Northern District of California
Press releases recorded for this federal judicial district.
Hoopa Valley Fentanyl Dealer Sentenced to Two Years in Federal PrisonRead the Press Release
SAN FRANCISCO – Warren Herman Sloan was sentenced to 24 months in federal prison for attempting to distribute, and possessing with the intent to distribute, fentanyl on the Hoopa Valley Tribe Indian Reservation, announced United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Sean Ragan, and Drug Enforcement Administration Special Agent in Charge Wade R. Shannon. The sentence was handed down by United States District Judge Susan Illston.
Sloan, 25, formerly of Hoopa Valley in Humboldt County, pleaded guilty to the charges on February 15, 2022. In his plea agreement, Sloan admitted that in early 2021 he engaged in distributing drugs for profit on the Hoopa Valley Indian Reservation. Sloan further admitted that on March 29, 2021, he attempted to meet with his drug supplier to obtain narcotics which he planned to resell for profit on the Hoopa reservation. He acknowledged in the plea agreement that he intended to purchase approximately 120 counterfeit pharmaceutical pills for $1,700. During that meeting, police officers arrived and arrested Sloan. Sloan stated in his plea agreement that he now knows the counterfeit pills he was purchasing contained fentanyl.
In a memorandum filed with the court for Sloan’s sentencing, the government pointed out additional facts relevant to the sentence Sloan should receive. Specifically, the government argued that two young women, one 19 years old and the other 20, tragically died from fentanyl overdoses in Hoopa Valley in the early months of 2021. The government pointed out that in his plea agreement Sloan admitted he was aware that on March 5, 2021 – two weeks before his arrest – the 19 year old woman, whom he knew from the reservation, died from a drug overdose and that he heard the overdose was caused by counterfeit pharmaceutical pills laced with fentanyl. Sloan nevertheless continued to sell – and was one of only a few sellers of – counterfeit pills in Hoopa Valley.
In addition to the 24-month prison term, U.S. District Judge Illston ordered Sloan to serve three years of supervised release following release from federal prison.
Assistant U.S. Attorney Ross E. Weingarten prosecuted the case. The prosecution is the result of an investigation by the FBI, DEA, and the Humboldt County Drug Task Force.
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 typically be obtained at a lower cost than the genuine drugs. However, very small variations in the amount or quality of fentanyl can have huge effects on the potency of the counterfeit pills, and with 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 contain fentanyl. These tablets are round and often light blue in color, though they come in many colors, and have “M” and “30” imprinted on opposite sides of the pill.
California Man Sentenced to 10 Years in Prison for Conspiracy to Receive and Distribute Child PornographyRead the Press Release
OAKLAND - Abel Garcia-DeLeon was sentenced to 10 years in prison for facilitating the distribution of child sex abuse materials in connection with serving as the administrator for several chatrooms designated for sharing illegal child exploitation materials, announced United States Attorney Stephanie M. Hinds and U.S. Homeland Security Investigations (HSI) San Francisco Special Agent in Charge Tatum King. The sentence was handed down by the Hon. Yvonne Gonzalez Rogers, U.S. District Court Judge.
Garcia-DeLeon pleaded guilty to the charge on June 9, 2022. According to the plea agreement, Garcia-DeLeon admitted that he agreed with another person to use the Kik social media application to receive and distribute images depicting minors engaged in sexually explicit conduct. Specifically, the plea agreement states that Garcia DeLeon, along with his co-defendant, administered a private chat group on Kik. The co-defendants organized a “Rage Bot” that instructed anyone intending to join the chat group to first send three videos depicting child pornography. Intended users were instructed to send the videos via private messenger to “verify” themselves. After the intended user delivered to the defendants the three videos, the person would be invited to enter a second private chat group. While in the second chat group, intended users would encounter another “Rage Bot” that instructed members to post videos depicting children aged ten or younger who were engaged in sexually explicit conduct. Intended users who did not post three videos within six minutes of being admitted to the group were removed from the group. Between May 8, 2020, and May 20, 2020, Garcia-DeLeon and his co-defendant were joined by at least ten other members of the chat group.
In his plea agreement, Garcia-DeLeon also admitted that he distributed to the chat group images of minors engaged in sexually explicit conduct. Further, Garcia-DeLeon acknowledged he administered several other chat groups dedicated to the exchange of child pornography. Garcia-DeLeon acknowledged that law enforcement officers searched his home on August 19, 2020, and that at that time, Garcia-DeLeon possessed on his phone at least 684 images and one video depicting minors engaged in sexually explicit conduct.
On February 9, 2021, a federal grand jury indicted Garcia-DeLeon charging him with conspiracy to receive and distribute child pornography, in violation of 18 U.S.C. §§ 2252(a)(2) and (b), and one count of distribution of child pornography, in violation of 18 U.S.C. § 2252(a)(2) and (b). Pursuant to his plea agreement, Garcia-DeLeon pleaded guilty to the conspiracy count and the substantive distribution count was dismissed at sentencing.
In addition to the prison term, Judge Gonzalez Rogers also sentenced Garcia-DeLeon to a 10-year period of supervised release that will commence after the prison term is concluded. The defendant was immediately remanded into custody.
Assistant U.S. Attorney Alexis James prosecuted the case with the assistance of Katie Turner and Kay Konopaske. The prosecution is the result of an investigation by Homeland Security Investigations and the Contra Costa District Attorney’s Office.
U.S. Government Seeks Information from Victims of Theranos FraudsRead the Press Release
SAN JOSE, CALIF. – The United States Attorney’s Office for the Northern District of California and law enforcement agencies have issued a call for information from victims of frauds perpetrated by Elizabeth Holmes and Ramesh Balwani in connection with their company, Theranos, Inc. The information is being sought in connection with the upcoming sentencings of Holmes and Balwani. Information obtained from victims may be presented to the Court for consideration in connection with the upcoming sentencing hearings of the two Theranos, Inc. officers.
On January 3, 2022, a jury in the Northern District of California returned a verdict finding Defendant Holmes guilty of conspiracy to commit wire fraud against Theranos investors, in violation of 18 U.S.C. § 1349, and three counts of wire fraud against Theranos investors, in violation of 18 U.S.C. § 1343.
On July 7, 2022, a separate jury in the Northern District of California returned a verdict finding Defendant Balwani guilty of conspiracy to commit wire fraud against Theranos investors, in violation of 18 U.S.C. § 1349, conspiracy to commit wire fraud against Theranos paying patients, in violation of 18 U.S.C. § 1349, six counts of wire fraud against Theranos investors, in violation of 18 U.S.C. § 1343, and four counts of wire fraud against Theranos paying patients, in violation of 18 U.S.C. § 1343.
Defendant Holmes is scheduled to be sentenced October 17, 2022. Defendant Balwani is scheduled to be sentenced November 15, 2022.
The United States Attorney’s Office for the Northern District of California and investigating agencies are seeking information from those who may be victims of the Defendants’ crimes.
Simultaneous with this release, the United States Attorney’s Office for the Northern District of California is distributing questionnaires, requesting information and statements about the impact of the frauds committed by the Defendants. The questionnaires are available online at the following website: https://www.justice.gov/usao-ndca/us-v-elizabeth-holmes-et-al. All responses are voluntary, but complete submissions will be useful in identifying respondents as potential victims and supplying the Court with the information necessary for sentencing. It is requested that respondents submit their statements via email as indicated on those questionnaires. Based on the information submitted, respondents may be contacted by law enforcement agencies and asked to provide additional information.
Both Defendants are currently free on bond pending sentencing. Defendants face a maximum sentence of twenty (20) years in prison, and a fine of $250,000, plus restitution, for each count of conviction. However, any sentence 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.
The announcement was made by United States Attorney Stephanie M. Hinds; Federal Bureau of Investigation (FBI) Special Agent in Charge Sean Ragan; 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.
Assistant U.S. Attorneys Robert S. Leach, Jeff Schenk, John C. Bostic, and Kelly Volkar are prosecuting the case with the assistance of Lakisha Holliman, Madeline Wachs, Sarah Slattery, Elise Etter, Susan Kreider, and Leeya Kekona. The prosecution is the result of an investigation by the FBI, USPIS, and FDA Office of Criminal Investigations.
Former HP Planning Manager Sentenced to Three Years in Prison in $5+ Million Wire Fraud SchemeRead the Press Release
OAKLAND – Shelbee Szeto was sentenced to 36 months in prison in connection with her scheme to defraud her former employer out of more than five million dollars, announced United States Attorney Stephanie M. Hinds and Internal Revenue Service Criminal Investigation Special Agent in Charge Mark H. Pearson. The sentence was handed down by Honorable Haywood S. Gilliam Jr., United States District Judge.
Szeto, 30, of Fremont, pleaded guilty on March 23, 2022, to wire fraud, money laundering, and related tax charges. According to the plea agreement, Szeto was employed by HP, Inc. (HP) as an executive assistant and finance planning manager from approximately August 2017 until June of 2021. In these roles, Szeto was responsible for making payments to HP vendors and was issued multiple HP commercial credits cards to make the payments on HP’s behalf. Rather than make payments in accordance with the company’s policies, Szeto devised a fraudulent scheme whereby she sent approximately $4.8 million in unauthorized payments from her HP commercial credit cards to several Square, PayPal, and Stripe merchant accounts under her control.
Court documents provide several details of the scheme. For example, court documents describe how, as part of her employment with HP, Szeto was issued multiple American Express commercial credit cards that were intended only for business expenses. Szeto then set up bogus merchant accounts with PayPal, Stripe, and Square that she maintained under her control, but represented were for legitimate vendors. Szeto then unlawfully sent payments from the credit cards to the bogus accounts. To further her plan, Szeto uploaded falsified invoices to HP’s internal system and falsely represented to HP that the payments were made to legitimate vendors. She also made false representations to Square that the payments sent from the credit cards were sent to HP’s approved vendors for legitimate business transactions and falsely represented to her bank that the money from HP was for legitimate business transactions. In total, Szeto caused at least $4.8 million to be fraudulently from HP accounts to accounts she controlled and attempted to steal an additional approximately $330,000 from HP.
On February 11, 2022, Szeto was charged by information with two counts of wire fraud, in violation of 18 U.S.C. § 1343; two counts of money laundering, in violation of 18 U.S.C. § 1957; and one count of filing a false tax return, in violation of 26 U.S.C. § 7206(1). Pursuant to her guilty plea, Szeto pleaded guilty to all five counts.
In addition to the prison term, Judge Gilliam ordered Szeto to serve 3 years of supervised release that will begin after the prison term is concluded. As a special condition of her supervised release, Szeto may not maintain a position of fiduciary capacity or manage a third party’s finances without the prior permission of her probation officer. Szeto was also ordered to forfeit certain luxury items purchased with the proceeds of her fraud. The items for forfeiture were derived from a list that includes the proceeds of a First Republic Bank account; a 2020 Tesla sedan; a 2021 Porsche sport utility vehicle; several bags and purses from Dior, Gucci, Hermes, and Chanel; and a collection of jewelry and timepieces including necklaces, rings, pendants, and watches from Rolex, Bulgari, Audemars Pignet, and Cartier. The list contains 161 line items—some lines of which include multiple items such as “7 necklaces with clover-shaped design,” “6 gold necklaces with pendants,” and “26 pairs of earrings.”
Assistant U.S. Attorney Molly Priedeman is prosecuting the case with the assistance of Leeya Kekona. The prosecution is the result of an investigation by the IRS-CI.
Mill Valley Man Pleads Guilty to Unlicensed Firearms Manufacturing and TraffickingRead the Press Release
SAN FRANCISCO – James William Palmer pleaded guilty in federal court today to the unlicensed manufacturing and dealing of firearms, announced United States Attorney Stephanie M. Hinds and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Patrick T. Gorman.
In a plea agreement he entered today, Palmer, 38, of Mill Valley, admitted that from May 2020 to January 2021 he engaged in the business of manufacturing and dealing in firearms. He acknowledged that he ran his business for profit and without a license, and he knew it was unlawful to do so. Palmer described that he manufactured firearms at his Mill Valley home, where he maintained an area in his garage for his firearms manufacturing and had on hand the tools, parts, and accessories necessary to do so. He also admitted he sold marijuana during this time period.
To run his firearm business, Palmer communicated with buyers and sellers of firearms via text messages in which he discussed the prices for firearms, the meeting places for transactions, and the amounts owed. In his plea agreement, he further detailed that he utilized a white board to write down customer names and numbers and the amounts owed or paid by the customers. As an example of one of his firearms sales, Palmer described a sale in October 2020 of a Glock 17 semi-automatic pistol to a customer for $780.
Palmer also described that on January 27, 2021 – the day of his arrest – he was driving his car and had ammunition in his pants pocket, a loaded Glock Model 26 .45 ACP caliber semi-automatic pistol in the car, and two loaded .45 caliber magazines in the center console. He had bought the Glock pistol for $900 at a gun show, paying a higher price to avoid paperwork and get the handgun immediately.
Palmer also admitted that on the day of his arrest he had in his garage multiple firearm receivers in various stages of handgun construction, privately made firearm (PMF, or “ghost gun”) jigs, and firearms parts and assorted ammunition, along with the tools necessary to manufacture firearms. He also had in his garage a Glock pistol frame with its serial number plate removed as well as magazines of standard and high capacity for multiple firearm calibers. Palmer admitted he also had a loaded P80 .45 caliber Glock-style semi-automatic handgun in the garage.
Palmer is next scheduled for a sentencing hearing before United States District Judge James Donato in San Francisco federal court on December 12, 2022. Palmer remains out of custody pending his sentencing hearing.
Palmer pleaded guilty to one count of unlicensed firearms manufacturing and dealing in violation of 18 U.S.C. § 922(a)(1)(A). The count carries a maximum of 5 years imprisonment and a $250,000 fine. However, any sentence following conviction that is imposed by the court will occur only after the court’s 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. Attorneys Ilham A. Hosseini and Alexis J. James prosecuted the case with the assistance of Maribel Gallegos. The prosecution is the result of an investigation by ATF and the Marin County Sheriff’s Office.
This case follows the U.S. Department of Justice’s launch in five key regions of Cross-Jurisdictional Firearms Trafficking Strike Forces that are focused on disrupting illegal firearms trafficking. One of the five Strike Forces was launched here in the San Francisco Greater Bay Area and Sacramento Region. The Strike Force identifies and investigates sources of illegally trafficked firearms and disrupts straw purchasing as well as firearms trafficking networks by collaborating in cross-jurisdictional efforts that include multiple federal agencies and multiple states and their local law enforcement agencies.
Federal Jury Finds Two San Francisco Residents Guilty for Respective Roles in Shootout Resulting in MurderRead the Press Release
SAN FRANCISCO – A federal jury handed down guilty verdicts in the cases against Robert Manning and Jamare Coats for their respective roles in the March 23, 2019, shootout at the Fillmore Heritage Center, announced United States Attorney Stephanie Hinds and Federal Bureau of Investigation, Special Agent in Charge Sean Regan. The verdicts follow a three- week trial before the Hon. William H. Alsup, United States District Judge.
At trial, the government submitted evidence that Manning, 28, and Coats, 26, both of San Francisco, were members of a street gang called Mac Block, prosecuted in this case as a racketeering enterprise under the Violent Crimes in Aid of Racketeering Activity (“VICAR”) statute. The gang operated in San Francisco’s Western Addition and its members engaged in racketeering activity, including murder, attempted murder, and robbery. The central issue at trial was the March 23, 2019, murder of a man in front of the Fillmore Heritage Center. The government demonstrated that on that day, Manning and Coats, each a felon at the time, possessed a firearm and ammunition that had traveled in interstate commerce. The government also demonstrated that Coats fired his pistol and committed murder in aid of racketeering activity, and that Manning aided and abetted the murder for an illegal gang-related purpose— i.e., maintaining and increasing their position in the Mac Block street gang. Coats and Manning provoked a deadly shootout which ultimately led to the firing of at least 24 shots on a crowed sidewalk in front of the Fillmore Heritage Center. Four innocent bystanders were struck by bullets, in addition to the shootout participant who died. One of the bystanders remains paralyzed from the bullet wound he received in the shootout.
On August 10, 2021, a federal grand jury handed down a second superseding indictment charging Manning and Coats with murder in aid of racketeering in aid in violation of 18 U.S.C. § 1959(a)(1) and being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g). Pursuant to the jury’s verdicts today, each defendant has been found guilty of both crimes.
Both defendants are in custody. Judge Alsup has scheduled a sentencing hearing for October 11, 2022. The defendants face a mandatory sentence of life in prison for the VICAR murder charge. For the felon in possession charge, the defendants each face a maximum statutory sentence of 10 years in prison, 3 years of supervised release, and a $250,000 fine. 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.
This case was prosecuted by the Organized Crime Strike Force section of the United States Attorney’s Office and was the result of an investigation by the Federal Bureau of Investigation and the San Francisco Police Department.
Oakland Resident Charged in Scheme to Distribute Drugs in the Tenderloin District of San FranciscoRead the Press Release
SAN FRANCISCO – The Office of the United States Attorney filed a federal criminal complaint charging Elio Hernandez-Zuniga with distributing methamphetamine and fentanyl in San Francisco’s Tenderloin District, announced U.S. Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon. Zuniga was arrested Thursday, August 4, 2022, and appeared August 10, 2022, at a detention hearing before U.S. Magistrate Judge Sallie Kim, who remanded him into federal custody pending further proceedings.
According to the criminal complaint, on May 26, 2022, Hernandez-Zuniga, 25, of Oakland, was riding back and forth on a scooter in the Tenderloin district when an undercover law enforcement officer approached Zuniga and offered to purchase $100 worth of methamphetamine. Zuniga agreed to the transaction, exchanged telephone numbers with the undercover officer, and gestured to a colleague to come where the transaction was occurring. The complaint alleges that Zuniga conversed in Spanish with the associate, received something from him, and eventually provided the undercover officer with 10 small packages of suspected methamphetamine.
In additional filings in the case, the government alleges that Hernandez-Zuniga commuted directly from Oakland to San Francisco and back approximately six days a week between around 9 a.m. and 5 p.m. to sell drugs. The complaint describes an additional four transactions that are alleged to have occurred during June and July of 2022. The first transaction, on June 7, 2022, allegedly occurred after an undercover officer contacted Hernandez-Zuniga by text message and offered to purchase $100 worth of methamphetamine and $100 worth of fentanyl. Hernandez-Zuniga agreed and arranged to meet in the Tenderloin. The officer and Hernandez-Zuniga met, but Hernandez-Zuniga provided $200 worth of suspected methamphetamine, but no fentanyl. An additional transaction occurred the next day when Hernandez-Zuniga agreed to, and actually did, provide the undercover officer with $100 worth of suspected fentanyl.
The next transaction allegedly occurred July 7, 2022. On that day, the undercover officer drove an unmarked police vehicle and parked at the corner of Post and Larkin Streets in the Tenderloin. Hernandez-Zuniga allegedly parked his scooter nearby, entered the unmarked car, and negotiated the sale of two bags of suspected fentanyl, weighing in total over 50 grams. Similarly, the complaint describes a transaction that allegedly occurred July 27, 2022, after which the undercover officer again drove an unmarked police vehicle and parked at the corner of Post and Larkin Streets. Again, Hernandez-Zuniga entered the car and this time negotiated the sale of over 57 gross grams of suspected methamphetamine for $800.
In connection with his August 4, 2022, arrest, law enforcement officers found 162.2 grams of suspected fentanyl, 180 grams of suspected methamphetamine, 120.7 grams of suspected cocaine base, and 35.3 grams of suspected heroin in Zuniga’s possession. In addition, officers found packaging materials, multiple digital scales, and over $2,000 in cash.
The criminal complaint charges Hernandez-Zuniga with possession with intent to distribute and distribution of 40 grams or more of a mixture or substance containing a detectable amount of fentanyl, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(B)(vi), and possession with intent to distribute and distribution of a mixture or substance containing a detectable amount of methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(C). For the fentanyl distribution charge, Hernandez-Zuniga faces a mandatory minimum five years in prison as well as a maximum 40 years of imprisonment and $5,000,000 fine. For the methamphetamine distribution charge, Hernandez-Zuniga faces a maximum 20 years of imprisonment and $1,000,000 fine. However, any sentence after 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.
Hernandez-Zuniga is next scheduled to appear on August 31, 2022, before Judge Kim, for a further detention hearing.
Assistant U.S. Attorney Kevin Yeh is prosecuting this case with assistance from Mimi Lam and Alycee Lane.
This case is the result of an investigation by the DEA with assistance from the San Francisco Police Department.
Fairfax Man Sentenced to More Than 15 Years in Prison for Distributing Child PornographyRead the Press Release
OAKLAND – Ryan Michael Kannett was sentenced to 188 months in prison for possessing and distributing child sex abuse material, announced United States Attorney Stephanie M. Hinds and Homeland Security Investigations Special Agent in Charge Tatum King. The sentence was handed down by the Honorable Haywood S. Gilliam, Jr., U.S. District Court Judge.
Kannett, 39, of Fairfax, pleaded guilty on March 16, 2022, to possessing child pornography and distributing child pornography. According to the plea agreement, Kannett admitted that between December 6, 2019, and December 9, 2019, he used the Kik messenger app to distribute several electronic files over the internet that contained both video and still images of sexually explicit material involving children. Kannett further admitted that he possessed over 600 images of child sex abuse material; the materials included images that portrayed sadistic or masochistic conduct, involved prepubescent minors, and depicted sexual abuse of infants and toddlers.
In addition, court documents established that Kannett used the handle “Sir Sicko,” among others, to engage online with an individual whom he believed to be interested in child pornography. The individual was, in fact, an undercover agent. Kannett provided the agent with several videos and images depicting sexual acts with minors and expressed a desire to rape and murder two women. Kannett told the undercover agent that he and the agent should do a practice run by raping and killing children, of any age, before killing the two targeted women. Law enforcement agents traced the IP addresses from which the electronic files were sent to Kannett’s residence in Fairfax. Agents executed a search warrant at that residence and recovered a tablet device that contained approximately 454 videos depicting child pornography, including videos depicting minors forced to engage in bestiality and bondage. One video was approximately 8 minutes long and showed an adult female sexually and physically abusing a girl who appeared to be between 2 and 5 years old.
On January 11, 2022, Kannett was charged by information with one count of possession of child pornography, in violation of 18 U.S.C. 2252(a)(4)(B) and (b)(2), and one count of distribution of child pornography, in violation of 18 U.S.C. 2252(a)(2) and (b). Pursuant to his guilty plea, Kannett pleaded guilty to both counts.
In addition to the prison term, Judge Gilliam ordered the defendant to serve 15 years of supervised release that will begin after the prison term is concluded. The defendant has been in custody since his arrest on December 17, 2019, and will begin serving his sentence immediately.
Assistant U.S. Attorney Alexis James is prosecuting the case with the assistance of Karina Ruiz and Maria Sunga. The prosecution was the result of an investigation by Homeland Security Investigations.
Former Twitter Employee Found Guilty of Acting as an Agent of a Foreign Government and Unlawfully Sharing Twitter User InformationRead the Press Release
Federal Jury Finds Former Twitter Middle East Media Partnerships Employee Guilty of Fraud, Conspiracy, Obstruction, and Foreign Agent Charges for Bribe Scheme to Access, Monitor, and Convey User Information on Behalf of the Kingdom of Saudi Arabia and its Royal Family
A federal jury yesterday convicted a former Media Partnerships Manager for the Middle East/North Africa (MENA) region at Twitter of acting as a foreign agent without notice to the Attorney General, conspiracy, wire fraud, international money laundering, and falsification of records in a federal investigation. The verdict follows a two-week trial before the Honorable Senior U.S. District Judge Edward M. Chen for the Northern District of California.
According to court documents and evidence presented at trial, Ahmad Abouammo, 44, formerly of Walnut Creek, California, and currently residing in Seattle, was employed at Twitter as Media Partnerships Manager for the MENA region. The evidence at trial demonstrated that Abouammo took bribes in exchange for accessing, monitoring, and conveying the private information of Twitter users to officials of the Kingdom of Saudi Arabia and the Saudi Royal family. In this position, Abouammo was responsible for protecting Twitter user information and owed Twitter his honest services. Twitter policies also required Abouammo to disclose violations of Twitter’s security policies and report gifts from those with business dealings with the company. When questioned about the accesses of Twitter user information and his receipt of bribes, Abouammo then lied to FBI investigators and falsified a document.
“Abouammo acted in secret as an agent of a foreign government targeting dissenting voices,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “This verdict shows that the Justice Department will not tolerate any act of transnational repression and will hold accountable those who aid hostile regimes in extending their reach to our shores.”
“The Northern District of California is home to many of the most innovative technology companies in the world,” said U.S. Attorney Stephanie M. Hinds for the Northern District of California. “One consequence of this good fortune is that companies in this district often collect and store vast amounts of data from customers and vendors. In this case, the government demonstrated, and the jury found, that Abouammo violated a sacred trust to keep private personal information from Twitter’s customers and sold private customer information to a foreign government. Abouammo’s decision to accept bribes in exchange for providing to a foreign government the protected information of customers could have untold damaging consequences. As this case demonstrates, we will not tolerate the misuse of personal information or attempts by foreign governments to recruit secret, malign agents at American technology companies. Where such misuse violates the federal law, offenders will be prosecuted.”
“Any attempts by foreign governments to hijack free speech – in social media or any form – will not be tolerated here in the United States. This case is proof of the FBI’s commitment to defend our constitutional right,” said Assistant Director Alan E. Kohler Jr. of the FBI’s Counterintelligence Division. “Authoritarian governments rely on transnational repression to shape the world in their favor and stifle dissent. We remain dedicated to protecting the United States from all threats foreign and domestic, which includes efforts by foreign governments to stalk, harass, or intimidate the people within our borders.”
“The FBI San Francisco division works tirelessly to prevent efforts by foreign governments to suppress fundamental human rights, including the free speech of dissenting voices on U.S. social media platforms,” said Special Agent in Charge Sean Ragan of the FBI’s San Francisco Field Office. “This verdict reaffirms the FBI's dedication to stopping transnational repression from any foreign government and sends a clear message that justice will be brought to those who threaten the freedoms of an open society.”
According to the evidence presented at trial, Abouammo began receiving bribes from an official of the Kingdom of Saudi Arabia as early as December 2014. The foreign official met with Abouammo in London and provided Abouammo with a luxury Hublot watch. Abouammo later acknowledged the value of the watch was $42,000 when he offered it for sale on Craigslist. After the meeting in London, Abouammo began repeatedly accessing private information about several Twitter accounts, at least one of which was an influential account who was critical of members of the Saudi Royal Family and the government of the Kingdom of Saudi Arabia. Abouammo also continued to communicate with the official of the Kingdom of Saudi Arabia, including regarding the influential critical account.
Evidence at trial further showed that after Abouammo traveled to Lebanon in February 2015. A bank account was opened in the name of his father in Lebanon and Abouammo obtained access to that bank account. The account then received $100,000 from the official of the Kingdom of Saudi Arabia and Abouammo laundered the money by sending it into the United States in small wire transfers with false descriptions. Abouammo left his job at Twitter in May 2021 and, shortly thereafter, received another $100,000 into the bank account in Lebanon accompanied by a note from the official apologizing for the delayed payment. Abouammo responded, in part, by asking whether the official wanted any additional information from Twitter.
In October 2018, FBI agents interviewed Abouammo at his residence about his involvement in the scheme with officials of the Kingdom of Saudi Arabia. Evidence at trial demonstrated that Abouammo provided false information to the FBI investigators and falsified an invoice for one of the payments he received from the foreign official.
Abouammo was arrested on Nov. 5, 2019. On July 28, 2020, a federal grand jury returned a superseding indictment charging him with acting as an agent of a foreign government without providing notice to the Attorney General; conspiracy to commit wire fraud and honest services fraud; six counts of honest services fraud and wire fraud; international money laundering; and falsification of records in a federal investigation. The jury acquitted Abouammo of five of the counts pertaining to wire fraud and honest services fraud. The jury returned a verdict of guilty on all the remaining counts.
Abouammo faces a maximum sentence of 10 years in prison for the charge of acting as an agent of a foreign government and 20 years in prison for each of the other counts. In addition, each count for which Abouammo was found guilty carries up to a $250,000 fine and additional periods of supervised release to follow the prison term. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. A sentencing hearing has not yet been scheduled.
Assistant U.S. Attorneys Colin Sampson and Eric Cheng for the Northern District of California and Trial Attorney Christine Bonomo of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case with the assistance of Beth Margen and Alycee Lane. The prosecution is the result of an investigation by the FBI.
Former Twitter Employee Found Guilty of Acting as an Agent of A Foreign Government and Unlawfully Sharing Twitter User InformationRead the Press Release
Federal Jury Finds Former Twitter Middle East Media Partnerships Employee Guilty of Fraud, Conspiracy, Obstruction, and Foreign Agent Charges for Bribe Scheme to Access, Monitor, and Convey User Information on Behalf of the Kingdom of Saudi Arabia and its Royal Family
SAN FRANCISCO – A federal jury today convicted a former Media Partnerships Manager for the Middle East/North Africa (MENA) region at Twitter, of acting as a foreign agent without notice to the Attorney General, conspiracy, wire fraud, international money laundering, and falsification of records in a federal investigation. The verdict follows a two-week trial before the Honorable Senior U.S. District Judge Edward M. Chen for the Northern District of California.
According to court documents and evidence presented at trial, Ahmad Abouammo, 44, formerly of Walnut Creek, California, and currently residing in Seattle, was employed at Twitter as Media Partnerships Manager for the MENA region. The evidence at trial demonstrated that Abouammo took bribes in exchange for accessing, monitoring, and conveying the private information of Twitter users to officials of the Kingdom of Saudi Arabia and the Saudi Royal family. In this position, Abouammo was responsible for protecting Twitter user information and owed Twitter his honest services. Twitter policies also required Abouammo to disclose violations of Twitter’s security policies and report gifts from those with business dealings with the company. When questioned about the accesses of Twitter user information and his receipt of bribes, Abouammo then lied to FBI investigators and falsified a document.
“The Northern District of California is home to many of the most innovative technology companies in the world,” said U.S. Attorney Stephanie M. Hinds for the Northern District of California. “One consequence of this good fortune is that companies in this district often collect and store vast amounts of data from customers and vendors. In this case, the government demonstrated, and the jury found, that Abouammo violated a sacred trust to keep private personal information from Twitter’s customers and sold private customer information to a foreign government. Abouammo’s decision to accept bribes in exchange for providing to a foreign government the protected information of customers could have untold damaging consequences. As this case demonstrates, we will not tolerate the misuse of personal information or attempts by foreign governments to recruit secret, malign agents at American technology companies. Where such misuse violates the federal law, offenders will be prosecuted.”
“Abouammo acted in secret as an agent of a foreign government targeting dissenting voices,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “This verdict shows that the Justice Department will not tolerate any act of transnational repression and will hold accountable those who aid hostile regimes in extending their reach to our shores.”
“Any attempts by foreign governments to hijack free speech – in social media or any form – will not be tolerated here in the United States. This case is proof of the FBI’s commitment to defend our constitutional right,” said Assistant Director Alan E. Kohler Jr. of the FBI’s Counterintelligence Division. “Authoritarian governments rely on transnational repression to shape the world in their favor and stifle dissent. We remain dedicated to protecting the United States from all threats foreign and domestic, which includes efforts by foreign governments to stalk, harass, or intimidate the people within our borders.”
“The FBI San Francisco division works tirelessly to prevent efforts by foreign governments to suppress fundamental human rights, including the free speech of dissenting voices on U.S. social media platforms,” said Special Agent in Charge Sean Ragan of the FBI’s San Francisco Field Office. “This verdict reaffirms the FBI's dedication to stopping transnational repression from any foreign government and sends a clear message that justice will be brought to those who threaten the freedoms of an open society.”
“The FBI San Francisco division works tirelessly to prevent efforts by foreign governments to suppress fundamental human rights, including the free speech of dissenting voices on U.S. social media platforms,” said Special Agent in Charge Sean Ragan. “This verdict reaffirms the FBI's dedication to stopping transnational repression from any foreign government and sends a clear message that justice will be brought to those who threaten the freedoms of an open society.”
According to the evidence presented at trial, Abouammo began receiving bribes from an official of the Kingdom of Saudi Arabia as early as December 2014. The foreign official met with Abouammo in London and provided Abouammo with a luxury Hublot watch. Abouammo later acknowledged the value of the watch was $42,000 when he offered it for sale on Craigslist. After the meeting in London, Abouammo began repeatedly accessing private information about several Twitter accounts, at least one of which was an influential account who was critical of members of the Saudi Royal Family and the government of the Kingdom of Saudi Arabia. Abouammo also continued to communicate with the official of the Kingdom of Saudi Arabia, including regarding the influential critical account.
Evidence at trial further showed that after Abouammo traveled to Lebanon in February 2015. A bank account was opened in the name of his father in Lebanon and Abouammo obtained access to that bank account. The account then received $100,000 from the official of the Kingdom of Saudi Arabia and Abouammo laundered the money by sending it into the United States in small wire transfers with false descriptions. Abouammo left his job at Twitter in May 2021 and, shortly thereafter, received another $100,000 into the bank account in Lebanon accompanied by a note from the official apologizing for the delayed payment. Abouammo responded, in part, by asking whether the official wanted any additional information from Twitter.
In October 2018, FBI agents interviewed Abouammo at his residence about his involvement in the scheme with officials of the Kingdom of Saudi Arabia. Evidence at trial demonstrated that Abouammo provided false information to the FBI investigators and falsified an invoice for one of the payments he received from the foreign official.
Abouammo was arrested on Nov. 5, 2019. On July 28, 2020, a federal grand jury returned a superseding indictment charging him with acting as an agent of a foreign government without providing notice to the Attorney General; conspiracy to commit wire fraud and honest services fraud; six counts of honest services fraud and wire fraud; international money laundering; and falsification of records in a federal investigation. The jury acquitted Abouammo of five of the counts pertaining to wire fraud and honest services fraud. The jury returned a verdict of guilty on all the remaining counts.
Abouammo faces a maximum sentence of 10 years in prison for the charge of acting as an agent of a foreign government and 20 years in prison for each of the other counts. In addition, each count for which Abouammo was found guilty carries up to a $250,000 fine and additional periods of supervised release to follow the prison term. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. A sentencing hearing has not yet been scheduled.
Assistant U.S. Attorneys Colin Sampson and Eric Cheng for the Northern District of California and Trial Attorney Christine Bonomo of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case with the assistance of Beth Margen and Alycee Lane. The prosecution is the result of an investigation by the FBI.
Alleged Russian Cryptocurrency Money Launderer Extradited to United StatesRead the Press Release
SAN FRANCISCO – The alleged operator of the illicit cryptocurrency exchange BTC-e was extradited yesterday from Greece to the United States to face charges in the Northern District of California.
“After more than five years of litigation, Russian national Alexander Vinnik was extradited to the United States yesterday to be held accountable for operating BTC-e, a criminal cryptocurrency exchange, which laundered more than $4 billion of criminal proceeds,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “This extradition demonstrates the Department’s commitment to investigating and dismantling illicit cyber activity and would not have been possible without the relentless work of the Justice Department’s Office of International Affairs. The Justice Department thanks the Government of Greece, particularly the Ministry of Justice, for all their efforts in securing the defendant’s transfer to the United States.”
Alexander Vinnik, 42, a Russian citizen, was charged in a 21-count superseding indictment in January 2017. Vinnik was taken into custody in Greece in July 2017 at the request of the United States. He made his initial appearance earlier today in federal court in San Francisco before U.S. Magistrate Judge Sallie Kim.
According to the indictment, Vinnik and his co-conspirators allegedly owned, operated, and administrated BTC-e, a significant cybercrime and online money laundering entity that allowed its users to trade in bitcoin with high levels of anonymity and developed a customer base heavily reliant on criminal activity.
The indictment alleges BTC-e facilitated transactions for cybercriminals worldwide and received criminal proceeds from numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings, and was used to facilitate crimes ranging from computer hacking, to fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. The investigation has revealed that BTC-e received more than $4 billion worth of bitcoin over the course of its operation.
Despite doing substantial business in the United States, the indictment alleges that BTC-e was not registered as a money services business with the U.S. Department of Treasury, had no anti-money laundering process, no system for appropriate “know your customer” or “KYC” verification, and no anti-money laundering program as required by federal law.
In 2017, FinCEN assessed a civil money penalty against BTC-e for willfully violating U.S. anti-money laundering (AML) laws and against Vinnik for his role in the violations. A civil matter to enforce civil monetary penalties, in the amount of $88,596,314 as to BTC-e and $12 million as to Vinnik, is pending in the Northern District of California.
The indictment charges BTC-e and Vinnik with one count of operation of an unlicensed money service business, and one count of conspiracy to commit money laundering. In addition, the indictment charges Vinnik with 17 counts of money laundering and two counts of engaging in unlawful monetary transactions.
The FBI, IRS Criminal Investigation (Oakland Field Office and Cyber Crime Unit, Washington, D.C.), Homeland Security Investigations, and U.S. Secret Service Criminal Investigative Division are investigating the case.
Assistant U.S. Attorney Claudia Quiroz of the U.S. Attorney’s Office for the Northern District of California and Trial Attorney C. Alden Pelker of the Justice Department’s Computer Crime and Intellectual Property Section are prosecuting the criminal case. The forefeiture action is being handled by David Countryman and related civil matters are being handled by Savith Iyengar.
The Justice Department’s National Cryptocurrency Enforcement Team provided substantial assistance. The extradition request was handled by the Justice Department’s Office of International Affairs.
The Justice Department thanks the Greek Ministry of Justice for its cooperation in securing the defendant’s transfer to the United States.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Man Indicted in Murder for Hire Scheme Arrested in BostonRead the Press Release
SAN FRANCISCO – Allen Gessen was arrested in Boston after a San Francisco federal grand jury indicted him for murder for hire, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Sean Ragan.
The indictment, filed July 26, 2022, against Gessen, 47, of Massachusetts, charges that from June 2 to July 26, 2022, he engaged in a murder for hire scheme targeting a person identified only as “P.C.” in the indictment. The indictment alleges the consideration offered for the murder was $50,000. The indictment further alleges that Gessen paid a gold coin as a down payment in the murder scheme on June 22, 2022, and the indictment seeks to forfeit that gold coin as well as $22,950.
Gessen made his initial federal court appearance July 28, 2022, in United States District Court in Boston.
The indictment charges one count of murder for hire in violation of 18 U.S.C. § 1958. The maximum statutory penalty for the charge is 10 years of imprisonment 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 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 the Corporate and Securities Fraud Section of the U.S. Attorney’s Office. The case is being investigated by the FBI.
Seven Defendants Plead Guilty to Fentanyl Trafficking-Based Charges in Oakland and San LeandroRead the Press Release
OAKLAND – Six East Bay residents and one Oregon resident pleaded guilty today to drug trafficking charges that led to the largest seizure of fentanyl in the Bay Area at that time, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Sean Ragan. The guilty pleas were accepted by the Hon. Yvonne Gonzalez Rogers, United States District Judge.
In connection with entering their guilty pleas, each defendant submitted to the court a written plea agreement. Javier Castro Banegas-Medina (Castro), 41; Elmer Rosales-Montes, 29; and Jose Ivan Cruz-Caceres, 32, admitted to engaging in a conspiracy to distribute fentanyl to numerous people who acted as re-distributors, selling the drugs to others. The defendants charged as re-distributors are Jihad Jad Tawasha, 35; William Joseph Laughren, 26; Heather Borges, 34; and Yeny Lizeth Fernandez-Reyes, 26.
Castro admitted in his plea agreement that in the spring of 2021 he led a drug trafficking organization. The organization was created to distribute large amounts of fentanyl in Oakland and San Leandro. Castro acknowledged that, as the leader of the organization, he conspired with others to distribute more than 10 kilograms (22 pounds) of fentanyl. The drug trafficking organization distributed fentanyl from two residences, one located in San Leandro and the other in Oakland were Castro lived with other members of his organization. Castro described in his plea agreement that he set up a price list based on the strength of the fentanyl, which involved dying fentanyl different colors such as blue, yellow, pink, purple, and green. Castro admitted that he and his co-members of drug trafficking organization sold well over 100 orders for fentanyl between approximately April 21, 2021, and May 19, 2021.
Two other defendants, Elmer Rosales-Montes and Jose Ivan Cruz-Caceres, pleaded guilty to conspiring to distribute fentanyl from April 21 to May 25, 2021. They admitted in their respective plea agreements that they lived at the Oakland residence with other members of the drug trafficking organization. They each admitted that the two residences were storage and distribution centers for the drugs and that their role was to act on the fentanyl orders that the organization received. Rosales-Montes and Cruz-Caceres delivered the drugs to customers by rendezvousing at a gas station or a car wash near the residences. At those locations, they would engage in hand-to-hand transactions of fentanyl with the buyers in exchange for cash.
The remaining four defendants admitted in their plea agreements to buying the fentanyl and pleaded guilty to purchasing it with the intent to re-distribute it. Yeny Lizeth Fernandez-Reyes admitted that she purchased fentanyl on multiple occasions with the intent to distribute it. For example, she admitted purchasing five ounces on April 21, 2021, and she admitted that a co-conspirator purchased 400 grams on May 10, 2021, of which at least 200 grams were hers for re-distribution. Jihad Jad Tawasha admitted that on April 26, 2021, he drove to the Oakland residence and bought seven ounces of fentanyl, then drove to Modesto where he intended to distribute it. He was arrested three days later with multiple ounces of fentanyl. Heather Rae Borges admitted that she bought fentanyl from the organization on multiple occasions, and that on May 6, 2021, in Oakland she bought 10 ounces of fentanyl which she intended to distribute. However, law enforcement officers conducted a traffic stop on her car and seized the drugs. William Joseph Laughren, Jr., admitted that on May 12, 2021, he bought 12.2 grams of fentanyl from the organization with intent to distribute it, but was arrested before he could do so.
Court documents describe additional circumstances of the arrests of several of the defendants. For example, both Elmer Rosales-Montes and Jose Ivan Cruz-Caceres admitted in their plea agreements that they each were arrested with others at the Oakland residence on May 25, 2021, when law enforcement investigators executed search warrants at both the Oakland and San Leandro residences; both defendants acknowledge in their plea agreements that during the searches the investigators recovered approximately 10 kg of fentanyl and hundreds of rounds of ammunition in multiple calibers that had been hidden in fenceposts surrounding the Oakland property. From both properties, the investigators seized a total of $31,400 in cash which was proceeds from the organization’s drug trafficking activities; and other equipment including dyes, scales, and blenders.
Castro, Rosales-Montes, Cruz-Caceres, and Fernandez-Reyes pleaded guilty to conspiracy to distribute more than 40 grams of fentanyl in violation of 21 U.S.C. §§ 846, 841(b)(1)(B)(vi). Borges pleaded guilty to possession with intent to distribute more than 40 grams of fentanyl in violation of 21 U.S.C. § 841(b)(1)(B)(vi). All five defendants face a maximum prison term of 40 years, with a mandatory minimum prison term of 5 years. Laughren and Tawasha pleaded guilty to possession with intent to distribute fentanyl, in violation of 21 U.S.C. § 841(a)(1) &(b)(1)(C). These two defendants face a maximum prison term of 20 years in prison.
In addition to the maximum statutory penalties for their crimes, the court may order each defendant to serve additional periods of supervised release and additional fines. However, any sentence will be imposed only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. Sentencing for Castro-Benegas, Rosales-Montes, Cruz-Caceres, and Fernandez-Reyes is set for October 27, 2022. Judge Gonzalez Rogers scheduled further status hearings for Tawasha, Laughren, and Borges on September 29, 2022.
Assistant U.S. Attorneys Benjamin Kleinman and Noah Stern are prosecuting the case with the assistance of Katie Turner, Kay Konopaske, Leeya Kekona and Karina Ruiz. The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Drug Enforcement Investigation, and the Alameda County Sheriff’s Office. This investigation and prosecution are under the auspices of the Organized Crime Drug Enforcement Task Force, 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.
Morgan Hill Man Sentenced to More Than 17 Years for Child Sexual Abuse OffensesRead the Press Release
SAN JOSE – Johnny Ray Wolfenbarger was sentenced today to 210 months in federal prison for the attempted production of child pornography, the attempted coercion and enticement of a minor to engage in child pornography production, and the receipt of child pornography, 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 Edward J. Davila.
“All children, wherever they are, must be protected from being preyed upon by a sexual predator,” said United States Attorney Stephanie M. Hinds. “Johnny Ray Wolfenbarger leveraged the extreme poverty and desperation of foreign families to perpetrate sexual abuse on their young children. His prison sentence reflects these vile acts and the immeasurable harm he caused to these children’s lives.”
“Child exploitation deprives children of their basic rights to safety and well-being. The physical and emotional trauma the defendant inflicted on child victims may alter their lives for years to come,” said FBI San Francisco Special Agent in Charge Sean Ragan. “Children deserve to be free from exploitation. It is of utmost importance to the FBI that children are made safe and that the creators of child pornography are caught and pay for their crimes.”
“CBP protects the public from many threats. The prosecution of child predators is only one aspect of our multi-faceted mission,” said CBP Acting Director of Field Operations Bruce Murley. “We will continue to work closely with our Federal and State law enforcement partners to ensure the safety of the most vulnerable in our society.”
Wolfenbarger, 65, of Morgan Hill, was convicted by a federal jury on August 12, 2021, of all child sexual abuse offenses charged against him. According to evidence presented at trial, the FBI initiated an investigation into Wolfenbarger after receiving a CyberTipline report from the National Center for Missing and Exploited Children (NCMEC) that Wolfenbarger received and distributed child pornography using his email account. In 2016, a federal magistrate judge issued a search warrant authorizing the FBI to examine the contents of the email account for child pornography. The FBI executed the warrant on the email account and discovered numerous images and videos of child pornography, chats detailing Wolfenbarger’s solicitation of livestreamed child sex abuse shows, and receipts for money transfers by Wolfenbarger to numerous sex traffickers the Philippines who were selling these shows. The chats demonstrated that Wolfenbarger customized these livestreamed sex shows by directing the children to engage in specific sex acts on camera.
Further trial evidence showed Wolfenbarger traveled to the Philippines throughout 2015 and early 2016. On August 2, 2016, he returned to the United States. Upon his arrival, an FBI Special Agent interviewed Wolfenbarger. Wolfenbarger admitted during the interview that the email account belonged to him. He further admitted that he solicited, paid for, and directed livestreamed child sex abuse shows from numerous women in the Philippines. Wolfenbarger directed the children in the shows to engage in sex acts by themselves, upon each other, and upon adults, and directed the use of bottles, vibrators, and other sex toys during these acts. He also directed adults in the show to engage in sex acts upon the children and to use the sex toys upon them. The children who were in these shows engaging in sex acts, Wolfenbarger admitted, were twelve years old and younger – including as young as four years old.
Wolfenbarger further described that he watched the livestreamed child sex abuse on his desktop and laptop computers at his home in California. Trial evidence showed that he paid for the live webcam sessions via Western Union and by using the tip function of the webcam service. Western Union records documented over $25,000 in money transfers from Wolfenbarger to individuals in the Philippines. On several occasions, Wolfenbarger sent money to the children or their guardians for living expenses and to purchase sex toys and web cams, with the explicit understanding that he would receive sex shows in return.
The government’s trial evidence included Wolfenbarger’s recorded statements, records of his chats, images and videos of child pornography attached to emails that Wolfenbarger received and sent, and Western Union records of money transfers sent by Wolfenbarger to pay for the livestreamed child sex abuse.
In a memo filed for sentencing, the government highlighted Wolfenbarger’s callousness towards the children. Online sexual exploitation of vulnerable children in the Philippines has greatly increased in recent years due to demand from pedophiles in wealthy Western nations, the government described. In this case, the government outlined how the extreme poverty of the young victims and their families provided extensive leverage to Wolfenbarger, who used his payments to induce the young victims and their families to create sex shows for him. Several sex chats feature victims’ requests for money to pay for food, overdue rent, school fees, and other necessities. As an example, in one chat a young victim asked Wolfenbarger for money to attend a school Christmas party with her cousin. Wolfenbarger wired her approximately $30 worth of Philippine Pesos, then added, “dad need a good show later my daughter.”
The federal jury convicted Wolfenbarger of all counts in the superseding indictment. The mandatory minimum and statutory maximum sentences for the crimes are as follows:
- for attempted production of child pornography in violation of Title 18, United States Code, Sections 2251(a) and (e): imprisonment for a minimum term of 15 years and a maximum term of 30 years; and a minimum term of supervised release of 5 years and a maximum of life;
- for attempted coercion and enticement of a minor to engage in the production of child pornography in violation of Title 18, United States Code, Section 2422(b): imprisonment for a minimum term of 10 years and a maximum term of life; and a minimum term of supervised release of 5 years and a maximum of life; and
- for the receipt of child pornography in violation of Title 18, United States Code, Section 2252(a)(2): imprisonment for a minimum term of 5 years and a maximum term of 20 years; and a minimum term of supervised release of 5 years and a maximum of life.
In addition to the 210 month prison term, Judge Davila sentenced Wolfenbarger to a 15 year term of supervision upon release from federal prison. The defendant was in custody at the hearing and begins serving his prison term immediately.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys' Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc.
Assistant United States Attorneys Marissa Harris and Maia Perez prosecuted the case, with the assistance of paralegal Mimi Lam and legal assistants Susan Kreider and Sahib Kaur. The prosecution is the result of an investigation by the Federal Bureau of Investigation and United States Customs and Border Protection.
Uber Enters Non-Prosecution Agreement Related to 2016 Data BreachRead the Press Release
SAN FRANCISCO – Uber Technologies, Inc., has entered a non-prosecution agreement with federal prosecutors to resolve a criminal investigation into the coverup of a significant data breach suffered by the company in 2016, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Sean Ragan.
As part of a non-prosecution agreement to resolve the investigation, Uber admitted to and accepted responsibility for the acts of its officers, directors, employees, and agents in concealing its 2016 data breach from the Federal Trade Commission (“FTC”), which at the time of the 2016 breach had a pending investigation into the company’s data security practices. The FTC’s investigation continued from 2015 into 2017, and its written questions to Uber required Uber to provide information about any unauthorized access to personal information.
In the agreement’s Statement of Facts, Uber admits that its personnel failed to report the November 2016 data breach to the FTC despite a pending FTC investigation into data security at the company. According to the agreed facts, the hackers responsible for the 2016 breach used stolen credentials to access a private source code repository and obtain a private access key. The hackers then used that key to access and copy large quantities of data associated with Uber’s users and drivers, including data pertaining to approximately 57 million user records with 600,000 drivers’ license numbers. The breach was not reported to the FTC until approximately a year later, when new executive leadership was managing the company. Upon learning of the 2016 data breach, the new leadership team investigated the breach and disclosed it to affected drivers, to the public, to law enforcement, and to foreign and domestic regulators, including state attorneys general and the FTC.
The agreement filed today acknowledges several factors that support the resolution of the criminal investigation by a non-prosecution agreement. First, the agreement notes a change of executive management in late 2017 and the new leadership team’s prompt investigation of the 2016 breach and its disclosure to the public, FTC, law enforcement, and foreign and domestic regulators, and state attorneys general. Second, the agreement notes the company has invested substantial resources to significantly restructure and enhance the company’s compliance, legal, and security functions.
Third, the agreement further describes that in October 2018, after disclosing the 2016 data breach, Uber entered an agreement with the FTC under which Uber agreed to maintain a comprehensive privacy program for 20 years and to report to the FTC any incident reported to other government agencies relating to unauthorized intrusion into individuals’ consumer information. Fourth, the agreement cites Uber’s full cooperation with the government investigation of this matter, including the ongoing criminal case against Uber’s former chief security officer for his alleged attempt to cover-up the 2016 breach. However, the charges in that case are merely allegations, and the defendant in that case, as in all criminal cases, is presumed innocent until proven guilty beyond a reasonable doubt.
Finally, the agreement also notes that Uber settled civil litigation with the attorneys general for all 50 States and the District of Columbia related to the 2016 data breach, paying $148 million and agreeing to implement a corporate integrity program, specific data security safeguards, and incident response and data breach notification plans, along with biennial assessments.
Link to non-prosecution agreement here.
The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office. The case is being investigated by the FBI. The U.S. Attorney’s Office acknowledges the assistance of the FTC.
Two Airline Passengers Indicted for Interfering with Crew and Attendant on Flight to New DelhiRead the Press Release
SAN FRANCISCO – An indictment unsealed in federal court today charges David Singh Bhinder and Nitesh Babbar with interfering with a flight crew member and a flight attendant during a flight, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Sean Ragan.
According to the indictment, Bhinder, 44, and Babbar, 32, both of Southern California, were passengers onboard United Airline Flight 867 on October 19, 2021, departing from San Francisco enroute to New Delhi, India. The indictment alleges the two attempted to interfere with and intimidate a flight crew member and a flight attendant during the performance of their duties. The indictment describes that Bhinder and Babbar were disruptive and unruly, threatened to assault a flight crew member and flight attendant, and refused to comply with directions.
Bhinder and Babbar appeared today in federal court before United States Magistrate Judge Alex Tse to face the indictment. Their next appearance is scheduled for August 10 before United States District Judge Charles R. Breyer. Both Bhinder and Babbar remain out of custody.
Bhinder and Babbar have been charged together in one count of interference and attempted interference with the performance of duties of a flight crew member and flight attendant on an aircraft in violation of Title 49, United States Code, Section 46504. The charge carries maximum possible penalties of 20 years in prison and a $250,000 fine. However, any sentence following conviction would be 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.
Charges contained in a criminal indictment are merely allegations. As in any criminal case, the defendants are presumed innocent unless and until proven guilty in a court of law.
The case is being prosecuted by the General Crimes 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.
Uber Commits to Changes and Pays Millions to Resolve Justice Department Lawsuit for Overcharging People with DisabilitiesRead the Press Release
SAN FRANCISCO – The Department of Justice filed in court today a multi-million-dollar settlement agreement with Uber Technologies Inc. (Uber) to resolve a lawsuit alleging that Uber violated the Americans with Disabilities Act (ADA). Under the agreement, Uber will offer several million dollars in compensation to more than 65,000 Uber users who were charged discriminatory fees due to disability.
In November 2021, the department filed a lawsuit alleging that Uber violated Title III of the ADA, which prohibits discrimination by private transportation companies like Uber. According to the complaint, in April 2016, Uber began charging passengers wait time fees in a number of cities, eventually expanding the policy nationwide. The wait time fees started two minutes after the Uber car arrived at the pickup location and were charged until the car began its trip. The department’s complaint alleged that Uber violated the ADA by failing to reasonably modify its wait time fee policy for passengers who, because of disability, needed more than two minutes to get in an Uber car. Passengers with disabilities may need additional time to enter a car for various reasons. A passenger may, for example, use a wheelchair or walker that needs to be broken down and stored in the car. Or a passenger who is blind may need additional time to safely walk from the pickup location to the car itself. The department’s lawsuit alleged that, even when Uber was aware that passengers’ need for additional time was clearly disability-based, Uber started charging a wait time fee at the two-minute mark.
Under the two-year agreement, Uber has committed to waive wait time fees for all Uber riders who certify that they (or someone they frequently travel with) need more time to get in an Uber car because of a disability. Uber also will ensure that refunds are easily available for anyone who does not have a waiver and is charged a wait time fee because of disability. Uber will advertise the wait time fee waiver program and train its customer service representatives on the waiver program and refund process to ensure that people with disabilities are not charged illegal fees.
Additionally, Uber will credit the accounts of more than 65,000 eligible riders who signed up for the waiver program for double the amount of wait time fees they were ever charged, which could amount to potentially hundreds of thousands or millions of dollars in compensation. Uber will also pay $1,738,500 to more than one thousand riders who complained to Uber about being charged wait time fees because of disability, and $500,000 to other harmed individuals identified by the department.“Ensuring equal access to transportation for those with disabilities is an important goal of the ADA,” said U.S. Attorney Stephanie M. Hinds of the Northern District of California. “People with disabilities must have access to ridesharing services provided by Uber and similar companies without enduring discriminatory wait time fees. This agreement removes that barrier to equal access for passengers with disabilities and provides a mechanism to compensate those harmed by Uber’s past wait time fee policy.”
“People with disabilities should not be made to feel like second-class citizens or punished because of their disability, which is exactly what Uber’s wait time fee policy did,” said Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division. “This agreement sends a strong message that Uber and other ridesharing companies will be held accountable if their services discriminate against people with disabilities. The Civil Rights Division remains committed to enforcing the ADA and ensuring that people with disabilities can travel free from barriers and indignities.”
This matter was handled jointly by Assistant U.S. Attorney David DeVito for the Northern District of California and the Civil Rights Division’s Disability Rights Section. A copy of the settlement agreement is on NDCA Pacer and posted on our website with this press release.
For more information on the Civil Rights Division, please visit http://www.justice.gov/crt. For more information on the ADA, please call the department’s toll-free ADA information line at 800-514-0301 (TDD 800-514-0383) or visit www.ada.gov. ADA complaints may be filed online at http://www.ada.gov/complaint.
Second Man Pleads Guilty in Marijuana Grow Burglary That Sparked A Gun BattleRead the Press Release
SAN FRANCISCO – Joevonne Ralls pleaded guilty today in federal court to attempted possession of marijuana plants with the intent to sell them, announced United States Attorney Stephanie M. Hinds, Bureau of Alcohol, Tobacco, Firearms, and Explosives Special Agent in Charge Patrick Gorman, and United States Marshal Service Acting United States Marshal Mark Kolc.
Ralls, 25, a resident of Oakland, entered a plea agreement as part of his guilty plea today that described his attempted theft of marijuana plants from a warehouse grow in Richmond during the late evening of August 1 and early morning hours of August 2, 2017. Ralls admitted in the plea agreement that he and two others broke into a Richmond warehouse containing a large marijuana grow. They cut down 200 marijuana plants and stuffed the plants into trash bags, intending to sell the plants later. As the three carried the bags outside to a waiting vehicle, a car pulled up on the street outside of the warehouse’s gate. Its occupants began shooting at them. Ralls described in his plea agreement that he was shot in the ankle and ran back into the warehouse’s garage. He admitted that one of his associates fired shots from the garage back towards the street. Ralls described in his plea agreement that he then drove away in a black Honda with an associate, and Richmond police officers pursued them. Ralls admitted that he eventually crashed the Honda in Albany after striking a curb at a high speed, and he was arrested at the crash scene. According to the plea agreement, officers opened the Honda’s trunk and found a black trash bag full of stolen marijuana plants.
On May 12, 2022, Vernell Thrower, who was a co-defendant of Ralls in this case, also admitted to participating in the attempted marijuana theft and to firing two shots from the warehouse’s garage during the shootout. Thrower was sentenced to 80 months in federal prison.
Ralls is now scheduled for a sentencing hearing before United States District Judge Charles R. Breyer in San Francisco federal court on October 19, 2022. Ralls remains out of custody pending his sentencing hearing.
Ralls pleaded guilty to one count of attempted possession of marijuana with the intent to distribute it in violation of 21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(C). He faces maximum statutory penalties of 20 years imprisonment, a life term of supervised release, and a $1,000,000 fine. However, any sentence following a conviction is 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.
Daniel Pastor is the Assistant U.S. Attorney prosecuting the case with the assistance of Andy Ding and Helen Yee. The prosecution is the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the United States Marshals Service, with the assistance of the Oakland Police Department, Richmond Police Department, and the San Francisco Police Department.
East Bay Mail Bomber Sentenced to 40 YearsRead the Press Release
SAN FRANCISCO – Ross Gordon Laverty, convicted of multiple felonies for mailing two improvised explosive devices with the intent to injure or kill his targets, was sentenced today to 40 years (480 months) in federal prison, announced United States Attorney Stephanie M. Hinds and U.S. Postal Inspection Service San Francisco Division Acting Inspector-In-Charge Kevin Rho. United States District Judge William H. Orrick handed down the sentence.
A federal jury convicted Laverty, 61, of Oakland, on October 14, 2020, of mailing explosive devices through the U.S. mail on two occasions with the intent to kill or injure the addressees. An explosives expert testified at trial that the improvised explosive devices (IEDs) were victim-activated devices “intended to go off when the victim causes it to go off” by opening the package. Both IEDs contained a nickel coin epoxied to the end of a pipe that was designed to shoot “off like a projectile” in a manner “just like a bullet would out of a gun,” thereby injuring or killing the victims “pretty easily.”
Revenge motivated Laverty’s mailings. Trial evidence established that he sent the first package to retaliate against a corrections officer who strip-searched Laverty while he was incarcerated at a San Mateo county jail in April of 2014. Evidence showed Laverty sent the second package as retribution against an Alameda Police Department officer involved in a probation search of Laverty’s residence in October of 2013. The officer found contraband during that search and arrested Laverty.
Laverty missed his intended targets and injured others instead. Trial evidence showed that Laverty mailed the first package to the wrong person, directing it to an East Palo Alto man employed as a Whole Foods grocery store clerk who happened to share the same name as Laverty’s intended victim, the San Mateo corrections officer. The package arrived via U.S. mail at the victim’s residence. Its return address listed a purported jewelry store in Palo Alto. On October 19, 2017, the victim opened the package while he was in his backyard. The package detonated with a loud blast. The nickel epoxied to the end of the device’s copper pipe shot off, blowing a hole in the backyard fence and ultimately landing in a neighbor’s yard. The victim was left injured and in shock, with bleeding hands and blisters on his stomach. To this day the victim suffers ringing in his ears, cramping in his hands, and trouble concentrating.
The intended target of Laverty’s second mail bomb was the Alameda police officer who had arrested Laverty. On November 24, 2017, the officer’s wife returned home to find a U.S. postman had delivered a package addressed to her husband. The package listed a return address for a non-existent jewelry store in Berkeley. As the wife began to open the package, she saw wires inside. She quickly threw it. The package exploded, filling the house with smoke and debris. The victim’s head was injured, and an ambulance rushed her to a hospital where she was admitted. Three years later, the victim testified at trial that she still experiences head pains and ringing in her ears.
A grand jury returned a superseding indictment against Laverty on May 21, 2019, charging him with two counts of mailing an explosive devise with the intent to injure or kill, in violation of 18 U.S.C. § 1716(a) and (j)(2); two counts of possession of an unregistered firearm (explosive device), in violation of 26 U.S.C. § 5861(d); and two counts of using an explosive during the commission of a felony, in violation of 18 U.S.C. § 844(h)(1) and (2).
A federal jury found Laverty guilty on all counts following his October 2020 trial.
“My heart goes out to the innocent victims of these horrific acts,” said United States Attorney Stephanie M. Hinds. “Ross Laverty not only injured the victims, he put mail carriers and handlers and numerous others at risk of serious injury and death. The public must be protected from such reckless, violent crimes. I thank our law enforcement partners, both federal and local, who worked long and hard to solve and prosecute these crimes.”
“This desperate and shocking attack on our partners in law enforcement did real harm to customers of the U.S. Postal Service,” said Acting Inspector-in-Charge Kevin Rho of the U.S. Postal Inspection Service, San Francisco Division. “Today’s sentence demonstrates our unity of purpose in protecting the public from dangerous items in the mail. I want to thank ATF, FBI, the San Mateo County Crime Laboratory, Verdugo Regional Crime Laboratory, San Mateo County Sheriff’s Office, East Palo Alto Police Department, Alameda Police Department, Alameda County Sheriff’s Department, and Oakland Police Department for their invaluable teamwork in bringing this criminal to justice.”
In addition to the 40 year sentence, United States District Judge Orrick imposed a three year term of supervision following Laverty’s release from prison and ordered that he pay restitution to his victims. Laverty was in custody at sentencing and begins serving his sentence immediately.
Assistant U.S. Attorney Barbara J. Valliere and former Assistant U.S. Attorney Elise LaPunzina of the Special Prosecutions Section of the United States Attorney’s Office prosecuted the case, with the assistance of Helen Yee. The prosecution is the result of an investigation by the U.S. Postal Inspection Service with assistance from the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the East Palo Alto Police Department, the San Mateo County Sheriff’s Department, Alameda Police Department, Oakland Police Department, Alameda County Sheriff’s Department, and the San Mateo County Crime Laboratory and Verdugo Regional Crime Laboratory.
U.S. Attorney’s Office Reaches Settlement with Tattoo Studio for Alleged HIV DiscriminationRead the Press Release
SAN JOSE—The U.S. Attorney’s Office for the Northern District of California announced today that the United States has resolved a claim that Luna Tattoo Studio discriminated against a person with HIV in violation of the Americans with Disabilities Act (ADA).
Luna is a tattoo studio located in San Jose, California. The Department of Justice received a complaint from a prospective customer who is HIV-positive. The Complainant alleged that she was refused service by a tattoo artist who worked at Luna.
Title III of the ADA prohibits public accommodations, such as tattoo parlors, from excluding people with disabilities, including people with HIV, from enjoying the services they provide. In this case, the settlement agreement includes key findings from the Department of Justice’s investigation of the Complainant’s allegations. Specifically, the Department of Justice found that in August of 2020, the Complainant made an appointment to receive a tattoo at Luna. After informing the tattoo artist at Luna of her HIV-positive status, the prospective customer first was told that the artist would need to speak with the owner about the situation, and later, that the appointment was cancelled altogether. In refusing to provide service, the tattoo artist told the Complainant that the possibility of the tattoo artist performing tattoo services on Complainant made other artists at Luna Tattoo “very uncomfortable.”
To resolve the complaint, Luna agreed to pay $7,000 in compensatory damages to the victim. Luna also agreed, among other things, to develop a non-discrimination policy and to provide training to its employees for a two-year period.
The United States recognizes Luna’s cooperation in reaching this resolution.
For more information regarding the Department of Justice’s efforts to combat HIV discrimination, please visit https://www.ada.gov/hiv/ada_hiv_discrimination.htm.
Assistant U.S. Attorney David DeVito handled the matter for the government, with assistance from Lillian Do.
Attorney General Merrick B. Garland Honors Two Northern District of California Department of Justice Employees as Part of 69th Annual Attorney General’s AwardsRead the Press Release
SAN FRANCISCO –Attorney General Merrick B. Garland announced the recipients for the 69th Annual Attorney General’s Awards, recognizing Department of Justice employees and partners for extraordinary contributions to the enforcement of our nation’s laws. This year, 298 Justice Department employees received awards, while 54 non-department individuals are also being honored for their work.
“This year’s awardees have served selflessly to further the Department’s important work upholding the rule of law, keeping our country safe, and protecting civil rights,” said Attorney General Merrick B. Garland. “I am proud to recognize these individuals for their professionalism, skill, and leadership, and I am grateful for their service to our Department and our nation.”
Recipients of the 69th Annual Attorney General’s Awards include Assistant U.S. Attorney Ben S. Kingsley and Paralegal Specialist Jonathan Birch, both of whom are employed with the U.S. Attorney’s Office for the Northern District of California. Kingsley and Birch received the Attorney General’s Award for Fraud Prevention, an award to recognize exceptional dedication and effort to prevent, investigate, and prosecute fraud, white-collar crimes, and official corruption.
The Attorney General awarded two Fraud Prevention Awards this year. Along with Kingsley and Birch, recipients of the first Award for Fraud Prevention included Assistant U.S. Attorneys Abraham C. Meltzer, Alexander B. Schwab, and Carolyn S. Small; Paralegal Specialist Yeni Gomez for the Central District of California; Assistant U.S. Attorney Daniel Ryan for the Western District of North Carolina; Trial Attorney Alexander T. Pogozelski, Civil Frauds Section, Civil Division; Postal Inspector Megan Bradley, U.S. Postal Inspection Service, U.S. Postal Service; Special Agent Paul Richard, Office Inspector General, Federal Housing Finance Agency; Special Agent Ryan Wat Office of Inspector General, Consumer Financial Protection Bureau; Special Agents Armando Delgado-Campos and Albert Fontana, FBI; and Special Agent Kelvin Zwiefelhofer, Office of Inspector General, Federal Deposit Insurance Corporation.
The second Award for Fraud Prevention was presented to Assistant U.S. Attorney Francis D. Murray for the Middle District of Florida; Special Agents Kristy L. Anderson, Alvis A. Lockhart, and Yenixa Perez, Tampa Field Office, Homeland Security Investigations, U.S. Immigration and Customs Enforcement; and Task Force Officer Ryan P. Doherty, Tampa Field Office, U.S. Citizenship and Immigration Services, U.S. Department of Homeland Security.
U.S. Attorney Stephanie M. Hinds said, “It is always special to see the great work of the employees of this district recognized by the Attorney General of the United States. I am gratified to see the talent and hard-work of these employees acknowledged.”
Former Chief of Cardiology at Palo Alto Va Hospital Sentenced to Prison for Sexual Battery of Subordinate DoctorRead the Press Release
SAN JOSE – Cardiologist John Giacomini was sentenced today to eight months in prison in connection with his conviction for felony abusive sexual contact, announced United States Attorney Stephanie M. Hinds; Veterans Affairs Office of Inspector General (VA OIG) Special Agent in Charge Jason Root; and Chief of Police of the Veterans Affairs Police Service Martin Sizemore. The sentence was handed down by the Honorable Beth L. Freeman, United States District Judge.
Giacomini, 73, of Atherton, pleaded guilty to the charge on March 2, 2022. Giacomini practiced medicine and cardiology for over 30 years and from 1985 until 2018 he was the Chief of the Cardiology Section at the VA Hospital in Palo Alto, Calif. According to his plea agreement, Giacomini admitted that beginning in the fall of 2017, he repeatedly subjected a subordinate doctor to unwanted and unwelcome sexual contact, to include hugging, kissing, and intimate touching while on VA premises. On November 10, 2017, the victim told Giacomini she was not interested in a romantic or sexual relationship with him. She also forcibly resisted his repeated attempts to kiss her on the mouth. Nevertheless, Giacomini continued to subject his subordinate to unwanted sexual advances and touching, culminating on December 20, 2017, when Giacomini aggressively groped her breasts, buttocks, and vagina during a meeting in her office. The victim later resigned from her position at the VA, citing Giacomini’s behavior as her principal reason for leaving.
At today’s sentencing, the victim spoke about the harm she suffered from Giacomini’s sexual harassment and abuse. “I felt overwhelming disappointment that my chief and former mentor who I trusted would abuse his position like that. During that period at the VA, I felt a myriad of emotions, from fear to helplessness to disgust to anger and finally sadness.” She also testified regarding her desire to prevent other female doctors from suffering her fate. “The primary reason I reported these events was to help prevent this from happening to anyone else again, especially women fellows in the field of cardiology.”
During the sentencing hearing, Judge Freeman cited the egregiousness of Giacomini’s conduct, the victim’s courage in coming forward, and the pervasiveness of workplace sexual assault as compelling factors justifying imposition of a prison sentence as opposed to a lesser sentence of probation or home detention.
"For those willing and able to share their stories of abuse, the Office of the U.S. Attorney is here to listen," said U.S. Attorney Hinds. "And where the law and evidence permit, we will act. Dedicated public servants are the government's most precious resource. It is our obligation, and our honor, to protect them from harassment and abuse in their federal workplaces and to seek justice on their behalf."
A federal grand jury indicted Giacomini on March 12, 2020, charging him with one count of abusive sexual contact, in violation of 18 U.S.C. § 2244(b). Three days before his trial was set to begin, Giacomini pleaded guilty to the felony charge.
In addition to the prison term, Judge Freeman also ordered Giacomini to serve one year of supervised release, pay a fine of $15,000, and pay mandatory special assessment fees.
Assistant U.S. Attorneys Marissa Harris and Jeffrey Nedrow are prosecuting the case with the assistance of Nina Burney-Williams, Sahib Kaur, and Susan Kreider. The prosecution is the result of an investigation by the U.S. Department of Veterans Affairs Office of the Inspector General and the Veterans Affairs Police Service.
Theranos Chief Operating Officer Ramesh “Sunny” Balwani Found Guilty of Conspiracy, Wire FraudRead the Press Release
SAN JOSE - A federal jury found Ramesh “Sunny” Balwani guilty of two counts of conspiracy and ten counts of wire fraud though a multi-million-dollar scheme to defraud investors and patients in connection with the operations of Theranos, Inc., announced United States Attorney Stephanie M. Hinds; Federal Bureau of Investigation (FBI) Special Agent in Charge Sean Ragan; 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 verdicts follow a trial that began March 9, 2022, before the Honorable Edward J. Davila, United States District Judge, and concluded just over 6 months after a jury found Elizabeth A. Holmes guilty of one count of conspiracy and three counts of wire fraud in related proceedings.
“Six months after the guilty verdicts in the Elizabeth Holmes trial, this jury has concluded that Holmes’s business partner, Ramesh Balwani, also bears responsibility for defrauding investors in Theranos,” said U.S. Attorney Hinds. "The jury concluded that Balwani also perpetrated fraud on unsuspecting patients. I want to thank the jury for dutifully navigating through the complex issues presented by this case. In this trial, it took four months for the parties to present their evidence and argument, all the while wading through the additional challenges presented by the Coronavirus pandemic. We are gratified by the jury’s hard work and attentiveness to the evidence presented. We appreciate the verdict and look forward to sentencing proceedings.”
“Once again, a jury has determined that the fraud at Theranos reached the level of a criminal conspiracy," said FBI Special Agent in Charge Sean Ragan. "The FBI has spent years investigating this investment fraud scheme with our partners at USPIS and the FDA Office of Criminal Investigations. Lies, deceit, and criminal actions cannot replace innovation and success.”
“Medical product fraud jeopardizes patient health,” said FDA Assistant Commissioner for Criminal Investigations Catherine A Hermsen. “This defendant joins his partner in being found guilty of fraud related to diagnostic tests. The FDA will vigilantly investigate and bring to justice individuals and companies responsible for putting the public health at risk.”
USPIS Acting Inspector-in-Charge Rho said “I want to thank the FBI, the FDA-Office of Criminal Investigations, and the U.S. Attorney’s Office for the Northern District of California for the extraordinary teamwork supporting this verdict. Postal Inspectors have been investigating snake oil and investment fraud schemes for more than a hundred years, and we remain committed to uncovering criminal frauds with these partners.”
Balwani, 57, of Atherton, was employed at Theranos from September of 2009 through July of 2016. The blood testing company based in Palo Alto and Newark, Calif., was founded by Holmes, 38, of Woodside, Calif., in 2003. While employed with Theranos, Balwani worked for the company in several capacities, including as a member of the company’s board of directors, as its president, and as its chief operating officer. At trial, the government submitted evidence that while at Theranos Balwani conspired to commit wire fraud against investors between 2010 and 2015, conspired to commit wire fraud between 2013 and 2016 against patients who paid for Theranos’ blood testing services, and that he committed wire fraud against investors and patients.
With respect to the conspiracy charges, the government submitted evidence regarding Balwani’s claims that Theranos developed a revolutionary and proprietary analyzer that the defendants referred to by various names, including as the TSPU, Edison, or minilab. Balwani and Holmes claimed the analyzer was able to perform a full range of clinical tests using small blood samples drawn from a finger stick. They also represented that the analyzer could produce results that were more accurate and reliable than those yielded by conventional methods—all at a faster speed than previously possible. At trial, the government demonstrated that Holmes and Balwani knew that many of their representations about the analyzer were false, but nevertheless conspired to convince potential investors and patients that the claims were true. For example, Holmes, Balwani, and others knew that the analyzer had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and, in some respects, could not compete with existing, more conventional machines.
Similarly, with respect to the substantive fraud charges, the evidence demonstrated Balwani used advertisements and solicitations to encourage and induce patients to use Theranos’s blood testing laboratory services, even though he knew Theranos was not capable of consistently producing accurate and reliable results for certain blood tests.
Evidence showed that Balwani represented to investors that Theranos would generate over $100 million in revenues and break even in 2014 and that Theranos expected to generate approximately $1 billion in revenues in 2015. In truth, Theranos resorted to using conventional machines bought from third parties to perform much of Theranos’s blood testing and Balwani knew Theranos would generate only negligible or modest revenues in 2014 and 2015. The trial evidence included numerous misrepresentations made by Balwani to potential investors about Theranos’s financial condition and its future prospects. In addition, the evidence showed that Balwani represented to investors that Theranos would dramatically increase the number of Wellness Centers within Walgreens stores even though Theranos’s retail Walgreens rollout had stalled because of several issues.
On July 28, 2020, a federal grand jury returned a superseding indictment charging Balwani 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. Like Holmes, Balwani was charged with conspiring to commit wire fraud against investors in Theranos during the period 2010 to 2015, conspiring to commit wire fraud against patients who paid for Theranos’ blood testing services during the period 2013 to 2016, and ten counts of wire fraud in violation of Section 1343 of Title 18 of the United States Code. Six of the wire fraud counts involved fraud against investors in Theranos while the remaining four involved wire fraud against patients who paid for Theranos’ blood testing services and advertising purchased by Theranos to attract those patients. Pursuant to today’s verdicts, Balwani was found guilty on all counts.
Balwani remains free on bond pending further hearings. Judge Davila scheduled Balwani’s sentencing hearing for November 15, 2022. Balwani faces a maximum sentence of twenty (20) years in prison, and a fine of $250,000, plus restitution, for each count of conspiracy and each count of wire fraud. 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.
In a separate trial, a separate jury convicted Holmes on January 3, 2022, of the investor-related conspiracy count and three counts of wire fraud. That jury acquitted Holmes of the patient-related conspiracy wire fraud count and three additional wire fraud counts; in addition, one count of wire fraud relating to a Theranos patient was dismissed during Holmes’s trial. The jury could not reach a unanimous verdict in her trial with respect to three investor fraud-related counts. Judge Davila scheduled Holmes’s sentencing for September 26, 2022.
Assistant U.S. Attorneys Robert S. Leach, Jeff Schenk, John C. Bostic, and Kelly Volkar are prosecuting the case with the assistance of Lakisha Holliman, Madeline Wachs, Elise Etter, Susan Kreider, Leeya Kekona, Sara Slattery and Sutton Peirce. The prosecution is the result of an investigation by the FBI, USPIS, and FDA Office of Criminal Investigations.
Orinda Man Found Guilty of Bank Fraud, Wire Fraud, and Money LaunderingRead the Press Release
SAN FRANCISCO – Alan Safahi was found guilty following a federal bench trial of bank fraud, wire fraud, and money laundering in a prepaid debit card scheme that caused losses of approximately $1.5 million, announced United States Attorney Stephanie M. Hinds and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Mark H. Pearson.
In a 39-page order filed late Thursday, United States District Judge Susan Illston convicted Safahi, 61, of Orinda, of one count of bank fraud, four counts of wire fraud, and one count of money laundering. The order, handed down following a nearly four-week bench trial, detailed the evidence against Safahi.
Evidence presented at trial demonstrated that Safahi developed an elaborate fraud scheme in which he collected money from clients to fund prepaid debit cards and, while accurately reporting the balances of the cards to the clients, created a system called “funding on demand” to defraud the bank that supported the cards. In the fraud, Safahi reported to the bank only the amount the clients spent on the card as the card’s “balance,” while diverting to himself the remaining balance of the card’s value. For example, a client of Safahi’s company, CardEx, would buy a prepaid debit card for $100 and spend $10 of that $100 balance. Safahi’s fraudulent “funding on demand” system would then report to the bank the “balance” of that card as $10 instead of $100. This allowed Safahi to access the money representing the difference between the actual card balance and the amount that had been spent on the card as reported to the bank.
Safahi used the fraudulently obtained funds not only to pay off his company’s debt to another bank but also to buy a house in Orinda. Just two days before reporting the accurate balance to the bank, Safahi issued himself an $80,000 cashier’s check from his company’s account that, among other fraudulently obtained funds, he used to purchase the house. This transaction provided the basis of his money laundering conviction.
The fraud scheme unraveled on September 25, 2014. On the same day Safahi shut down his CardEx business, he directed an employee to provide the accurate balances of the prepaid debit cards to the bank. According to trial evidence, Safahi had earlier reported to the bank a false balance of $93,734 on the cards he had sold. The true balance on the cards reported to the bank that day was $2,774,953. The difference was nearly $2.7 million, and further investigation revealed that Safahi had fraudulently appropriated approximately $1.5 million of that amount.
United States District Judge Susan Illston has not yet set a sentencing date.
Safahi was convicted of one count of bank fraud in violation of 18 U.S.C. § 1344, which carries a maximum term of imprisonment of 30 years and a maximum fine of up to $1,000,000 or twice the gross gain or loss amount. He was also convicted of four counts of wire fraud in violation of 18 U.S.C. § 1343, which carries a maximum term of imprisonment of 20 years and a maximum fine of $250,00. Safahi was lastly convicted of one count of money laundering in violation of 18 U.S.C. § 1957, which carries a maximum term of imprisonment of 10 years and a maximum fine of $250,000. However, any sentence for these convictions 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.
Robert David Rees and Benjamin Kurtis Kleinman are the Assistant U.S. Attorneys who prosecuted the case, with the assistance of Llessica Chan Fierro, Veronica Hernandez, Olivia Hawkins, Leeya Kekona, and Karina Ruiz. The prosecution is the result of an investigation by IRS-CI.
North Bay Accountant Sentenced to 29 Months in Prison for Bank Fraud, Embezzlement of Credit Union Funds, and Tax Evasion in Connection with Schemes to Defraud Cavallo Point Lodge and Redwood Credit UnionRead the Press Release
SAN FRANCISCO – Stephanie Simontacchi was sentenced to 29 months in prison for bank fraud, embezzlement of credit union funds, and tax evasion in connection with schemes to use her access as an accountant to enrich herself at the expense of two former employers, announced U.S. Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Sean Ragan, and IRS Criminal Investigation Division (IRS-CI) Special Agent in Charge Mark H. Pearson. The sentence was handed down by the Hon. William H. Orrick, U.S. District Judge.
According to her plea agreement, Simontacchi, 48, of Petaluma, was employed as a bookkeeper and controller at Cavallo Point Lodge (CPL), a hotel near Sausalito, Calif., from December 2009 through April 2016. While employed at CPL, Simontacchi had access to CPL’s accounting records systems and had signatory authority over CPL’s bank accounts. Simontacchi admitted that between October 2012 and March 2016, she used her skills as an accountant and access to CPL’s accounting systems to steal approximately 81 accounts payable checks issued by CPL and accounts receivable checks intended for CPL. Simontacchi deposited the checks into her personal bank accounts for her own personal gain. Simontacchi acknowledged in her plea agreement that her false representations and statements caused financial institutions to part with approximately $384,363.28 that belonged to CPL.
In addition, Simontacchi admitted that between April 2016 and April 2019, she also was employed as a senior accountant and accounting manager at Redwood Credit Union (RCU), a credit union, where she was responsible for processing voided cashier’s checks and other accounting-related tasks for the credit union. Simontacchi admitted that she used her position to embezzle and misapply approximately 35 checks including voided cashier’s checks returned to RCU by its members, United States Treasury checks, and State of California checks intended for RCU. She deposited the checks into her personal bank and credit card accounts for personal use and used the funds to make payments toward a personal home equity line of credit. Combined, the checks amounted to at least $437,162.24.
Further, Simontacchi admitted that between 2014 and June 2020, she attempted to evade and defeat income tax that she owed. Specifically, she caused to be prepared and filed false tax returns for the calendar years of 2013-2019. Simontacchi acknowledged that the total tax loss from her misconduct was over $100,000.
On June 24, 2021, a federal grand jury indicted Simontacchi charging her with seven counts of bank fraud, in violation of 18 U.S.C. § 1344(2); seven counts of misapplication and embezzlement of credit union funds, in violation of 18 U.S.C. § 657; and four counts of tax evasion, in violation of 26 U.S.C. § 7201. Pursuant to her plea agreement, Simontacchi pleaded guilty to one count of each crime and has agreed to pay at least $821,525.52 in restitution.
In addition to the prison term, Judge Orrick ordered Simontacchi to serve three years of supervised release to begin after her prison term. Judge Orrick ordered Simontacchi to surrender on or before August 11, 2022 to begin serving her prison term. The court has not yet scheduled a hearing to make final determinations regarding restitution.
Assistant U.S. Attorneys Amani S. Floyd and Kristina Green are prosecuting this case. The case was investigated by the FBI and IRS-CI.
California Man Pleads Guilty for $3.6 Million Paycheck Protection Program and Economic Injury Disaster Loan FraudRead the Press Release
SAN FRANCISO –Lebnitz Tran pleaded guilty to criminal charges related to a scheme to submit fraudulent loan applications seeking millions of dollars in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) COVID-19 relief funds. The plea was accepted by the Hon. William H. Orrick, United States District Judge.
According to court documents, Lebnitz Tran, 41, of San Jose, submitted at least 27 PPP loan applications and at least seven EIDL loan applications on behalf of multiple persons and business entities, using false and fictitious information and documents, including falsified employee information, fictitious or grossly exaggerated payroll figures, and fake tax documents. Tran sought approximately $8.5 million in PPP and EIDL funds, obtained over $3.6 million in illicit loan proceeds, and ultimately netted approximately $1.7 million from the scheme. Tran and others used these illicit loan proceeds to make purchases at restaurants and retail stores, make deposits into personal investment accounts, buy cryptocurrency, and, in one instance, to purchase a $100,000 Tesla from a luxury car dealership.
On July 1, 2021, a federal grand jury indicted Tran, charging him with six counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of bank fraud, in violation of 18 U.S.C. § 1344(2). Pursuant to the plea, Tran pleaded guilty to two of the wire fraud counts. If Tran complies with the plea agreement, the remaining counts will be dismissed at sentencing.
Judge Orrick scheduled Tran’s sentencing for November 3, 2022; he faces a maximum penalty of 20 years in prison as to each count of wire fraud. At sentencing, Tran also may be ordered to pay restitution and fines, as well as serve an additional term of supervised release. However, any sentence will be imposed only after consideration of the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Stephanie M. Hinds of the Northern District of California and Federal Bureau of Investigation, Special Agent in Charge of the San Francisco Field Office Sean Ragan made the announcement.
The FBI and the Small Business Administration’s Office of Inspector General are investigating the case.
Assistant U.S. Attorney Sarah Griswold of the Northern District of California and Trial Attorney Christopher Jackson of the Criminal Division’s Fraud Section are prosecuting the case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Oakland Resident Charged with Fentanyl and Methamphetamine Sales in San Francisco’s TenderloinRead the Press Release
SAN FRANCISCO – Alex Murillo appeared in federal court today and was ordered detained in custody on charges of distribution of fentanyl and methamphetamine, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon.
Murillo, 26, who resides in Oakland, was arrested on June 21, 2022, following the filing of a federal criminal complaint. The complaint charges multiple street drug sales by Murillo in San Francisco’s Tenderloin District. It specifically alleges 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 5 grams of a substance containing fentanyl for $100. The complaint further alleges that on June 8, 2022, Murillo communicated again with one of the undercover police officers and then met with the undercover officer in the area of the San Francisco Civic Center BART platform in the Tenderloin. This time, the complaint alleges, Murillo sold the undercover officer approximately two ounces of suspected fentanyl and approximately three ounces of methamphetamine for $1,400.
In a filed memo seeking his detention, the government described the arrest of Murillo on June 21 as he was leaving his residence in Oakland. Police searched Murillo upon his arrest and found in his backpack a digital scale, over three ounces of a substance containing methamphetamine, and over an ounce of a substance containing cocaine base.
The complaint charges Murillo with one count of distributing fentanyl in violation of 21 U.S.C. § 841(a)(1), (b)(1)(C). The maximum statutory penalty for the charge is 20 years of imprisonment with three years of supervision upon release from prison. The complaint also charges Murillo with one count of distributing 50 grams or more of a substance containing methamphetamine in violation of 21 U.S.C. § 841(a)(1), (b)(1)(B)(viii). The statutory penalty for this charge is a minimum of five years imprisonment and a maximum of 40 years imprisonment as well as a minimum of 4 years of supervision following release from prison with a maximum of life 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.
The charges contained in the complaint are only allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Murillo made his initial court appearance to face the federal complaint on June 22, 2022, in United States District Court in San Francisco. He appeared today before United States Magistrate Judge Laurel Beeler for a detention hearing and was ordered to remain detained in custody. His next court appearance is a status hearing scheduled for July 13 before United States Magistrate Judge Alex Tse.
Assistant U.S. Attorneys Christa Hall and Chris Kaltsas are 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.
Jury Convicts Father and Son of Multiple Conspiracies in Extensive Food Stamp Fraud SchemeRead the Press Release
OAKLAND – A federal jury yesterday convicted son Ali Mugalli Hassan and father Mugalli Ahmed Hassan of multiple counts involving government benefits fraud and conspiracies to commit such fraud, announced United States Attorney Stephanie M. Hinds and United States Department of Agriculture Office of Inspector General (USDA-OIG) Western Region Special Agent in Charge Dustin Cladis. The verdicts follow a one-week jury trial before United States Chief District Judge Phyllis J. Hamilton in Oakland.
Ali Mugalli Hassan, 32, of Alameda, and Mugalli Ahmed Hassan, 50, also of Alameda, were charged on March 14, 2019, in a multiple count superseding indictment along with another family member, co-defendant Ahmed Ahmed Hasan Dharahan, 41, of Oakland. The superseding indictment alleged the defendants defrauded the United States Department of Agriculture (USDA) by unlawfully trafficking federal food stamp benefits from 2014 through 2017.
Yesterday afternoon, a jury convicted son Ali and his father Mugalli of all four charges against them. Specifically, son and father were each convicted of conspiracy to defraud the United States; government benefits fraud greater than $5,000; conspiracy to commit wire fraud; and wire fraud.
According to evidence presented at trial, Ali Mugalli Hassan owned and operated a convenience store on International Boulevard in Oakland. Members of Ali’s family served as cashiers at the store, including his father Mugalli Ahmed Hassan and his uncle Ahmed Ahmed Hasan Dharahan. The convenience store was an authorized vendor for the USDA’s Supplemental Nutritional Assistance Program (SNAP), formerly known as the Food Stamp Program. SNAP helps economically disadvantaged persons pay for essential food items for themselves and their families. Program recipients receive their benefits via an electronic benefits transaction (EBT) card, which operates much like a debit card but limits purchases to program-eligible items. The store conducted a high-volume of SNAP transactions, including redeeming over $2.3 million in SNAP benefits between August 2014 and November 2017.
Trial evidence showed that the defendants conducted fraudulent SNAP transactions through the convenience store by charging purchases on the customers’ EBT cards, when in reality the customers received few or no SNAP-eligible products. The defendants kept approximately half the value of the fraudulent transactions and returned the remainder in cash to the customers. As part of the scheme, the defendants also kept customers’ EBT cards and used the federal benefits assigned to those cards at other stores to purchase items to sell at their own convenience store.
Evidence at trial described numerous instances of this fraud over multiple years. For example, evidence showed that the defendants engaged in 10 fraudulent transactions with undercover agents as well as over a hundred additional fraudulent transactions shown on surveillance video. The evidence further showed that the defendants’ store engaged in over $2.3 million in SNAP transactions over an approximately three-year period, in contrast to the average medium grocer in Alameda County that redeemed just $520,000.
The federal jury today convicted Ali Mugalli Hassan and Mugalli Ahmed Hassan of one count of conspiracy to commit benefits fraud and to defraud the United States in violation of 18 U.S.C. § 371, which carries a maximum penalty of five years imprisonment. Ali Mugalli Hassan and Mugalli Ahmed Hassan were each also convicted of one count of benefits fraud greater than $5,000 in violation of 7 U.S.C. § 2024(b), one count of conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349, and one count of wire fraud in violation of 18 U.S.C. § 1343. Before trial began Mugalli Ahmed Hassan also pleaded guilty to nine other charged counts of wire fraud in violation of 18 U.S.C. § 1343. Each conviction of a violation of 7 U.S.C. §2024(b) and of 18 U.S.C. §§ 1349 and 1343 carries a maximum sentence of 20 years imprisonment. All of the above counts of conviction carry a maximum fine of $250,000. However, any sentence for these convictions 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 Chief District Judge Phyllis J. Hamilton scheduled a sentencing hearing for both defendants on December 8, 2022. Both defendants remain out of custody pending sentencing.
Co-defendant Ahmed Ahmed Hasan Dharahan’s case is still pending. A trial date has not yet been set in his case.
Assistant U.S. Attorneys Abraham Fine and Molly Priedeman prosecuted the case at trial with the assistance of Patricia Mahoney, Kay Konopaske, and Leeya Kekona. The prosecution is the result of an investigation by the USDA-OIG with the assistance of the Oakland Police Department, the U.S. Marshals Service, and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).
Two Oakland Men Charged with Firearms TraffickingRead the Press Release
OAKLAND - Moises De Jesus Gomez and Roy Montoya were charged in separate indictments in federal court in Oakland with firearms dealing without a license, announced United States Attorney Stephanie M. Hinds, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Patrick T. Gorman, and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King. Montoya is also charged with illegal possession of a machinegun.
A federal grand jury returned an indictment against Gomez, 29, of Oakland, on June 16, 2022, for dealing firearms without a license in violation of 18 U.S.C. § 922(a)(1)(A). The illegal firearms dealing is alleged in the indictment to have occurred from July 2021 through April 2022. Gomez was arrested yesterday and made his initial appearance today in Oakland federal magistrate court to face the indictment. He is next scheduled to appear on July 6 at 2 p.m. before United States District Judge Haywood S. Gilliam, Jr.
The federal grand jury also returned a separate indictment on June 16 against Montoya, 26, of Oakland, for a violation of 18 U.S.C. § 922(a)(1)(A). That indictment charges Montoya with manufacturing and dealing firearms without a license, also during the time period of July 2021 through April 2022. Montoya is further charged in the indictment with possessing a machinegun, in violation of 18 U.S.C. § 922(o). The indictment describes the machinegun as a 5.56 NATO caliber AR-15 type rifle that bears no serial numbers. Montoya was arrested on April 26, 2022, on the charge of unlicensed firearms dealing and will next appear on the two charges in his indictment in front of United States District Judge Jon S. Tigar on August 26, 2022.
Gomez and Montoya each face, if convicted, a maximum sentence of five years imprisonment and a fine of $250,000 for unlicensed dealing in firearms in violation of 18 U.S.C. § 922(a)(1)(A). Montoya also faces, if convicted, a maximum sentence of 10 years imprisonment and a fine of $250,000 for possession of a machine gun in violation of 18 U.S.C. § 922(o). However, any sentence following 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.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Alexis James is the Assistant U.S. Attorney who is prosecuting the case, with the assistance of legal assistant Karina Ruiz. The prosecution is the result of an approximately year-long investigation by ATF, HSI, and the California Highway Patrol.
These cases follow the launch by the U.S. Department of Justice of five Cross-Jurisdictional Firearms Trafficking Strike Forces in key regions nationwide that are focused on disrupting illegal firearms trafficking. One of the five Strike Forces was launched here, in the San Francisco Greater Bay Area and Sacramento Region. The Strike Force identifies sources of illegally trafficked firearms and disrupts straw purchasing and firearms trafficking schemes and networks by using collaborative cross-jurisdictional law enforcement efforts that include federal, state, and local law enforcement agencies working together.
More Than Two Years Imposed on Modesto Woman Who Conspired with Incarcerated Son to Submit 121 Fraudulent Stimulus Check ApplicationsRead the Press Release
SAN FRANCISCO – Sheila Denise Dunlap was sentenced today to 27 months in federal prison for engaging in a conspiracy to commit wire fraud and for aggravated identity theft, announced United States Attorney Stephanie M. Hinds, Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Mark H. Pearson, and U.S. Department of the Treasury, Treasury Inspector General for Tax Administration (TIGTA) Special Agent in Charge Rod Ammari. United States District Judge Susan Illston handed down the sentence.
Dunlap, 52, of Modesto, pleaded guilty on March 4, 2022, to engaging in a wire fraud conspiracy and in aggravated identity theft by filing scores of fraudulent applications for Economic Impact Payment (EIP) payments, commonly known as stimulus checks. The EIP program was part of the federal CARES Act signed into law on March 27, 2020, to relieve the adverse economic impact of the COVID-19 pandemic upon individuals. Under the EIP provision of the CARES Act, individuals who made less than $99,000 on their 2019 tax returns and those whose income was sufficiently low that a tax return filing was not required (non-filers) were eligible to receive EIP funds. EIP payments amounted to as much as $1,200 per adult and $500 for a qualifying child.
In her plea agreement, Dunlap admitted that she conspired from March 2020 through July 2020 with her son to obtain the personal identifiable information (PII) of others and to use that PII to apply for EIP funds. In 2016, Dunlap’s son began serving a capital sentence on Death Row in San Quentin State Prison.
Dunlap described in her plea agreement how her son, identified only by his initials D.W., sent her the PII of his fellow prisoners along with the PII of other individuals whom they suspected might qualify as non-filers of 2018 or 2019 income tax returns and thus were eligible for EIP funds. Dunlap admitted she used the PII to file multiple fraudulent claims for EIP funds through the Internal Revenue Service’s online EIP Portal. In each of the applications, Dunlap listed her own Bank of America account to receive the EIP payments.
Dunlap specifically admitted that in or about April 2020, her son arranged the delivery to her of an email containing a spreadsheet with the PII of 9,043 individuals. She and her son agreed on a strategy to begin filing fraudulent EIP claims first by using the PII of the youngest adults listed on the spreadsheet. According to Dunlap, both she and her son believed that the younger, college-aged individuals on the list likely lacked income sufficient to trigger their filing of a 2018 or 2019 tax return. These individuals were thus more likely to be non-filers and thereby eligible for EIP payments.
Using the PII of these real individuals – including their names and social security numbers and other personal details – Dunlap admitted that in May and June 2020 she electronically filed 121 fraudulent EIP claims. Each EIP application, regardless of the applicant’s name, listed Dunlap’s bank account number for payment of the stimulus check. In total, Dunlap filed claims for $145,200 in EIP payments.
In addition to the 27 month prison sentence, United States District Judge Susan Illston imposed a three year term of supervision following release from prison and ordered Dunlap pay full restitution. Dunlap remains out of custody and will surrender to begin her sentence on September 30.
The case has been prosecuted by Assistant U.S. Attorneys Christa Hall and Annie Hsieh, with the assistance of Llessica Chan Fierro, Ralph Banchstubbs, and Maribel Gallegos. The prosecution is the result of an investigation by IRS-CI and TIGTA.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Three Members of Sonoma Motorcycle Gang Convicted of Racketeering Conspiracy and Related CrimesRead the Press Release
SAN FRANCISCO – Earlier today, a federal jury found Jonathan Nelson, a/k/a Jon Jon; Brian Wayne Wendt; and Russell Taylor Ott, a/k/a Rusty, guilty of murder in aid of racketeering as part of their participation in a criminal enterprise involving their membership in the Sonoma County charter of the Hells Angels Motorcycle Club (HASC), announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation (FBI) Special Agent in Charge Sean Ragan. The verdicts follow a nine-week trial before the Honorable Edward M. Chen, United States District Judge.
“The jurors found that these members of a violent motorcycle gang killed one of their own and engaged in a conspiracy to commit many other serious criminal acts,” said U.S. Attorney Hinds. “This office is laser-focused on removing from our neighborhoods those elements who use violence to achieve illegal goals. Today’s verdicts are the result of an intense multi-year investigation and should serve as notice to all such criminal enterprises that this office will devote the resources necessary to bring them to justice.”
“Today’s verdict marks a milestone in an investigation that spanned nearly eight years and involved multiple agency partners, including the Santa Rosa Police Department and the California Highway Patrol. Each agency involved in this investigation provided crucial expertise and resources, making a guilty verdict possible,” said Special Agent in Charge Ragan. “Criminal acts perpetrated by the convicted members of the Sonoma County and Fresno County Hells Angels adversely affected our communities, and their presence infested our citizens with worry. Today’s verdict is a step toward removing their violent and criminal ideals from our community.”
On October 10, 2017, a federal grand jury indicted eleven members and associates of the HASC, charging the defendants with being part of a conspiracy whose members furthered the aims of the enterprise by engaging in a broad swath of criminal activity including murder, narcotics distribution, assault, robbery, extortion, illegal firearms possession, and obstruction of justice. As set out in the indictment, the Hells Angels is a transnational violent outlaw motorcycle gang and the HASC is a subset of the gang whose members primarily operate in Sonoma County, Calif. while working cooperatively with other Hells Angels chapters to engage in criminal activity. The trial that led to today’s verdict focused on the activities of Nelson, 46, of Santa Rosa; Wendt, 45, of Tulare; and Ott, 69, of Santa Rosa. In finding all three defendants guilty, the jury concluded that each conspired to further the aims of the criminal conspiracy and each played a role in carrying out the July 15, 2014, murder of former HASC member Joel Silva.
The focus of the trial was the murder of Joel Silva; at trial, the government submitted evidence describing the role of each defendant in the murder. At the relevant time, Nelson was the president of the HASC, Wendt was the president of the Hell’s Angels Fresno chapter, and Ott was a former president and well-respected member of the HASC whom Silva trusted. According to the trial evidence, Nelson, Wendt, and Ott each concluded for varied reasons that Silva had been creating problems for HASC and that he had to be killed. Nelson arranged with Ott, a long-tenured member who lived near Silva and was close with his family, to have Silva killed in Fresno. Nelson arranged for Ott to take Silva to Fresno. Silva understood that he probably would have to fight with Wendt to resolve his problems with the club and agreed to travel with Ott to Fresno. However, after the two arrived at the Fresno Hells Angels clubhouse, Wendt shot Silva in the head. On the morning of July 16, 2014, Silva’s body was delivered to a local crematory and was incinerated.
In addition to the Silva murder, the evidence at trial included proof that HASC engaged in witness intimidation, extortion, drug trafficking, and robbery. For example, witnesses testified that HASC created a reputation for threatening anyone who goes to the police about HASC activity. In addition, testimony was introduced demonstrating that the defendants threatened the lives of witnesses and their families to make clear harm will come to anyone who cooperates with law enforcement.
In sum, the jury convicted all three defendants of participating in a racketeer influenced and corrupt organizations conspiracy, in violation of 18 U.S.C. § 1962(d); murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(3); and conspiracy to commit murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(5). In addition, Nelson also was convicted of assault with a dangerous weapon in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(2), and use or possession of a firearm in relation to a crime of violence, in violation of 18 U.S.C. § 924(c)(1)(A).
The defendants face a mandatory life sentence in prison. Further, additional fines, forfeitures, and restitution may be ordered; 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 defendants were remanded to federal custody pending sentencing. Judge Chen scheduled the defendants’ sentencing hearings for October 13, 2022.
Assistant U.S. Attorneys Lina Peng, Ajay K. Krishnamurthy, and Kevin Barry are prosecuting the case with the assistance of Kevin Costello. The prosecution is the result of an investigation by the FBI, the Santa Rosa Police Department, the Sonoma County Sheriff’s Department, and the California Highway Patrol.
Leader of Bay Area Drug Distribution Network Sentenced to Six Years in PrisonRead the Press Release
SAN FRANCISCO - Andy Manuel Reanos-Moreno was sentenced to 72 months in prison for his role in a large-scale drug distribution conspiracy announced U.S. Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon. Senior United States District Judge Charles R. Breyer handed down the sentence.
Reanos-Moreno, 27, of Oakland, California, pleaded guilty to the charge on November 10, 2021, without a written plea agreement. According to court documents, Reanos-Moreno was the leader of a vast network of street-level drug dealers who sold drugs in the Tenderloin neighborhood of San Francisco. Documents filed in connection with Reanos-Moreno’s sentencing describe a sophisticated operation that provided drugs for resale and housing for street-level dealers in Oakland who then commuted into San Francisco where the drugs were sold.
In pleading guilty, Reanos-Moreno admitted running his network of dealers from at least January 15, 2019, to July 31, 2019. Described in charging and sentencing documents as “redistributors,” Reanos-Moreno supplied these individuals with heroin, methamphetamine, cocaine, and cocaine base. In exchange, the dealers were expected to purchase drugs for resale from only Reanos-Moreno. The dealers called Reanos-Moreno on a nearly daily basis to place orders for re-supplies of drugs. Reanos-Moreno’s role as the head of the organization involved sourcing the drugs from Southern California, renting houses and apartments for dealers, and managing customer relations. Reanos-Moreno used undocumented street-level dealers and used his knowledge of immigration laws to threaten dealers who did not sell enough narcotics for the organization. The government’s sentencing memorandum concludes that Reanos-Moreno “used his legal immigration status, his knowledge of real estate in the area, and his ability to pay upfront costs such as deposits on apartments as a means of both enticing street-level dealers to work for his organization and then holding their feet to the fire to ensure that they sold enough drugs or else they would lose their housing or face potential legal jeopardy.”
On August 1, 2019, the United States Attorney filed a federal criminal complaint against Reanos-Moreno, charging him with conspiracy to distribute controlled substances, in violation of 21 U.S.C. §§ 846 and 841(a)(1). Subsequently, a federal grand jury issued an indictment charging Reanos-Moreno with the same violation. Pursuant to his guilty plea, he admitted he committed the crime.
In addition to the prison sentence, Judge Breyer also ordered Reanos-Moreno to serve 48 months of supervised release and forfeit over $25,000 seized from his home at the time of arrest. Reanos-Moreno has been in custody since August 7, 2019, and will begin to serve his prison term immediately.
Assistant U.S. Attorneys Sailaja M. Paidipaty and Ryan Rezaei are prosecuting the case with assistance from Madeline Wachs and Linda Love. The prosecution is the result of an investigation by the DEA, San Francisco Police Department, and Richmond Police Department.
Former Chairman and Managing Partner of Energy Company Pleads Guilty to $15 Million Ponzi SchemeRead the Press Release
A California man who previously served as an executive at an energy company pleaded guilty today to defrauding investors of more than $15 million as part of a Ponzi scheme involving limited partnerships created to provide services to oil and gas companies in North Dakota.
According to court documents, Joey Stanton Dodson, 58, formerly of Indio, engaged in a scheme between November 2012 and May 2015 to defraud investors while serving as the executive chairman and managing partner of Citadel Energy Partners. In his role, Dodson had certain responsibilities for three limited partnerships, Fort Berthold Water Partners L.P., Citadel Watford City Disposal Partners L.P., and H20 Partners L.P., which included raising funds for the limited partnerships, controlling their bank accounts, and disseminating their financial information to investors. As part of the scheme, Dodson made materially false and misleading representations and omissions to prospective and existing investors regarding his receipt of compensation, the intended use of investor funds, and the status of a potential acquisition of the limited partnerships by a private-equity firm, among other things.
After inducing investors to deposit their funds, Dodson pooled the funds from the limited partnerships and conducted multiple transfers between Citadel-related accounts that helped him divert investor funds for his own benefit and conceal his actions. In total, Dodson fraudulently raised over $15.6 million from 51 investors and misappropriated $1.3 million in investor funds, which he used to repay investors in an unrelated investment he operated under an entity known as Duke Equity and to pay other personal expenses. After Dodson’s misappropriation was discovered, the limited partnerships were placed into bankruptcy and the investors suffered a total loss of their investments.
Dodson pleaded guilty to one count of wire fraud. He is scheduled to be sentenced on Oct. 25 and faces a maximum penalty of 20 years in prison. A federal district court judge 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; and Special Agent in Charge Sean Ragan of the FBI’s San Francisco Field Office made the announcement.
The FBI’s San Francisco Field Office investigated the case.
Trial Attorney Jason M. Covert of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Sarah Griswold of the U.S. Attorney’s Office for the Northern District of California are prosecuting the case. The Enforcement Division of the U.S. Securities and Exchange Commission provided valuable assistance.
Former Chairman and Managing Partner of Energy Company Pleads Guilty to $15 Million Ponzi SchemeRead the Press Release
SAN JOSE – Joey Stanton Dodson, who previously served as an executive at Citadel Energy Partners, pleaded guilty today to defrauding investors of more than $15 million. Dodson admitted the fraud was part of a Ponzi scheme involving limited partnerships created to provide services to oil and gas companies in North Dakota. The plea was accepted by the Hon. Beth Labson Freeman, U.S. District Judge.
According to court documents, Dodson, 58, formerly of Indio, engaged in a scheme between November 2012 and May 2015 to defraud investors while serving as the executive chairman and managing partner of Citadel Energy Partners. In his role, Dodson had certain responsibilities for three limited partnerships, Fort Berthold Water Partners L.P., Citadel Watford City Disposal Partners L.P., and H20 Partners L.P., which included raising funds for the limited partnerships, controlling their bank accounts, and disseminating their financial information to investors. As part of the scheme, Dodson made materially false and misleading representations and omissions to prospective and existing investors regarding his receipt of compensation, the intended use of investor funds, and the status of a potential acquisition of the limited partnerships by a private-equity firm, among other things.
After inducing investors to deposit their funds, Dodson pooled the funds from the limited partnerships and conducted multiple transfers between Citadel-related accounts that helped him divert investor funds for his own benefit and conceal his actions. In total, Dodson fraudulently raised over $15.6 million from 51 investors and misappropriated $1.3 million in investor funds, which he used to repay investors in an unrelated investment he operated under an entity known as Duke Equity and to pay other personal expenses. After Dodson’s misappropriation was discovered, the limited partnerships were placed into bankruptcy and the investors suffered a total loss of their investments.
Dodson pleaded guilty to one count of wire fraud. Judge Freeman scheduled Dodson’s sentencing for October 25, 2022; he faces a maximum penalty of 20 years in prison. Any sentence will be imposed only after consideration of 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; and Special Agent in Charge Sean Ragan of the FBI’s San Francisco Field Office made the announcement.
The FBI’s San Francisco Field Office investigated the case.
Assistant U.S. Attorney Sarah Griswold of the U.S. Attorney’s Office for the Northern District of California and Trial Attorney Jason M. Covert of the Criminal Division’s Fraud Section are prosecuting the case. The Enforcement Division of the U.S. Securities and Exchange Commission provided valuable assistance.
Scotts Valley Resident Pleads Guilty to Defrauding Investors in Medical Technology CompanyRead the Press Release
SAN FRANCISCO - A California man pleaded guilty yesterday in connection with a scheme to defraud investors in a publicly traded company’s securities and manipulate the company’s stock price.
According to court documents, Jason Nielsen, 48, of Scotts Valley, was a large shareholder of Arrayit, a publicly traded medical device company based in California. From approximately 2019 through April 2020, Nielsen engaged in an unlawful “scalping” and “spoofing” scheme to manipulate the price of Arrayit securities. Nielsen used online message boards to publicly post false and misleading information about the nature of his trading in Arrayit securities, in order to induce others to purchase Arrayit securities and thereby drive up the stock’s price, a practice known as “scalping.”
Nielsen admitted that he placed orders to buy Arrayit stock that he intended to cancel before execution. The purpose of these orders was to deceive the public and Arrayit shareholders by signaling demand for Arrayit securities which did not exist. This allowed Nielsen to sell his shares at artificially inflated prices, a practice known as “spoofing.” While engaged in these practices, Nielsen was secretly selling his own previously acquired shares at an artificially inflated price.
Nielsen pleaded guilty to one count of securities fraud. He is scheduled to be sentenced on Oct. 24 and faces a maximum penalty of five years in prison. A federal district court judge 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 Steven Ryan of the Department of Health and Human Services – Office of Inspector General (HHS-OIG); Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division; Special Agent in Charge Sean Ragan of the FBI’s San Francisco Field Office; Inspector in Charge Eric Shen of the U.S. Postal Inspection Service’s Criminal Investigations Group; Special Agent in Charge Kim Lampkins of the Department of Veterans Affairs – Office of Inspector General (VA-OIG), Mid-Atlantic Field Office; and Special Agent in Charge Bryan Denny of the Department of Defense Office of Inspector General’s (DoD OIG) Defense Criminal Investigative Service (DCIS) made the announcement.
HHS-OIG’s San Francisco Regional Office and Detroit Regional Office, U.S. Postal Inspection Service, the FBI, VA-OIG and DCIS investigated the case.
Acting Principal Assistant Chief Justin Weitz, Assistant Chief Jacob Foster, and Trial Attorney Laura Connelly of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Lloyd Farnham of the Northern District of California are prosecuting the case.
The Fraud Section is using 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, please visit https://www.justice.gov/criminal-vns/case/Nielsen.
Former Inmate Admits Distributing Fentanyl at Santa Rita Jail That Killed Fellow InmateRead the Press Release
OAKLAND – Kameron Patricia Reid pleaded guilty today in federal court to two counts of distributing fentanyl that resulted in the death of a Santa Rita Jail inmate, announced United States Attorney Stephane M. Hinds, FBI Special Agent in Charge Sean Ragan, and Drug Enforcement Administration Special Agent in Charge Wade R. Shannon.
In a written plea agreement entered today in federal court, Reid, 38, of San Leandro, described the events that led to the death of her fellow inmate on May 16, 2021. Reid was incarcerated at that time at Santa Rita Jail, located in Dublin, Alameda County, and she admitted that while incarcerated she distributed fentanyl to inmates. Reid hid fentanyl from correctional officers by holding it in a body cavity. Reid described that on May 16, 2021, she provided fentanyl to two fellow inmates who are identified in the plea agreement only as “Victim 1” and “Inmate 2.” She had provided the same two inmates with fentanyl on an earlier occasion. Reid admitted that on May 16 she provided fentanyl to the two inmates and watched as both inmates snorted it. They each shortly became visibly intoxicated. Reid observed that Victim 1 lapsed into unconscious and became motionless near her bunk. Reid suspected Victim 1 was overdosing on fentanyl. Reid admitted in her plea agreement that she did not call for assistance because she wanted to avoid getting into trouble. Reid instead went to a toilet and flushed down the rest of the fentanyl she had. After several hours, another inmate called for assistance for Victim 1. Paramedics responded to aid Victim 1, but Victim 1 was unresponsive and eventually pronounced dead. Reid thereafter lied to investigators about her involvement in Victim 1’s death. In her plea agreement today, Reid admitted that the fentanyl she distributed to Victim-1 caused Victim-1’s death.
Reid is next scheduled for a sentencing hearing before United States District Judge Jon S. Tigar in Oakland federal court on October 28, 2022. The parties have agreed that Reid will self-surrender into custody by 5:00 p.m. today.
Reid pleaded guilty to two counts of distributing fentanyl in violation 21 U.S.C. § 841(a)(1) and (b)(1)(C). She faces a maximum statutory sentence of 20 years imprisonment, a life term of supervised release, and a $1,000,000 fine. However, any sentence following a conviction is 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 Molly K. Priedeman is prosecuting the case with the assistance of Leeya Kekona. The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Drug Enforcement Investigation, and the Alameda County Sheriff’s Office.
One Pill Can Kill: Fentanyl, a Schedule II controlled substance, is a highly potent opioid that can be diluted with cutting agents to create counterfeit pills that purport to mimic the effects of Oxycodone and can typically be obtained at a lower cost than genuine Oxycodone. Counterfeit, fentanyl-laced pills are commonly shaped and colored to resemble Oxycodone pills sold legitimately in the marketplace. Counterfeit pills known as M30s are round tablets that are often light blue, but can vary in color, and have “M” and “30” imprinted on opposite sides of the pill. Small variations in the amount or quality of fentanyl can have significant effects on the potency of the counterfeit pills, drastically raising the danger of overdoses. Fentanyl recently became the leading cause of drug overdose deaths throughout the United States.
Tenderloin Drug Dealer Sentenced to 46 Months for Fentanyl SalesRead the Press Release
SAN FRANCISCO – Emil Arriola Melendez was sentenced in federal court today to 46 months in prison for the distribution of fentanyl, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon. Senior United States District Judge Maxine M. Chesney handed down the sentence.
Melendez, 33, of South San Francisco, pleaded guilty on March 18, 2022, to distributing fentanyl. In his plea agreement, Melendez admitted that in September and November 2021 he exchanged numerous text messages with an undercover law enforcement officer posing as a drug buyer. Melendez arranged through the messages to sell fentanyl and heroin to the undercover officer. On September 22, 2021, near Geary and Hyde Streets in San Francisco’s Tenderloin area, Melendez met and sold the undercover officer 110 grams of fentanyl for $3,000. Melendez further admitted that on October 27, 2021, he again met with the undercover officer near Geary and Hyde Streets and sold the officer 227 grams (approximately eight ounces) of fentanyl and 56 grams (approximately two ounces) of heroin. Melendez charged the officer $7,800.
In its sentencing memo, the government described that the investigation of Melendez began when three individuals in Trinity County in the rural north of California (population: 12,541) died from fentanyl overdoses in a single weekend in August 2021. The dealer who sold fentanyl to the decedents before their overdoses was arrested. That dealer identified Melendez as a source of fentanyl supply and said that he would drive to meet and buy fentanyl from Melendez in the San Francisco Bay Area and then return with the fentanyl to Trinity and Shasta Counties. This information led to the undercover officer being introduced to Melendez and Melendez’s sales to the officer.
During the search of Melendez’s home at the time of his arrest, law enforcement located a privately made firearm (a PMF, or “ghost gun”). As part of the sentence, the firearm was forfeited.
In addition to the 46 month federal prison term, Senior U.S. District Judge Maxine M. Chesney ordered Melendez to serve three years of supervised release following his release from prison. Melendez was in custody at his sentencing hearing and begins serving his sentence immediately.
Assistant U.S. Attorney Joseph Tartakovsky prosecuted the case with the assistance of Mark DiCenzo. The prosecution is the result of an investigation by DEA, the U.S. Bureau of Land Management, the Trinity County Sheriff’s Office, the Shasta Interagency Narcotics Task Force, and the North State Major Investigation Team.
Fentanyl, a Schedule II controlled substance, is a highly potent opioid that can be diluted with cutting agents to create counterfeit pills that purport to mimic the effects of Oxycodone and can typically be obtained at a lower cost than genuine Oxycodone. Counterfeit fentanyl-laced pills are commonly shaped and colored to resemble Oxycodone pills sold legitimately in the marketplace. Counterfeit pills known as M30s are round tablets that are often light blue, but can vary in color, and have “M” and “30” imprinted on opposite sides of the pill. Small variations in the amount or quality of fentanyl can have significant effects on the potency of the counterfeit pills, drastically raising the danger of overdoses. Fentanyl recently became the leading cause of drug overdose deaths throughout the United States.
Federal Jury Convicts Two Gang Members of Conspiracies to Commit Assault and Murder Inside Monterey County JailRead the Press Release
SAN JOSE – A federal jury convicted Vincent Gerald Garcia and Jorge Jasso today of engaging in multiple conspiracies involving gang membership and gang violence, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Sean Ragan. The verdict follows a three-week jury trial before United States District Judge Beth L. Freeman.
Garcia, 55, of Salinas, and Jasso, 29, of Soledad, were charged along with thirteen co-defendants on September 26, 2018, and are the last defendants pending in the case. At trial, Garcia and Jasso each faced three charges: (1) engaging in a racketeering (RICO) conspiracy; (2) engaging of conspiracy to commit murder in aid of racketeering; and (3) engaging in a conspiracy to commit assault with a dangerous weapon in aid of racketeering. The jury convicted Garcia and Jasso of all counts.
According to the evidence presented at trial, from December 2012 through April 2014 the defendants Garcia and Jasso were active members of the Nuestra Familia (“NF”) prison gang and its affiliated Norteño street gang. Garcia was the Regiment Commander for the NF in charge of all Monterey County. Jasso was a Norteño member from Soledad. Norteño gang members pledged loyalty to the NF. Inside prisons and local jails, all members and associates of the NF worked together to maintain the structure and follow the gang’s rules. Any member in a Norteño housing unit who committed a serious violation of the rules was subject to “removal.” A removal was orchestrated by Norteño gang members and involved an organized attack upon the target, first by at least one “hitter” stabbing the target and followed immediately by a beating without weapons by at least two “bombers.” The beating inflicted maximum damage to the victim and caused a distraction that allowed time for the hitters to hide weapons and wash off.
Trial evidence showed that removals were approved in advance by the Norteño in charge of the facility upon learning of violations from members in the jail housing unit. The Norteño gang member in charge of the housing unit planned the removal. All members of the Norteño housing unit were aware of the removal process and were required to assist if requested.
Other evidence demonstrated that the sale of controlled substances both inside custodial facilities and on the street was a central income producer for the gang. Norteño members smuggled controlled substances into Monterey County Jail as well as other jails and sold the “hard” drugs to other inmates, but distributed marijuana solely to fellow Norteños in custody.
The evidence at 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 housing active Norteño members and associates exclusively. Three removals occurred in the jail’s main yard during the recreation period for inmates housed in the lockdown pods for Norteños.
The defendant Garcia was identified by trial evidence as the leader responsible for approving the removals. Garcia was a long time gang member who rose through the ranks to become a carnale of the NF prison gang in the 1990s. He later became the NF Regiment Commander in charge of Salinas and all of Monterey County from at least 2012 through 2014. From May 2013 through February 2015, Garcia was incarcerated in the Monterey County Jail. Evidence showed he was in charge of the entire jail for the NF and ordered assaults and murder attempts. He retained ultimate authority and could put fellow gang members on “freeze” status, clear them for rule violations, strip them of gang or leadership roles, and elevate others into leadership positions.
Jorge Jasso, according to the evidence, was a Norteño street gang member from Soledad who was housed in Monterey County Jail from May 2012 through September 2013. The evidence established that Jasso was a NF foot soldier that participated in murder attempts and assaults. He participated in the removal of a Norteño gang member on December 2, 2012, by performing the role of a bomber after others stabbed the victim. Jasso was also involved in the removal of a second victim on February 25, 2013, again acting as a bomber after the victim was stabbed.
United States District Judge Freeman scheduled sentencing hearings for Garcia and Jasso on August 30, 2022. Both defendants remain in custody pending sentencing.
For their conviction of a racketeering conspiracy in violation of 18 U.S.C. §1962(d) in Count 1, Garcia and Jasso each face a maximum of life in prison. For their conviction of conspiracy to commit murder in aid of racketeering in violation of 18 U.S.C. § 1959(a)(5) in Count 2, Garcia and Jasso each face a maximum 10 years in prison. For their conviction of conspiracy to commit assault with a dangerous weapon in aid of racketeering in violation of 18 U.S.C. § 1959(a)(6) in Count 3, Garcia and Jasso face a maximum of 3 years in prison. For each count of conviction, they face 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 the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Stephen J. Meyer and Neal Hong prosecuted the case at trial with the assistance of Christine Tian, Mimi Lam, Laurie Worthen, Susan Kreider, Lynette Dixon, and Elise Etter. The prosecution is the result of an investigation by the FBI with 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.
Steven Carrillo Sentenced to 41 Years in Prison for Murder and Attempted Murder for Role in Drive-By Shooting at Federal Courthouse in OaklandRead the Press Release
SAN FRANCISCO - Steven Carrillo was sentenced today to 41 years in prison for murder and attempted murder in connection with the May 29, 2020, drive-by shooting at the Ronald V. Dellums Federal Building and U.S. Courthouse in Oakland, California, announced U.S. Attorney Stephanie M. Hinds, Homeland Security Investigations (HSI) Special Agent in Charge Tatum King, Federal Bureau of Investigation (FBI) Special Agent in Charge Sean Ragan, and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) San Francisco Field Division Special Agent in Charge Patrick T. Gorman. Protective Services Officer Dave Patrick Underwood was killed in the attack and a second security contractor was wounded. Today’s sentence was handed down by the Hon. Yvonne Gonzalez Rogers, United States District Judge.
Carrillo, 34 of Ben Lomond, pleaded guilty to the federal charges on February 11, 2022. According to the plea agreement Carrillo admitted that he intended to kill the two officers and acted with premeditation by firing on the officers from a van driven by another individual. Carrillo agreed that his killing of Officer Underwood was first degree murder as defined by the federal statute at 18 U.S.C. § 1111. Carrillo also admitted that during the months before the shooting, he aligned himself with an anti-government ideology and wanted to carry out violent acts against federal law enforcement, in particular.
Carrillo posted messages and writings on social media sites during the weeks leading up to the shooting, describing the timing as favorable for the destruction of the government. Carrillo admitted that on May 29, 2020, he posted social media comments referring to the ongoing protests over the killing of George Floyd, and he made plans to travel to an area in Oakland where protests were expected that night. Carrillo admitted that he went to the protests with another individual, and Carrillo brought firearms and incendiary devices in a van driven by the other individual. After observing the protests, federal building and courthouse, and surrounding area, at approximately 9:44 p.m., while the other individual drove the van, Carrillo fired approximately 19 shots at the two security officers, killing Officer Underwood and wounding a second security officer with life-threatening and permanent injuries. In addition, Carrillo agreed and recommended to the court that a reasonable and appropriate disposition of this case would be 41 years in prison and a lifetime term of supervised release.
Carrillo was indicted by a federal grand jury on June 25, 2020, for his role in the May 29 shooting at the Oakland Federal Courthouse. Carrillo pleaded guilty to use of a firearm in furtherance of a crime of violence resulting in death, in violation of 18 U.S.C. §§ 924(j)(1) and attempted murder of a person assisting an officer or employee of the U.S. Government, in violation of 18 U.S.C. §§ 1114(3), 1111, and 2.
Carrillo came into federal custody following his arrest on June 6, 2020, by Santa Cruz County authorities stemming from his alleged involvement in a separate shooting that day in Ben Lomond that resulted in the death of a Santa Cruz County Deputy Sheriff and injuries to other law enforcement personnel.
In addition to imposing the prison term, Judge Gonzalez Rogers also scheduled a hearing for September 1, 2022, in San Francisco, to consider restitution claims for the victims of Carrillo’s conduct.
The United States Attorney’s Office’s Organized Crime Strike Force is prosecuting this case with assistance from the National Security Division’s Counterterrorism Section. The case is being investigated by the FBI, the ATF, the FPS, and the U.S. Marshal Service with assistance from the Oakland Police Department and the Santa Cruz County Sheriff’s Office.
Bogus Online Auto Auction Participant Indicted for Bank FraudRead the Press Release
SAN JOSE – A federal grand jury indicted Ionut Ganea with three counts of bank fraud in a scheme to defraud consumers with fake online automobile auction advertisements, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Sean Ragan.
According to the indictment, Ionut Ganea, 28, a Romanian national last known to be in Romania, conspired to defraud consumers by posting fraudulent automobile auction advertisements on multiple automobile websites. The automobile auction advertisements contained information typical of legitimate auctions, including photographs of the automobiles for sale. The indictment alleges, however, that the automobiles advertised for sale were not owned by the purported sellers. The purported sellers thereafter communicated with interested buyers through online messaging platforms and induced them to place bids on the auctions. After a victim-buyer “won” an auction and wired payment to the seller’s bank account as instructed, the vehicle was never delivered.
The indictment alleges Ganea acted as a “money mule” in the scheme, collecting the illegally obtained money and sending it to the other participants in the fraud. Ganea used fake identities to set up bank accounts in the United States with legitimate banking institutions. The bank accounts were used to receive the wire transfers of funds from the victim-buyers in the fraudulent auctions. Ganea then allegedly withdrew the funds from the accounts.
Between December 2019 and September 2020, the indictment alleges Ganea opened at least 74 bank accounts in eight banks across the country while using 28 fake names and fraudulent passports from the Czech Republic, Slovakia, and Latvia. According to the indictment, 117 individual victim-buyers wired nearly $2 million dollars to these accounts, and Ganea withdrew more than $1.8 million of those funds.
The federal indictment charges Ganea with three counts of bank fraud in violation of 18 U.S.C. § 1344(2). The maximum statutory sentence for each violation of 18 U.S.C. § 1344(2) is 30 years in prison, a fine up to $1,000,000 or twice the gross gain or loss amount, and five years of supervised release following 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.
Ganea remains at large. The investigation continues.
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.
Assistant United States Attorney Anne Hsieh is prosecuting the case with the assistance of Laurie Worthen. The prosecution was the result of an investigation by the Federal Bureau of Investigation.
Second Man Pleads Guilty to Scheme to Attack Democratic Headquarters in SacramentoRead the Press Release
SAN FRANCISCO – The second of two California men pleaded guilty today to a conspiracy to destroy by fire or explosive a building affecting interstate commerce in a scheme to attack the Democratic Headquarters in Sacramento, announced U.S. Attorney Stephanie M. Hinds, Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, and Special Agent in Charge Sean Ragan of the FBI’s San Francisco Field Office.
Ian Benjamin Rogers, 46, of Napa, and Jarrod Copeland, 38, previously of Vallejo, were indicted on July 21, 2021, in connection with a plan to attack targets they associated with Democrats after the 2020 Presidential election. Today, Rogers pleaded guilty to the conspiracy charge in United States District Court. Rogers also pleaded guilty to additional weapons violations, including one count of possession of unregistered destructive devices, and one count of possessing an illegal machine gun. Copeland previously pleaded guilty to the conspiracy charge and an additional count of destruction of records.
According to the plea agreements entered at the time of their guilty pleas, Rogers and Copeland admitted that they conspired together between November 2020 and January 2021 to destroy the John L. Burton Democratic Headquarters in Sacramento. Rogers and Copeland admitted that they discussed plans to attack the building with cans of gasoline, including by throwing gas cans through the front windows of the building and igniting the gasoline to burn down the building.
Documents filed by the government describe that in November 2020, Rogers told Copeland that he would “hit the enemy in the mouth” by using Molotov cocktails and gasoline to attack targets associated with Democrats, including the Governor’s Mansion and the Democratic Headquarters Building in Sacramento. According to court documents, Rogers and Copeland went on to discuss potentially getting labeled as “domestic terrorists,” with Rogers describing a “hope [their] actions will make others to get involved.” The indictment describes that in late December 2020, Copeland told Rogers he contacted an anti-government militia group to gather support for the movement and in January 2021, Rogers stated to Copeland “I want to blow up a democrat building bad.” Copeland agreed, saying, “I agree” and “Plan attack.” They agreed to start with the Democratic Headquarters in Sacramento and to “see what happens.”
Rogers admitted in his plea agreement to viewing the building on the internet and sending a map of the location to Copeland. The men also admitted to discussing the building’s proximity to a fire department and certain law enforcement in devising their plan, using that information to refine the method of attack to ensure they caused the greatest damage to the building while allowing their escape without detection. Rogers and Copeland also discussed waiting until after the presidential inauguration on Jan. 20, 2021, before carrying out the attack. As described in the indictment, Rogers wrote to Copeland, “after the 20th we go to war.”
According to court documents, on Jan. 15, 2021, law enforcement officers searched Rogers’s home and business and seized a cache of weapons, including 45 to 50 firearms, thousands of rounds of ammunition, and five pipe bombs. Rogers admitted in his plea agreement that he had constructed the pipe bombs and anticipated using them against the property of those whose political views differed from his, including the Democratic Headquarters building in Sacramento. He further admitted that he possessed at least three fully automatic machine guns and considered using one of them in the attack on the building.
In addition, Copeland admitted in his plea agreement that after he learned of Rogers’s Jan. 15 arrest, he notified a militia group to which he belonged and, in response to instruction from them, destroyed evidence to prevent law enforcement from finding the evidence.
Rogers and Copeland each face a maximum statutory sentence of 20 years imprisonment, a three-year term of supervised release, and a $250,000 fine for the conspiracy charge. In addition, Rogers faces a maximum of 10 years in prison for the weapons charges and Copeland faces a maximum of 20 years in prison for the destruction of evidence charge. Any sentence will be determined only after considering the U.S. Sentencing Guidelines and other statutory factors. Rogers also faces numerous state charges arising out of his possession of the pipe bombs and machine guns, and his possession of assault rifles prohibited under California law, and he is being prosecuted for those offenses by the Napa County District Attorney’s Office.
Rogers’s sentencing is scheduled for September 30, 2022. Copeland’s sentencing, also pending before U.S. Senior District Judge Charles R. Breyer in San Francisco, has not yet been scheduled. Rogers has remained in continuous custody since his arrest on Jan. 15, 2021; he was transferred from state to federal custody in January 2022. Copeland has remained in federal custody since his arrest on July 14, 2021.
Assistant U.S. Attorneys Frank Riebli and Eric Cheng of the Northern District of California are prosecuting the case, with assistance from Trial Attorney David Cora of the National Security Division’s Counterterrorism Section. The FBI’s San Francisco Field Office is investigating the case, with valuable assistance provided by the FBI Sacramento Field Office and Napa County Sheriff’s Department.
Father and Son Sentenced for Conspiracy to Defraud Their Former Employer and Divert Medical Equipment for Their Own UseRead the Press Release
OAKLAND – Today, the Hon. Jon S. Tigar, U.S. District Judge, sentenced Anthony Giovanni Montanelli to a year and a day in prison and ordered him to pay $1.2 million in restitution within 90 days for his role in a conspiracy to commit mail fraud in connection with a scheme to embezzle medical equipment owned by Kaiser Foundation Hospitals and Health Plan, Inc. (Kaiser). Judge Tigar ordered Montanelli’s father and charged co-conspirator, Steven John Montanelli, to serve a five year term of probation for his role in the scheme and ordered him jointly responsible to pay $1.2 million in restitution to Kaiser. The announcement was made by United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Sean Ragan.
Anthony Montanelli, 34, and his father Steven Montanelli, 63, both of San Ramon, pleaded guilty to the charges on January 14, 2022. According to the plea agreements, the defendants worked as biomedical engineers at Kaiser, responsible for repairing and servicing Kaiser ultrasound systems used at its medical facilities located throughout the Bay Area. The defendants used their positions at Kaiser to order new ultrasound parts that were supposed to be used to repair, replace, and/or maintain Kaiser’s medical equipment, but instead were diverted to their own business, Pacific Coast Imaging (PCI). The defendants then sold the diverted parts through PCI for their own profit. The father and son also admitted operating their scheme and business, which they did not disclose to Kaiser, while being paid by Kaiser to service Kaiser-owned equipment.
The defendants admitted that, beginning February 2010 and continuing through about April of 2018, they worked together to defraud Kaiser. Specifically, the defendants rented storage units in which they stockpiled new, used, and decommissioned Kaiser-owned ultrasound systems and parts. Some of the Kaiser inventory they ordered through Kaiser became PCI inventory, which they sold and leased to PCI customers. The defendants acknowledged that for years they caused Kaiser’s procurement specialists to process, order, and have mailed to them an unknown number of ultrasound parts which they diverted to PCI. Further, the defendants admitted that they recorded parts and/or systems as decommissioned when, in fact, the equipment was diverted to PCI. In sum, both defendants admitted that they diverted Kaiser-owned equipment to PCI, operated PCI while employed by Kaiser, and used work hours paid for by Kaiser to operate PCI. The defendants admitted that the value of the loss to Kaiser resulting from the conspiracy exceeded $1,500,000. Anthony Montanelli had previously tendered a check to Kaiser to pay restitution in the amount of $449,955, bringing the total amount paid and owed in restitution to $1,649,955.
A federal grand jury issued a superseding indictment on June 10, 2021, charging each defendant with one count of conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349. Both defendants pleaded guilty to the count.
In addition to the prison term and probation, Judge Tigar also ordered each defendant to pay a $150,000 fine. Anthony Montanelli was ordered to surrender on or before July 1, 2022, to begin serving his prison term.
Assistant U.S. Attorneys Thomas Green and Garth Hire are prosecuting the case, with the assistance of Kay Konopaske and Noble Hughes. The prosecution was the result of an investigation by the Federal Bureau of Investigation.
South Bay Resident Charged with Smuggling and Exporting American Aviation Technology to Beijing UniversityRead the Press Release
SAN FRANCISCO – The United States Attorney’s Office today unsealed a criminal complaint charging Jonathan Yet Wing Soong with smuggling and violating export control laws by allegedly secretly funneling sensitive aeronautics software to a Beijing university, announced United States Attorney Stephanie M. Hinds; Federal Bureau of Investigation Special Agent in Charge Sean Ragan; Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement (BIS), Special Agent in Charge John D. Masters; Defense Criminal Investigative Service (DCIS) Special Agent in Charge Bryan D. Denny. Soong made his initial appearance to face the charges in federal court earlier today before U.S. Magistrate Judge Joseph C. Spero.
The allegations against Soong, 34, of San Jose, were set out in a complaint filed May 23, 2022, and unsealed earlier today. According to the complaint, Soong was employed by Universities Space Research Association (USRA) between April 2016 and September 2020 as a program administrator. USRA is a nonprofit corporation contracted by the National Aeronautics and Space Administration (NASA) to, among other things, distribute domestically and internationally sensitive aeronautics-related software developed through the Army’s Software Transfer Agreement (STA) program. As USRA’s STA program administrator, Soong was responsible for overseeing certain software license sales, conducting export compliance screening of customers, generating software licenses, and, on occasion, physically exporting software.
Soong is alleged to have been trained in and been aware of export compliance rules which, among other things, restrict sales and exports to certain entities. As relevant to this case, the complaint describes rules that restrict sales of certain technology to entities on the U.S. Department of Commerce Entity List (Entity List), a list with associated regulations that are maintained by the Department of Commerce pursuant to federal statutory and presidential directive. The Entity List and associated regulations prohibit export without a license of certain technology with commercial and potential military applications to entities and individuals whose activities have been found to be contrary to U.S. national security or foreign policy interests. The complaint alleges Soong unlawfully and without a license exported and facilitated the sale and transfer of software to an entity on the Entity List—Beijing University of Aeronautics and Astronautics (BUAA), which is also known as Beihang University. According to the complaint, Beihang University was added to the Entity List due to the University’s involvement in People’s Republic of China military rocket systems and unmanned air vehicle systems. Given its inclusion on the Entity List, BUAA is prohibited from receiving certain items without a license. The complaint alleges Soong used an intermediary in hopes that the illegal transfer would not be detected.
At issue in the case is a software package that is marketed for the development of unmanned aircraft. The Army flight-control software packages, referred to in the complaint as CIFER, performed as a tool to allow a user to develop a dynamic model of an aircraft based on collective flight test data. The package could be used to analyze and design aircraft control systems. According to the complaint, in April 2017, Soong became aware that BUAA was on the Entity List and nonetheless arranged to sell and transfer the CIFER software package to BUAA. Soong ultimately exported directly to Beihang University in July 2018. The complaint alleges that Soong arranged to sell the CIFER software package to Beijing Rainbow Technical Development Ltd., as an intermediary for the purchase to disguise BUAA’s involvement, as Soong knew that BUAA could not receive this technology without a license from the Department of Commerce. The complaint describes how Soong arranged for the intermediary to receive the CIFER program package, and ultimately Soong arranged to have the passcodes for the CIFER software package forwarded to Beihang University with payment coming from Beijing Rainbow.
A criminal complaint merely alleges that crimes have been committed. All defendants, including Soong, are presumed innocent until proven guilty beyond a reasonable doubt.
Soong is charged with violating International Emergency Economic Powers Act (IEEPA), in violation of 50 U.S.C. §§ 1701–1707, and smuggling, in violation of 18 U.S.C. § 554. The IEEPA violation carries a statutory maximum penalty of 20 years in prison and a $1,000,000 fine. The smuggling count carries a statutory maximum penalty of 10 years in prison and a $250,000 fine. In addition, as part of any sentence handed down after conviction, the court may order restitution, and up to three years of supervised release. However, any sentence after 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.
Soong’s next scheduled appearance is set for June 2, 2022, before U.S. Magistrate Judge the Honorable Laurel Beeler.
Assistant United States Attorney Barbara Valliere of the United States Attorney’s Office’s Special Prosecutions Section is prosecuting the case with the assistance of Maddi Wachs and Kathy Tat. The prosecution is the result of an investigation by the BIS, DCIS, and the FBI with assistance from the NASA Office of Inspector General; U.S. Army Criminal Investigation Division; the U.S. Army Counterintelligence; and the Department of Homeland Security, Homeland Security Investigations.
Twitter Agrees with DOJ and FTC to Pay $150 Million Civil Penalty and to Implement Comprehensive Compliance Program to Resolve Alleged Data Privacy ViolationsRead the Press Release
SAN FRANCISCO – The Department of Justice, together with the Federal Trade Commission (FTC), announced a settlement that, if approved by a federal court, will require Twitter, Inc. to pay $150 million in civil penalties and implement robust compliance measures to protect users’ data privacy. The settlement will resolve allegations that Twitter violated the FTC Act and an administrative order issued by the FTC in March 2011 by misrepresenting how it would make use of users’ nonpublic contact information. The announcement was made by United States Attorney Stephanie M. Hinds for the Northern District of California; U.S. Department of Justice Associate Attorney General Vanita Gupta; and FTC Chair Lina M. Khan.
In a complaint filed today in the U.S. District Court for the Northern District of California, the government alleges that Twitter violated the FTC Act and the 2011 order by deceiving users about the extent to which Twitter maintained and protected the security and privacy of users’ nonpublic contact information. Specifically, the complaint alleges that, from May 2013 to September 2019, Twitter told its users that it was collecting their telephone numbers and email addresses for account-security purposes, but failed to disclose that it also would use that information to help companies send targeted advertisements to consumers. The complaint further alleges that Twitter falsely claimed to comply with the European Union-U.S. and Swiss-U.S. Privacy Shield Frameworks, which prohibit companies from processing user information in ways that are not compatible with the purposes authorized by the users.
“Consumers who share their private information have a right to know if that information is being used to help advertisers target customers,” said U.S. Attorney Hinds. “Social media companies that are not honest with consumers about how their personal information is being used will be held accountable.”
“The Department of Justice is committed to protecting the privacy of consumers’ sensitive data,” said Associate Attorney General Gupta. “The $150 million penalty reflects the seriousness of the allegations against Twitter, and the substantial new compliance measures to be imposed as a result of today’s proposed settlement will help prevent further misleading tactics that threaten users’ privacy.”
“As the complaint notes, Twitter obtained data from users on the pretext of harnessing it for security purposes but then ended up also using the data to target users with ads," said FTC Chair Khan. “This practice affected more than 140 million Twitter users, while boosting Twitter’s primary source of revenue.”
Twitter has agreed to settle the government’s allegations by paying a $150 million civil penalty and implementing significant new compliance measures intended to ensure that Twitter improves its data privacy practices. For instance, Twitter will be required to develop and maintain a comprehensive privacy and information-security program, conduct a privacy review with a written report prior to implementing any new product or service that collects users’ private information, and conduct regular testing of its data privacy safeguards. Twitter also will be required to obtain regular assessments of its data privacy program from an independent assessor, provide annual certifications of compliance from a senior officer, provide reports after any data privacy incidents affecting 250 or more users, and comply with numerous other reporting and record-keeping requirements. The settlement also will require Twitter to notify all U.S. customers who joined Twitter before Sept. 17, 2019, about the settlement and to provide users with options for protecting their privacy and security. Under the settlement terms, the Department of Justice and FTC will each have responsibility for monitoring and enforcing Twitter’s compliance.
This matter is being handled by Assistant U.S. Attorney Emmet Ong of the U.S. Attorney’s Office for the Northern District of California; attorneys in the Civil Division’s Consumer Protection Branch, including Director Gustav W. Eyler, Assistant Director Lisa K. Hsiao and Trial Attorneys Zachary Cowan and Deborah Sohn; James Kohm, Reenah Kim and Laura Koss from the FTC’s Division of Enforcement; and Andrea Arias of the FTC’s Division of Privacy and Identity Protection.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch. For more information about the FTC, visit its website at https://www.FTC.gov.
San Francisco Physician to Pay More Than $1,000,000 to Settle Allegations of False Medicare ChargesRead the Press Release
SAN JOSE – Bay Area physician Dr. Roger Wang has agreed to pay $1,033,666.42 to resolve allegations that he violated the False Claims Act by charging Medicare for non-FDA-approved drugs and associated services, announced United States Attorney Stephanie M. Hinds; Special Agent in Charge, Office of Inspector General for the U.S. Department of Health and Human Services Steven J. Ryan; and Special Agent in Charge of the Food and Drug Administration (FDA), Office of Criminal Investigations, Los Angeles Field Office, Lisa L. Malinowski.
According to the settlement, viscosupplements, such as Synvisc, Synvisc One, and Orthovisc, are FDA-approved drugs injected for the treatment of osteoarthritis pain. The United States has alleged that Wang, a rheumatology specialist practicing in San Francisco, purchased and injected into his patients versions of Synvisc, Synvisc One, or Orthovisc that were not approved by the FDA for distribution in the United States and therefore were not covered by Medicare, and billed Medicare for the drugs and injections. The settlement agreement resolves claims the United States might have brought based upon these allegations.
“When Medicare pays for drugs and services, the government expects doctors to follow the rules in place to protect patient safety,” said U.S. Attorney Stephanie M. Hinds. “In this case, the rules require doctors seeking reimbursement from Medicare for injecting viscosupplements to use FDA-approved drugs. This office will hold accountable anyone who seeks to cut corners by defrauding American taxpayers and risking harm to patients by using unapproved medications.”
"Physicians who bill Medicare for ineligible medications and procedures defy basic requirements for their participation in the program and wrongfully attempt to collect taxpayer funds," stated HHS-OIG Special Agent in Charge Steven J. Ryan. "We will continue to work closely with our law enforcement partners to investigate bad actors that cheat federal health care programs and flout their safeguards meant to protect patients’ health and well-being.”
“Drugs and devices that are produced and distributed outside the FDA’s oversight present the prospect of harm to the public health,” said Special Agent in Charge Lisa L. Malinowski, FDA Office of Criminal Investigations, Los Angeles Field Office. “We commend DOJ and HHS-OIG for their commitment to protecting American patients.”
According to the settlement, the United States alleged Wang knowingly submitted thousands of false claims for reimbursement for non-FDA-approved Synvisc and Orthovisc and related procedures. Specifically, the United States alleged that Wang used non-FDA-approved drugs that were packaged and labeled for use in foreign markets. At least some of the labeling, according to the settlement, was for additional uses not approved in the United States. In addition, the United States alleged that, from June 30, 2015, to December 1, 2019, Wang knowingly submitted claims to Medicare for reimbursement for non-FDA-approved Synvisc and Orthovisc, and for injection procedures, even though neither the non-FDA-approved drugs nor the injections of those drugs are covered by Medicare. Pursuant to the settlement, the United States agreed to resolve the government’s claims resulting from Wang’s conduct, including the government’s claims under the False Claims Act, codified at 31 U.S.C. §§ 3729-3733, and certain other related claims, for more than $1 million.
The claims resolved by this settlement are allegations only and there has been no determination of liability.
Assistant U.S. Attorney Michael Pyle is handling the matter. The settlement is the result of an investigation by the U.S. Attorney’s Office for the Northern District of California, the U.S. Department of Health and Human Services Office of Inspector General, and the Food and Drug Administration, Office of Criminal Investigations.
Six Individuals Charged with Federal Drug Trafficking OffensesRead the Press Release
SAN JOSE – Victor Nevarez, Juan Rivera Arzate, Adhemar Castaneda Becerril, and Pedro Gaona Salse were four of six charged defendants arrested and arraigned yesterday in federal court on narcotics trafficking charges, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration Special Agent in Charge Wade R. Shannon.
Victor Nevarez, 49, who resides in San Jose, California, and Juan Rivera Arzate, 38, also of San Jose, were charged together in a four-person indictment unsealed yesterday with engaging in a conspiracy to traffic methamphetamine from December 13, 2020, to March 8, 2022. According to representations by the government attorney at their arraignment hearing yesterday, agents seized more than ten kilograms of methamphetamine, thousands of dollars in cash, and a pistol in conjunction with the arrests of Nevarez and Arzate.
Pedro Gaona Salse, 28, of San Jose, was arrested and arraigned on a complaint filed yesterday with possession with intent to distribute fentanyl. According to the complaint, DEA agents executed a search warrant at Gaona’s residence in the early morning of May 19, 2022. Gaona was present in the home. Next to a toilet in the bathroom nearest Gaona’s bedroom, the agents found approximately 80 grams of a gray substance believed to be fentanyl. At Gaona’s arraignment hearing yesterday, the government attorney represented that agents also found a pistol at Gaona’s residence.
Adhemar Castaneda Becerril, 26, of Gilroy, was arrested and arraigned on a separate complaint filed yesterday charging him with possession with the intent to manufacture, distribute, or dispense methamphetamine. According to the complaint, in the early morning of May 19, DEA agents also executed a search warrant at Castaneda’s residence. Castaneda was home at the time. During the search, agents found in the laundry room a saucer pan with a dark liquid substance inside. The dark liquid tested presumptively positive as methamphetamine. The substance weighed approximately 2.6 kilograms (more than 5.8 pounds). According to the complaint, other items were located near the liquid methamphetamine that, in combination, are consistent with clandestine methamphetamine conversion labs.
Nevarez, Arzate, Castaneda, and Gaona appeared for arraignments yesterday before United States Magistrate Judge Nathanael M. Cousins. All were detained in custody pending upcoming detention hearings. The hearings are scheduled next week before U.S. Magistrate Judge Cousins.
The charges, in sum, include an indictment charging Victor Nevarez, Juan Rivera Arzate, and others, with conspiracy to distribute and to possess with intent to distribute five grams or more of methamphetamine in violation of 21 U.S.C. §§ 846 and 841(a)(1), (b)(1)(B). The complaint against Adhemar Castaneda Becerril charges him with possession with the intent to manufacture, distribute, or dispense 50 grams or more of a substance containing methamphetamine, in violation of 21 U.S.C. § 841(a)(1), (b)(1)(B). These charges carry a mandatory minimum sentence of 5 years and a maximum of 40 years in prison, a maximum fine of $5,000,000, and a period of supervised release following imprisonment of at least 4 years. The complaint against Pedro Gaona Salse charges him with possession with the intent to distribute fentanyl in violation of 21 U.S.C. § 841(a)(1), (b)(1)(C). This charge carries a maximum of 20 years in prison, a maximum fine of $1,000,000, and a period of supervised release following imprisonment of at least 3 years. 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.
Indictments and complaints merely allege that crimes have been committed, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Michael G. Pitman and Daniel Kassabian are the Assistant U.S. Attorneys prosecuting the case, with the assistance of Sahib Kaur. The prosecution is the result of an investigation by DEA.
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.
Eighty Months Imposed on Oakland Man Involved in Shootout While Burglarizing Marijuana Grow WarehouseRead the Press Release
OAKLAND – Vernell Thrower pleaded guilty and was sentenced in federal court today to 80 months (6 years, 8 months) for attempting to possess marijuana plants with the intent to sell them, for carrying a firearm during and in relation to that crime, and for the unlawful possession and transfer of a machine gun, announced United States Attorney Stephanie M. Hinds, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Patrick Gorman, Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon, and United States Marshal Service (USMS) Acting United States Marshal Mark Kolc. United States District Judge Yvonne Gonzalez Rogers handed down the sentence.
Thrower, 30, a resident of Oakland, pleaded guilty and was sentenced today in two separate cases. The earlier crime occurred during the late evening of August 1 and early hours of August 2, 2017. In his plea agreement, Thrower admitted that he and two others broke into a Richmond warehouse containing a large marijuana grow late on August 1. Once inside, they cut 200 marijuana plants and stuffed them into trash bags. As the three carried the bags of marijuana plants to their vehicle outside, a car pulled up on the street outside of the warehouse’s gate. Its occupants began shooting at them. Thrower ran back inside. Thrower admitted firing two shots from the warehouse’s garage back towards the location of the gunfire. He eventually escaped, but without the marijuana plants they cut. Thrower admitted he had intended to distribute the 200 marijuana plants had they made away with them. Thrower also admitted he carried a black handgun during the attempted theft because he knew that stealing marijuana plants from a grow house created a potential for violence.
Thrower further admitted in his plea agreement that three months later, on November 2, 2017, he sold a machine gun. On that date, Thrower possessed a Glock 23 .40 caliber pistol loaded with 16 rounds of ammunition and traveled to Makin Road in Oakland to sell it. Thrower admitted he knew the semi-automatic Glock pistol had a “Glock switch” installed in it that converted it into a fully automatic machine gun, that is, a firearm capable of shooting multiple bullets by one pull of its trigger. After Thrower arrived on Makin Road, he sold the fully automatic Glock machine gun to another person for $1,600.
Thrower also admitted he knew he was prohibited from possessing any firearm because he had previously been convicted of a felony. In a memo filed for sentencing, the government pointed out that Thrower’s prior felony convictions included a 2011 home invasion robbery in which the victim was threatened with a gun and another conviction for being a felon in possession of a firearm.
In addition to the 80 month federal prison sentence, United States District Judge Yvonne Gonzalez Rogers ordered that Thrower serve a four year period of supervision following his release from prison. Thrower was in custody at the sentencing hearing and begins serving his sentence immediately.
Daniel Pastor, Sloan Heffron, Amani S. Floyd, and Frank Riebli are the Assistant U.S. Attorneys who prosecuted the cases, with the assistance of Andy Ding, Helen Yee, Pat Mahoney, and Veronica Hernandez The prosecutions are the result of investigations by ATF, DEA, and USMS, with the assistance of the Oakland Police Department, Richmond Police Department, San Leandro Police Department, San Ramon Police Department, and Alameda County Sheriff’s Office.
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.
Oakland Resident Faces Fentanyl Distribution Charge Following Tenderloin ArrestRead the Press Release
SAN FRANCISCO – Mainor Escoto Escoto appeared in United States District Court today and was ordered detained in custody on a charge of possession with the intent to distribute fentanyl, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon.
The indictment against Escoto, 20, who is last known to reside in Oakland, arose following his arrest in San Francisco’s Tenderloin District on February 16, 2022. In a memo seeking his detention, the government described that Escoto was arrested based on a warrant when he was located on February 16 on the corner of Eddy and Larkin Streets. Police searched Escoto following his arrest and found numerous sandwich baggies of fentanyl in the pouch pocket of the sweatshirt he wore and in a backpack he had on. The fentanyl in both the sweatshirt’s pouch pocket and the backpack varied in color – including white, green, purple, and pink – and weighed 345 grams in total. According to the government’s memo, fentanyl sells on the street for approximately $30 per gram.
The indictment charges Escoto with 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 of 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.
The charges contained in the indictment are only allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Escoto made his federal court appearance today in United States District Court in San Francisco before United States Magistrate Judge Joseph C. Spero. His next court appearance is a status hearing scheduled for May 23, 2022, at 2 p.m. before United States District Judge Vince Chhabria.
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.
Defendants Appear in Court to Face Charges in High School Drug Advertising and Distribution CasesRead the Press Release
SAN JOSE – The Office of the United States Attorney filed federal criminal complaints charging Benjamin Reily Bliss; Louis Alexander, aka Lulu; and Brandon William Carranza-Arthur with crimes related to the distribution of fentanyl to high school students in Monterey County, announced U.S. Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon. Alexander and Carranza-Arthur appeared before U.S. Magistrate Judge Nathanael Cousins on Friday, May 6, 2022, to face their respective charges. Bliss appeared before U.S. Magistrate Judge Nathanael Cousins today.
According to the criminal complaints, the investigation into drug distribution to high schoolers in the area began as early as October of 2021 but took a turn after a 15-year-old Pacific Grove resident suffered a fatal overdose on or about March 5, 2022. Evidence collected at the scene of the overdose established that the juvenile overdosed from inhaling the smoke from a pulverized counterfeit “M30” pill. Subsequent investigation resulted in the complaints that allege Bliss, 18, of Carmel; Carranza, 19, of Monterey; and Alexander, 19, of Monterey, each played a role in distributing drugs to high school students in Monterey County.
The complaint against Bliss alleges that as part of the investigation into the deadly overdose, law enforcement interviewed a second juvenile who also overdosed, but survived. Text messages from the surviving juvenile’s cell phone established that on March 20, 2022, Bliss provided transportation for the juvenile. Specifically, Bliss picked up the surviving juvenile and provided a ride to San Francisco, where the juvenile purchased a baggie containing fentanyl in the form of a multicolored powdery/rocky substance. The juvenile allegedly paid $250 for the drugs which, after using, resulted in a non-fatal overdose on March 23, 2022.
The complaint against Alexander alleges that he used Snapchat to advertise, offer, and sell fentanyl-based counterfeit oxycodone and Xanax pills to high school students in the Monterey area. In October 2021, one of the juveniles he is believed to have supplied suffered a non-fatal overdose. While the juvenile overdose victim was recovering in the hospital, the juvenile’s mother discovered Snapchat messages on a cellular phone that the juvenile used. The Snapchat messages were about drug sales and were between the juvenile and a person named “lulu.” According to the complaint, law enforcement personnel later identified “lulu” as Alexander. In addition, the mother of yet another local high school student reported that “numerous students [ ] are using and addicted to ‘percocets,’”and that “lulu” is a known as a supplier of these “blue pills” at the student’s high school.
Similarly, the complaint filed against Carranza alleges that law enforcement personnel obtained text messages between Carranza and a juvenile establishing Carranza played a role in supplying drugs to high school students. According to the complaint, Carranza provided information regarding how a student should take counterfeit prescription drugs. The complaint describes numerous text messages in which a juvenile admits he was having intense cravings for drugs and Carranza negotiates the price and quantity of pills that could be supplied. In one exchange, the juvenile offers to pay Carranza $60 for $50 worth of pills if Carranza would front the money; the juvenile explained that the arrangement would provide sufficient time to arrange the sale of a cell phone to finance the transaction. According to the complaint, Carranza ultimately arranged for the juvenile to obtain the drugs.
In sum, Bliss is charged with aiding and abetting distribution of fentanyl, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(c) and 18 U.S.C. § 2, while Carranza and Alexander are charged with unlawfully using, or causing to be used, the Internet to advertise, or to offer to sell or distribute a controlled substance, in violation of 21 U.S.C. § 843(c)(2)(A). Bliss faces a maximum statutory sentence of 20 years in prison. Alexander and Carranza face a maximum term of four years in prison. In addition, as part of any sentence handed down after conviction of any of the three defendants, the court may order a fine of up to $250,000, restitution, and up to three years of supervised release. However, any sentence after 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.
Carranza and Alexander are next scheduled to appear on May 11 before Magistrate Judge Cousins. Bliss is making his initial federal court appearance today.
Assistant U.S. Attorneys Amani S. Floyd and Maya Karwande are prosecuting the cases with assistance from Linda Love and Andy Ding.
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.
This case is the result of an investigation by the DEA with assistance from Homeland Security Investigations; the FBI; the police departments of Pacific Grove, Seaside, Monterey, Salinas, Marina, Greenfield, and Soledad; the Monterey County Probation Department; and the Monterey County Sheriff’s Office.
Former Pleasanton Resident Pleads Guilty to Theft of COVID-19 Relief FundsRead the Press Release
OAKLAND – Javed Wahab pleaded guilty today to theft of government property in connection with a scheme to steal funds designed to aid medical providers in the treatment of patients suffering from COVID-19, announced U.S. Attorney Stephanie M. Hinds and U.S. Department of Health and Human Services’ Office of Inspector General’s (HHS-OIG) San Francisco Regional Office Special Agent in Charge Steven J. Ryan. The Hon. Yvonne Gonzalez Rogers, U.S. District Judge, accepted the plea.
According to court documents, Wahab, 53, formerly of Pleasanton, admitted he owned Premier Home Health Care & Hospice, Inc., Carelink Hospice Services, Inc., and JW Healthcare, Inc, each providing home health and hospice care in Alameda County, and elsewhere. Together, the three businesses received approximately $285,000 designated for the medical treatment and care of COVID-19 patients. Wahab admitted he stole $186,516.72 of these funds by spending them for his personal use and by transferring them to family members, rather than using the funds in conjunction with pandemic relief efforts as required.
The charges against Wahab resulted from his intentional misuse of funds distributed from the Coronavirus Aid, Relief, and Economic Security (CARES) Act Provider Relief Fund, money specially apportioned by the CARES Act to help health care providers who were financially impacted by the COVID-19 pandemic to provide care to patients who were suffering from COVID-19, and to compensate providers for the cost of that care. These funds were critical to delivering relief to health care providers and maintaining access to medical care during the pandemic.
On September 1, 2021, a federal grand jury indicted Wahab, charging him with five counts of theft of government property, in violation of 18 U.S.C. § 641. Pursuant to today’s plea agreement, Wahab pleaded guilty to one count. If Wahab complies with the plea agreement, the remaining counts will be dismissed at sentencing.
Judge Gonzalez Rogers scheduled Wahab’s sentencing for August 25, 2022. Wahab faces a maximum statutory prison term of 10 years. In addition, as part of a sentence, the court may order a fine of up to $250,000, restitution, and up to three years of supervised release. 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.
Assistant U.S. Attorney Katherine Lloyd-Lovett of the U.S. Attorney’s Office for the Northern District of California and Trial Attorney Shankar Ramamurthy of the Criminal Division’s Fraud Section are prosecuting the case.
This case was brought following an investigation by HHS-OIG.
The case was brought in coordination with the Health Care Fraud Unit’s COVID-19 Interagency Working Group, which is chaired by the National Rapid Response Strike Force and organizes efforts to address illegal activity involving health care programs during the pandemic.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.