Eastern District of California
Press releases recorded for this federal judicial district.
Fresno Business Owner Pleads Guilty to Money LaunderingRead the Press Release
FRESNO, Calif. — Krishen Sauble Iyer, 36, of Fresno, pleaded guilty today to conspiring to launder money, U.S. Attorney Phillip A. Talbert announced.
According to court documents, Iyer was the owner of several insurance sales and brokerage businesses in Fresno. Iyer conspired with S.V., whom he knew to be a marijuana trafficker, to launder the proceeds of S.V.’s marijuana trafficking through one of Iyer’s businesses, Health Shield. Iyer and S.V. agreed that S.V. would transfer the drug proceeds to Health Shield, and those funds would then be paid back to S.V. to make the drug proceeds appear to be legitimate salary payments. Iyer issued two Form 1099s to S.V., which claimed that Health Shield paid S.V. $111,952 in 2013 and $164,000 in 2014, even though he never earned all of those funds from the company. S.V. paid Iyer a commission for transferring the funds.
This case is the product of an investigation by the Drug Enforcement Administration, the IRS Criminal Investigation, and the Fresno Police Department. Assistant United States Attorneys Grant B. Rabenn and Jeffrey A. Spivak are prosecuting the case.
Iyer is scheduled to be sentenced by Judge Dale A. Drozd on April 24, 2017 at 10:00 a.m. Iyer faces a maximum statutory penalty of 20 years in prison and a $500,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Sacramento Man Pleads Guilty to Failing to Register as a Sex OffenderRead the Press Release
SACRAMENTO, Calif. — Timothy Donald Fialdini, 51, of Sacramento, pleaded guilty on Thursday to failure to register as a sex offender, U.S. Attorney Phillip A. Talbert announced.
According to court documents, in August 2015, Fialdini moved to Sacramento from the state of Nevada and intentionally did not register as a sex offender under the Sex Offender Registration and Notification Act (SORNA) as was required as a result of multiple convictions in Nevada for open and gross lewdness. Among the convictions, in 2009, Fialdini was convicted of committing sexual battery upon a female victim and an intentional sex act in public.
On November 30, 2015, Fialdini indecently exposed himself to an adult female in Sacramento. On March 8, 2016, Fialdini was arrested in a Sacramento County park by U.S. Marshal deputies with the assistance of state and local law enforcement.
This case is the product of an investigation by the U.S. Marshals Service and the Sacramento County Sheriff’s Sex Assault Felony Enforcement (SAFE) Team. The SAFE Team is multi-agency task force operating in Northern California that monitors sex offenders and conducts investigations regarding sex offender registration violations. Assistant U.S. Attorney Michelle Rodriguez is prosecuting the case.
Fialdini is scheduled to be sentenced by U.S. District Judge Morrison C. England Jr. on April 27, 2017. Fialdini faces a maximum statutory penalty of 10 years in prison. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Stockton Woman Pleads Guilty to Bank Fraud, Mail Fraud and Aggravated Identity TheftRead the Press Release
SACRAMENTO, Calif. — Patricia Ramona Vasquez, 37, of Stockton, pleaded guilty today to bank fraud, aggravated identity theft, and mail fraud, U.S. Attorney Phillip A. Talbert announced.
According to court documents, between February 3, 2016, and July 7, 2016, Vasquez targeted a victim with the same last name and obtained the victim’s mail to obtain documents and information to steal her identity. Vasquez created an email address for her new identity. On April 4, 2016, Vasquez entered a DMV branch in Sacramento and claimed her California driver’s license was lost or stolen. In doing so, Vasquez obtained a genuine driver’s license with her own picture and the victim’s personal identifying information. On April 15, 2016, Vasquez used the false identity to purchase a Nissan Altima from an auto dealership in Stockton. At the victim’s and creditors expense, Vasquez obtained a car loan from Well Fargo Bank for $16,703. On May 20, 2016, Vasquez opened accounts at Golden 1 Credit Union in Stockton using her phony California driver’s license number, the victim’s SSN, date of birth, true residence address, and signature. After opening the credit union accounts, Vasquez deposited stolen and altered checks in her scheme to obtain cash.
San Francisco Division Inspector in Charge Rafael Nunez of the U.S. Postal Inspection Service stated, “We are working closely with the U.S. Attorney’s Office and our partners in law enforcement to arrest and prosecute those responsible for complex identity theft and mail fraud schemes.”
This case is a product of an investigation by the U.S. Postal Inspection Service with assistance from the Stockton Police Department. Assistant U.S. Attorney Michelle Rodriguez is prosecuting the case.
Vasquez is scheduled to be sentenced by U.S. District Judge Morrison C. England Jr. on April 27, 2017. Vasquez faces a maximum statutory penalty of 30 years in prison and a $1 million fine for bank fraud; 20 years in prison and a $250,000 fine for mail fraud, and a mandatory two-year prison term to be served consecutively to any other sentence for the aggravated identity theft. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Fairfield Man to Be Arraigned Today for Tax Refund Fraud SchemeRead the Press Release
SACRAMENTO, Calif. — Brandon Anderson-Lacy, 29, of Fairfield, is scheduled to be arraigned today for a tax refund fraud scheme, U.S. Attorney Phillip A. Talbert announced.
On January 12, 2017, a federal grand jury returned a nine-count indictment charging Anderson‑Lacy with conspiring to submit false claims for tax refunds to the Internal Revenue Service.
According to court documents, from February 2011 through March 2012, Anderson-Lacy and others participated in a conspiracy to submit false tax returns to the IRS by obtaining personal identifying information of others, and then submitting returns seeking refunds to which the people listed on the returns were not entitled. To pursue the refunds, false statements were placed on the tax returns regarding income, withholding from income, dependent care, and education expenses, among other things. In addition to the conspiracy charge, Anderson-Lacy is charged with making false claims in connection with eight returns filed in January 2012, each of which falsely listed $18,909 in wages and sought thousands of dollars in refunds. More than $319,000 in refunds were claimed in connection with the conspiracy.
This case is the product of an investigation by the IRS Criminal Investigation with the assistance from the Vacaville Police Department. Assistant U.S. Attorney Christopher S. Hales is prosecuting the case.
If convicted of conspiracy to submit false claims, Anderson-Lacy faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. If convicted on the false claims counts, Anderson-Lacy faces a maximum statutory penalty of five years in prison and a $250,000 fine for each count. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Former Northern California Man Sentenced to 6 Years in Prison for Conspiracy to Grow and Distribute MarijuanaRead the Press Release
SACRAMENTO, Calif. — Yan Ebyam, 39, of Missoula, Montana, was sentenced today by U.S. District Judge John A. Mendez to six years in prison for two separate conspiracies to grow and distribute marijuana, U.S. Attorney Phillip A. Talbert announced.
According to court documents, Ebyam conspired with others to develop two industrial‑sized marijuana cultivation sites in Sutter County and Sacramento. Ebyam and his co‑conspirators sought to make profits from the illegal distribution of large amounts of marijuana. On June 21, 2011, federal and state agents executed seven federal search warrants in Sacramento, Sutter, and Tehama Counties. Two of these warrants were executed at the sites of large, commercial greenhouses located at the Jopson Ranch in Rio Oso and at the Cal-Nevada Wholesale Florist in Sacramento. Law enforcement officers seized over 5,000 marijuana plants in all stages of growth from these two locations: approximately 2,168 plants at Jopson Ranch and approximately 3,305 plants at Cal-Nevada Florist. Ten defendants were charged in these two cases, and all have now pleaded guilty to participation in the conspiracies and have been sentenced to prison.
These cases were the product of an investigation by the Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigation, the Sutter County Sheriff’s Department, and the California Bureau of Narcotic Enforcement. It was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF Program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply. Assistant U.S. Attorneys Jason Hitt and Todd A. Pickles prosecuted the cases.
El Dorado County Man Sentenced for Attack on Park RangerRead the Press Release
SACRAMENTO, Calif. — Nicholas Martin Coberley, 45, of Pollock Pines, was sentenced today by U.S. District Judge John A. Mendez to 27 months in prison, to be followed by three years of supervised release for assault on a federal employee with a deadly weapon, U.S. Attorney Phillip A. Talbert announced.
According to court documents, on June 20, 2016, Coberley attacked a Lassen Volcanic National Park ranger who had been called out to investigate reports of a man walking in the middle of the road at 9:00 p.m., yelling loudly. When the ranger approached, Coberley jumped into the back of the ranger’s truck, grabbed a firefighting tool, and began hitting the truck’s passenger compartment with the tool, causing more than $2,000 in damage to the roof and windshield. Moments later, Coberley smashed out the rear window with an axe, climbed into the passenger compartment, and put the ranger in a chokehold. At that point, Coberley swung an axe at the ranger’s head from behind while the truck was in motion. The ranger was able to speak calmly with Coberley and defused the situation. Coberley returned to his residence near the park’s boundary and was arrested later without incident.
This case was the product of an investigation by the National Parks Service and the Plumas County District Attorney's Office with assistance from the Plumas County Sheriff’s Office and the California Highway Patrol.
Lassen Volcanic National Park Chief Ranger John Fish stated: “The National Park Service would like to thank the U.S. Attorney’s Office and Plumas County District Attorney’s Office for their support in the successful prosecution of Mr. Coberly. Visitor and employee safety is of paramount importance to the National Park Service. We would further like to thank the Plumas County Sheriff’s Office and the CHP in helping resolve the situation with no injuries of significance to park visitors or our employee.”
Former U.S. Navy Sailor from Lemoore Arrested for Credit Card FraudRead the Press Release
FRESNO, Calif. — Jarrod M. Langford, 25, of Orlando, Florida, was arrested today in Florida after a federal grand jury in Fresno returned an indictment charging him with conspiracy to commit credit card fraud and aggravated identity theft, United States Attorney Phillip A. Talbert announced.
According to court documents, Langford was assigned as an aviation electrician’s mate with the United States Navy in Lemoore, California. From about June 2011 until August 2015, he conspired with others to fraudulently acquire and use credit card account numbers to purchase and resell over the internet voucher codes redeemable for consumer items such as wrist watches, jewelry, computer software applications and electronic devices. Langford used various methods to fraudulently acquire other peoples’ credit card information, including purchasing the information over the internet.
In September 2012, Langford fraudulently possessed more than 2,500 records of credit card account numbers and the associated account holders’ personal identifying information, such as names, addresses, telephone numbers, and email addresses.
To hide his actual location and conceal his involvement in his fraudulent activities, Langford installed an application on his computers that would establish a virtual private network (VPN) in furtherance of conducting anonymous encrypted internet sessions and giving the appearance that he was located outside of California.
Throughout the course of the scheme, Langford fraudulently purchased approximately $340,000 of consumer products and unauthorized voucher codes redeemable for such items.
This case is the product of an investigation by the Federal Bureau of Investigation with assistance from the United States Attorney’s Office for the Northern District of Florida. Assistant United States Attorney Christopher D. Baker is prosecuting the case.
If convicted, Langford faces a maximum statutory penalty of five years in prison for the conspiracy charge, 10 years in prison for each of the seven counts of fraudulent use and possession of unauthorized credit cards, an additional two years in prison for each of two counts of aggravated identity theft, and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Tracy Man Convicted of Making Harassing Phone Calls to U.S. Securities & Exchange Commission Employees and Another IndividualRead the Press Release
SACRAMENTO, Calif. — After a three–day trial, a federal jury found Kulwant (Ken) Singh Sandhu, 56, of Tracy, guilty today of two counts of making harassing interstate telephone calls, U.S. Attorney Phillip A. Talbert announced. The trial was held before U.S. District Judge Garland E. Burrell Jr.
“This conviction demonstrates the Office of Inspector General’s commitment to investigate individuals who harass SEC officials in carrying out their mission of protecting investors, maintaining fair and orderly functioning of securities markets, and facilitating capital formation. I would like to express my appreciation to the team from the U.S. Attorney’s Office, the FBI, and the SEC OIG who worked diligently to bring this matter to justice.”
According to evidence presented at trial, since at least 2012, Sandhu has been making harassing phone calls to personnel at the U.S. Securities and Exchange Commission (SEC), in Washington, D.C., and other private individuals. During 2015, Sandhu placed over 3,000 harassing phone calls to SEC employees, leaving at least 350 lengthy voicemails and also made hundreds of phone calls to another nongovernmental person. According to the evidence at trial, many of Sandhu’s phone calls to employees and his voicemails were profanity-filled tirades that repeatedly called for SEC personnel and others to be, among other things, rounded up, publicly hanged, water-boarded, burned alive, shot, and blown up with rockets and tanks. His comments were often sexually graphic and targeted individuals.
This case was the product of an investigation by the Federal Bureau of Investigation and the Security & Exchange Commission’s Office of Inspector General. Assistant United States Attorneys Nirav Desai and James Conolly are prosecuting the case.
Sandhu is scheduled to be sentenced by Judge Burrell on April 7, 2017. He faces a maximum statutory penalty of two years in prison on each count and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Paradise Man Sentenced to 30 Years in Prison for Production of Child PornographyRead the Press Release
SACRAMENTO, Calif. — U.S. District Judge Morrison C. England Jr. sentenced Bret Allan Nichols, 32, of Paradise, today to 30 years in prison for production of child pornography to be followed by a lifetime term of supervised release, United States Attorney Phillip A. Talbert announced. The 30-year sentence is the maximum punishment allowed by the statute.
On June 18, 2015, Nichols pleaded guilty to production of child pornography. According to court documents, on December 12, 2012, law enforcement in the United States received a referral from the Danish National Police related to a video containing child pornography. Further investigation revealed that the video was made by a Florida couple running a business that used a computer to stream illicit sexual sessions at the request of customers. In August 2012, Nichols paid the Florida couple to produce child pornography and recorded it. A forensic search of Nichols’ computer seized during the subsequent search of his residence found multiple videos that Nichols had recorded of five additional child victims in Colombia and the Philippines.
The Florida couple were prosecuted in the Northern District of Florida and received sentences of 29.5 and 35 years in prison.
“Nichols committed horrendous crimes against multiple children, and the substantial sentence that the court imposed today reflects the seriousness of his crimes,” stated U.S. Attorney Talbert. “Every child deserves a childhood safe from abuse like this. Our office is committed to protecting society, and particularly children, by prosecuting cases like this.”
This case was the product of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorney William Wong prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.
Costco Wholesale to Pay $11.75 Million to Settle Allegations of Lax Pharmacy ControlsRead the Press Release
SACRAMENTO, Calif. — Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act (CSA) when they improperly filled prescriptions for controlled substances. The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid DEA registration numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations, which resulted in a significant shortage at the West Sacramento central fill pharmacy.
The settlement was announced today by U.S. Attorneys Annette L. Hayes for the Western District of Washington, Michael C. Ormsby for the Eastern District of Washington, Eileen M. Decker for the Central District of California, Barbara L. McQuade for the Eastern District of Michigan, and Phillip A. Talbert for the Eastern District of California.
“Pharmacies are the gatekeepers responsible for ensuring the lawful use of powerful drugs that have a legitimate medical purpose but are easily abused. The CSA provides the statutory oversight to ensure that pharmacies keep meticulous records,” U.S. Attorney Talbert stated. “The successful resolution of this matter demonstrates the Department of Justice’s commitment to enforcing the CSA.”
“Last year, over 50,000 Americans died as a result of drug overdoses, many of which were related to the misuse of prescription drugs. This settlement demonstrates the accountability and responsibility that go along with handling controlled prescription drugs,” said DEA Assistant Administrator Louis Milione. “DEA works every day to reinforce good corporate practices through outreach and education efforts and, when appropriate, with administrative and criminal action.”
Under the settlement reached January 18, 2017, Costco acknowledges that between January 1, 2012, and December 31, 2015, certain Costco pharmacies dispensed controlled substances inconsistent with their compliance obligations under the CSA and its implementing regulations. The violations include: filling prescriptions from practitioners who did not have a valid DEA number; incorrectly recording the practitioner’s DEA number; filling prescriptions outside the scope of a practitioner’s DEA registration; filling prescriptions that did not contain all the required information; failing to maintain accurate dispensing records; and failing to maintain records for their central fill locations in Sacramento, California and Everett, Washington.
U.S. Attorney McQuade stated, “In light of the prescription pill and opioid overdose epidemic we are seeing across the country, compliance with regulations governing pharmacies is more important than ever. We applaud Costco for working with DEA and taking steps to tighten up its compliance to ensure that prescription pills do not end up on the street market.”
“These are not just administrative or paperwork violations — Costco’s failure to have proper controls in place in its pharmacies played a role in prescription drugs reaching the black market,” said U.S. Attorney Decker. “Costco pharmacies in Southern California filled numerous prescriptions for drugs that should not have been sold to consumers because of its flawed system for validating DEA registration numbers.”
U.S. Attorney Ormsby said “Opioid misuse has reached epidemic levels in the United States. This important matter is yet another example of the tenacious dedication of Drug Enforcement Administration investigators in uncovering and addressing corporate regulatory noncompliance. The DEA must be commended for its superb efforts in combating the opioid problem at so many different levels, including regulatory compliance.”
“Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” said U.S. Attorney Hayes. “A company such as Costco that distributes a significant volume of controlled substances has a responsibility to ensure it complies with regulations that help prevent opioids and other dangerous drugs from being misused or otherwise added to the illegal marketplace. I commend the Drug Enforcement Administration investigators for uncovering the violations at issue in this case, and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.”
To address the numerous issues uncovered in this investigation, Costco surrendered its DEA Registration at its central fill location in West Sacramento and accordingly, lost the ability to handle controlled substances. Costco also made improvements in its pharmacies by purchasing a new pharmacy management system at a total budgeted five-year cost of approximately $127 million. Additionally, Costco implemented a three-tier audit program of its pharmacy locations: Tier 1, done by pharmacy managers and regional pharmacy supervisors; Tier 2, completed by an Internal Audit group consisting of three auditors and an audit supervisor; and Tier 3, an External Audit of 40 annual audits.
Under the terms of the settlement, over the next three years, DEA is allowed to conduct unannounced and unrestricted inspections of all DEA registered Costco pharmacy locations without Administrative Inspection Warrants. The Drug Enforcement Administration monitors pharmacy prescribing practices to ensure compliance with federal law. Pharmacies found in violation face escalating penalties up to the revocation of their DEA Registration number — the authorization that allows them to write prescriptions for controlled substances.
This case was investigated by DEA Diversion Groups in Seattle, Los Angeles, Sacramento and Detroit. While this settlement is national in scope, the settlement was negotiated by the U.S. Attorney’s Offices in the Western and Eastern Districts of Washington, Central and Eastern Districts of California and Eastern District of Michigan. Assistant U.S. Attorneys Anderson Berry and Kurt A. Didier handled the matter for the Eastern District of California.
Yuba City Man Pleads Guilty to Child Pornography OffenseRead the Press Release
SACRAMENTO, Calif. — Joseph Wood, 67, of Yuba City, pleaded guilty today to possession of child pornography, U.S. Attorney Phillip A. Talbert announced.
According to court documents, on November 20, 2009, law enforcement agents executed a search warrant at Wood’s home in Yuba City. Subsequent forensic review of computers and hard drives that belonged to Wood located several hundred images and videos of child pornography.
This case is the product of an investigation by the California Department of Justice Major Crimes Team. Assistant U.S. Attorneys Matthew G. Morris and Jeremy J. Kelley are prosecuting the case.
Wood is scheduled to be sentenced by Judge Kimberly J. Mueller on April 26, 2017. Wood faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.
Los Angeles Lawyer Pleads Guilty to Drug TraffickingRead the Press Release
SACRAMENTO, Calif. — Nathan Hoffman, 56, of Los Angeles, pleaded guilty today to manufacturing marijuana as part of a larger conspiracy to distribute marijuana throughout California, U.S. Attorney Phillip A. Talbert announced.
As part of his plea agreement, Hoffman agreed to give up his license to practice law in the State of California and not contest any disbarment proceedings instituted by the State Bar of California.
According to court documents, Hoffman, a Los Angeles attorney with offices on Wilshire Boulevard, conspired with Yan Ebyam, Hung Nguyen, and others to develop two industrial-sized marijuana cultivation sites in Sutter County and Sacramento. Hoffman created legal entities designed to lend legitimacy to the marijuana cultivation and distribution, but, as part of the plea agreement, Hoffman admitted that he and his co-conspirators sought to make profits from the illegal distribution of large amounts of marijuana. Much of the marijuana grown in Northern California from this conspiracy was distributed by Nguyen. Nguyen, who entered a guilty plea last week, operated two Southern California marijuana stores, the Canna Clinic of Garden Grove and the South Bay Canna Clinic in Torrance.
This case is part of investigations into industrial-scale marijuana cultivation conspiracies operating within the Eastern District of California. A total of 12 defendants were indicted for crimes relating to their marijuana cultivation in this case and in two related cases (United States v. Yan Ebyam et al. 2:11-cr-275-JAM and 2:11-cr-276-JAM). All defendants have now pleaded guilty to participation in the conspiracies, and most have been sentenced to prison.
According to court documents, on June 21, 2011, federal and state agents executed seven federal search warrants in Sacramento, Sutter, and Tehama Counties. Two of these warrants were executed at the sites of large, commercial greenhouses located at the Jopson Ranch in Rio Oso and at the Cal-Nevada Wholesale Florist in Sacramento. Law enforcement officers seized over 5,000 marijuana plants in all stages of growth from these two locations: approximately 2,168 plants at Jopson Ranch and approximately 3,305 plants at Cal-Nevada Florist. Two leaders arrested at the grow sites, Yan Ebyam and Aimee Sisco, admitted their involvement in the marijuana cultivation business.
Sentencing for Hoffman is set for April 18, 2017, before U.S. District Judge John A. Mendez. Hoffman faces a maximum statutory penalty of 20 years in prison and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
These three cases are the product of an investigation by the Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigation, the Sutter County Sheriff’s Department, and the California Bureau of Narcotic Enforcement. It was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF Program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply. Assistant U.S. Attorneys Jason Hitt and Todd A. Pickles are prosecuting the cases.
McKesson Agrees to Pay Record $150 Million Settlement for Failure to Report Suspicious Orders of Pharmaceutical DrugsRead the Press Release
SACRAMENTO, Calif. — McKesson Corporation, one of the nation’s largest distributors of pharmaceutical drugs, agreed to pay a record $150 million civil penalty for alleged violations of the Controlled Substances Act (CSA). The settlement resolves allegations that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers.
The nationwide settlement was announced today by U.S. Attorney Phillip A. Talbert, Drug Enforcement Administration Special Agent in Charge John J. Martin and the U.S. Attorneys for 11 other federal districts.
“The abuse of prescription painkillers has become an epidemic,” said United States Attorney Talbert. “The Controlled Substances Act is a tool to assist the DEA with monitoring the movement of prescription drugs and prevent the diversion of powerful drugs to unintended users who may be injured by them. Our office will continue to work with our law enforcement partners to investigate these cases and enforce federal law.”
“Accountability is key for all DEA registrants who distribute controlled substances; detecting and reporting suspicious orders is part of the equation,” said DEA Special Agent in Charge John J. Martin. “DEA is committed to utilizing a variety of tools, which include implementing new methods for accountability, to combat the prescription drug epidemic.”
The nationwide settlement requires McKesson to suspend sales of controlled substances from distribution centers in Colorado, Ohio, Michigan and Florida for multiple years. The staged suspensions are among the most severe sanctions ever agreed to by a DEA registered distributor. The settlement also imposes new and enhanced compliance obligations on McKesson’s distribution system.
In 2008, McKesson agreed to a $13.25 million civil penalty and administrative agreement for similar violations. In this case, the government alleged again that McKesson failed to design and implement an effective system to detect and report “suspicious orders” for controlled substances distributed to its independent and small chain pharmacy customers — i.e., orders that are unusual in their frequency, size, or other patterns. From 2008 until 2013, McKesson supplied various U.S. pharmacies an increasing amount of oxycodone and hydrocodone pills, frequently misused products that are part of the current opioid epidemic.
The government’s investigation developed evidence that even after designing a compliance program after the 2008 settlement, McKesson did not fully implement or adhere to its own program. In Colorado, for example, McKesson processed more than 1.6 million orders for controlled substances from June 2008 through May 2013, but reported just 16 orders as suspicious, all connected to one instance related to a recently terminated customer.
In addition to the monetary penalties and suspensions, the government and McKesson agreed to enhanced compliance terms for the next five years. Among other things, McKesson has agreed to specific, rigorous staffing and organizational improvements; periodic auditing; and stipulated financial penalties for failing to adhere to the compliance terms. Critically, the settlement will require McKesson to engage an independent monitor to assess compliance — the first independent monitor of its kind in a CSA civil penalty settlement.
This was a multidistrict investigation that involved the following DEA Field Divisions: Boston Field Division, Chicago Field Division, Denver Field Division, Detroit Field Division, Miami Field Division, Newark Field Division, San Francisco Field Division, St. Louis Field Division, and Washington District Office. In addition to the Eastern District of California, the following U.S. Attorney’s Offices participated in the case: Central District of California, District of Colorado, Middle District of Florida, Eastern District of Kentucky, Northern District of Illinois, District of Massachusetts, Eastern District of Michigan, District of Nebraska, District of New Jersey, Northern District of West Virginia, and Western District of Wisconsin.
U.S. Attorneys’ Offices for the District of Colorado and the Northern District of West Virginia, along with DEA Office of Chief Counsel and Diversion Control Division, led the civil settlement negotiations. DEA’s Denver, Detroit and Miami Field Divisions, and its Washington Division Office led the administrative and civil investigation. The Criminal Division’s Narcotic and Dangerous Drug Section (NDDS) also coordinated and assisted in negotiating certain portions of the settlement. Assistant United States Attorneys Amanda Rocque (Colorado) and Alan McGonigal (NDWV) represented the United States in the civil penalty investigations and negotiations. Associate Chief Counsel Lee Reeves and Senior Attorneys Dedra Curteman, Dana Hill and Krista Tongring represented DEA in the investigations and negotiations. Trial Attorneys Harry Matz and Kirtland Marsh were involved for NDDS. McKesson has a branch in Sacramento. Assistant U.S. Attorneys Kelli L. Taylor and Kurt Didier handled the matter for the Eastern District of California.
Former Fresno Business CEO Pleads Guilty to Embezzling over $500,000 from Pension PlanRead the Press Release
FRESNO, Calif. — Mary Williams, 70, of Fresno, pleaded guilty today to embezzling from a pension plan, U.S. Attorney Phillip A. Talbert announced.
According to court documents, Williams was the Chief Executive Officer of Aeroplate Corporation, an engineering and contracting firm in Fresno. From June 2011 to November 2016, Williams embezzled approximately $509,000 from a pension plan that Aeroplate established for its employees. One of the fund’s assets was a set of real estate parcels in Fresno that at one point was appraised at over $900,000 in value.
Under federal law, assets that belong to pension plans can only be used to fund the plan, which must pay future benefits to employees, and not the business that started the plan.
According to the plea agreement, Williams and the company used the properties to raise money for the company. Eventually, the company was unable to repay its loans, and the properties were foreclosed on. The fund became insolvent because it did not have enough money to pay expected benefit claims. However, the plan’s benefits are federally insured by the Pension Benefit Guaranty Corporation, which protects employees from losing their benefits when their plans are insolvent.
This case is the product of an investigation by the U.S. Department of Labor’s Employee Benefit Security Administration. Assistant U.S. Attorney Michael G. Tierney is prosecuting the case.
Williams is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on April 3, 2017. Williams faces a maximum statutory penalty of five years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Calaveras County Man Sentenced to over 15 Years in Prison for Child Pornography OffenseRead the Press Release
SACRAMENTO, Calif. — Miguel Angel Morales, 32, of Valley Springs, was sentenced today by U.S. District Judge John A. Mendez to 15 years and 8 months in prison for receipt of child pornography, U.S. Attorney Phillip A. Talbert announced.
According to court documents, between August 16, 2013, and September 30, 2013, Morales used a smart phone application to induce and entice a 15-year-old girl to produce pornographic photos and videos of herself and to send those images to Morales. During chats with the minor victim, Morales discussed her age and the fact that he would face serious trouble if their activities were discovered. According to court documents, at the time of the offense, Morales had a prior conviction from 2010 for unlawful sex with a minor. After serving his prison term, Morales will serve 10 years of supervised release.
This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorney Matthew G. Morris prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.
Brooklyn Man Pleads Guilty to Conspiring to Distribute Heroin on the Dark WebRead the Press Release
FRESNO, Calif. — Chaudhry Ahmad Farooq, 24, of Brooklyn, New York, pleaded guilty today to one count of conspiring to distribute heroin, U.S. Attorney Phillip A. Talbert announced.
According to court documents, from approximately November 2015 through August 2016, Farooq conspired with co-defendant Abdullah Almashwali to distribute heroin on AlphaBay, a dark web marketplace. Under the moniker “DarkApollo,” Farooq distributed more than 600 grams of heroin in exchange for more than $145,000 in Bitcoin.
Dark web marketplaces are operated on computer networks designed to conceal the true Internet Protocol (IP) address of the computers accessing the network. Dark web marketplaces allow for payments to be made only in the form of digital currency, most commonly Bitcoin. While not inherently illegal, digital currency is used by dark web marketplaces because online transactions in digital currency can be completed without a third-party payment processor and are therefore perceived to be more anonymous and less vulnerable to law enforcement scrutiny.
This case is the product of an investigation by the Drug Enforcement Administration, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service, Criminal Investigation, the U.S. Postal Inspection Service, and the Fresno Police Department. Assistant U.S. Attorneys Grant B. Rabenn and Ross Pearson are prosecuting the case.
Both Farooq and Almashwali are in federal custody. Almashwali is scheduled for trial on April 18, 2017. The charges against him are only allegations; he is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Farooq is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on May 17, 2017. Farooq faces a maximum statutory penalty of 20 years in prison and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
This case was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
West Sacramento Man Indicted for Receiving Child PornographyRead the Press Release
SACRAMENTO, Calif. — Zaid Bader Jacob, 47, of West Sacramento, is scheduled to be arraigned today after a federal grand jury returned an indictment charging him with receipt of child pornography, U.S. Attorney Phillip A. Talbert announced.
According to court documents, law enforcement agents executed a search warrant at Jacob’s residence in April 2015 after they identified an IP address there offering child pornography over the internet via a peer-to-peer network. The indictment alleges that between January and April 2015, Jacob used a computer to receive one or more visual depictions of a minor engaging in sexually explicit conduct.
This case is the product of an investigation by the Federal Bureau of Investigation and the Sacramento Internet Crimes Against Children (ICAC) Task Force, a federally and state-funded task force managed by the Sacramento Sheriff’s Department with agents from federal, state, and local agencies. The Sacramento ICAC investigates online child exploitation crimes, including child pornography, enticement, and sex trafficking. Assistant U.S. Attorney Shelley D. Weger is prosecuting the case.
If convicted, Jacob faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.
Southern California Marijuana Store Owner Pleads Guilty to Drug TraffickingRead the Press Release
SACRAMENTO, Calif. — Hung C. Nguyen, 40, of Moorpark, pleaded guilty today to manufacturing marijuana as part of a larger conspiracy to distribute marijuana throughout California, U.S. Attorney Phillip A. Talbert announced.
According to court documents, Nguyen conducted a marijuana cultivation business with Nathan Hoffman, a Los Angeles attorney with offices on Wilshire Boulevard, and others using marijuana grown in Sutter County and Sacramento. Nguyen operated two Southern California marijuana stores, the Canna Clinic of Garden Grove and the South Bay Canna Clinic in Torrance. Nguyen was a distributor for the marijuana produced in Northern California. According to the plea agreement, one of Nguyen’s dispensary’s could sell more than $10,000 of marijuana in a single busy day.
This case is part of investigations into industrial-scale marijuana cultivation conspiracies operating within the Eastern District of California. A total of 12 defendants were indicted for crimes relating to their marijuana cultivation in this case and in two related cases (United States v. Yan Ebyam et al. 2:11-cr-275-JAM and 2:11-cr-276-JAM). All defendants except for Hoffman have pleaded guilty to participation in the conspiracies, and most have been sentenced to prison. Hoffman is scheduled for trial on January 23, 2017. The charges against Hoffman are only allegations; he is presumed innocent until and unless proven guilty beyond a reasonable doubt.
According to court documents, on June 21, 2011, federal and state agents executed seven federal search warrants in Sacramento, Sutter, and Tehama Counties. Two of these warrants were executed at the sites of large, commercial greenhouses located at the Jopson Ranch in Rio Oso and at the Cal-Nevada Wholesale Florist in Sacramento. Law enforcement officers seized over 5,000 marijuana plants in all stages of growth from these two locations: approximately 2,168 plants at Jopson Ranch and approximately 3,305 plants at Cal-Nevada Florist. Two leaders arrested at the grow sites, Yan Ebyam and Aimee Sisco admitted their involvement in the marijuana cultivation business.
Sentencing for Nguyen is set for April 18, 2017, by U.S. District Judge John A. Mendez. Nguyen faces a maximum statutory penalty of 20 years in prison and a $1 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
These three cases are the product of an investigation by the Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigation, the Sutter County Sheriff’s Department, and the California Bureau of Narcotic Enforcement. It was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF Program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply. Assistant U.S. Attorneys Jason Hitt, Todd A. Pickles, and Samuel Wong are prosecuting the cases.
Sacramento Man Sentenced to over 7 Years in Prison for Distribution of Child PornographyRead the Press Release
SACRAMENTO, Calif. — John K. Cabrera, 35, of Sacramento, was sentenced today by United States District Judge Garland E. Burrell Jr. to over seven years in prison for distribution of child pornography, United States Attorney Phillip A. Talbert announced.
According to court documents, between April 24, 2014, and April 27, 2014, Cabrera used the internet to transmit images of prepubescent children engaged in sexually explicit conduct with another person.
This case was the product of an investigation by the Sacramento Internet Crimes Against Children (ICAC) Task Force, a federally and state-funded task force managed by the Sacramento Sheriff’s Department with agents from federal, state, and local agencies. The Sacramento ICAC investigates online child exploitation crimes, including child pornography, enticement, and sex trafficking. Assistant United States Attorney Rosanne Rust prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about Internet safety education.
Sacramento Man Sentenced to over 7 YearsRead the Press Release
SACRAMENTO, Calif. — John K. Cabrera, 35, of Sacramento, was sentenced today by United States District Judge Garland E. Burrell, Jr. to over 7 years in prison for distribution of child pornography, United States Attorney Phillip A. Talbert announced.
According to court documents, on or about April 24, 2014, and continuing through on or about April 27, 2014, Cabrera used the Internet to transmit images of prepubescent children engaged in sexually explicit conduct with another person.
This case was investigated by the Sacramento Internet Crimes Against Children (ICAC) Task Force, a federally and state-funded task force managed by the Sacramento Sheriff’s Department with agents from federal, state, and local agencies. The Sacramento ICAC investigates online child exploitation crimes, including child pornography, enticement, and sex trafficking. Assistant United States Attorney Rosanne Rust prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about Internet safety education.
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Orangevale Man Sentenced to 15 Years in Prison for Receipt and Distribution of Child PornographyRead the Press Release
SACRAMENTO, Calif. — Theodore Allen Leleaux, 34, of Orangevale, was sentenced today by U.S. District Judge Garland E. Burrell Jr. to 15 years in prison for distribution of child pornography with a prior conviction relating to the sexual abuse of a minor, U.S. Attorney Phillip A. Talbert announced.
According to court documents, in December 2013, agents in Maine and Wyoming investigating distribution of child pornography received unsolicited emails from Leleaux seeking to trade child pornography with accounts that the agents had taken over. On February 2014, a search warrant was executed at Leleaux’s residence. On his cellphone, agents found at least 5,000 images and 400 videos of child pornography. At the time he sent the emails, Leleaux had been convicted in the Superior Court of Contra Costa County of having unlawful sex with a minor who was more than three years younger than him.
“While the internet has positively transformed the lives of millions, some have chosen to use it as a tool to prey on innocent victims,” said Ryan L. Spradlin, Special Agent in Charge of HSI San Francisco. “This sentence reflects the seriousness of the crimes of the defendant who repeatedly disregarded the law while causing long-lasting damage to his young victims.”
This case was the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant U.S. Attorney Matthew G. Morris prosecuted the case.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.
Susanville Man Indicted on Narcotics and Firearms ChargesRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned a three-count indictment today against Courtney Dale Eames, 55, of Susanville, charging him with possession with intent to distribute methamphetamine, being a felon in possession of a firearm, and possession of stolen firearms, U.S. Attorney Phillip A. Talbert announced.
According to court documents, Susanville Police Officers executed search warrants at Eames’s address in September 2016. In the course of the search, the officers found a package of methamphetamine as well as 32 different firearms and several hundred rounds of ammunition.
This case is the product of an investigation by the FBI and the Susanville Police Department. Assistant U.S. Attorney Owen Roth is prosecuting the case.
If convicted, Eames faces a maximum statutory penalty of 40 years in prison on the methamphetamine charge and a substantial fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Stockton Man Sentenced to 15 Years in Prison for Drugs, Firearms OffensesRead the Press Release
SACRAMENTO, Calif. — Richard J. Beall, 49, of Stockton, was sentenced today by U.S. District Judge Morrison C. England Jr. to 15 years in prison for distribution of methamphetamine and possession of a firearm in furtherance of a drug-trafficking crime, U.S. Attorney Phillip A. Talbert announced.
Beall pleaded guilty to the charges on September 29, 2016. According to the plea agreement, in February and March 2016, Beall engaged in methamphetamine transactions with an undercover agent and a confidential informant. During one transaction in Beall’s residence, he sat on a couch with a semi-automatic pistol on an end table near his left hand. Beall cannot legally possess firearms because he is a convicted felon.
“At ATF, our highest priority is reducing violent crime within our communities,” said ATF Special Agent in Charge Jill Snyder. “This case is an example of the work ATF agents do on a daily basis to protect the public from armed drug traffickers who threaten our neighborhoods.”
According to court documents, on March 29, 2016, Beall was seen driving a truck that had been reported stolen. When local patrol officers initiated a traffic stop, Beall drove off and led the officers on a chase through orchards and farmlands before abandoning the truck and climbing a cherry tree. The arresting officers got him down from the tree and found a loaded pistol in his left-rear pocket. Later that day, officers obtained and executed a search warrant at Beall’s residence and found a loaded AK-47 rifle with a high-capacity magazine and two additional handguns.
This case was a product of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Stockton Police Department, and the California Highway Patrol. Assistant U.S. Attorney Ross K. Naughton prosecuted the case.
Sacramento Man Sentenced to over 7 Years in Prison for False Tax Return Claims and Identity Theft ChargesRead the Press Release
SACRAMENTO, Calif. — Lejohn Windom Sr., 53, of Sacramento, was sentenced today by U.S. District Judge Troy L. Nunley to seven years and 10 months in prison and ordered to pay $1.1 million in restitution to the IRS for mail fraud, conspiracy to submit false claims, and aggravated identity theft, U.S. Attorney Phillip A. Talbert announced.
According to court documents, between 2010 and 2013, Windom and his co‑conspirators filed 682 income tax returns, requesting nearly $2 million in fraudulent refunds. Of those returns, more than $1.1 million in fraudulent refunds were paid. Windom and others used stolen identities to request the tax refunds and then forged the names of the taxpayers to make the fraudulent refund checks payable to themselves.
“The false tax refund scheme perpetrated by Lejohn Windom and other co-conspirators victimized hundreds of taxpayers and stole over one million dollars from all American taxpayers,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “With the April 18 tax deadline approaching, it is important taxpayers know IRS-Criminal Investigation and our law enforcement partners are actively combating identity theft involving their personal information used to file false tax returns. The sentence imposed today by the court sets a clear example that tax fraud does not pay.”
This case is the product of an investigation by the Internal Revenue Service – Criminal Investigation and the United States Postal Inspection Service. Assistant U.S. Attorney Matthew G. Morris is prosecuting the case.
Co-defendants Tracy Hartway and Audrey Johnson have pleaded guilty and are scheduled for sentencing on January 12, 2017, and January 26, 2017 respectively. Co-defendant Lejohn Windon Jr. is scheduled for a status hearing on January 12, 2017. The charges against him are only allegations; he is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Granite Bay Property Investor Sentenced to over 2 Years in Prison for Investment Fraud SchemeRead the Press Release
SACRAMENTO, Calif. — John Stuart Hill, 33, of Granite Bay, was sentenced today by U.S. District Judge Morrison C. England Jr. to two years and three months in prison and ordered to pay $1.4 million in restitution to eight victims for wire fraud and mail fraud in connection with a real estate investment scheme, U.S. Attorney Phillip A. Talbert announced.
According to court documents, between August 9, 2011, and April 2013, Hill, acting under the business name Granite Bay Investment Partners (GBIP), solicited and received money from investors who intended that their money would be used to purchase, rehabilitate, and resell residential properties in the Sacramento area. In reality, Hill used the money for his own personal expenses, made false accounting entries on statements he sent to his investors, and misrepresented the purchase and resale prices of the properties in question. In some cases, the properties that Hill alleged his investors to be rehabilitating had never been purchased by Hill or GBIP. In other cases, multiple investors were told that they were partners on the same property in order to increase the amount invested to far above the purchase and rehabilitation costs.
According to court documents, Hill received at least $1.9 million from investors, only $600,000 of which was ever returned, leaving at least $1.3 million unaccounted for. On September 29, 2016, Hill pleaded guilty to wire fraud and mail fraud.
This case was the product of an investigation by the United States Secret Service. Assistant United States Attorney Matthew G. Morris prosecuted the case.
Former Tribal Officials and Employees Charged with Embezzling $6 Million from Paskenta Band of Nomlaki IndiansRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned a 69-count indictment today against John A. Crosby, 53, of Redding; Ines S. Crosby, 73, of Orland; and Leslie A. Lohse, 62, of Glenn County, charging them with conspiracy to embezzle tribal funds, embezzlement of tribal funds, false statements to federal agents, and tax charges, U.S. Attorney Phillip A. Talbert announced.
According to court documents, John Crosby, Ines Crosby, and Leslie Lohse were officers and employees of the Paskenta Band of Nomlaki Indians in Tehama and Glenn Counties. The Tribe obtained substantial revenues from the operation of the Rolling Hills Casino located on tribal land. Between January 2009 and May 2014, the defendants, who had access to tribal funds, used that money for their own personal expenses. They sought to conceal the embezzlement, including creating a false line-of-credit document and remotely accessing the Tribe’s computers to destroy evidence.
According to the indictment, in June 2015 during the investigation, each defendant falsely stated to a federal agent that they had received a $5 million line of credit from the Tribe. Further, John Crosby and Leslie Lohse submitted tax returns that omitted the embezzled funds. For her part, Ines Crosby failed to file any tax returns. It is estimated that the defendants embezzled at least $6 million in tribal funds.
This case is the product of an investigation by the Internal Revenue Service-Criminal Investigation and the Federal Bureau of Investigation. Assistant U.S. Attorneys Todd A. Pickles and Matthew M. Yelovich are prosecuting the case.
If convicted, each of the defendants face a maximum statutory penalty of 20 years in prison and a $250,000 fine on the charge of falsifying a document in a federal investigation. The maximum statutory penalty for each count of conspiracy, embezzling, and making a false statement to a government agent is five years in prison and a $250,000 fine. The maximum statutory penalty for filing a false tax return is three years in prison and a $25,000 fine, and one year in prison and a $25,000 fine for failure to file a tax return. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Tracy Resident Indicted for over 30 Counts of “H-1B” Visa Fraud and 2 Counts of Aggravated Identity TheftRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned an indictment Thursday against Abhijit Prasad, 49, of Tracy, charging him with 31 counts of visa fraud and two counts of aggravated identity theft, U.S. Attorney Phillip A. Talbert announced.
According to the indictment, Prasad filed 31 petitions for H-1B nonimmigrant visas containing false statements, made under penalty of perjury, as to purported work projects to be performed at various locations in California. The indictment further alleges that Prasad obtained two H-1B visas procured by fraud and false statements, and used the means of identification of a real person to effectuate his visa fraud scheme.
The case is the product of an investigation by the U.S. Department of State, Diplomatic Security Service’s representative to the Document and Benefit Fraud Task Force (DBFTF), overseen by the Department of Homeland Security’s Homeland Security Investigations. The DBFTF is a multi-agency task force that coordinates investigations into fraudulent immigration documents. U.S. Citizenship and Immigration Service’s Office of Fraud Detection and National Security also assisted with the investigation. Assistant U.S. Attorney Nirav Desai is prosecuting the case.
If convicted, Prasad faces a maximum statutory penalty of 10 years in prison and a $250,000 fine for the visa fraud. He faces a two-year mandatory, consecutive prison sentence a $250,000 fine for the aggravated identity theft counts. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
San Francisco, New York, and Granite Bay Residents Charged in Bid-Rigging Conspiracy Involving Government ContractsRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned an indictment today against John Brewer, 47, of San Francisco; Brent Vinch, 47, of Manorville, New York; and Loraine Dixon, 55, of Granite Bay, charging them with a bid-rigging conspiracy involving state contracts, U.S. Attorney Phillip A. Talbert announced.
According to court documents, Brewer and Vinch were the owners of and senior executives for a company called Expert Network Consultants, which submitted bids to the State of California for various government contracts. From 2008 through early 2012, it is alleged that Brewer, Vinch and Dixon conspired with each other and others to rig the State’s competitive bidding process by creating inflated bids for submission by co-conspirators to state contracting agencies in an effort to ensure that Expert Network Consultants received the contracts.
This case is the product of an investigation by the Federal Bureau of Investigation with assistance from the California Attorney General’s Office. Assistant U.S. Attorneys Jared C. Dolan and Matthew M. Yelovich are prosecuting the case.
If convicted, Brewer, Vinch, and Dixon face a maximum statutory penalty of 10 years in prison and a $1 million fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Sacramento Man Charged with Distribution of Child PornographyRead the Press Release
SACRAMENTO, Calif. — Mark Corum, 60, of Sacramento, was arraigned today in Sacramento on an indictment charging him with distribution of child pornography, U.S. Attorney Phillip A. Talbert announced.
According court documents, on June 23, 2016, Corum transmitted images of prepubescent children engaged in sexually explicit conduct to another person via the internet.
This case was investigated by the Sacramento Internet Crimes Against Children (ICAC) Task Force, a federally and state-funded task force managed by the Sacramento Sheriff’s Department with agents from federal, state, and local agencies. The Sacramento ICAC investigates online child exploitation crimes, including child pornography, enticement, and sex trafficking. Assistant U.S. Attorney Katherine T. Lydon is prosecuting the case.
Corum is in custody and is scheduled to appear before U.S. District Judge Kimberly J. Mueller on January 25, 2017 at 9:00 a.m.
If convicted, Corum faces a maximum statutory penalty of 20 years in prison and a maximum statutory fine of $250,000. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc.
Point Arena Couple Indicted for Sex Trafficking of a MinorRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned a two-count indictment today against Tion Makeise Foster, 21, and Monica Merlin Morales, 25, both of Point Arena, charging them with sex trafficking a minor and conspiracy to traffic a minor, U.S. Attorney Phillip A. Talbert announced.
According to court documents, the defendants transported a 16-year-old female victim to various places in the Eastern District of California and the Bay Area in August 2016 so that she could engage in commercial sex acts for their financial benefit. They subsequently conspired to traffic her again in November and December.
This case is the product of an investigation by the Federal Bureau of Investigation with assistance from the Yuba County Sheriff’s Office. Assistant U.S. Attorney Michele Beckwith is prosecuting the case.
If convicted, Foster and Morales face a maximum statutory penalty of life in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Eastern District of California U.S. Attorney’s Office Collects $49 Million and an Additional $3 Billion in Joint Efforts with the Justice Department in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2016Read the Press Release
SACRAMENTO, Calif. —Phillip A. Talbert, U.S. Attorney for the Eastern District of California, announced today that his office collected $49 million in criminal and civil enforcement actions in Fiscal Year 2016 (the 12 months ending September 30, 2016), and an additional $3 billion in cases pursued jointly with other U.S. Attorney’s Offices and components of the U.S. Department of Justice.
“Our office is committed to aggressively pursuing monetary compensation in both criminal and civil matters from those who cause harm to the public,” said U.S. Attorney Talbert. “Each year we collect more money for victims and taxpayers than it costs to operate our office. This year’s financial recoveries are no different, and they reflect the strength of our commitment to ensuring that the public does not bear the costs of those who commit criminal and civil violations in our district.”
The office’s largest civil collections were from affirmative civil enforcement cases in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals or corporations for violations of federal health, safety, civil rights, or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration, and Department of Education.
Multiple major recoveries arose from allegations of procurement fraud and grant fraud. Menlo Worldwide Services LLC, Con-way Inc. and their subsidiaries Estes Forwarding Worldwide LLC and Estes Express Lines, paid $13 million to resolve allegations under the False Claims Act that they overcharged the government in part by billing the cost of moving freight by air when it was actually shipped by ground. Bard College paid $4 million to resolve allegations of False Claims Act violations regarding the receipt and disbursement of federal student aid funds. E&A Protective Services-Bravo LLC and Eris Security Inc. paid $340,000, plus all net proceeds from the liquidation of their assets, to resolve allegations that they submitted false claims in connection with a contract to provide armed security guard services at IRS facilities in Fresno, California and Ogden, Utah.
Mary’s Gone Crackers Inc., a natural food company based in Gridley, paid $1.5 million and agreed to establish a corporate compliance program following an investigation into potential criminal violations of federal immigration laws.
The office also had multiple major recoveries arising from investigations of health care fraud and Controlled Substances Act violations. In June, Marshall Medical Center paid $5.5 million to settle allegations that it violated the False Claims Act through billing improprieties. CRC Health Group paid $1 million to settle claims that it violated the Controlled Substances Act. An oncologist and his wife who was theoffice administrator paid $300,000 to settle allegations that they improperly billed Medicare for chemotherapy drugs purchased from an unlicensed foreign pharmaceutical distributor. The owner of the Script Life Pharmacy in Clovis paid $200,000 to settle civil claims for multiple violations of the Controlled Substances Act.
The office collected over $7.5 million this year for damages caused by wildfires in the Eastern District of California.
By far, the largest recovery through joint efforts with other arms of the Justice Department was $2.96 billion paid by Goldman Sachs Group Inc. in settlement of claims arising from Goldman’s marketing, underwriting, issuing, and selling residential mortgage-backed securities in the years leading up to the financial crisis.
In addition, working with partner law enforcement agencies, the office collected over $11 million in asset forfeiture actions in FY 2016. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
The office also worked with the department’s other litigating divisions to enforce and collect criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
Attorney General Loretta E. Lynch announced on December 14, 2016, that the Justice Department collected nearly $15.4 billion in civil and criminal actions in Fiscal Year 2016. Those collections are more than five times the appropriated budget for all 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period (approximately $2.93 billion).
“Every day, the men and women of the Department of Justice work tirelessly to enforce our laws, ensuring that taxpayer dollars are used properly and that the American people are protected from exploitation and abuse,” said Attorney General Lynch. “Today’s announcement is a testament to that work, and it makes clear that our actions deliver a significant return on public investment. I want to thank the prosecutors and trial attorneys who made this year's collections possible, and I want to emphasize that the Department remains committed to the well-being of our people and our nation.”
Third Fresno Resident Sentenced for Manufacturing and Selling Fraudulent Identification DocumentsRead the Press Release
FRESNO, Calif. — Veronica Rosales-Capitaine, 49, of Fresno, was sentenced today by Chief U.S. District Judge Lawrence J. O’Neill to 14 months in prison for conspiracy to produce, transfer, possess, and sell false identification documents, U.S. Attorney Phillip A. Talbert announced.
According to court documents, between June 2015 and June 2016, Rosales-Capitaine conspired with others to manufacture fraudulent identification documents, including social security cards and alien registration receipt cards, for customers who placed orders and paid as much as $150 for a set of the fraudulent documents. In March 2010, Rosales-Capitaine was convicted of the same offense and sentenced to six months in prison, admitting that between January 2009 and October 2009, she conspired with others to manufacture fraudulent identification documents.
This case is the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI) and the California Department of Motor Vehicles, Investigations Division. Assistant U.S. Attorney Christopher D. Baker is prosecuting the case.
On June 16, 2016, Rosales-Capitaine and five co-defendants were arrested for the scheme. On December 5, 2016, co-defendant Francisco Javier Hidalgo-Flores was sentenced to 15 months in prison. Charges are pending against the remaining co-defendants.
Kern County Man Pleads Guilty to Possessing Methamphetamine with the Intent to Distribute ItRead the Press Release
FRESNO, Calif. — Jose Soto, 36, of Lamont, pleaded guilty today to possession with intent to distribute methamphetamine, United States Attorney Phillip A. Talbert announced.
According to court documents, on May 5, 2016, at his residence, Soto possessed over two pounds of methamphetamine that he intended to sell. At the time of his arrest, Soto was on Kern County Mandatory Supervision for a prior narcotics trafficking offense.
This case is the product of an investigation by the Drug Enforcement Administration and the Kern County Probation Department. Assistant United States Attorney Angela Scott is prosecuting the case.
Soto is scheduled to be sentenced on March 6, 2017, by U.S. District Judge Dale A. Drozd. Soto faces a maximum statutory penalty of life in prison and a $10 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Former VA Podiatry Chief and Sunrise Shoes CEO Indicted for Health Care Fraud SchemeRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned an 11-count indictment Thursday against Anthony Lazzarino, 66, former Chief of Podiatry for the VA’s Northern California Health Care System, and Peter Wong, 58, founder and CEO of Sunrise Shoes and Pedorthic Service, charging them with health care fraud, conspiracy to pay and receive kickbacks on medical referrals, and conspiracy to commit wire fraud, United States Attorney Phillip A. Talbert announced.
According to court documents, between March 2008 and February 2015, Lazzarino and Wong engaged in a scheme to defraud the VA by billing the Veterans Health Administration for custom work and services that were prescribed but not supplied in shoes delivered to veterans. In addition, Lazzarino referred patients directly to Sunrise in violation of VA policy, and agreed with Wong to offer kickbacks in return for such referrals. Finally, Lazzarino, Wong, and Jai Aing Chen, who separately pleaded guilty on December 6, 2016, agreed to make materially false statements and omissions to the VA regarding where the shoes were manufactured, in the course of applying for an estimated $59 million contract.
This case is the product of an investigation by the Department of Veterans Affairs, Office of Inspector General, the Department of Veterans Affairs Police Service, and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant U.S. Attorney Matthew M. Yelovich is prosecuting the case.
If convicted, Lazzarino and Wong face a maximum statutory penalty of 10 years in prison and a $250,000 fine for each health care fraud count, and five years in prison and a $250,000 fine for each of the two conspiracy counts. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Chico Man Pleads Guilty to Transportation of Child PornographyRead the Press Release
SACRAMENTO, Calif. — Mark McLeod Wygant, 46, of Chico, pleaded guilty today to transportation of child pornography, U.S. Attorney Phillip A. Talbert announced.
According to court documents, from early 2011 to early 2012, Wygant surreptitiously filmed a child on numerous occasions using a hidden cellphone and hidden “spy cameras” that he had purchased for that purpose. He then transported those videos and photos from a location in Butte County to South Lake Tahoe. Wygant has been in custody since his arrest on January 29, 2015.
This case is the product of an investigation by the Federal Bureau of Investigation and the South Lake Tahoe Police Department. Assistant U.S. Attorney Matthew G. Morris is prosecuting the case.
Wygant is scheduled to be sentenced by U.S. District Judge Garland E. Burrell Jr. on March 3, 2017. Wygant faces a minimum of five years and a maximum statutory penalty of 20 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.
Fresno County Man Indicted for Weapons ChargesRead the Press Release
FRESNO, Calif. — A federal grand jury returned a one-count indictment today against Michael Mathison, 26, of Selma, charging him with being a felon in possession of a firearm and ammunition, U.S. Attorney Phillip A. Talbert announced.
According to court documents, a Fresno police officer assigned to the Fresno County Probation Adult Compliance Team arrested Mathison after an encounter in late November. According to the complaint, Mathison attempted to flee when the officer approached him and allegedly threw a gun into a nearby yard. After officers caught Mathison, they searched the yard and found a firearm. Mathison is prohibited by law from possessing a firearm because he has previously been convicted of multiple felonies.
This case is the product of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Fresno County Probation Adult Compliance Team, and the Fresno Police Department. Assistant U.S. Attorney Ross Pearson is prosecuting the case.
If convicted, Mathison faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case was brought as part of Project Safe Neighborhoods (PSN), an initiative that brings together federal, state and local law enforcement to combat gun and gang crime. At the core of PSN is increased federal prosecution to incapacitate chronic violent offenders as well as to communicate a credible deterrent threat to potential gun offenders.
Fentanyl and Heroin Sold on Dark Web MarketplaceRead the Press Release
FRESNO, Calif. — A federal grand jury in Fresno returned an indictment today against Emil Vladimirov Babadjov, 31, of San Francisco, charging him with distributing fentanyl and heroin, United States Attorney Phillip A. Talbert announced. Babadjov was arrested and made his initial court appearance on December 14, 2016, in San Francisco.
According to the complaint filed on December 9, 2016, Babadjov, using the vendor names “Blime-Sub” and “BTH-Overdose,” was a heroin, fentanyl, and methamphetamine distributor on the dark web marketplace AlphaBay. The reverse order of the word “Blime” is “Emil B.” Dark web marketplaces are operated on computer networks designed to conceal the true Internet Protocol (IP) address of the computers accessing the network. Dark web marketplaces allow for payments to be made only in the form of digital currency, most commonly in Bitcoin.
According to the complaint, Babadjov accepted orders for heroin, fentanyl, and methamphetamine on AlphaBay, and then mailed the narcotics from a post office in San Francisco to customers throughout the United States. Babadjov received payment for the narcotics in Bitcoin. On October 20, 2016, law enforcement made an undercover purchase of heroin from “Blime-Sub,” which was delivered to a post office box in the Eastern District of California. The parcel contained a mixture of fentanyl and heroin.
This case is a product of an investigation by the Central California Darknet Strike Force, an inter-agency task force dedicated to combating the use of dark web marketplaces and digital currency to distribute narcotics and launder money. The lead agency on this case was the Drug Enforcement Administration, with assistance from the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service, Criminal Investigation, and the U.S. Postal Inspection Service. Assistant United States Attorneys Grant B. Rabenn and Ross Pearson are prosecuting the case.
Additionally, this case was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.
If convicted, Babadjov faces a maximum statutory penalty of 20 years in prison and a $1 million fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Stratos Sentenced to over 21 Years in PrisonRead the Press Release
SACRAMENTO, Calif. — Troy David Stratos, 50, formerly of Los Angeles, was sentenced today by United States District Judge Troy L. Nunley to 21 years and 10 months in prison for multiple counts of mail fraud, wire fraud, money laundering and obstruction of justice, United States Attorney Phillip A. Talbert announced.
U.S. Attorney Talbert stated, “The fraudulent schemes devised and orchestrated by Stratos were staggering in their scope and audacity. Stratos crafted multiple layers of lies and worked to obstruct his victims’ and the authorities’ ability to discover the truth. He preyed upon his victims to satisfy his own voracious greed and desire for a lavish lifestyle. The sentence today reflects the seriousness of his crimes and the harm done to his victims.”
“Despite the complexity of his lies to conceal his schemes, Troy Stratos is, quite simply, a common con artist. He exploited a life-long friendship to live luxuriously while draining the friend’s financial accounts. He also misrepresented himself to others to glean funds for stock shares that never existed to support his fraudulent lifestyle,” said Special Agent in Charge Monica M. Miller of the Federal Bureau of Investigation’s Sacramento field office. “The FBI will identify and investigate individuals who perpetrate such large-scale fraud to ensure they face justice for their crimes.”
According to court documents and evidence presented during the course of the case, between August 2005 and September 2007, Stratos devised and executed a scheme to defraud his targeted victim of money and property. He told her that he was wealthy and successful, and that, among other things, he had made substantial money from oil investments. Stratos promised that he would help manage the victim’s portion of the proceeds from her recent divorce, including real property in her name and cash assets. Stratos told her that she needed to create a trust allowing Stratos to have access and control over her assets and the trust.
Stratos falsely represented that he would invest the divorce proceeds overseas, including in Dubai and in the United Arab Emirates, where the proceeds would earn a high rate of return. Stratos also falsely represented that he would pay for her expenses from his own money because her money was purportedly invested overseas.
Stratos never invested any money overseas as he promised. Instead, he diverted substantial sums of money from the trust for his own personal use. He also used portions of the money to pay the victim=s expenses, misrepresenting to her that he was spending his own money to pay those expenses.
Further, between February 2007 and April 2007, Stratos was informed of a grand jury subpoena that his bookkeeper had received requiring the production of various financial records relating to Stratos, including documents relating to Stratos’ spending the victim’s money in casinos in Las Vegas. Stratos instructed the bookkeeper to not provide some of the records. In April 2010, the FBI executed a search warrant for a storage locker maintained by Stratos and located the records covered by the grand jury subpoena that were withheld at the direction of Stratos.
Thereafter, beginning in December 2010 and continuing through February 2012, Stratos engaged in a new scheme to defraud Tim Burns, a financial manager in Pennsylvania, of approximately $11,250,000 of investors’ money. Burns was in the market to buy Facebook stock, pre-IPO (initial public offering), for some of his clients in 2011. Stratos, who used the alias “Ken Dennis,” because his own name had numerous negative postings on the internet, told Burns that he represented Carlos Slim, one of the wealthiest individuals in the world. Stratos claimed that Carlos Slim was in the process of purchasing a large block of Facebook shares, and Stratos offered to sell to Burns favorably priced Facebook shares that were in excess of what Carlos Slim was purchasing. Stratos also claimed to be connected with insiders at Facebook, including Mark Zuckerberg, and Facebook’s CFO. Stratos promised increasingly larger amounts of Facebook stock starting at approximately two million shares and up to 40 million shares. Based on the representations by Stratos, Burns sent three wire transfers totaling $11,250,000 to purchase the Facebook stock. The first wire transfer was sent to the client-trust account at Venable LLP, which was the law firm that Stratos had retained. The subsequent wire transfers were sent to bank accounts that Stratos controlled.
Throughout the scheme, Stratos assured Burns that the deal would close at any moment, often promising that the “papers” were about to be signed. Alternatively, Stratos offered to refund to Burns his deposit, even within a few days, but warned Burns that he would regret missing the opportunity to make money.
On December 20, 2011, the Federal Bureau of Investigation arrested Stratos in Los Angeles for the earlier fraud scheme. Stratos, through text messages and a telephone call, continued to tell Burns that the deal was real and that he could refund Burns’ money. By this time, Stratos had spent nearly all of the $11.25 million.
At sentencing, the court found that Stratos also engaged in other fraudulent conduct. The United States has estimated that Stratos obtained in excess of $43 million in fraudulent proceeds between in 1996 and his arrest in 2011.
A hearing was held to determine restitution. The court took it under submission and will issue a written order.
This case was the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorneys Todd Pickles and Jared Dolan prosecuted the case.
Stratos has remained in custody since his in arrest in 2011.
Federal Jury Finds Stockton Man Guilty of Being a Felon in Possession of a Fully Automatic FirearmRead the Press Release
SACRAMENTO, Calif. — On Thursday, after a three-day trial, a federal jury found Antonio Nicholas Smith, 26, of Stockton, guilty of unlawfully possessing a firearm as a felon, U.S. Attorney Phillip A. Talbert announced. The trial was held before U.S. District Judge John A. Mendez.
According to evidence presented at trial, on March 6, 2016, Smith and another man were driving in the Bear Creek district in Stockton. A police officer tried to stop the car for a traffic violation, but the car failed to yield and instead led the officer on a high-speed chase through a residential area. The car lost control and crashed several blocks later. When it did, Smith fled from the passenger’s seat with a bag in his hands. Smith discarded the bag shortly afterwards and fled from the area. He was apprehended in a neighbor’s backyard several minutes later. Inside the bag, officers found a Glock 9mm pistol with a 50-round drum magazine attached. The gun was loaded with 43 rounds of ammunition and one live round in the chamber. Officers later determined that the gun had been modified to function in a fully automatic mode. Smith cannot lawfully possess firearms because he has previously been convicted of felony offenses.
This case is a product of an investigation by the Stockton Police Department and the United States Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant U.S. Attorney Justin L. Lee is prosecuting the case.
Smith is scheduled to be sentenced by Judge Mendez on March 14, 2017. Smith faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
El Dorado Hills Woman Sentenced to 2 Years in Prison for Tax Refund Conspiracy Involving More than $750,000 in Illegitimate RefundsRead the Press Release
SACRAMENTO, Calif. — U.S. District Judge Garland E. Burrell Jr. sentenced Sherry Taggart, 57, of El Dorado Hills, today to two years in prison and ordered her to pay $757,412 in restitution for conspiring to file false claims and filing false claims, U.S. Attorney Phillip A. Talbert announced. Taggart pleaded guilty to the charges on September 23, 2016.
According to court documents in 2010, Taggart joined a scheme initiated in 2008 and operated by her co-conspirator, Barbara Antonucci, an unlicensed tax preparer, to obtain false refunds by preparing and filing false claims on behalf of clients with the IRS. Together, the two conspired to prepare and file hundreds of false claims with the IRS between June 2012 and March 2014, seeking refunds totaling approximately $1.4 million. As a result of the conspiracy, the IRS issued more than $757,000 in illegitimate refunds. In total, including the period in which Antonucci operated the scheme by herself, the IRS issued more than $1.8 million in illegitimate refunds from more than $2.5 million illegitimate claims filed during the scheme.
The fraudulent returns Taggart and Antonucci prepared and caused to be filed reported false wages and dependents for their clients and, in many cases, qualified the clients for the refundable Earned Income Credit (EIC) when the client’s true wages or family situation would have qualified the client for no credit or a lower credit. Most of the fraudulent returns listed wages associated with self-employment not documented by a Form W-2, such as “housekeeper.” The defendants obtained the names, social security numbers, and other personal identifying information of minors and falsely listed those minors as dependents on tax returns for clients who were unrelated to those minors. Taggart and Antonucci also filed false claims on their own behalf. They filed the false federal tax returns with the IRS through the mail and via the internet from Sacramento, Yuba and Placer Counties.
“As we approach tax filing season next month it is important that this sentence represents adverse consequences for those tax return preparers who file false tax returns for their clients,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “It is important for tax return preparers to follow the law and guidance set forth by IRS on preparing tax returns. It is also very important for taxpayers to review their tax return with their tax return preparer to verify it has been prepared correctly before it is filed with the IRS and ask questions when they do not understand what has been prepared.”
San Francisco Division Inspector in Charge Rafael Nunez of the U.S. Postal Inspection Service stated, “We are working closely with the U.S. Attorney’s Office and our partners in law enforcement to arrest and prosecute those responsible for complex Identity Fraud Schemes and to protect the public and their personal information from theft.”
Taggart was ordered to surrender to begin serving her sentence on February 17, 2017. Antonucci was sentenced on December 2, 2016, to three and a half years in prison.
This case was the product of an investigation by the IRS‑Criminal Investigation, the United States Postal Inspection Service, and the Sacramento County Sheriff’s Office. Assistant U.S. Attorney André M. Espinosa prosecuted the case.
Rocklin Man Pleads Guilty to Fraud and Money Laundering ChargesRead the Press Release
SACRAMENTO, Calif. — Kevin Lee Co, 45, of Rocklin, pleaded guilty today to wire fraud and money laundering for embezzling approximately $4.8 million from his employer, United States Attorney Phillip A. Talbert announced.
According to court documents, Co was employed by Holt of California, where he served as the controller and managed the company’s accounting department. During his tenure at Holt, from May 2008 until March 2015, Co embezzled approximately $4.8 million from the company. Co used the money he embezzled to purchase, among other things, luxury cars, home furniture, and NFL football and NBA basketball season tickets. In addition, Co spent approximately $1 million on player fees for an online video game. Co also engaged in a money laundering scheme involving a portion of the embezzled funds, which was designed to conceal the origin of the money he embezzled.
This case is the product of an investigation by the IRS Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorneys Brian A. Fogerty and Kevin C. Khasigian are prosecuting the case.
Co is scheduled to be sentenced by United States District Judge Troy L. Nunley on May 26, 2017. Co faces a maximum statutory penalty of 20 years in prison and a $250,000 fine for the wire fraud charge. For the money laundering charge, Co also faces a maximum statutory penalty of 20 years in prison and a fine of up to $500,000, or twice the value of the property involved in the money laundering transactions. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Former Sacramento Resident Charged with Murdering British Couple in 1978Read the Press Release
SACRAMENTO, Calif. — A federal grand jury returned an indictment today against Silas Duane Boston, 75, charging him with two counts of first degree maritime murder, U.S. Attorney Phillip A. Talbert announced.
Boston was arrested last week in Paradise, California. He was arraigned today before U.S. Magistrate Judge Carolyn K. Delaney and entered a plea of not guilty.
According to court documents, between June and July 1978, Boston, a U.S. citizen, owned a sailboat named the Justin B., which he sailed throughout the western Caribbean Sea, sometimes taking tourists on various excursions in the area. The indictment alleges that Boston killed a 25-year-old man and a 25-year-old woman, both originally from Manchester, England, who had chartered his boat. Boston allegedly bound them, covered their heads with plastic bags, attached weights to their bindings, and pushed them overboard, drowning them. The bodies were found on about July 8, 1978, off the coast of Punta de Manabique, Guatemala. The investigation into their deaths stalled and eventually the case went cold.
U.S. Attorney Talbert stated: “This case is the product of diligent work by the Sacramento Police Department’s Cold Case Unit, the FBI, and the Greater Manchester Police Department. Kudos are especially due to the Sacramento Police Department’s Cold Case Unit, whose persistent investigative efforts made this prosecution possible. Nothing would have happened if the Sacramento Police Department had not thought to consult with this office about what could be done with a 38-year-old homicide in the Caribbean Sea. We look forward to working with them as the case continues.”
This case is the product of an investigation by the FBI and the Sacramento Police Department. Assistant U.S. Attorneys Matthew D. Segal, Heiko P. Coppola, and Jeremy J. Kelley are prosecuting the case.
If convicted, Boston faces a maximum statutory penalty of death or life in prison, but the United States is not seeking the death penalty in this case. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Rideout Health to Pay Civil Monetary Penalties to Resolve Controlled Substance Act ClaimsRead the Press Release
SACRAMENTO, Calif. — Rideout Health will pay the United States $2,425,000 to settle the federal claims of alleged violations of the Controlled Substances Act by three of Rideout Health’s facilities in Yuba and Sutter Counties: Rideout Memorial Hospital, Fremont Medical Center, and Feather River Surgery Center, United States Attorney Phillip A. Talbert announced today.
In addition, Rideout Health has agreed to a three-year compliance plan. The payment and plan resolve the United States= claims that the three Rideout Health facilities failed to properly record and maintain thousands of transactions involving controlled substances in violation of the Controlled Substances Act and its implementing regulations.
The settlement also resolves the United States’ contention that the system Rideout Health used during that time to distribute controlled substances between these facilities failed to provide sufficient security controls. This settlement arises from a Drug Enforcement Administration (DEA) investigation that began after DEA received information from the California State Board of Pharmacy that Fremont Medical Center’s DEA Registration had expired, and that from October 23, 2012, to October 23, 2014, pharmacy technicians at Rideout Memorial Hospital were transporting controlled substances between Rideout Health facilities with little or no security controls in place.
“Hospitals have a duty to ensure that controlled substances are not diverted for nonmedical use,” said U.S. Attorney Talbert. “When a pharmacy or hospital has record keeping problems, it is impossible to know exactly how many controlled substances are on hand. Without that knowledge, and without proper security controls, the potential for diversion into our community escalates and jeopardizes the public health and safety.”
“Healthcare providers are the gatekeepers of controlled substances in their possession,” said DEA Special Agent in Charge John J. Martin. “With prescription drug misuse rates alarmingly high, proper accountability and security reduces the opportunity for diversion to unintended users. DEA will continue to use every investigative tool available in response to the prescription drug epidemic.”
Since the investigation began, Rideout Health has worked with the DEA and the United States Attorney’s Office to develop a detailed compliance plan to address the deficiencies in Rideout Health’s handling of controlled substances. Rideout Health also took proactive steps to reorganize its Compliance Department to improve controls with respect to the purchase, storage and dispensing of controlled substances. The compliance plan with the DEA is designed to advance Rideout Health’s ability to meet its record keeping requirements and enhance its ability to detect and prevent drug diversion.
Assistant United States Attorneys M. Anderson Berry and Kurt A. Didier handled the case with assistance from Diversion Investigators from DEA’s Sacramento Field Office.
Tehachapi Resident Pleads Guilty to Bank RobberyRead the Press Release
FRESNO, Calif. — Michael Brian Taylor, 60, of Tehachapi, pleaded guilty today to bank robbery, United States Attorney Phillip A. Talbert announced.
According to his plea agreement and other court documents, on May 24, 2016, at approximately 11:45 a.m., Taylor entered and robbed the Bank of the Sierra in Tehachapi, of approximately $34,000. Taylor entered the bank wearing a ski mask pulled down over his face and yelled loudly, “Hands in the air!” He approached the bank teller, demanded $200,000, and placed a black bag on the counter. Ultimately, he took approximately $34,000 given to him by the teller.
This case is the product of an investigation by the Tehachapi Police Department and the Federal Bureau of Investigation. Assistant United States Attorney Angela L. Scott is prosecuting the case.
Taylor is scheduled to be sentenced by Judge Lawrence J. O’Neill on March 20, 2017. Taylor faces a maximum statutory penalty of 20 years in prison. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Kern County Man Sentenced for Illegally Possessing Firearms, Explosives and a Destructive DeviceRead the Press Release
FRESNO, Calif. — Kenneth William Kirkland, 48, of California City, was sentenced today by U.S. District Judge Dale A. Drozd to four years and nine months in prison for being a felon in possession of firearms, being a felon in possession of a destructive device, being a felon in possession of explosives, and possession of a destructive device not registered in the National Firearms Registry, U.S. Attorney Phillip A. Talbert announced.
Kirkland was convicted of these offenses in September 2016 after a three-day trial. According to court documents and evidence produced at trial, on October 11, 2015, officers from the California City Police Department executed a search warrant at Kirkland’s house and found a 5.56-caliber assault rifle that was loaded with a high-capacity magazine and one round in the chamber and a 7.62 x 54R-caliber rifle. When officers discovered detonators in a yellow metal container, they requested the assistance of the Kern County Sheriff’s bomb squad.
In addition to the detonators, several sticks of dynamite were found and a partially constructed improvised explosive device (IED) was found in a shoebox under Kirkland’s bed. Electrical components in a separate shoebox were also found. It was later determined that with either the insertion of batteries into a battery pack or the connecting of its wires directly to a battery, the partially constructed improvised explosive device could be readily assembled into a fully functional IED.
According to the indictment, on June 17, 1993, Kirkland was convicted in Kern County of burglary and was prohibited from possessing firearms or ammunition.
This case was the product of an investigation by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the California City Police Department, and the Kern County Sheriff’s Office. Assistant U.S. Attorneys Angela L. Scott and Christopher Baker prosecuted the case.
Jury Finds Bakersfield Man Guilty of Hate CrimeRead the Press Release
BAKERSFIELD, Calif. — After a five-day trial, a federal jury in Fresno found Justin Cole Whittington, 25, of Bakersfield, guilty of federal hate crimes for firing a shotgun while yelling racist slurs at a Latino man, Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, and U.S. Attorney Phillip A. Talbert announced.
Whittington was convicted today of interfering with a person’s housing rights because of his race, color, or national origin by use of force or threat of force; use of a firearm during a crime of violence; and making a false statement to a special agent of the FBI. Whittington had earlier pleaded guilty to unlawful possession of a prohibited firearm in connection to the same crime.
According to court documents, on December 19, 2012, the victim, a Latino man, was standing in his front yard with his wife and son when a dark-colored PT Cruiser drove past slowly and came to a stop in front of his neighbor’s house. The victim thought this was unusual and paid close attention the car. Whittington, whom the victim had never seen before, got out of the front passenger seat of the car holding a sawed-off shotgun. Whittington used profanity and shouted a racial epithet as he fired one round toward the victim from about 15 yards away, and yelled that the victim should move out of Oildale. Whittington got back into the car and it drove away. Shortly thereafter, the shotgun was fired from the PT Cruiser at a nearby convenience store owned by a man of Middle Eastern descent. The blast left a large hole in the store’s glass door, and circles of missing paint on the metal gate in front of the store.
According to evidence presented at trial, the victim was able to describe Whittington and the car to Kern County Sheriff’s deputies, and they found Whittington nearby standing outside the PT Cruiser. The deputies recovered a sawed-off shotgun in the trunk of Whittington’s Crown Victoria, which was parked near the PT Cruiser.
Whittington was also found guilty of making false statements to an FBI agent when he falsely claimed that on the evening of the incident, he had been paid by someone to keep the sawed-off shotgun in the trunk of his car.
According to court documents and evidence presented at trial, the victim and his family no longer felt safe in their home, and as soon as they had the financial means to do so, they moved from the neighborhood.
“Whittington used violence to terrorize an innocent man and his family,” said Principal Deputy Assistant Attorney General Gupta. “The harm from hate crimes like this one extends beyond individuals and threatens the security, freedom and well-being of entire communities. No conviction can reverse that harm, but this verdict does provide a measure of justice for the victim, his family and his community.”
U.S. Attorney Talbert stated: “The Eastern District of California is a community of different races, ethnicities, and backgrounds. This defendant tried to strike at the diversity that enriches us by making a cowardly and unprovoked attack on a man who was simply standing in his front yard with his family. Hate crimes like this have profound effects not only on the victims, but on those in the victims’ communities, making them feel vulnerable and unsafe. Our office is committed to investigating and prosecuting those who violate the civil rights of others, and enforcing laws against hate crimes will remain one of the core missions of this office.”
This case is the product of an investigation by the Federal Bureau of Investigation and the Kern County Sheriff’s Office. Assistant U.S. Attorney Brian K. Delaney is prosecuting the case with the assistance of Trial Attorney Samantha Trepel of the Justice Department’s Civil Rights Division.
Whittington is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on February 27, 2017. Whittington faces a maximum statutory penalty of life in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Federal Jury Convicts California Man of Hate CrimeRead the Press Release
Defendant Fired Shotgun Round Toward Victim and Shouted, “Move … Out of Oildale”
After a five-day trial, a federal jury found Justin Cole Whittington, 25, of Bakersfield, California, guilty of federal hate crimes for firing a shotgun while yelling racist slurs at a Latino man.
The conviction was announced by Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, and U.S. Attorney Phillip A. Talbert of the Eastern District of California.
Whittington was convicted today of interfering with a person’s housing rights because of his race, color or national origin by use of force or threat of force; use of a firearm during a crime of violence; and making a false statement to a special agent of the FBI. Whittington had earlier pleaded guilty to unlawful possession of a prohibited firearm in connection to the same crime.
“Whittington used violence to terrorize an innocent man and his family,” said Principal Deputy Assistant Attorney General Gupta. “The harm from hate crimes like this one extends beyond individuals and threatens the security, freedom and well-being of entire communities. No conviction can reverse that harm but this verdict does provide a measure of justice for the victim, his family and his community.”
“The Eastern District of California is a community of different races, ethnicities and backgrounds,” said U.S. Attorney Talbert. “This defendant tried to strike at the diversity that enriches us by making a cowardly and unprovoked attack on a man who was simply standing in his front yard with his family. Hate crimes like this have profound effects not only on the victims, but on those in the victims’ communities, making them feel vulnerable and unsafe. Our office is committed to investigating and prosecuting those who violate the civil rights of others and enforcing laws against hate crimes will remain one of the core missions of this office.”
According to court documents, on Dec. 19, 2012, the victim, a Latino man, was standing in his front yard with his wife and son when a dark-colored PT Cruiser drove past slowly and came to a stop in front of his neighbor’s house. Whittington, whom the victim had never seen before, got out of the front passenger seat of the car holding a sawed-off shotgun. Whittington used profanity and shouted a racial epithet as he fired one round toward the victim from about 15 yards away, and yelled that the victim should move out of Oildale, California. Whittington got back into the vehicle and drove off. Shortly thereafter, the shotgun was fired from the car at a nearby convenience store owned by a man of Middle Eastern descent. The blast left a large hole in the store’s glass door and circles of missing paint on the metal gate in front of the store.
According to evidence presented at trial, the victim was able to describe Whittington and the car to Kern County, California, Sheriff’s deputies, and they found Whittington nearby standing outside the PT Cruiser. The deputies recovered a sawed-off shotgun in the trunk of Whittington’s Crown Victoria, which was parked near the PT Cruiser.
Whittington was also found guilty of making false statements to an FBI agent when he claimed that on the evening of the incident, he had been paid by someone to keep the sawed-off shotgun in the trunk of his car.
According to court documents and evidence presented at trial, the victim and his family no longer felt safe in their home and, as soon as they had the financial means to do so, they moved from the neighborhood.
Whittington is scheduled to be sentenced by U.S. District Judge Dale A. Drozd of the Eastern District of California on Feb. 27, 2017. Whittington faces a maximum sentence of life in prison and a $250,000 fine.
This case was investigated by the FBI and the Kern County Sheriff’s Office. The case is being prosecuted by Assistant U.S. Attorney Brian K. Delaney of the Eastern District of California and Trial Attorney Samantha Trepel of the Civil Rights Division’s Criminal Section.
Citrus Heights Woman Convicted of Mortgage FraudRead the Press Release
SACRAMENTO, Calif. — After a four–day trial, a federal jury found Dianna F. Woods, 59, of Citrus Heights, guilty today of four counts of making false statements on loan applications, United States Attorney Phillip A. Talbert announced.
According to evidence presented at trial, Woods was a licensed real estate salesperson who worked at a company called VLD Realty, doing business as Trade House USA, in the Sacramento area. VLD built and sold houses in residential developments in Sacramento, Carmichael, and Copperopolis. As the housing market began to weaken from 2006 through 2008, VLD sought to sell the houses by offering incentives to buyers. VLD offered to pay the down payment or offered to give the buyers money after the sale, neither of which was disclosed to the lenders. For her part, Woods purchased two houses based on the undisclosed kickbacks. Further, for the purpose of obtaining loans to purchase the properties, Woods signed and submitted loan applications and other documents that contained false statements as to Woods’s income, employment, assets, the purpose of the property, the sales price, and whether the down payment was borrowed. Woods also assisted another buyer in making false statements to the lenders to get loans for the purchase of two properties in the housing developments and falsely verified his employment.
This case is the product of an investigation by the Federal Bureau of Investigation and Internal Revenue Service-Criminal Investigation. Assistant United States Attorneys Shelley Weger and Todd Pickles are prosecuting the case.
To date, six other defendants have been found guilty or have pleaded guilty in three related cases.
Woods is scheduled to be sentenced by United States District Judge William B. Shubb on February 27, 2017. Woods faces a maximum statutory penalty of 30 years in prison and a $1 million fine on each count. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Two Sentenced for Synthetic Drug ShipmentsRead the Press Release
FRESNO, Calif. — On Friday, December 2, 2016, U.S. District Judge Dale A. Drozd sentenced two defendants for their involvement in a large-scale smokeable synthetic cannabinoid trafficking organization based in Millbrae and Stockton, United States Attorney Phillip A. Talbert announced.
Timothy New, 34, of Pensacola, Florida, was sentenced to two and a half years in prison and ordered to forfeit $50,053, and Natalie Middleton, 31, of Clovis, California, was sentenced to four months in prison and ordered to forfeit $11,236.
Smokeable synthetic cannabinoid products are synthetic drugs commonly known as “spice” or “K-2.” These products are falsely touted as legal alternatives to controlled substances. In some instances, however, they are far more lethal.
In May 9, 2016, New pleaded guilty to the fraudulent interstate shipment of misbranded drugs. On June 27, 2016, Middleton, a former manager of The Stuffed Pipe, a smoke shop with locations throughout the Central Valley, pleaded guilty to laundering the proceeds from the sale of synthetic drugs. Court documents indicate that from September 2012 to May 2013, New, Middleton, Douglas Jason Way, 41, of Evanston, Illinois; and Timothy Ortiz, aka Michael Fitton, 45, of Waukegan, Illinois, were involved in a drug trafficking enterprise that imported raw synthetic cannabinoids from China containing AM-2201 and XLR11 that they processed into a smokeable form. They distributed the drugs to smoke shops, including The Stuffed Pipe, adult novelty stores, gas stations, and other retail establishments throughout the United States.
At the time of the illicit enterprise, AM-2201 was a schedule I controlled substance under the Controlled Substances Act. XLR11 was scheduled as an illicit controlled substance in May 2013, after the Center for Disease Control and Prevention found that XLR11 can cause acute kidney damage.
According to court documents, New, Middleton, and their co-defendants shipped at least 24 tons of misbranded drugs and generated in excess of $33 million as a result of the fraudulent sales. The drugs were manufactured by Zencense IncenseWorks, LLC, aka ZIW, LLC (dba Zencense), ZenBio, LLC (dba ZenBio), and Biozen, LLC (dba Biozen) and were sold under the brand names of Bizarro, Orgazmo, Headhunter, Defcon, Neutronium, Sonic Zero, Sonic Boom, Sonic Blast, Shockwave, Hampster, and Posh. The drugs were sold by the gram and marketed as “potpourri” or “herbal incense” and claimed they were “not for human consumption,” although they were fully intended to be used for intoxication.
This case is the product of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation by the Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigation, and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), with assistance from the Food and Drug Administration and the Fresno County Sheriff’s Office. The OCDETF Program was established in 1982 to mount a comprehensive attack against organized drug traffickers. This OCDETF investigation was also part of a nationwide law enforcement effort coordinated by the DEA’s Special Operations Division. Assistant United States Attorney Karen A. Escobar is prosecuting the case.
Charges against Way and Ortiz are pending. They are next scheduled to appear in court on December 12, 2016. If convicted, they face a maximum penalty of 20 years in prison and a fine of $10 million for drug trafficking offenses and drug misbranding charges. The charges against them are only allegations; Way and Ortiz are presumed innocent until and unless proven guilty beyond a reasonable doubt.
Medical Device CEO Sentenced to One Year in Prison for Tax EvasionRead the Press Release
SACRAMENTO, Calif. — U.S. District Judge Garland E. Burrell Jr. sentenced Briant Benson, 59, of El Dorado Hills, today to 12 months and one day in prison for tax evasion, U.S. Attorney Phillip A. Talbert announced.
According to court documents, during the years 2004 through 2006, Benson failed to file tax returns or pay any personal income tax to the Internal Revenue Service, despite receiving at least $2 million dollars in income as the President and CEO of multiple medical device companies. Further, Benson used corporate funds to support his lavish lifestyle. He used corporate funds to purchase multimillion dollar homes, buy hundreds of thousands of dollars in jewelry and furniture, and pay for lavish travel accommodations such as luxury hotels, private jets, and limousines. Benson also used corporate funds to pay over half a million dollars in gambling debt. Nevertheless, when confronted by IRS officers, Benson denied using corporate funds for his personal use.
Benson’s failure to report his personal income and pay taxes due and owing on that income resulted in a tax loss of at least $249,000.
This case was the product of an investigation by the IRS Criminal Investigation. Assistant United States Attorneys Matthew D. Segal and Amy Schuller Hitchcock prosecuted the case.