Eastern District of California

SACRAMENTO, Calif. — Paul La, 58, of Sacramento, was arraigned today on a 10-count indictment charging him with arson of a commercial structure, arson to commit a federal felony, and mail fraud, Acting United States Attorney Phillip A. Talbert announced. 

According to the indictment, on February 6, 2011, La intentionally set fire to Golden Nails & Hair, a salon that he owned at 8335 Folsom Boulevard in Sacramento. La then knowingly lied about the cause of the fire and the extent of his destroyed business property in order to obtain payment from his insurance company. 

This case is the product of an investigation by the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Assistant United States Attorneys Michael D. Anderson and Amanda Beck are prosecuting the case.

If convicted, La faces a minimum five years and a maximum of 20 years in prison for arson to a commercial structure; a consecutive 10 years in prison for arson to commit another felony; and a maximum of 20 years in prison for each count of mail fraud. Each count also carries 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 unless and until proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — A federal grand jury returned a six-count indictment on May 19, 2016, against Pamela Dawn Pierson, 50, of Vallejo, and Michelle Louise Travis, 50, of Suisun City. The indictment, which was unsealed today, charges both Pierson and Travis with conspiracy to commit wire fraud, conspiracy to defraud the United States government, filing false claims against the United States government, and aggravated identity theft, Acting United States Attorney Phillip A. Talbert announced. 

According to court documents, Pierson and Travis used identity theft victims’ personal identifying information to file fraudulent tax returns in order to obtain income tax refunds to which they were not entitled.

This case is the product of an investigation by the Internal Revenue Service – Criminal Investigation, the Federal Bureau of Investigation, and the Fairfield Police Department, with assistance from the University of California – San Francisco Police Department. Assistant United States Attorney Brian A. Fogerty is prosecuting the case.

If convicted, Pierson and Travis face a maximum statutory penalty of 20 years in prison for the conspiracy to commit wire fraud charge, a maximum of 10 years in prison for conspiracy to defraud the United States government, a maximum of five years in prison for the false claims charges, and a mandatory term of two years in prison for the aggravated identity theft charges. Each of the charges carries 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 defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — John Cal Howe II, 42, of Lakehead, was sentenced today to 18 months in prison after being convicted of 23 misdemeanor counts in a scheme to obtain thousands of dollars in veterans’ benefits to which he was not entitled, Acting United States Attorney Phillip A. Talbert announced. 

According to court documents, Howe was engaged in a scheme to defraud the VA for over three years. He falsely claimed he was a decorated United States Marine Corps veteran, although he had never enlisted or served in the armed forces of the United States. He stole $13,623.02 in benefits from the Veterans Affairs (VA) and sought to further defraud the VA by applying for a service-related pension. In connection with his scheme, he repeatedly lied about serving in the United States Marine Corps, including lying about being wounded in combat; about completing 12 tours of duty in operation Desert Shield, the Persian Gulf War, Somalia, Afghanistan, and Iraq; and about being awarded three Purple Heart medals. Further, when the VA began to question Howe’s lies, Howe tried to have a Congressman’s office intervene on his behalf.

This case was the product of an investigation by the Veterans Affairs Office of the Inspector General. Special Assistant United States Attorney Elliot Wong prosecuted the case.

FRESNO, Calif. — After a four-day trial, a federal jury found Kimberly English, 53, of Fresno, guilty today of two counts of filing a fraudulent tax return by an employee of the United States and four counts of making an opportunity for a person to defraud the United States, Acting U.S. Attorney Phillip A. Talbert announced. 

According to evidence presented at trial, English was an employee of the IRS in Fresno when she prepared and filed her own fraudulent tax returns for tax years 2011 and 2012. She also prepared and filed false and fraudulent tax returns for others, including her daughter and her daughter’s boyfriend, for the same tax years. The returns identified in court included fraudulent claims for false deductions and credits, such as the number of dependents and eligibility for the child tax credit. The false returns allowed English and other taxpayers to obtain undue tax refunds or improperly reduce their tax liabilities.

This case is the product of an investigation by the Treasury Inspector General for Tax Administration and the Tax Division of the Department of Justice. Assistant United States Attorneys Patrick R. Delahunty and Angela L. Scott are prosecuting the case.

English is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on August 15, 2016. English faces a sentence of up to five years in prison, a $10,000 fine, and mandatory dismissal from her job. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

SACRAMENTO, Calif. — After a three–day trial, a federal jury found Frank W. Coon, 51, of Chico, guilty today of one count of receipt of child pornography, Acting United States Attorney Phillip A. Talbert announced. The trial was held before United States District Judge Garland E. Burrell Jr.

According to evidence presented at trial, when agents executed a search warrant in March 2012, they found Coon inside his apartment at the keyboard of a computer. That computer was later found to be filled with child pornography videos. It was ultimately determined that over the course of approximately seven months, Coon used peer-to-peer software to download 117 child pornography videos. Several videos involved the portrayal of sadistic, masochistic, and other depictions of violence, and included depictions of pre-pubescent minors.

This case is the product of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorneys Matthew G. Morris and Rosanne Rust are prosecuting the case.

After the jury verdict, the defendant was remanded into custody.

Coon is scheduled to be sentenced by Judge Burrell on August 5, 2016. Coon faces a mandatory minimum sentence of five years and a maximum possible penalty of 20 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.justice.gov/psc. Click on the “resources” tab for information about Internet safety.

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SACRAMENTO, Calif. — Moo Hoon “Steve” Kim, 54, of Cypress, was sentenced today to five years in prison and ordered to pay over $16 million in restitution for mail fraud related to a scheme to avoid paying excise tax on tobacco products, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, between 2006 and 2009, Kim was responsible for bringing over $35 million in untaxed other tobacco products (OTP) into California. OTP is any tobacco product other than cigarettes and consists primarily of cigars, chewing tobacco, and leaf tobacco. A federal jury found Kim guilty after a seven–day trial in March 2015 before United States District Judge William B. Shubb.

The evidence at trial showed that Kim used front companies, set up by others at his direction, to disguise his illegal purchases and subsequent sales of untaxed OTP from out-of-state sources. These companies included KS Wholesale in Vernon, California, and Cheap Cig Distributor in Paramount, California. Kim also used another front company – Discounted Tobacco in Long Beach, California – as a retail outlet for some of the untaxed OTP that he sold through his company, Jobber’s Wholesale. As a result of Kim’s scheme, California was defrauded of over $16 million in excise taxes. A large percentage of the revenue from the excise tax is used to fund California’s early childhood development program, First 5 California.

“Many resources were utilized to combat the unlawful trafficking of tobacco products by Moo Hoo Kim who was ultimately found guilty of mail fraud,” said Special Agent in Charge Jill A. Snyder. “ATF and our partners stopped the illegal activities by Kim which resulted in a loss of over $16 million dollars in excise taxes for state of California. Today’s sentencing reflects this significant prosecution.”

“This sentence is a huge victory in our fight against underground economic activity in our state,” said Board of Equalization Member Jerome E. Horton. “It reinforces the need for continued prosecution of these types of crimes.”

This case was the result of the efforts of a joint task force involving the U.S. Attorney’s Office, the California Department of Justice, the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and the California State Board of Equalization (BOE). To date, 27 defendants have been sentenced in 16 criminal cases. Over $50 million in restitution has been ordered to be repaid to BOE.  Nineteen civil forfeiture cases have resulted in over $16 million in assets seized for repayment to BOE for lost tax revenue. For the last several years, these offices have supported a task force dedicated to combating the systemic problem of tobacco excise tax evasion in California. In 2007, the BOE estimated that the state lost approximately $90 million in unstamped tobacco excise taxes to contraband distributors and approximately $120 million in excise taxes for taxed stamped tobacco like cigarettes. Because California has a relatively high tobacco excise tax rate, it is a frequent target for contraband tobacco smugglers and tax evaders. Assistant United States Attorney Michael D. Anderson and U.S. Department of Justice Antitrust Division Trial Attorney Richard A. Powers, designated as a Special Assistant United States Attorney, prosecuted the case.

FRESNO, Calif. — Brian Caputo, 27, of Arvin, pleaded guilty today to receipt and distribution of child pornography, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, between December 2008 and February 2014, Caputo used various social media accounts to pose as a girl and communicate with dozens of minor females throughout the United States. Soon after establishing communication with the minors, Caputo would threaten to reveal sexually explicit images of their friends unless they created and sent him images of themselves posing nude or otherwise engaging in sexually explicit conduct. In June 2013, Caputo contacted a 12-year-old girl in El Paso, Texas and threatened to distribute sexually explicit pictures of her 11-year-old friend unless she sent nude images of herself to Caputo. The victim told a family member who contacted the El Paso Police Department.

When law enforcement investigators traced the threatening communications to Caputo, they discovered that he had been victimizing other minors across the United States. For example, Caputo convinced one victim to take more than 660 sexually explicit images of herself and upload them to a Dropbox account that Caputo controlled.

This case is the product of an investigation by the Federal Bureau of Investigation with assistance from the El Paso Police Department and the FBI’s Violent Crimes Against Children Task Force. Assistant United States Attorney Michael Tierney is prosecuting the case.

Caputo is scheduled to be sentenced on August 8, 2016. Caputo faces a maximum statutory penalty of 20 years in prison for receipt or distribution of child pornography and a $250,000 fine for each count. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This case is 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.justice.gov/psc. 

Click on the “resources” tab for information about Internet safety education.

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FRESNO, Calif. —Christina Hernandez, 39, resident of Las Vegas, Nevada, appeared in court today and pleaded not guilty to an eleven-count indictment charging her with health care fraud and embezzlement from a health care benefits program, Acting United States Attorney Phillip A. Talbert announced. 

According to court documents, Hernandez was a provider relations specialist at the Fresno County Department of Behavioral Health, which is responsible for administering mental health services to Fresno County’s Medi-Cal beneficiaries. Hernandez was responsible for reviewing and approving claim forms from private mental health care providers who provided services to Medi-Cal beneficiaries. The indictment alleges that Hernandez submitted claim forms for medical services that were never actually provided and that she subsequently cashed the reimbursement checks for her own benefit. The indictment also alleges that Hernandez stole reimbursement checks that the county issued to doctors for actual medical services provided. In total, it is alleged that Hernandez stole approximately $98,560 from the Fresno County Department of Behavioral Services.         

This case was the product of an investigation by the Federal Bureau of Investigation and the Fresno County Sheriff’s Office. Assistant United States Attorney Grant B. Rabenn is prosecuting the case.

If convicted, Hernandez faces a maximum statutory penalty of ten years in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

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FRESNO, Calif. — Ralph Dale Shepherd, 58, of Bakersfield, was sentenced today to 12 years and seven months in prison for possession of child pornography, Acting U.S. Attorney Phillip A. Talbert announced.

According to court documents, on May 6, 2014, Shepherd was found to have possessed within his cellphone between 300 and 600 images of minors engaged in sexually explicit conduct. The images also involved the portrayal of sadistic, masochistic, and other depictions of violence, and included depictions of pre-pubescent minors.

“We are gratified by the sentence imposed which will provide some measure of justice,” said Ryan L. Spradlin, special agent in charge for HSI San Francisco. “Together, with our local law enforcement partners, we will continue to put predators behind bars and continue our efforts to create a safer community for our children.”

This case was the product of an investigation by the Bakersfield Office of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorney Brian W. Enos prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about Internet safety education.

SACRAMENTO, Calif. — Andrew Kimura, 31, of Sacramento, pleaded guilty today to two counts of conspiracy to commit bribery, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, Kimura was an employee of the California Department of Motor Vehicles, working in Sacramento as a Licensing-Registration Examiner. He processed applications for Class A and Class B commercial driver’s licenses (CDLs) and Class C noncommercial driver’s licenses.

According to the plea agreement, between April 2013 and July 2015, Kimura received money from various brokers in order to provide CDLs for individuals who had not taken or passed the necessary DMV examinations. Kimura then accessed the DMV’s database to alter records indicating those individuals had passed certain tests. As a result, the individuals were able to obtain CDLs without having taken or passed the requisite written or behind-the-wheel driving tests. Additionally, Kimura also altered DMV records to provide for renewal of various CDLs in exchange for money from brokers.

This case is the product of an investigation by the Federal Bureau of Investigation, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the California DMV. Assistant United States Attorney Todd A. Pickles and Rosanne Rust are prosecuting the case.

Emma Klem, another DMV employee, and Kulwinder Dosanjh Singh, a broker, previously pleaded guilty to conspiracy to commit bribery as part of the same investigation in United States v. Klem, 2:15-cr-139 GEB, and United States v. Kulwinder Dosanjh, 2:15-cr-146 GEB, respectively. No sentencing date has been set for them.

Co-defendants Robert Turchin, Mangal Gil, and Pavitar Dosangh Singh are awaiting trial. The charges against them are only allegations; they are presumed innocent until and unless proven guilty beyond a reasonable doubt.

Kimura is scheduled to be sentenced by United States District Judge Garland E. Burrell Jr. on August 12, 2016. Kimura 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.

SACRAMENTO, Calif. — Christopher Mroz, 23, of Sacramento, was arrested today at his residence, charged with aggravated sexual abuse, and assault resulting in serious bodily injury, Acting United States Attorney Phillip A. Talbert announced.

Mroz is scheduled to be arraigned today at 2:00 p.m. before U.S. Magistrate Judge Kendall J. Newman. On Thursday, a federal grand jury returned a two-count indictment against Mroz.

According to court documents, Mroz was a member of the Air Force stationed in Lakenheath, England in 2012 through 2014. Although he was discharged in 2014, he remained on base with his wife, who was an active duty member of the Air Force. The indictment alleges that during the course of their time in England, Mroz forcibly raped his wife and, on another occasion, broke her arm. Mroz is subject to prosecution for these alleged offenses based on the Military Extraterritorial Jurisdiction Act of 2000.

This case is the product of an investigation by the Air Force Office of Special Investigations and the FBI. Assistant United States Attorneys Jill Thomas and Michele Beckwith are prosecuting the case.

If convicted, Mroz faces a maximum statutory penalty of life in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. —Charles Connor, 35, of Anchorage, Alaska, was sentenced today by United States District Judge Troy L. Nunley to six years and six months in prison for conspiracy to distribute and to possess with intent to distribute oxycodone, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, on December 17, 2012, the United States Postal Service in Anchorage intercepted a package sent to Connor from co-defendant Stacy Mistler, a resident of Marysville, California. The package contained 300 oxycodone 30‑mg tablets. Law enforcement delivered the package to Connor and then arrested him.

Further investigation revealed that between November 7, 2011, and December 17, 2012, Mistler sent prescription drugs from Northern California to Connor in Alaska. Connor made deposits into Mistler’s bank account to pay for the pills. In total, Mistler shipped approximately 9,600 pills to Connor. About two-thirds of the pills were oxycodone and one‑third of the tablets were morphine. In exchange for the pills, Connor deposited approximately $125,000 into Mistler’s bank account.

On April 21, 2016, Judge Nunley sentenced Mistler to 35 months in prison.

This case was the product of an investigation by the Drug Enforcement Administration, the United States Postal Service, the Alaska State Troopers, the California Department of Justice Bureau of Medi-Cal Fraud & Elder Abuse, the U.S. Department of Health & Human Services, and the U.S. Marshals Service. Assistant United States Attorney Christiaan Highsmith prosecuted 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. OCDETF’s principal mission 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.

SACRAMENTO, Calif. — Thomas Jaime Orozco, 35, of Stockton, was sentenced Wednesday by U.S. District Judge Kimberly J. Mueller to 12 years in prison for conspiring to distribute methamphetamine, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, Orozco was the leader of a methamphetamine distribution conspiracy in San Joaquin County in 2012. He supplied five co-defendants with methamphetamine that they, in turn, sold to an undercover agent and others. On two occasions, an undercover agent purchased a total of about 1.7 pounds of methamphetamine from Orozco’s co-conspirators. On November 29, 2012, the undercover agent agreed to meet with Orozco in Lodi to purchase 10 pounds of methamphetamine. Co-conspirators Vincent Camarillo, 29, and Theodore Ohagen IV, 25, both of Stockton, came with Orozco. Agents arrested all three at the site of the deal and discovered that Camarillo was carrying a stolen, loaded handgun concealed in his waistband.

After the arrests, police found at the site of the last deal, which was a home occupied by co-conspirator Jeffrey Lamendola, 53, of Lodi, two additional loaded handguns, four pistol magazines, 70 rounds of ammunition, 55 grams of methamphetamine, a digital scale, baggies, needles, and 215 grams of marijuana. A Lodi residence shared by Camarillo and Ohagen contained two bulletproof vests, seven rifle magazines, one pistol magazine, about 700 rounds of ammunition, nearly $15,000 in cash, 12 cellphones, 24 grams of cocaine, and nearly 10 kilograms of marijuana.

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 Amanda Beck prosecuted the case.

“This sentence is a direct result of the tireless work HSI agents and our local law enforcement partners have carried out to disrupt and dismantle drug trafficking rings in a joint effort to keep our communities safe,” said Ryan L. Spradlin, Special Agent in Charge of HSI San Francisco.

After pleading guilty to conspiracy to distribute methamphetamine, Camarillo was sentenced to 10 years in prison on October 28, 2016, and Lamendola was sentenced to seven and a half years in prison on January 6, 2016.

The following defendants in the conspiracy pleaded guilty to using a cellphone for the purpose of drug trafficking and were sentenced as follows: On January 20, 2016, Sarah Torreblanca, 29, of San Jose, was sentenced to four years in prison; on April 9, 2014, Lisa Elliott, 55, of Lodi, was sentenced to three years in prison; and on March 2, 2016, Ohagen was sentenced to four years in prison.

SACRAMENTO, Calif. — Babulal Bera, 83, of La Palma, pleaded guilty today to making excessive campaign contributions and making campaign contributions in the name of another.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting United States Attorney Phillip A. Talbert made the announcement.

The charges were filed in the District Court in Sacramento on Monday. Earlier today, Bera was arraigned and pleaded guilty to both counts before United States District Judge Troy L. Nunley.

According to court documents, in 2010 and 2012, Bera’s son was a candidate for a seat in the United States Congress representing District 3 (2010) and District 7 (2012) from the state of California. With respect to both elections, the candidate’s official federal campaign committee was headquartered in Elk Grove. With respect to both elections, the defendant made the maximum allowable individual contributions to his son’s campaign, and he also solicited friends, family members and acquaintances to make contributions, which he then reimbursed with his own funds. Bera did this to make contributions to his son’s campaign in excess of the contribution limits established by federal law. With respect to the 2010 and 2012 elections, the government has identified over 130 improper campaign contributions involving approximately 90 contributors. To date, the government has identified over $220,000 in reimbursed contributions relating to the 2010 campaign, and over $40,000 in reimbursed contributions relating to the 2012 campaign.

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorneys John Vincent and Philip Ferrari, and Department of Justice Public Integrity Section Trial Attorney Richard Evans are prosecuting the case.

Bera, who was ordered released on his own recognizance, is scheduled to be sentenced by Judge Nunley on August 4, 2016. Bera faces a maximum statutory penalty of five years in prison on each count. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

SACRAMENTO, Calif. — A Lodi oncologist and his wife, who served as the doctor’s office administrator, have paid the United States $300,000 to settle allegations that they improperly billed Medicare for certain chemotherapy drugs purchased from an unlicensed foreign pharmaceutical distributor, Acting United States Attorney Phillip A. Talbert announced today.

The United States alleged that, between October 2010 and May 2011, Dr. John F. Kiraly and Rena Kiraly billed and received reimbursement from Medicare for such drugs in violation of the federal False Claims Act. Specifically, the Kiralys purchased chemotherapy drugs from Warwick Healthcare Solutions Inc., also known as Richards Pharma, a former United Kingdom-based drug distributer that distributed non-FDA approved drugs throughout the United States. The Kiralys administered certain of these drugs to their patients, billing Medicare. One medication they purchased from Warwick was Altuzan, a drug not approved by the FDA. In addition, the FDA tested a batch of Altuzan that the Kiralys had purchased from Warwick and determined that it was counterfeit, lacking the active ingredient bevacizumab.

“Our District has now pursued and resolved False Claims Act allegations against three doctors for improperly billing Warwick drugs to public insurers,” said Acting U.S. Attorney Talbert. “These cases demonstrate the commitment of our district to preserving the integrity of federal health care programs and ensuring that doctors participating in such programs provide their patients with safe and effective care.”

“Patients getting life-saving prescriptions from their doctors must be able to trust that their medicines have been FDA-proven as safe and effective,” said Steven Ryan, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Health and Human Services. “Our investigators tirelessly pursue those who ignore requirements protecting patient health in order to increase profits.”

“Patients receiving cancer treatment drugs should be able to trust that these drugs have been the subject of the FDA-approval process, which requires that the drugs have been proven to be safe and effective for treating their medical conditions,” said Lisa L. Malinowski, Special Agent in Charge, FDA Office of Criminal Investigations’ Los Angeles Field Office. “The FDA will continue its vigilance over the prescription-drug supply chain to ensure that the drugs reaching patients have been proven to be both safe and effective, and that those who attempt to circumvent the agency’s oversight will be brought to justice.”

The case was investigated by the U.S. Department of Health and Human Services Office of Inspector General and the FDA’s Office of Criminal Investigations. 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.

FRESNO, Calif. — Rafael Guzman, 42, of Fresno, pleaded guilty today to conspiracy to distribute and possess with intent to distribute heroin, Acting United States Attorney Phillip A. Talbert announced.

Guzman was indicted on April 9, 2015, with six other defendants including Keith Foster, a former deputy chief of the Fresno Police Department. According to Guzman’s plea agreement, between December 23, 2014, and February 2, 2015, he conspired with Foster to acquire and distribute heroin.

This case is the product of an investigation by the Federal Bureau of Investigation and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant United States Attorneys Melanie L. Alsworth and Duce W. Rice are prosecuting the case.

Guzman is scheduled to be sentenced by United States District Judge Anthony W. Ishii on August 15, 2016. Guzman 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.

Co-defendant Sarah Ybarra previously pleaded guilty to conspiring to distribute marijuana and was sentenced to a one year in prison. The charges against all of the remaining defendants, including Foster, are allegations only; they are presumed innocent until and unless proven guilty beyond a reasonable doubt.

FRESNO, Calif. — Juan Martin Torres, 28, of Firebaugh, was sentenced today by United States District Judge Anthony W. Ishii to 12 years and seven months in prison for enticing a minor to engage in unlawful sexual activity, Acting United States Attorney Phillip A. Talbert announced.

According to evidence presented at trial in February 2016, Torres was the director of the Firebaugh Boys and Girls Club. Torres was supervising a 14-year-old boy who often came to that Boys and Girls Club after school to complete 120 hours of community service. Torres sent the boy messages over Facebook that offered to shortcut his community‑service-hours requirement if the boy would agree to sexual acts with Torres. The boy reported the messages to law enforcement.

This case was the product of an investigation by the Firebaugh Police Department, the Fresno County Sheriff’s Office, and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorneys Michael Tierney and Vincenza Rabenn prosecuted the case.

“We trust those in positions like the one held by the defendant to protect our children,” said Acting U.S. Attorney Talbert. “In committing this crime, the defendant committed an incredible breach of trust with the community, and we are grateful for the hard work by our partners in federal and local law enforcement to bring him to justice.”

 “Torres’ heinous violation of the trust afforded to him as a mentor and protector remains appalling,” said Ryan L. Spradlin, special agent in charge of HSI San Francisco. “The sentence is befitting of his disturbing crime and should be seen as a clear message that HSI and our law enforcement partners will make certain that anyone who chooses to exploit innocent children will be held accountable for their actions.”

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about Internet safety education.

FRESNO, Calif. — Timothy New, 33, of Pensacola, Florida, pleaded guilty today to shipping in interstate commerce, with intent to defraud, misbranded synthetic drugs, commonly known as “spice,” Acting United States Attorney Philip A. Talbert announced.

According to court documents, between September 2012 and May 2103, New and his co‑defendants utilized a manufacturing and distribution operation at a processing lab in Stockton to ship at least 24 tons of misbranded smokeable synthetic cannabinoids that contained the synthetic drugs AM-2201 and XLR11 to smoke shops and retail outlets throughout the United States. They generated in excess of $33 million as a result of the fraudulent sales.

Operating under the guise of legitimacy by companies called Zencense Incense Works LLC, ZenBio LLC, and Biozen LLC, New and his co-defendants received falsely invoiced raw synthetic cannabinoids from China that they used to manufacture and distribute as smokeable synthetic cannabinoids. The drugs were sold under the brand names Bizarro, Orgazmo, Headhunter, Defcon, Neutronium, Sonic Zero, Sonic Boom, Sonic Blast, Shockwave, Hampster, and Posh. To evade detection by federal law enforcement authorities, New and his co-defendants deliberately misbranded and marketed their product as “potpourri” or “herbal incense” that they claimed was “not for human consumption,” but fully intended to be used as a narcotic. New and his co-defendants distributed the drugs to the Stuffed Pipe smoke shops located throughout the Central Valley of California, as well as to numerous other retail establishments throughout the United States.

At the time of the illicit enterprise, AM-2201 was a Schedule I controlled substance and XLR11 was a controlled substance analogue that was publically noticed for scheduling in April, 2013, and was placed under Schedule I as a controlled substance in May, 2013.

Public health and law enforcement agencies have seen the emergence of synthetic drug use. State and local public health departments note that synthetic cannabinoids cause serious adverse health effects, including agitation, anxiety, nausea, vomiting, tachycardia, elevated blood pressure, tremor, seizures, hallucinations, and paranoid behavior. DEA scheduled XLR11 based, in part, on findings of the Center for Disease Control and Prevention that the drug causes kidney damage.

This case is the product of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation by the Drug Enforcement Administration, Internal Revenue Service-Criminal Investigation, and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), with assistance from the Food and Drug Administration and the Fresno County Sheriff’s Office. Assistant United States Attorney Karen A. Escobar is prosecuting the case.

 The OCDETF Program was established in 1982 to mount a comprehensive attack against organized drug traffickers. Today, the OCDETF Program is the centerpiece of the United States Attorney General's drug strategy to reduce the availability of drugs by disrupting and dismantling major drug trafficking organizations and money laundering organizations and related criminal enterprises. This OCDETF investigation was also part of a nationwide law enforcement effort coordinated by the DEA’s Special Operations Division.

New is scheduled for sentencing on August 1, 2016, by United States District Judge Dale A. Drozd. He faces a maximum statutory penalty of three years in prison and a $250,000 fine, or twice the gross gain from the crime. 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.

Co-defendants Douglas Jason Way, 41, of Evanston, Illinois, Timothy Ortiz, 45, of Waukegan, Illinois, and Natalie Middleton, 28, of Clovis, California, have entered not guilty pleas and are next scheduled to appear in federal court in September. They are charged with drug and money laundering offenses, in addition to the misbranding charge, and face a maximum penalty of 20 years in prison and a $10 million fine. The charges against them are only allegations; Way, Ortiz, and Middleton are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — Nathan Penner, 26, of Yuba City, was sentenced today to 16 years and three months in prison for producing child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Phillip A. Talbert of the Eastern District of California, Special Agent in Charge Ryan Spradlin of the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) San Francisco Field Division and Chief of Police Robert D. Landon of the Yuba City Police Department.

Penner pleaded guilty on November 5, 2015, to one count of production of child pornography. U.S. District Judge Troy L. Nunley sentenced Penner today and also ordered him to serve a lifetime term of supervised release.

In connection with his plea, Penner admitted to producing sexually explicit images and videos of a five-year-old girl in September and October of 2012. During the sentencing hearing, evidence revealed that Penner downloaded hundreds of files of child pornography located on his computer and distributed such material using an online chat messaging service.

“We are gratified by the sentence imposed today, which provides a measure of justice in response to a crime that inflicts tremendous suffering upon the most vulnerable of victims and sends a strong message that all children deserve a childhood free from such exploitation and harm,” said Acting U.S. Attorney Talbert.  “We are grateful for the hard work and collaboration of our local and federal law enforcement partners, and we will continue to aggressively investigate and prosecute those who engage in the exploitation of our children.”

Chief Robert D. Landon stated: “The Yuba City Police Department extends sincere appreciation to all agencies involved in this case. The collaborative effort of all who worked on the thorough investigation and successful prosecution of this child predator should be commended.”

This case was investigated by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Yuba City Police Department. Trial Attorney Reginald E. Jones of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Special Assistant U.S. Attorney Josh F. Sigal of the Eastern District of California prosecuted the case. CEOS’ High Technology Investigative Unit assisted with computer forensic analysis for the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by the U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

SACRAMENTO, Calif. — A federal grand jury returned a four-count indictment today against Virendra “Vic” Maharaj, 49, and his wife, Rosalin Prasad, 40, both of Woodland, charging them with one count of conspiring to defraud the United States by impeding the IRS’s assessment of their income tax liability, and further charging Maharaj with three counts of tax evasion, Acting U.S. Attorney Phillip A. Talbert announced.

According to court documents, between January 2005 and January 2010, Maharaj and Prasad conspired to defraud the United States by impeding the Internal Revenue Service in its attempt to assess the couple’s tax obligations for the years 2005, 2006, and 2007. Additionally, Maharaj, who worked at multiple car dealerships in Sacramento and Woodland, attempted to evade or defeat the assessment of his tax obligations for those same tax years. In an attempt to conceal the source and amount of his income, Maharaj caused part of his wages to be paid directly to Prasad. He caused Wage and Tax Statements on W-2 forms to be issued in Prasad’s name for wages actually paid to him, and in amounts that recorded only part of the wages he received. Maharaj took some of his compensation from the car dealerships in cash, and this compensation was not recorded on the W‑2 forms. Maharaj also caused the dealership to pay some of his compensation directly to one of Prasad’s creditors to pay for a loan, and these payments were not recorded on the W‑2 forms.

According to the indictment, tax returns were filed for Prasad for the tax years 2005, 2006, and 2007, reporting the wages on the W-2 forms that underreported the income received for Maharaj’s work. Maharaj failed to file tax returns for any of the years in question.

This case is the product of an investigation by the Internal Revenue Service, Criminal Investigation. Assistant U.S. Attorney Nirav Desai is prosecuting the case.

The defendants are scheduled to be arraigned on the indictment on May 6, 2016.

If convicted of the conspiracy offense, Maharaj and Prasad each face a maximum statutory penalty of five years in prison and a $250,000 fine. If convicted on the tax evasion counts, Maharaj faces a maximum statutory penalty of five years in prison and a $100,000 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.

SACRAMENTO, Calif. — A federal grand jury returned a 22-count indictment today against Juan Carlos Montalbo, 54, of San Antonio, Texas; Wayne Arthur York II, 47, of Albuquerque, New Mexico; and Marco Antonio Ramirez-Zuno, 31, of Cancun, Mexico, charging them with wire fraud and conspiracy to commit wire fraud in relation to a timeshare-resale scheme, Acting U.S. Attorney Phillip A. Talbert announced.

According to court documents, between 2011 and 2012, the defendants conducted a timeshare resale fraud scheme based in Puerto Vallarta, Mexico. Montalbo conducted sales meetings to convince prospective customers to purchase a timeshare vacation package marketed under the names Platinum Access Program or World Luxury Destinations. If customers had existing timeshare properties, Montalbo (also known as John Monte) assured them that another company, Continental Resources, would arrange for their sale. When the customers returned from Mexico, they were contacted by York (also known as Tim Hamick or Michael Halston), who claimed to represent companies named Property Marketing Group or Eagle Market Solution and claiming that a bona fide purchaser had been found and was ready to purchase their existing timeshares. Others were contacted directly by York without first giving their information to Montalbo.

According to court documents, York and others would then extract a series of upfront payments from the victims, which York claimed were required to be wired to bank accounts in Mexico in order for the guaranteed sale to be completed. York and the others would falsely claim that a buyer for the timeshare had already been located, and that all the prepaid fees wired to Mexico were being held in escrow and would be refunded to the victims as soon as the transaction was completed. After the victims wired the money to Mexico, York and the others would break off all contact with them. According to court documents, Ramirez Zuno managed the Mexican bank accounts used in the fraud, trained co-conspirators on how to conduct the fraud, and managed the disbursement of the proceeds of the fraud.

This case is the product of an extensive and ongoing investigation by the Federal Bureau of Investigation. Assistant United States Attorney Matthew G. Morris is prosecuting the case.

On October 15, 2015, Montalbo was arrested in Phoenix, Arizona and has been released on bond. His next scheduled court appearance is May 12, 2016, before U.S. Magistrate Judge Kendall J. Newman.

On March 30, 2016, York was arrested in Albuquerque, New Mexico, and was ordered held without bond. On April 14, 2016, Ramirez Zuno was arrested in Miami, Florida and remains in custody pending further proceedings.

York and Zuno were arraigned today in Sacramento before U.S. Magistrate Judge Edmund F. Brennan and entered pleas of not guilty. They are next scheduled for a status conference on June 28, 2016, before U.S. District Judge John A. Mendez at 9:15 a.m.

If convicted, each defendant faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — David M. Lewis, 62, of Sacramento, was sentenced today by United States District Judge Morrison C. England Jr. to three years and 10 months in prison and a $75,000 fine for health care fraud, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, beginning approximately in late 2008, Lewis, a dentist practicing in Sacramento, began targeting United Parcel Service employees for dental treatment because their health care plan under the Northern California General Teamsters Security Fund provided 100 percent coverage without any annual limits. Lewis offered cash and other incentives to UPS patients for receiving dental treatment or for recruiting other UPS employees to receive such treatment.

The UPS health care plan was administered by Delta Health Systems. In some instances, Lewis caused claims to be submitted to Delta that falsely billed the plan for work that was never performed. In many other instances, Lewis performed unnecessary dental work on UPS employees, including root canals, and claims were submitted to Delta for payment for these unnecessary services.

Lewis created false narratives for dental work that was not performed or created false statements about purported pre-existing dental conditions to justify the work performed. In some instances, Lewis drilled into teeth to install temporary filings and instructed his assistants to take X-rays of the temporary filings. Lewis then submitted claims to Delta with X-rays of the temporary fillings, falsely claiming that the X-rays depicted tooth decay justifying further restorative procedures.

“This defendant went well beyond the lies one normally finds at the root of a fraud scheme,” said Acting U.S. Attorney Talbert. “He not only plundered funds meant to provide essential services, he inflicted pain and suffering on his patients through the performance of unnecessary medical procedures, all in the name of additional profit. We are gratified by today’s sentence, and thankful for the critical work done by our partners in the Department of Labor and the State of California.”

“Today’s sentencing demonstrates that those who commit heath care fraud will be held criminally accountable. We will continue to work with our law enforcement partners to safeguard the health benefits of union workers from medical providers seeking self‑enrichment,” stated Abel Salinas, Special Agent-in-Charge of the Los Angeles Regional Office of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.

“Dr. Lewis put his own financial interests ahead of his patients’ dental health, causing them harm instead of healing,” commented Jean Ackerman, Regional Director for EBSA. “This case is indicative of our close and continued partnership with fellow federal agencies to vigorously pursue those who commit crimes against employee benefit plan participants.”

A restitution hearing is set for June 23, 2016, and Lewis is scheduled to self‑surrender to begin serving his sentence on July 14, 2016.

An employee at Lewis’s dental practice, Nichol Ramirez aka Nichol Lomack, previously pleaded guilty to one count of health care fraud for her part in the fraud scheme in a separate case. (2:14-cr-056 MCE) Lomack is scheduled to be sentenced on September 1, 2016. She faces a maximum statutory penalty of 10 years in prison and a fine of $250,000 or twice the gross loss or gain of the scheme. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

These cases are the product of an investigation by the U.S. Department of Labor, Office of Inspector General-Office of Labor Racketeering and Fraud Investigations and the U.S. Department of Labor, Employee Benefits Security Administration, with assistance from the California Dental Board and the California Attorney General’s Office. Assistant United States Attorney Todd A. Pickles is prosecuting the cases.

SACRAMENTO, Calif. —Jarrail Lamont Smith, 23, of Cleveland, Ohio, pleaded guilty today to two counts of interstate transportation of a minor for the purpose of prostitution, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, in August 2015, Smith traveled from Cleveland to California with two minor victims with the expectation that they would engage in commercial sex acts with others for his benefit. Once they arrived in Northern California, he directed them to post advertisements for sexual services online. The investigation revealed multiple advertisements posted in the Bay area and Sacramento that featured photographs of both victims. After receiving a tip that one of the minors was being trafficked at a motel in Sacramento, the FBI initiated a sting operation to recover her. The operation was successful, and agents also found the other minor victim in the same hotel room. One of the minors had two black eyes when the FBI located her.

This case is the product of an investigation by the FBI’s Child Exploitation Task Force, which is made up of FBI agents and detectives from the Sacramento Police Department. Assistant United States Attorney Michele Beckwith is prosecuting the case.

Smith is scheduled to be sentenced by United States District Judge Troy L. Nunley on August 4, 2016. Smith faces a maximum statutory penalty of life in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

SACRAMENTO, Calif. — A federal jury found William Louis Filter, 46, of Live Oak, guilty on Tuesday of unlawful baiting and unlawful taking of a migratory game bird by aid of bait, Acting United States Attorney Phillip A. Talbert announced.

The evidence at the two-day trial showed that Filter baited a field on his family’s hunting ranch in the Sutter Buttes by covering it with birdseed to attract mourning doves. On September 1, 2015, which is opening day of mourning dove season, Filter returned to that baited field with his three hunting buddies. Altogether, Filter and his friends shot and killed 34 mourning doves over the baited fields.

Mourning doves are a migratory game bird. It is lawful to hunt mourning doves during the appropriate hunting season. It is unlawful, however, to hunt mourning doves using bait. Baiting means placing, distributing, or scattering of salt, grain, or other feed that could serve as a lure or attractions for migratory game birds to any areas where hunters are attempting to take them.

This case is the product of an investigation by the United States Fish and Wildlife Service and California Department of Fish and Wildlife. Special Assistant United States Attorneys Benjamin Nelson and Elliot Wong prosecuted the case.

Filter is scheduled to be sentenced on June 6, 2016, by United States Magistrate Judge Allison Claire. Filter faces a maximum statutory penalty of one year in prison, a $100,000 fine, and a one-year term of supervised release. The actual sentenced will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

SACRAMENTO, Calif. — Leonardo Cesar Pulido-Escamilla, 39, a Mexican national who previously resided in Yuba City and other California cities, pleaded guilty today to making a false statement in an application for a United States Passport, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, Pulido-Escamilla fraudulently applied for a U.S. Passport in 2012, using another person’s name and birth certificate in connection with the application. Pulido-Escamilla had been deported from the United States in 1997 and 2004, and on March 20, 2016, he was apprehended by border patrol agents in Arizona.

This case is the product of an investigation by the U.S. Department of State’s Diplomatic Security Service. Assistant U.S. Attorney Nirav Desai is prosecuting the case.

Pulido-Escamilla is scheduled to be sentenced by United States District Judge Kimberly J. Mueller on July 20, 2016. Pulido-Escamilla 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.

SACRAMENTO, Calif. — A company and its subcontractor have paid a total of $13 million to resolve allegations under the False Claims Act that they overcharged the government in various ways under the Defense Transportation Coordination Initiative contract in part by billing the cost of moving freight by air when it was actually shipped by ground, Acting United States Attorney Phillip A. Talbert announced today.

Menlo Worldwide Services Inc. has paid the United States $10 million, and Estes Forwarding Worldwide, on behalf of itself and its parent Estes Express Lines, has paid $3 million.

“This settlement demonstrates our commitment to protecting the integrity of federal contracts and ensuring the government only pays for the actual services rendered as required under the contract,” said Acting U.S. Attorney Talbert.

The civil settlement resolves a lawsuit filed in the Eastern District of California under the qui tam, or whistleblower, provisions of the False Claims Act. These provisions allow private citizens to bring civil actions on behalf of the United States for false claims and share in a portion of the government’s recovery. The whistleblowers in this case will collectively receive $2.86 million of the recovery proceeds.

This settlement was the result of a coordinated effort among the U.S. Attorney’s Office for the Eastern District of California, the United States Transportation Command, the Defense Criminal Investigative Service, the Defense Contract Audit Agency, the U.S. Army Criminal Investigation Command, and the Department of Justice’s Civil Division, Commercial Litigation Branch. Assistant United States Attorneys Kelli Taylor and Colleen Kennedy handled the matter for the United States.

The claims settled by this agreement are allegations only, and there has been no determination of liability. Menlo Worldwide Services Inc., Estes Forwarding Worldwide, and Estes Express Lines cooperated with the United States’ investigation of this matter.

SACRAMENTO, Calif. — Richard C. Sihner, 54, of Elk Grove, was sentenced today to two years and six months in prison for a scheme to fraudulently obtain bonuses in a recruitment program for the California National Guard, Acting United States Attorney Phillip A. Talbert announced.

On January 22, 2016, after a seven-day trial, a jury found Sihner guilty of 18 counts of wire fraud relating to his scheme to receive unearned recruiting bonuses relating to California National Guard enlistees. The jury also convicted Sihner of one count of making false statements to a federal agent.

In sentencing Sihner, United States District Judge John A. Mendez rejected the suggestion that any blame for the crime rested with others involved in the process. “You, and you alone, are responsible,” said Judge Mendez.

“Integrity is a California National Guard core value, and we're committed to holding our soldiers and airmen accountable if they elect to commit fraud,” said Maj. Gen. David S. Baldwin, Adjutant General for the California National Guard. “These cooperative efforts by the U.S. Attorney's Office continue to help us ensure we remain not only a capable force, but also an ethical force worthy of the people's trust.”

Sihner is a retired member of the California National Guard and participated in the Guard Recruiter Assistant Program (G-RAP). The United States Army contracted with Document and Packaging Broker Inc. (DOCUPAK) to administer G-RAP. Under G-RAP, members of the California National Guard served as recruiting assistants (RA). If an RA referred a potential Guard member to a recruiting office and that person ultimately enlisted, the RA was eligible to receive monetary compensation disbursed by DOCUPAK. RAs would typically receive a $1,000 payment when a nominee enlisted and a second $1,000 payment when the nominee left for boot camp. Ultimately, the G-RAP program was discontinued following the discovery of widespread fraud. Recruits who walked into recruiting offices entirely on their own initiative and were not referred by an RA, were claimed by corrupt RAs in DOCUPAK’s system, often with the assistance of corrupt recruiters.

According to evidence produced at trial, from December 27, 2007 to April 16, 2010, Sihner was an RA in the G-RAP program. A recruiter gave him information about new recruits so that Sihner could falsely claim to have referred them. Sihner made false claims and wrote elaborate falsehoods in the notes section of the DOCUPAK online portal indicating that he had referred the recruits. In fact, the recruits had made contact with the Guard to discuss potential enlistment for reasons entirely unrelated to Sihner. Sihner was paid $95,000 in compensation for purportedly referring 51 soldiers to enlist. Of the 39 recruits federal agents contacted prior to indictment, none had been referred to the Guard by Sihner. When confronted, Sihner lied to federal law enforcement agents investigating the fraud by repeatedly claiming that he had personally referred all of the new soldiers and that he had taken them to the recruiting office to introduce them.

This case was the product of an ongoing investigation by the Army Criminal Investigative Command Major Procurement Fraud Unit, the Defense Criminal Investigative Service, and the Federal Bureau of Investigation. Assistant United States Attorneys Matthew G. Morris and Katherine T. Lydon prosecuted the case.

Other National Guard members and recruiters have been charged in similar recruiting‑fraud schemes in the Eastern District of California. The following defendants have pleaded guilty and await sentencing.

• 2:14-cr-153 TLN — Brian Kaps, 42, of Chico, pleaded guilty on November 21, 2014, to one count of wire fraud. Sentencing is set for August 18, 2016.

• 2:14-cr-152 TLN — Sarah Nattress, 28, of Paradise, pleaded guilty on October 23, 2014, to one count of wire fraud. Sentencing is set for May 26, 2016.

• 1:14-cr-108-LJO — Nicholas Huerta, 33, of Fresno, pleaded guilty on September 14, 2015, to one count of wire fraud. Sentencing is set for November 14, 2016.

• 1:14-cr-106 DAD — Joaquin Cuenca, 38, of San Diego, was a recruiter. On February 2, 2016, a jury found him guilty of three counts of wire fraud for fraudulent bonuses. He is scheduled for sentencing on July 18, 2016.

FRESNO, Calif. — Two Nuestra Familia gang members were sentenced today for racketeering offenses, and a third defendant who held a leadership role in the gang was also recently sentenced, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney Phillip A. Talbert of the Eastern District of California announced.

Earlier today, United States District Judge Lawrence J. O’Neill sentenced Joe Anthony Felix, 36, of Modesto, to 12 years and seven months in prison for conspiring to engage in racketeering and sentenced him to an additional, consecutive term of nine months in prison for a supervised release violation on a 2004 case. Judge O’Neill also sentenced Jesus Gomez Felix, 32, of Modesto, today to two and a half years in prison for assault with a deadly weapon in aid of racketeering. Previously, on April 11, Gary Anthony Romero, 50, of Stockton, was sentenced to 20 years in prison for conspiring to engage in racketeering.

According to court documents, Nuestra Familia is a prison gang that originally formed in the California state prison system in the 1960s. Nuestra Familia leaders control and direct the gang’s criminal activities both inside and outside of the prison system.

According to court documents, Romero has been a member of Nuestra Familia for approximately 20 years and reached one of the highest levels of authority in Nuestra Familia. He ordered various crimes to be committed for the benefit of the gang in Stanislaus County, including aggravated assaults, robberies and drug dealing. Romero ordered a home invasion robbery in Turlock in which the robbers wielded firearms and made off with a vehicle and several other items. While Romero was in custody at the Stanislaus County Jail, he ordered the “removal” of several Nortenos who had violated Nuestra Familia rules. A “removal” involved assaulting the individuals with homemade weapons, as well as fists and feet. Several of the victims suffered stab wounds. Romero also directed a gang member to set up subsets of the gang throughout Stanislaus County to collect money from the members, including proceeds of their drug trafficking activities, and to put the funds in Romero’s account at Stanislaus County Jail.

Joe Felix was a Norteno, a gang under the Nuestra Familia umbrella, who provided direction to other Nortenos to commit various crimes, including attempted murder and drug trafficking in Modesto. Joe Felix participated and directed others to participate in an assault on two individuals who had dropped out of the gang. Jesus Felix participated in this assault and exchanged gunfire with someone from the opposing side during the incident. No one was shot, but as a result of the attack, one of the victims suffered a fractured orbital bone and injury to his eye. Joe Felix also directed the sales of methamphetamine by other Nortenos, and profited from the drug trafficking operation.

This case was the product of an investigation by the Central Valley Gang Impact Task Force under the FBI’s Safe Streets Initiative, with the assistance of the Stanislaus County District Attorney’s Office, the Stanislaus County Sheriff’s Office, the Modesto Police Department, the Ceres Police Department, the California Highway Patrol, the California Department of Corrections and Rehabilitation, the Bureau of Prisons, and the Stanislaus County Probation Department.

Stanislaus County District Attorney Birgit Fladager said, “I would like to thank the United States Department of Justice and the hard work of the federal prosecutors who prosecuted this case. We will remain committed to working collaboratively with our federal partners to pursue criminal gang members who commit violent crimes and pose a threat to the citizens of Stanislaus County.”

The case was prosecuted by Trial Attorneys Louis A. Crisostomo and Kelly Pearson of the Criminal Division’s Organized Crime and Gang Section and Assistant United States Attorneys Kimberly A. Sanchez and Laurel J. Montoya of the Eastern District of California.

FRESNO, Calif. — Kevin Nouthai Yang, aka Thai Yang, 49, of Fresno, was sentenced today to three years and 10 months in prison, to be followed by three years of supervised release, for conspiring to cultivate, distribute and possess with intent to distribute marijuana grown on property that he owned in Hay Fork in the Shasta Trinity National Forest, Acting United States Attorney Phillip A. Talbert announced.

In sentencing Yang, U.S. District Judge Lawrence J. O’Neill also ordered the forfeiture of the property and a firearm.

According to court documents, Yang, who was then a high school teacher’s aide for the Central Unified School District, was found armed at the Hay Fork property during the execution of a federal search warrant. Yang was in the process of harvesting marijuana and was in possession of 324 pounds of marijuana and 200 marijuana plants. He was also in possession of restricted-use pesticides that had been transported across public land for use in the marijuana cultivation operation. Yang has since resigned from his teaching position.

U.S. Forest Service agents obtained the search warrant after seeing hundreds of large, mature marijuana plants growing on Yang’s property. Some of the marijuana grown on Yang’s property had already been transported to Fresno for distribution.

This case was the product of an investigation by the U.S. Forest Service and the Trinity County Sheriff’s Office. Assistant United States Attorney Karen A. Escobar prosecuted the case.

SACRAMENTO, Calif. — Kulvir Singh Cheema, 55, of Ripon, was arraigned today before U.S. Magistrate Judge Edmond F. Brennan on bankruptcy fraud charges, United States Attorney Benjamin B. Wagner announced.

On March 31, 2016, a federal grand jury returned an indictment against Cheema, charging him with false bankruptcy declaration, concealment of bankruptcy assets, and fraudulent transfer. At the arraignment, Cheema entered a plea of not guilty. A status conference is scheduled for May 20, 2016 before U.S. District Judge Garland E. Burrell Jr.

According to court documents, when Cheema filed for bankruptcy in April 2011, he provided false information about his employment and wages that he received, his current income, his residence, and whether he had lost a piece of property in the past. He is also alleged to have concealed income that he received, as well as assets such as trucks and bank accounts that he controlled and that were held in other names. In January 2010, in contemplation of filing for bankruptcy, Cheema knowingly and fraudulently transferred ownership of his residence in Ripon from himself to another person.

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys John K. Vincent and Brian A. Fogerty are prosecuting the case.

If convicted, Cheema faces a maximum statutory penalty of five years in prison for each of the three bankruptcy counts and up to a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — Cesar Caballero, 46, of Diamond Springs, was found guilty on Tuesday after a two-day jury trial for failing to surrender for service of sentence, United States Attorney Benjamin B. Wagner announced.

According to court documents, on August 30, 2011, Caballero was convicted of obstruction of mail for submitting Official Federal Mail Forwarding Change of Address Order forms to the U.S. Postal Service for the purpose of diverting mail addressed to the Shingle Springs Band of Miwok Indians to himself. After he was sentenced, Caballero appealed, and the Ninth Circuit affirmed his conviction on two of the three counts against him. He was resentenced on June 29, 2015, to a sixty day term of incarceration.  He was ordered to surrender to begin serving his sentence by September 8, 2015.

As the evidence at trial demonstrated, Caballero failed to surrender as ordered on September 8, 2015, or any day thereafter. He was subsequently arrested by the El Dorado County Sheriff’s Office on February 28, 2016.

This case is the product of an investigation by the United States Marshals Service, with the assistance of the United States Postal Inspection Service, the Federal Bureau of Prisons, and the El Dorado County Sheriff’s Office. Special Assistant United States Attorneys Elliot Wong and Benjamin Nelson prosecuted the case.

Caballero is scheduled to be sentenced on May 17, 2016, by United States District Judge John A. Mendez. Caballero faces a maximum statutory penalty of one year in prison, a $100,000 fine, and a one-year term of supervised release. The actual sentenced will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

SACRAMENTO, Calif. – After collecting and destroying 5.5 million pounds—2,762 tons—of unused prescription drugs in the past five years, the U.S. Drug Enforcement Administration is continuing its efforts to take back unused, unwanted and expired prescription medications. The DEA invites the public to bring their potentially dangerous, unwanted medicines to one of over 5,000 collection sites around the country that are manned by more than 3,800 of DEA’s tribal and local law enforcement partners. This service is free of charge, with no questions asked.

The public can find a nearby collection site by visiting www.dea.gov, clicking on the “Got Drugs?” icon, and entering their zip code into the search window, or they can call 800-882-9539. Only pills and other solids, like patches, will be accepted—the public should not bring liquids, needles or other sharps to take back sites.

America is presently experiencing an epidemic of addiction, overdose and death due to abuse of prescription drugs, particularly opioid painkillers. 6.5 million Americans abuse prescription drugs, according to the most recent National Survey on Drug Use and Health, more than abuse cocaine, heroin, and hallucinogens combined.

“The abuse of prescription drugs is America’s fastest-growing drug problem, and too many people are dying or being seriously injured for the misuse of such drugs,” U.S. Attorney Wagner stated. “Young people are particularly at risk. Since most people who abuse prescription drugs say that they get them from family members or friends, it is imperative that we all take steps to dispose of unwanted drugs.”

“Unused prescription drugs that languish in the home are susceptible to diversion for misuse and abuse,” said DEA Special Agent in Charge John J. Martin. “You can make your home and our community safer by taking advantage of this free and anonymous service.”

Drug overdoses are now the leading cause of injury-related death in the United States, eclipsing deaths from motor vehicle crashes or firearms. The removal from homes of unwanted prescription pills that can be abused, stolen or resold is an easy way to help fight the epidemic of substance abuse and addiction.

According to the DEA, in the previous 10 take-back events, approximately 302,427 pounds or 151 tons of unused medication were collected from Northern California and Central Valley residents.

SACRAMENTO, Calif. — Sergio Roman Barrientos, 62, of Poway, was arrested on Wednesday in San Diego. On Thursday, April 14, a federal grand jury returned a six-count superseding indictment against Barrientos that added co-defendant Zalathiel Aguila, 42, of Fairfield, to the indictment originally brought on March 3, 2016, United States Attorney Benjamin B. Wagner announced.

According to the indictment, Barrientos, Aguila, and Omar Anabo, 53, of Vallejo, engaged in a foreclosure rescue fraud scheme that began in September 2004 and continued to February 2008. Barrientos and Aguila are charged with conspiracy to commit and the commission of wire fraud affecting a financial institution, bank fraud, and conspiracy to make and making false statements on loan applications. On January 15, 2016, Anobo pleaded guilty to conspiring to make false statements on loan applications (case number 2:16-cr-001 GEB). He is scheduled for sentencing on November 4, 2016.

According to court documents, Barrientos owned Capital Access LLC, in Vallejo, and along with Aguila and Anabo, preyed on homeowners nearing foreclosure. The defendants’ “Keep Your Home” program purported to be a temporary rescue plan whereby “qualified investors” took over the mortgages while the homeowners paid rent and worked on rebuilding their credit. It is alleged that he defendants convinced homeowners to sign over title to their homes, which were then sold to straw buyers. The straw buyers obtained loans under fraudulent pretenses by claiming on loan applications that, for example, they intended to occupy the homes as primary residences and that no part of the down payment for the purchase was borrowed. In fact, it is alleged that Capital Access provided the down payment amounts, and the straw buyers never intended to live in the properties. The defendants stripped the equity from the homes and used it to pay the operational expenses of the scheme and personal expenses. Vulnerable homeowners across California lost their homes as a result of the alleged scheme, and lenders lost an estimated $10.47 million from the fraud.

This case is the product of an investigation by the Federal Bureau of Investigation and the United States Postal Inspection Service. Assistant U.S. Attorney Matthew M. Yelovich is prosecuting the case.

If convicted, the defendants face a maximum statutory penalty of 30 years in prison and a $1 million fine for each count of wire fraud, bank fraud, and false statement, as well as for the conspiracy to commit wire and bank fraud count. If convicted of conspiracy to make false statements on loan applications, they face a maximum statutory penalty of five 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.

SACRAMENTO, Calif. — Stacy Miranda Phillips, 29, of Montague, pleaded guilty today to aggravated ID theft related to her participation in a bank fraud and identity theft scheme, United States Attorney Benjamin B. Wagner announced.

According to court documents, between September and December of 2015, Phillips worked with others in Siskiyou County to execute a scheme to steal from banks and merchants in the Siskiyou County. Phillips admitted that as part of her scheme she stole U.S. Mail and other personal property of local residents. Phillips and her associates targeted certain victims, postal customers, and mail receptacles utilized by those victims. Phillips used the checks, credit or debit cards, account numbers, names, PINs, and signatures found in the stolen mail to obtain cash and purchase items. Phillips also attempted to open a line of credit in the name of a Weed, California victim. Phillips stole mail from the following Siskiyou County Post Offices: Hornbrook, Grenada, and Montague.

This case is the product of an investigation by the United States Postal Inspection Service, the Siskiyou County Sheriff's Department, and the Yreka Police Department. Assistant United States Attorney Michelle Rodriguez is prosecuting the case.

Phillips is scheduled for sentencing on July 28, 2016, before U.S. District Judge Troy L. Nunley. Phillips faces a mandatory minimum sentence of two 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.

SACRAMENTO, Calif. — United States Attorney Benjamin B. Wagner has announced his resignation effective midnight on April 30, 2016. 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 and Supervisory AUSA for over 17 years before that.

During his tenure as United States Attorney, Wagner served for three years on the Attorney General’s Advisory Committee under Attorney General Eric Holder, and was appointed to co-chair the White Collar Crime Subcommittee of the AGAC by Attorney General Loretta 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 United States Attorney for the Eastern District of California has been the most fulfilling and exciting experience of my professional career,” said 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 Loretta 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 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 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 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, 2016, 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, 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 2005-06, he was stationed in Jakarta as the first Department of Justice Resident Legal Advisor in Indonesia.

  Some of the notable cases which 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.

After his resignation, Wagner plans to seek employment at a law firm in the Northern California area.

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.

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.

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.

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:

1. March 23, 2016, Zhiqiang Liu was sentenced to three years in prison.

2. March 16, 2016, Jun Mou Peng was sentenced to one year and one day in prison.

3. October 28, 2015, Qinghong Li was sentenced to one year and one day in prison.

4. 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.

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.

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.

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.

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. 

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.

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.

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.

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, 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.

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.

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.