properties as “investors,” and ensured that they qualified for financing by fabricating important aspects of their loan applications.
The five defendants were arrested yesterday by special agents with the FBI, the Federal Housing Finance Agency’s Office of Inspector General, and IRS - Criminal Investigation. Those taken into custody are:
Aref Abaji, 31, of Aliso Viejo, a real estate agent;Maher Obagi, 26, of Huntington Beach, the brother of Aref Abaji;
Jacqueline Burchell, 52, of Orange, an escrow agent;
Mohamed Salah, 37, of Mission Viejo; and
Mohamed El Tahir, 35, of Glen Burnie, Maryland.
A sixth defendant named in the indictment – mortgage loan officer Wajieh Tbakhi, 48, of Corona – is being sought by federal authorities.
According to an indictment returned last Friday by a federal grand jury in Los Angeles, the defendants involved in the scheme negotiated with the builders of new housing developments in California, Florida and Arizona to sell condominium units on behalf of builders in exchange for a hefty commission, which they often misleadingly referred to as “marketing fees” and did not disclose to the lenders. In each of the transactions – the indictment alleges there were more than 100 of them – the defendants earned commissions of $50,000 to $100,000, and sometimes more. The defendants bought units for themselves, their relatives, and on behalf of “investors” with good credit scores who served as “straw buyers.” They allegedly recruited the straw buyers by presenting the scheme as an investment opportunity which required no down payment and would generate income through rental payments.
To obtain mortgages for the properties, the defendants allegedly prepared loan applications with false information about the buyers’ employment, income and assets. They allegedly submitted fabricated and altered W-2 forms, pay stubs and bank statements in support of those applications. According to the indictment, they concealed the huge commissions from mortgage lenders by submitting false Settlement Statements – or Form HUD-1s – which omitted these large payments.
When many of the loans defaulted and led to foreclosure, the lending institutions suffered losses of at least $6.2 million. The Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) purchased dozens of these loans on the secondary mortgage market and suffered losses of at least $2.37 million as a result of delinquencies, defaults and foreclosures on the properties.
The six defendants named in the indictment are all charged with conspiring to commit bank fraud and wire fraud. Abaji, Obagi, Tbakhi and Burchell are additionally charged with six counts of wire fraud.
Release No. 13-005
Attorney Sentenced to Seven Years in Prison for Racketeering and Money Laundering Offenses Committed on Behalf of Mexican MafiaRead the Press Release
LOS ANGELES – A federal criminal defense attorney was sentenced this afternoon to seven years in federal prison for his conviction on racketeering and money laundering offenses committed on behalf of the Mexican Mafia and the 18th Street gang.
Isaac Guillen, 52, received the 84-month sentence from United States District Judge Dean D. Pregerson.
Guillen was a member of a street gang during his late teens, leaving that life behind to attend the UCLA School of Law and become a successful criminal defense attorney. But he became an associate of the Columbia Lil' Cycos (CLCS) clique of the 18th Street gang while doing legal work for a member of that criminal street gang.
Guillen admitted that he used the shield of the attorney-client privilege to relay CLCS communications to and from convicted Mexican Mafia member Francisco “Puppet” Martinez, who was serving multiple life sentences at the federal “supermax” prison in Florence, Colorado. With Guillen’s help, Martinez was able to continue to run the CLCS from behind the walls of the United States Penitentiary, Administrative Maximum Facility, which is regarded as the nation’s most secure prison.
In addition to facilitating communications between Martinez and the CLCS leadership, Guillen laundered more than $1.3 million dollars in drug and extortion proceeds on the organization’s behalf by, among other things, creating three businesses and providing funds for the establishment of a methamphetamine laboratory.
The State Bar of California disbarred Guillen in late 2010.
According to court documents and evidence presented at trial, the CLCS used violence and intimidation to control narcotics distribution in an area adjoining MacArthur Park in the Westlake District of Los Angeles. Under the orders of CLCS leadership, narcotics suppliers and street dealers paid “rent” – typically a percentage of proceeds from the sale of narcotics – in exchange for permission from the CLCS to sell narcotics in the gang’s territory. Those who paid rent received the exclusive authorization to sell narcotics in CLCS territory, as well as protection from rivals. Street vendors operating in CLCS Organization territory also were required to pay rent to the organization in order to be allowed to sell their wares near MacArthur Park. The CLCS made tens of thousands of dollars a week through its collection of rent. The failure or refusal to pay rent and otherwise follow the gang’s rules would result in retribution, including acts of violence.
A street vendor who refused to make a $50 rent payment to the CLCS was targeted to be killed by members of the gang in a shooting on September 15, 2007. The man survived despite being shot four times, but a 23-day-old infant sleeping in a stroller next to the vendor was struck and killed.
Forty-three members and associates of the CLCS were charged in a 2009 federal racketeering indictment that alleged acts of violence, narcotics distribution, money laundering and various violent crimes in aid of racketeering (VICAR). Thirty-seven of the defendants named in the indictment have been convicted in either federal or state court. The remaining six defendants are fugitives.
The CLCS racketeering case was investigated by the Federal Bureau of Investigation and the Los Angeles Police Department.
Release No. 13-006
18th Street Gangmember Sentenced to Life in Federal Prison for Racketeering Offenses Related to Fatal Shooting of 23-Day-Old InfantRead the Press Release
LOS ANGELES – A member of the 18th Street criminal street gang was sentenced today to life in federal prison for his conviction on racketeering offenses arising out of the September 2007 shooting of a street vendor near MacArthur Park that resulted in the murder of a 23-day-old infant.
Javier Perez, 35, received the life prison sentence from United States District Judge Dean D. Pregerson. There is no parole in the federal system.
Perez was one of four defendants – all of whom were members or associates of the Columbia Lil’ Cycos (CLCS) clique of the 18th Street gang – who were found guilty of federal racketeering offenses last May.
The three other defendants found guilty after last May’s trial are: Eduardo Hernandez, 35; Vladimir Iraheta, 31; and Leonidas Iraheta, 31. Judge Pregerson is scheduled to sentence those defendants on January 24 and 25.
According to court documents and evidence presented at trial, the CLCS used violence and intimidation to control narcotics distribution in an area adjoining MacArthur Park in the Westlake District of Los Angeles. Under the orders of CLCS leadership, narcotics suppliers and street dealers paid “rent” – typically a percentage of proceeds from the sale of narcotics – in exchange for permission from the CLCS to sell narcotics in the gang’s territory. Those who paid rent received the exclusive authorization to sell narcotics in CLCS territory, as well as protection from rivals. Street vendors operating in CLCS Organization territory also were required to pay rent to the organization in order to be allowed to sell their wares near MacArthur Park. Evidence presented at trial showed that the CLCS Organization made tens of thousands of dollars a week through its collection of rent. The failure or refusal to pay rent and otherwise follow the gang’s rules would result in retribution, including acts of violence.
A street vendor who refused to make a $50 rent payment to the CLCS was targeted to be killed by members of the gang in a shooting on September 15, 2007. The man survived despite being shot four times, but a 23-day-old infant sleeping in a stroller next to the vendor was struck and killed.
Shortly after the failed attempt to murder the vendor and the resulting death of the child, CLCS Organization leaders ordered the kidnaping and murder of the shooter in order to make amends with the Mexican Mafia. The shooter was thereafter taken to Mexico by Javier Perez – who had been released from prison only 10 days before – and other CLCS gangsters, under the false pretense that the shooter would hide out from the police there. Once in Mexico, the shooter was driven to a remote area where he was strangled and his lifeless body was thrown over a cliff. Unbeknownst to the would-be killers, the shooter survived the attempt on his life. The CLCS associate who assisted Perez in strangling the shooter was convicted in state court and sentenced to life without parole.
The four convicted at trial were among 43 members and associates of the CLCS Organization who were charged in a 2009 federal racketeering indictment that alleged acts of violence, narcotics distribution, money laundering and various violent crimes in aid of racketeering (VICAR). The charged defendants included local criminal defense attorney Isaac Guillen, who laundered more than $1.3 million in drug and extortion proceeds on behalf of the CLCS Organization and Mexican Mafia member Francisco "Puppet" Martinez. Guillen is scheduled to be sentenced by Judge Pregerson tomorrow.
Thirty-seven of the defendants named in the indictment have been convicted in either federal or state court. The remaining six defendants are fugitives.
The CLCS racketeering case was investigated by the Federal Bureau of Investigation and the Los Angeles Police Department.
Release No. 13-004
Rancho Cucamonga Man Who Operated Large-Scale Marijuana Grow and Commercial Pot Store Sentenced to 10 Years in Federal PrisonRead the Press Release
LOS ANGELES – The former president of G3 Holistics, Inc., a marijuana business operating in the Inland Empire, was sentenced this morning to 10 years in prison for his conviction last fall on federal narcotics charges for distributing hundreds of pounds of marijuana.
Aaron Sandusky, 42, of Rancho Cucamonga, was sentenced by United States District Judge Percy Anderson, who presided over Sandusky’s trial last fall.
A federal jury that heard two days of evidence convicted Sandusky of two counts – conspiracy and possession with the intent to distribute marijuana. In relation to each of the two counts, the jury determined that the crimes involved at least 1,000 marijuana plants. As a result of the convictions, federal law called for a mandatory sentence of at least 10 years.
Sandusky “is an unrepentant manipulator who used the perceived ambiguity surrounding ‘medical’ marijuana to exploit a business opportunity for himself,” prosecutors wrote in a sentencing memo filed with the court.
Sandusky “used G3 as a means to replace the vast income he lost from the collapse of his real estate business. Defendant built a veneer of legitimacy around his criminal enterprise using his customers’ good-faith search for pain relief. There is
absolutely no altruistic component to defendant’s continued and sustained criminality,” according to the sentencing memo.The jury that returned guilty verdicts on two counts could not reach unanimous verdicts on four other counts, which specifically charged Sandusky with maintaining drug-involved premises at each of G3’s marijuana stores – in Upland, Colton and Moreno Valley – and at G3’s marijuana grow operation in Ontario. At the government’s request today, Judge Anderson dismissed those counts.
The criminal case against Sandusky came after he had received written warnings in October 2011 from the United States Attorney's Office that G3’s marijuana stores were operating in violation of federal law. While Sandusky closed G3 stores in Colton and Moreno Valley, he kept the Upland store open – even after federal authorities executed two separate search warrants at that location, filed an asset forfeiture lawsuit against the Upland property, and filed a second asset forfeiture lawsuit against nearly $11,500 in cash seized by federal authorities in November 2011.
Sandusky was one of six people connected to G3 who were indicted by a federal grand jury in June 2012. The other five defendants – including G3’s co-owner, John Leslie Nuckolls II, of Rialto – pleaded guilty prior to trial and are scheduled to be sentenced by Judge Anderson in the coming weeks.
The investigation of this case was conducted by special agents from the Drug Enforcement Administration, who received assistance from the San Bernardino County Sheriff’s Department.
Release No. 13-003
Tips from Members of the Public Lead to Arrest of Woman Charged as ‘Jane Doe’ in Federal Child Pornography Production CaseRead the Press Release
LOS ANGELES – Within hours of federal authorities appealing to the public for help in a child pornography case with ties to the Los Angeles area, a woman charged as “Jane Doe” has been arrested outside her apartment complex in the San Fernando Valley.
Letha Mae Montemayor, 52, was taken into custody without incident at approximately 7:30 p.m. Thursday by special agents with ICE Homeland Security Investigations (HSI) and officers from the Los Angeles Police Department. Montemayor was identified by both her facial appearance and distinctive tattoos.
Montemayor was arrested less than 10 hours after the United States Attorney and officials with HSI announced the filing of a criminal case and released photographs of an unidentified man and woman – who at the time were known only as “Jane Doe” and “John Doe” – involved in a child sexual exploitation case (see: http://www.justice.gov/usao/cac/Pressroom/2013/001.html).
At approximately 2 p.m. Thursday, authorities received the first tip via a call to the ICE Tip Line regarding the possible identity of “Jane Doe.” After this initial phone call, several corroborating leads were provided by members of the public. After further investigation, HSI special agents determined that Montemayor was the likely suspect. She was placed under surveillance and subsequently arrested.
“This significant development brings us one step closer to vindicating the victim and helping to regain some dignity for all victims of child exploitation crimes,” said United States Attorney André Birotte Jr. “With the help of the media and concerned members of the public, we were able to quickly identify the woman allegedly involved in this child pornography case. We still want the public’s help in identifying John Doe and the victim in the disturbing series of images that continue to be circulated on the Internet.”
Montemayor is charged as “Jane Doe” in a federal criminal complaint that alleges two counts – one count of conspiracy to produce child pornography and one count of production of child pornography. Each of those two counts carry a mandatory minimum sentence of 15 years in federal prison. Montemayor is expected to make her initial appearance in federal court on Monday afternoon.
The identity and whereabouts of the male suspect in the case, “John Doe,” remain unknown at this time, as does the identity of the victim. Federal authorities emphasized that the investigation is ongoing.
“Just after ICE’s nationwide plea for public assistance, five separate community tips led to the arrest of Jane Doe, said U.S. Immigration and Customs Enforcement (ICE) Director John Morton. “This arrest would not have happened without the public’s help, and it demonstrates how much individual citizens can do to help law enforcement attack crime. The best way to protect innocent children from sex offenders is for law enforcement, educators, parents and concerned citizens to join forces and fight back.”
The criminal complaint alleges that “Jane Doe” – now believed to be Montemayor – was involved in the production of a widely circulated series of child pornography images taken about 11 years ago. Despite extensive investigative efforts, investigators were unable to determine the identity of the male and female in the photographs, which is what prompted the appeal for the public’s assistance. The pictures show an adult man and woman sexually molesting a girl who appears to be about 13. Forensic analysis of the images conducted by the National Center for Missing & Exploited Children (NCMEC) led investigators to conclude they were produced in the Los Angeles area, specifically the San Fernando Valley.
The child pornography images in this case were first discovered in Chicago in 2007. The material was submitted to the Child Victim Identification Program operated by NCMEC, which determined the victim had not yet been identified and was not linked with other known child pornography images.
The search for “John Doe” and the victim in this case continues, and anyone with information or tips that can assist in the investigation is encouraged to call 866-347-2423 or visit www.ICE.gov/tips. Both are staffed around the clock by investigators. Tips may be reported anonymously.
Release No. 13-002
Federal Authorities Seek Help Identifying Two in Child Sexual Exploitation Case with Photos Likely Taken in Los Angeles AreaRead the Press Release
LOS ANGELES – Seeking leads in an unsolved child sexual exploitation case, federal authorities today announced the filing of a federal criminal complaint against two individuals – known only as “John Doe” and “Jane Doe” – who are charged with producing child pornography.
In relation to the filing of the case against the unidentified man and woman, authorities today released photographs connected to the investigation, which has determined that the child pornography images were likely produced in the Los Angeles area. Authorities hope the photos will prompt members of the public to provide information that will lead to arrests in this case.
The criminal complaint, which was filed Monday, involves a widely circulated series of child pornography images which authorities believe were taken about 11 years ago in the San Fernando Valley. Despite their investigative efforts, special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) have been unable to determine the identities of the defendants. While the girl being sexually abused in the images is now likely an adult, authorities continue to pursue the case for several reasons, including bringing the defendants to justice and preventing the abuse of additional victims.
“We need the public’s help in identifying the man and woman responsible for molesting this young girl, whose victimization has continued with the trading of these images by those who collect child pornography,” said United States Attorney André Birotte Jr. “The Justice Department is deeply committed to protecting all of our children by investigating and prosecuting these types of child exploitation crimes.”
The pictures in this case show a male and female adult sexually molesting a girl who appears to be about 13. Although the male’s face has been purposely obscured, the female’s face can be seen in a number of the images. “John Doe” is a 40- to 50-year-old white male, and “Jane Doe” is a 35- to 45-year-old white female. Both defendants would now be approximately 11 years older. The female has several tattoos, including a black tattoo on her right hip resembling a butterfly, a tattoo on her right shoulder blade depicting the outline of a curled up cat, a tattoo with words across the top of her left wrist and a tattoo on the upper portion of her left breast.
“The images in this series have been identified in connection with more than 275 child pornography investigations across the country,” said Claude Arnold, Special Agent in Charge for HSI Los Angeles. “The reality is, every time a photo or a video of an innocent child being sexually exploited is viewed, that victim is violated again. That is why we owe it to all of the juvenile victims in these kinds of cases to work tirelessly to seek answers and, ultimately, justice. Those who produce and trade child pornography over the Internet believe they’re protected by the anonymity of cyberspace. With the public’s help, we’re determined to prove them wrong.”
Based upon forensic analysis conducted by the National Center for Missing & Exploited Children (NCMEC), investigators believe that the images were produced in the Los Angeles area, specifically in the San Fernando Valley. So far, HSI special agents in Los Angeles have interviewed dozens of individuals seeking further leads in the case, but they have yet to identify either the adults or the victim in the photographs.
The child pornography images in this case were first discovered by HSI special agents in Chicago in 2007. The material was submitted to the Child Victim Identification Program operated by NCMEC, which determined the victim had not yet been identified and was not linked with other known child pornography images.
Anyone with information or tips that can assist in this investigation is encouraged to call 1-866-DHS-2ICE or visit http://www.ice.gov/exec/forms/hsi-tips/tips.asp. Tips may be reported anonymously. Incidents involving suspected child sexual exploitation or missing children may also be reported to the National Center for Missing & Exploited Children through its toll-free 24-hour hotline, 1-800-THE-LOST (1-800-843-5678).
The announcement of the case against John and Jane Doe was made in relation to HSI’s Operation Sunflower, a recently concluded enforcement action aimed at rescuing victims and targeting individuals who own, trade and produce child pornography. In the Los Angeles area, HSI identified several children who had been subjected to ongoing sexual abuse, and those allegedly responsible are now being prosecuted by the Orange County District Attorney’s Office.
Images depicting John Doe and Jane Doe were filed with the criminal complaint earlier this week. Those images and the affidavit in support of the criminal complaint are available for download at: https://www.yousendit.com/dl/UW15Q3R6TStubVdVQU1UQw.
ICE has posted “wanted” posters and selected images on its website – www.ice.gov – and at: http://www.dvidshub.net/unit/ICE.
Media may also request the photos via email from the Public Affairs Office of the United States Attorney’s Office.
Release No. 13-001