Northern District of California
Press releases recorded for this federal judicial district.
Concord Nursing Home to Pay $2.3 Million to Settle Allegations of Grossly Substandard CareRead the Press Release
SAN FRANCISCO – Tranquility Incorporated, a corporation doing business as San Miguel Villa (San Miguel Villa) which is a 190-bed nursing home located in Concord, Calif., has agreed to pay $2.3 million to settle allegations that it submitted false claims by billing the Medicare and Medi-Cal programs for grossly substandard nursing home services it provided to its residents between 2012 and 2017, announced United States Attorney Stephanie M. Hinds and Department of Health and Human Services Office of Inspector General (HHS-OIG) Special Agent in Charge Steven J. Ryan.
The settlement resolves allegations that from 2012 to 2017 San Miguel Villa submitted, or caused to be submitted, claims to the Medicare and Medi-Cal programs for payment of its services that were grossly substandard and failed to meet minimum required standards of skilled nursing care in multiple ways. The United States alleges that nursing home residents at San Miguel Villa were overmedicated with psychotropic drugs, suffered excessive falls, were exposed to resident-on-resident altercations, and experienced other mental and physical harm.
“Residents of nursing homes are among the most vulnerable in our community, and they rely on Medicare and Medi-Cal programs to provide the care and services they must have,” said United States Attorney Stephanie M. Hinds. “Nursing homes are entrusted to impart competent and quality care to their residents. This case demonstrates that when federal funds are provided but substandard care is delivered, this office is committed to seeking accountability.”
“Nursing homes are intended to be places of comfort and healing, but the provision of substandard care jeopardizes the residents’ health and safety,” stated Steven J. Ryan, Special Agent in Charge with HHS-OIG. “HHS-OIG and our law enforcement partners are staunchly dedicated to investigating allegations of inadequate care at Medicare- and Medicaid-certified nursing homes.”
Assistant U.S. Attorney Gioconda Molinari investigated the matter with the assistance of Paralegal Lillian Do and Auditor Garland He. The United States Attorney’s Office initiated the investigation with assistance from HHS-OIG as part of its ongoing commitment to ensure that nursing home residents receive the necessary skilled nursing home services that they are entitled to and require. The United States Attorney’s Office acknowledges and thanks HHS-OIG as well as the California Department of Justice’s Division of Medi-Cal Fraud and Elder Abuse for their assistance in investigating this matter.
Working in conjunction with the United States Department of Justice Elder Justice Initiative, the United States Attorney’s Office runs an Elder Justice Task Force to identify and investigate nursing homes that provide grossly substandard care, and to support the efforts of state and local prosecutors, law enforcement, and other elder justice professionals who combat elder abuse, neglect and financial exploitation. If you or a loved one is experiencing abuse at a nursing home, please contact the California Long Term Care Ombudsman Crisis line at 1-800-231-4024, or the National Elder Fraud Hotline at 1-833–FRAUD–11 (or 833–372–8311).
Justice Department Secures Agreement with University of California, Berkeley to Make Online Content Accessible to People with DisabilitiesRead the Press Release
The Justice Department announced today that it has filed a proposed consent decree in federal court to resolve allegations that the Regents of the University of California on behalf of the University of California, Berkeley (collectively, UC Berkeley) violated Title II of the Americans with Disabilities Act (ADA) because much of UC Berkeley’s free online content is inaccessible to individuals with hearing, vision, and manual disabilities. The proposed consent decree was filed together with a complaint setting forth the allegations of discrimination.
“By entering into this consent decree, UC Berkeley will make its content accessible to the many people with disabilities who want to participate in and access the same online educational opportunities provided to people without disabilities,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This decree will provide people with disabilities access to the numerous free online courses, conferences, lectures, performances and other programming offered by UC Berkeley and its faculty, providing lifelong learning opportunities to millions of people.”
UC Berkeley makes conferences, lectures, sporting events, graduation ceremonies and other university events available to the public on its websites and on other online platforms, including its YouTube and Apple Podcasts channels. It also makes courses available on its UC BerkeleyX platform. Much of this online content is not accessible to people with disabilities because it lacks captions and transcripts for individuals who are deaf and alternative text describing visual images for individuals who are blind. It is also formatted in a way that does not allow individuals with disabilities to access the content using screen readers or other assistive technology.
Under the three-and-a-half-year long consent decree, which requires court approval, UC Berkeley will make all future and the vast majority of its existing online content accessible to people with disabilities. This includes BerkeleyX courses, university websites and video and podcast content on its YouTube, Apple Podcasts and other third-party platforms. UC Berkeley will also revise its policies, train relevant personnel, designate a web accessibility coordinator, conduct accessibility testing of its online content and hire an independent auditor to evaluate the accessibility of its content.
“Through this consent decree, the Department of Justice demonstrates its commitment to ensuring compliance with the ADA by providing individuals with disabilities a full and equal opportunity to participate in and enjoy the benefits of UC Berkeley’s services, programs and activities in equal measure with people without disabilities,” said U.S. Attorney Stephanie M. Hinds for the Northern District of California.
For more information on the ADA, please call the Department’s toll-free ADA Information Line at 1-800-514-0301 (TDD 800-514-0383) or visit www.ada.gov. For more information on the Civil Rights Division, please visit www.justice.gov/crt.
Justice Department Secures Agreement with University of California, Berkeley to Make Online Content Accessible to People with DisabilitiesRead the Press Release
SAN FRANCISCO –The Justice Department announced today that it has filed a proposed consent decree in federal court to resolve allegations that the Regents of the University of California on behalf of the University of California, Berkeley (collectively, UC Berkeley) violated Title II of the Americans with Disabilities Act (ADA) because much of UC Berkeley’s free online content is inaccessible to individuals with hearing, vision, and manual disabilities. The proposed consent decree was filed together with a complaint setting forth the allegations of discrimination.
“By entering into this consent decree, UC Berkeley will make its content accessible to the many people with disabilities who want to participate in and access the same online educational opportunities provided to people without disabilities,” said Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division. “This decree will provide people with disabilities access to the numerous free online courses, conferences, lectures, performances, and other programming offered by UC Berkeley and its faculty, providing lifelong learning opportunities to millions of people.”
“Through this consent decree, the Department of Justice demonstrates its commitment to ensuring compliance with the ADA by providing individuals with disabilities a full and equal opportunity to participate in and enjoy the benefits of UC Berkeley’s services, programs, and activities in equal measure with people without disabilities,” said U.S. Attorney Stephanie M. Hinds for the Northern District of California.
UC Berkeley makes conferences, lectures, sporting events, graduation ceremonies, and other University events available to the public on its websites and on other online platforms, including its YouTube and Apple Podcasts channels. It also makes courses available on its UC BerkeleyX platform. Much of this online content is not accessible to people with disabilities because it lacks captions and transcripts for individuals who are deaf and alternative text describing visual images for individuals who are blind. It is also formatted in a way that does not allow individuals with disabilities to access the content using screen readers or other assistive technology.Under the three-and-a-half-year long consent decree, which requires court approval, UC Berkeley will make all future and the vast majority of its existing online content accessible to people with disabilities. This includes BerkeleyX courses, university websites, and video and podcast content on its YouTube, Apple Podcasts, and other third-party platforms. UC Berkeley will also revise its policies, train relevant personnel, designate a web accessibility coordinator, conduct accessibility testing of its online content, and hire an independent auditor to evaluate the accessibility of its content.
For more information on the ADA, please call the Department’s toll-free ADA Information Line at 1-800-514-0301 (TDD 800-514-0383) or visit www.ada.gov. For more information on the Civil Rights Division, please visit www.justice.gov/crt.
Fugitive to Face Sentencing After 20 YearsRead the Press Release
OAKLAND – Voni Chen appeared in federal court today for the first time since becoming a fugitive in 2002 when she failed to appear at her sentencing hearing, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp.
Voni Chen, 57, of Taiwan, and her father Richard Chen, 87, were charged in the same indictment in August 2000 with multiple counts of mail fraud. Each pleaded guilty to mail fraud on October 26, 2001, before U.S. District Judge D. Lowell Jensen. They both failed to appear as ordered on May 3, 2002, for their sentencing hearings, and U.S. District Judge Jensen issued bench warrants for their arrests. Twenty years later, Singaporean authorities alerted US authorities that they had located the Chens in Singapore, and based on a US provisional arrest request, Singaporean authorities arrested them. Following the Chens’ consent to their extradition to the United States, the Singapore Minister for Law ordered both to be extradited. Voni Chen was transported yesterday and made an initial appearance today in federal court in Oakland before U.S. Magistrate Judge Donna M. Ryu. Richard Chen is awaiting transportation.
According to the nearly identical plea agreements each entered into on October 26, 2001, Richard Chen was a principal and Voni Chen was the president of Golden Pacific Manufacturing Corporation, Inc. (Golden Pacific), and together they managed the company. Among other things, Golden Pacific manufactured and sold plastic bags. The company started to experience cash flow problems, and Richard and Voni Chen, along with a third party, began a scheme to defraud the credit company that financed Golden Pacific’s accounts receivables. The scheme initially involved Golden Pacific sending invoices to the credit company that reflected orders from Golden Pacific that its customers had never made. Once the credit company received the false invoices, it loaned funds to Golden Pacific as required in their financing agreement.
The plea agreements of both Richard Chen and Voni Chen describe that to increase the number of false invoices, Golden Pacific asked other companies to act as customers of Golden Pacific even though those companies never bought merchandise from Golden Pacific. In addition, Richard Chen and Voni Chen asked their existing customers to represent they purchased more goods from Golden Pacific than they had actually ordered. Richard Chen and Voni Chen also created shell corporations to act as fake customers of Golden Pacific. The false invoices from all of these sources were submitted to the credit company to obtain loaned funds. Eventually, the credit company agreed to loan Golden Pacific more than $5 million, largely secured by the fictitious receivables created from sham transactions.
Assistant United States Attorney Robert Rees is prosecuting the case, with the assistance of Leeya Kekona. The prosecution was a result of an investigation by the FBI.The extradition was handled by the U.S. Justice Department’s Office of International Affairs.
The U.S. Justice Department, including the U.S. Attorney’s Office for the Northern District of California, thanks the Singapore Police Force and Attorney General’s Chambers for its cooperation with the United States.
Elizabeth Holmes Sentenced to More Than 11 Years for Defrauding Theranos Investors of Hundreds of MillionsRead the Press Release
SAN JOSE – Elizabeth A. Holmes was sentenced today to 135 months (11 years, 3 months) in federal prison for defrauding investors in Theranos, Inc. of hundreds of millions of dollars, announced United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp, Food and Drug Administration (FDA) Assistant Commissioner for Criminal Investigations Catherine A. Hermsen, and U.S. Postal Inspection Service (USPIS) San Francisco Division Acting Inspector in Charge Kevin Rho. The sentence was handed down by United States District Judge Edward J. Davila.
“Silicon Valley has seen the rise of companies whose inventions have changed the world and, through intellectual prowess, hard work, and sheer determination, this region continues to innovate,” said U.S. Attorney Stephanie M. Hinds. “Capital investment is critical to that innovation. When fraud is perpetrated on those providing the necessary capital, it staunches investment and can cripple an industry. For almost a decade, Elizabeth Holmes fabricated and spread elaborate falsehoods to draw in a legion of capital investors, both big and small, and her deceit caused the loss of hundreds of millions of dollars. Her sentence reflects the audacity of her massive fraud and the staggering damage she caused.”
“Frauds such as the one perpetrated by Holmes can erode investor confidence which impacts our capital markets. Today's sentence should serve as a warning that deceiving investors will not be tolerated. The FBI is committed to investigating corporate fraud and working with our partners to help keep our capital markets working effectively,” said FBI Special Agent in Charge Robert K. Tripp. “The FBI and our partners worked tirelessly on this multi-year case and are proud justice has been served as a result.”“Today’s announcement should serve as a reminder that fraud related to medical products will not be tolerated,” said FDA Assistant Commissioner for Criminal Investigations Catherine A. Hermsen. “The FDA will continue to work with our law enforcement partners to bring to justice those who place profits above public health.”
“Postal Inspectors worked closely with our partners at the U.S. Attorney’s Office, the FDA Office of Criminal Investigations, and the FBI to bring this case to court,” said USPIS San Francisco Division Acting Inspector in Charge Kevin Rho. “USPIS remains committed to protecting consumers and investors from fraud.”
Holmes, 38, of Woodside, Calif., founded Theranos in 2003 and held the positions of Chairperson and Chief Executive Officer. Theranos, now defunct, was a blood testing company based in Palo Alto and Newark, Calif. Evidence at her jury trial showed that for more than a decade, Holmes claimed that Theranos had developed a revolutionary blood analyzer, variously referred to as the Theranos Sample Processing Unit (TSPU), Edison, and minilab. She asserted that the Theranos proprietary blood analyzer device could run any blood test that was run by conventional labs, all from a blood sample drawn via a fingerstick rather than the traditional draw from a vein. She asserted the Theranos analyzer produced results that were better, cheaper, and more accurate than existing methods and at a speed faster than ever before possible.
Trial evidence demonstrated that Holmes knew the analyzer was not producing accurate and reliable results. Holmes understood that at best it could only perform a few basic tests and was slower than existing devices. She knew that it could not successfully compete with the established conventional machines. Evidence showed that Holmes repeatedly had to resort to using conventional machines to obtain the blood test results that the Theranos analyzer was supposed to perform, though she led investors and the public to believe that Theranos was conducting most or all of its tests using its own analyzer.
Evidence showed that Holmes, despite being aware of the Theranos analyzer’s failure to perform, was able to induce dozens of investors, many of whom were prominent public figures, to invest hundreds of millions of dollars in Theranos. She used direct communications, marketing materials, statements to the media, financial statements, models, and other information to reach potential investors and induce investments. Holmes consistently provided glowing but false representations to investors and potential investors about the analyzer’s progress and capabilities. She falsely represented to investors that multiple major pharmaceutical companies had comprehensively evaluated Theranos and had validated its technology, and she provided investors with reports bearing logos from pharmaceutical companies, falsely suggesting the pharmaceutical companies endorsed Theranos. Holmes misrepresented to investors that Theranos had a profitable, revenue-generating business relationship with the U.S. Department of Defense and that the Theranos technology had been deployed to the battlefield to treat wounded soldiers. In truth, Holmes knew the technology was never deployed in the battlefield and that Theranos had acquired little revenue from military contracts for trial-runs of the analyzer. Holmes also falsely represented to investors that Theranos would dramatically increase its number of Wellness Centers within stores operated by its partner Walgreens from a few dozen to 900, despite knowing that the relationship with Walgreens was stagnating.
Trial evidence demonstrated that Holmes also misrepresented the dire financial status of Theranos to investors and its prospects for future earnings. In examples at trial, Holmes represented to one investor in 2010 that the projected revenue for Theranos in 2011 was $223 million, when she knew that Theranos’ revenue was dropping precipitously, from $2.8 million in 2009 to less than $600,000 in 2011. Holmes misrepresented to other investors that Theranos, which had zero revenue in 2012 and 2013, was projected to generate over $100 million in revenue in 2014 and to reach nearly $1 billion in 2015. She knew when she made these representations that Theranos would at best generate only modest revenue in 2014 and 2015.
In its memorandum filed for the sentencing hearing, the government pointed to evidence that Holmes’ fraud was immensely successful. Projecting altruistic motives, Holmes raised hundreds of millions of dollars by duping investors of all experience levels to invest in Theranos. She fooled investors new to the healthcare and bio-tech sector as well those with deep sophistication and experience in that arena. By the end of 2014, her stock in Theranos was valued at more than $4 billion. She enjoyed a lavish life while carrying out her fraudulent scheme, living in a $15 million mansion and traveling in a Theranos-paid private jet. She gained a national profile, adorning the cover of Fortune, Forbes, Inc., Glamour, and T: The New York Times Style Magazine. Holmes dined at the White House, joined the Board of Fellows of Harvard Medical School, and was named by Time as one of the 100 Most Influential People in the World. But as the government describes, her scheme not only deprived investors of vast sums of money, it also placed numerous others at risk of great physical harm. Wanting to paint Theranos as a legitimate enterprise, Holmes offered Theranos blood tests to the public, and Theranos’ flawed technology was used on patients with serious medical conditions. As a result, Theranos sent out inaccurate results to patients being screened for cancer, to women monitoring their pregnancies, and to one victim who was led to believe she had the precursor virus to AIDS, among many other examples. Theranos itself eventually concluded a patient impact existed for every test run on patients and voided all tests with its analyzer. The government points out that Holmes was undeterred and again choose deceit over candor by downplaying the extent of the patient impact to investor-victims and continuing forward with her elaborate fraud.
Federal criminal charges were initially filed against Holmes on June 14, 2018. On July 28, 2020, a federal grand jury returned a superseding indictment charging her with two counts of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and ten counts of wire fraud, in violation of 18 U.S.C. § 1343. Of the two conspiracy counts, one alleged Holmes conspired to defraud investors and the second alleged Holmes conspired to defraud patients who used Theranos services. Some of the ten counts of wire fraud alleged Holmes committed fraud on individual investors while others alleged Holmes defrauded patients who were induced to purchase Theranos services.
On January 3, 2022, after a nearly four-month trial, a federal jury convicted Holmes of one count of conspiracy to commit fraud on investors and three counts of committing fraud on individual investors which involved wire transfers totaling more than $140 million. The jury acquitted Holmes of the patient-related fraud conspiracy count and on three counts of fraud against individual patients. The jury could not reach a unanimous verdict with respect to three individual investor fraud counts. An additional count of wire fraud relating to a Theranos patient had been dismissed during trial.
In addition to the 135 month prison term, U.S. District Judge Davila sentenced Holmes to three years of supervision following release from prison. The parties were instructed to meet and agree on a future date for a hearing to determine the restitution amount to be paid by Holmes. No fine was assessed. Holmes was ordered to surrender on April 27, 2023, to begin serving her prison sentence.
Assistant U.S. Attorneys Robert S. Leach, Jeff Schenk, John C. Bostic, and Kelly Volkar are prosecuting the case with the assistance of Madeline Wachs, Lakisha Holliman, Sara Slattery, Elise Etter, Susan Kreider, and Leeya Kekona. The prosecution is the result of an investigation by the FBI, USPIS, and the FDA Office of Criminal Investigations.
Richmond Man Indicted in Connection with Attempted Kidnapping and Assault at Pelosi ResidenceRead the Press Release
SAN FRANCISCO – A federal grand jury returned an indictment today charging a Richmond man with assault and attempted kidnapping in connection with the break in at the Pelosi residence on Oct. 28 in San Francisco.
The indictment supersedes the federal criminal complaint filed on Oct. 31.
According to the indictment, David DePape, 42, was arrested on Oct. 28 inside the Pelosi residence by San Francisco Police Department (SFPD) police officers responding to a 911 call from Paul Pelosi, husband of U.S. House of Representatives Speaker Nancy Pelosi. Paul Pelosi later described to police that he had been asleep when DePape, whom he had never seen before, entered his bedroom looking for Nancy Pelosi.
According to the indictment, minutes after the 911 call, two police officers responded to the Pelosi residence where they encountered Paul Pelosi and DePape struggling over a hammer. Officers told the men to drop the hammer, and DePape allegedly gained control of the hammer and swung it, striking Pelosi in the head. Officers immediately restrained DePape, while Pelosi was injured on the ground. As set forth in the indictment, once DePape was restrained, officers secured a roll of tape, white rope, a second hammer, a pair of rubber and cloth gloves, and zip ties from the crime scene, where officers also observed a broken glass door to the back porch.
DePape is charged with one count of assault upon an immediate family member of a United States official with the intent to retaliate against the official on account of the performance of official duties, which carries a maximum sentence of 30 years in prison. DePape is also charged with one count of attempted kidnapping of a United States official on account of the performance of official duties, which carries a maximum sentence of 20 years in prison.
U.S. Attorney Stephanie M. Hinds, Special Agent in Charge Robert K. Tripp of FBI San Francisco, and Chief J. Thomas Manger of the U.S. Capitol Police made the announcement.
The charges contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty in a court of law.
The Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District of California is prosecuting the case. FBI San Francisco, the U.S. Capitol Police, and the San Francisco Police Department are investigating the case.
Man Indicted in Connection with Attempted Kidnapping and Assault at Pelosi ResidenceRead the Press Release
A federal grand jury returned an indictment today charging a California man with assault and attempted kidnapping in connection with the break in at the Pelosi residence on Oct. 28 in San Francisco.
The indictment supersedes the federal criminal complaint filed on Oct. 31.
According to the indictment, David DePape, 42, of Richmond, was arrested on Oct. 28 inside the Pelosi residence by San Francisco Police Department (SFPD) police officers responding to a 911 call from Paul Pelosi, husband of U.S. House of Representatives Speaker Nancy Pelosi. Paul Pelosi later described to police that he had been asleep when DePape, whom he had never seen before, entered his bedroom looking for Nancy Pelosi.
According to the indictment, minutes after the 911 call, two police officers responded to the Pelosi residence where they encountered Paul Pelosi and DePape struggling over a hammer. Officers told the men to drop the hammer, and DePape allegedly gained control of the hammer and swung it, striking Pelosi in the head. Officers immediately restrained DePape while Pelosi was injured on the ground. As set forth in the indictment, once DePape was restrained, officers secured a roll of tape, white rope, a second hammer, a pair of rubber and cloth gloves, and zip ties from the crime scene, where officers also observed a broken glass door to the back porch.
DePape is charged with one count of assault upon an immediate family member of a U.S. official with the intent to retaliate against the official on account of the performance of official duties. He is also charged with one count of attempted kidnapping of a U.S. official on account of the performance of official duties. If convicted, he faces a maximum sentence of 30 years in prison for the assault count and 20 years in prison for the attempted kidnapping count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Stephanie M. Hinds for the Northern District of California, Special Agent in Charge Robert K. Tripp of the FBI San Francisco Field Office, and Chief J. Thomas Manger of the U.S. Capitol Police made the announcement.
The FBI San Francisco Field Office, the U.S. Capitol Police, and the San Francisco Police Department are investigating the case.
The Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District of California is prosecuting the case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Oakland Man Convicted by Jury of Murder for HireRead the Press Release
SAN FRANCISCO – A federal jury on Friday convicted Burte Gucci Rhodes, a.k.a. Moeshawn, of conspiring to commit a murder for hire and of committing a murder for hire, announced United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp, and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Mark H. Pearson.
Rhodes, 41, of Oakland, was charged by superseding indictment on December 18, 2018. His co-defendants Marcus Etienne, a.k.a. Hitler, and Mario Robinson were also charged in that superseding indictment with conspiracy to commit murder for hire and murder for hire, among other charges. Both Etienne, 41, of St. Martin Parish, La., and Robinson, 39, of Oakland, have since pleaded guilty and admitted their roles in the murder.
The trial of Rhodes focused on the March 22, 2016, murder of Louisiana native Trince Thibodeaux, age 28. Trial evidence demonstrated that Etienne was the leader of a racketeering enterprise based near Lafayette, Louisiana, that engaged in extensive illegal activities, including drug trafficking, assault, and illegal firearms possession. Robinson moved from Oakland, California, to Louisiana in 2015 and joined in the Etienne enterprise.
Evidence at trial showed that in 2016 Etienne believed Thibodeaux had stolen several thousand dollars that he had been tasked with transporting from Louisiana to California and therefore ordered Robinson and another member of the organization to have Thibodeaux killed. Robinson then contracted with Rhodes, a longtime friend of his from Oakland, to carry out the murder in exchange for $5,000.
Evidence at trial showed that on the night of March 22, 2016, Robinson and another member of the organization lured Thibodeaux to a predetermined location near the intersection of 90th Avenue and International Boulevard in the eastern part of Oakland, where Rhodes was waiting. The evidence demonstrated that, once Thibodeaux arrived, Rhodes approached him from behind and shot him nine times. Thibodeaux was pronounced dead later that night.
One week after the murder, Robinson sent Rhodes a wire transfer of $1,250. In the months following the murder, Robinson had other associates in Louisiana send additional wire transfers to Rhodes.
A federal jury convicted Rhodes following a one week trial of one count of murder for hire in violation of 18 U.S.C. § 1958, which carries a sentence of life in prison. The jury also convicted Rhodes of one count of conspiracy to commit murder for hire in violation of 18 U.S.C. § 371, which carries a maximum sentence of five years in prison. Any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
United States District Judge William Alsup presided over the Rhodes trial and set a sentencing hearing for January 31, 2023. Rhodes remains in custody pending his sentencing hearing.
Etienne and Robinson were sentenced on October 13, 2020, for their involvement in the racketeering conspiracy, which encompassed their roles in the murder for hire. U.S. District Judge Alsup sentenced Etienne to 34 years and Robinson to 32 years in federal prison.
Assistant U.S. Attorneys Casey Boome and Kevin Rubino prosecuted the case, with the assistance of Jessie Chelsea.. The prosecution was a result of an investigation by the FBI and IRS-CI with assistance of the United States Postal Inspection Service and the Oakland Police Department.
Fentanyl Dealer Sentenced to Six Years for Selling “M30” Pills That Killed Monterey VictimRead the Press Release
SAN JOSE – Matthew Sanchez was sentenced today to 75 months (6 years, 3 months) in federal prison for distributing fentanyl-laced pills that killed a Monterey County resident, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration Acting Special Agent in Charge Bob P. Beris. The sentence was handed down by United States District Judge Edward J. Davila.
Sanchez, 27, of Monterey County, CA, was charged in a May 23, 2022, superseding information with a conspiracy to distribute alprazolam and fentanyl and with the distribution of fentanyl. He entered a plea agreement and pleaded guilty to both charges on June 6, 2022.
In his plea agreement, Sanchez admitted that from June 2018 through October 2019 he conspired with others to sell, and did sell, counterfeit pharmaceutical pills containing fentanyl. The fentanyl-laced pills were called “M30s” and were light blue in color with an imprinted “M” on one side and “30” on the other. Sanchez also conspired to sell and sold bottles of alprazolam (U.S. brand name: Xanax) packaged as “Farmapram.”
Sanchez described in his plea agreement that during the conspiracy, he bought “Farmapram” pills and M30 pills containing fentanyl from a co-conspirator supplier multiple times. At the peak of the conspiracy Sanchez bought a batch of about 30 bottles of Farmapram and 50 M30 pills containing fentanyl every two weeks from the co-conspirator. The co-conspirator often “fronted” the drugs to Sanchez, providing the drugs first and accepting payment later, after Sanchez had sold them.
Sanchez understood that the M30 pills were from Mexico and admitted that he knew they contained fentanyl. In his plea agreement, he asserted he informed buyers that the M30 pills contained fentanyl.
Sanchez further admitted in his plea agreement that between August and early September 2019, he sold M30 pills containing fentanyl to a Monterey County resident. Sanchez agreed that the fentanyl he sold to that victim caused the victim to overdose and to die from the fentanyl.
The victim, found in the victim’s home, left behind a spouse and a young son.
In a memorandum filed for the sentencing hearing, the government described that Sanchez learned of the victim’s death from a fentanyl overdose in the following days, yet he continued to sell M30s laced with fentanyl to other customers until he was arrested weeks later. The government argued that his continued sales, with full knowledge that his M30s had already killed one person, were “inexplicable and unspeakably horrible.”
Sanchez’s co-defendant Francisco Javier Schraidt Rodriguez, a former Mexican pharmacy employee, was also convicted of distributing the fentanyl-laced pills that killed the Monterey County victim and was earlier sentenced to 90 months (7½ years). A copy of that press release is available at https://www.justice.gov/usao-ndca/pr/former-mexican-pharmacy-employee-sentenced-more-7-years-selling-fentanyl-pills-killed.
In addition to the 75 month federal prison term, United States District Judge Edward J. Davila ordered Sanchez to serve three years of supervision following release from federal prison. Sanchez will surrender on February 8, 2023, to begin serving his sentence.
The case was prosecuted by Assistant United States Attorneys Christina Liu and Casey Boome, with the assistance of Mark DiCenzo, Linda Love, and Andy Ding. The prosecution is the result of an investigation by DEA, with assistance from the Customs and Border Protection, Office of Field Operations; the Department of Homeland Security, Homeland Security Investigations; the Pacific Grove Police Department; Monterey County Sheriff’s Office; and the Monterey Police Department.
This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
One Pill Can Kill: Avoid pills bought on the street because One Pill Can Kill. Fentanyl is a highly potent opioid that drug dealers dilute with cutting agents to make counterfeit prescription pills that appear to be Oxycodone, Percocet, Xanax, and other drugs. Fentanyl is used because it’s cheap. Small variations in the quantity or quality of fentanyl in a fake prescription pill can accidentally create a lethal dosage. Fentanyl has now become the leading cause of drug poisoning deaths in the United States. Fake prescription pills laced with fentanyl are usually shaped and colored to look like pills sold at pharmacies, like Percocet and Xanax. For example, fake prescription pills known as “M30s” imitate Oxycodone obtained from a pharmacy, but when sold on the street the pills routinely contain fentanyl. These particular pills are usually round tablets and often light blue in color, though they may be in different shapes and a rainbow of colors. They often have “M” and “30” imprinted on opposite sides of the pill. Do not take these or any other pills bought on the street – they are routinely fake and poisonous, and you won’t know until it’s too late.
Jury Convicts Former Santa Rosa Doctor of Illegally Prescribing Oxycodone and Other Controlled SubstancesRead the Press Release
SAN FRANCISCO – A federal jury yesterday convicted former physician Thomas Keller of four counts of distributing controlled substances, including Oxycodone, Carisoprodol and Diazepam, outside the scope of his professional practice and without a legitimate medical need, announced United States Attorney Stephanie M. Hinds, Drug Enforcement Administration (DEA) Acting Special Agent in Charge Bob P. Beris, FBI San Francisco Special Agent in Charge Robert K. Tripp, and U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) Special Agent in Charge Steven J. Ryan, and the California Department of Justice Division of Medi-Cal Fraud and Elder Abuse (DMFEA).
Keller, 75, was a Santa Rosa resident and a licensed physician who ran a pain management practice in Santa Rosa when he was indicted on September 27, 2018. At trial, the evidence demonstrated that Keller repeatedly prescribed the opioid oxycodone and other strong, addictive drugs to his patient, A.M., in dosages that far exceeded the usual course of professional practice and was for no legitimate medical need. Trial evidence showed that on December 22, 2016, Keller prescribed Oxycodone, Diazepam, and Carisoprodol at the same time to A.M., knowing she did not need such a dangerous combination of drugs. Evidence also showed that on January 20, 2017, Keller again distributed Diazepam, often called Valium, to A.M., and on February 16, 2017, distributed Oxycodone to A.M., again knowing the distribution of both was outside the scope of professional practice and not for a legitimate medical purpose. Keller was also convicted of distributing Carisoprodol to A.M. on July 10, 2017. Approximately two weeks later, A.M. died of an overdose of Oxycodone and other drugs.
The jury convicted Keller of four counts of distributing drugs outside the scope of professional practice in violation of 21 U.S.C. §§ 841(a)(1), but was unable to reach a verdict on six counts. Of the four counts of conviction, the counts of distributing Oxycodone carry a maximum sentence of 20 years in prison and the counts of distributing Carisoprodol and Diazepam carry a maximum sentence of five years in prison. Additional fines, restitution, and periods of supervised release may also be ordered at sentencing. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
United States District Judge Vince Chhabria has not yet set a date for a sentencing hearing. Keller remains out of custody pending his sentencing hearing.
Assistant U.S. Attorneys Kristina Green and Ross E. Weingarten are prosecuting the case with the assistance of Pat Mahoney. This case was investigated and prosecuted by member agencies of the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state, and local law enforcement agencies.
Gang Leader Sentenced to More Than 25 Years for Assault and Murder Schemes Committed Inside Monterey County JailRead the Press Release
SAN JOSE –Vincent Gerald Garcia was sentenced to 306 months in federal prison today following his federal jury convictions for multiple conspiracies involving gang violence in the Monterey County Jail, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp. The sentence was handed down by United States District Judge Beth L. Freeman.
U.S. District Judge Freeman imposed sentence on each of the three counts Garcia was convicted of, as follows: 306 months in prison for engaging in a racketeering (RICO) conspiracy, 120 months for engaging in a conspiracy to commit murder in aid of racketeering, and 36 months for engaging in a conspiracy to commit assault with a dangerous weapon in aid of racketeering. The shorter sentences were ordered to run concurrently with the longer sentence, for a total custody time of 306 months.
Garcia, 55, of Salinas, is the 14th defendant charged, convicted, and sentenced in this case. Garcia was convicted by a federal jury on June 7, 2022. Garcia’s only co-defendant at the jury trial, Jorge Jasso, is the 15th and final defendant in the case and was also convicted at the trial of all counts. Jasso is awaiting his sentencing hearing.
At trial, the evidence showed that from December 2012 through April 2014, Garcia was an active member of the Nuestra Familia (“NF”) prison gang and, for most of that time, incarcerated in the Monterey County Jail. Garcia held the position of Regiment Commander for the NF in charge of all Monterey County and, as such, controlled the criminal activities of gang inmates at the Monterey County Jail. The Norteño street gang is affiliated with the NF, and Norteño gang members pledge loyalty to the NF. Evidence showed that inside prisons and local jails, all members and affiliates of the NF, including Norteños, worked together to maintain gang structure and to follow gang rules.
According to trial evidence, any member in a Norteño housing unit who committed a serious violation of the rules was subject to “removal.” A removal operation was executed by Norteño gang members and involved an organized attack upon the targeted victim. In the attacks, one or more “hitters” stabbed the victim and were followed immediately by at least two “bombers” who viciously beat the victim without weapons. The beating by the bombers inflicted further injury to the stabbed target and continued the attack’s chaotic distraction at the jail, which allowed time for the hitters to hide their weapons and wash off.
Trial evidence also showed that removals were approved in advance by the gang leader in charge of the facility. The Norteño gang member who was in charge of the particular housing unit then planned the removal. All members in the Norteño housing unit were aware of the removal process and were required to assist if requested.
Additional trial evidence demonstrated that the sale of controlled substances both inside custodial facilities and on the street was a central income producer for the gang. Evidence showed that Norteño members smuggled controlled substances into Monterey County Jail as well as other jails and sold the “hard” drugs to the inmates, while any smuggled marijuana was distributed only to fellow gang members.
The trial focused on ten removals in the Monterey County Jail between December 2012 and April 2014. Most of the removals occurred in “K-Pod,” a cell block in Monterey County Jail that housed active Norteño members and associates exclusively. Three of the removals occurred in the jail’s main yard, during the recreation period for inmates who were housed in the lockdown pods for Norteños.
Evidence at trial identified Garcia as the gang leader responsible for approving all removals. Evidence showed that Garcia was a long time gang member who rose through the ranks to become a carnale of the NF prison gang in the 1990s before becoming the NF Regiment Commander in charge of Salinas and Monterey County from 2012 through 2014. From May 2013 through February 2015, Garcia was incarcerated in the Monterey County Jail. Evidence demonstrated that while he was in charge of the entire jail for the NF, he ordered the assaults and murder attempts. He had ultimate gang authority and could put fellow gang members on “freeze” status, clear them for rule violations or strip them of gang or leadership roles, and elevate members into leadership positions. Evidence showed that Garcia approved all of the ten removals, including ones in which his co-defendants Jasso participated.
In addition to the concurrent prison sentences, U.S. District Judge Freeman imposed a five term of supervised release upon Garcia’s release from prison. Defendant Garcia was in custody at the time of his sentencing hearing and will begin to serve his sentence immediately.
Below are the names, charges of conviction, and sentences of the 15 individuals charged in this case:
Name Charge(s) Sentence Johnny Magdaleno 18 U.S.C. § 1962(d) – Racketeering Conspiracy 360 months imprisonment Vincent Gerald Garcia- 18 U.S.C. §1962(d) - Racketeering Conspiracy
- 18 U.S.C. §1959(a)(5) - Conspiracy to Commit Murder in Aid of Racketeering
- 18 U.S.C. § 1959(a)(6) - Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
- 18 U.S.C. § 962(d) - Racketeering Conspiracy
- 18 U.S.C. § 1959(a)(5) - Conspiracy to Commit Murder in Aid of Racketeering
- 18 U.S.C. § 1959(a)(6) - Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
- 18 U.S.C. § 1962(d) - Racketeering Conspiracy
- 18 U.S.C. § 1959(a)(5) - Conspiracy to Commit Murder in Aid of Racketeering
- 18 U.S.C. § 1959(a)(6) - Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
- 18 U.S.C. § 1962(d) - Racketeering Conspiracy
- 18 U.S.C. § 1959(a)(5) - Conspiracy to Commit Murder in Aid of Racketeering
- 18 U.S.C. § 1959(a)(6) - Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
Assistant U.S. Attorneys Stephen Meyer and Neal C. Hong prosecuted the case at trial with the assistance of Christine Tian, Mimi Lam, Laurie Worthen, Susan Krieder, Lynette Dixon, and Elise Etter. The prosecution is the result of an investigation by the FBI with investigative assistance from the Monterey County Sheriff’s Office, the California Highway Patrol, the California Department of Corrections and Rehabilitation, the Salinas Police Department, the Soledad Police Department, and the Fresno Police Department.
Former Apple Employee Admits Defrauding Apple of More Than $17 MillionRead the Press Release
SAN JOSE – Dhirendra Prasad pleaded guilty in federal court today to conspiracy to commit fraud and conspiracy to defraud the United States in connection with multiple schemes defrauding his then employer Apple, Inc., announced United States Attorney Stephanie M. Hinds and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Mark H. Pearson.
In a written plea agreement entered today, Prasad, 52, of Mountain House, California, described that he was employed by Apple from 2008 through 2018 and acted for most of that time as a buyer in Apple’s Global Service Supply Chain. Prasad’s responsibilities involved purchasing parts and services for Apple from vendors. Prasad admitted he began to defraud Apple as early as 2011 by taking kickbacks, inflating invoices, stealing parts, and causing Apple to pay for items and services never received. Prasad admitted these schemes continued through 2018 and ultimately resulted in a loss to Apple of more than $17 million.
Prasad admitted his co-conspirators in the fraud schemes were Robert Gary Hansen and Don M. Baker, who reside in the Central District of California. Hansen and Baker each owned vendor companies, and their companies engaged in business with Apple. Hansen and Baker were earlier charged in separate federal criminal cases, and they have admitted their involvement in the schemes.
In one of several fraud schemes admitted by Prasad, in 2013 he had motherboards shipped from Apple’s inventory to Baker’s company, CTrends. Baker arranged to have the motherboards’ components harvested, and Prasad arranged for Apple to issue purchase orders for those harvested components. Baker shipped the harvested components back to Apple, and CTrends submitted invoices to Apple, thus billing Apple for its own components. Prasad caused Apple to pay the fraudulent invoices, and Baker and Prasad thereafter split the proceeds of the fraud.
In another example, in approximately 2016 Prasad arranged to have components shipped from Apple’s inventory located in a Nevada warehouse to Hansen’s business, Quality Electronics Distributors, Inc. Hansen intercepted the components, removed them from their packaging, placed them in new packaging, and shipped them back to Apple’s warehouse. Prasad created purchase orders for the components, and Hansen submitted invoices to Apple for them, thus billing Apple for its own components. Prasad caused Apple to pay the fraudulent invoices, and Hansen and Prasad split the proceeds of the fraud.
In addition to the many fraud schemes, Prasad admitted he engaged in tax fraud by funneling illicit payments from Hansen directly to Prasad’s creditors. Prasad also caused a shell company to issue sham invoices to CTrends in order to conceal Baker’s illicit payments to Prasad and to allow Baker to claim hundreds of thousands of dollars of unjustified tax deductions. These schemes resulted in an IRS loss of more than $1.8 million.
The United States also instituted a civil forfeiture action to forfeit the assets acquired by Prasad with the fraud proceeds, including multiple real properties he purchased and numerous financial accounts containing funds traced to Prasad’s crimes. These assets have an aggregate value of approximately $5 million. Today, Prasad agreed to forfeit all the assets to the United States.
Prasad pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud in violation of 18 U.S.C. § 1349, 18 U.S.C. § 1341 & 18 U.S.C. § 1343, which carries a maximum sentence of 20 years in prison. He also pleaded guilty to one count of conspiracy to defraud the United States in violation of 18 U.S.C. § 371, which carries a maximum sentence of five years. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
United States District Judge Beth L. Freeman scheduled Prasad’s sentencing hearing for March 14, 2023. Prasad remains out of custody pending his sentencing hearing.
Assistant United States Attorney Michael G. Pitman is prosecuting the case, with the assistance of Sahib Kaur. Assistant United States Attorney Karen D. Beausey is representing the United States in the civil forfeiture action, with the assistance of Carolyn Caparas. The prosecution was the result of an investigation led by Internal Revenue Service, Criminal Investigation with the assistance of the Special Enforcement Program.
Richmond Man Charged with Assault and Attempted Kidnapping Following Breaking and Entering of Pelosi ResidenceRead the Press Release
SAN FRANCISCO – A Richmond man was charged today with assault and attempted kidnapping in violation of federal law in connection with the break-in at the residence of Nancy and Paul Pelosi in San Francisco on Friday.
According to the complaint, David DePape, 42, was arrested on Friday inside the Pelosi residence by San Francisco Police Department (SFPD) police officers responding to a 911 call from Paul Pelosi, husband of U.S. House of Representatives Speaker Nancy Pelosi. Paul Pelosi later described to police that he had been asleep when DePape, whom he had never seen before, entered his bedroom looking for Nancy Pelosi.
According to the complaint, minutes after the 911 call, two police officers responded to the Pelosi residence where they encountered Paul Pelosi and DePape struggling over a hammer. Officers told the men to drop the hammer, and DePape allegedly gained control of the hammer and swung it, striking Pelosi in the head. Officers immediately restrained DePape, while Pelosi appeared to be unconscious on the ground. As set forth in the complaint, once DePape was restrained, officers secured a roll of tape, white rope, a second hammer, a pair of rubber and cloth gloves, and zip ties from the crime scene, where officers also observed a broken glass door to the back porch.
The complaint charges DePape with one count of assault of an immediate family member of a United States official with the intent to retaliate against the official on account of the performance of official duties, which carries a maximum sentence of 30 years in prison. DePape is also charged with one count of attempted kidnapping of a United States official on account of the performance of official duties, which carries a maximum sentence of 20 years in prison.
U.S. Attorney Stephanie M. Hinds, Special Agent in Charge Robert K. Tripp of FBI San Francisco, and Chief J. Thomas Manger of the U.S. Capitol Police made the announcement.
The charges contained in the complaint are allegations. The defendant is presumed innocent unless and until proven guilty in a court of law.
The Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District of California is prosecuting the case. FBI San Francisco, the U.S. Capitol Police, and the San Francisco Police Department are investigating the case.
Man Charged with Assault and Attempted Kidnapping Following Breaking and Entering of Pelosi ResidenceRead the Press Release
A California man was charged today with assault and attempted kidnapping in violation of federal law in connection with the break-in at the residence of Nancy and Paul Pelosi in San Francisco on Friday.
According to the complaint, David Wayne DePape, 42, of Richmond, was arrested on Friday inside the Pelosi residence by San Francisco Police Department (SFPD) police officers responding to a 911 call from Paul Pelosi, husband of U.S. House of Representatives Speaker Nancy Pelosi. Paul Pelosi later described to police that he had been asleep when DePape, whom he had never seen before, entered his bedroom looking for Nancy Pelosi.
According to the complaint, minutes after the 911 call, two police officers responded to the Pelosi residence where they encountered Paul Pelosi and DePape struggling over a hammer. Officers told the men to drop the hammer, and DePape allegedly gained control of the hammer and swung it, striking Pelosi in the head. Officers immediately restrained DePape, while Pelosi appeared to be unconscious on the ground. As set forth in the complaint, once DePape was restrained, officers secured a roll of tape, white rope, a second hammer, a pair of rubber and cloth gloves, and zip ties from the crime scene, where officers also observed a broken glass door to the back porch.
DePape is charged with one count of assault of an immediate family member of a United States official with the intent to retaliate against the official on account of the performance of official duties, which carries a maximum sentence of 30 years in prison. DePape is also charged with one count of attempted kidnapping of a United States official on account of the performance of official duties, which carries a maximum sentence of 20 years in prison.
U.S. Attorney Stephanie M. Hinds for the Northern District of California, Special Agent in Charge Robert K. Tripp of the FBI San Francisco Field Office, and Chief J. Thomas Manger of the U.S. Capitol Police made the announcement.
The Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District of California is prosecuting the case.
The FBI San Francisco Field Office, the U.S. Capitol Police, and the San Francisco Police Department are investigating the case.
A criminal complaint is merely an allegation. The defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Former Santa Rita Jail Inmate Sentenced to 7 Years for Distributing Fentanyl That Killed Fellow InmateRead the Press Release
OAKLAND – A federal judge today sentenced Kameron Patricia Reid to 84 months in prison for distributing fentanyl that killed an inmate at the Santa Rita Jail, announced United States Attorney Stephane M. Hinds, FBI San Francisco Special Agent in Charge Robert K. Tripp, and Drug Enforcement Administration Acting Special Agent in Charge Bob P. Beris. The sentence was handed down by United States District Judge Jon S. Tigar.
In a written plea agreement entered earlier, Reid, 38, of San Leandro, described the events that led to her fellow inmate’s death on May 16, 2021. Reid was incarcerated at the time in Santa Rita Jail located in Dublin, Alameda County. She admitted that during her incarceration she distributed fentanyl within the jail, hiding the fentanyl from correctional officers by concealing it in a cavity of her body. On May 16, Reid provided fentanyl to two inmates identified in the plea agreement as “Victim 1” and “Inmate 2.” She saw both inmates ingest the fentanyl, and each became visibly intoxicated. Reid suspected Victim 1 was overdosing. In her plea agreement Reid admitted she did not call for assistance for fear of getting into trouble. Instead, she flushed the rest of her fentanyl down a toilet. Another inmate eventually called for assistance, but Victim 1 died. Reid admitted in her plea agreement that she then lied to investigators about her role in Victim 1’s death.
The government described in its sentencing memo filed for today’s hearing that Reid distributed fentanyl to multiple inmates at Santa Rita Jail from approximately April 23, 2021, when Reid was arrested by San Leandro police officers and found with fentanyl, until her release in May 2021. The day before Victim 1’s death, Reid distributed pink-colored fentanyl to Victim 1 and Inmate 2. After learning the pink fentanyl created little effect on the inmates, the next day – May 16 – Reid provided Victim 1 and Inmate 2 with white-colored fentanyl. According to the government’s sentencing memo, Reid knew the white-colored fentanyl was stronger and referred to it as the “big dog.” The sentencing memo further describes that once Victim 1 ingested the white fentanyl and showed signs of overdosing, Reid checked on the victim multiple times but never summoned help. Hours later another inmate summoned assistance, and a half hour after that Victim 1 was pronounced dead. The government argued in its sentencing memo that Reid’s distribution of fentanyl was reckless and her failure to summon help was callous, selfish, and cruel.
In addition to the 84 month sentence, United States District Judge Tigar ordered Reid to serve a three year period of supervision when she leaves prison. Reid was in custody at her sentencing hearing and begins serving her sentence immediately.
Assistant U.S. Attorney Molly K. Priedeman of the Oakland Branch of the United States Attorney’s Office is prosecuting the case with the assistance of Leeya Kekona. The prosecution is the result of an investigation by the FBI, DEA, and the Alameda County Sheriff’s Office.
One Pill Can Kill: Avoid pills bought on the street because One Pill Can Kill. Fentanyl is a highly potent opiate that drug dealers dilute with cutting agents to make counterfeit prescription pills that appear to be Oxycodone, Percocet, Xanax, and other drugs. Fentanyl is used because it’s cheap. Small variations in the quantity or quality of fentanyl in a fake prescription pill can accidentally create a lethal dosage. Fentanyl has now become the leading cause of drug poisoning deaths in the United States. Fake prescription pills laced with fentanyl are usually shaped and colored to look like pills sold at pharmacies, like Percocet and Xanax. For example, fake prescription pills known as “M30s” imitate Oxycodone obtained from a pharmacy, but when sold on the street the pills routinely contain fentanyl. These particular pills are usually round tablets and often light blue in color, though they may be in different shapes and a rainbow of colors. They often have “M” and “30” imprinted on opposite sides of the pill. Do not take these or any other pills bought on the street – they are routinely fake and poisonous, and you won’t know until it’s too late.
Former Correctional Officer Admits to Abusive Sexual Contact with InmateRead the Press Release
OAKLAND – Enrique Chavez pleaded guilty in federal court today to abusive sexual contact with a female prison inmate while he was employed as a correctional officer at the Federal Correctional Institute Dublin (FCI Dublin) in Alameda County.
“Correctional institutions play a vital role in securing the safety and welfare of our communities, and its officers must ensure the same for prisoners under their custody and control,” said United States Attorney Stephanie M. Hinds. “Correctional officers are trained and required to act with integrity and professionalism towards the prisoners they supervise. Any officer who breaches those responsibilities and violates the law in doing so should expect a federal criminal investigation and prosecution to follow.”
“The public trusts correctional officers to act with integrity, but instead, Chavez used his position of power to sexually abuse an inmate under his supervision. The DOJ Office of the Inspector General will continue to aggressively investigate allegations of abuse, including sexual abuse, across the BOP,” said Zachary Shroyer, Special Agent in Charge of the Department of Justice Office of the Inspector General Los Angeles Field Office.
“Employees of federal prisons who abuse their authority are not above the law,” said FBI Special Agent in Charge Robert K. Tripp. “The FBI and our partners will continue to identify correctional officers like Chavez who violated federal law and hold them accountable.”
According to the plea agreement he entered today, Chavez, 50, formerly of Manteca, California, was employed in October 2020 as a correctional officer at FCI Dublin. FCI Dublin is a correctional institution operated by the Federal Bureau of Prisons that houses female prisoners. A female prisoner identified only as Victim 1 in the plea agreement was in detention at FCI Dublin. Victim 1 was under Chavez’s supervision and disciplinary authority at the time.
Chavez admitted today in his plea agreement that during October 2020 he met Victim 1 in the food service pantry at FCI Dublin. After they met in the pantry, Chavez locked the door. The lights were turned off. Chavez admitted to putting his hand inside Victim 1’s underwear and touching her genitals. Chavez also admitted to touching the victim’s breasts.
Chavez pleaded guilty today to one count of abusive sexual contact with a prisoner in violation of 18 U.S.C. § 2244(a)(4). The count carries a maximum statutory sentence of two years imprisonment and a $250,000 fine, with a minimum period of supervision following release from prison of five years and a maximum of a lifetime of supervision. However, any sentence following a conviction would be imposed by a court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
United States District Judge Yvonne Gonzalez Rogers set a sentencing hearing for Chavez on February 2, 2023 at 3:00 p.m. Chavez remains out of custody on bond while awaiting his sentencing hearing.
U.S. Attorney Stephanie M. Hinds, DOJ Office of the Inspector General Los Angeles Field Office Special Agent in Charge Zachary Shroyer, and FBI Special Agent in Charge Robert K. Tripp made the announcement.
Assistant U.S. Attorneys Andrew Paulson, Mohit Gourisaria, and Molly K. Priedeman are prosecuting the case, with the assistance of Kay Konopaske and Leeya Kekona. The prosecution is the result of an investigation by the DOJ Office of the Inspector General and the FBI.
Google Enters into Stipulated Agreement to Improve Legal Process Compliance ProgramRead the Press Release
The Department of Justice today filed a stipulation and agreement resolving a dispute with Google over the loss of data responsive to a search warrant issued in 2016.
Pursuant to the first-of-its-kind resolution, Google has agreed to reform and upgrade its legal process compliance program to ensure timely and complete responses to legal process such as subpoenas and search warrants, as required under the Stored Communications Act (SCA) and other applicable legal authorities. To monitor that Google fulfills its legal obligations, an Independent Compliance Professional will be retained to serve as an outside third-party related to Google’s compliance enhancements.
“The Department is committed to ensuring that electronic communications providers comply with court orders to protect and facilitate criminal investigations,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “This agreement demonstrates the Department’s resolve in ensuring that technology companies, such as Google, provide prompt and complete responses to legal process to ensure public safety and bring offenders to justice.”
“The warrant underlying this agreement was sought in connection with a significant criminal investigation,” said U.S. Attorney Stephanie Hinds for the Northern District of California. “This agreement will help to ensure that, moving forward, Google will maintain the technical capability and resources necessary to comply with lawful warrants and orders, such as the one at issue in this case, that are critical to federal criminal investigations.”
As detailed in the Statement of Facts accompanying today’s agreement, in 2016, the United States obtained a search warrant in the Northern District of California for data held at Google related to the investigation of the criminal cryptocurrency exchange BTC-e. The warrant was issued under the SCA, the federal statute that requires providers such as Google to disclose customer communications when served with a warrant signed by a judge and supported by probable cause.
After the warrant was reviewed by a judge in the Northern District of California, sworn, signed, and served on Google, the Second Circuit Court of Appeals issued a decision holding that SCA search warrants did not reach data stored outside of the United States. Google halted execution of the search warrant and made rolling productions containing only information it could confirm was stored in the United States. Because Google’s data preservation tools at the time stored data in the United States – and thus brought the data under undisputed U.S. jurisdiction – Google also endeavored to create new tools that would prevent the data from being repatriated. Google and the government litigated regarding the search warrant through 2017 and into 2018, when Congress clarified that the SCA does indeed reach data that U.S. providers choose to store overseas. In the intervening time, data responsive to the warrant was lost.
In resolving the matter with the department, Google has agreed to numerous improvements to its legal process compliance program, as set forth in the filed agreement. The improvements are tailored to ensure that Google complies with its legal obligations to respond to lawful court orders, including those issued pursuant to the SCA. Google will maintain sufficient compliance staffing levels to support the enhancements to the program and will allocate engineering resources to support legal process compliance.
Google has further committed to implement processes and procedures to ensure timely response to legal process, as required under the SCA and other relevant legal frameworks, and to generate a compliance timeliness record for missed deadlines, which will be made available to the government upon request. Google will also develop and maintain needed tools to retrieve data in response to legal process, and to develop plans for legal process responses corresponding to new product launches.
The agreement also provides that an Independent Compliance Professional will verify the accuracy of assertions in all reports contemplated by the agreement and evaluate Google’s assessment of its compliance with the enhancements to Google’s Legal Process Compliance Program set forth in the agreement. Pursuant to the agreement and in consultation with the mandated Independent Compliance Professional, Google will assemble periodic reports and updates regarding its Legal Process Compliance Program and its implementation of the enhancements set forth in the agreement. Google will provide these reports to the government, the Google Compliance Steering Committee, and the Audit and Compliance Committee of the Alphabet Board of Directors.
In the filed stipulation, Google represented to the court that it spent over $90 million on additional resources, systems, and staffing to implement legal process compliance program improvements.
Google will maintain its lawful protections of user data, and the agreement does not provide the United States access to Google user data.
Senior Counsel C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section and Corporate and Securities Fraud Section Chief Lloyd Farnham for the Northern District of California negotiated the agreement on behalf of the government.
Google Enters into Stipulated Agreement to Improve Legal Process Compliance ProgramRead the Press Release
SAN FRANCISCO – The Department of Justice today filed a stipulation and agreement resolving a dispute with Google over the loss of data responsive to a search warrant issued in 2016.
Pursuant to the first-of-its-kind resolution, Google has agreed to reform and upgrade its legal process compliance program to ensure timely and complete responses to legal process such as subpoenas and search warrants, as required under the Stored Communications Act (SCA) and other applicable legal authorities. To monitor that Google fulfills its legal obligations, an Independent Compliance Professional will be retained to serve as an outside third-party related to Google’s compliance enhancements.
“The warrant underlying this agreement was sought in connection with a significant criminal investigation,” said U.S. Attorney Stephanie Hinds for the Northern District of California. “This agreement will help to ensure that, moving forward, Google will maintain the technical capability and resources necessary to comply with lawful warrants and orders, such as the one at issue in this case, that are critical to federal criminal investigations.”
“The Department is committed to ensuring that electronic communications providers comply with court orders to protect and facilitate criminal investigations,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “This agreement demonstrates the Department’s resolve in ensuring that technology companies, such as Google, provide prompt and complete responses to legal process to ensure public safety and bring offenders to justice.”
As detailed in the Statement of Facts accompanying today’s agreement, in 2016, the United States obtained a search warrant in the Northern District of California for data held at Google related to the investigation of the criminal cryptocurrency exchange BTC-e. The warrant was issued under the SCA, the federal statute that requires providers such as Google to disclose customer communications when served with a warrant signed by a judge and supported by probable cause.
After the warrant was reviewed by a judge in the Northern District of California, sworn, signed, and served on Google, the Second Circuit Court of Appeals issued a decision holding that SCA search warrants did not reach data stored outside of the United States. Google halted execution of the search warrant and made rolling productions containing only information it could confirm was stored in the United States. Because Google’s data preservation tools at the time stored data in the United States – and thus brought the data under undisputed U.S. jurisdiction – Google also endeavored to create new tools that would prevent the data from being repatriated. Google and the government litigated regarding the search warrant through 2017 and into 2018, when Congress clarified that the SCA does indeed reach data that U.S. providers choose to store overseas. In the intervening time, data responsive to the warrant was lost.
In resolving the matter with the department, Google has agreed to numerous improvements to its legal process compliance program, as set forth in the filed agreement. The improvements are tailored to ensure that Google complies with its legal obligations to respond to lawful court orders, including those issued pursuant to the SCA. Google will maintain sufficient compliance staffing levels to support the enhancements to the program and will allocate engineering resources to support legal process compliance.
Google has further committed to implement processes and procedures to ensure timely response to legal process, as required under the SCA and other relevant legal frameworks, and to generate a compliance timeliness record for missed deadlines, which will be made available to the government upon request. Google will also develop and maintain needed tools to retrieve data in response to legal process, and to develop plans for legal process responses corresponding to new product launches.
The agreement also provides that an Independent Compliance Professional will evaluate Google’s assessment of its compliance with the enhancements to Google’s Legal Process Compliance Program set forth in the agreement. Pursuant to the agreement and in consultation with the mandated Independent Compliance Professional, Google will assemble periodic reports and updates regarding its legal process compliance program and its implementation of the enhancements set forth in the agreement. Google will provide these reports to the government, the Google Compliance Steering Committee, and the Audit and Compliance Committee of the Alphabet Board of Directors.
In the filed stipulation, Google represented to the court that it spent over $90 million on additional resources, systems, and staffing to implement legal process compliance program improvements.
Google will maintain its lawful protections of user data, and the agreement does not provide the United States access to Google user data.
Corporate and Securities Fraud Section Chief Lloyd Farnham for the Northern District of California and Senior Counsel C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section and negotiated the agreement on behalf of the government.
U.S. Attorney Stephanie M. Hinds Announces $399,000 in Justice Department Grants to Support Project Safe NeighborhoodsRead the Press Release
SAN FRANCISCO – U.S. Attorney Stephanie M. Hinds announced today that the Department of Justice has awarded $399,193 to support the Project Safe Neighborhoods Program in the Northern District of California. Funding will support community efforts to address the epidemic of gun crime and serious violence in the district. The grant is one of a number of awards being made to state and local agencies across the country. Funds are administered by the Bureau of Justice Assistance, part of the Department’s Office of Justice Programs.
Launched two decades ago as an evidence-based and community-oriented response to serious gun crime, Project Safe Neighborhoods, known as PSN, is a key component of the Department’s Comprehensive Strategy for Reducing Violent Crime, outlined by Deputy Attorney General Monaco in May 2021. The PSN approach is guided by four key principles: fostering trust and legitimacy in our communities; supporting community-based organizations that help prevent violence from occurring in the first place; setting focused and strategic enforcement priorities; and measuring the results of our efforts. The fundamental goal is to reduce violent crime, not simply to increase the number of arrests or prosecutions.
“Reducing violence and sustaining those reductions will require strong partnerships between criminal justice agencies and community stakeholders and a shared commitment to the safety and well-being of every community member,” said OJP Deputy Assistant Attorney General Maureen Henneberg. “The investments we are making through Project Safe Neighborhoods will enable every stakeholder to play a part in building safer and healthier communities.”
PSN programs are led by U.S. Attorneys’ Offices in collaboration with local public safety agencies and community organizations. The programs’ emphasis on community engagement, prevention and intervention measures, focused and strategic enforcement, and measurement and accountability has helped achieve overall reductions in violent crime, including gun homicides, in neighborhoods where PSN strategies have been implemented.
“Over its two-decade history, Project Safe Neighborhoods has evolved to meet the complex challenges of community violence by enlisting the insights and expertise of local partners and by relying on the latest evidence,” said BJA Director Karhlton F. Moore. “We are proud to support our U.S. Attorneys and their allies in their critical work to curb violent crime and build the mutual trust necessary to ensure lasting success.”
The awards announced above are being made as part of the regular end-of-fiscal year cycle. More information about awards under PSN and other OJP grants can be found on the OJP Grant Awards Page.
The Office of Justice Programs provides federal leadership, grants, training, technical assistance and other resources to improve the nation’s capacity to prevent and reduce crime, advance racial equity in the administration of justice, assist victims and enhance the rule of law. More information about OJP and its components can be found at www.ojp.gov.
Sutter Health Agrees to Pay $13 Million to Settle False Claims Act Allegations of Improper Billing for Lab TestsRead the Press Release
SAN FRANCISCO – Sutter Health, a Sacramento-based health care services provider, and its affiliate Sutter Bay Hospitals, the successor to Sutter East Bay Hospitals dba Alta Bates Summit Medical Center (collectively Sutter Health), agreed to pay more than $13 million to settle allegations that it violated the False Claims Act by billing the United States for toxicology screening tests performed by outside labs, announced United States Attorney Stephanie M. Hinds; Federal Bureau of Investigation San Francisco Special Agent in Charge Robert K. Tripp; Office of Personnel Management Office of Inspector General (OPM OIG) Special Agent in Charge Amy K. Parker; Department of Health and Human Services Office of Inspector General (HHS-OIG) Special Agent in Charge Steven J. Ryan; Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS) Western Field Office Special Agent in Charge Bryan D. Denny; and the Defense Health Agency (DHA).
“Sutter Health agreed to pay $13 million to settle allegations that it billed government health programs for lab tests performed by others,” said U.S. Attorney Stephanie M. Hinds. “Government health care programs must be protected, and this office will investigate and pursue health care providers that fail to provide the services paid for by public health care programs.”
“Investigating health care fraud and abuse is a priority for the FBI,” said FBI San Francisco Special Agent in Charge Robert K. Tripp. “These cases are often worked in conjunction with our federal law enforcement partners, and this settlement is a great example of the multi-agency investigative team’s hard work to protect the integrity of the Federal Employees Health Benefits Program.”
“The OPM OIG is committed to protecting the Federal Employees Health Benefits Program from fraudulent claims,” said OPM OIG Special Agent in Charge Amy K. Parker. “I applaud the dedicated team for their effort in securing today’s settlement.”
“When medical providers charge federal health care programs for services that other providers actually performed, the integrity of these programs is undermined,” said HHS-OIG Special Agent in Charge Steven J. Ryan. “Working with our law enforcement partners, we will continue to uproot and investigate such schemes.”
“Today’s announced outcome concludes a collaborative effort to hold Sutter Health accountable for its improper billing practices that harmed our health care system, including the Department of Defense’s TRICARE program,” said DCIS Western Field Office Special Agent in Charge Bryan D. Denny. “DCIS will continue to work closely with our law enforcement partners to protect the integrity of the health care system.”
“We commend the Department of Justice, the U.S. Attorney’s office, and the other state and federal agencies for their commitment to justice,” stated the Defense Health Agency. “Their efforts protect taxpayer dollars to ensure our service members, veterans and their families continue to receive the highest level of medical care.”
The United States contends in the civil settlement agreement signed by Sutter Health that under the terms of a contract which the Sutter Health hospital Alta Bates Summit Medical Center entered into with Navigant Network Alliance, LLC, Navigant referred urine toxicology specimens obtained from physicians and laboratories across the country to Sutter. Sutter submitted bills, or caused bills to be submitted, for reimbursement of the qualitative and quantitative testing it performed on the specimens. The United States asserts that Sutter did not perform the quantitative testing on thousands of specimens referred under the agreement and that these quantitative tests were instead performed by third-party labs. The United States alleges that Sutter nevertheless sought reimbursement for the tests. In the settlement agreement, the United States contends that between August 1, 2016, and June 30, 2017, Sutter billed for urine toxicology tests it did not perform and was paid for the testing by the Federal Employees Health Benefits Program, Medicare, Medicaid, and Tricare.
Sutter agrees in the settlement agreement to pay $13,091,452 to settle the false claims allegations. Of that amount, Sutter has already paid more than $6.5 million to the United States. Sutter agrees to pay the remaining amount of approximately $6.5 million to the United States within 30 days. The settlement agreement resolves the civil law claims that the United States might have brought based upon these allegations.
This matter is being handled by Assistant United States Attorney David DeVito, with assistance from Garland He, Jonathan Birch, Lillian Do, and Alan Lopez. The matter is the result of a coordinated investigation between the U.S. Attorney’s Office for the Northern District of California and the FBI, OPM OIG, HHS-OIG, DCIS, and the DHA.
The investigation and resolution of this matter illustrate the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
The civil settlement agreement is neither an admission of liability by Sutter Health nor a concession by the United States that its claims are not well founded.
Oakland Dealer Pleads Guilty to Selling Fentanyl over Months in San Francisco’s TenderloinRead the Press Release
SAN FRANCISCO – Alex Murillo pleaded guilty today to all eight counts in a federal indictment charging him with multiple sales of fentanyl and methamphetamine that occurred in San Francisco’s Tenderloin District, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Acting Special Agent in Charge Bob P. Beris.
Murillo, 25, who resides in Oakland, was arrested on June 21, 2022, following the filing of a federal criminal complaint charging multiple street drug sales by Murillo in the Tenderloin. The complaint alleged that on April 7, 2022, Murillo met up with two undercover police officers near 8th and Market Streets in the Tenderloin and sold the undercover officers approximately five grams of fentanyl for $100. The complaint also asserted that on June 8, 2022, Murillo communicated again with one of the undercover police officers and met with the officer near the San Francisco Civic Center BART platform in the Tenderloin. The complaint describes that Murillo sold the undercover officer two ounces of fentanyl and three ounces of methamphetamine for $1,400.
After the complaint was filed, a federal grand jury issued an eight-count indictment that contained, in addition to the complaint’s two charges, six other charges against Murillo for fentanyl and methamphetamine trafficking on four other days. The indictment charges in two counts that Murillo on March 23 and again on April 21, 2022, sold fentanyl in the Tenderloin. In those sales, as described in a filed government detention memo, Murillo sold $40 of yellow fentanyl and $750 of pink fentanyl, respectively, to undercover police officers. The indictment also charges that on May 12, 2022, Murillo sold approximately one ounce of fentanyl and two ounces of methamphetamine for $800 to an undercover police officer in the Tenderloin. The indictment lastly charges that on June 21, 2022, Murillo possessed methamphetamine with the intention to sell it. On that date, as described in the government’s memo, law enforcement officers arrested Murillo outside of his Oakland apartment and seized nearly four ounces of methamphetamine from his backpack.
Murillo pleaded guilty today to all of the indictment’s eight counts, which included three counts of possession with the intent to distribute and distribution of fentanyl in violation of 21 U.S.C. § 841(a)(1), (b)(1)(C). Each of these counts carries a maximum prison sentence of 20 years. He also pleaded guilty to two counts of possession with the intent to distribute and distribution of at least 40 grams of fentanyl in violation of 21 U.S.C. § 841(a)(1), (b)(l)(B)(vi) and to three counts of possession with the intent to distribute and distribution of 50 grams and more of a substance containing methamphetamine in violation of 21 U.S.C. § 841(a)(1), (b)(l)(B)(viii). Each of these counts carry a maximum prison sentence of 40 years and a minimum sentence of 5 years. All of these counts also carry a period of supervision after release from prison for at least three years and for up to life. However, any sentence following a conviction would be imposed by a court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
United States District Judge Susan Illston received Murillo’s guilty pleas and set a sentencing hearing for Murillo on January 20, 2023. Murillo remains in custody while awaiting his sentencing hearing.
Assistant U.S. Attorney Christa Hall is prosecuting the case, with the assistance of Lance Libatique. The prosecution is the result of an investigation by DEA and the San Francisco Police Department.
One Pill Can Kill: Avoid pills bought on the street because One Pill Can Kill. Fentanyl is a highly potent opiate that drug dealers use to create counterfeit pills which appear to be Oxycodone, Percocet, Xanax, and other drugs. Fentanyl is used because it is cheap. However, very small variations in the quantity or quality of fentanyl in a counterfeit pill will have huge effects on the pill’s potency, and these pills easily can and do cause deaths. Fentanyl is now the leading cause of drug overdose deaths in the United States. Counterfeit, fentanyl-laced pills are usually shaped and colored to look like pills that are sold at pharmacies, like Percocet, Xanax, and others. For example, counterfeit pills known as “M30s” imitate Oxycodone, but when sold on the street they routinely contain fentanyl. These counterfeits are usually round tablets and often light blue in color, though they may be in a rainbow of colors, and they often have “M” and “30” imprinted on opposite sides of the pill. Do not take these or any other pills bought on the street – they can be counterfeit and poisonous, and you won’t know until it’s too late.
Former Chief Security Officer of Uber Convicted of Federal Charges for Covering up Data Breach Involving Millions of Uber User RecordsRead the Press Release
SAN FRANCISCO – A federal jury convicted Joseph Sullivan, the former Chief Security Officer of Uber Technologies, Inc. (“Uber”), of obstruction of proceedings of the Federal Trade Commission (“FTC”) and misprision of felony in connection with his attempted cover-up of a 2016 hack of Uber. The announcement was made by United States Attorney Stephanie M. Hinds and FBI San Francisco Special Agent in Charge Robert K. Tripp following a four week trial before the Hon. William H. Orrick, United States District Judge.
“Technology companies in the Northern District of California collect and store vast amounts of data from users,” said U.S. Attorney Hinds. “We expect those companies to protect that data and to alert customers and appropriate authorities when such data is stolen by hackers. Sullivan affirmatively worked to hide the data breach from the Federal Trade Commission and took steps to prevent the hackers from being caught. We will not tolerate concealment of important information from the public by corporate executives more interested in protecting their reputation and that of their employers than in protecting users. Where such conduct violates the federal law, it will be prosecuted.”
“The message in today’s guilty verdict is clear: companies storing their customers’ data have a responsibility to protect that data and do the right thing when breaches occur,” said FBI Special Agent In Charge Tripp. “The FBI and our government partners will not allow rogue technology company executives to put American consumers’ personal information at risk for their own gain."
The circumstances regarding Sullivan’s violations of the law involve two separate hacks of Uber’s databases—one in 2014 and another in 2016. The evidence at trial established that Sullivan was hired as Uber’s Chief Security Officer (“CSO”) in April 2015. At that time, Uber had recently disclosed to the FTC that it had been the victim of a data breach in 2014 (“2014 Data Breach”) and that the breach related to the unauthorized access of approximately 50,000 consumers’ personal information, including their names and driver’s license numbers. In the wake of that disclosure, the FTC’s Division of Privacy and Identity Protection embarked on an investigation of Uber's data security program and practices. In May 2015, the month after Sullivan was hired, the FTC served a detailed Civil Investigative Demand on Uber, which demanded both extensive information about any other instances of unauthorized access to user personal information, and information regarding Uber’s broader data security program and practices.
The evidence at trial demonstrated that Sullivan, in his new role as CSO, played a central role in Uber's response to the FTC. Specifically, Sullivan supervised Uber’s responses to the FTC’s questions, participated in a presentation to the FTC in March 2016, and testified under oath, at length, to the FTC on November 4, 2016, regarding Uber’s data security practices. Sullivan’s testimony included specific representations about steps he claimed Uber had taken to keep customer data secure.
Exactly ten days after his FTC testimony, Sullivan learned that Uber had been hacked again. The hackers reached out to Sullivan directly, via email, on November 14, 2016. The hackers informed Sullivan and others at Uber that they had stolen a significant amount of Uber user data, and they demanded a large ransom payment from Uber in exchange for their deletion of that data. Employees working for Sullivan quickly verified the accuracy of these claims and the massive theft of user data, which included records on approximately 57 million Uber users and 600,000 driver license numbers.
The evidence demonstrated that, shortly after learning the extent of the 2016 breach and rather than reporting it to the FTC, any other authorities, or Uber’s users, Sullivan executed a scheme to prevent any knowledge of the breach from reaching the FTC. For example, Sullivan told a subordinate that they “can’t let this get out,” instructed them that the information needed to be “tightly controlled,” and that the story outside of the security group was to be that “this investigation does not exist.” Sullivan then arranged to pay off the hackers in exchange for them signing non-disclosure agreements in which the hackers promised not to reveal the hack to anyone, and also contained the false representation that the hackers did not take or store any data in their hack. Uber paid the hackers $100,000 in bitcoin in December 2016, despite the fact that the hackers had refused to provide their true names. Uber was ultimately able to identify the two hackers in January of 2017 and required them to execute new copies of the non-disclosure agreements in their true names and emphasized that they were not allowed to talk about the hack to anyone else. Sullivan orchestrated these acts despite knowing that the hackers were hacking and extorting other companies as well as Uber, and that the hackers had obtained data from at least some of those other companies.
The evidence showed that, despite knowing in great detail that Uber had suffered another data breach directly responsive to the FTC’s inquiry, Sullivan continued to work with the Uber lawyers handling or overseeing that inquiry, including the General Counsel of Uber, and never mentioned the incident to them. Instead, he touted the work that he and his team had done on data security. Uber ultimately entered into a preliminary settlement with the FTC in summer 2016, supported fully by Sullivan, without disclosing the 2016 data breach to the FTC.
In Fall 2017, Uber’s new management began investigating facts surrounding the 2016 data breach. When asked by Uber’s new CEO that had happened, Sullivan lied, falsely telling the CEO that the hackers had only been paid after they were identified and deleting from a draft summary prepared by one of his reports that the hack had involved personally identifying information and a very large quantity of user data. Sullivan lied again to Uber’s outside lawyers conducting an investigation into the incident. Nonetheless, the truth about the breach was ultimately discovered by Uber’s new management, which disclosed the breach publicly, and to the FTC, in November 2017.
In addition, the two hackers identified by Uber were ultimately prosecuted in the Northern District of California. Both pleaded guilty on October 30, 2019, to computer fraud conspiracy charges and now await sentencing. The separate guilty pleas entered by the hackers demonstrate that after Sullivan assisted in covering up the the hack of Uber, the hackers were able to commit an additional intrusion at another corporate entity—Lynda.com—and attempt to ransom that data as well.
In finding Sullivan guilty, the jury concluded he obstructed justice, in violation of 18 U.S.C. § 1505, and that he committed misprision of felony (i.e., knew that a federal felony had been committed and took affirmative steps to conceal that felony), in violation of 18 U.S.C. § 4. Sullivan faces a maximum of five years in prison for the obstruction charge, and a maximum three years in prison for the misprision charge. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Sullivan remains free on bond pending sentencing. His sentencing will be set at a later date.
The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office. The prosecution is the result of an investigation by the FBI.
Oakland Resident Pleads Guilty to Possessing Fentanyl for Distribution in San Francisco’s TenderloinRead the Press Release
SAN FRANCISCO – Mainor Escoto Escoto pleaded guilty yesterday afternoon in federal court to possessing fentanyl with the intent to distribute it, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Acting Special Agent in Charge Bob P. Beris.
According to his plea agreement, Escoto, 20, last known to reside in Oakland, was stopped and arrested on February 16, 2022, by San Francisco police near the corner of Larkin and Eddy Streets in San Francisco’s Tenderloin District. At the time he was arrested, Escoto was wearing a hooded sweatshirt with a front pocket and carrying a backpack. Escoto admitted in his plea agreement that in his sweatshirt he possessed a baggie of heroin, a pill bottle with base cocaine inside, and four baggies of fentanyl. He also carried a digital scale and cash.
Escoto further admitted that in his backpack he carried a loaded 9 millimeter pistol and 28 additional baggies of fentanyl. Escoto agreed the fentanyl weighed more than 160 grams (.35 pounds) but less than 280 grams (.6 pounds).
Escoto pleaded guilty to one count of possession with the intent to distribute fentanyl in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(C). The maximum statutory penalty for the charge is 20 years imprisonment with a minimum of three years of supervision following release from prison. However, any sentence following a conviction would be imposed by a court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
United States District Judge Vince Chhabria set a sentencing hearing for Escoto on January 23, 2023. Escoto remains in custody while awaiting his sentencing hearing.
Assistant U.S. Attorney Christa Hall is prosecuting the case, with the assistance of Veronica Hernandez. The prosecution is the result of an investigation by DEA and the San Francisco Police Department.
One Pill Can Kill: Beware of pills bought on the street: One Pill Can Kill. Fentanyl, a Schedule II controlled substance, is a highly potent opiate that can be diluted with cutting agents to create counterfeit pills that purport to mimic the effects of Oxycodone, Percocet, and other drugs, but can be obtained at a lower cost. However, very small variations in the amount or quality of fentanyl creates huge effects on the potency of the counterfeit pills and can easily cause death. Fentanyl has now become the leading cause of drug overdose deaths in the United States. Counterfeit, fentanyl-laced pills are usually shaped and colored to resemble pills that are sold legitimately at pharmacies. For example, counterfeit pills known as M30s mimic Oxycodone, but when sold on the street they routinely contain fentanyl. These tablets are round and often light blue in color, though they may be made in many colors, and have “M” and “30” imprinted on opposite sides of the pill.
Multiple Federal Fraud Charges Filed Against San Francisco Father and SonRead the Press Release
SAN FRANCISCO - Santos Rene Soto and Santos Moises Soto III appeared in federal court today to face a federal indictment charging them with conspiracy, wire fraud, bank fraud, and false statements in a loan application, announced U.S. Attorney Stephanie M. Hinds and FBI San Francisco Special Agent in Charge Robert K. Tripp.
Santos Rene Soto (Santos), 59, and Santos Moises Soto III, also known as Saints Soto (Saints), 39, both of San Francisco, are described in the indictment as a father and son who engaged in multiple frauds. The first charged fraud involves Golden Spear LLC, an artificial intelligence (AI) technology company purportedly based in San Francisco and Barcelona, Spain. Saints was the CEO, and Santos acted as a board member. According to the indictment, GoldenSpear offered clothing retailers an “A.I. Fashion Assistant” that used “visual and textual algorithms” to help retailers identify specific fashion brands and clothing that their customers might want to purchase. The indictment describes that from 2017 to March 2020 Saints raised investment funds by representing to potential investors that GoldenSpear had entered into contracts with, or discussed investments or acquisitions by, numerous established business entities. These representations were false, according to the indictment. GoldenSpear allegedly raised more than $12 million in investment funds.
The indictment further describes that following the onset of the Covid-19 pandemic in early 2020, Saints and Santos began raising investment funds for a new subsidiary of GoldenSpear named “AI Health.” Saints and Santos informed potential investors that AI Health created a wearable device that, using AI, detected the COVID-19 virus in its wearer. Saints and Santos allegedly made numerous representations, including that the devices were being worn in a Los Angeles high school by students and staff, that AI Health was conducting a large study using data from a Los Angeles-based children’s hospital, and that a prominent accounting firm valued AI Health at more than $100 million. The indictment charges that these representations were false. AI Health, according to the indictment, raised more than $2.5 million from investors.
The indictment lastly alleges that Saints and Santos defrauded the Paycheck Protection Program (PPP), a federal government pandemic relief program. The PPP is administered by the U.S. Small Business Administration as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. CARES is a federal law enacted in March 2020 to provide billions of dollars in emergency financial assistance to millions of Americans suffering from the economic effects of the COVID-19 pandemic. The PPP provided forgivable loans to small businesses for job retention and limited other business expenses. The indictment describes that on April 2, 2020, GoldenSpear submitted a PPP application in which Saints and Santos represented that GoldenSpear had 33 employees located in the United States, a monthly payroll of $267,899, and a monthly office rental expense of approximately $18,000. Instead, the indictment alleges, GoldenSpear averaged seven to eight U.S.-based employees and had an average monthly payroll of $67,000 or less. Additionally, the indictment alleges that the address listed on the PPP application for the commercial lease was in fact Santos’s residential address. A PPP loan in an amount of $669,700 was approved and issued based on the misrepresentations of Santos and Saints, the indictment charges.
Santos and Saints made their initial appearance in federal court today before United States Magistrate Judge Thomas S. Hixson. Their next scheduled appearance is scheduled before the same judge on October 12 at 10:30 a.m.
Santos and Saints are charged with one count of conspiracy in violation of 18 U.S.C. § 371, which carries a maximum sentence of five years in federal prison. Saints and Santos are also charged with one count of conspiracy to commit wire fraud in violation of 18 USC §§ 1343 and 1349, which carries a maximum 20 year sentence. Saints is also charged with two counts and Santos is charged with one count of wire fraud, and each count carries a maximum sentence of 20 years. Santos and Saints also face one count of bank fraud in violation of 18 U.S.C. § 1344 and one count of making false statements on a loan application in violation of 18 U.S.C. § 1014, each of which carries a maximum sentence of 30 years. The court may also order additional fines, restitution, and forfeiture on each count. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The charges in the indictment are merely allegations and the defendants are presumed innocent unless proven guilty in a court of law.
The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office for the Northern District of California. Ross Weingarten and Alethea Sargent are the Assistant U.S. Attorneys who are prosecuting the case, with the assistance of Margoth Turcios. The prosecution is the result of an investigation by the FBI.
San Francisco Drug Dealer Sentenced to More Than 13 Years in PrisonRead the Press Release
SAN FRANCISCO – Alejandro Alvarez was sentenced to 160 months in prison for drug trafficking charges in connection with a scheme to distribute more than 65 pounds of methamphetamine, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Acting Special Agent in Charge Bob P. Beris. The sentence was handed down by the Honorable William H. Orrick, U.S. District Judge.
The sentence follows a guilty verdict issued by a federal jury on April 14, 2022, after a four-day trial. Evidence at trial showed that Alvarez, 46, of San Francisco, had been distributing tens of thousands of dollars’ worth of methamphetamine and heroin monthly at the time that San Francisco Police Department officers executed a search warrant at his residence. Law enforcement officers recovered about 65 pounds of methamphetamine with a street retail value of more than $1.5 million.
The trial evidence demonstrated that the investigation began when officers with the San Francisco Police Department learned that an individual who went by the name “Chewy” was selling heroin and other drugs. Eventually officers developed enough evidence to obtain and execute a search warrant on Alvarez’s apartment. They recovered over $46,000 in bulk cash, some 65 pounds of methamphetamine, and other indicia of drug trafficking. Evidence at trial showed that Alvarez managed a sophisticated drug distribution operation out of his apartment on Sanchez Street in San Francisco’s Noe Valley neighborhood. Text messages between Alvarez and his customers (including their names, transaction dates, drug quantities, and drug types) matched up with a ledger found on Alvarez’s bed that demonstrated an operation capable of distributing hundreds of thousands of dollars’ worth of drugs annually. Mr. Alvarez’s ledger showed that in the week before his arrest, he sold $15,300 worth of methamphetamine and heroin.
On February 20, 2020, a federal grand jury indicted Alvarez, charging him with one count of possession with intent to distribute 500 grams and more of methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(A)(viii). Pursuant to the jury’s verdict, Alvarez was found guilty of the sole count in the indictment.
In addition to the prison term, Judge Orrick ordered the defendant to serve a five-year period of supervised release, to begin after Alvarez completes his prison term.
Assistant U.S. Attorneys Joseph Tartakovsky and Alexis James prosecuted the case with the assistance of Lance Libatique. The prosecution is the result of an investigation by the San Francisco Police Department, United States Drug Enforcement Administration, and the U.S. Attorney’s Office.
Violent Child Sex Trafficker Sentenced to More Than 38 Years in PrisonRead the Press Release
SAN JOSE – Ariel Guizar-Cuellar was sentenced to 460 months in prison in connection with multiple child-sex-trafficking-related charges for his role in a Bay Area conspiracy to exploit minors for child pornography and sex trafficking, announced United States Attorney Stephanie M. Hinds and FBI Special Agent in Charge Robert K. Tripp. The sentence was handed down by the Honorable Beth L. Freeman, U.S. District Judge. Judge Freeman also sentenced one of Guizar-Cuellar’s co-defendants, Araceli Mendoza, to serve a 120-month prison term for her role in the same conspiracy.
Guizar-Cuellar, 41, and Mendoza, 30, both of San Jose, are two of four defendants convicted in the child sex trafficking scheme. The other two co-defendants are Jocelyn Contreras, 29, of Redwood City, and Alyssa Anthony, 30, of Gilroy. Guizar-Cuellar, Contreras, and Anthony all pleaded guilty to their respective roles in the conspiracy; in October 2021, a jury convicted Mendoza for her role in the conspiracy and for the sex trafficking of one minor victim. Judge Freeman scheduled sentencing hearings for Contreras and Anthony on November 8, 2022.
According to the defendants’ guilty pleas and the evidence submitted at Mendoza’s trial, Guizar-Cuellar was the leader, primary facilitator, enforcer, and main financial beneficiary of the operation. Guizar-Cuellar admitted that over a 16-month period, he and the other three defendants established and operated an illegal prostitution enterprise that exploited numerous women and children. Guizar-Cuellar acknowledged in his plea agreement that he and the other defendants, operated a commercial sex venture and recruited, enticed, harbored, and transported several minor females to work as prostitutes and exotic dancers. Guizar-Cuellar rented rooms at various hotels and motels in San Jose, Santa Clara, and Sunnyvale, Calif., for prostitution activities and told minor females not to tell anyone that they were minors. The youngest of the victims recruited into the prostitution enterprise were 15 years old at the time. Court records in the case demonstrate that the defendants received thousands of dollars from the prostitution of their victims and then flaunted the profits in part to recruit more victims.
The documents in the case provide a harrowing description of the treatment of the minor victims. According to trial evidence and testimony, Guizar-Cuellar subjected both the child victims and his female co-defendants to physical and sexual abuse. In addition, the victims were shuttled daily throughout the Bay Area and sexually exploited. They were isolated from their families and support systems; deprived of food and sleep; and given cocaine, alcohol, and other substances to keep them compliant. They were deliberately supplied methamphetamine to keep them awake so they could meet nightly profit quotas. Defendants posted online prostitution advertisements repeatedly over many months using pictures of the children posed naked and in provocative lingerie. After one victim escaped and returned home, Guizar-Cuellar sought to shame her by distributing videos of the victim engaged in sexual intercourse with a customer on social media sites—the government’s sentencing memorandum describes how Guizar-Cuellar, Mendoza, and Anthony all are heard on the video clips mocking the girl and laughing at her.
A federal grand jury indicted all four defendants on April 7, 2016. Guizar-Cuellar was charged with one count of conspiracy to commit sex trafficking of children, in violation of 18 U.S.C. § 371; three counts of sex trafficking of children, in violation of 18 U.S.C. § 1591; and one count of sexual exploitation of children, in violation of 18 U.S.C. § 2251. On May 7, 2019, Guizar-Cuellar pleaded guilty to all the charges. Mendoza was charged in the original and superseding indictments with conspiracy and three counts of sex trafficking of children. On October 6, 2021, a jury convicted Mendoza of the conspiracy charge and one of the child sex trafficking counts.
In addition to the prison terms, Judge Freeman also ordered Guizar-Cuellar and Mendoza to serve terms of supervised release and to pay restitution to their victims. Guizar-Cuellar remains in federal custody following the imposition of his sentence. Judge Freeman ordered Mendoza to self-surrender to the Bureau of Prisons in January 2023.
Contreras and Anthony both pleaded guilty to separate superseding Informations charging them with conspiracy to commit sex trafficking of children. Contreras entered her plea on September 4, 2019, and Anthony entered hers on July 21, 2020. Both await sentencing in November 2022.
Assistant U.S. Attorneys Marissa Harris, Annie Hsieh, and Sarah Griswold are prosecuting the case with the assistance of Nina Burney, Sahib Kaur, and Elise Etter. The prosecution is the result of an investigation by the FBI, the San Jose Police Department, and the Santa Clara County District Attorney’s Office Bureau of Investigation, with assistance from the Santa Clara County Human Trafficking Task Force.
FCI Dublin Correctional Officer Faces Sexual Abuse Charges Against Two Additional Incarcerated VictimsRead the Press Release
OAKLAND–A grand jury handed down a superseding indictment today charging former FCI Dublin correctional officer John Russell Bellhouse with sexual abuse charges against two additional female inmates.
“The additional charges unsealed today demonstrate the priority the Department of Justice has placed on prosecuting cases of sexual misconduct by Bureau of Prison employees,” said Deputy Attorney General Lisa O. Monaco. “We have no tolerance for correction officers who betray the trust placed in them to safely and humanely care for those in their custody.”
“Individuals incarcerated in federal prison should never experience sexual abuse, and particularly not at the hands of correctional officers charged with maintaining safety and order within the institution’s walls,” said United States Attorney Stephanie M. Hinds. “The security of inmates is a vital priority within our prison system. This office will continue to pursue allegations of correctional officers abusing inmates and will seek accountability for those who engage in such conduct.”
“The safety, security, and integrity of federal prisons are of the utmost importance, and the Department of Justice Office of the Inspector General will continue to aggressively pursue allegations of abuse at FCI Dublin and across the BOP,” said Inspector General Michael E. Horowitz.
“The defendant had a fundamental responsibility to care for the welfare of inmates in his custody and maintain the good order of FCI Dublin,” said FBI San Francisco Special Agent in Charge Robert K. Tripp. “The additional charges allege the defendant did neither, but instead abused his powers and took advantage of the women for whose care he was responsible. Investigation of violations of the public trust, regardless of the status of the victims, will remain among the highest priorities of the FBI.”
The grand jury originally charged Bellhouse, 39, formerly of Pleasanton, California, on February 17, 2022, in an indictment that alleged Bellhouse committed sexual abuse against a female prison ward identified only as “Victim 1.” Bellhouse was employed as a correctional officer at the Federal Correctional Institute Dublin (FCI Dublin), an all-female correctional institution in Alameda County that houses federal prisoners and is operated by the Federal Bureau of Prisons (BOP). Victim 1 was an inmate at FCI Dublin and under the custodial authority of Bellhouse. The sexual abuse is alleged to have occurred between February and October 2020.
Today the grand jury handed down additional charges against Bellhouse in a superseding indictment. The superseding indictment expanded the charges against Bellhouse to a total of three sexual assault charges involving Victim 1. Two charges allege Bellhouse sexually abused Victim 1 and a third alleges Bellhouse engaged in abusive sexual contact with Victim 1. All three incidents occurred before October 2020, with two occurring as early as February 2020 and the third as early as December 2019. All three incidents are alleged to have occurred within FCI Dublin Prison Safety facilities.
The superseding indictment further added three additional charges that Bellhouse sexually abused two other female victims identified as “Victim 2” and “Victim 3.” Both Victims 2 and 3 are described as inmates serving their prison sentences at FCI Dublin at the time of the sexual abuse and were also under the custodial supervision of Bellhouse. The superseding indictment charges two counts of abusive sexual contact by Bellhouse against Victim 2. One of these contacts is alleged to have occurred between October and December 2020 and the other on October 22, 2020. The superseding indictment also charges one count of sexual abusive contact by Bellhouse against Victim 3 between May and December 2020. All of the charged acts involving Victim 2 and Victim 3 are alleged to have occurred in the FCI Dublin Camp Safety Office.
Bellhouse is next scheduled for a court appearance on October 13, 2022, in U.S. District Court in Oakland before United States District Judge Yvonne Gonzalez Rogers. A jury trial is currently set for June 5, 2023, in United States District Court in Oakland.
Bellhouse is charged in the superseding indictment with two counts of sexual abuse of a ward in violation of 18 U.S.C. § 2243(b). For each charge, Bellhouse faces a maximum statutory sentence of 15 years imprisonment, a minimum five year term of supervision following release from prison, and a $250,000 fine. He is also charged with four counts of sexually abusive contact in violation of 18 U.S.C. § 2244(a)(4). If convicted of the charge, Bellhouse faces a maximum statutory sentence of 2 years imprisonment, a minimum five term of supervised release, and a $250,000 fine. However, any sentence following a conviction would be imposed by a court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The charges contained in the superseding indictment are allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Assistant U.S. Attorneys Molly K. Priedeman and Andrew Paulson are prosecuting the case with the assistance of Leeya Kekona. The prosecution is the result of an investigation by the Department of Justice Office of the Inspector General and the Federal Bureau of Investigation.
FCI Dublin Correctional Officer Faces Abuse Charges Against Two Additional Incarcerated VictimsRead the Press Release
A federal grand jury in Oakland, California, returned a superseding indictment today charging a former California correctional officer with sexual abuse charges against two female inmates.
John Russell Bellhouse, 39, formerly of Pleasanton, California, was originally charged by criminal complaint on Nov. 30, 2021, one count of sexual abuse of a prison ward.
“The additional charges unsealed today demonstrate the priority the Department of Justice has placed on prosecuting cases of sexual misconduct by Bureau of Prison employees,” said Deputy Attorney General Lisa O. Monaco. “We have no tolerance for correction officers who betray the trust placed in them to safely and humanely care for those in their custody.”
“The safety, security and integrity of federal prisons are of the utmost importance, and the Department of Justice Office of the Inspector General will continue to aggressively pursue allegations of abuse at FCI Dublin and across the BOP,” said Inspector General Michael E. Horowitz.
According to the superseding indictment, two charges allege Bellhouse, former correctional officer at an all-female correctional institution in Alameda County that houses federal prisoners and is operated by the Federal Bureau of Prisons, sexually abused Victim 1 and a third charge alleges Bellhouse engaged in abusive sexual contact with Victim 1. All three incidents occurred before October 2020, with two occurring as early as February 2020 and the third as early as December 2019. All three incidents are alleged to have occurred within FCI Dublin Prison Safety facilities.
The superseding indictment further added three additional charges that Bellhouse sexually abused two other female victims identified as “Victim 2” and “Victim 3.” Both Victims 2 and 3 are described as inmates who were serving their prison sentences at FCI Dublin at the time of the sexual abuse and were also under the custodial supervision of Bellhouse. The superseding indictment charges two counts of abusive sexual contact by Bellhouse against Victim 2. One of these contacts is alleged to have occurred between October and December 2020 and the other on Oct. 22, 2020. The superseding indictment also charges one count of sexual abusive contact by Bellhouse against Victim 3 between May and December 2020. All of the charged acts involving Victim 2 and Victim 3 are alleged to have occurred in the FCI Dublin Camp Safety Office.
“Individuals incarcerated in federal prisons should never experience sexual abuse, and particularly not at the hands of correctional officers charged with maintaining safety and order within the institution’s walls,” said U.S. Attorney Stephanie M. Hinds for the Northern District of California. “The security of inmates is a vital priority within our prison system. This office will continue to pursue allegations of correctional officers abusing inmates and will seek accountability for those who engage in such conduct.”
“The defendant had a fundamental responsibility to care for the welfare of inmates in his custody and maintain the good order of FCI Dublin,” said FBI Special Agent in Charge Robert K. Tripp of the San Francisco Field Office. “The additional charges allege the defendant did neither, but instead abused his powers and took advantage of the women for whose care he was responsible. Investigation of violations of the public trust, regardless of the status of the victims, will remain among the highest priorities of the FBI.”
Bellhouse is charged in the superseding indictment with two counts sexual abuse of a ward and four counts of sexually abusive contact. The defendant is scheduled for his initial court appearance on Oct. 13, 2022, and his jury trial is set for June 5, 2023, before U.S. Magistrate Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of California. If convicted for sexual abuse, he faces a maximum statutory sentence of 15 years in prison for each count. If convicted for sexual abusive contact, he faces a maximum statutory sentence of two years in prison, a minimum five term of supervised release, and a $250,000 fine for each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
An investigation was conducted by the Justice Department’s Office of the Inspector General and the FBI. Assistant U.S. Attorneys Molly K. Priedeman and Andrew Paulson Attorney for the Northern District of California are prosecuting the case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Berkeley Brothers Plead Guilty to Selling Fentanyl in San Francisco’s TenderloinRead the Press Release
SAN FRANCISCO –Juan Carlos Hernandez-Ordonez pleaded guilty today in United States District Court to a federal charge of distributing 40 grams or more of fentanyl in San Francisco’s Tenderloin District, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Acting Special Agent in Charge Bob P. Beris. David Ordonez, the brother of Hernandez-Ordonez, pleaded guilty in the same case on September 15, 2022, to conspiring with Hernandez-Ordonez to distribute fentanyl and to charges involving distribution of fentanyl and methamphetamine.
In the plea agreement he entered today, Hernandez-Ordonez, 18, admitted to traveling time and again with his older brother David Ordonez, 20, from an apartment they shared in Berkeley to the Tenderloin District of San Francisco to sell narcotics. The Tenderloin contains an open-air illegal drug market which includes the 7th Street and Market Street area. Hernandez-Ordonez described in his plea agreement that on March 9, 2022, he and his brother David Ordonez travelled from their Berkeley apartment to the Tenderloin to sell fentanyl. At approximately 5:30 p.m., a buyer approached him on the southwest corner of 7th Street and Market Street and asked for “yellow.” Hernandez-Ordonez knew yellow as slang for fentanyl, and he sold the buyer just over two grams of fentanyl in exchange for $40 in cash. Unbeknownst to Hernandez-Ordonez, the buyer was an undercover law enforcement agent.
Hernandez-Ordonez further admitted in his plea agreement that on March 29, 2022, he exchanged text messages with the same undercover law enforcement agent and negotiated the sale of 2.5 ounces of fentanyl for $1000. That day, Hernandez-Ordonez again travelled with his brother David Ordonez from their Berkeley apartment to the Tenderloin. Hernandez-Ordonez described in his plea agreement that at about 8:30 p.m. he met with the undercover agent in the Tenderloin’s Stevenson Alley, near 7th Street and Market Street. The undercover agent again asked for yellow. Hernandez-Ordonez walked away to meet his brother and returned with fentanyl. In Stevenson Alley, Hernandez-Ordonez weighed out the drugs on a digital scale and admitted he then sold the undercover agent approximately 59 grams of fentanyl in exchange for $1000 in cash.
Earlier in this case’s proceedings, David Ordonez admitted to the narcotics trafficking charges against him. On September 15, he pleaded guilty to a conspiracy with Hernandez-Ordonez spanning from February 9 through April 19, 2022, to distribute and to possess with the intent to distribute at least 40 grams of fentanyl. David Ordonez also pleaded guilty to two counts of possessing with intent to distribute and distributing at least 40 grams of fentanyl, one count occurring on February 22, 2022, and the other on April 19, 2022. He further pleaded guilty to possessing and distributing at least 50 grams of a substance containing methamphetamine on March 10, 2022.
United States District Judge William H. Orrick scheduled a sentencing hearing for Hernandez-Ordonez on January 12, 2023, at 1:30 p.m. David Ordonez is scheduled for a sentencing hearing before the same judge on December 15, 2022, at 1:30 p.m. Both defendants remain in custody pending their sentencing hearings.
Each count to which Hernandez-Ordonez and David Ordonez pleaded guilty contains both maximum and mandatory minimum penalties. Both Hernandez-Ordonez and David Ordonez pleaded guilty to separate counts of distributing 40 or more grams of fentanyl in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(B)(vi). David Ordonez also pleaded guilty to one count of engaging in a conspiracy to distribute at least 40 grams of fentanyl in violation of 21 U.S.C. § 846 and 21 U.S.C. § 841(a)(1), (b)(1)(B)(vi) and to one count of distributing at least 50 grams of a substance containing methamphetamine in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(B)(viii). The statutory penalty for each one of these counts is a mandatory minimum of five years imprisonment (absent qualifying for statutory relief from the mandatory minimum) and a maximum of 40 years imprisonment, a maximum fine of $5,000,000, and a minimum of 4 years of supervision following release from prison, with a maximum of life. However, any sentence following a conviction will be imposed by a court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Lauren M. Harding is prosecuting the case with the assistance of Jasmine Sanders and Amala James. The prosecution is the result of an investigation by DEA and the San Francisco Police Department Narcotics Division.
One Pill Can Kill: Beware of pills bought on the street: One Pill Can Kill. Fentanyl, a Schedule II controlled substance, is a highly potent opiate that can be diluted with cutting agents to create counterfeit pills that purport to mimic the effects of Oxycodone, Percocet, and other drugs, but can be obtained at a lower cost. However, very small variations in the amount or quality of fentanyl creates huge effects on the potency of the counterfeit pills and can easily cause death. Fentanyl has now become the leading cause of drug overdose deaths in the United States. Counterfeit, fentanyl-laced pills are usually shaped and colored to resemble pills that are sold legitimately at pharmacies. For example, counterfeit pills known as M30s mimic Oxycodone, but when sold on the street they routinely contain fentanyl. These tablets are round and often light blue in color, though they may be made in many colors, and have “M” and “30” imprinted on opposite sides of the pill.
East Bay Resident Convicted of Abetting Airport Smuggler Sentenced to Ten Years in PrisonRead the Press Release
SAN FRANCISCO - Lemack Bellot was sentenced to ten years in prison for attempting to aid and abet possession with intent to distribute cocaine in connection with a scheme to smuggle drugs through San Francisco International Airport (SFO), announced United States Attorney Stephanie M. Hinds and Drug Enforcement and Drug Enforcement Administration (DEA) Acting Special Agent in Charge Bob P. Beris. The sentence was handed down by the Honorable Vince Chhabria, United States District Judge.
Bellot, 43, of Hayward, Calif., was convicted of the crimes on March 4, 2022, after a week-long trial. At trial, the government demonstrated Bellot attempted to facilitate the smuggling of cocaine through SFO in May 2018 and in November 2018. Unbeknownst to Bellot, the shipments were not actually cocaine because he was negotiating with a confidential source (CS) working for the DEA. The DEA was investigating Bellot based on information that Bellot had been paying airport employees to allow drugs to be smuggled past airport security. The CS, posing as an Atlanta-based drug trafficker, met with Bellot at a bar in Hayward, Calif., where the two discussed using Bellot’s connections at Bay Area airports to smuggle drugs. Over the next eight months, Bellot made arrangements on six occasions in an attempt to assist the CS to smuggle drugs through Bay Area airports.
In February 2019, a federal grand jury indicted Bellot for attempting to aid and abet the possession with intent to distribute 500 grams or more of cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(B)(ii)(II), and attempting to aid and abet the possession with intent to distribute 5 kilograms or more of cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(A)(ii)(II). In March of 2022, a federal jury found Bellot guilty of both counts.
Papers submitted by the government after Bellot’s conviction describe additional facts considered by the court in connection with Bellot’s sentencing. According to the government’s sentencing memorandum, Bellot tried on multiple occasions to sell heroin to the CS and to buy cocaine from him. In addition, shortly before his originally scheduled sentencing in July 2022, Bellot attempted to flee the United States. Specifically, Bellot boarded a commercial cargo freighter that was leaving from Miami, Fla. and was bound for Haiti. The U.S. Coast Guard learned of Bellot’s plans after which agents arrested Bellot aboard the vessel.
In addition to the 10-year prison term, Judge Chhabria ordered Bellot to serve a term of five years of supervised release.
Assistant United States Attorneys Molly A. Smolen and Daniel Pastor prosecuted the case. This investigation and prosecution is part of the Organized Crime and Drug Enforcement (OCDETF) Section, which identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.The prosecution is the result of an investigation by the DEA.
Alleged Drug Dealer Charged with Distributing Fentanyl in Civic Center AreaRead the Press Release
SAN FRANCISCO –A federal grand jury indicted Cesia Medina-Zuniga in connection with an alleged scheme to sell narcotics in the Tenderloin District of San Francisco announced U.S. Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Acting Special Agent in Charge Bob P. Beris.
According to documents filed by the government, since 2019, Zuniga, 26, has commuted “regularly and frequently” from her residence in Oakland to San Francisco’s Tenderloin District to sell narcotics. Further, the government alleges that since 2020, Zuniga added fentanyl to the products that she distributed on the streets of the Tenderloin.
According to the government, an undercover officer contacted Zuniga on July 12, 2022, and requested “yellow,” a slang term for fentanyl. Although she demonstrated she was suspicious of the officer, Zuniga allegedly completed a transaction with him in which she provided just over 8 grams of fentanyl in exchange for $80. Following this first transaction, Zuniga sold increasing quantities and varieties of narcotics to the officer, including methamphetamine and a brightly colored fentanyl dubbed “rainbow.” Following three more transactions on July 19, 2022, July 26, 2022, and August 19, 2022 (involving a total of $2,600, 95 grams of fentanyl, and over 100 grams of methamphetamine), the undercover officer sent a text to Zuniga on September 6, 2022, asking how much fentanyl he could buy for $2,000. After Zuniga allegedly replied that she would sell the officer seven ounces of fentanyl for $2,000, the two arranged to meet on September 8, to complete the transaction. On September 8, 2022, Zuniga was observed leaving her residence in Oakland wearing a black backpack. In connection with her arrest, officers retrieved the backpack which was alleged to have contained 351 grams of suspected fentanyl.
The indictment charges Zuniga with one count of possessing with intent to distribute fentanyl, in violation of 21 U.S.C. § 841(a) and (b)(1)(C), and three counts of possession with intent to distribute over 40 grams of fentanyl, in violation of 18 U.S.C. § 841(a)(1)(C) and (b)(1)(B). If convicted of the first count, Zuniga faces a maximum statutory sentence of 20 years in prison. For each of the three counts under section (b)(1)(B), Zuniga faces a mandatory minimum of five years in prison and a maximum of 40 years in prison, if convicted. However, any sentence after a conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Zuniga remains in custody pending further proceedings. The defendant is next scheduled to appear September 27, 2022, before Magistrate Judge Joseph C. Spero, to be arraigned on the charges in the indictment.
The charges contained in the criminal indictment are only allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
The case is being prosecuted by Assistant United States Attorney Alethea M. Sargent with assistance from Claudia Hyslop. The prosecution is the result of an investigation by the DEA and SFPD.
San Francisco Resident Sentenced to Six Years in Prison for Possession of Guns, Ammunition, and DrugsRead the Press Release
SAN FRANCISCO – Samuel Polanco was sentenced to 72 months for being a felon in possession of ammunition and in connection with a scheme to sell methamphetamine and Suboxone, announced United States Attorney Stephanie M. Hinds and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Patrick T. Gorman. The sentence was handed down by the Hon. Richard Seeborg, Chief United States District Judge.
Polanco pleaded guilty to the charges on June 28, 2021. According to the plea agreement, Polanco admitted that on September 17, 2020, he was arrested on an outstanding warrant by members of the San Francisco Police Department. Polanco was arrested near his white Jaguar SUV that he parked outside the SoMa Park Inn in San Francisco. Having been previously convicted of a felony, Polanco was not permitted to possess a firearm or ammunition. Nevertheless, at the time of his arrest, Polanco was in possession of a privately manufactured, unserialized 9mm caliber pistol, or “ghost gun,” and a magazine containing 10 rounds of unfired 9mm ammunition. Additional rounds of ammunition were found in his car, including 28 rounds of unfired 9mm ammunition and 17 rounds of unfired .40 caliber ammunition.
In addition to illegally possessing these items, Polanco admitted that he also was in possession of narcotics. Specifically, Polanco acknowledged that at the time of his arrest, he was found with approximately 210 grams of methamphetamine and 45.33 grams of fentanyl in the folds of his skin. Polanco admitted in his plea agreement that he knowingly possessed the methamphetamine with the intent to distribute it.
Polanco also pleaded guilty to an additional crime that he committed after his arrest. Specifically, beginning March 25, 2021, Polanco was detained in pretrial custody at Santa Rita Jail and, while detained, asked a confederate outside of the jail to send him Suboxone (in the form of sublingual strips), a Schedule III controlled substance. Polanco admitted that he received the strips, used the drugs himself, and distributed the drugs to other inmates in exchange for payment in currency or commissary items. Polanco admitted he possessed the Suboxone with the intent to distribute it to other inmates.
On June 24, 2021, the government filed a superseding information charging Polanco with being a felon in possession of ammunition, in violation of 18 U.S.C. § 922(g)(1); possession with intent to distribute methamphetamine, in violation of 21 U.S.C. § 841(a)(1), (b)(1)(B)(viii); and possession with intent to distribute Suboxone, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(E)(i). Polanco pleaded guilty to all three counts.
In addition to the prison term, Chief Judge Seeborg also ordered Polanco to a four-year term of supervised release.
The case was prosecuted by Assistant U.S. Attorney Joseph Tartakovsky. The prosecution is a result of investigations by the San Francisco Police Department and Alameda County Sheriff’s Office.
Oakland Investment Advisor Charged with Securities FraudRead the Press Release
OAKLAND - John Mendes, a registered investment advisor, was charged in a federal information filed today with securities fraud for trading upon non-public inside information, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Sean Ragan.
According to the information filed in Oakland federal court, Mendes, 39, formerly of Oakland, is a registered representative and investment adviser who learned non-public information from his friend, identified in the information only as “Insider One.” At the time of the allegations in the information, Insider One worked for Granite Construction, Inc. (Granite), a construction materials company headquartered in Watsonville, California. Granite focuses on large scale public and private infrastructure projects and is traded publicly on the New York Stock Exchange. Granite negotiated with and eventually acquired another company in 2018 that also traded on the New York Stock Exchange, Layne Christensen Company (Layne). Layne was a water management, construction, and drilling company headquartered in The Woodlands, Texas. Granite publicly announced the agreement to acquire Layne on February 14, 2018.
The information alleges that Insider One was actively engaged in Granite’s negotiations to acquire Layne and learned non-public information regarding the deal. During this period of time, Insider One was also a friend of Mendes.
The information alleges that from approximately November 2016 through February 2018, in the course of their friendship Insider One disclosed material nonpublic information to Mendes about Granite’s potential acquisition of Layne before that information was available to the public. Mendes had a history of sharing confidences with Insider One, who expected that Mendes would maintain the confidentiality of the nonpublic information. The information asserts that Mendes breached that duty of confidence and used Insider One’s material non-public information to trade on Layne’s stock before Granite’s public announcement on February 14, 2018.
The information describes instances of Mendes’s trading based on inside information and alleges that between November 2017 and January 2018 Mendes purchased Layne stock and options in accounts in the names of family members and in no fewer than 10 clients’ accounts. All of the securities were sold later for a profit following the February 14, 2018, announcement of Granite’s intent to acquire Layne. The purchases and subsequent sales of Layne stock generated profits of about $242,000 in those accounts.
Mendes is expected to make his initial appearance in federal court to face the securities fraud charge later this week.
Mendes is charged in the information with one count of securities fraud in violation of 15 U.S.C. §§ 78j(b) and78ff and Title 17 C.F.R. § 240.10b-5. If convicted of securities fraud, he faces a maximum sentence of 20 years in prison and a fine of $5,000,000. If convicted, he will also be required to pay restitution. Any sentence following conviction, however, would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
A federal information merely alleges that crimes have been committed, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
In a separate civil action, the United States Securities and Exchange Commission filed a civil enforcement action today in the Northern District of California alleging that Mendes engaged in insider trading.
The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office for the Northern District of California. The prosecution is the result of an investigation by the FBI. The U.S. Attorney’s Office and the FBI appreciate the assistance of the Market Abuse Unit of the Securities and Exchange Commission’s Division of Enforcement.
Former Broadcom Engineer Sentenced to Eight Months in Prison for Theft of Trade SecretsRead the Press Release
SAN JOSE – Peter Kisang Kim, a former Broadcom Inc. engineer, was sentenced today to eight months in prison for trade secret theft involving Broadcom trade secrets, announced United States Attorney Stephanie M. Hinds and FBI Special Agent in Charge Sean Ragan. The sentence was handed down by the Hon. Beth Labson Freeman, United States District Judge.
Kim, 51, a resident of Ben Lomond, pleaded guilty to the crimes on May 10, 2022. According to documents filed in the case, Broadcom is headquarted in San Jose and its products include networking chips used in equipment sold worldwide, including for enterprise and data center networking. In July 2020, Kim had been employed by Broadcom for over twenty years and worked as a principal design engineer at the company. He worked on various Broadcom products during his time at the company, including the Trident family of chips frequently used in high-volume data centers.
Kim resigned from Broadcom effective July 17, 2020, and in the days before he left Broadcom, Kim copied more than 500 Broadcom files from its document repository system. In pleading to trade secret theft, he admitted to possessing Broadcom trade secrets related to the Trident family of chips, including those contained in test plans, design verification environment files, and design specifications. He admitted that he knowingly possessed the Broadcom trade secrets knowing that he took them from Broadcom. He also acknowledged that Broadcom took reasonable measures to keep the Broadcom trade secrets secret, including by storing the trade secrets on non-public document repositories in which the access permissions were restricted, requiring appropriate nondisclosure agreements to be executed before the trade secrets could be shared outside Broadcom, and in view of the confidentiality agreements Kim signed with Broadcom and the annual trainings he received, among other things.
Less than two weeks after he left Broadcom, Kim began working as IC Design Verification Director for a startup company based in the People’s Republic of China (“PRC”). Kim acknowledged in his plea agreement that the company was seeking to become a leading chip designer focused on the PRC’s domestic market for networking chips at the time. During Kim’s employment at his new company, Kim repeatedly accessed and referenced the Broadcom trade secrets on his personal electronic devices as well as the laptop issued by his new employer, as he admitted in his plea agreement. Further, Kim reviewed the Broadcom trade secrets on his company-issued laptop while also working on verification, test plan, and architecture documents for his new employer.
Kim admitted in his plea agreement that, having taken the Broadcom trade secrets for reference purposes, he knew that having them could advance the quality of his work as an employee for his new employer and therefore economically benefit the company. Kim also admitted that he knew that his actions could injure Broadcom, including because his new employer was seeking to become a competitor to Broadcom by developing competing products abroad.
On November 4, 2021, a federal grand jury indicted Kim charging him with eighteen counts of trade secret theft associated with Broadcom. Pursuant to his plea agreement, Kim pleaded guilty to three counts. In accordance with the terms of his plea agreement, the remaining counts were dismissed today in connection with his sentencing.
In addition to the prison term, Judge Freeman imposed a three-year term of supervised release on Kim following incarceration, restitution to the victim Broadcom, and a fine.
The cases were prosecuted by Assistant U.S. Attorneys Eric Cheng and Kyle Waldinger from the Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District of California, with the assistance of Margoth Turcios, Kathy Tat, and Megan Pagaduan. The prosecutions are the result of investigations by the Federal Bureau of Investigation.
Former San Quentin Prison Guard and Three Others Plead Guilty to Bribery and Smuggling Contraband into Death RowRead the Press Release
SAN FRANCISCO - Keith Christopher, Isaiah Wells, and Dustin Albini pleaded guilty in federal court on Friday to charges of conspiracy to commit honest services fraud and bribery of a public official, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Sean Ragan. Another co-defendant, Tanisa Smith-Symes, pleaded guilty earlier to the same charges based on the same underlying conduct. The pleas were entered before United States District Judge Susan Illston.
On September 29, 2021, Keith Christopher, 38, of Pittsburg, Calif.; Isaiah Wells, 33, of Tracy, Calif.; Tanisa Smith-Symes, 46, of Las Vegas, Nevada; and Dustin Albini, 38, of Pittsburg, Calif., were charged in a federal indictment with bribery of a public official and conspiring to smuggle numerous cell phones into San Quentin State Prison (SQP) located in Marin County. Each defendant entered a plea agreement admitting their own participation in the criminal conspiracy and briberies.
Christopher was employed as a Correctional Officer at SQP and, as described in the indictment, worked in SQP’s East Block, known as Death Row. Cell phones are deemed contraband for prisoners in all parts of the prison as they create safety and security risks for prison employees and other inmates. The California Code of Regulations accordingly prohibits prisoners from possessing cell phones.
Christopher admitted in his plea agreement that as a correctional officer in 2019 he orchestrated a conspiracy involving Wells, Albini, Smith-Symes, and a condemned inmate referred to in the plea agreement only as “Inmate 1.” According to Christopher’s plea agreement, the object of the conspiracy was to pay Christopher bribes in exchange for his smuggling of contraband cell phones into SQP. He delivered the cell phones to Inmate 1, who in turn sold the phones to other inmates.
Christopher’s plea agreement includes descriptions of two instances in which he arranged to receive bribes in exchange for smuggling cell phones into the prison. In the first instance, Christopher admitted that in December 2019, Inmate 1 arranged for 10 cell phones to be shipped to the Nevada residence of an associate. That associate was Smith-Symes. Christopher instructed Smith-Symes to send the cell phones to Albini’s residence in Pittsburg, Calif. Christopher then collected the 10 cell phones from Albini and smuggled them into SQP for Inmate 1. Inmate 1 was the ultimate source of the bribes, and Smith-Symes informed Inmate 1 that Christopher’s price for smuggling the phones was $5,000. At Christopher’s direction, Smith-Symes sent some of the $5,000 to Albini and some to Wells. Christopher admitted that he collected the bribe money from both Wells and Albini.
The second example in Christopher’s plea agreement of smuggling cell phones into SQP in exchange for bribes involves a May 2020 transaction. Christopher admitted that he agreed to smuggle 15 more cell phones into SQP for Inmate 1 and requested a bribe of $7,500. Inmate 1 once again arranged to have the phones shipped to Smith-Symes. Christopher directed Smith-Symes to send those cell phones to the Tracy, Calif. address for Wells, which she did. Smith-Symes also forwarded a text message from Inmate 1 to Christopher requesting that Christopher reduce his smuggling fee from $7,500 to $6,500. Christopher agreed and directed Smith-Symes to send the $6,500 payment to Wells. Christopher retrieved the 15 cell phones and approximately $6,000 in cash from Wells, leaving Wells the balance as his fee. Christopher admitted he then smuggled the 15 cell phones into SQP and delivered them to Inmate 1.
For her part, Smith-Symes described in her plea agreement that in 2018 she began a romantic relationship with the condemned Inmate 1 at SQP. Starting in 2019, Inmate 1 began asking for favors, eventually asking her to help smuggle contraband cellphones into SQP. She agreed and followed Inmate 1’s direction to work with a SQP Corrections Officer she knew as “Dude,” who was Christopher. Smith-Symes admitted she conspired with Christopher as well as Wells and Albini to smuggle the cell phones into SQP and to pay bribes to Christopher.
In their plea agreements, both Wells and Albini admitted they joined the conspiracy to pay bribes to Christopher in exchange for his use of his official position to smuggle cell phones into SQP. Each admitted that they knowingly and willingly engaged in their respective roles in the conspiracy and briberies.
Each defendant pleaded guilty to one count of conspiracy to commit honest services fraud in violation of 18 USC §§ 1343, 1346, and 1349, which carries a maximum sentence of 20 years in federal prison and a $250,000 fine. Each defendant also pleaded guilty to two counts of bribery of a public official in violation of 18 U.S.C. § 666(a)(2), which carries a maximum sentence of 10 years in federal prison and a $250,000 fine. However, any sentence following a conviction is imposed by a court only after the court’s consideration of the United States Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 USC § 3553.
U.S. District Judge Illston scheduled sentencing hearings for Christopher and Wells for January 13, 2023, and set status hearings for Albini and Smith-Symes for September 15, 2023.
Assistant US Attorney Casey Boome is prosecuting the case with the assistance of Erick Machado and Margoth Turcios. The prosecution is the result of an investigation by the FBI and the California Department of Corrections and Rehabilitation’s Office of Internal Affairs.
San Mateo-Based Driving School Instructor Charged with Coercion and Enticement to Produce Child PornographyRead the Press Release
SAN FRANCISCO – San Mateo-based driving instructor Johnnatan Zelaya Izaguirre (Zelaya) appeared in federal court to face charges that he coerced and enticed minor teenaged girls to produce child pornography and related offenses, announced U.S. Attorney Stephanie M. Hinds and FBI Special Agent in Charge Sean Ragan. Chief U.S. Magistrate Judge Joseph C. Spero presided over yesterday’s proceedings at the conclusion of which the magistrate judge ordered Zelaya to be detained pending further proceedings.
A federal grand jury handed down an indictment on September 1, 2022, charging Zelaya, 39, of Redwood City with the crimes. According to the indictment, Zelaya used social media to entice and coerce minor teenaged girls to produce child pornography for his personal use and for sale. The indictment alleges Zelaya offered to manage the minor victims’ sale of their sexually explicit content, offered monetary rewards for selling the victim’ content, and bought the victims sex toys to use in videos they were encouraged to create.
Additional details of the alleged scheme are set out in documents filed by the government in the federal court proceedings. According to government’s filings, Zelaya is both a graduate of a local police academy and the owner and operator of a driving school in San Mateo County. The government alleged that Zelaya used his “position of authority and the powers of social media” to prey on teenage girls. Specifically, Zelaya allegedly used social media to identify underage girls, ranging from ages 14 to 17—three of which are identified by their initials in the indictment—to entice and coerce them to produce child pornography. Further, the government alleges Zelaya persuaded his teenage victims, some of whom were his students, to create child pornography in part by falsely claiming he was in law enforcement; the government alleges that although Zelaya graduated from a police academy, he never joined a police department. In addition, the government’s papers describe how Zelaya groomed his victims at times by complimenting their appearance, developing sexualized friendships with them, offering to manage their explicit content online, and offering them financial rewards for the creation of explicit content. Zelaya allegedly provided a victim a list of the amounts of money she could earn by producing videos depending upon whether the content included nude vs. non-nude videos, videos of masturbation, or videos of “toy play.” On one occasion, Zelaya allegedly threatened to leak explicit content to everyone his victim knew if she stopped creating content for him.
Zelaya was arrested on January 4, 2022, after communicating with an undercover police officer he thought was 17 years old. The government’s court filings describe multiple communications between the undercover officer, who had posed as a driving student, and Zelaya that included highly sexualized conversations with instructions on how to masturbate, discussions of future interactions in which he would orally copulate and have sexual intercourse with her, and a request to have the officer perform a photo shoot with him. The conversations culminated with Zelaya’s arrest on January 4, 2022, during a planned meet-up with the undercover agent.
Zelaya is charged with two counts of coercion and enticement of a minor, in violation of 18 U.S.C. § 2422(b); one count of receipt of child pornography, in violation of 18 U.S.C. § 2252(a)(2); and one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B) and (b)(2).
Zelaya is next scheduled to appear on October 6, 2022, before United States District Court Judge William H. Orrick for an initial appearance before a district judge.
The charges contained in the criminal indictment are only allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
The case is being prosecuted by Assistant United States Attorney Lauren Harding with assistance from Patricia Mahoney and Amala James. The prosecution is the result of an investigation by the FBI, the Redwood City Police Department, the Atherton Police Department, the Burlingame Police Department, and the California Department of Motor Vehicles Investigations Division.
Anyone with information should contact the FBI at 415-553-7400.
San Jose Group Homes Owner Pleads Guilty to Fraud by Diverting Foster Care Funds to Personal UseRead the Press Release
SAN JOSE – Annie Corbett, the CEO of her group homes company that provided foster care, pleaded guilty today in federal court to wire fraud and failure to pay over employment taxes, announced United States Attorney Stephanie M. Hinds, FBI Special Agent in Charge Sean Ragan, Internal Revenue Service—Criminal Investigation (IRS-CI) Special Agent in Charge Mark H. Pearson, and U.S. Department Health and Human Services—Office of Inspector General (HHS-OIG) Special Agent in Charge Steven J. Ryan.
Annie Corbett, 55, formerly of Redwood City, was initially charged by federal complaint on October 30, 2020, with wire fraud in connection with her operation of Corbett Group Homes, Inc. (CGH), a company that provided foster care for children and adolescents in group homes located primarily in San Jose. According to the plea agreement entered today, Corbett was the owner, CEO and President of CGH from 2011 through mid-2018, when the business closed. Corbett was the sole signatory on CGH’s bank accounts, was solely responsible for hiring and firing, and was responsible for processing employee payroll. During this time, CGH employed about 60 employees a year.
Corbett admitted in her plea agreement that she knowingly failed to pay employment taxes. She contracted with payroll processing companies to determine the tax withholdings for CGH employees, and Corbett issued paychecks and W-2s to the employees reflecting the withholding of employment taxes. Corbett admitted, however, that she never paid those employment taxes over to the IRS or filed those W-2s with the IRS. Corbett also admitted that she deceived her bookkeeper and CPA into believing the employment taxes had been paid despite not paying any taxes to the IRS. In an example, Corbett described that she issued several checks from a CGH account made out to the U.S. Treasury and gave copies of them to CGH’s bookkeeper to create the appearance that the taxes had been paid. However, instead of providing the checks to the U.S. Treasury, Corbett changed the name of the checks’ payee and deposited the funds into an account she controlled. Corbett admitted in her plea agreement that from 2014 through 2017 she failed to pay employment taxes to the IRS in an amount totaling more than $752,000.
In the plea agreement, Corbett further described the fraud she committed involving funds CGH received directly from local county governments and private charities to support CGH’s care of foster children. Corbett controlled multiple CGH bank accounts and diverted funds deposited in CGH’s business accounts into personal bank accounts. Corbett used the diverted funds for her personal enrichment, including making her own credit card payments, her personal retail business payments, and her payments on a vacation timeshare. Corbett agreed in her plea agreement to a fraud loss amount that exceeded $550,000.
Corbett is next scheduled for a sentencing hearing before United States District Judge Beth L. Freeman in San Jose federal court on January 31, 2023. Corbett remains out of custody pending her sentencing hearing.
Corbett pleaded guilty to one count wire fraud in violation of 18 U.S.C. § 1343. The maximum statutory sentence for a violation of 18 U.S.C. § 1343 is 20 years in prison and a fine of $250,000. Corbett also pleaded guilty to willful failure to pay over employment taxes in violation of 26 U.S.C. § 7202, which carries a maximum statutory sentence of 5 years in prison and a $250,000 fine. However, any sentence following a conviction would be imposed by a court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Anne Hsieh is prosecuting the case, with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the FBI, IRS-CI, and HHS-OIG.
Bay Area Rapper Mark “Kafani” Hicks and Two Co-Conspirators Sentenced to Prison for Multi-Million Dollar Mortgage Fraud SchemeRead the Press Release
SAN FRANCISCO – Bay area rapper Mark “Kafani” Hicks, aka Amir Rashad, was sentenced to 87 months in prison for his role in orchestrating a complex loan fraud and identity theft conspiracy, announced United States Attorney Stephanie M. Hinds, FBI Special Agent in Charge Sean Ragan, U.S. Postal Inspection Service Acting Inspector in Charge Kevin Rho, and U.S. Secret Service Special Agent in Charge Shawn M. Bradstreet. Co-defendants Demarcus Hicks and Dionysius “Donnie” Costello were sentenced to 48 months and 54 months respectively for their roles in the two-year conspiracy. An additional three members of the fraud ring were sentenced on May 23, 2022, and June 13, 2022. A seventh alleged member remains a fugitive. The sentences were handed down by the Hon. James Donato, United States District Judge.
According to the plea agreements, Mark Hicks admitted to being at the center of a conspiracy in which he directed a team of criminals who stole approximately $2 million from banks and lending institutions. Specifically, Hicks admitted that within months of being released from prison in November 2017, he began orchestrating a scheme and conspiracy to defraud lending institutions and financial institutions. Hicks admitted that he obtained the personal identifying information of nine victims; obtained additional information about the victims, such as their credit history; used the illegally-obtained information to create fraudulent bank accounts, emails, and phone numbers in the victims’ names; and then applied for mortgage refinance loans in the victims’ names.
Hicks admitted that he used these methods to victimize nine individuals when fraudulently applying for eight loans. In some cases, the loans were not approved. In other cases, Hicks convinced lending institutions to forward funds to fraudulently-created bank accounts.
During the sprawling two-year loan fraud conspiracy, Hicks impersonated victims in over a dozen phone calls with banks, lending institutions, and gold dealers. Hicks used the stolen funds primarily to buy gold bars and coins that his co-conspirators sold for cash. Over $480,000 of the illicit gains were recovered from a safe deposit box controlled by Hicks’s relatives.
Demarcus Hicks (Mark Hicks’s half-brother) and Costello each admitted to assisting Hicks in executing various aspects of the scheme. For example, Demarcus Hicks admitted that after he was made aware of the scheme, he obtained and passed on to coconspirators the personal identifying information of a victim, he sold gold bars and coins that had been purchased with the proceeds of the scheme, he traveled with coconspirators who impersonated victims to get fraudulent loan documents notarized, and he withdrew cash from bank accounts that had been fraudulently established as part of the scheme. Similarly, Costello admitted that after being informed about the scheme, he obtained counterfeit drivers’ licenses with the names of victims but photographs of coconspirators, and facilitated meetings between coconspirators and notaries to obtain fraudulent loan documents.
In sum, the scheme included the following defendants:
Defendant Age, Residence Statutes of Conviction Sentence Imposed Mark “Kafani” Hicks 42, Oakley, California 18 U.S.C. § 1349
18 U.S.C. § 1344
18 U.S.C. § 1028A 87 months Demarcus Hicks 38, Stockton, California 18 U.S.C. § 1349
18 U.S.C. § 1344
18 U.S.C. § 1028A 48 months Dionysius Costello 38, Berkeley, California 18 U.S.C. § 1349
18 U.S.C. § 1344
18 U.S.C. § 1028A 54 months Susan Arreola-Martin 72, Antioch, California 18 U.S.C. § 1349
18 U.S.C. § 1344
18 U.S.C. § 1028A
21 U.S.C. § 841 84 months Leif Skorochod 48, San Francisco, California 18 U.S.C. § 1349
18 U.S.C. § 1344
18 U.S.C. § 1028A 14.5 months Christopher Pool 57, Stockton, California 18 U.S.C. § 1349
18 U.S.C. § 1344
18 U.S.C. § 1028A 15 monthsJudge Donato ordered each of the defendants to pay restitution in the amount of $1,904,988.79.
The cases were prosecuted by Assistant U.S. Attorneys Barbara J. Valliere and David J. Ward, with assistance from Claudia Hyslop and Kathy Tat. The prosecutions are the result of investigations by the Federal Bureau of Investigation, the United States Secret Service, and the United States Postal Inspection Service.
Oakland Money Service Business Owner and Employees Charged with Laundering Drug ProceedsRead the Press Release
OAKLAND – The Office of the United States Attorney filed federal criminal complaints charging money service business employees Griselda Cancelada Liceaga, Veronica Mora, and Yoselin Perez Ramirez with conspiracy to commit money laundering and identity theft in connection with a scheme to facilitate wire transfers for drug traffickers sending drug proceeds to their sources of supply in Mexico. The owner of the money service business Rincon Musical—Felipe de Jesus Ornelas Mora—was charged with conspiracy to commit money laundering, in a separate complaint, for his participation in the scheme. The announcement was made by U.S. Attorney Stephanie M. Hinds, Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Mark H. Pearson, and Drug Enforcement Administration (DEA) Acting Special Agent in Charge Bob P. Beris. The defendants were arrested Wednesday, August 31, 2022, and made their initial federal court appearances the following morning before U.S. Magistrate Judge Donna M. Ryu.
According to the criminal complaints, Ornelas, 49, was the owner of Oakland-based money transmitter Rincon Musical where Liceaga, 39; Mora, 26; and Ramirez, 24, worked as cashiers. All the defendants are Oakland residents. Liceaga eventually opened her own money transmitter business—America Latina—in Oakland. When providing money transmitter services, the defendants were acting as local agents of corporate money service businesses that maintain policies and require training to ensure compliance with national anti-money laundering laws and regulations. The anti-money laundering corporate policies as well as federal laws and regulations require money service businesses to avoid allowing their services to be used to support money laundering. The complaint alleges the defendants completed annual trainings and were aware of the applicable laws and policies and, nevertheless, charged unrecorded transaction “fees” to narcotics traffickers for assisting the traffickers with laundering drug proceeds from the United States to Mexico.
The complaints describe several methods allegedly used by the defendants to launder drug proceeds. For example, the defendants allegedly used identification cards and personal information of legitimate customers to complete wire transfers in names other than those of the drug dealers. In addition, the defendants allegedly structured large amounts of cash into smaller wire transfers to avoid arousing suspicion that the wire transfers were drug proceeds. The complaints describe how a former narcotics trafficker working under the supervision of law enforcement agents brought $20,000 in cash to Rincon Musical to have wired to people in Mexico. Two of the defendants split the money into multiple transactions of less than $3,000—amounts small enough to avoid being flagged for suspicious activity. The complaint also alleges that defendants did not ask customers to explain the origin of large amounts of cash they agreed to wire as the defendants had been trained to do and did not record the “extra” transaction fees that they charged for helping process suspicious transactions. All of this, the complaint alleges, defendants did to assist drug traffickers who sent wire transfers without using their true names, showing identification, or having their transactions scrutinized by the corporate money service businesses that provide wire transfer services.
The criminal complaints detail the IRS and DEA investigation that led to the arrest and charging of the defendants. According to the complaints, law enforcement arrested two drug traffickers—one in December 2020 and the other around June 2021—both of whom admitted to sending drug proceeds to their drug suppliers in Mexico at Rincon Musical. The complaints describe the drug traffickers’ statements, cell phone communications, and transaction receipts found on their phones to demonstrate how they allegedly used money transmitter services to pay drug suppliers in Mexico. In addition, the complaints describe multiple covert operations that investigators used to determine how the defendants were allegedly circumventing anti-money laundering rules and allegedly using the personal information of legitimate customers to satisfy identification requirements on large suspicious transactions.
In sum, the criminal complaints charge Ornelas, Liceaga, Mora, and Ramirez with conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). Liceaga, Mora, and Ramirez also are charged with identity theft, in violation of 18 U.S.C. § 1028(a)(7). If convicted, defendants face a maximum statutory term of 20 years in prison and a $500,000 fine (or twice the gain resulting from the crime). However, any sentence after a conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Defendants Ornelas, Liceaga, and Mora are next scheduled to appear on September 6, 2022, before Magistrate Judge Donna M. Ryu for arraignment, identification of counsel, and further status on conditions of release.
Defendant Yoselin Perez Ramirez is scheduled to appear on September 2, 2022, before Magistrate Donna M. Ryu for initial appearance and identification of counsel.
Assistant U.S. Attorney Daniel Pastor is prosecuting this case with assistance from Amanda Martinez and Andy Ding.
This case is the result of an investigation by IRS-Criminal Investigations and the DEA with assistance from the Oakland Police Department. This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles high-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States, by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
Medical Technology Company President Convicted in $77 Million COVID-19 and Allergy Testing SchemeRead the Press Release
A federal jury convicted the president of a Silicon Valley-based medical technology company yesterday of participating in a scheme to mislead investors, commit health care fraud, and pay illegal kickbacks in connection with the submission of over $77 million in false and fraudulent claims for COVID-19 and allergy testing.
Mark Schena, 59, of Los Altos, California, served as the president of Arrayit Corporation. According to court documents and evidence presented at trial, Schena engaged in a scheme to defraud Arrayit’s investors by claiming that he had invented revolutionary technology to test for virtually any disease using only a few drops of blood. In meetings with investors, Schena and his publicist claimed that Schena was the “father of microarray technology” and falsely stated that he was on the shortlist for the Nobel Prize. The evidence at trial showed that Schena also falsely represented to investors that Arrayit could be valued at $4.5 billion based on purported revenues of $80 million per year.
In furtherance of the scheme, the evidence at trial showed that Schena, among other things, failed to release Arrayit’s SEC-required financial disclosures and concealed that Arrayit was on the verge of bankruptcy. Schena lulled investors who were concerned that the company was a “scam” by inviting them to private meetings and issuing false press releases and tweets stating that Arrayit had entered into lucrative partnerships with companies, government agencies, and public institutions, including a children’s hospital and a major California health care provider. The tweets and press releases falsely claimed that such entities had agreed to use the Arrayit technology, when in fact no such agreements existed or were of minimal value.
Schena also orchestrated an illegal kickback and health care fraud scheme that involved submitting fraudulent claims to Medicare and private insurance for unnecessary allergy testing. Arrayit ran allergy screening tests on every patient for 120 different allergens (ranging from hornet stings to codfish) regardless of medical necessity. In order to obtain patient blood specimens, Schena paid kickbacks to marketers in violation of the Eliminating Kickbacks in Recovery Act and orchestrated a deceptive marketing plan that falsely claimed that the Arrayit test was highly accurate in diagnosing allergies, when it was not, in fact, a diagnostic test. Arrayit billed more per patient to Medicare for blood-based allergy testing than any other laboratory in the United States, the evidence at trial showed, and billed some commercial insurers over $10,000 per test.
In early 2020, Arrayit’s allergy testing business declined because the COVID-19 pandemic and stay-at-home orders reduced demand for allergy testing. Schena then falsely announced that Arrayit “had a test for COVID-19” based on Arrayit’s blood testing technology, before developing such a test. Seeking to capitalize on the nationwide shortage of COVID-19 testing, Schena orchestrated a deceptive marketing scheme that falsely claimed that Dr. Anthony Fauci and other prominent government officials had mandated testing for COVID-19 and allergies at the same time and required that patients receiving the Arrayit COVID-19 test also be tested for allergies. Schena also falsely claimed that the Arrayit COVID-19 test was more accurate than a PCR test for diagnosing COVID-19 infections, while concealing from investors and patients taking the test that the Food and Drug Administration had informed him that the Arrayit test was not accurate enough to receive an Emergency Use Authorization for use in the United States.
Schena was convicted of one count of conspiracy to commit health care fraud and conspiracy to commit wire fraud, two counts of health care fraud, one count of conspiracy to pay kickbacks, two counts of payment of kickbacks, and three counts of securities fraud. He is scheduled to be sentenced on Jan. 30, 2023 and faces a maximum penalty 20 years imprisonment for the conspiracy to commit health care fraud and conspiracy to commit wire fraud; 10 years of imprisonment for each count of health care fraud; five years imprisonment for conspiracy to pay kickbacks; 10 years imprisonment for each count of payment of kickbacks; and 20 years imprisonment for each count of securities fraud. U.S. District Judge Edward J. Davila will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division; U.S. Attorney Stephanie M. Hinds for the Northern District of California; Special Agent in Charge Craig D. Fair of the FBI’s San Francisco Field Office; Acting Special Agent in Charge Steven J. Ryan of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG); Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service (USPIS) – Criminal Investigations Group; Special Agent in Charge Kim R. Lampkins of the Veterans Affairs Office of Inspector General (VA-OIG); and Special Agent in Charge Bryan D. Denny of the Defense Criminal Investigative Service (DCIS) Western Field Office made the announcement.
HHS-OIG’s San Francisco Regional Office and Detroit Regional Office, USPIS, the FBI, VA-OIG and DCIS investigated the case.
Acting Principal Assistant Chief Jacob Foster and Trial Attorney Laura Connelly of the Justice Department’s Fraud Section and Assistant U.S. Attorney Christina Liu for the Northern District of California are prosecuting the case.
The Fraud Section uses the Victim Notification System (VNS) to provide victims with case information and updates related to this case. Victims with questions may contact the Fraud Section’s Victim Assistance Unit by calling the Victim Assistance phone line at 1-888-549-3945 or by emailing [email protected]. To learn more about victims’ rights, please visit: https://www.justice.gov/criminal-vns/victim-rights-derechos-de-las-v-ctimas. If you believe you are a victim who has invested in Arrayit, or you have taken a COVID-19 test prepared or marketed by Arrayit, please visit https://www.justice.gov/criminal-vns/case/Arrayit.
Medical Technology Company President Convicted in $77 Million COVID-19 and Allegy Testing SchemeRead the Press Release
SAN JOSE – A federal jury convicted the president of a Silicon Valley-based medical technology company yesterday of participating in a scheme to mislead investors, commit health care fraud, and pay illegal kickbacks in connection with the submission of over $77 million in false and fraudulent claims for COVID-19 and allergy testing.
Mark Schena, 59, of Los Altos, California, served as the president of Arrayit Corporation. According to court documents and evidence presented at trial, Schena engaged in a scheme to defraud Arrayit’s investors by claiming that he had invented revolutionary technology to test for virtually any disease using only a few drops of blood. In meetings with investors, Schena and his publicist claimed that Schena was the “father of microarray technology” and falsely stated that he was on the shortlist for the Nobel Prize. The evidence at trial showed that Schena also falsely represented to investors that Arrayit could be valued at $4.5 billion based on purported revenues of $80 million per year.
“The Covid-19 pandemic presented our communities, our country, and indeed the world with profound challenges to our health care systems,” said U.S. Attorney Stephanie M. Hinds. “Mark Schena preyed on investors, customers, and the health care industry by claiming he was helping us all to meet some of these challenges. In fact, Schena committed federal crimes by, among other things, defrauding investors, receiving illegal kickbacks, disseminating deceptive marketing, and submitting fraudulent claims for reimbursement of unnecessary testing. We thank the jury for their careful attention to the evidence in this case and look forward to the sentencing phase of these proceedings.”
“Mark Schena defrauded investors, and health care insurance programs, then turned to exploit the pandemic with a Covid-19 test that returned inaccurate results and placed public safety at risk,” said FBI San Francisco Special Agent in Charge Sean Ragan. “The FBI, DOJ, and other federal law enforcement partners will identify and investigate anyone-from the street to a corporate boardroom-who capitalizes on any national emergency to commit fraud and threaten the integrity of the securities market.”
“Mr. Schena’s conviction holds him accountable for a multi-million dollar fraudulent scheme driven purely by greed and devoid of concern for his unwitting patients or financial backers,” said Bryan D. Denny, Special Agent in Charge for the Department of Defense (DoD) Office of Inspector General, Defense Criminal Investigative Service (DCIS), Western Field Office. “DCIS and our partners will continually seek to identify and eliminate fraudulent schemes that corrupt the integrity of TRICARE, the DoD’s health care program for uniformed service members, retirees, and their families.”
“Mark Schena orchestrated a wide-ranging fraud scheme to boost his profits by exploiting the American public’s trust, paying illegal kickbacks, and submitting millions in false claims to Medicare,” said Special Agent in Charge Steven J. Ryan of the U.S Department of Health and Human Services Office of Inspector General (HHS-OIG). “Working closely with our law enforcement partners, our agency will continue to investigate such fraudulent activity in order to protect taxpayer-funded federal health care programs from the abuse of bad actors.”
In furtherance of the scheme, the evidence at trial showed that Schena, among other things, failed to release Arrayit’s SEC-required financial disclosures and concealed that Arrayit was on the verge of bankruptcy. Schena lulled investors who were concerned that the company was a “scam” by inviting them to private meetings and issuing false press releases and tweets stating that Arrayit had entered into lucrative partnerships with companies, government agencies, and public institutions, including a children’s hospital and a major California health care provider. The tweets and press releases falsely claimed that such entities had agreed to use the Arrayit technology, when in fact no such agreements existed or were of minimal value.
Schena also orchestrated an illegal kickback and health care fraud scheme that involved submitting fraudulent claims to Medicare and private insurance for unnecessary allergy testing. Arrayit ran allergy screening tests on every patient for 120 different allergens (ranging from hornet stings to codfish) regardless of medical necessity. In order to obtain patient blood specimens, Schena paid kickbacks to marketers in violation of the Eliminating Kickbacks in Recovery Act and orchestrated a deceptive marketing plan that falsely claimed that the Arrayit test was highly accurate in diagnosing allergies, when it was not, in fact, a diagnostic test. Arrayit billed more per patient to Medicare for blood-based allergy testing than any other laboratory in the United States, the evidence at trial showed, and billed some commercial insurers over $10,000 per test.
In early 2020, Arrayit’s allergy testing business declined because the COVID-19 pandemic and stay-at-home orders reduced demand for allergy testing. Schena then falsely announced that Arrayit “had a test for COVID-19” based on Arrayit’s blood testing technology, before developing such a test. Seeking to capitalize on the nationwide shortage of COVID-19 testing, Schena orchestrated a deceptive marketing scheme that falsely claimed that Dr. Anthony Fauci and other prominent government officials had mandated testing for COVID-19 and allergies at the same time and required that patients receiving the Arrayit COVID-19 test also be tested for allergies. Schena also falsely claimed that the Arrayit COVID-19 test was more accurate than a PCR test for diagnosing COVID-19 infections, while concealing from investors and patients taking the test that the Food and Drug Administration had informed him that the Arrayit test was not accurate enough to receive an Emergency Use Authorization for use in the United States.
Schena was convicted of one count of conspiracy to commit health care fraud and conspiracy to commit wire fraud, two counts of health care fraud, one count of conspiracy to pay kickbacks, two counts of payment of kickbacks, and three counts of securities fraud. He is scheduled to be sentenced on Jan. 30, 2023 and faces a maximum penalty 20 years imprisonment for the conspiracy to commit health care fraud and conspiracy to commit wire fraud; 10 years of imprisonment for each count of health care fraud; five years imprisonment for conspiracy to pay kickbacks; 10 years imprisonment for each count of payment of kickbacks; and 20 years imprisonment for each count of securities fraud. U.S. District Judge Edward J. Davila will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Stephanie M. Hinds; Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division; Special Agent in Charge Craig D. Fair of the FBI’s San Francisco Field Office; Acting Special Agent in Charge Steven J. Ryan of the U.S. Department of Health and Human Services Office of Inspector General; Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service (USPIS) – Criminal Investigations Group; Special Agent in Charge Kim R. Lampkins of the Veterans Affairs Office of Inspector General (VA-OIG); and Special Agent in Charge Bryan D. Denny of the Defense Criminal Investigative Service Western Field Office made the announcement.
HHS-OIG’s San Francisco Regional Office and Detroit Regional Office, USPIS, the FBI, VA-OIG and DCIS investigated the case.
Assistant U.S. Attorney Christina Liu and Acting Principal Assistant Chief Jacob Foster and Trial Attorney Laura Connelly of the Justice Department’s Fraud Section are prosecuting the case.
The Fraud Section uses the Victim Notification System (VNS) to provide victims with case information and updates related to this case. Victims with questions may contact the Fraud Section’s Victim Assistance Unit by calling the Victim Assistance phone line at 1-888-549-3945 or by emailing [email protected]. To learn more about victims’ rights, please visit: https://www.justice.gov/criminal-vns/victim-rights-derechos-de-las-v-ctimas. If you believe you are a victim who has invested in Arrayit, or you have taken a COVID-19 test prepared or marketed by Arrayit, please visit https://www.justice.gov/criminal-vns/case/Arrayit.
East Bay Man Sentenced to 51 Months in Federal Prison for Armed Robbery of U.S. Mail CarrierRead the Press Release
OAKLAND – Kevin Allan Fowler was sentenced today to 51 months in federal prison for the armed robbery of a United States Postal Service letter carrier, announced United States Attorney Stephanie M. Hinds and U.S. Postal Inspection Service (USPIS) San Francisco Division Acting Inspector-In-Charge Kevin Rho. The sentence was handed down by United States District Judge Haywood S. Gilliam Jr.
Fowler, 31, a resident of the East Bay, was charged by federal information on April 13, 2022, with the armed robbery of a mail carrier that occurred on Merritt Avenue in Oakland on December 2, 2021. The charge alleged that Fowler used a pistol in the robbery.
On June 15, 2022, Fowler entered a plea agreement and pleaded guilty to the armed robbery. In his plea agreement, Fowler admitted that on December 2, 2021, he walked past a letter carrier while she was approaching a building to deliver mail. He then returned and approached the letter carrier. Fowler demanded that she turn over her keys. When she refused, Fowler admits he took out and brandished a handgun. The letter carrier then handed over her vehicle keys and two USPS keys. Fowler fled.
The government described in its sentencing memo that Fowler’s vehicle was identified through surveillance footage and stopped days later by Oakland Police Department officers. When arrested, Fowler had a loaded P80 9mm magazine and a counterfeit USPS mail key. The keys stolen from the victim letter carrier were not recovered, but the victim was able to identify Fowler has the perpetrator of the robbery.
In addition to the 51 month sentence, United States District Judge Gilliam ordered Fowler to serve a five year period under supervision when he leaves prison and to pay restitution to the victim. Fowler was in custody at his sentencing hearing and begins serving his prison sentence immediately.
Evan Mateer is the Assistant U.S. Attorney who is prosecuting the case, with the assistance of Christine Tian and Soana Katoa. The prosecution is the result of an investigation by the USPIS and Oakland Police Department.
Union City Man Sentenced to 4 Years in Federal Prison for Small Business RobberiesRead the Press Release
OAKLAND - Nelson Enrike Ramirez was sentenced today to 48 months in federal prison for multiple robberies of small stores and gas stations in East Bay and South Bay communities that affected interstate commerce, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Sean Ragan. The sentence was handed down by United States District Judge Jon S. Tigar.
Ramirez, 41, of Union City, California, was charged on December 1, 2021, by a federal information for the November 3, 2020, robbery of a 7-Eleven convenience store in Campbell, California, and the November 6, 2020, robbery of a 7-Eleven in Fremont.
On April 22, 2022, Ramirez entered a plea agreement and pleaded guilty to those two robberies and admitted 21 others. In his plea agreement, Ramirez described that from May to November 2020, he committed or attempted 23 robberies of small businesses in the East and South Bay areas, including Fremont, Newark, Hayward, Union City, Campbell, Milpitas, Mountain View, Los Altos, and Sunnyvale. During the robberies and attempted robberies, he carried a black rubber replica semiautomatic firearm and brandished it, and sometimes pointed it, at store clerks when demanding money. Ramirez often apologized to the store employees, stating he needed money because he had a sick child at home – but in his plea agreement he admitted he lied. He does not have a child.
Ramirez detailed two robberies in his plea agreement. On November 3, 2020, Ramirez entered a 7-Eleven convenience store in Campbell and asked the store clerk a question. When she approached, Ramirez told the clerk he needed money because his son was sick and insurance would not cover it. He pulled the black rubber replica firearm out of his pocket and held it at his side. He instructed the clerk to open the register, then walked behind the store’s counter with the clerk. Ramirez took approximately $1,500 from the open register and fled.
Ramirez also described in his plea agreement that three days later, on November 6, 2020, he walked into a 7-Eleven store in Fremont. He told the store clerk he needed a soda. When the clerk helped him, Ramirez pulled the replica firearm out of his pocket and told the clerk he needed money. He ordered the clerk to walk to the cash register. The clerk opened the register and handed Ramirez approximately $200. Ramirez forced the clerk to open a second cash register, but it was empty. Ramirez then left the store.
In addition to the 48 month sentence, United States District Judge Tigar ordered Ramirez to pay $9,192 in restitution and to serve a three year period of supervision when he leaves prison. Ramirez was in custody at his sentencing hearing and begins serving his sentence immediately.
Noah Stern is the Assistant U.S. Attorney who is prosecuting the case, with the assistance of Karina Ruiz, Kay Konopaske, and Kathleen Turner. The prosecution is the result of an investigation by the FBI, the Fremont Police Department, the Union City Police Department, the Newark Police Department, the Hayward Police Department, the Campbell Police Department, the Milpitas Police Department, the Mountain View Police Department, the Los Altos Police Department, and the Sunnyvale Police Department.
Former Mexican Pharmacy Employee Sentenced to More Than 7 Years for Selling Fentanyl Pills That Killed Monterey VictimRead the Press Release
SAN JOSE – Francisco Javier Schraidt Rodriguez was sentenced Monday to 90 months (7½ years) in federal prison for distributing fentanyl-laced pills that killed a resident of Monterey County, California, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration Special Agent in Charge Wade R. Shannon. The sentence was handed down by United States District Judge Edward J. Davila.
Schraidt Rodriguez, 63, formerly of Mexicali, Mexico, was charged in a superseding information filed on March 25, 2022, with the distribution of fentanyl and with a conspiracy to distribute fentanyl and alprazolam. He entered a plea agreement and pleaded guilty to both charges on April 11, 2022.
In his plea agreement, Schraidt Rodriguez admitted that from June 2018 through November 2019 he conspired with others to sell and did sell counterfeit pharmaceutical pills containing fentanyl. The fentanyl-laced pills were colored light blue and imprinted with “M” on one side and “30” on the other. These pills are commonly referred to as “M30s.” Schraidt Rodriguez also conspired to sell and did sell bottles of alprazolam (U.S. brand name: Xanax) packaged as “Farmapram.”
Schraidt Rodriguez described in the plea agreement that during the conspiracy, he lived in Mexico and worked at a pharmacy in Mexicali, Mexico. His co-conspirator was located in Monterey County, California. On multiple occasions his co-conspirator ordered bottles of alprazolam and M30 pills containing fentanyl from Schraidt Rodriguez. Upon receiving an order, Schraidt Rodriguez transported the drugs from Mexicali, Mexico, across the United States border to Calexico, California. He then shipped the drugs by mail to his co-conspirator’s address in Monterey County. Schraidt Rodriguez described that he mailed the M30s in batches of approximately 100 pills at a time. He often “fronted” the pills, accepting payment at a later date after the co-conspirator had resold the drugs to others.
Schraidt Rodriguez acknowledged in his plea agreement that when he sold the M30 pills to his co-conspirator, he knew the M30s contained fentanyl. His co-conspirator also knew this, as the co-conspirator asked him if the M30s contained fentanyl and Schraidt Rodriguez advised that they did.
Schraidt Rodriguez admitted the M30 pills he sold killed a victim who overdosed on his pills. He described in his plea agreement that between August 2019 and September 5, 2019, he sold M30 pills containing fentanyl to his Monterey County co-conspirator. He acknowledged that some of those M30s were then sold to the Monterey County victim. Schraidt Rodriguez admitted that the victim ingested some portion of one or more of the M30 pills laced with fentanyl, which caused an overdose in the victim. The victim was found unconscious in the victim’s home. He died as a result of the overdose. The victim left behind a spouse and a young son.
In addition to the 90 month federal prison term, United States District Judge Edward J. Davila ordered Schraidt Rodriguez to serve three years of supervision following release from federal prison. Schraidt Rodriguez was remanded into custody at the sentencing hearing to begin serving his sentence immediately.
The case was prosecuted by Assistant United States Attorneys Christina Liu and Casey Boome, with the assistance of Mark DiCenzo, Linda Love, and Andy Ding. The prosecution is the result of an investigation by DEA, with assistance from the Customs and Border Protection, Office of Field Operations; the Department of Homeland Security, Homeland Security Investigations; the Pacific Grove Police Department; the Monterey County Sheriff’s Office; and the Monterey Police Department.
One Pill Can Kill: Beware of pills bought on the street. Fentanyl, a Schedule II controlled substance, is a highly potent opiate that can be diluted with cutting agents to create counterfeit pills that purport to mimic the effects of Oxycodone, Percocet, and other drugs and can typically be obtained at a lower cost than the genuine drugs. However, very small variations in the amount or quality of fentanyl creates huge effects on the potency of the counterfeit pills and can easily have lethal consequences. Fentanyl has now become the leading cause of drug overdose deaths in the United States. Counterfeit, fentanyl-laced pills are commonly shaped and colored to resemble pills that are sold legitimately at pharmacies. For example, counterfeit pills known as M30s mimic Oxycodone but routinely contain fentanyl. These tablets are round and often light blue in color, though they come in many other colors, and have “M” and “30” imprinted on opposite sides of the pill.
This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
33 Month Sentence Imposed on San Francisco Design Company Controller Who Embezzled $1.9 MillionRead the Press Release
SAN FRANCISCO – Kerry Kit Yee Tang was sentenced today to 33 months in federal prison for bank fraud stemming from her embezzlement from a San Francisco-based design company, announced United States Attorney Stephanie M. Hinds and Homeland Security Investigations Special Agent in Charge Tatum King. The sentence was handed down by United States District Chief Judge Richard Seeborg.
Tang, 45, of San Francisco, was employed as the Controller of a San Francisco interior design company from December 2018 to January 2021. On December 16, 2021, a federal grand jury indicted Tang on five counts of bank fraud involving embezzlement from her employer. Tang entered a plea agreement on May 24, 2022, and pleaded guilty to all five counts of bank fraud.
According to the plea agreement, Tang was, as Controller, the only employee in an accounting role at the design company. She was responsible for tasks including monthly reconciliation of cash and credit card accounts, processing payroll, and processing payments to vendors via check, wire transfer, and credit card. Tang was not, however, an authorized signer for the company’s checks. That authority was vested only in the company’s principals.
In the plea agreement, Tang admitted that she commenced her scheme to defraud the company in March 2019 – a few months after becoming its Controller. Tang’s scheme involved drawing checks on the company’s bank accounts and forging the signatures of one or both of the company’s principals on the checks without their authorization. Over the next two years, Tang embezzled more than $1.9 million from the company by issuing unauthorized checks.
In total, Tang admits she wrote 69 unauthorized checks. As described in the plea agreement, the checks ranged from $30,000 to $100,000. Tang made 66 of the checks payable to herself and deposited them into her personal bank accounts. In addition, in November and December 2020, Tang wrote three unauthorized checks from a company bank account that were payable to third party companies and totaled $267,200. Tang admitted in her plea agreement that she was not authorized to issue or sign the checks and that the third party companies did not perform any services for her company.
The government asserted in its sentencing memo that Tang not only violated the trust placed in her by her colleagues but also jeopardized the livelihood of the design company and its employees. The majority of Tang’s embezzlement occurred in 2020, in the midst of the COVID-19 pandemic when the country’s populace struggled with financial difficulties and emotional stress. Tang’s crimes, according to the government’s sentencing memo, compounded the financial uncertainty of the company and its employees during an already precarious time.
In addition to the 33-month prison term, United States District Chief Judge Seeborg ordered Tang to serve three years of supervision following her release from federal prison and to pay restitution. Tang will surrender to begin her sentence on October 31, 2022.
The case was prosecuted by Assistant United States Attorneys Katherine Lloyd-Lovett and Kristina Green, with the assistance of Beth Kim. The prosecution is the result of an investigation by Homeland Security Investigations and the San Francisco Police Department.
Jury Convicts San Francisco Broker and Investor Victor Makras for Fraud in Real Estate LoanRead the Press Release
SAN FRANCISCO – A federal jury today convicted Victor Makras, a prominent San Francisco real estate broker and investor, of making false statements to a bank and of bank fraud tied to fraudulent representations made in a mortgage refinance loan application, announced United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Sean Ragan, and Internal Revenue Service-Criminal Investigation Special Agent in Charge Mark H. Pearson. The verdict follows a two-week trial before United States Chief District Judge Richard Seeborg.
Victor Makras, 64, of San Francisco, was charged in a superseding indictment filed on May 31, 2022. The four criminal counts related to a mortgage refinance loan obtained by an associate of Makras and the associate’s wife. Those four counts charged Makras with conspiring to make a false statement to a bank; making false statements to a bank; conspiring to commit bank fraud; and bank fraud.
The jury convicted Makras of two counts: making false statements to a bank and bank fraud. The jury was unable to reach a verdict on the other two counts: conspiracy to make false statements to a bank and conspiracy to commit bank fraud.
Trial evidence showed that Makras defrauded Quicken Loans, a financial lending institution, in a $1.3 million real estate mortgage loan secured by property owned by the Makras associate, who was the borrower on the loan. In the application for the $1.3 million loan, Makras represented to Quicken Loans a falsely inflated debt amount of $915,000 that Makras claimed the borrower owed to Makras and his investors. The falsely inflated debt allowed the borrower to conceal other debts from Quicken. The other outstanding debts included over $89,000 owed to a contractor for extensive remodel work on the property that was provided to the borrower without contemporaneous billing. Another debt concealed from the company was a $70,000 unsecured personal loan made by Makras to the borrower.
In summary, the evidence showed that Makras made false representations on the loan application that the borrower was indebted to Makras in an inaccurate, inflated amount of $915,000, concealing from Quicken the construction debt and the personal loan.
The federal jury today convicted Makras of one count of making false statements to a bank in violation of 18 U.S.C. § 1014, which carries a maximum possible penalty of 30 years imprisonment and a $1,000,000 fine. The jury also convicted Makras of one count of bank fraud, in violation of 18 U.S.C. §§ 1344(1), (2), which carries a maximum possible penalty of 30 years imprisonment and a fine of $1,000,000 or not more than the greater of twice the gross gain or gross loss. However, any sentence will be imposed by the court only after its consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
Makras remains out of custody pending sentencing. No future date has yet been set.
The charges contained in the superseding indictment against the co-defendant of Makras, and the charges on which the jury did not reach a verdict, remain only allegations. As in any criminal case, a defendant is presumed innocent unless and until proven guilty in a court of law.
Assistant U.S. Attorneys David Ward and Zachary Abrahamson prosecuted the case at trial with the assistance of Veronica Hernandez and Tina Rosenbaum. The case is being investigated by the FBI and the Internal Revenue Service-Criminal Investigation (IRS-CI).
This case is part of a larger federal investigation targeting public corruption in the City and County of San Francisco. To date, twelve individuals have been charged, including high-ranking San Francisco public official Mohammed Nuru who was sentenced yesterday to seven years in federal prison. Multiple city contractors and facilitators have also been charged.
Former San Francisco Public Works Director Sentenced to Seven Years in Federal PrisonRead the Press Release
SAN FRANCISCO – Former San Francisco City Hall public official Mohammed Colin Nuru was sentenced today to 84 months (7 years) in federal prison for honest services wire fraud, announced United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Sean Ragan, and Internal Revenue Service–Criminal Investigation Special Agent in Charge Mark H. Pearson. The sentence was handed down by United States District Judge William H. Orrick.
Nuru, 59, was first arrested on January 17, 2020, following the filing of a 79-page federal criminal complaint against him. Nuru was then the Director of the San Francisco Department of Public Works (DPW) and had held that position since 2011, when he was elevated from the DPW Deputy Director of Operations position that he had held since 2000. The complaint charged Nuru with honest services fraud in public office, alleging a long-running scheme of bribes and kickbacks during his DPW tenure. A second federal complaint filed January 28, 2020, charged Nuru for lying to a federal agent following his arrest.
On January 6, 2022, Nuru pleaded guilty to the charge of defrauding the public of its right to his honest services, in violation of 18 U.S.C. §§ 1343 and 1346.
“Mohammed Nuru’s prison sentence is punishment for more than a decade of public corruption,” said United States Attorney Stephanie Hinds. “As San Francisco’s Department of Public Works Deputy Director and then its Director, Nuru owed the people of San Francisco a duty of faithful, honest services. Instead, he betrayed that duty. For at least twelve years, Nuru shook down contractors eager for City business, trading his authority and influence for millions of dollars in cash, construction work, travel, meals, and gifts. His abhorrent conduct erodes the public’s trust in its government, and this case demonstrates the justice system can and will punish corrupt public officials.”
“Mohammed Nuru’s long-running scheme of bribes and kickbacks ultimately earned him seven years in prison. Today’s sentence sends a clear message that public officials who abuse their power for personal gain will be punished,” said FBI Special Agent in Charge Sean Ragan. “The FBI’s investigation into this case is not over. We will continue to unravel and disrupt corruption within the city of San Francisco.”
“Corruption happens in the shadows, often with the help of professional enablers who perpetuate fraudulent schemes and the corrupt who launder and hide their illicit wealth. The Oakland Field Office of IRS Criminal Investigation has dedicated resources to unraveling the truth behind the extensive web of corruption, which Mohammed Nuru presided over, during his tenure leading the San Francisco Department of Public Works,” said IRS Criminal Investigation Special Agent in Charge Mark H. Pearson. “Today’s sentencing is a true reflection of the collaborative commitment between IRS-CI, the FBI, and the USAO-NDCA to protect public welfare, the people in our communities, and bring justice to light.”
In his plea agreement, Nuru admits to a pervasive corruption scheme involving bribery, kickbacks and fraud that spanned at least his last 12 years in office. During that time, Nuru sat not only as Deputy Director of Operations and then Director at DPW but also as a member of the Board of the Transbay Joint Powers Authority (TJPA). Appointed to the TJPA board in 2014, Nuru eventually became its Chair. From these positions, Nuru exercised substantial power and influence over San Francisco (the City) business and policy, including its public contracts, permits, and construction projects. Nuru’s authority made him a powerful public official in the City.
Nuru’s admissions detail his broad array of graft in office, and a sample of them are below:
Walter Wong: Nuru’s corrupt relationship with San Francisco-based contractor Walter Wong began in 2008. Nuru accepted envelopes of cash containing as much as $5,000 at a time from Wong, and Wong bribed Nuru with more than $260,000 in construction labor and materials provided to Nuru’s San Francisco home and his vacation ranch property located in Stonyford in Colusa County. Wong also paid for Nuru to travel to China multiple times and to South America, footing the bill for international flights and a stay at the Ritz-Carlton in Santiago, Chile, for Nuru and his then-girlfriend Sandra Zuniga, another City official. In exchange, Nuru helped Wong secure City contracts by structuring the City’s Request for Proposals (RFPs) to ensure Wong’s company secured the contract, by providing Wong with confidential information on competitors’ bids, and by helping Wong expedite permit approvals.
Recology: Recology Inc. is a waste management company headquartered in San Francisco and the parent company of Sunset Scavenger Company, Golden Gate Disposal & Recycling Company, and Recology San Francisco (collectively referred to as Recology) that provided collection and disposal services for residential and commercial customers located in the City and for the City itself. In his DPW Director’s position, Nuru presided over the process governing the rates that Recology could charge, including “tipping fee” rates that Recology charged DPW when DPW dumped materials at a Recology facility. In exchange for favorable treatment from Nuru, Nuru describes that Recology bribed him with soil delivered to his Colusa County ranch, expensive meals, and a two-night trip to New York in December 2017. At Nuru’s request, Recology also donated hundreds of thousands of dollars to a San Francisco non-profit for a cleaning program that Nuru could access and use for other purposes, and Recology further funded DPW holiday parties with $60,000 in donations. Recology also arranged and funded the hiring of a Nuru family member.
Nick Bovis: Nuru received multiple bribes from restaurateur Nick Bovis, including free meals and entertainment for Nuru, his family, and associates at restaurants owned by Bovis and thousands of dollars in free appliances for Nuru’s ranch property. Nuru also expected tens of thousands of dollars in kickbacks from proceeds that Bovis would earn from City concessions or contracts awarded to Bovis. In exchange, Nuru used his official acts and influence to assist Bovis in obtaining public business and contracts with the City.
Florence Kong: Nuru accepted a gold Rolex watch valued at $36,550, cash, and an iron fence installed at Nuru’s ranch from businesswoman Florence Kong. In exchange, Nuru used his official position to benefit Kong’s businesses, including a recycling business owned by Kong.
Balmore Hernandez, William Gilmartin, & Alan Varela: In a series of bribes and kickbacks from Balmore Hernandez, William Gilmartin, and Alan Varela, Nuru received a brand new tractor for his vacation ranch, free meals, and cash. Nuru also expected to receive a portion of the proceeds from anticipated City contracts awarded to them. In exchange, Nuru exercised his official authority and influence to benefit their City business ventures.
These are just examples of some of the bribes Nuru admitted in his plea agreement. Multiple other individuals paid Nuru in exchange for favorable official acts from him.
In addition to the sentence of imprisonment, United States District Judge William H. Orrick ordered a three year term of supervision of Nuru upon his release from prison. He also ordered the forfeiture to the United States of Nuru’s vacation ranch property in Stonyford, California. Nuru will surrender to begin serving his sentence on January 6, 2023.
This case is part of a larger federal investigation targeting public corruption in the City and County of San Francisco. To date, twelve individuals and multiple corporate entities have been charged, including another high-ranking San Francisco public official, the former San Francisco Public Utilities Commission General Manager Harlan Kelly. Charges against Harlan Kelly remain pending. Multiple city contractors and facilitators have also been charged.
The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office. The case was investigated by the FBI and IRS-CI.
Sexual Abuse Charges Against Former Federal Prison Warden Expanded to Include Two Additional Inmate VictimsRead the Press Release
OAKLAND – A federal grand jury issued an eight count superseding indictment today charging former federal prison warden Ray J. Garcia with seven counts of sexually abusive conduct against three female victims who were serving prison sentences and one count of making false statements to government agents, announced U.S. Attorney Stephanie M. Hinds, Department of Justice (DOJ), Office of the Inspector General (OIG) Los Angeles Field Office Special Agent in Charge Zachary Shroyer, and FBI Special Agent in Charge Sean Ragan.
At the time of the eight offenses, Garcia, 55, of Merced, California, was employed as the Associate Warden or as the Warden of the Federal Correctional Institute Dublin (FCI Dublin), an all-female low security federal correctional institution in Alameda County. Garcia was initially charged by a complaint filed on September 24, 2021, that alleged he committed one count of sexual abuse of a ward. A federal grand jury thereafter issued an indictment on November 2, 2021, charging Garcia with two counts of sexual abuse of a ward who was identified only as “Victim 1.” Victim 1 was described in the indictment as a female inmate serving a prison sentence at FCI Dublin.
Today, the federal grand jury issued a superseding indictment against Garcia, now charging him with three counts of sexual abuse of Victim 1 and one count of abusive sexual contact with Victim 1, all while she was a prisoner at FCI Dublin. These counts are alleged to have occurred from December 2019 to March 2020.
The superseding indictment further charges Garcia with sexual offenses against two additional females serving prison sentences at FCI Dublin. These females are identified only as “Victim 2” and “Victim 3.” The superseding indictment charges Garcia with two counts of abusive sexual contact with Victim 2, both acts occurring in the period from January to July 2021. The superseding indictment also charges Garcia with one count of abusive sexual contact with Victim 3. The abusive sexual contact is alleged to have occurred during the period from March to September 2020.
Lastly, the superseding indictment charges Garcia with one count of making false statements to a government agency on July 22, 2021. On that date, Garcia is alleged to have stated to a government agency that he had never asked inmates to be undressed for him at a specific time nor had he ever touched an inmate inappropriately. The charge alleges that Garcia knew these statements to be untrue because he had asked multiple inmates to undress for him at a specific time and had touched Victim 1, Victim 2, and Victim 3 in a sexual manner.
Garcia is out of custody and his initial appearance on the superseding indictment has not yet been scheduled. However, Garcia is set to begin a jury trial on the charges against him on November 21, 2022, in front of United States District Judge Yvonne Gonzalez Rogers.
The charges contained in the superseding indictment are mere allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Garcia is charged with three counts of sexual abuse of a ward in violation of 18 U.S.C. § 2243(b). If convicted, he faces a maximum period of imprisonment of 15 years for each count of conviction. Garcia is also charged with four counts of abusive sexual contact in violation of 18 U.S.C. § 2244(a)(4). If convicted, he faces a maximum period of imprisonment of 2 years for each count of conviction. Garcia is lastly charged with making false statements to a government agency in violation of 18 U.S.C. § 1001(a)(2). If convicted of this offense, he faces a maximum penalty of 8 years imprisonment. For each conviction of the above offenses, Garcia faces a maximum fine of $250,000. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by AUSAs Molly Priedeman and Andrew Paulson with the assistance of Leeya Kekona. The prosecution is the result of an investigation by the DOJ-OIG and the FBI.
Militia Group Member Sentenced to over Ten Years in Prison for Obstruction of Justice Conspiracy and Enticement of A Minor to Engage in Sexual ActivityRead the Press Release
Last of Four “Grizzly Scouts” Members Sentenced For Conspiring to Thwart Investigation into the Murder of a Federal Protective Security Officer and the Shooting of Another; Robert Blancas Also Sentenced For Enticing a 15-Year-Old Girl to Produce Child Pornography
SAN FRANCISCO – Robert Blancas, a member of the “Grizzly Scouts” militia group connected to the “boogaloo” movement, was sentenced today to 126 months in prison for obstructing justice and enticement of a minor to engage in sexual activity, announced United States Attorney Stephanie M. Hinds and FBI Special Agent in Charge Sean Ragan. The obstruction charge relates to the investigation of the murder of a federal Protective Security Officer (PSO) and the shooting of another PSO at the Oakland federal building on May 29, 2020. The enticement charge relates to the production of child pornography. The sentence was handed down by the Hon. Vince Chhabria, United States District Judge.
Blancas, 35, of the San Francisco Bay Area, was one of four members of the militia group indicted on March 23, 2021, in connection with their scheme to obstruct justice by destroying records related to the murder and shooting investigation. Today, Blancas was the last of the four defendants to be sentenced. Three other members of the group were previously sentenced on May 5, 2022 by the Hon. James Donato, United States District Judge: Jessie Rush, 29, of Turlock; Simon Ybarra, 23, of Los Gatos; and Kenny Miksch, 21, of San Lorenzo. Rush, Ybarra, and Miksch each remain in federal custody.
“Today’s 126 month sentence imposed on Blancas brings an end to another chapter in this tragic story,” said U.S. Attorney Hinds. “The sentence of Blancas arises from two separate, serious offenses: enticement of a minor to produce child pornography and the obstruction of the federal investigation into the May 29, 2020, assault on the Oakland federal courthouse. The shooting involved the murder of a Federal Protective Service officer and the wounding of a second officer. Rather than assist federal authorities, Blancas and his Grizzly Scouts co-conspirators destroyed important evidence in an effort to obstruct justice. Through the diligence of law enforcement, their cowardly efforts were not successful, and all four have been convicted of felonies and sentenced to custodial sentences. Destruction of evidence relevant to a federal investigation is a serious offense and will land you in jail.”
"Robert Blancas and his three co-defendants conspired to cover up the murder of a federal officer. Not only was Blancas convicted of obstruction of justice, he was also convicted of the heinous crime of enticing a juvenile to make child pornography," said FBI Special Agent in Charge Sean Ragan. "Either of these crimes on their own would have been very significant, high-priority cases for the FBI. The broad nature of his criminal offenses demonstrate that Robert Blancas was a threat to society. The combined sentence of greater than ten years in federal prison prevents him from continuing to harm our community."
According to their plea agreements entered into at the time of their guilty pleas, Blancas and his codefendants Rush, Ybarra, and Miksch formed an armed anti-government militia group in April 2020 named the “1st Detachment, 1st California Grizzly Scouts” (Grizzly Scouts). They had connected earlier via a Facebook group created in connection to the “boogaloo” movement. “Boogaloo” is a term, as noted in the indictment, used by some militia extremists to reference a purportedly impending politically-motivated civil war or uprising against the government. Blancas assumed the rank of “1st Lieutenant” with responsibilities for the group’s security and intelligence. Blancas and his codefendants acknowledged in their plea agreements that they engaged in armed, in person “training operations” in May 2020 with “operations orders” that labeled law enforcement as potential “enemy forces” and suggested using lethal force and taking prisoners. They also engaged in June 2020 discussions with other Grizzly Scouts about “boog” (boogaloo), waging war against the government, and tactics for killing law enforcement personnel, including police officers.
Blancas and his codefendants acknowledged in their plea agreements that they learned another Grizzly Scouts member was involved in the May 29, 2020 murder of a federal PSO and the attempted murder of another PSO in Oakland. The Grizzly Scouts member sent group communications via a WhatsApp group entitled “209 Goon HQ” during that alleged member’s subsequent attack on and shoot-out with Santa Cruz County Sheriff’s deputies in Ben Lomond, California on June 6, 2020. Blancas and his codefendants admitted to conspiring with other group members to destroy the records of their interactions and communications because they foresaw authorities would investigate and prosecute that Grizzly Scouts member, and admitted that they intended to impair the integrity and availability of the records for use in official proceedings. Blancas also destroyed files on Dropbox regarding the Grizzly Scouts that consisted of the group’s rank structure, a non-disclosure agreement requiring members to maintain confidentiality of group materials, a liability release waiver, descriptions of the Grizzly Scouts uniforms, and a scorecard assessing the skills of Grizzly Scouts members in combat, firearms, medical, and other training.
Before the indictment, Blancas was also charged in a separate complaint and information with the enticement of a minor to engage in sexual activity, that is, the production of child pornography. Blancas was arrested on December 1, 2020, and he has remained in federal custody since then. In entering his plea of guilty, Blancas admitted that from about April through September 2020 he enticed a 15-year old girl to repeatedly make and send him pornographic photographs and videos of herself. Blancas admitted that he received more than one hundred pornographic photographs and videos from the victim, all while exchanging thousands of messages with her and speaking to her by audio and video call. Blancas also admitted that he knew she was a minor when he did so. Blancas pleaded guilty to enticing a minor to engage in sexual activity, in violation of 18 U.S.C. § 2422(b).
Last year, Blancas also pleaded guilty in the obstruction case to three counts: one count of conspiracy to obstruct justice by destroying records in an official proceeding, in violation of 18 U.S.C. § 1512(k), and two counts of destroying records in official proceedings, in violation of 18 U.S.C. § 1512(c)(1).
In addition to the prison term, Judge Chhabria imposed a ten year term of supervised release on Blancas following incarceration.
The cases were prosecuted by Assistant U.S. Attorney Eric Cheng and former Assistant U.S. Attorney Frank Riebli from the Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District of California, with assistance from the National Security Division’s Counterterrorism Section. The prosecutions are the result of investigations by the Federal Bureau of Investigation.
East Bay Man Sentenced to More Than 5 Years for Sale of Fentanyl That Killed A Young WomanRead the Press Release
SAN FRANCISCO – Gage Pascoe was sentenced to 68 months in federal prison for distributing pills laced with fentanyl that caused a Walnut Creek woman’s overdose death, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration Special Agent in Charge Wade R. Shannon. The sentence was handed down by United States District Judge William Alsup.
Pascoe, 23, of Pittsburg, California, pleaded guilty on February 14, 2022, to the charge of distributing fentanyl. In his plea agreement, Pascoe admitted that on the night of June 16, 2020, a former high school classmate came to his house to buy oxycodone pills. He sold her thirteen M30 pills, which lab tests later showed were laced with deadly fentanyl. The next morning the victim was found dead in her bed, and the baggie containing the M30s that Pascoe sold to the victim was found in her bedroom. Pascoe agreed in his plea agreement that the victim ingested the M30s he sold her and as a result suffered an overdose of fentanyl.
The government filed a sentencing memorandum asserting that while Pascoe did not intentionally cause his high school classmate’s death, her death was the product of Pascoe’s reckless disregard for her safety. Pascoe told the victim he would buy the oxycodone pills from a street source he referred to as his “other connect.” The government pointed out that dealing in M30 oxycodone pills bought on the street is extremely dangerous. According to DEA, counterfeit M30 pills routinely contain fentanyl, and four out of every ten such pills contain a potentially lethal dose of fentanyl. A lethal dose can be miniscule, as little as two milligrams. Pascoe essentially “played Russian roulette,” the government asserted, but it was the victim who suffered the fatal consequences of Pascoe’s reckless, grossly negligent conduct.
In addition to the 68 month prison term, U.S. District Judge Alsup ordered Pascoe to serve five years of supervision following release from federal prison and to pay restitution to the family of the victim for funeral costs.
Assistant U.S. Attorneys Alexandra Shepard and Ross Weingarten prosecuted the case with the assistance of Andy Ding and Jasmine Sanders. The prosecution is the result of an investigation by DEA and the Walnut Creek Police Department.
One Pill Can Kill: Beware of pills bought on the street. Fentanyl, a Schedule II controlled substance, is a highly potent opiate that can be diluted with cutting agents to create counterfeit pills that purport to mimic the effects of Oxycodone, Percocet, and other drugs and can typically be obtained at a lower cost than the genuine drugs. However, very small variations in the amount or quality of fentanyl creates huge effects on the potency of the counterfeit pills and can easily have lethal consequences. Fentanyl has now become the leading cause of drug overdose deaths in the United States. Counterfeit, fentanyl-laced pills are commonly shaped and colored to resemble pills that are sold legitimately at pharmacies. For example, counterfeit pills known as M30s mimic Oxycodone and routinely contain fentanyl. These tablets are round and often light blue in color, though they come in many other colors, and have “M” and “30” imprinted on opposite sides of the pill.