Eastern District of California
Press releases recorded for this federal judicial district.
United States Attorney Wagner Announces His ResignationRead the Press Release
U.S. Attorney Benjamin B. Wagner for the Eastern District of California has announced his resignation effective midnight on April 30. U.S. Attorney Wagner has served as the U.S. Attorney for the Eastern District of California for six and a half years and he served as an Assistant U.S. Attorney (AUSA) and Supervisory AUSA for over 17 years before that.
During his tenure as U.S. Attorney, he served for three years on the Attorney General’s Advisory Committee (AGAC) under Attorney General Eric Holder and was appointed to co-chair the White Collar Crime Subcommittee of the AGAC by Attorney General Loretta E. Lynch. He served on numerous other AGAC subcommittees and for five years was a co-chair of the Mortgage Fraud Working Group of the President’s Financial Fraud Enforcement Task Force.
“Serving as the U.S. Attorney for the Eastern District of California has been the most fulfilling and exciting experience of my professional career,” said U.S. Attorney Wagner. “I have the greatest respect for the women and men in this office who seek to do justice each day and I am proud of all that we have been able to accomplish together.”
“Ben Wagner has served the people of the Eastern District of California with distinction for nearly a quarter of a century, spending more than 17 years as a prosecutor in the office before becoming U.S. Attorney in 2009,” said Attorney General Lynch. “Throughout his career with the Department of Justice, he has accepted a wide range of responsibilities – from coordinating his district’s anti-terrorism and hate crimes efforts to representing the department overseas as our Resident Legal Advisor in Indonesia. As U.S. Attorney, he has worked tirelessly to combat the most serious offenses, including gang violence and child exploitation. He has been a leader in the department’s outreach to Arab and Muslim Americans, helping to ensure strong relationships and defend against bigotry. He has vigorously prosecuted cases of mortgage fraud, securing record sums from banks for their role in the 2008 financial crisis. And he has provided critical insight and valuable advice as a member of my Advisory Committee, where I appointed him co-chair of the Subcommittee on White Collar Crime. I am grateful to Ben for his outstanding record of service to the Department of Justice and to the American people and I wish him the very best in his future endeavors.”
In civil and asset forfeiture cases, the Eastern District had several years of record recoveries under U.S. Attorney Wagner’s leadership. A few of the significant civil cases handled by the office over the past six years include the following:
- The recent $5.06 billion multiparty settlement with Goldman Sachs relating to the securitization and sale of residential mortgage-backed securities. The settlement included a $2.385 billion payment to the Department of Justice as a result of efforts by attorneys in the Eastern District — the largest civil recovery in the history of the district.
- The $13 billion multiparty settlement with JPMorgan Chase announced in 2013 relating to the securitization and sale of residential mortgage-backed securities. The settlement included a $2 billion payment to the Department of Justice as a result of the Eastern District’s work.
- The settlement with Sierra Pacific Industries announced in 2012, valued at approximately $122 million, relating to its role in the huge Moonlight Fire that damaged tens of thousands of acres of U.S. Forest Service (USFS) land. The settlement agreement required the transfer of 22,500 acres of wilderness to the USFS in California.
- Health care fraud and false billing settlements against Adventist Health, Catholic Health Care West, Medtronic Inc., Biotronik and Quest Diagnostics, resulting in total recoveries of nearly $40 million between 2011 and 2015.
In criminal cases, the office expanded its prosecution of financial and health care fraud cases, firearms trafficking, human trafficking and child exploitation cases. In the area of narcotics enforcement, the office focused on the prosecution of high-level and violent offenders, while seeking more lenient sentences for lower-level and nonviolent offenders. A few of the significant criminal cases handled by the office include the following:
- The conviction of nearly 300 defendants in complex mortgage fraud cases, many involving schemes that fleeced homeowner victims of many millions of dollars. Sentences imposed ranged up to 30 years in prison.
- The convictions and lengthy sentences obtained in the Wannakuatte and Vassallo cases, involving the largest Ponzi schemes in the history of the district, in which investors lost about $150 million.
- The RICO conviction of Scott Salyer, CEO of SK Foods and nine other officers of food product companies in a series of prosecutions involving fraud and commercial bribery in the tomato products industry.
- The conviction of approximately 70 leaders of the hyper-violent Nuestra Familia criminal organization in a series of prosecutions in both Fresno and Sacramento. Most defendants received lengthy prisons sentences.
- The extradition and prosecution of Shiraz Malik, the leader of an international drug trafficking organization, who was based in Poland.
During U.S. Attorney Wagner’s tenure, the number of Assistant U.S. Attorneys in the Eastern District increased by over 12 percent. He established a National Security Unit within the office, created a Civil Rights/Human Trafficking Working Group, expanded the White Collar Unit in the Fresno Division and opened a new branch office in Bakersfield. He also conducted extensive outreach to underserved populations in the district, including the Muslim, Sikh, Southeast Asian and LGBT communities.
As of May 1, Phillip A. Talbert will assume leadership of the office as Acting U.S. Attorney. Talbert, who is currently the First Assistant U.S. Attorney, has had a distinguished career in more than 13 years in the office. He previously served as Appellate Chief and as a prosecutor in the Narcotics and Violent Crime Unit and served in the Department of Justice’s Office of Professional Responsibility before coming to the Eastern District of California. Before joining the Department of Justice, he was in private practice. He is a graduate of Harvard University and the UCLA School of Law.
As a supervisor and line prosecutor in the office before becoming U.S. Attorney, U.S. Attorney Wagner worked in all three units of the criminal division and prosecuted a wide range of cases, including investment fraud, tax evasion, violent crime, public corruption, money laundering, domestic terrorism, and hate crimes. He tried 19 cases to verdict and argued numerous appeals in the Ninth Circuit Court of Appeals. At various times he served as the district antiterrorism coordinator, the hate crimes and civil rights coordinator and the Violence Against Women Act coordinator. He was awarded a national Director’s Award for Superior Performance by an AUSA three times and was also presented with the national IRS-Criminal Investigation Chief’s Award and with a Meritorious Honor Award by the State Department. In 2005 to2006, he was stationed in Jakarta as the first Department of Justice Resident Legal Advisor in Indonesia.
Some of the notable cases which U.S. Attorney Wagner handled as an Assistant U.S. Attorney include the prosecution of Blue Shield of California in an audit obstruction case; the prosecution of reproductive health care clinic serial arsonists Rachelle Shannon and Richard Andrews; the prosecution of the leaders of Anderson Ark & Associates, an international money laundering and tax evasion organization; the prosecution of 10 defendants including doctors, a CPA and an attorney, in three offshore tax evasion scheme cases; the prosecution of 17 defendants, including a CPA and an attorney, in seven investment fraud cases; the prosecution of two corrupt State Department employees and several others in a scheme to obtain visas through bribes; the hate crime prosecution of the Williams brothers, who torched three synagogues in Sacramento; the public corruption prosecution of Monte McFall and various officials from San Joaquin County, including the elected sheriff; the prosecution of five defendants, including three attorneys, in an asylum application fraud scheme; and the prosecution of two cross-burning cases.
Redding Man Sentenced to Prison for Interstate Marijuana Trafficking and Money LaunderingRead the Press Release
SACRAMENTO, Calif. — John James Kash, 53, of Redding, was sentenced today by United States District Judge Kimberly J. Mueller to six and a half years in prison for conspiracy to distribute marijuana, manufacturing marijuana, and conspiracy to launder monetary instruments, United States Attorney Benjamin B. Wagner announced.
Kash was convicted on November 18, 2015, after a six-day jury trial. The evidence at trial demonstrated that Kash was part of an interstate marijuana trafficking conspiracy that diverted marijuana from California to Pennsylvania from 2009 through 2013. Kash was arrested in 2013 after being found in a warehouse in Redding, California that had been converted into an indoor marijuana grow. The warehouse contained four separate marijuana grow rooms with plants in various stages of development to allow for year-round marijuana production.
Kash and his co-conspirators shipped marijuana that had been grown in the Redding area to Pittsburgh, Pennsylvania. Kash, a native of Pennsylvania, coordinated the marijuana distribution in the Pittsburgh area. In May 2013, Kash and co-defendant James Massery shipped 158 one-pound bags of marijuana concealed within shrink-wrapped barrels from California to Pennsylvania. Kash and co-conspirators Massery, Glen Meyers, and Aimee Burgess were all arrested in Pennsylvania as they were unloading the marijuana from the barrels.
Kash recruited his family and friends to assist with the concealment and transport of the cash proceeds of drug trafficking. During an eight-month period between August 2010 and April 2011, Kash and others attempted to launder $382,000 in drug proceeds through credit unions in Pittsburgh and Redding. Kash was arrested in May 2012 in Utah attempting to drive $60,000 in cash from Pittsburgh to Redding.
The United States ultimately seized approximately $1 million in drug proceeds from various bank accounts and other assets that Kash and his co-conspirators controlled.
This case was the product of an investigation by the Internal Revenue Service – Criminal Investigation and the Sacramento Valley Financial Crimes Task Force, with assistance from the Pennsylvania State Police, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Drug Enforcement Administration, Pennsylvania’s Washington County Drug Task Force, and the Utah Highway Patrol. Assistant United States Attorneys Michele Beckwith, Christiaan Highsmith, Kevin Khasigian, and Justin Lee prosecuted the case.
Kash is the last of four defendants to be sentenced. Co-defendant Glen Meyers was sentenced to eight years and two months in prison; James Massery was sentenced to six years and three months in prison; and Aimee Burgess was sentenced to five years in prison.
Redding Man Sentenced to 14 Years in Prison for Receiving Child PornographyRead the Press Release
SACRAMENTO, Calif. — Nicholas Torrieri, 43, of Redding, was sentenced today by United States District Judge Kimberly J. Mueller to 14 years in prison for receiving child pornography, United States Attorney Benjamin B. Wagner announced. Upon release, he will be required to register as a sex offender and will be supervised by the court for the rest of his life.
According to court documents, in October 2014 and again in January 2015, agents identified a computer offering files depicting minors engaged in sexually explicit conduct through a file-sharing network. The computer’s Internet Protocol address was traced to Torrieri’s residence. On February 11, 2015, agents searched the residence and seized several digital devices. A subsequent forensic review of these devices uncovered more than 600 images and 240 videos containing child pornography.
During the course of the investigation, law enforcement discovered a videotape of a 1998 television talk show about how to protect children from sexual abuse. Torrieri appeared on the show and claimed that he had participated in hundreds of incidents of victimizing children, including both encouraging minors to expose themselves and actual molestation. At today’s sentencing, Judge Mueller noted that he has “a compulsion that he has been unable to control.”
“Criminals who create and distribute pornographic images of children often fuel the behavior of like-minded predators who covet this despicable content. Innocent victims are left with permanent scars that can never be entirely healed,” said Ryan L. Spradlin, special agent in charge for HSI San Francisco. “This sentencing is a testament to the dedicated HSI agents and our law enforcement partners who work tirelessly to root out predators and make them face the judgment they deserve.”
This case was the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Special Assistant United States Attorney Josh F. Sigal 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.
Final Defendant in Sacramento County Indoor Marijuana Cultivation Scheme Sentenced to Federal PrisonRead the Press Release
SACRAMENTO, Calif. — Shihong Chen, 51, of Elk Grove, was sentenced today by United States District Judge Kimberly J. Mueller to one year and one day in prison for growing marijuana inside homes in Elk Grove and Sacramento, United States Attorney Benjamin B. Wagner announced.
According to court documents, Chen participated in scheme to grow marijuana inside homes in Sacramento and Elk Grove. On January 30, 2013, law enforcement executed federal search warrants at seven residential homes in Sacramento County, including the four houses where Chen cultivated marijuana: 9761 McKenna Drive, Sacramento; 8270 Cliffcrest Way, Sacramento; 8108 Gwerder Court, Elk Grove; and 3713 45th Avenue, Sacramento. Altogether, authorities seized more than 1,000 plants.
The investigation started when law enforcement learned of abnormally high power consumption at 8646 Everidge Court in Sacramento, owned by Green Ventures LLC. During their investigation, law enforcement observed Oakland-based real estate agent Zhiqiang Liu traveling frequently to and from the Everidge Court house. On January 30, 2013, law enforcement executed a federal search warrant at Everidge Court and found 867 growing marijuana plants, approximately 31.8 kilograms of cultivated marijuana, and $7,070 in cash.
Chen is the fifth and final defendant to be sentenced in this case. Four other defendants have been sentenced:
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March 23, 2016, Zhiqiang Liu was sentenced to three years in prison.
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March 16, 2016, Jun Mou Peng was sentenced to one year and one day in prison.
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October 28, 2015, Qinghong Li was sentenced to one year and one day in prison.
- December 17, 2015, Huanhao Chen was sentenced to one year of probation.
This case was the product of an investigation by the Drug Enforcement Administration and the Elk Grove Police Department. Assistant United States Attorney Christiaan Highsmith prosecuted the case.
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Washington Man Pleads Guilty to Sending Death ThreatsRead the Press Release
SACRAMENTO, Calif. — Scott Anthony Orton, 57, of Puyallup, Washington, pleaded guilty today to transmitting interstate threats, United States Attorney Benjamin B. Wagner announced.
According to court documents, Orton posted several threatening statements on a popular news website in which he expressed his intent to travel to Placerville, California to kill an officer of the Placerville-based company, Stem Express LLC. On July 16, 2015, among other threats, Orton wrote, “The management of StemExpress should be taken by force and killed in the streets today. Kill StemExpress employees. I'll pay you for it.” Orton also identified the target of his threats by name, and wrote “I’ll pay ten grand to whomever beats me to [the target].”
“Terrorizing others through threats of violence, whether communicated in person or through media websites, is cruel, dangerous and disruptive, and is also a federal crime,” said U.S. Attorney Wagner. “As Mr. Orton now knows, those who seek to terrorize others online will be identified and prosecuted.”
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorney Brian A. Fogerty is prosecuting the case.
Orton is scheduled to be sentenced by United States District Judge John A. Mendez on August 2, 2016. Orton 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.
Sierra National Forest Marijuana Cultivator Sentenced to 3 Years in PrisonRead the Press Release
FRESNO, Calif. — Humberto Ceballos-Rangel (Ceballos), 38, of Tuxpan, Jalisco, Mexico, was sentenced today to three years in prison in connection with his involvement in a large marijuana cultivation operation found by law enforcement last summer in the Sierra National Forest in Madera County, United States Attorney Benjamin B. Wagner announced.
According to court documents, Ceballos was found at a campsite within a marijuana cultivation site that caused significant damage to public land and natural resources. Native vegetation was cut to accommodate the marijuana plants, foot trails, and cooking and sleeping areas. Water was also diverted from a nearby creek to irrigate the marijuana plants. Agents found and removed from the site insecticide, propane tanks, and a large quantity of trash and hose line. Ceballos pleaded guilty on January 19, 2016.
In sentencing Ceballos, U.S. District Judge Lawrence J. O’Neill ordered Ceballos to pay $8,750 in restitution to the U.S. Forest Service for the costs of cleaning up the site.
The case was the product of an investigation by the U.S. Forest Service, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the California Department of Justice’s Campaign Against Marijuana Planting (CAMP), the California Department of Fish and Wildlife, and Madera County Narcotic Enforcement Team (MADNET). Assistant United States Attorney Karen A. Escobar prosecuted the case.
Defendant Pleads Guilty to Cultivating Marijuana in Sequoia National ForestRead the Press Release
FRESNO, Calif. —Macedonio Madrigal-Herrera (Madrigal), 44, of Michoacán, Mexico, pleaded guilty today to conspiring to manufacture, distribute and possess with intent to distribute marijuana, in connection with a large-scale cultivation operation located in the Brush Creek drainage in the Sequoia National Forest in Tulare County, United States Attorney Benjamin B. Wagner announced.
According to court documents, Madrigal was responsible for watering 2,719 marijuana plants in the National Forest. The marijuana cultivation activities caused extensive damage to the public land and natural resources. Zinc phosphide, a toxic pesticide from Mexico, was found at the site, along with fertilizer and trash. Trees and plants, newly generated following the 2002 McNally Fire, were cut down to make room for the marijuana. Water was diverted from a nearby stream that supports trout. As part of the plea agreement, Madrigal will pay $4,190 in restitution to the U.S. Forest Service for the damage caused by his wrongful conduct.
Madrigal is scheduled for sentencing on July 18, 2016. He 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 is the product of an investigation by the U.S. Forest Service, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the California National Guard, the California Department of Fish and Wildlife, and Tulare County Sheriff’s Office. Assistant United States Attorney Karen Escobar is prosecuting the case.
Bakersfield Man Sentenced to over 4 Years in Prison for Possession of Child PornographyRead the Press Release
FRESNO, Calif. — Timothy Brian Grayson, 58, of Bakersfield, was sentenced today by United States District Judge Lawrence J. O'Neill to four years and 9 months in prison for possessing child pornography, United States Attorney Benjamin B. Wagner announced.
According to court documents, between September and October 2013, Grayson possessed on a laptop computer and hard drive at least 300 image files with visual depictions of minors engaging in sexually explicit conduct.
This case was the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorney Grant B. Rabenn and Special Assistant U.S. Attorney Katherine A. Plante 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.
Bakersfield Man Sentenced for Striking Sheriff’s Helicopter with LaserRead the Press Release
FRESNO, Calif. —Pablo Cesar Sahagun, 26, a citizen of Mexico and resident of Bakersfield, was sentenced to 18 months in prison for aiming the beam of a laser pointer at a Kern County Sheriff’s helicopter, United States Attorney Benjamin B. Wagner announced.
On January 11, 2016, Sahagun pleaded guilty to aiming a beam of a laser pointer at an aircraft. According to court documents, he repeatedly struck and tracked a Kern County Sheriff’s helicopter, Air-1, with the beam of a green laser pointer. The laser pointer was key-activated and labeled as a Laser 301, a device that purports to emit a one-watt laser beam, which is 2,000 times more powerful than what is legally permissible for a laser pointer. The laser strikes caused the airmen to experience flash blindness, glare, blurry vision, eye discomfort, headache and irritation.
In sentencing Sahagun, United States District Judge Dale A. Drozd stated: “This is an egregious case of a laser strike. … The circumstances are inexplicable.”
Reports of laser attacks on aircraft have increased dramatically in recent years as powerful laser devices have become more affordable and widely available to the public. From 2011 to 2015, there have been over 23,000 laser illumination incidents in the United States reported to the Federal Aviation Administration (FAA). This year there have been over 22 laser strikes reported in the United States every day. In the Eastern District of California, which encompasses 34 counties in the eastern portion of California, there were 214 reported laser incidents in 2015. Lasers can completely incapacitate pilots who are trying to fly safely to their destination, endangering their crew members, passengers and people on the ground.
This case was the product of an investigation by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Kern County Sheriff’s Office, and the Bakersfield Police Department. Assistant U.S. Attorney Karen A. Escobar prosecuted the case.
Roseville Podiatrist Sentenced to 3 Years in Federal Prison for Health Care Fraud SchemeRead the Press Release
SACRAMENTO, Calif. — Neil Van Dyck, 64, of Roseville, was sentenced today by United States District Judge Garland E. Burrell Jr. to three years in prison and a $10,000 fine for committing healthcare fraud, United States Attorney Benjamin B. Wagner announced.
According to court documents, Van Dyck was a California-licensed podiatrist who operated a podiatry practice in Roseville called Placer Podiatry. Van Dyck offered “spa”-like treatments and performed routine foot care at his practice. Between 2009 and 2014, however, Van Dyck submitted over $2.8 million in fraudulent claims for reimbursement to Medicare, Medi-Cal, Tricare and private insurers. He falsely claimed that he performed more expensive procedures than he actually performed, or that the routine foot care that was provided was justified because of illness or symptoms that were not present. Often the treatments were performed by unlicensed staff, sometimes when Van Dyck was not present at his practice. Additionally, Van Dyck altered a single-use skincare patch by cutting it into pieces and billed Medicare for multiple applications. In 2011, in response to a request for documents from an investigator for Medicare, Van Dyck altered patients’ medical records to justify his fraudulent bills. Medicare, Medi-Cal, Tricare, and the private insurers paid Van Dyck over $1 million for his fraudulent claims.
“Van Dyck schemed to increase his profits at the expense of patients and taxpayers,” said Steven Ryan, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Instead, along with our law enforcement partners, my agents ensured that he ended up paying a high price, indeed, for his criminal actions.”
The Court previously entered an order requiring Van Dyck forfeited $1.2 million from a retirement account into which proceeds of the healthcare fraud scheme were traced. Most of this money is expected to be used to pay restitution to the insurance victims. The date for a further restitution hearing is set for May 27, 2016.
This case was the product of an investigation by the Department of Health and Human Services and the Federal Bureau of Investigation. Assistant United States Attorney Todd A. Pickles prosecuted the case.
IRS Employees Arrested for Fraudulent Tax Returns, Two Others Charged for Tax EvasionRead the Press Release
SACRAMENTO, Calif. — This week, prior to the annual tax return filing deadline, four individuals, including two current IRS employees, were charged in separate cases with federal tax crime, United States Attorney Benjamin B. Wagner announced today.
Longtime IRS Employees Arrested Today in Fresno
Two long-time IRS employees were arrested today at the IRS facility in Fresno as they came to work. On April 14, 2015, a 38-count indictment was brought against Della Ornelas, 48, and Randall Ruff, 52, both of Fresno, charging them with aiding others in the preparation of false tax returns, and making their own fraudulent tax returns as employee of the United States. According to the indictment, Ornelas and Ruff are married to each other, and are longtime employees of the Internal Revenue Service in Fresno. They are charged with helping themselves, family and friends file false tax returns that claimed false dependents, generating large tax refunds that were diverted into bank accounts they controlled. They allegedly defrauded the United States of approximately $146,561 over a seven-year period.
This case is the product of an investigation by the Treasury Inspector General for Tax Administration and the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorney Mark J. McKeon is prosecuting the case. (case # 1:16-cr-054)
Fairfield Resident Indicted for Tax Evasion
On Thursday, April 14, 2016, a federal grand jury returned an indictment against Bobby Louis Sanders, 52, of Fairfield, charging him with two counts of tax evasion. According to the indictment, Sanders failed to pay the tax due of $31,061 for tax years 2009 and 2010 and failed to file tax returns for tax years 2009 and 2010. The indictment alleges that Sanders willfully provided false information on W-4 forms claiming exemptions he was not entitled to claim.
This case is the product of an investigation by the Internal Revenue Service. Assistant U.S. Attorney William S. Wong is prosecuting the case. (case # 2:16-cr-081)
Citrus Heights Man Indicted for Failure to File Tax Returns
On April 12, 2016, Donnie Francis Schroeder, 52, of Citrus Heights, was charged with four-counts of failure to file income taxes for tax years 2009 through 2012. According to court documents, between 2009 and 2012, Schroeder willfully did not file income taxes on income he earned as a 50 percent partner in a sweeping and cleaning business that operates in Sacramento and Reno, Nevada.
This case is the product of an investigation by the Internal Revenue Service – Criminal Investigation. Assistant U.S. Attorney André M. Espinosa is prosecuting the case. (case # 2:16-cr-080)
If convicted, Ornelas and Ruff face a maximum statutory sentence of three years in prison for each count of aiding and abetting false tax returns and five years in prison for making fraudulent tax return by an employee of the United States. If convicted, Sanders faces a maximum statutory penalty of five years in prison and a $100,000 fine on each count. If convicted, Schroeder faces a maximum statutory penalty of one year in prison and a $25,000 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 against each of the foregoing defendants are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
In addition to the above, so far in 2016, eight individuals have been indicted, five have been convicted and 14 were sentenced for either submitting false claims for refunds or evading taxes. For more information, see the press release also issued this week.
U.S. Attorney Holds Roundtable with Community and Law Enforcement Leaders to Address Prevention of Backlash Against Muslim, Arab, Sikh and South Asian Americans Following Terrorist AttacksRead the Press Release
SACRAMENTO, Calif. — U.S. Attorney Ben Wagner held a roundtable discussion today with Muslim and Sikh community leaders and senior law enforcement officials to discuss community concerns over potential bias incidents and hate crimes, the need for reporting by victims of those incidents, and the need to build solid relationships between the community and law enforcement. The group also discussed how law enforcement can assist in building resilient communities that can resist radicalization to violence. After the discussion, local media was invited to talk with participants.
Today’s meeting was one of 14 events in 11 federal judicial districts across the United States designed to build on both the Justice Department’s prosecutorial work in countering post-September 11th backlash, as well as its outreach efforts, including the new interagency initiative to combat religious discrimination throughout the country.
U.S. Attorney Wagner stated: “The Muslim community is a strong ally in combatting radicalization and terrorism. We want the Muslim community to know that we stand with them against Islamophobia and hate. Those who seek to target or harass them should be on notice that such conduct will be investigated by law enforcement.”
Since Sept 11, 2001, the Department of Justice has investigated over 1,000 incidents involving acts of violence, threats, assaults, vandalisms and arsons targeting Arab, Muslim, Sikh and South Asians, and those perceived to be members of these groups. The Civil Rights Division and U.S. Attorneys’ offices throughout the country have brought prosecutions against more than 60 defendants in such cases, with 57 convictions to date.
The Civil Rights Division is leading an interagency initiative to combat religious discrimination, which includes combatting illegal restrictions on religious properties like mosques.
Sacramento Man Pleads Guilty to Manufacturing Guns, Dealing in Firearms, and Possession of a MachinegunRead the Press Release
SACRAMENTO, Calif. — Daniel Albert Crowninshield, 53, of Sacramento, pleaded guilty today to unlawfully manufacturing and dealing in firearms and possession of an unregistered machinegun, United States Attorney Benjamin B. Wagner announced.
In his plea agreement, Crowninshield, who was also known by his online moniker “Dr-Death,” admitted that he operated an unlicensed firearms manufacturing business out of C&G Tool, a metal shop in North Sacramento. Using sophisticated computer controlled machines, Crowninshield manufactured lower receivers for AR-15s and other firearms. Crowninshield did not conduct background checks, enforce waiting periods, or complete firearm transaction paperwork.
Crowninshield advertised such services on at least one online firearm enthusiast forum. This website mainly consists of forums where people ask and answer questions related to firearms. Crowninshield, using the moniker “Dr-Death” was a prolific poster on the website. Additionally, other members frequently posted about Dr-Death, including review of service provided and recommending that other users visit his shop.
“The manufacturing and unlicensed sale for profit of high-capacity firearms is a serious threat to public safety,” said U.S. Attorney Wagner. “We will continue to vigorously investigate unlicensed gun dealers and prosecute violations of the federal firearms laws.”
“Daniel Crownshield, AKA: Dr. Death owned and operated a machine shop where he allowed customers with unknown backgrounds to use his machinery to unlawfully manufacture firearms for profit,” said Special Agent in Charge Jill A. Snyder. “ATF regulates the firearm industry, and it is illegal to manufacture and sell firearms without possessing a federal firearms license, and without conducting background checks. ATF’s goal is to keep firearms out of the hands of prohibited individuals and prevent violent crime.”
This case is the product of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the California Department of Justice’s Bureau of Firearms, with the assistance of the Sacramento Police Department, the Sacramento County Sheriff’s Department, and the California Highway Patrol. Assistant United States Attorneys Justin Lee and Matthew Yelovich are prosecuting the case.
Crowninshield is scheduled to be sentenced by Judge Troy L. Nunley on June 30, 2016. Crowninshield 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.
California Man Pleads Guilty to Manufacturing Guns and Dealing in Firearms and Possession of a MachinegunRead the Press Release
Daniel Albert Crowninshield, 45, of Sacramento, California, pleaded guilty today to unlawfully manufacturing and dealing in firearms and possession of an unregistered machinegun, announced U.S. Attorney Benjamin B. Wagner for the Eastern District of California.
In his plea agreement, Crowninshield, who was also known by his online moniker “Dr-Death,” admitted that he operated an unlicensed firearms manufacturing business out of C&G Tool, a metal shop in North Sacramento. Using sophisticated computer controlled machines, Crowninshield manufactured lower receivers for AR-15s and other firearms. Crowninshield did not conduct background checks, enforce waiting periods, or complete firearm transaction paperwork.
Crowninshield advertised such services on at least one online firearm enthusiast forum. This website mainly consists of forums where people ask and answer questions related to firearms. Crowninshield, using the moniker Dr-Death was a prolific poster on the website. Additionally, other members frequently posted about Dr-Death, including review of service provided and recommending that other users visit his shop.
“The manufacturing and unlicensed sale for profit of high-capacity firearms is a serious threat to public safety,” said U.S. Attorney Wagner. “We will continue to vigorously investigate unlicensed gun dealers and prosecute violations of the federal firearms laws.”
“Daniel Crownshield aka Dr. Death owned and operated a machine shop where he allowed customers with unknown backgrounds to use his machinery to unlawfully manufacture firearms for profit,” said Special Agent in Charge Jill A. Snyder for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). “ATF regulates the firearm industry and it is illegal to manufacture and sell firearms without possessing a federal firearms license and without conducting background checks. ATF’s goal is to keep firearms out of the hands of prohibited individuals and prevent violent crime.”
This case is the product of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the California Department of Justice’s Bureau of Firearms, with the assistance of the Sacramento Police Department, Sacramento County Sheriff’s Department and California Highway Patrol. Assistant United States Attorneys Justin Lee and Matthew Yelovich are prosecuting the case.
Crowninshield is scheduled to be sentenced by U.S. District Judge Judge Troy L. Nunley for the Eastern District of California on June 30. Crowninshield 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.
Former Fox40 Web Producer Sentenced to Prison for Attack on Media SitesRead the Press Release
SACRAMENTO, Calif. — Matthew Keys, 29, former web producer and network site administrator for KTXL FOX40, a Sacramento television station, was sentenced today to two years in prison for inciting, assisting, and conducting a weeks-long campaign of online attacks against FOX40 and The Los Angeles Times, United States Attorney Benjamin B. Wagner and FBI Special Agent in Charge Monica M. Miller announced.
On October 7, 2015, following an eight-day trial, a jury found Keys guilty of one count of conspiracy to make unauthorized changes to the Tribune Company’s websites and damage its computer systems, one count of transmitting malicious code, and one count of attempted transmission of malicious code.
At sentencing, United States District Judge Kimberly J. Mueller stated: “Ultimately, his downfall came from playing his former employer against Anonymous, while holding himself out as a professional journalist. … The mask that Mr. Keys put on appeared to allow a heartless character to utter lines that are unbecoming a journalist.” Judge Mueller ordered Keys to begin serving his sentence on June 15, 2016.
“Although this case has drawn attention because of Matthew Keys’ employment in the news media, this was simply a case about a disgruntled employee who used his technical skills to taunt and torment his former employer,” said U.S. Attorney Wagner. “Although he did no lasting damage, Keys did interfere with the business of news organizations, and caused the Tribune Company to spend thousands of dollars protecting its servers. Those who use the Internet to carry out personal vendettas against former employers should know that there are consequences for such conduct.”
“Matthew Keys will spend the next two years in prison,” said Assistant Special Agent in Charge Tom F. Osborne. “This sentence serves as a warning that those who engage in this type of behavior face harsh penalties.”
According to evidence produced at trial, Keys was a site administrator for FOX40’s access to Tribune Company’s content management system (CMS). Tribune Company’s various broadcast and print media properties all used the CMS to publish their news content on the Internet. Keys had an argument with his supervisor on October 28, 2010, after which time FOX40 terminated Keys’ CMS user account, and Keys never returned to work. Secretly, Keys had maintained an unauthorized access point through a set of unauthorized “super user” credentials.
In his own words, Keys later admitted that he was “angry” and “hurt.” Initially, he refused to relinquish control over the station’s Twitter and Facebook accounts. On November 3 and November 22, 2010, Keys used his unauthorized CMS access to download the email list of FOX40 viewers who had given the station their personal information as part of a rewards program. Then, beginning on December 1, 2010, Keys used that list to send anonymous emails denigrating the station and implying that viewer information was not secure. Simultaneously, Keys sent anonymous emails to his former supervisor at FOX40 taunting him that Tribune Company’s CMS was not secure and that corporate information security cannot defend against an insider who decides to “go rogue.” During this time, Keys also used his unauthorized network access to repeatedly deactivate the credentials of the person who took over his duties at FOX40.
According to the evidence at trial, on December 8, 2010, Keys, using the moniker “AESCracked,” appeared in chatrooms used by Anonymous. This was during the time of “Operation Payback,” when Anonymous initiated attacks on various entities that had acted against the interests of WikiLeaks. In the Anonymous chatroom, Keys posted super user credentials to the Tribune Company CMS and exhorted those present to “go f--- s--- up.” He instructed those present on what Tribune Company’s “bread and butter assets” were and what media organizations should be targeted for the “largest impact.” Keys also tutored Anonymous members on how to navigate the CMS and create super user credentials that blended in more easily on the network.
Anonymous did not immediately use the credentials for malicious purposes, and Keys spent the next few days advocating an attack on Tribune media properties. When one member said he was researching the network, Keys responded, “I did not give you those passwords for research. I want you to f--- s--- up.” On December 9, 2010, Keys posted a link to a Los Angeles Times story critical of WikiLeaks and characterized it as “yet another reason why the Times must be demolished.” On December 10, 2010, when a member of Anonymous stated opposition to attacking a media site, Keys replied, “FOX News is not media, it’s ‘infotainment’ for inbreds. I say we target them.”
At the same time that he was instigating an attack against Tribune Company and the Los Angeles Times, Keys sought credit as a journalist for predicting it. On December 12, 2010, in an email and a recorded telephone conversation, Keys declared that he had acquired “documents pertaining to future operations,” including “operations” against The Los Angeles Times.
On December 14, 2010, an Anonymous member who used the moniker “Sharpie” used backdoor credentials to deface a story on the website of the Los Angeles Times. What readers noticed on the front side of the CMS was limited because editors quickly noticed what had happened. They were able to repair the defacement within 40 minutes of the desktop site and a day on the mobile site. The next day, Keys tried to help Sharpie put up altered front-page layouts on several Tribune Company properties, but failed.
Keys’ actions involved disclosure of super user credentials and required the Tribune Company to conduct a damage assessment that lasted to late January or early February of 2011. Five high-level Tribune Company information technology professionals testified at trial that they and their subordinates spent an urgent night searching for and deactivating unauthorized credentials on the CMS. They reset every password on the network. Information security then spent weeks assessing the extent of the compromise and how the breach had occurred. They did not know whether CMS server logs themselves had been altered and whether even the authentication system itself had been compromised. Information security managers had to review whether the attack had changed archived news stories, changed newspaper circulation information, accessed payment systems, or altered the systems that printed actual newspapers. According to trial testimony, this involved “literally hundreds of servers with thousands of pages and archives and things of that nature.”
The case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Matthew D. Segal and Paul A. Hemesath of the Eastern District of California and Deputy Chief James A. Silver of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) prosecuted the case.
Federal Tax Enforcement Is a Focus of Prosecutions in the First Quarter of 2016Read the Press Release
SACRAMENTO, Calif. — With the annual tax filing deadline approaching, U.S. Attorney Benjamin B. Wagner noted that his office had taken a number of criminal enforcement actions in recent months in tax evasion cases in the Eastern District of California. The U.S. Attorney’s Office works with the Internal Revenue Service – Criminal Investigation and other law enforcement partners to enforce federal tax laws.
“This is an appropriate time of year to remind those few individuals who set out to cheat or evade their tax obligations that such conduct can result in prosecution,” said U.S. Attorney Wagner. “Every year some deliberately fail to file required returns or file false and fraudulent returns in order to evade the assessment and payment of tax due. It is the obligation of this office to pursue and prosecute them for their criminal conduct.”
“All Americans have a responsibility to pay taxes. In today’s economic environment, it’s more important than ever that people feel confident that everyone is playing by the rules and paying the taxes they owe,” said Michael T. Batdorf, IRS-CI Special Agent in Charge of the Oakland Field Office. “Those who file accurate, honest and timely returns can be assured that the government will hold accountable those who don’t. IRS-CI and the Department of Justice will investigate and prosecute those who violate our tax system.”
Cases involving IRS employees are investigated jointly by the Inspector General for Tax Administration (TIGTA) and IRS-CI. Rod Ammari, Special Agent-in-Charge of TIGTA’s San Francisco Field Division stated: “It is very important that the American taxpayers have confidence in the IRS and its functions. When IRS employees use their insider knowledge to file fraudulent tax returns, we are committed to prosecuting these individuals to the fullest extent of the law. IRS employees committing tax fraud cannot be tolerated.”
Indictments in the Eastern District of California so far in 2016:[1]
U.S. v. Davis — Indicted on March 31, 2016. Sherrell Davis, 42, of Benicia, allegedly submitted fraudulent claims for tax refunds in the names of other people and assisted in preparing fraudulent tax returns seeking thousands of dollars in refunds. (2:16-cr-072)
U.S. v. Black — Indicted on March 24, 2016. Kenley Black, 41, formerly of Burney, allegedly failed to file tax returns for tax years 2009 to 2013 and evaded paying more than $225,000 in taxes for those years. (2:16-cr-062)
U.S. v. Boone et al. — Indicted on February 10, 2016. Marty Boone, 54, and his wife Ronda Boone, 53, both of Vallejo, allegedly filed separate false tax returns claiming million-dollar refunds. Marty Boone was paid approximately $1.9 million, which they laundered by moving it through various accounts, including one in Cyprus. (2:16-cr-020)
U.S. v. Rocha, et al. — Indicted on January 14, 2016. Lorita Marie Rocha, 35, of Fresno, and Nereida Rodriguez, 28, of Firebaugh, allegedly filed fraudulent tax returns using stolen identities of over two dozen individuals that Rocha obtained through her employment with the IRS as a seasonal tax examiner. They claimed over $100,000 in refunds. (1:16‑cr‑001)
U.S. v. Chambers et al. — Indicted on January 14, 2016. Denna Chambers, 33, of Woodland, and Starsheka Mixon, 32, of Pinole, allegedly filed approximately 178 fraudulent income tax returns requesting more than $900,000 in refunds. (2:16-cr-010)
Convictions in 2016:
U.S. v. Cooper et al. — On April 12, 2016, Tiana Naples, 29, of Vallejo pleaded guilty to conspiring to submit false claims. On February 9, 2016, her co-defendant Leticia Roque, 49, of Vallejo, was sentenced to 30 months in prison, for conspiring to submit false claims and aggravated identity theft. Together, Naples and Roque submitted 60 false tax returns requesting more than $200,000 in refunds in the names of other people. (2:14-cr-022)
U.S. v. Kuzmenko et al. — On April 8, 2016, Aleksandr Kuzmenko, 32, of Loomis, pleaded guilty to conspiring to defraud the U.S. in connection with his participation in a tax refund fraud scheme. Kuzmenko conspired with others to file approximately 90 fraudulent tax returns with the IRS for the 2008 tax year using various identities, including some that were stolen. The fraudulent claims totaled approximately $695,000, which resulted in a loss of more than $570,000 to the IRS. (2:14-cr-044)
U.S. v. Shchirskiy et al. — On April 7, 2016, Vladislav Atamanyuk, 28, of Sacramento County, pleaded guilty to conspiring to submit fraudulent claims for tax refunds using the identities of various individuals, some of which were stolen. Atamanyuk and his co‑conspirators claimed more than $650,000 in fraudulent refunds, although the IRS issued about $88,000 in connection with the scheme. (2:14-cr-198)
U.S. v. Miller — On February 5, 2016, Linda J. Miller, 63, of Woodland, pleaded guilty to filing a false tax return. Miller provided bookkeeping services, and she admitted that on her 2008 tax return, she did not report $138,000 in checks she received. (2:15‑cr‑066)
U.S. v. Knockum — On January 29, 2016, Kenneth Knockum, 48, of Vallejo, was found guilty at trial of filing false returns seeking large refunds — two returns requested refunds of over $1.4 million each — he generated false 1099-OIDs and other tax forms to support the claimed income and taxes. The IRS caught the majority of the false returns but over $125,000 in fraudulent refunds were issued. (2:14‑cr-115)
Sentences in 2016:
U.S. v. Castro — On April 6, 2016, Yolanda Castro, 48, a 20-year employee of the IRS in Fresno, was sentenced to one year in prison and ordered to pay $37,387 in restitution for aiding in the preparation of a false tax return. Between 2007 and 2013, she prepared and filed false federal income tax returns for herself, her family members and others in which she fraudulently claimed tax deductions and credits. (1:15-cr-050)
U.S. v. Williams — On March 31, 2016, Jasmine Ann Williams, 26, of Sacramento, was sentenced to three years of probation for using her position as a volunteer tax preparer to steal two tax refunds totaling $10,745 from two individuals. Williams was also ordered to pay restitution to the two victims. (2:15-cr-206)
U.S. v. Eidson — On March 21, 2106, Brandon Adam Eidson, 34, of Turlock, was sentenced to three years and one month in prison and ordered to pay $433,205 in restitution for structuring cash transactions and filing false tax returns. Between 2008 and 2010, he underreported approximately $1.2 million in gross receipts for his business Hooked Up Hydroponics. Eidson deposited more than $1.5 million in increments of $10,000 or less in an attempt to prevent his bank from filing Currency Transaction Reports. (1:15‑cr-085)
U.S. v. Bonderer et al. — On March 10, 2016, Clint D. Bonderer, 37, of Stockton, was sentenced to three years in prison for conspiring to submit false claims. Co-defendant Slavic Khudoy, 36, of Loomis, pleaded guilty today, April 13, 2016. Bonderer and Khudoy submitted 842 fraudulent tax returns, requesting more than $600,000 in refunds in the names of other people and in most cases, kept the refunds for themselves. (2:15‑cr‑028)
U.S. v. Bolanos — In 2008, seven defendants submitted false tax returns claiming they were owed more than $33 million in refunds. In response, the IRS issued approximately $400,000 in unearned refunds. On March 7, 2016, Gaylene Lynnette Bolanos, 58, of Fresno, was sentenced to 10 years in prison and ordered to pay $429,300 in restitution; Leroy Donovan Combs, 74, of Fresno, was sentenced to three years and nine months in prison; Charles Wayne Uptergrove, 57, of Madera County, was sentenced to three years and three months in prison; and Ladonna Lee Moon, 55, of Texas, was sentenced to one year and nine months in prison. On February 29, 2016, Louis Calles, 67, of Fresno, was sentenced to 16 months in prison; and James Schwartz, 61, of Fresno, was sentenced to one year and a day in prison. On January 11, 2106, Oswald Georgner, was sentenced to 18 months in prison. (1:13-cr-362)
U.S. v. Ruiz — On February 3, 2016, Manuel Ruiz, 47, of Sacramento, was sentenced to 18 months in prison for making false claims for tax refunds on federal income tax returns for clients of his home-based tax preparation business. In total, between tax years 2009 and 2011, Ruiz made false claims on more than 180 returns that resulted in over $650,000 paid out by the IRS. After payments to clients, Ruiz retained at least $192,000 from the false claims. (2:14-cr-009)
U.S. v. Richards — On January 21, 2106, James Stewart Richards, 69, of West Sacramento, was sentenced to two years in prison for tax evasion. Richards is an attorney and a member of the bar in California and Hawaii. Between 1994 and 2003, Richards evaded paying over $170,000 in federal income taxes. He filed a false “Offer in Compromise” to the IRS that omitted bank accounts and six rental properties. He used a client trust account to hold his own assets. He also made false statements about his assets to a bankruptcy court and to the IRS. (2:10-cr-089)
More criminal tax investigations are underway.
[1] The charges in an indictment are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
30-Year Sentence for Fresno Man for Receiving and Distributing Child PornographyRead the Press Release
FRESNO, Calif. — United States District Judge Dale A. Drozd sentenced Shane Paul Young, 45, of Fresno, on Monday to 30 years in federal prison for receipt and distribution of child pornography, United States Attorney Benjamin B. Wagner announced.
On January 22, 2016, after a three–day trial, a federal jury returned a guilty verdict. According to evidence presented at trial, federal investigators in Fresno received a lead regarding an email address in Fresno that was distributing child pornography. Investigators determined that Young was the user of that Fresno email account. The evidence showed that Young sent and received hundreds of videos and images containing child pornography over the Internet with users across Europe and North America. The child pornography that Young received and distributed was not only voluminous, but also included graphic images of infants and toddlers being sexually abused. Both the nature of Young’s offense and his significant prior criminal history factored into the sentence that was imposed.
This case was the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Fresno County Sheriff’s Department, the Kings County District Attorney’s Office, and the Fresno Internet Crimes Against Children (ICAC) task force. ICAC is a federally and state-funded task force with agents from federal, state, and local agencies. The Fresno ICAC investigates online child exploitation crimes, including child pornography, enticement, and sex trafficking. Assistant United States Attorneys Mark J. McKeon and Jeffrey A. Spivak 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.
Visalia Man Sentenced to over 12 Years in Prison for Sex Trafficking of a MinorRead the Press Release
FRESNO, Calif. — Tyrell Richmond, 33, of Visalia, was sentenced today by U.S. District Judge Lawrence O’Neill to 12 years and seven months in prison for sex trafficking a minor, United States Attorney Benjamin B. Wagner announced.
According to court documents, on June 21, 2014, FBI’s Fresno Child Exploitation Task Force and members of the Fresno Police Department’s Vice Unit conducted undercover operations targeting prostitution rings that appeared to utilize underage victims. During the investigation, they detained three 16-year-old girls, all of whom were runaways, at a motel in Fresno. Further investigation revealed that Richmond had prostituted the girls for about one week, first in Visalia and then in Fresno. Richmond collected all of the money received by the girls, and did not permit them to leave their motel rooms, other than to get ice. Richmond pleaded guilty on December 14, 2015.
At the sentencing hearing, one of the victims delivered powerful testimony about the trauma she endured at the hands of Richmond. In imposing the sentence, Judge O’Neill described Richmond’s conduct as “horrid” and noted the serious impact it had on the victims in this case.
“Today's sentencing highlights the commitment of the FBI, the Fresno Police Department, and the Visalia Police Department to combating the commercial sexual exploitation of minors in the region and the success of Operation Cross Country,” said Supervisory Special Agent Robert Guyton of the FBI Sacramento field office Fresno resident agency's violent crime squad. “Richmond's sentence offers justice for his victims and serves as a warning to others who may attempt to exploit minors.”
This case was the product of an investigation by the Federal Bureau of Investigation, the Visalia Police Department, and the Fresno Police Department. Assistant United States Attorney Vincenza Rabenn 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.
One Fresno Defendant Sentenced to Federal Prison, Another Enters Guilty Plea for Structuring Financial Transactions Involving Drug Trafficking ProceedsRead the Press Release
FRESNO, Calif. B Aseel Al-Saber, 24, of Fresno, was sentenced today by United States District Judge Lawrence J. O’Neill to one year and a day in federal prison for conspiring to structure cash transactions, United States Attorney Benjamin B. Wagner announced. In addition, co-defendant Brandon Thomas, 26, of Fresno, pleaded guilty today to conspiring to structure cash transactions. He is scheduled to be sentenced on August 29, 2016, before Judge O’Neill.
According to court documents, Al-Saber and seven co-defendants opened and maintained bank accounts for the purpose of funneling cash proceeds of marijuana trafficking from Florida and other states back to California. Al-Saber’s bank account was used to deposit and withdraw more than $72,000 in cash in amounts of $10,000 or less to prevent Currency Transaction Reports from being filed by the banks on those transactions. The cash funneled through Al-Saber’s bank account was the proceeds marijuana trafficking. In addition, Al-Saber recruited two other individuals to have more than $30,000 in proceeds of marijuana trafficking funneled through their respective bank accounts.
According to his plea agreement, over $700,000 passed through accounts opened and maintained by Thomas in structured transactions. In total, the government alleges that members of the conspiracy involving Al-Saber and Thomas structured more than $7.5 million in cash that was the proceeds of marijuana trafficking.
This case is being brought as part of Operation Footprint, a nationwide law enforcement initiative led by the U.S. Attorney’s Offices, the Internal Revenue Service- Criminal Investigation, the Drug Enforcement Administration, and the United States Postal Inspection Service. Operation Footprint targets large drug trafficking organizations by identifying the transfer of drug proceeds through financial institutions, bulk cash smuggling and other forms of money transfers. Operation Footprint is focused on bringing criminal charges based on Bank Secrecy Act violations in addition to violations of the Controlled Substances Act and the Money Laundering Control Act.
This case is also the product of the Organized Crime Drug Enforcement Task Force (OCDETF), a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies. Assistant U.S. Attorney Grant B. Rabenn is prosecuting the case.
Previously, co-defendant Chad Riffle was sentenced to five years imprisonment and co-defendant Jeremy Murphy was sentenced to fifteen months in prison. In addition, co-defendants Peter Capodieci, Miguel Gonzalez and Bree Benson have pleaded guilty to conspiring to structure financial transactions and are awaiting sentencing. The maximum statutory penalty for conspiracy to structure is five years in prison and a $250,000 fine. The actual sentences, 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.
Co-defendant Ashley Starling Thomas is scheduled for trial on May 24, 2016. The charges against Ashley Thomas are only allegations; she is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Modesto Developer Sentenced for Mortgage Fraud SchemeRead the Press Release
FRESNO, Calif. — United States District Judge Anthony W. Ishii sentenced Aruna Kumari Chopra, 66, of Modesto, today to one year and one day in prison, to be followed by a year of home confinement, for her mail fraud conviction in connection with a mortgage fraud scheme, United States Attorney Benjamin B. Wagner announced.
According to court documents, in 2008, Chopra purchased property on Dale Road in Modesto that she intended to develop into a shopping center to be called “The Plaza at Dale.” She defrauded lenders by filing documents with the Stanislaus County Recorder=s Office that contained forged signatures in an attempt to conceal liens on the property from her lenders. The loans made by the defrauded lenders on the property totaled approximately $8.9 million. Chopra pleaded guilty on November 30, 2015.
This case was the product of an investigation by the Federal Bureau of Investigation, the Stanislaus County District Attorney’s Office, and the Federal Housing Finance Office, Office of Inspector General, working together through the San Joaquin Mortgage Fraud Task Force. The U.S. Attorney and the FBI created the San Joaquin Valley Mortgage Fraud Task Force in 2009 to further the prosecution of mortgage fraud cases arising out of the southern half of the Central Valley. Assistant United States Attorney Mark J. McKeon prosecuted the case.
Goldman Sachs to Pay More than $5 Billion for Misconduct Relating to Mortgage-Backed SecuritiesRead the Press Release
SACRAMENTO, Calif. – The Justice Department, along with federal and state partners, announced today a $5.06 billion settlement with Goldman Sachs related to Goldman’s conduct in the packaging, securitization, marketing, sale, and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. The resolution announced today requires Goldman to pay a $2.385 billion in a civil penalty under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) and also requires the bank to provide $1.8 billion in consumer relief, including relief to underwater homeowners, distressed borrowers, and affected communities in the form of loan forgiveness and financing for affordable housing. Goldman will also pay $875 million to resolve claims by other federal entities and state claims. Investors, including federally insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Goldman between 2005 and 2007.
The FIRREA penalty announced today is the largest recovery ever in a case handled by the U.S. Attorney’s Office for the Eastern District of California. The settlement is the latest in a string of five multibillion dollar settlements announced by the RMBS Working Group. Of those five, two have been handled by the Eastern District of California — today’s settlement and the $2 billion FIRREA penalty obtained from JPMorgan Chase as part of the $13 billion settlement with the RMBS Working Group announced in November 2013.
“Today’s settlement is yet another acknowledgment by one of our leading financial institutions that it did not live up to the representations it made to investors about the products it was selling,” said U.S. Attorney Benjamin B. Wagner. “Goldman’s conduct in exploiting the RMBS market contributed to an international financial crisis that people across the country, including many in the Eastern District of California, continue to struggle to recover from. I am gratified that this office has developed investigations, first against JPMorgan Chase and now against Goldman Sachs, that have led to significant civil settlements that hold bad actors in this market accountable. The results obtained by this office and other members of the RMBS Working Group continue to send a message to Wall Street that we remain committed to pursuing those responsible for the financial crisis.”
The $2.385 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. The settlement expressly preserves the government’s ability to bring criminal charges against Goldman, and does not release any individuals from potential criminal or civil liability. In addition, as part of the settlement, Goldman agreed to fully cooperate with any ongoing investigations related to the conduct covered by the agreement.
Of the $875 million Goldman has agreed to pay to settle claims by various other federal and state entities, Goldman will pay: $575 million to settle claims by the National Credit Union Administration, $37.5 million to settle claims by the Federal Home Loan Bank of Des Moines as successor to the Federal Home Loan Bank of Seattle, $37.5 million to settle claims by the Federal Home Loan Bank of Chicago, $190 million to settle claims by the state of New York, $25 million to settle claims by the state of Illinois, and $10 million to settle claims by the state of California.
Goldman will pay out the remaining $1.8 billion in the form of relief to aid consumers harmed by its unlawful conduct. $1.52 billion of that relief will be paid out pursuant to an agreement with the United States that Goldman will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country, as well as financing for affordable rental and for-sale housing throughout the country. This agreement represents the largest commitment in any RMBS agreement to provide financing for affordable housing—a crucial need following the turmoil of the financial crisis. $280 million will be paid out by Goldman pursuant to an agreement separately negotiated with the state of New York.
The settlement includes a statement of facts to which Goldman has agreed. That statement of facts describes how Goldman made false and misleading representations to prospective investors about the characteristics of the loans it securitized and the ways in which it would protect investors in Goldman RMBS from harm (the quotes in the following paragraphs are from that agreed-upon statement of facts, unless otherwise noted):
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Goldman told investors in offering documents that “[l]oans in the securitized pools were originated generally in accordance with the loan originator’s underwriting guidelines,” other than possible situations where “when the originator identified ‘compensating factors’ at the time of origination.” But Goldman has today acknowledged that, “Goldman received information indicating that, for certain loan pools, significant percentages of the loans reviewed did not conform to the representations made to investors about the pools of loans to be securitized.”
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Specifically, Goldman has now acknowledged that, even when the results of its due diligence on samples of loans from those pools “indicated that the unsampled portions of the pools likely contained additional loans with credit exceptions, Goldman typically did not . . . identify and eliminate any additional loans with credit exceptions.” Goldman has acknowledged that it “failed to do this even when the samples included significant numbers of loans with credit exceptions.”
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Goldman’s Mortgage Capital Committee, which included senior mortgage department personnel and employees from Goldman’s credit and legal departments, was required to approve every RMBS issued by Goldman. Goldman has now acknowledged that “[t]he Mortgage Capital Committee typically received . . . summaries of Goldman’s due diligence results for certain of the loan pools backing the securitization,” but that “[d]espite the high numbers of loans that Goldman had dropped from the loan pools, the Mortgage Capital Committee approved every RMBS that was presented to it between December 2005 and 2007.” As one example, in early 2007, Goldman approved and issued a subprime RMBS backed by New Century loans, after Goldman’s due diligence process found that one of the loan pools to be securitized included loans originated with “[e]xtremely aggressive underwriting,” and where Goldman dropped 25 percent of the loans from the due diligence sample on that pool without reviewing the unsampled 70 percent of the pool to determine whether those loans had similar problems.
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Goldman has acknowledged that, for one August 2006 RMBS, the due diligence results for some of the loan pools resulted in an “unusually high” percentage of loans with credit and compliance defects. The Mortgage Capital Committee was presented with a summary of these results and asked “How do we know that we caught everything?” One transaction manager responded “we don’t.” Another transaction manager responded, “Depends on what you mean by everything? Because of the limited sampling . . . we don’t catch everything . . .” Goldman has now acknowledged that the Mortgage Capital Committee approved this RMBS for securitization without requiring any further due diligence.
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Goldman made detailed representations to investors about its “counterparty qualification process” for vetting loan originators, and told investors and one rating agency that Goldman would engage in ongoing monitoring of loan sellers. Goldman has now acknowledged however, that it “received certain negative information regarding the originators’ business practices” and that much of this information was not disclosed to investors.
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For example, Goldman has now acknowledged that in late 2006 it conducted an internal analysis of the underwriting guidelines of Fremont Investment & Loan (an originator), which found many of Fremont’s guidelines to be “off market” or “at the aggressive end of market standards.” Instead of disclosing its view of Fremont’s underwriting, Goldman has acknowledged that it “[u]ndertook a significant marketing effort” to tell investors about what Goldman called Fremont’s “commitment to loan quality over volume” and “significant enhancements to Fremont underwriting guidelines.” Fremont was shut down by federal regulators within several months of these statements.
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In another example, Goldman was aware in early-mid 2006 of certain issues with Countrywide Financial Corporation’s origination process, including a pattern of non-responsiveness and inability to provide sufficient staff to handle the numerous loan pools Countrywide was selling. In April 2006, while Goldman was preparing an RMBS backed by Countrywide loans for securitization, a Goldman mortgage department manager circulated a “very bullish” equity research report that recommended the purchase of Countrywide stock. Goldman’s head of due diligence, who had just overseen the due diligence on six Countrywide pools, responded “If they only knew …”
- Meanwhile, “[around the end of 2006], Goldman employees observed signs of uncertainty in the residential mortgage market [and] by March 2007, Goldman had largely halted new purchases of subprime loan pools.”
The Eastern District of California’s investigation into Goldman’s conduct in connection with RMBS was led by Assistant U.S. Attorneys Colleen Kennedy and Kelli Taylor, with the support of the Federal Housing Finance Agency’s Office of the Inspector General (FHFA-OIG) and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
“Goldman Sachs had a fiduciary responsibility to investors, which they blatantly side stepped,” said Deputy Inspector General for Investigation Rene Febles for the FHFA-OIG. “They knowingly put investors at risk and in so doing contributed significantly to the financial crisis. The losses caused by this irresponsible behavior deeply affected not only financial institutions but also taxpayers and one can only hope that Goldman Sachs has learned the difference between risk and deceit. Two Federal Home Loan Banks suffered significant losses so we are pleased to see both entities receive a portion of this settlement. We will continue to work with our law enforcement partners to hold those accountable who have engaged in misconduct.”
“Goldman took $10 billion in TARP bailout funds knowing that it had fraudulently misrepresented to investors the quality of residential mortgages bundled into mortgage backed securities,” said Special Inspector General Christy Goldsmith Romero for TARP. “Many of these toxic securities were traded in a taxpayer funded bailout program that was designed to unlock frozen credit markets during the crisis. While crisis investigations take time, SIGTARP is committed to working with our law enforcement partners to protect taxpayers and bring accountability and justice.”
The settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered tens of billions of dollars on behalf of American consumers and investors for claims against large financial institutions arising from misconduct related to the financial crisis. The RMBS Working Group brings together attorneys, investigators, analysts, and staff from multiple state and federal agencies, including the Department of Justice, U.S. Attorneys’ Offices, the FBI, the U.S. Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, SIGTARP, the Federal Reserve Board’s OIG, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network and multiple state Attorneys General offices around the country. The RMBS Working Group is led by Director Joshua Wilkenfeld and five co-chairs: Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Director Andrew Ceresney of the SEC’s Division of Enforcement, U.S. Attorney John Walsh of the District of Colorado, and New York Attorney General Eric Schneiderman.
Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at www.StopFraud.gov.
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Goldman Sachs Agrees to Pay More than $5 Billion in Connection with Its Sale of Residential Mortgage Backed SecuritiesRead the Press Release
The Justice Department, along with federal and state partners, announced today a $5.06 billion settlement with Goldman Sachs related to Goldman’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) between 2005 and 2007. The resolution announced today requires Goldman to pay $2.385 billion in a civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and also requires the bank to provide $1.8 billion in other relief, including relief to underwater homeowners, distressed borrowers and affected communities, in the form of loan forgiveness and financing for affordable housing. Goldman will also pay $875 million to resolve claims by other federal entities and state claims. Investors, including federally-insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued and underwritten by Goldman between 2005 and 2007.
“This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail,” said Acting Associate Attorney General Stuart F. Delery. “This $5 billion settlement includes a $1.8 billion commitment to help repair the damage to homeowners and communities that Goldman acknowledges resulted from its conduct, and it makes clear that no institution may inflict this type of harm on investors and the American public without serious consequences.”
“Today’s settlement is another example of the department’s resolve to hold accountable those whose illegal conduct resulted in the financial crisis of 2008,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Viewed in conjunction with the previous multibillion-dollar recoveries that the department has obtained for similar conduct, this settlement demonstrates the pervasiveness of the banking industry’s fraudulent practices in selling RMBS, and the power of the Financial Institutions Reform, Recovery and Enforcement Act as a tool for combatting this type of wrongdoing.”
“Today’s settlement is yet another acknowledgment by one of our leading financial institutions that it did not live up to the representations it made to investors about the products it was selling,” said U.S. Attorney Benjamin B. Wagner of the Eastern District of California. “Goldman’s conduct in exploiting the RMBS market contributed to an international financial crisis that people across the country, including many in the Eastern District of California, continue to struggle to recover from. I am gratified that this office has developed investigations, first against JPMorgan Chase and now against Goldman Sachs, that have led to significant civil settlements that hold bad actors in this market accountable. The results obtained by this office and other members of the RMBS Working Group continue to send a message to Wall Street that we remain committed to pursuing those responsible for the financial crisis.”
The $2.385 billion civil monetary penalty resolves claims under FIRREA, which authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. The settlement expressly preserves the government’s ability to bring criminal charges against Goldman, and does not release any individuals from potential criminal or civil liability. In addition, as part of the settlement, Goldman agreed to fully cooperate with any ongoing investigations related to the conduct covered by the agreement.
Of the $875 million Goldman has agreed to pay to settle claims by various other federal and state entities: Goldman will pay $575 million to settle claims by the National Credit Union Administration, $37.5 million to settle claims by the Federal Home Loan Bank of Des Moines as successor to the Federal Home Loan Bank of Seattle, $37.5 million to settle claims by the Federal Home Loan Bank of Chicago, $190 million to settle claims by the state of New York, $25 million to settle claims by the state of Illinois and $10 million to settle claims by the state of California.
Goldman will pay out the remaining $1.8 billion in the form of relief to aid consumers harmed by its unlawful conduct. $1.52 billion of that relief will be paid out pursuant to an agreement with the United States that Goldman will provide loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners throughout the country, as well as financing for affordable rental and for-sale housing throughout the country. This agreement represents the largest commitment in any RMBS agreement to provide financing for affordable housing—a crucial need following the turmoil of the financial crisis. $280 million will be paid out by Goldman pursuant to an agreement separately negotiated with the state of New York.
The settlement includes a statement of facts to which Goldman has agreed. That statement of facts describes how Goldman made false and misleading representations to prospective investors about the characteristics of the loans it securitized and the ways in which Goldman would protect investors in its RMBS from harm (the quotes in the following paragraphs are from that agreed-upon statement of facts, unless otherwise noted):
- Goldman told investors in offering documents that “[l]oans in the securitized pools were originated generally in accordance with the loan originator’s underwriting guidelines,” other than possible situations where “when the originator identified ‘compensating factors’ at the time of origination.” But Goldman has today acknowledged that, “Goldman received information indicating that, for certain loan pools, significant percentages of the loans reviewed did not conform to the representations made to investors about the pools of loans to be securitized.”
- Specifically, Goldman has now acknowledged that, even when the results of its due diligence on samples of loans from those pools “indicated that the unsampled portions of the pools likely contained additional loans with credit exceptions, Goldman typically did not . . . identify and eliminate any additional loans with credit exceptions.” Goldman has acknowledged that it “failed to do this even when the samples included significant numbers of loans with credit exceptions.”
- Goldman’s Mortgage Capital Committee, which included senior mortgage department personnel and employees from Goldman’s credit and legal departments, was required to approve every RMBS issued by Goldman. Goldman has now acknowledged that “[t]he Mortgage Capital Committee typically received . . . summaries of Goldman’s due diligence results for certain of the loan pools backing the securitization,” but that “[d]espite the high numbers of loans that Goldman had dropped from the loan pools, the Mortgage Capital Committee approved every RMBS that was presented to it between December 2005 and 2007.” As one example, in early 2007, Goldman approved and issued a subprime RMBS backed by loans originated by New Century Mortgage Corporation, after Goldman’s due diligence process found that one of the loan pools to be securitized included loans originated with “[e]xtremely aggressive underwriting,” and where Goldman dropped 25 percent of the loans from the due diligence sample on that pool without reviewing the unsampled 70 percent of the pool to determine whether those loans had similar problems.
- Goldman has acknowledged that, for one August 2006 RMBS, the due diligence results for some of the loan pools resulted in an “unusually high” percentage of loans with credit and compliance defects. The Mortgage Capital Committee was presented with a summary of these results and asked “How do we know that we caught everything?” One transaction manager responded “we don’t.” Another transaction manager responded, “Depends on what you mean by everything? Because of the limited sampling . . . we don’t catch everything . . .” Goldman has now acknowledged that the Mortgage Capital Committee approved this RMBS for securitization without requiring any further due diligence.
- Goldman made detailed representations to investors about its “counterparty qualification process” for vetting loan originators, and told investors and one rating agency that Goldman would engage in ongoing monitoring of loan sellers. Goldman has now acknowledged, however, that it “received certain negative information regarding the originators’ business practices” and that much of this information was not disclosed to investors.
- For example, Goldman has now acknowledged that in late 2006 it conducted an internal analysis of the underwriting guidelines of Fremont Investment & Loan (an originator), which found many of Fremont’s guidelines to be “off market” or “at the aggressive end of market standards.” Instead of disclosing its view of Fremont’s underwriting, Goldman has acknowledged that it “[u]ndertook a significant marketing effort” to tell investors about what Goldman called Fremont’s “commitment to loan quality over volume” and “significant enhancements to Fremont underwriting guidelines.” Fremont was shut down by federal regulators within several months of these statements.
- In another example, Goldman was aware in early-mid 2006 of certain issues with Countrywide Financial Corporation’s origination process, including a pattern of non-responsiveness and inability to provide sufficient staff to handle the numerous loan pools Countrywide was selling. In April 2006, while Goldman was preparing an RMBS backed by Countrywide loans for securitization, a Goldman mortgage department manager circulated a “very bullish” equity research report that recommended the purchase of Countrywide stock. Goldman’s head of due diligence, who had just overseen the due diligence on six Countrywide pools, responded “If they only knew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .”
- Meanwhile, as Goldman has acknowledged in this statement of facts, “[Around the end of 2006], Goldman employees observed signs of uncertainty in the residential mortgage market [and] by March 2007, Goldman had largely halted new purchases of subprime loan pools.”
Assistant U.S. Attorneys Colleen Kennedy and Kelli Taylor of the Eastern District of California investigated Goldman’s conduct in connection with RMBS, with the support of the Federal Housing Finance Agency’s Office of the Inspector General (FHFA-OIG) and the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
“Goldman Sachs had a fiduciary responsibility to investors, which they blatantly side stepped,” said Deputy Inspector General for Investigation Rene Febles of FHFA-OIG. “They knowingly put investors at risk and in so doing contributed significantly to the financial crisis. The losses caused by this irresponsible behavior deeply affected not only financial institutions but also taxpayers and one can only hope that Goldman Sachs has learned the difference between risk and deceit. Two Federal Home Loan Banks suffered significant losses so we are pleased to see both entities receive a portion of this settlement. We will continue to work with our law enforcement partners to hold those accountable who have engaged in misconduct.”
“Goldman took $10 billion in TARP bailout funds knowing that it had fraudulently misrepresented to investors the quality of residential mortgages bundled into mortgage backed securities,” said Special Inspector General Christy Goldsmith Romero for TARP. “Many of these toxic securities were traded in a taxpayer funded bailout program that was designed to unlock frozen credit markets during the crisis. While crisis investigations take time, SIGTARP is committed to working with our law enforcement partners to protect taxpayers and bring accountability and justice.”
The settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered tens of billions of dollars on behalf of American consumers and investors for claims against large financial institutions arising from misconduct related to the financial crisis. The RMBS Working Group brings together attorneys, investigators, analysts and staff from multiple state and federal agencies, including the Department of Justice, U.S. Attorneys’ Offices, the FBI, the U.S. Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, SIGTARP, the Federal Reserve Board’s OIG, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network and multiple state Attorneys General offices around the country. The RMBS Working Group is led by Director Joshua Wilkenfeld and five co-chairs: Principal Deputy Assistant Attorney General Mizer, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Director Andrew Ceresney of the SEC’s Division of Enforcement, U.S. Attorney John Walsh of the District of Colorado and New York Attorney General Eric Schneiderman. This settlement is the fifth multibillion-dollar RMBS settlement announced by the working group.
Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at www.StopFraud.gov.
Two Defendants Plead Guilty to Child ExploitationRead the Press Release
SACRAMENTO, Calif. — Jason S. Wymer, 44, of Citrus Heights, pleaded guilty today to sexual exploitation of children, United States Attorney Benjamin B. Wagner announced. Previously, on March 25, 2016, co-defendant Stormy M. Avers, 36, of Placerville, pleaded guilty to sexual exploitation of children.
According to court documents, the case began when a parent accidentally texted a photo of her eight-year-old to a wrong number who turned out to be Wymer. Thinking he received the picture from a child, Wymer responded and began a dialog. The parent brought the cellphone to the FBI, and an undercover employee, pretending to be an eight-year-old child, continued the dialog with Wymer, whom investigators were subsequently able to locate.
Upon his arrest, law enforcement found photos of Wymer and co-defendant Avers molesting a child, who was approximately three years old, in order to create child pornography. Avers had custody and control of the child at the time. In pleading guilty, Wymer admitted to this conduct, and also to a separate instance of sexual exploitation of a four-year-old child in August of 2011.
A third defendant, Jolene Davis, 40, of Stockton, is charged with having participated with Wymer in the sexual exploitation of a child of whom she had control or custody. Davis is scheduled to appear for a status conference before Judge Burrell on April 22, 2016. The charges against Davis are only allegations; she is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Wymer is scheduled to be sentenced by U.S. District Judge Garland E. Burrell Jr. on July 29, 2016. Wymer faces up to 30 years in federal prison. Ayers is scheduled to be sentenced on June 24, 2016. She faces up to 20 years in federal prison. The actual sentences, 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 is the product of an investigation by the Federal Bureau of Investigation and the Sacramento Internet Crimes against Children Task Force. Assistant United States Attorney Matthew G. Morris is prosecuting 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.
Roseville Resident Sentenced for Loan Modification and Foreclosure Rescue Scam That Targeted Spanish-Speaking CommunityRead the Press Release
SACRAMENTO, Calif. — Ligia Sandoval Spafford (Sandoval), 48, of Roseville, was sentenced Thursday by U.S. District Judge Troy L. Nunley to two years and three months in prison for a scheme to defraud distressed homeowners, United States Attorney Benjamin B. Wagner announced. Sandoval was ordered to self-surrender on June 9, 2016.
Sandoval paid $115,065.00 in restitution, the full amount of restitution ordered by the Court, to compensate the victims for the losses that they incurred as a result from this fraud scheme. In February 2015, Sandoval and her then husband, Martin Wayne Flanders, 51, of Roseville, pleaded guilty to mail fraud for the fraud scheme. On October 29, 2015, Flanders was sentenced to six years and five months in prison.
In sentencing, Judge Nunley stated: “She knew what was going on and enticed these people to become part of this scheme. They trusted her. … She ruined some peoples’ lives. That she paid restitution does not do anything to take away from the anxiety and fear they [the victims] had at the time that this was occurring. These victims were devastated.”
According to court documents, between 2008 and 2010, Flanders charged clients advance fees in exchange for a number of financial services, including loan modifications, mortgage loan audits, credit repair, debt relief, bankruptcy filings, and a program to sell homes to “investors” with a rent-to-own option. Sandoval and Flanders marketed these services to economically distressed homeowners with particular emphasis on those who were Spanish speakers. Sandoval, a Spanish-speaker, promoted the services she and Flanders, who was not a fluent Spanish speaker, offered during a radio program that aired twice weekly on a Bay Area Spanish‑language Christian radio station, Radio Luz. Sandoval who was a licensed real estate agent, further assisted Flanders in the fraud scheme by interacting with and explaining the services to Spanish-speaking clients. The services offered by Flanders and Sandoval were also advertised on a Spanish-language television station, Univision, and in Spanish-language magazines. About 98 percent of the defendants’ clients were of Hispanic descent, some of whom spoke little to no English.
Sandoval and Flanders made numerous false statements to investors as to the success of the programs being offered or refunds that would be available if the programs were not successful. “Ghost offers” – i.e., fictitious offers to purchase the victim’s property through short sale – and “skeleton bankruptcies” – i.e., sham bankruptcy petitions that were quickly dismissed by the bankruptcy court – were also used by Sandoval or Flanders to try to stall the foreclosure process. At least 25 to 30 individuals paid for services and did not receive them or did not receive refunds when the programs failed to deliver as promised. The total loss to the victims is at least $115,000. Some homeowners who were not able to obtain relief were foreclosed upon by their lenders.
This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Todd A. Pickles and Shelley Weger prosecuted the case.
Rocklin Identity Thief Sentenced to 3 Years in PrisonRead the Press Release
SACRAMENTO, Calif. — Melvin Lee Gregory, 33, of Oroville, was sentenced today by U.S. District Judge Garland E. Burrell Jr. to three years in prison: two years for participating in a bank fraud and identity theft scheme and one year for violating terms of probation, United States Attorney Benjamin B. Wagner announced.
According to court documents, on April 2, 2015, Gregory was released from federal prison after serving a four-year sentence for a previous conviction. Between April 2, 2015, and August 22, 2015, while on probation, Gregory opened a bank account and deposited several forged checks. On August 22, 2015, Gregory was observed attempting to break into and steal U.S. Mail from a Roseville mailbox, and minutes later he successfully stole U.S. Mail from a Rocklin mailbox. When Gregory was arrested by Rocklin Police, he was in possession of stolen U.S. Mail, burglary tools, and stolen identification documents. Gregory pleaded guilty on November 17, 2015.
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 postal customers’ mail and personal information from theft.”
This case was the product of an investigation by the United States Postal Inspection Service and the Rocklin Police Department. Assistant United States Attorney Michelle Rodriguez prosecuted the case.
Stockton Man Charged with Sex Trafficking a MinorRead the Press Release
SACRAMENTO, Calif. — Ricky Lee Richardson Jr., 39, of Stockton, was arrested on Monday, April 4, 2016, charged with sex trafficking of a minor and possession of child pornography, United States Attorney Benjamin B. Wagner announced.
A two-count indictment, unsealed after his arrest, was returned by a federal grand jury in Sacramento on March 31, 2016. According to court documents, between November 2011 and March 2012, Richardson transported, harbored, and maintained a minor victim, knowing that the minor would be caused to engage in prostitution. Richardson also possessed images of child pornography.
This case is the product of an investigation by the Federal Bureau of Investigation with assistance from the Stockton Police Department. Assistant United States Attorney Brian A. Fogerty is prosecuting the case.
Richardson is scheduled to be arraigned today before United States Magistrate Judge Carolyn Delaney.
If convicted of sex trafficking of a minor, Richardson faces a minimum of 10 years in prison and a maximum statutory penalty of life in prison. The possession of child pornography charge carries a maximum statutory penalty of 10 years in prison. Both charges carry a maximum 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 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.
Alleged Drug Trafficker Extradited from Mexico to Eastern District of CaliforniaRead the Press Release
SACRAMENTO, Calif. — On Friday, April 1, 2016, Alvaro Rios-Madrid, 57, of Guamuchil, Sinaloa, Mexico, was formally extradited to the United States by Mexico to face federal narcotics charges, United States Attorney Benjamin B. Wagner announced.
On December 13, 2012, a federal grand jury in Sacramento indicted Rios-Madrid on one count of conspiring to distribute cocaine and two counts of using phones to facilitate the distribution of narcotics.
According to court documents, the government alleges that Rios-Madrid regularly exported large quantities of cocaine from Mexico to the United States and used a U.S.-based distribution cell to move his cocaine through a nationwide network of couriers to several states including Utah, Minnesota, Indiana, Ohio, Massachusetts, and California. Rios-Madrid is alleged to have regularly smuggled multi-kilogram quantities of cocaine into the United States through various ports of entry, including Nogales, Arizona, and San Ysidro, California. The cash proceeds from the sale of Rios-Madrid’s cocaine totaled, on average, between $500,000 and $1.3 million every month. Operatives in the United States arranged for those proceeds to be sent to Rios-Madrid in Mexico. As a result of a long-term investigation, the DEA and other state and federal agencies seized large quantities of cocaine and over $1 million in cash.
This case is the product of an investigation by the U.S. Drug Enforcement Administration; the United States Marshals Service; the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); the Department of Homeland Security, U.S. Customs and Border Patrol; the Sacramento County Sheriff’s Department; the Central Valley HIDTA; the Sacramento Police Department; the California Department of Justice (Cal MMET); the San Joaquin County Metropolitan Narcotics Task Force; the Elk Grove Police Department; the San Joaquin County Sheriff’s Department; the Stockton Police Department; the Los Angeles County Sheriff’s Department; the Galt Police Department; the California Highway Patrol; the Nevada State Highway Patrol; the Minnesota Highway Patrol; the Kansas State Highway Patrol; the Massachusetts State Highway Patrol; and the Iowa State Highway Patrol. The U.S. Department of Justice’s Office of International Affairs provided assistance with the extradition. Assistant United States Attorneys Michael M. Beckwith and Paul A. Hemesath are prosecuting the case.
If convicted of the conspiracy, Rios-Madrid faces a maximum statutory penalty of 10 years to life in prison, a $10 million fine, and five years to life of supervised release. If convicted of using a cellphone to facilitate a drug trafficking offense, Rios-Madrid faces a maximum statutory penalty of four 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.
Southern California Man Brings Methamphetamine and Heroin to Fresno for SaleRead the Press Release
FRESNO, Calif. — A federal grand jury returned a two-count indictment today against Jesus Ramon, 31, of Moreno Valley, charging him with possession of methamphetamine and heroin with the intent to distribute, United States Attorney Benjamin B. Wagner announced.
According to court documents, Ramon negotiated to sell a large quantity of methamphetamine and heroin to purported buyers who were actually Drug Enforcement Administration agents. Ramon brought the drugs to a parking lot located at Jensen and Highway 99 in Fresno where, after agents viewed the drugs, Ramon was arrested. Approximately 45 pounds of methamphetamine and over one kilogram of heroin was seized from the vehicle Ramon arrived in.
This case is the product of an investigation by the Drug Enforcement Administration, Fresno Police Department, and the Fresno Sheriff’s Department. Assistant United States Attorney Laurel J. Montoya is prosecuting the case.
If convicted, Ramon 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.
Five Sacramento Men Indicted for Trafficking in Drugs and GunsRead the Press Release
SACRAMENTO, Calif. — A federal grand jury returned a 32-count indictment today against five Sacramento men, charging them with various crimes related to trafficking in narcotics and firearms, United States Attorney Benjamin B. Wagner announced.
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Osvaldo Hernandez, 33, is charged with conspiring to distribute methamphetamine and heroin; distributing methamphetamine, heroin, and cocaine; and possessing with the intent to distribute methamphetamine, heroin, and cocaine.
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Hector Gonzalez, 36, is charged with conspiring to distribute methamphetamine and heroin; conspiring to deal firearms without a license, distributing methamphetamine and heroin; dealing firearms without a license; and possessing with the intent to distribute methamphetamine.
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Christopher McCurin, 40, is charged with conspiring to deal firearms without a license and being a felon in possession of a firearm.
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Noe Baeza-Bravo, 30, is charged with conspiring to distribute methamphetamine; conspiring to deal firearms without a license; distributing methamphetamine; and dealing firearms without a license.
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Vidal Gonzalez, 56, is charged with conspiring to distribute methamphetamine; distributing methamphetamine, and dealing firearms without a license.
According to court documents, between June 2014 and February 2016, on at least 19 different occasions, agents purchased methamphetamine, heroin, cocaine, and assault rifles from various defendants. According to the indictment, between April 2015 and October 2015, Baeza-Bravo, McCurin, and Hector Gonzalez conspired to willfully engage in the business of dealing in firearms without a license. Vidal Gonzalez, Baeza-Bravo, and Hector Gonzalez sold assault rifles to an FBI source.
All five defendants were arrested on March 16, 2016. All have been released pending trial except for Hector Gonzalez, who remains in custody.
If convicted, the defendants face the following penalties: the penalty for conspiring to distribute methamphetamine is 10 years to life in prison; the maximum penalty for conspiring to distribute heroin is 20 years in prison; the maximum penalty for conspiring to deal firearms without a license is five years in prison; the maximum penalty for distributing methamphetamine, heroin or cocaine is 20 years in prison; the maximum penalty for dealing firearms without a license is five years in prison; the maximum penalty for possessing with the intent to distribute methamphetamine, heroin, or cocaine is 20 years in prison; and the maximum penalty for being a felon in possession of a firearm is 10 years in prison. 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.
This case is the product of an investigation by the Federal Bureau of Investigation and the Sacramento Police Department. Assistant United States Attorney Ross K. Naughton is prosecuting the case.
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.
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Former Finance Director of Pit River Tribe Indicted for Tax Evasion, Failure to File a Tax Return, and Theft from the Pit River TribeRead the Press Release
SACRAMENTO, Calif. — Kenley Black, 41, formerly of Burney, California, was arrested today at his home in Ft. Defiance, Arizona on charges of tax evasion, failure to file income taxes, and embezzlement and theft from a tribal organization, United States Attorney Benjamin B. Wagner announced.
A federal grand jury returned a 25-count indictment on Thursday, March 24, 2016, against Kenley, who served as the the Finance Director for the Pit River Tribe from 2009 to 2013. Black is not a member of the Pit River Tribe.
According to court documents, while employed as Finance Director, Black earned over $810,000 yet did not file income taxes and evaded paying over $225,000 in taxes. He is charged with five counts of tax evasion and five counts of failure to file income taxes. Additionally, he is charged with 15 counts of embezzlement and theft from a tribal organization for embezzling $81,578 from the Pit River Tribe in 2012 and 2013.
This case is the product of an investigation by the Federal Bureau of Investigation and Internal Revenue Service – Criminal Investigation. Assistant United States Attorney Justin Lee is prosecuting the case.
If convicted, Black faces a maximum statutory penalty of five years in prison and a $100,000 fine for each count of tax evasion. Additionally, Black faces up to one year in prison for each count of failure to file a tax return and up to five years in prison for each count of theft from a tribal organization. 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.
Stanislaus County District Attorney’s Office Receives Award for Contributions to the Mission of the Department of JusticeRead the Press Release
FRESNO, Calif. — United States Attorney Benjamin B. Wagner is pleased to announce the 2015 winner of the Eastern District of California Outstanding Law Enforcement Agency Award in the Fresno Division. This is one of four awards presented annually to a law enforcement agency and an officer in each of the Sacramento and Fresno divisions of the Eastern District of California to recognize outstanding collaboration between federal, state and local law enforcement in addressing criminal conduct in this region.
The 2015 Fresno division’s Outstanding Law Enforcement Agency Award goes to the Stanislaus County District Attorney’s Office for its participation in task forces that resulted in a number of significant prosecutions involving violent crime and fraud in the mortgage industry.
U.S. Attorney Wagner stated: “Our success is only ever possible because of dedicated, hard-working law enforcement officers in both federal and state law enforcement. The investigators with the Stanislaus County District Attorney’s Office deserve particular recognition for their skill, diligence, and spirit of cooperation.”
“District Attorney Birgit Fladager said, “We truly value the partnership we have with the U.S. Attorney’s Office and are grateful for this recognition. Serving crime victims and holding criminals accountable can best be done when working together.”
Two investigators merit particular mention this year: Lieutenant Froilan Mariscal who worked on the gang task force that investigated the notorious, violent gang Nuestra Familia, and Investigator Glenn Gulley who worked on the FBI’s Mortgage Fraud Task Force while it was in operation and continues to work extensively with our office.
Lt. Mariscal spearheaded a long-term and complex investigation of the Nuestra Familia gang that resulted in a RICO prosecution and a 20-year sentence for the lead defendant. So far, nine co-defendants have pleaded guilty. The case involved a series of assaults executed in jail, drug trafficking, an armed home invasion and carjacking, and a gang fight involving a shooting. Lt. Mariscal was relentless in his pursuit of this investigation and brought with him knowledge, gang expertise, good judgment, and dogged determination.
Investigator Gulley currently has several significant fraud cases pending with the office. He has comprehensive knowledge of real estate fraud, including industry practices and case-specific knowledge of pertinent real estate transactions. Gulley investigated the case against Xue Heu, who was a serial investment fraudster. He posed as a government representative to purportedly sell distressed properties to unwitting investors. Heu was indicted for defrauding victims, and was indicted in the Western District of Texas for a separate real estate investment fraud scheme. Investigator Gulley coordinated the case with other investigators in Texas, marshaled evidence to obtain a guilty plea in the Eastern District of California case, and also found the time and energy to uncover additional criminal conduct Heu perpetrated while out on bond. Investigator Gulley’s determination resulted in a prison sentence of over five years, as well as an additional state court conviction for Heu’s criminal conduct while on bail.
Merced Man Arrested for Distributing Marijuana and Cocaine Nationwide Through the Silk Road and Other Dark-Web Marketplace WebsitesRead the Press Release
FRESNO, Calif. — David Ryan Burchard, 38, of Merced, was arrested late Monday, charged in a criminal complaint with distribution of marijuana and cocaine on dark-web marketplaces, including the Silk Road, United States Attorney Benjamin B. Wagner announced. Burchard made his initial appearance on the complaint today before U.S. Magistrate Judge Erica P. Grosjean in Fresno.
According to the criminal complaint, Burchard, using the moniker “Caliconnect,” was a major narcotics vendor on the Silk Road and other dark-web marketplaces, including Agora, Abraxas, and AlphaBay. Dark-web marketplaces are operated on computer networks designed to conceal the true Internet Protocol (IP) address of the computers accessing the network. In addition, dark-web marketplaces allow for payments to be made only in the form of digital currency, most commonly in 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.
According to the complaint, Burchard accepted orders for marijuana and cocaine on dark-web marketplaces and then mailed the narcotics from post offices in Merced and Fresno County to his customers throughout the United States. Burchard was paid primarily in Bitcoin. Federal law enforcement estimates that Burchard, whose sales through the Silk Road were in excess of $1.4 million before that website was closed, was one of the largest vendors on the Silk Road. The complaint alleges that after federal law enforcement shut down the Silk Road website and arrested its founder in October 2013, Burchard transferred his narcotics business to Agora and then to AlphaBay, which are other dark-web marketplaces.
“The Department of Justice and our federal law enforcement partners will continue to investigate and prosecute major interstate narcotics traffickers,” said U.S. Attorney Wagner. “Those traffickers who believe they can escape the scrutiny of law enforcement by conducting their business on the dark-web and receiving payments in digital currency are mistaken.”
“HSI and our partners are at the forefront of combating illicit activities and financial crimes now seen in virtual currency systems,” said Ryan L. Spradlin, special agent in charge of HSI San Francisco. “Criminals continue to spread their businesses through online black‑markets using digital currency like Bitcoin, however they do not escape the reach of law enforcement who will continue to investigate, disrupt, and dismantle hidden illegal networks that pose a threat in cyberspace.”
“The combined efforts of law enforcement agencies in this type of investigation produce a formidable force against narcotics trafficking,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “With the increase use of the dark-web to facilitate the drug trade and other illicit activities, IRS-CI will continue to trace the complex financial transactions that identify where the money comes from and where it goes.”
San Francisco Division Inspector in Charge Rafael Nunez of the U.S. Postal Inspection Service stated: “Postal Inspectors worked closely with the U.S. Attorney’s Office and our partners in law enforcement on this investigation and will continue to vigorously protect the U.S. Mail against all forms of criminal misuse.”
This case is the product of an investigation by 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, with assistance from Trial Attorney Anitha Ibrahim of the U.S. Department of Justice’s Computer Crimes and Intellectual Property Section. Assistant United States Attorney Grant Rabenn is prosecuting the case.
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.
Fresno Police Officer Receives Award for His Contributions to the Mission of the Department of JusticeRead the Press Release
FRESNO, Calif. — United States Attorney Benjamin B. Wagner is pleased to announce the 2015 winner of the Eastern District of California Outstanding Investigator Award for the Fresno Division. This is one of four awards presented annually to a law enforcement agency and an officer in each of the Sacramento and Fresno divisions of the Eastern District of California to recognize outstanding collaboration between federal, state and local law enforcement in addressing public safety issues in this region.
The 2015 Fresno Division’s Outstanding Investigator Award goes to Fresno Police Detective David Fries for his work on cases of sex trafficking of minors. Detective Fries is deserving of recognition for his diligent, principled work. With cases that are difficult to build and involve reluctant and sometimes antagonistic victims, Det. Fries works tirelessly until the case is closed. His efforts have been essential to the successful prosecution of these cases.
U.S. Attorney Wagner stated: “It is my honor to recognize David Fries for the difficult and important work of bringing to justice those who prey upon some of the most vulnerable members of our community. It is in large part due to the hard work of Detective Fries and his colleagues that the Eastern District of California is seen as a national leader in the investigation and prosecution of the commercial exploitation of children. We thank him for his service.”
Recent cases that Detective Fries has investigated are:
Maurice Hunt: This case involved the trafficking of a 13-year-old girl. Hunt sexually assaulted, beat and trafficked this girl in Fresno and Bakersfield for 10 days. Hunt represented himself at trial and was convicted of sex trafficking of a minor, obstruction of justice, and witness tampering charges. His 50-year prison sentence was recently upheld on appeal.
Tyrell Richmond: This case involved three 16-year-old runaway girls trafficked by Richmond in Fresno and Visalia. They were required to turn over all the cash they earned and were not permitted to leave their motel room, other than to get ice. Richmond pleaded guilty on December 14, 2015, and is scheduled to be sentenced April 11, 2016, for sex trafficking of a minor.
Tryvell Powell: This case involved the sex trafficking of a 16-year-old girl in Fresno for about five months by Powell in which he forced the victim to earn a quota of $300 per day. Powell threatened to kill her and her unborn child if she left him. Powell pleaded guilty to enticement of a minor and was sentenced to 10 years and 10 months in prison.
EDD Investigator Receives Award for Contributing to the Mission of the Department of JusticeRead the Press Release
SACRAMENTO, Calif. — United States Attorney Benjamin B. Wagner is pleased to announce the 2015 winner of the Eastern District of California Outstanding Investigator Award for the Sacramento division. This award is one of four awards presented annually to a law enforcement agency and an officer in each of the Sacramento and Fresno divisions of the Eastern District of California to recognize outstanding collaboration between federal, state and local law enforcement.
The Sacramento division’s 2015 Outstanding Investigator Award goes to California Employment Development Department Investigator Celia Lopez for her work in a sprawling unemployment and disability benefit fraud investigation in Sutter County with criminal conduct that spanned decades and resulted in over $14 million in loss. Celia Lopez was the original case agent for the case and, working with agents from the FBI and the Department of Labor, Office of Inspector General, she helped to bring five indictments against 29 individuals. The lead defendant, Mohammad Nawaz Khan, was sentenced to 12 and a half years in prison, Mohammad Adnan Khan was sentenced to nine years in prison, Mohammad Shahbaz Khan was sentenced to seven years in prison, and Iqila Begum Khan was sentenced to five years in prison.
U.S. Attorney Wagner stated: “It is my honor to recognize Celia Lopez for her work that led to the complete dismantling of one of the the most sophisticated and wide-reaching fraud schemes our district has seen. Her work on this case was timely, thorough, and meticulous. We thank her for her service.”
The Khans sold fake paystubs and reported false wages to EDD for the individuals who purchased those paystubs. The purchasers used the fake paystubs to fraudulently claim unemployment and disability benefits. Over the course of the conspiracy, the defendants reported wages for over 400 separate individuals that resulted in more than 2,000 fraudulent claims for unemployment and disability benefits.
Investigator Lopez marshalled over 20 years of voluminous records evidencing criminal conduct involving hundreds of potential subjects. She conducted scores of interviews of both criminal participants and witnesses. She worked tirelessly to identify not only the organizers of the scheme, but also the most culpable other participants in the scheme that should face charges. Investigator Lopez was able to distill the complex case into manageable documents, understandable spreadsheets, and persuasive charts. Even after the initial indictment was brought in 2012, she continued to investigate and discovered that the brothers of the main subject restarted the fraud scheme under other names shortly after the initial arrests. Investigator Lopez worked quickly to bring that evidence to the attention of the U.S. Attorney’s Office before the loss spiraled out of control. It resulted in an extensive grand jury investigation and perjury charges against new participants. Because of Investigator Lopez’s work, less than $30,000 was lost from the new scheme.
San Joaquin County District Attorney’s Office Receives Award for Its Contribution to the Mission of the Department of JusticeRead the Press Release
SACRAMENTO, Calif. — United States Attorney Benjamin B. Wagner is pleased to announce the 2015 winner of the Eastern District of California Outstanding Law Enforcement Agency Award for the Sacramento Division. This award is one of four awards presented annually to a law enforcement agency and an officer in each of the Sacramento and Fresno divisions of the Eastern District of California to recognize outstanding collaboration between federal, state and local law enforcement in addressing public safety issues in this region.
U.S. Attorney Wagner stated: “Our success was only possible because of the dedicated, hard-working staff of law enforcement agencies like Scott McDonald and Cheryl Mason. All successful prosecutions rely on good investigations. Without their professional attention to detail and dogged investigation, it would not have been possible to bring this defendant to justice. My office, the Eastern District, and San Joaquin County all owe a great debt to the District Attorney’s Office and the many skilled and dedicated people who work there.”
San Joaquin County District Attorney Tori Verber Salazar stated: “We are greatly appreciative of this award. It exemplifies the collaborative effort of our 220 employees with our law enforcement partners, like the U.S. Attorney’s Office, to make our communities safe.”
The 2015 Sacramento Division’s Outstanding Law Enforcement Agency Award goes to the San Joaquin County District Attorney’s Office for its work in the John Steven Keplinger case. Keplinger purported to sell used car engines online, took people’s money, and often never sent the engines or sent defective engines from junkyards. Working out of his house in Stockton, he had over 300 victims nationwide.
Before federal law enforcement became involved, the San Joaquin DA’s office, with Deputy District Attorney Scott McDonald and paralegal Cheryl Mason, did all they could to shut down the original website and find and shut down new websites he opened in order to continue his fraud. Their focus was always on the victims, many of whom were poor and were buying replacement engines because they could not afford a new car. When the FBI began investigating, McDonald and Mason connected them to the Bureau of Automotive Repair which had opened the investigation, and shared an extensive amount of victim complaint information collected from various agencies across the country. Throughout the time-consuming process, the San Joaquin County team of McDonald and Mason kept their focus on preventing Keplinger from committing further crimes. Eventually, he was sentenced to two years and three months in prison and a $100,000 fine.
Last Defendant Sentenced in Central Valley Student Aid Fraud and Identity Theft SchemeRead the Press Release
FRESNO, Calif. — Piersha Dwan Woolridge, 37, of Atwater, was sentenced today by United States District Judge Anthony W. Ishii to four years and eight months in prison and ordered to pay $347,732 in restitution, for her role in a student aid fraud and identity theft scheme, United States Attorney Benjamin B. Wagner announced.
According to court documents, Woolridge was the leader of a scheme to defraud the United States Department of Education of student aid grants and loans. She submitted false financial aid applications to the University of Phoenix and Capella University on behalf of students who did not intend to attend either school. She also used stolen identities to apply for college financial aid in the names of persons who did not know their information was being used in the scheme. As a result of the scheme, more than $370,000 in fraudulently obtained grants and loans was disbursed.
“U.S. Attorney Wagner said: “Federal student loan programs are intended to improve the long-term prospects of students committed to education and to create a more competitive economy for the nation. Those who rip off these programs are not only stealing from the taxpayer, they are taking money intended for deserving students. The U.S. Department of Justice will continue to target fraudsters who perpetuate student loan fraud schemes.”
“I’m proud of the work of OIG special agents and our law enforcement colleagues for shutting down yet another student aid fraud ring and holding Ms. Woolridge and her conspirators accountable for their criminal actions,” said Natalie Forbort, Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s Western Regional Office. “OIG is committed to fighting student financial aid fraud, and we will continue to aggressively pursue those who participate in these types of crimes.”
On July 11, 2013, a jury found co-defendant Keith Woolridge guilty of conspiracy to commit mail fraud, mail fraud, and aggravated identity theft after a three-day jury trial. He was sentenced to three years and eight months in prison. Other participants in the scheme received the following prison sentences after pleading guilty: Yvette August was sentenced to two years and one month; Kim Gray was sentenced to two years and four months; and Sherise Woolridge was sentenced to four years and six months.
This case was the product of an investigation by the U.S. Department of Education Office of Inspector General. United States Attorneys Mark J. McKeon and Grant B. Rabenn prosecuted the case.
Hydroponics Store Owner Sentenced to over 3 Years in Prison for Structuring Cash Deposits and Filing False Tax ReturnsRead the Press Release
FRESNO, Calif. — Branden Adam Eidson, 34, of Turlock, was sentenced today by United States District Judge Dale A. Drozd to three years and one month in prison and ordered to pay $433,205 in restitution for structuring cash transactions and filing false tax returns, United States Attorney Benjamin B. Wagner announced.
According to court documents, Eidson operated a hydroponics equipment and supply business, Hooked Up Hydroponics. Between 2008 and 2010, he filed false federal income tax returns by underreporting approximately $1,244,365 in gross receipts for his business, resulting in a tax loss to the Internal Revenue Service of more than $430,000. In addition, Eidson made multiple cash deposits of $10,000 or less during this same time period in an attempt to prevent his bank from filing Currency Transaction Reports. In total, Eidson made more than $1.5 million in structured cash deposits.
This case was a product of an investigation by the Internal Revenue Service, Criminal Investigation. Assistant United States Attorney Grant B. Rabenn prosecuted the case.
Clovis Pharmacy Owner Agrees to Pay $200,000 in Civil Penalties to Resolve Controlled Substances Act ClaimsRead the Press Release
SACRAMENTO, Calif. – Khoa Tan Huynh, owner of the Script Life Pharmacy in Clovis has agreed to pay the United States $200,000 to settle civil claims for statutory violations occurring at the pharmacy, United States Attorney Benjamin B. Wagner announced today.
According to the settlement agreement, in June 2013, an audit revealed multiple violations of the Controlled Substances Act (CSA). The government contends that between June 6, 2011, and December 31, 2012, Script Life Pharmacy accepted and filled prescriptions that lacked required information, including the prescribers’ DEA registration numbers and signatures. In addition, the audit demonstrated shortages of several controlled substances, along with overages of several others.
“Abuse of prescription drugs is a significant societal problem. Pharmacies must take great care to ensure that controlled substances do not end up in the wrong hands. This settlement underscores the federal commitment to holding accountable dispensaries of controlled substances,” said U.S. Attorney Wagner.
The Controlled Substances Act (CSA) authorizes the Drug Enforcement Administration (DEA) to regulate controlled substances to create a “closed” system of distribution that provides the legitimate drug industry with a unified approach to narcotic and dangerous drug control. The CSA establishes a classification system for all controlled substances, including prescription medications, based upon the potential for abuse, dependence profile, and medicinal value of the drugs. The CSA and its implementing regulations mandate that prescriptions for controlled substances include certain critical information and require pharmacies to maintain certain records and inventories of these controlled substances; these controls allow the DEA to protect the distribution system and prevent drug diversion and abuse.
This case was prosecuted by Assistant United States Attorney Catherine Swann and results from an investigatory audit by the DEA Fresno Diversion Group.
Bakersfield Man Pleads Guilty to Federal Firearm ChargeRead the Press Release
FRESNO, Calif. —Bryson LaPaul Blair, 30, of Bakersfield, pleaded guilty today to being a convicted felon in possession of a firearm and ammunition, United States Attorney Benjamin B. Wagner announced.
According to court documents, during the execution of a search warrant at Blair’s residence, officers found a loaded Russian assault weapon under Blair’s bed and 145 rounds of ammunition. Blair was previously convicted in Kern County of a felony and was prohibited from possessing firearms and ammunition.
Blair is scheduled to be sentenced by United States District Judge Lawrence J. O’Neil on June 13, 2016. Blair 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 is the product of an investigation by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the Bakersfield Police Department. Assistant United States Attorney Karen Escobar is prosecuting the case.
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.
Three Charged in Arson Fraud Scheme Involving Seven Sacramento Area Commercial BuildingsRead the Press Release
SACRAMENTO, Calif. — Three Sacramento-area men have been charged in a 60-count indictment for a scheme to commit multiple arsons for profit, United States Attorney Benjamin B. Wagner announced.
The indictment returned by a grand jury on February 25, 2016, and unsealed today, charges Jamal M. Shehadeh, 57, of Sacramento, with all counts: seven counts of arson, 52 counts of mail and wire fraud, and one count of money laundering. Brian J. Stone, 57, of Elk Grove, is charged with 13 counts of mail fraud or wire fraud, and Saber A. Shehadeh, 73, of Sacramento, is charged with three counts of mail fraud. As a result of the scheme, the defendants and their associates received over $1.5 million in insurance proceeds.
According to court documents, the defendants participated in an arson fraud scheme that ran from at least December 2009 through September 2013, involving seven fires at six commercial buildings in Sacramento and Carmichael. Jamal Shehadeh owned and operated various businesses, many of which burned in commercial structure fires. Saber Shehadeh owned Tru Value Market and a nearby corner property, which were destroyed in two of the fires. Brian Stone provided business consultant services that included assisting with the insurance claims.
The dates and locations of the fires are as follows:
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1007 E Street and 427 10th St., Sacramento — December 27, 2009
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511 Broadway, Sacramento — June 9, 2010
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427 10th St., Sacramento — August 15, 2010
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6964 65th St., Sacramento — April 23, 2012
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5725 Marconi Avenue, Carmichael — September 24, 2012
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910 University Avenue, Sacramento — October 15, 2012
- 2764 Fulton Avenue, Sacramento — June 16, 2013
According to the indictment, Jamal Shehadeh and others working with him and at his direction obtained insurance policies that covered fire damage for businesses owned and controlled by the defendants and their associates. In some cases, false statements were made to insurance representatives in order to obtain insurance coverage. Once Jamal Shehadeh knew that insurance policies existed, he deliberately set fires or caused fires to be set that damaged the businesses and at least one vehicle.
According to the indictment, after the properties were destroyed and damaged by fire, the defendants submitted insurance claims. Those claims contained false statements regarding the amount, cost, value, and true ownership of property damaged and destroyed in a particular fire, as well as the prior income of the business, the amount of lost business income, and whether a business had reopened.
As part of the scheme, the defendants made false statements regarding the identity of the company doing the post-fire cleanup, the relationship between the insured and the company doing the cleanup, the actual cost of the cleanup, and whether other companies had been consulted to do the cleanup work and had submitted bids and estimates. In some cases, the defendants used a company that Jamal Shehadeh controlled for the cleanup, while misrepresenting to the insurance companies that it was a third-party company.
In furtherance of the scheme, the defendants personally, and through their associates and companies and accounts that they controlled, received insurance proceeds from the insurance companies.
This case is the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation with assistance from the Sacramento Metropolitan Fire District and the City of Sacramento Fire Department. Assistant United States Attorneys Michael D. Anderson and Christopher S. Hales are prosecuting the case.
If convicted, the defendants face the following possible penalties: The maximum statutory penalty for mail fraud or wire fraud is 20 years in prison and a $250,000 fine. The statutory penalty for arson of property used in commerce is five to 20 years in prison and a fine up to $250,000. There is a mandatory minimum sentence of 10 years in prison for the first count of arson to commit a federal felony, a mandatory 20 years in prison consecutive to any other sentence for each subsequent count and a fine of up to $250,000. The maximum statutory penalty for money laundering is 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 defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
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Former Federal Employee Sentenced to Five Years in Prison for Receipt of Child PornographyRead the Press Release
SACRAMENTO, Calif. — Eric Worrell, 57, of Rancho Cordova and formerly a federal Department of Transportation employee, was sentenced today by United States District Judge Troy L. Nunley to five years in prison, to be followed by 20 years of supervised release, for receipt of child pornography, United States Attorney Benjamin B. Wagner announced. On release, Worrell will be required to register as a sex offender.
According to court documents, a thumb drive found in a hallway outside the offices of the federal Department of Transportation in Sacramento was turned over to investigators, who determined it belonged to Worrell. A forensic review of the thumb drive and Worrell’s work laptop found they contained hundreds of images of child erotica and child pornography. Worrell told agents that he would carry this thumb drive with him so that he would not leave the materials at home where his family members could find them.
“Countless children around the world fall prey to sexual predators. It is our priority to make every effort to keep our children safe,” said Ryan L. Spradlin, special agent in charge of HSI San Francisco. “Together with our law enforcement partners, we work tirelessly to search out criminals who seek to harm or exploit innocent children and hold them accountable for their actions.”
This case was the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Department of Transportation’s Office of Inspector General. Special Assistant United States Attorney Josh F. Sigal 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.
Former Correctional Officer at Susanville Pleads Guilty to Accepting BribesRead the Press Release
SACRAMENTO, Calif. — Jordan Kinglee, 23, of Susanville, pleaded guilty today to honest services wire fraud for smuggling cellphones into prison, United States Attorney Benjamin B. Wagner announced.
According to court documents, while working as a correctional officer at the California Correctional Center (CCC) in Susanville, Kinglee smuggled cellphones into the prison for an inmate. A friend of the inmate, who was not in custody, paid Kinglee more than $8,000 to smuggle the cellphones. As a correctional officer, Kinglee was prohibited under California law from providing cellphones to prisoners, receiving any compensation from prisoners or their representatives, and from any barter or dealings with any prisoner. Kinglee was arrested on May 12, 2015.
This case is the product of an investigation by the Federal Bureau of Investigation, the California Department of Corrections and Rehabilitation Office of Internal Affairs Northern Region, and the Susanville Police Department. Assistant United States Attorney Christiaan Highsmith is prosecuting the case.
Kinglee is scheduled to be sentenced by U.S. District Judge Morrison C. England Jr. on June 9, 2016. Kinglee faces 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.
Placer County Woman Sentenced to 14 Years in Prison for Multimillion Dollar Mortgage Fraud SchemeRead the Press Release
SACRAMENTO, Calif. - United States District Judge John A. Mendez sentenced Vera Kuzmenko, 46, of Loomis, today to 14 years in prison for multiple counts of mail and wire fraud, witness tampering, and money laundering associated with her involvement in a mortgage fraud scheme that cost financial institutions over $16 million, United States Attorney Benjamin B. Wagner announced.
On December 4, 2015, after a 16-day trial, a federal jury returned guilty verdicts for Kuzmenko and Rachel Siders, 40, of Roseville. Siders is scheduled to be sentenced on June 21, 2016.
According to evidence presented at trial, from late 2006 through early 2008, Kuzmenko and Siders engaged in a mortgage fraud scheme involving over 30 properties in the Sacramento area. They were responsible for securing more than $30 million in residential mortgage loans on more than 30 homes purchased through straw buyers. Records introduced at trial showed Vera Kuzmenko received millions of dollars.
Kuzmenko, who had been a licensed real estate agent for part of the scheme, created fraudulent loan applications on behalf of the straw buyers. The loan applications contained materially false information as to the straw buyers’ income, employment, assets, and intent to occupy the residences. The loan paperwork also hid from lenders millions of dollars of payments that went to the defendants. She also served as a straw-buyer herself. With respect to the witness tampering count, the evidence showed that after Kuzmenko learned the FBI was investigating her, she told various witnesses to lie to the FBI and blame a dead woman for the fraud.
U.S. Attorney Wagner stated: “There were many causes for the mortgage crisis that decimated the national economy and hit the Sacramento region so especially hard. One factor that did not help, and that contributed to the explosion of foreclosures in our neighborhoods was the proliferation of mortgage fraud schemes like the one operated by Vera Kuzmenko. My office will continue to seek to hold accountable those who profited from such schemes, and the sentence imposed today is a significant reminder that there is a heavy price to pay for those who seek to profit through fraud.”
“Vera Kuzmenko’s scheme cost financial institutions over $16 million,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “Fraud in the mortgage industry has played a major role in almost crippling this nation’s economy. While today’s sentencing cannot reverse the damage caused by these defendants, IRS-CI is committed to investigate individuals who engage in deceptive and fraudulent behavior, fueled by greed.”
“As the mastermind of a scheme to intentionally defraud members of her own community, Vera Kuzmenko, coordinated a network of individuals who perpetrated a multimillion-dollar fraud scheme,” said Assistant Special Agent in Charge Manuel Alvarez of the Federal Bureau of Investigation Sacramento field office. “Her sentence cannot undo the damage done to her community’s trust and financial well-being, but it will ensure justice for victims and serve as a warning to other would-be fraudsters.”
This case is the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorneys Lee S. Bickley and Michael D. Anderson and Special U.S. Attorney David J. Ward are prosecuting the case.
On October 20, 2015, Judge Mendez sentenced co-defendants Peter Kuzmenko, 37, of West Sacramento, to 19 years in prison; Aaron New, 41, of Sacramento, to 11 years and three months in prison; Nadia Kuzmenko, 36, formerly of Loomis, to eight years in prison; and Edward Shevtsov, 52, of North Highlands, to eight years in prison. They were found guilty on February 13, 2015, after a 21-day trial, of multiple counts of mail and wire fraud associated with the mortgage fraud scheme. In addition, Peter Kuzmenko, Edward Shevtsov, and Aaron New were found guilty of money laundering associated with the scheme, and Nadia Kuzmenko was found guilty of witness tampering.
Sierra National Forest Marijuana Cultivator Pleads GuiltyRead the Press Release
FRESNO, Calif. — Francisco Javier Gomez-Rodriguez, 38, of Mexico, pleaded guilty today to conspiring to manufacture, distribute and possess with intent to distribute marijuana grown in the Sierra National Forest in Madera County, United States Attorney Benjamin B. Wagner announced.
According to court documents, co-defendant Humberto Ceballos-Rangel, 37, also of Mexico, was found at a campsite within the marijuana cultivation site, where agents found 5,904 marijuana plants. Gomez-Rodriguez and two other co‑defendants, Alejandro Ramirez-Rojo, 31, of Mexico, and Anthony Isaac Santibanez, 20, of Woodlake, California, were found a short time later approaching the grow site in a vehicle delivering supplies.
Ceballos-Rangel previously pleaded guilty. Both Gomez-Rodriguez and Ceballos-Rangel have agreed to make restitution to the U.S. Forest Service for the damage they inflicted on the public land and natural resources as a result of their marijuana cultivation activities. Native vegetation was cut down, and water was diverted from a nearby creek to irrigate the marijuana plants. A large quantity of trash was also found at the site.
Gomez-Rodriguez is scheduled for sentencing before U.S. District Judge Lawrence J. O’Neill on June 13, 2016. Ceballos-Rangel is scheduled for sentencing on April 18. They face a maximum statutory penalty of 20 years in prison and a $1 million fine. The actual sentences, 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.
Santibanez and Ramirez-Rojo are scheduled for trial on August 9. They face additional charges, including depredation of public land and natural resources. The charges are only allegations; these defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case is the product of an investigation by the U.S. Forest Service, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the California Department of Justice’s Campaign Against Marijuana Planting (CAMP), the California Department of Fish and Wildlife, and Madera County Narcotic Enforcement Team (MADNET). Assistant United States Attorney Karen A. Escobar is prosecuting the case.
Modesto Tri Counties Bank Robber Sentenced to over 26 Years in PrisonRead the Press Release
FRESNO, Calif. — Lloyd George Kenney, 65, was sentenced today by United States District Judge Anthony W. Ishii to 26 years and seven months in prison for an armed bank robbery he committed at the Tri Counties Bank in Modesto. The sentencing followed his conviction by a jury in December 2015 of armed bank robbery, using a firearm during a crime of violence, and of being a felon in possession of a firearm, United States Attorney Benjamin B. Wagner announced.
According to evidence presented at trial, on the morning of May 25, 2012, Kenney robbed the Tri Counties Bank located inside the Raley’s grocery store at Floyd Avenue in Modesto. Kenney was armed with a semi-automatic handgun and was heavily disguised, wearing a hockey helmet, facemask, long black coat and gloves. He took $2,872 from tellers at gunpoint and fled on a bicycle into a neighborhood to the east of the store where he had parked a van earlier.
Within minutes of being alerted to the robbery, a Modesto police officer saw Kenney, who was still wearing the helmet, enter his van and begin to drive away. The officer pulled the van over and Kenney was taken into custody. During a search of the van, officers found the cash taken from the Tri Counties Bank, Kenney’s bike, a hockey helmet, a mask, a loaded Glock handgun and a loaded Browning handgun. While searching Kenney, officers found a police scanner set to channels used by the Modesto Police Department.
Court records reflect that Kenney had federal felony convictions in 1984 and 1985, as well as a felony conviction in San Mateo Superior Court in 1974.
This case was the product of an investigation by the Federal Bureau of Investigation and the Modesto Police Department. Assistant United States Attorneys Michael Frye and Mia Giacomazzi prosecuted the case.
Carmichael Man Sentenced to 5 Years in Prison for Possessing Biological Toxin and Selling Machine GunsRead the Press Release
SACRAMENTO, Calif. — James Christopher Malcolm, 31, of Carmichael, was sentenced today to five years in prison for possessing abrin, a biological toxin; unlawful dealing in firearms; and possession and transfer of a machine gun, United States Attorney Benjamin B. Wagner announced.
United States District Judge Troy L. Nunley also ordered Malcolm to pay $30,918 in restitution.
According to court documents, Malcolm met with a confidential informant to discuss a plan to sell fully automatic rifles. At the meeting, Malcolm told the informant that distributing firearms was only a side business, and his main business was distributing explosives and poison. Later, Malcolm sold four short-barrel AR-15-style machine guns, 1.5 pounds of improvised explosive material, three blasting caps, and a firearm silencer to undercover agents posing as arms dealers for drug trafficking organizations. Additionally, Malcolm told undercover law enforcement agents that he could manufacture parts to convert Glock pistols into fully automatic machine guns. Malcolm actually demonstrated the process of converting pistols to machine guns and over the course of various meetings, sold the agents parts to convert 10 pistols.
In addition to face-to-face sales, Malcolm also utilized the online moniker “Dark_Mart.” Using the Dark_Mart moniker, Malcolm opened a seller’s account on Black Market Reloaded (BMR), an online marketplace accessed via TOR network. Malcolm’s Dark_Mart page on BMR provided a menu of items for sale, including Glock auto-sears, explosives, ricin, and abrin.
Abrin is a natural poison found in the seed of the rosary pea, a tropical plant. Similar to ricin, abrin is a protein inhibitor that prevents cells from making the proteins they need to survive. A dose as small as several micrograms may be fatal. The cause of death is typically internal bleeding or organ failure within three days. Abrin can be injected, inhaled, or swallowed. Abrin is classified as a “Select Agent and Toxin” by the United States Department of Health and Human Services because of the potential severe threat to public health and safety.
On BMR, Malcolm was contacted by two separate individuals who desired to purchase abrin, one in New York and one in San Francisco. Malcolm agreed to ship abrin to the two individuals in exchange for payment in bitcoin. On December 5, 2013, Malcolm shipped two packages from Vacaville, one to New York and one to San Francisco. Both shipments contained small glass vials filled with a rudimentary form of abrin concealed within flashlights.
This case was the product of an investigation by the Bureau of Alcohol Tobacco, Firearms and Explosives and the Federal Bureau of Investigation. Assistant United States Attorney Justin Lee prosecuted the case.
Former Deputy U.S. Marshal Sentenced to 10 Years in Prison for Yuba City Armed Robbery of Marijuana DealersRead the Press Release
SACRAMENTO, Calif. — Clorenzo Griffin, 38, of Fort Lauderdale, Florida, was sentenced today to 10 years in prison for planning and participating in the robbery of marijuana from drug dealers in Yuba City, United States Attorney Benjamin B. Wagner announced.
In sentencing Griffin, United States District Judge Kimberly J. Mueller noted that the defendant was very lucky that nothing worse happened on the day of his arrest. Judge Mueller had earlier sentenced Griffin’s co-conspirators, Andre Jamison, 40, of Miami, Florida, to seven years and three months in prison and crew member Rodney Rackley, 24, of Miami, Florida, to six years in prison.
According to court documents, on October 11, 2014, a CHP officer in Sutter County attempted to stop a speeding Jeep Patriot. Griffin, with his co-conspirators as passengers, was the driver of the rented Jeep and drove evasively. As the pursuing CHP officer drew closer, Griffin drew his firearm. This caused a Sutter County Sheriff’s deputy to fire at Griffin in order to halt his aggression toward the pursuing CHP officer. The three defendants eventually abandoned the vehicle in a parking lot on Starr Drive and fled on foot. The defendants were subsequently taken into custody with the assistance of the Sutter County Sheriff’s deputies. At the time of his arrest, Griffin possessed a loaded .40-caliber firearm. Further investigation revealed that Griffin was a deputy U.S. Marshal from South Florida.
Court documents further indicate that before fleeing from the CHP, Griffin, Rackley and Jamison, wearing police ballistic vests, had brandished firearms and robbed three individuals at gunpoint of approximately 24 pounds of marijuana. The robbery took place in the parking lot of a hotel off State Route 99 in Yuba City.
“Violence relating to marijuana trafficking is a serious problem in this region, but it is particularly deplorable when the conduct involves a rogue member of federal law enforcement,” said U.S. Attorney Wagner. “Mr. Griffin not only endangered the public by his conduct, but he abused the public trust placed in federal law enforcement by using his service firearm to commit the crime.”
This case was the product of an investigation by the Drug Enforcement Administration, the California Highway Patrol, the Sutter County Sheriff’s Office, the Yuba City Police Department, and the Sutter County District Attorney’s Office. Assistant United States Attorney Jason Hitt prosecuted the case.
Bard College to Pay $4 Million to Resolve False Claims Act AllegationsRead the Press Release
SACRAMENTO, Calif. — Bard College has agreed to pay $4 million to resolve allegations that it violated the False Claims Act in connection with a federal grant and with regard to the receipt and disbursement of Title IV federal student aid funds, United States Attorney Benjamin B. Wagner announced today.
The settlement announced today stems from a whistleblower complaint filed by two former students of Bard’s Master of Arts in Teaching Program at Paramount Bard Academy in Delano, California (Kern County) pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the United States and to share in the proceeds of the suit. The act permits the United States to intervene and take over the lawsuit, as it did in this case as to some of the students’ claims. The students will receive a percentage share of the settlement in an amount to be determined.
Bard College, a nonprofit institution with its main campus in Annandale-on-Hudson, New York, received funds under the Department of Education’s Teacher Quality Partnership Grant Program. The settlement resolves allegations that Bard received funds under the Teacher Quality Partnership Grant Program despite failing to comply with the conditions of the grant.
The settlement also resolves allegations that Bard awarded, disbursed, and received Title IV student loan funds at campus locations before such locations were accredited or before providing notice of such locations to the Department of Education, in violation of applicable regulations and Bard’s Title IV Program Participation Agreements with the Department of Education.
“When institutions of higher education opt to participate in loan and grant programs administered by teh Department of Education, their participation comes with conditions designed to protect the institution’s students and the integrity of the Department of Education’s programs,” said United States Attorney Benjamin B. Wagner. “Today’s resolution demonstrates the Department of Justice’s continuing commitment to ensuring that such institutions meet those conditions and fulfill their promises.”
“Throughout this Administration, the Department of Education has aggressively enforced accountability and compliance laws for institutions of higher education to protect students, families, and taxpayers. Today’s agreement illustrates our commitment to these enforcement efforts,” said U.S. Education Under Secretary Ted Mitchell. “Bard’s resolution through this agreement indicates a willingness to take responsibility, and a commitment to more effectively meet the requirements for implementing grants and distributing federal student aid and loans. As with all institutions, the Department will continuously monitor Bard to ensure that students, families and taxpayers are protected. ”
“I’m proud of the work of OIG special agents and staff and our colleagues in the U.S. Attorney’s Office whose work brought about today’s fair and reasonable settlement,” said Natalie Forbort, Special Agent in Charge of the Office of Inspector General’s Western Regional Office. “We will continue to work together to protect and maintain the integrity of the Department of Education’s programs. America’s taxpayers and students deserve nothing less.”
The settlement was the result of a coordinated effort among the Eastern District of California’s U.S. Attorney’s Office, the U.S. Department of Education and the U.S. Department of Education, Office of Inspector General. Assistant United States Attorney Vincente A. Tennerelli represented the United States in this matter.
The claims settled by this agreement are allegations only, and there has been no determination of liability.
Tehachapi Doctor Sentenced to 6 Months in Prison for Defrauding Patients and Insurers by Implanting Unapproved IUDsRead the Press Release
FRESNO, Calif. — Dr. Paul S. Singh, 55, of Tehachapi, was sentenced today to six months in prison, to be followed by one year of home detention by United States District Judge Anthony W. Ishii, for a scheme to defraud patients and their insurers by implanting and billing for unapproved intrauterine devices (IUDs), United States Attorney Benjamin B. Wagner announced. A restitution hearing is set for May 9, 2016, at 10:00 a.m.
Singh, a medical doctor licensed to practice in California, had an office in Tehachapi. He provided obstetric and gynecological services to women, including providing forms of birth control. One form of birth control he provided were IUDs, which the Food and Drug Administration (FDA) regulates. The FDA has approved only one IUD that uses copper as its active ingredient, the ParaGard T-380A, which was sold only by its manufacturer and not available on third-party websites. Doctors who implant a non-FDA-approved copper IUD risk a patient’s safety. Such a device can result in an increased risk of pelvic inflammatory disease, ectopic pregnancy, hysterectomy, and other serious complications.
According to court documents, Singh bought unapproved IUDs on the Internet and implanted them in his patients. Rather than inform his patients or their insurers of using non-FDA approved IUDs, however, he fraudulently billed his patients and their insurers as if he had implanted FDA-approved IUDs, all without the permission or consent of his patients. Singh profited from the implanting unapproved IUDs by billing his patients and their insurers for the higher cost of approved IUDs, which was false and fraudulent.
According to court documents, Singh was sent multiple bulletins and newsletters warning against the use of unapproved IUDs. He was also warned that products sold by online pharmacies were not identical to the ParaGard T-380A and had not been approved as safe and effective by the FDA. In spite of the warnings, Singh purchased unapproved IUDs from online retailers and implanted them in numerous patients without their consent, between April 2008 and June 2012.
In August 2010, agents from the FDA confronted Singh about his history of implanting unapproved IUDs. During the meeting, Singh agreed to stop implanting them in his patients. In 2012, agents searched Singh’s office and learned that he had continued to implant unapproved IUDs in his patients.
According to the plea agreement, many of Singh’s patients later complained to him and other doctors about medical complications they associated with Singh’s insertion of the IUD. In multiple instances, Singh responded to such complaints by re-inserting the IUD rather than removing it. Some patients ultimately had to switch doctors in order to have the IUD removed.
U.S. Attorney Wagner stated: “Singh’s scheme risked the health of his patients and defrauded health care providers to benefit his bottom line. The investigation and prosecution of health care fraud is a priority for my office, particularly where that fraud endangers innocent patients.”
“Medical doctors have a special responsibility to make the best choices for their patients. When they ignore that responsibility and use unapproved medical devices, they put patients’ safety and health at risk,” said Special Agent in Charge Lisa L. Malinowski, FDA Office of Criminal Investigations’ Los Angeles Field Office. “Our office will continue its work to ensure that doctors and other healthcare professionals understand the consequences of using medical products that have not been approved by the FDA.”
This case was the product of an investigation by the Food and Drug Administration, Office of Criminal Investigations. Assistant United States Attorneys Patrick R. Delahunty and Kirk E. Sherriff prosecuted the case.
Clovis Man Pleads Guilty to Laser Strikes on CHP PlaneRead the Press Release
FRESNO, Calif. — Jeremy Scott Danielson, 35, of Clovis, pleaded guilty today to striking a California Highway Patrol plane with a powerful green laser beam, United States Attorney Benjamin B. Wagner announced.
According to court documents, Danielson tracked and struck a CHP plane, Air 43, 18 to 20 times with a powerful green laser pointer. Clovis police officers were dispatched to the source of the laser beam and found Danielson with a laser pointer in his pants’ pocket. As a result of the laser strikes, the pilot and tactical flight officer, who were conducting a routine patrol, suffered flash blindness and watery eyes. The laser pointer was the size of a flashlight and had a danger warning.
Reports of laser attacks have increased dramatically in recent years as powerful laser devices have become more affordable and widely available to the public. This year, according to the Federal Aviation Administration (FAA), there have been over 22 laser incidents reported each day in the United States. The Eastern District of California, which encompasses 34 counties in the eastern portion of California, has a high proportion of reported laser incidents. Lasers can completely incapacitate pilots who are trying to fly safely to their destination, endangering their crew members, passengers and people on the ground.
Danielson is scheduled for sentencing before U.S. District Judge Lawrence J. O’Neill on May 31, 2016. He faces a maximum prison term of five years and a fine of up to $250,000. 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 is the product of an investigation by the Federal Bureau of Investigation, the CHP, and the Clovis and Fresno Police Departments. Assistant U.S. Attorney Karen A. Escobar is prosecuting the case.