Northern District of California
Press releases recorded for this federal judicial district.
Brentwood Woman Sentenced to 81 Months in Prison for Serial Tax Fraud, Wire Fraud, and Aggravated Identity TheftRead the Press Release
OAKLAND – Jehoaddan Wilson was sentenced in federal court today to 81 months for filing false tax claims, wire fraud, and aggravated identity theft in a tax fraud scheme that caused losses of $902,040, announced United States Attorney Stephanie M. Hinds and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Mark H. Pearson. The sentence was handed down by United States District Judge Jon S. Tigar.
Wilson, 41, of Brentwood, was convicted by a federal jury on September 28, 2021, of five counts of filing a false tax claim, five counts of wire fraud, and five counts of aggravated identify theft. Trial evidence demonstrated that Wilson obtained personal identifying information from scores of unsuspecting individuals through lies and misrepresentations and then filed fraudulent tax returns in their names.
Evidence presented at trial showed Wilson perpetrated her scheme by obtaining victims’ social security numbers either by manipulating them into providing the information under false pretenses or by obtaining their social security numbers without their knowledge. Wilson then filed tax returns in each victim’s name that contained false information and that fraudulently claimed a tax refund. In each return, Wilson requested the tax refund be deposited between at least two bank accounts, one or both of which were Wilson’s personal bank accounts. In sum, Wilson filed fraudulent tax returns for people without their knowledge or consent that caused the federal government to pay tax refunds not owed and to deposit those refunds into bank accounts controlled by Wilson.
At trial, one victim testified that she provided her personal identifying information to Wilson with the understanding that Wilson, who presented herself as a legitimate tax preparer, would assist in filing her tax return. Unbeknownst to the victim, Wilson made numerous false statements about the victim’s employment, expenses, and income in the tax return which fraudulently claimed a tax refund. Wilson also requested, without the victim’s knowledge or consent, that approximately half of the tax refund be deposited into Wilson’s bank account. In another instance, an elderly woman fell victim to Wilson’s scheme when Wilson or one of her associates visited the woman’s retirement community and convinced her to provide her identifying information to obtain free money from an alleged federal government “Obama Stimulus” plan. Wilson used the personal information to file a tax return on the elderly woman’s behalf and without her knowledge. The tax return, replete with false information, generated a fraudulent tax refund, and Wilson directed approximately half of the refund into her own bank account. Wilson victimized a third person, according to trial evidence, by obtaining the victim’s identifying information and filing a false tax return in his name while he was incarcerated and without his knowledge, again enriching herself. Wilson exploited a fourth and a fifth victim using a similar pattern of obtaining their identifying information, filing false tax returns in their names without their knowledge or consent, and causing portions of the tax refunds to be deposited into her bank accounts.
Evidence presented at trial also established that search warrants executed at Wilson’s home and office turned up numerous additional documents containing identifying information of victims, including copies of driver licenses and social security cards.
In its memorandum filed for sentencing, the government described that Wilson’s fraud was so pervasive that in just one tax year – 2011 – she victimized approximately 388 people. Her fraudulent tax claims caused a loss to the federal government of $902,040 in that tax year alone.
United States District Judge Jon S. Tigar also ordered, in addition to the 81 months imprisonment, that Wilson pay restitution in the amount of $902,040. The sentence included a three year period of supervision for Wilson following her release from prison. Wilson was remanded into custody at the end of the sentencing hearing and begins serving her sentence immediately.
Robert David Rees and Kristina Green are the Assistant U.S. Attorneys who prosecuted the case, with the assistance of Jasmine Sanders, Claudia Hyslop, and Leeya Kekona. The prosecution is the result of an investigation by IRS-CI.
Discovery of Cache of Drugs, Cash, and Weapons in Pacific Grove Apartment Leads to Federal Firearm and Drug Trafficking Charges Against Monterey County ResidentRead the Press Release
SAN JOSE – The Office of the United States Attorney has filed a federal criminal complaint charging Mario Jose Villagrana with federal drug distribution and firearms charges in connection with the discovery of a cache of drugs, cash, and weapons in a Pacific Grove, Calif., apartment, announced U.S. Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon.
The criminal complaint, filed April 28, 2022, and unsealed late yesterday, describes the drugs, cash, and weapons law enforcement officers found on February 15, 2022, in Villagrana’s Pacific Grove apartment and a closet within. For example, among the weapons found were two AR-15-style and two AK-47-style rifles, four handguns, and a 30-round extended magazine. The complaint also describes additional items collected, including a duffle bag with various caliber magazines and ammunition; two milling machines and a Dremel tool, both commonly used to fabricate firearm component parts; various gun parts; a variety of drugs, and more than $20,000 in U.S. currency. The drugs found allegedly include over 13,000 counterfeit “M30” pills containing fentanyl (weighing more than 1.4 kilograms).
The complaint charges Villagrana, 27 of Monterey County, Calif,, with possession with intent to distribute 40 grams or more of a mixture or substance containing fentanyl, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(B)(vi), and being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1). Villagrana faces a statutory mandatory minimum sentence of five years in prison, and a maximum sentence of 40 years in prison, for the drug charge, as well as a statutory maximum of 10 years in prison for the firearm charge. In addition, as part of any sentence, the court may order a maximum $5 million fine for the drug charge and a $250,000 fine for the firearm count, a term of supervised release, and forfeiture. 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.
Villagrana made his initial court appearance in the Northern District of California before U.S. Magistrate Judge Nathanael Cousins on May 3, 2022, and is scheduled to return to court May 10, for a detention hearing.
A criminal complaint merely alleges that a crime has been committed, and, as with all defendants, Villagrana is presumed innocent until proven guilty beyond a reasonable doubt.
Assistant U.S. Attorney Christoffer Lee is prosecuting the case with the assistance of Lynette Dixon. This prosecution is the result of an investigation by the DEA, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Monterey County Sheriff’s Office.
Woman Formerly of Bay Area Sentenced to Five Years in Prison for Fraud SchemeRead the Press Release
SAN JOSE – Amanda Christine Riley was sentenced in federal court today to 60 months in prison after pleading guilty to wire fraud in connection with a scheme to solicit donations from individuals to help her pay for cancer treatments she never needed nor received, announced United States Attorney Stephanie M. Hinds and Internal Revenue Service (IRS) Criminal Investigation, Special Agent in Charge Mark H. Pearson. The sentence was handed down by the Honorable Beth Labson Freeman, United States District Judge for the Northern District of California.
Beginning in 2012, Riley, who was then living in San Jose, began to falsely report that she had been diagnosed with Hodgkin’s lymphoma, a type of cancer. Although she was not actually ill, Riley carefully cultivated a social media presence, using Facebook, Instagram, Twitter, and a blog. She used her presence on these sites to “document” her nonexistent medical condition, and to aggressively solicit donations, supposedly to cover her medical expenses. In truth, Riley had no medical expenses. The donations she received were deposited into her personal bank accounts and used to pay her living expenses. In total, the government identified 349 individuals and entities who made contributions with a total value of $105,513 towards Riley’s fabricated medical expenses.
Information provided at the sentencing hearing showed that Riley went to great lengths to maintain her deception: she shaved her head to make it appear as if she were receiving chemotherapy; she falsified medical records; she forged physicians’ letters and medical certifications; she convinced family members to echo her false claims; she gave materially false testimony in several legal proceedings; and she attacked anyone who suggested she was malingering (going so far as to sue one of them). Riley’s scheme continued from 2012 until 2019, when it was uncovered by an investigation of the Internal Revenue Service, Criminal Investigation, and the San Jose Police Department.
Riley was charged by criminal complaint in July 2020 and pleaded guilty to an information charging one count of wire fraud in violation of 18 U.S.C. § 1343 on October 12, 2021. In addition to her 60-month prison sentence, Judge Freeman ordered that Riley pay restitution in the amount of $105,513. The sentence also included a three year period of supervision following her release from prison.
Assistant U.S. Attorneys Michael G. Pitman and Scott Simeon prosecuted the case with the assistance of Sahib Kaur. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation, and the San Jose Police Department.
South Bay Resident Charged with Federal Firearm Violation in the Wake of January 2020 Shooting DeathRead the Press Release
SAN JOSE – The Office of the United States Attorney has filed a federal criminal complaint charging Marcus Pardo with a firearm-related crime in connection with a January 2020 shooting death near the corner of Squeri Drive and Clayton Road in San Jose, announced U.S. Attorney Stephanie M. Hinds and Federal Bureau of Investigation Acting Special Agent in Charge Sean Ragan.
The complaint, filed April 11, 2022, and unsealed earlier today, alleges that Pardo, of Gilroy, Calif., shot and killed the victim with a .50 caliber firearm on January 15, 2020, during a drug transaction. According to the complaint, the shooting victim was involved in coordinating a drug deal between Pardo and another individual (the Intended Buyer) earlier the same day. The victim’s recovered text messages and other evidence show that the victim and the Intended Buyer met with Pardo, who had agreed to sell prescription Oxycodone pills to the Intended Buyer. The text messages also indicate Pardo and the Intended Buyer were bringing firearms to the drug deal and that the Intended Buyer contemplated robbing Pardo during the deal. The complaint details text messages by the victim acknowledging the danger inherent in this situation, and, specifically, one message in which the victim wrote to his friends: “Y’all if I die tonight just know I love y’all.”
According to the complaint, during the resulting meeting, Pardo fired the .50 caliber handgun in his possession, striking and killing the victim.
Pardo is charged with one count of using or carrying a firearm during and in relation to a drug trafficking crime, in violation of 18 U.S.C. § 924(c)(1)(A)(i). Pardo faces a statutory mandatory minimum sentence of five years in prison, and a maximum sentence of life in prison. In addition, as part of any sentence, the court may order restitution, a maximum $250,000 fine, and up to three years of supervised release. 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.
Pardo made his initial federal court appearance this morning before U.S. Magistrate Judge Virginia K. DeMarchi.
A criminal complaint merely alleges that a crime has been committed, and, as with all defendants, Pardo is presumed innocent until proven guilty beyond a reasonable doubt.
Assistant U.S. Attorney Jeffrey Backhus is prosecuting the case with the assistance of Elise Etter. This prosecution is the result of an investigation by the San Jose Police Department and the FBI.
San Francisco Man Charged in Alleged Cryptocurrency Investor Fraud SchemeRead the Press Release
SAN FRANCISCO – Japheth Dillman was arrested today in connection with an alleged scheme to defraud victims into investing in a San Francisco-based cryptocurrency trading fund, announced U.S. Attorney Stephanie M. Hinds, FBI Acting Special Agent in Charge Sean Ragan and Internal Revenue Service, Criminal Investigation (IRS-CI) Special Agent in Charge Mark H. Pearson.
Dillman, 44, of San Francisco, was charged in a complaint filed April 26, 2022, and unsealed earlier today. According to the complaint, from June 2017 through July 2018, Dillman was a general partner of Block Bits Fund I, LP (Block Bits Fund), a limited partnership incorporated in Delaware with a principal place of business in San Francisco. Dillman is alleged to have represented to potential investors that Block Fits Fund was developing a novel autotrader that would automatically complete cryptocurrency arbitrage trades on different exchanges. Dillman told potential investors that Block Fits Fund would profit from exploiting the price differences between different cryptocurrencies being sold on various exchanges. According to Dillman, investor funds would be used to develop and operate the autotrader, which he told investors was functioning and already returning profits. The complaint further alleges that, together with another general partner, David Mata, 42, of Spokane Wash., Dillman raised approximately $960,000 from investors by misrepresenting the status and functionality of the technology underlying the autotrader and by making false representations regarding the manner investor funds were being used.
The misrepresentations Dillman allegedly made are described in the complaint. For example, Dillman represented to multiple investors in June and July 2017 that the autotrader was already functioning and returning a substantial profit to Block Bits Fund. In fact, according to the complaint, there was no functioning autotrader at the time, and any claims regarding the autotrader’s ability to generate profits were false. According to the complaint, Block Bits Fund was never able to develop a functioning autotrader at any point in its existence. Further, in August 2017, Dillman represented to investors in an email that the arbitrage autotrader was being tested and that it would be deployed for automated trades within a week. The complaint alleges that these representations were false. According to the complaint, there was no prospect that the autotrader could be developed and deployed within one week of the date of the email, as development of the autotrader had not yet begun.
In addition, the complaint describes how Dillman allegedly misrepresented how investor funds were being used by representing that funds were being placed in “cold storage” where they would return high rates of profit for investors. “Cold storage” refers to a way of storing cryptocurrency that is supposedly safe and not exposed to risky investments. Dillman informed investors on multiple occasions that Block Bits Fund had reached “cold storage” deals with third parties whereby investor funds would be placed in “cold storage” for a period of time and receive a significant profit at the end of the storage period. However, rather than place the investor funds in “cold storage” for safe keeping, Dillman and Mata instead diverted the funds and used them to invest in risky, cryptocurrency-related ventures, none of which involved “cold storage” or were related to the stated purpose of Block Bits Fund. Moreover, the complaint alleges Dillman and Mata sent misleading updates and profit reports to investors representing that their funds were being stored securely when, in fact, they were invested in risky ventures. According to the complaint, all of the investments failed and investors lost a substantial portion of their funds.
In sum, the complaint alleges Block Bits investors lost approximately $508,000 due to Dillman’s scheme. Dillman is charged with one count of wire fraud, in violation of 18 U.S.C. § 1343. Mata also is charged with one count of wire fraud in a separate document, an information filed earlier today. If convicted, Dillman and Mata face a maximum statutory prison sentence of 20 years. In addition, the charge carries a maximum $250,000 fine and 3 years of supervised release. 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.
A criminal complaint and an information contain mere allegations and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Dillman’s next court appearance is scheduled for April 28, 2022, before U.S. Magistrate Judge Thomas S. Hixson. Mata’s next court appearance is scheduled for April 29, before Magistrate Judge Hixson.
The cases against Dillman and Mata are brought as a result of an investigation by the FBI and IRS-Criminal Investigation.
The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office for the Northern District of California. The U.S. Attorney’s Office appreciates the assistance of the San Francisco Regional Office of the Securities and Exchange Commission.
Union City Man Pleads Guilty to Series of Small Business RobberiesRead the Press Release
OAKLAND - Nelson Enrike Ramirez pleaded guilty today in federal court to two counts of robbery affecting interstate commerce, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Acting Special Agent in Charge Sean Ragan.
A federal complaint filed on March 5, 2021, charged Ramirez, 41 years old and from Union City, with a November 6, 2020, robbery of a 7-Eleven convenience store on Washington Boulevard in Fremont and alleged his involvement in 22 other robberies. An information that followed on December 1, 2021, charged Ramirez with the same November 6, 2020, robbery as well as a November 3, 2020, robbery of a 7-Eleven in Campbell, California.
In a plea agreement he entered into today, Ramirez admitted that from May to November 2020, he committed or attempted 23 robberies of small businesses in the east and south bay areas, including in Fremont, Newark, Hayward, Union City, Campbell, Milpitas, Mountain View, Los Altos, and Sunnyvale. He admitted that during the robberies and attempted robberies, he carried a black rubber replica semiautomatic firearm, brandished the replica firearm, and demanded money from employees of the businesses. Ramirez often apologized to the employees, stating that he needed money because he had a sick child at home – but he admitted in his plea agreement that he did not have such a child.
Ramirez described in his plea agreement that on November 3, 2020, he entered a 7-Eleven convenience store on West Sunnyoaks Avenue in Campbell and asked the store clerk a question. When she approached him, Ramirez told the clerk that he needed money because his son was sick and insurance would not cover it. As he spoke to the clerk, he pulled the black rubber replica firearm out of his pocket and held it at his side. He told the clerk to open the register, then walked behind the store’s counter with the clerk. Ramirez took approximately $1,500 from the register and fled the scene.
Ramirez also described that on November 6, 2020, he walked into a 7-Eleven convenience store on Washington Boulevard in Fremont. He told the store clerk he needed a soda. When the clerk approached to help, Ramirez pulled the replica firearm out and told the clerk he needed money. He ordered the clerk over to the cash register. The clerk opened the register and handed Ramirez approximately $200. Ramirez ordered the clerk to open a second cash register, but it was empty. Ramirez left.
Ramirez is next scheduled for a sentencing hearing before United States District Judge Jon S. Tigar in Oakland federal court on August 19, 2022. He remains in custody pending sentencing.
Ramirez pled guilty to two counts of robbery affecting interstate commerce in violation of 18 U.S.C. § 1951(a). Each count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross pecuniary gain to the defendant or twice the gross pecuniary loss inflicted on victims, plus restitution. 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.
Noah Stern is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Karina Ruiz, Kay Konopaske, and Kathleen Turner. The prosecution is the result of an investigation by the FBI, the Fremont Police Department, the Union City Police Department, the Newark Police Department, the Hayward Police Department, the Campbell Police Department, the Milpitas Police Department, the Mountain View Police Department, the Los Altos Police Department, and the Sunnyvale Police Department.
Major San Francisco Drug Trafficker Convicted of Possessing with Intent to Distribute 65 Pounds of MethamphetamineRead the Press Release
SAN FRANCISCO – Alejandro Alvarez was convicted of possession with intent to distribute methamphetamine by a federal jury, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration Special Agent in Charge Wade R. Shannon. The guilty verdict followed a four-day jury trial before the Honorable William H. Orrick, U.S. District Court Judge, in San Francisco.
Evidence at trial showed that Alvarez, 46, of San Francisco, was dealing tens of thousands of dollars’ worth of methamphetamine and heroin monthly at the time that San Francisco Police Department officers executed a search warrant at his residence and recovered about 65 pounds of methamphetamine. The methamphetamine was valued at more than $1.5 million when sold in retail quantities. Alvarez’s stash contained more than five million individual doses.
The trial evidence demonstrated that the investigation began when officers with the San Francisco Police Department learned that an individual who went by the name “Chewy” was selling heroin and other drugs. Eventually officers developed enough evidence to execute a search warrant on Alvarez’s apartment. They recovered over $46,000 in bulk cash, ledgers that detailed drug deals and pricing, several pounds of suspected heroin, some 65 pounds of methamphetamine, and other indicia of drug trafficking.
On February 20, 2020, a federal grand jury indicted Alvarez, charging his with one count of possession with intent to distribute 500 grams and more of methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(A)(viii). Pursuant to the jury’s verdict, Alvarez was found guilty of the sole count in the indictment.
Judge Orrick scheduled Alvarez’s sentencing for July 14, 2022. Alvarez faces a maximum statutory penalty of life imprisonment and a fine of $10,000,000. However, any sentence will 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.
Assistant U.S. Attorneys Joseph Tartakovsky and Alexis James are prosecuting the case with the assistance of Lance Libatique. The prosecution is the result of an investigation by the San Francisco Police Department, United States Drug Enforcement Administration, and the U.S. Attorney’s Office.
Justice Department Announces Nationwide Coordinated Law Enforcement Action to Combat Health Care-Related COVID-19 FraudRead the Press Release
SAN FRANCISCO – The Department of Justice today announced criminal charges against 21 defendants in nine federal districts across the United States for their alleged participation in various health care related fraud schemes that exploited the COVID-19 pandemic. These cases allegedly resulted in over $149 million in COVID-19-related false billings to federal programs and theft from federally-funded pandemic assistance programs. In connection with the enforcement action, the department seized over $8 million in cash and other fraud proceeds.
“Today’s announcement by the Department of Justice demonstrates our continued resolve to protect the integrity of the government efforts to combat the COVID 19 pandemic,” said U.S. Attorney Stephanie M. Hinds for the Northern District of California. “We will pursue anyone seeking to profit from this health care crisis by committing crimes that endanger the health and well-being of the public at a time when confidence in our public health system is of critical importance. Every day, the multi-agency partnership formed to combat pandemic-related fraud is holding fraudsters to account for their crimes.”
“The Department of Justice’s Health Care Fraud Unit and our partners are dedicated to rooting out schemes that have exploited the pandemic,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “Today’s enforcement action reinforces our commitment to using all available tools to hold accountable medical professionals, corporate executives, and others who have placed greed above care during an unprecedented public health emergency.”
“This COVID-19 health care fraud enforcement action involves extraordinary efforts to prosecute some of the largest and most wide-ranging pandemic frauds detected to date,” said Director for COVID-19 Fraud Enforcement Kevin Chambers. “The scale and complexity of the schemes prosecuted today illustrates the success of our unprecedented interagency effort to quickly investigate and prosecute those who abuse our critical health care programs.”
This announcement builds on the success of the May 2021 COVID-19 Enforcement Action and involves the prosecution of various COVID-19 health care fraud schemes. For example, several cases announced today involve defendants who allegedly offered COVID-19 testing to induce patients to provide their personal identifying information and a saliva or blood sample. The defendants are alleged to have then used the information and samples to submit false and fraudulent claims to Medicare for unrelated, medically unnecessary, and far more expensive tests or services. In one such scheme in the Central District of California, two owners of a clinical laboratory were charged with a health care fraud, kickback, and money laundering scheme that involved the fraudulent billing of over $214 million for laboratory tests, over $125 million of which allegedly involved fraudulent claims during the pandemic for COVID-19 and respiratory pathogen tests. In two separate cases in the District of Maryland and the Eastern District of New York, owners of medical clinics allegedly obtained confidential information from patients seeking COVID-19 testing at drive-thru testing sites and then submitted fraudulent claims for lengthy office visits with the patients that did not, in fact, occur. The proceeds of these fraudulent schemes were allegedly laundered through shell corporations in the United States, transferred to foreign countries, and used to purchase real estate and luxury items.
“Throughout the pandemic, we have seen trusted medical professionals orchestrate and carry out egregious crimes against their patients all for financial gain,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “These health care fraud abuses erode the integrity and trust patients have with those in the health care industry, particularly during a vulnerable and worrisome time for many individuals. The actions of these criminals are unacceptable, and the FBI, working in coordination with our law enforcement partners, will continue to investigate and pursue those who exploit the integrity of the health care industry for profit.”
In another type of COVID-19 health care fraud scheme announced today, defendants allegedly exploited policies that the Centers for Medicare and Medicaid Services (CMS) put in place to enable increased access to care during the COVID-19 pandemic. For example, in the Southern District of Florida, one medical professional was charged with a health care fraud, wire fraud, and kickback scheme that allegedly involved billing for sham telemedicine encounters that did not occur and agreeing to order unnecessary genetic testing in exchange for access to telehealth patients. Late last year, one defendant previously was sentenced to 82 months in prison in connection with this scheme.
“The attempt to profit from the COVID-19 pandemic by targeting beneficiaries and stealing from federal health care programs is unconscionable,” said Inspector General Christi A. Grimm of the Department of Health and Human Services (HHS). “HHS-OIG is proud to work alongside our law enforcement partners at the federal and state levels to ensure that bad actors who perpetrate egregious and harmful crimes are held accountable.”
Today’s announcement includes charges against two additional defendants for schemes targeting the Provider Relief Fund (PRF). The PRF is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted in March 2020 that provided financial assistance to medical providers to provide needed medical care to Americans suffering from COVID-19. In total, 10 defendants have been charged with crimes related to misappropriating PRF monies intended for frontline medical providers and three have pleaded guilty.
Today’s announcement also includes charges against manufacturers and distributors of fake COVID-19 vaccination record cards who, according to the allegations, intentionally sought to obstruct the HHS and Centers for Disease Control and Prevention in their efforts to administer the nationwide vaccination program and provide Americans with accurate proof of vaccination. For example, in the Northern District of California, three additional defendants were charged in a scheme to sell homeoprophylaxis immunizations for COVID-19 and falsify COVID-19 vaccination record cards to make it appear that customers received government-authorized vaccines. One defendant allegedly misused her position as the Director of Pharmacy at a northern California hospital to obtain real lot numbers for the Moderna vaccine that were then used to falsify COVID-19 vaccination record cards.
“As alleged, the defendants knowingly deceived the public for their own gain while endangering the health of our community members,” said FBI Acting Special Agent in Charge Sean Ragan. “The FBI San Francisco office and our federal partners will continue to aggressively pursue the criminal behavior of those seeking to fraudulently profit from the current health crisis.”
Another defendant in the Northern District of California pleaded guilty to the scheme in April 2022. U.S. Attorney Hinds described additional schemes being prosecuted in the Northern District of California in a video posted here.
In addition, in a separate case in the Western District of Washington, one manufacturer was charged in the multistate distribution of fake COVID-19 vaccination record cards after allegedly telling an undercover federal agent that “until I get caught and go to jail, [expletive] it I’m taking the money, ha! I don’t care.”
Further, the Center for Program Integrity, Centers for Medicare & Medicaid Services (CPI/CMS) separately announced today that it has taken an additional 28 administrative actions against providers for their alleged involvement in fraud, waste, and abuse schemes related to the delivery of care for COVID-19, as well as schemes that capitalize upon the public health emergency.
“We are committed to working closely with our law enforcement partners to combat fraud, waste and abuse in our federal health care programs,” said CMS Administrator Chiquita Brooks-LaSure. “The administrative actions CMS has taken protect the Medicare Trust Funds while also safeguarding people enrolled in Medicare.”
Today’s enforcement actions were led and coordinated by Assistant Chief Jacob Foster and Trial Attorney D. Keith Clouser of the National Rapid Response Strike Force, and Assistant Chief Justin Woodard of the Health Care Fraud Unit’s Gulf Coast Strike Force in the Criminal Division’s Fraud Section. The Fraud Section’s National Rapid Response Strike Force and the Health Care Fraud Unit’s Strike Forces (SF) in Brooklyn, the Gulf Coast, Miami, Los Angeles, and Newark, as well as the U.S. Attorneys’ Offices for the District of Maryland, District of New Jersey, District of Utah, Northern District of California, and Western District of Tennessee are prosecuting these cases. Descriptions of each case involved in today’s enforcement action are available on the department’s website at: https://www.justice.gov/criminal-fraud/health-care-fraud-unit/case-summaries.
In addition to the FBI, HHS-OIG, and CPI/CMS, the U.S. Postal Inspection Service; U.S. Postal Service Office of the Inspector General; Department of Defense Office of Inspector General; Department of the Interior Office of the Inspector General; Department of Labor Office of the Inspector General; Food and Drug Administration Office of Criminal Investigations; Homeland Security Investigations; U.S. Department of Veterans Affairs Office of the Inspector General; and other federal and local law enforcement agencies participated in the law enforcement action.
The Fraud Section leads the Health Care Fraud Strike Force. Since its inception in March 2007, the Health Care Fraud Strike Force, which maintains 15 strike forces operating in 24 federal districts, has charged more than 4,200 defendants who have collectively billed the Medicare program for nearly $19 billion. In addition, the CMS, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
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.
The Department of Justice needs the public’s assistance in remaining vigilant and reporting suspected fraudulent activity. To report suspected fraud, contact the National Center for Disaster Fraud (NCDF) at (866) 720-5721 or file an online complaint at: https://www.justice.gov/disaster-fraud/webform/ncdf-disaster-complaint-form. Complaints filed will be reviewed at the NCDF and referred to federal, state, local, or international law enforcement or regulatory agencies for investigation.
An indictment, complaint, or information is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Berkeley Duo Charged with Conspiracy to Sell and Sales of Fentanyl and Methamphetamine in the TenderloinRead the Press Release
SAN FRANCISCO – David Ordonez and Juan Carlos Hernandez-Ordonez appeared in United States District Court today to face federal charges of conspiring to distribute 40 grams or more of fentanyl and of distributing 40 grams or more of fentanyl in San Francisco’s Tenderloin District, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon. David Ordonez is also charged with distribution of five grams or more of methamphetamine.
The federal criminal complaint unsealed today alleges that Ordonez, 19, and Hernandez-Ordonez, 18, repeatedly traveled from their shared apartment in Berkeley to the Tenderloin of San Francisco to sell narcotics in the open-air drug market of the 7th Street and Market Street area. The complaint charges the two Berkeley men with engaging together in a conspiracy to distribute more than 40 grams of fentanyl in the Tenderloin from February 9 to March 29, 2022. The complaint specifically describes five narcotics sales during this time period to undercover San Francisco police officers. In each sale, either Ordonez or Hernandez-Ordonez sold fentanyl or methamphetamine, and sometimes both, to an undercover officer. In addition to the conspiracy charge, the complaint charges each man with specific narcotics sales. Ordonez is charged in the complaint with selling approximately 59 grams of fentanyl for $1,000 to an undercover officer in an alley near the area of 7th Street and Market Street on February 24, 2022. The complaint describes that Ordonez at the same time sold the undercover officer approximately 30 grams of methamphetamine for $200. The complaint next charges Ordonez with selling approximately 71 grams of methamphetamine for $500 to an undercover officer on March 10, 2022, in the same location and alleges that at the same sale he sold approximately 28 grams of fentanyl to the officer for $500. The complaint next charges Hernandez-Ordonez with selling approximately 59 grams of fentanyl for $1,000 to a different undercover officer on March 29, 2022. That alleged sale also occurred in the area of 7th Street and Market Street.
The four counts in the federal complaint each carry the same minimum and maximum criminal penalties. The complaint charges Ordonez and Hernandez-Ordonez with one count of engaging in a conspiracy to distribute more than 40 grams of fentanyl in violation of 21 U.S.C. § 846 and 21 U.S.C. § 841(a)(1), (b)(1)(B)(vi). The complaint also charges Ordonez and Hernandez-Ordonez each with separate counts of distributing 40 or more grams of fentanyl in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(B)(vi). The complaint lastly charges Ordonez with one count of distributing five or more grams of methamphetamine in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(B)(viii). The statutory penalty for each one of these counts is a minimum of five years of imprisonment and a maximum of 40 years of imprisonment, a maximum of a 5,000,000 fine, and a minimum of 4 years of supervision following release from prison with a maximum of life. However, any sentence following a conviction would be imposed by a court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The charges contained in the criminal complaint are only allegations. As in any criminal case, a defendant is presumed innocent unless and until proven guilty in a court of law.
Ordonez and Hernandez-Ordonez made their initial federal court appearances today before United States Magistrate Judge Thomas S. Hixson. The next court appearance for Ordonez is scheduled on April 22 for appointment of an attorney and to set a detention hearing. Hernandez-Ordonez is next scheduled for April 27 for a detention hearing. Both remain in custody.
Assistant U.S. Attorney Lauren M. Harding is prosecuting the case with the assistance of Amala James. The prosecution is the result of an investigation by DEA and the San Francisco Police Department Narcotics Division.
Three East Bay Men Plead Guilty to A Conspiracy to Traffic FirearmsRead the Press Release
OAKLAND –Troy Elias Walker, David Michael Rembert, and Daljit Kamal Singh pleaded guilty today in federal court to a conspiracy to deal firearms without a license, announced United States Attorney Stephanie M. Hinds, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Patrick Gorman, U.S. Postal Inspection Service (USPIS) San Francisco Division Inspector in Charge Rafael Nuñez, and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon.
A federal complaint filed August 10, 2021, initiated charges against Walker, 24, and Rembert, 42, both from Concord, and Singh, 27, from Hercules, arising from an investigation into the trafficking of unlicensed and illegal firearms conducted in-person and via Instagram. The complaint described that law enforcement agents purchased 17 machinegun conversion switches designed for pistols and 13 other firearms over the course of multiple undercover buys in Concord, California. A machinegun conversion switch, also referred to as a conversion switch, is a device that modifies a firearm so that it fires as a machinegun, that is, it fires multiple bullets in rapid succession by a single pull of the trigger. A conversion switch itself qualifies as a machinegun under federal law. The undercover firearm purchases also included buys of privately made firearms (PMFs) in addition to commercially manufactured firearms. PMFs – which include firearms colloquially referred to as “ghost guns” – are firearms built from unfinished receivers and typically lack manufacturer’s marks or serial numbers.
Today each defendant entered into a plea agreement admitting he was guilty of conspiring with his two co-defendants to deal firearms without a license. In their respective plea agreements, the defendants described examples of their illegal firearms sales as part of the conspiracy. Singh admitted in his plea agreement that on April 21, 2021, he sold a Smith & Wesson handgun with an obliterated serial number and a conversion switch to an undercover law enforcement agent. Rembert was present at the transaction along with Walker, and Rembert admitted in his plea agreement that he obliterated the serial numbers on the handgun. Rembert also admitted that he installed the conversion switch onto the undercover agent’s firearm at the time of the sale, converting the handgun into a machinegun, and that he charged a fee for the installation service.
Rembert further admitted in his plea agreement that on May 6, 2021, he sold a Glock-style handgun with a conversion switch to an undercover law enforcement agent for $2,000. Rembert admitted he installed the switch into the firearm during the meeting, converting it to a machinegun.
Walker admitted in his plea agreement that on the same day, May 6, 2021, he sold four conversion switches for $1,050 to an undercover law enforcement agent. He also sold the undercover agent a privately made P80 firearm – a PMF or ghost gun – with a Glock slide on it for $1,050. Walker acknowledged these items qualify under federal law as machineguns.
Walker also admitted that on June 2, 2021, he sold ten conversion switches for $2,000 and a privately made P80 firearm with an obliterated serial number and an installed conversion switch for $1,000. He also sold an AR-15 style rifle and a SKS rifle. These sales were made to undercover law enforcement agents. Walker admitted the conversion switches and the P80 firearm qualified as machineguns.
Rembert further admitted in his plea agreement that on July 14, 2021, he sold a Glock Model 48 handgun, a Glock Model 36 handgun, and a Glock-style conversion switch to two undercover law enforcement agents. The total price was more than $3,200.
Each defendant admitted that the conspiracy spanned at least from April 15, 2021, through July 14, 2021, and during this time up to 99 firearms were sold. Walker specifically admitted selling 30 firearms to undercover agents during the conspiracy and selling firearms on Instagram. All three defendants admitted they did not have a license to sell firearms.
The three defendants were arrested on August 12, 2021. In their respective plea agreements, Walker acknowledged that on the day of the arrest, law enforcement agents seized twelve firearms from his residence, Rembert admitted agents seized 38 firearms from his residence, and Singh admitted agents recovered a machinegun pistol from a car registered to him.
The defendants are scheduled for their sentencing hearings before United States District Judge Jon S. Tigar in Oakland federal court on August 5, 2022. Walker remains in custody pending sentencing. Rembert and Singh are out of custody pending sentencing.
Walker, Rembert, and Singh each entered a guilty plea to a single count of conspiracy to deal firearms without a license in violation of 18 U.S.C. §§ 371 and 922(a)(1)(A). This charge carries a maximum term of 5 years in prison and a maximum fine of $250,000. 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.
Abraham Fine, Jonathan U. Lee, and Frank Riebli are the Assistant U.S. Attorneys prosecuting the case, with the assistance of Leeya Kekona and Kathleen Turner. The prosecution is the result of an investigation by ATF, DEA, the United States Postal Inspection Service, the Concord Police Department, and the Antioch Police Department.
This case follows the launch by the U.S. Department of Justice of Cross-Jurisdictional Firearms Trafficking Strike Forces in five key regions 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 through collaborative cross-jurisdictional efforts, which include additional states and multiple law enforcement agencies.
Two Santa Clara County Executives Charged with “Specialty Occupation” Visa FraudRead the Press Release
SAN JOSE – Elangovan Punniakoti and Mary Christeena appeared in federal court today to face an indictment charging them with visa fraud and conspiracy to commit visa fraud, announced United States Attorney Stephanie M. Hinds, U.S. Department of State Diplomatic Security Service (DSS), San Francisco Field Office, Special Agent in Charge William Chang, and Homeland Security Investigations Special Agent in Charge Tatum King.
According to the indictment, Innovate Solutions, Inc. in Santa Clara County was incorporated in 2008 as an information technology services company. Punniakoti, 52, a resident of Cupertino, acted as CEO of Innovate Solutions. Christeena, 47, also a resident of Cupertino, served as the company’s president.
The indictment charges that from 2010 through May 2020, Punniakoti and Christeena repeatedly submitted fraudulent H-1B visa applications for foreign workers sponsored by Innovate Solutions. H-1B visas are issued through the United States government’s H-1B Specialty Occupation Workers program. With an H-1B visa, a sponsoring employer can employ a foreign worker in the United States on a temporary, nonimmigrant basis in a “specialty occupation.” A specialty occupation requires the theoretical and practical application of a body of specialized knowledge and requires the employee to have a bachelor's degree or its equivalent in the relevant specialty. Each employer seeking to obtain an H-1B visa to employ a nonimmigrant foreign worker is required to submit an application to the U.S. Department of Labor that, among other things, attests to labor conditions and describes the existence, duration, and wages of the temporary job. A subsequent petition requires, among other information, biographical data of the proposed foreign worker and the address where the proposed foreign worker will be working for the sponsoring employer.
The indictment charges that from 2010 through May 2020, Punniakoti and Christeena submitted approximately 54 fraudulent H-1B visa applications for temporary nonimmigrant workers sponsored by Innovate Solutions. Each application required representations made under penalty of perjury as to the name, location, terms, and existence of the employment position for the sponsored nonimmigrant worker. Punniakoti and Christeena submitted, or caused to be submitted, statements in the application process that the foreign workers would be working offsite at specific end-client companies. The indictment charges that the identified end-client companies either never received the proposed foreign workers or never intended to receive those workers. The indictment also charges that Punniakoti and Christeena submitted, or caused to be submitted, statements that a foreign worker would be working on an internal project for Innovate Solutions despite knowing that no such project existed.
Once the applications were approved, Punniakoti and Christeena created a pool of H-1B workers that were placed at employment positions with other employers that had actual work, not with the identified end-clients. The practice provided Innovate Solutions with an unfair and illegal advantage over employment-staffing firms.
During the period of Punniakoti’s and Christeena’s conspiracy, the indictment alleges, the other employers paid fees of more than $2.5 million to Innovate Solutions to cover the cost of the H-1B workers’ wages and salaries as well as a profit markup for Innovate Solutions.
Punniakoti and Christeena made their initial appearances in San Jose federal court today before United States Magistrate Judge Virginia K. DeMarchi. A further court appearance is scheduled on July 25, 2022, before United States District Judge Edward J. Davila, who sits in San Jose. Both defendants were released.
The federal indictment charges both Punniakoti and Christeena with one count of conspiracy to commit visa fraud in violation of 18 U.S.C. § 371 and six counts of visa fraud in violation of 18 U.S.C. §§ 1546(a) and 2. The maximum statutory imprisonment sentence for a violation of 18 U.S.C. § 371 is 5 years in prison. The maximum statutory imprisonment sentence for each violation of 18 U.S.C. §§ 1546(a) is 10 years. Each of the charged statutes carry a maximum statutory fine of $250,000 or twice the gross gain or loss amount. 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 criminal indictment are only allegations. As in any criminal case, these defendants are presumed innocent unless and until proven guilty in a court of law.
Assistant United States Attorney Sarah Griswold is prosecuting the case with the assistance of Lynette Dixon. The prosecution was the result of an investigation led by the DSS representative to the Document and Benefit Fraud Task Force (DBFTF), overseen by Homeland Security Investigations. The DBFTF is a multi-agency task force that coordinates investigations into fraudulent immigration documents. U.S. Citizenship and Immigration Service’s Office of Fraud Detection and National Security also assisted with the investigation.
Justice Department Announces New Rule to Modernize Firearm DefinitionsRead the Press Release
WASHINGTON – Today, the Department of Justice announced that it has submitted to the Federal Register the “Frame or Receiver” Final Rule, which modernizes the definition of a firearm. Once implemented, this rule will clarify that parts kits that are readily convertible to firearms are subject to the same regulations as traditional firearms. These regulatory updates will help curb the proliferation of “ghost guns,” which are often assembled from kits, do not contain serial numbers, and are sold without background checks, making them difficult to trace and easy to acquire by criminals.
“One year ago, the Department committed to address the proliferation of ghost guns used in violent crimes,” said Attorney General Merrick B. Garland. “This rule will make it harder for criminals and other prohibited persons to obtain untraceable guns, will help ensure that law enforcement officers can retrieve the information they need to solve crimes, and will help reduce the number of untraceable firearms flooding our communities. I commend all our colleagues at the ATF who have worked tirelessly over the past 12 months to get this important rule finalized, and to do it in a way that respects the rights of law-abiding Americans.”
The rule goes into effect 120 days from the date of publication in the Federal Register, and once implemented, will address the proliferation of these un-serialized firearms in several ways. These include:
1. To help keep guns from being sold to convicted felons and other prohibited purchasers, the rule makes clear that retailers must run background checks before selling kits that contain the parts necessary for someone to readily make a gun.
2. To help law enforcement trace guns used in a crime, the rule modernizes the definition of frame or receiver, clarifying what must be marked with a serial number – including in easy-to-build firearm kits.
3. To help reduce the number of unmarked and hard-to-trace “ghost guns,” the rule establishes requirements for federally licensed firearms dealers and gunsmiths to have a serial number added to 3D printed guns or other un-serialized firearms they take into inventory.
4. To better support tracing efforts, the rule requires federal firearms licensees, including gun retailers, to retain records for the length of time they are licensed, thereby expanding records retention beyond the prior requirement of 20 years. Over the past decade, ATF has been unable to trace thousands of firearms – many reportedly used in homicides or other violent crimes – because the records had already been destroyed. These records will continue to belong to, and be maintained by, federal firearms licensees while they are in business.
As the final rule explains, from January 2016 to December 2021, ATF received approximately 45,240 reports of suspected privately made firearms recovered by law enforcement, including in 692 homicide or attempted homicide investigations. The chart below demonstrates the total annual numbers of suspected PMFs recovered by law enforcement over the past six years:
Today’s announcement marks one year since the Attorney General directed the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) to issue a proposed rule within 30 days that would address the proliferation of unmarked firearms increasingly being used in crimes. On May 7, 2021, the Department of Justice issued a notice of proposed rulemaking, and during the 90-day open comment period, the ATF received more than 290,000 comments, the highest number of comments submitted to a proposed rule in ATF’s history. Today’s announcement is also the latest in a series of steps the department has taken to address violent crime and gun violence.The final rule, as submitted to the Federal Register, can be viewed here: https://www.atf.gov/rules-and-regulations/definition-frame-or-receiver
To learn more about the rulemaking process, please see: https://www.federalregister.gov/uploads/2011/01/the_rulemaking_process.pdf -->President of Local Chapter of National Treasury Employees Union Convicted of Wire Fraud and False Statements ChargesRead the Press Release
A federal jury found Jonathon Ortino, former president of the National Treasury Employees Union Chapter 165 (Union), guilty of two counts of making false statements and three counts of wire fraud in connection with a scheme to defraud the Union and to hide the fraud by submitting false annual financial reports to the Department of Labor, announced U.S. Attorney Stephanie M. Hinds, Department of Homeland Security, Office of Inspector General (DHS OIG) Special Agent in Charge Matthew Brackett, and U.S. Department of Labor, Office of Labor Management Standards (DOL OLMS) District Director Bruce Edgington. The jury acquitted Ortino of one count of making false statements. The verdict was handed down after a five-day jury trial before the Hon. William Orrick, U.S. District Judge.
Between September 2013 and September 2017, Ortino, 47, of San Bruno, Calif., was the president of the Union, which represents Customs and Border Protection officers in California and Nevada. The evidence submitted at trial demonstrated that, beginning in February 2014, Ortino improperly took more than $84,000 in Union money, using it on himself, his wife, his friends, and other associates. The evidence also showed that Ortino falsely reported the amount of money paid to him in 2014 and 2016 on the Department of Labor’s Form LM-3 Labor Organization Annual Report (“Form LM-3”), which required Ortino to report, among other things, loans and disbursements made to Union officers, and money received by the Union.
On June 4, 2019, a federal grand jury returned a Superseding Indictment charging Ortino with three counts of making false statements to a government agency, in violation of 18 U.S.C. §§ 1001(a)(2) and 2, and three counts of wire fraud, in violation of 18 U.S.C. § 1343. After the trial, the jury convicted Ortino on five counts—all three counts of wire fraud and two of the three false-statements counts.
Ortino faces a statutory maximum term of 5 years in prison and a $250,000 fine for each count of making false statements and a statutory maximum term of 20 years in prison and a $250,000 fine on each count of wire fraud. In addition, as part of Ortino’s sentence, the court may order a term of supervised release, restitution, and additional assessments; however, any sentence following conviction 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. The court has not yet published a date for sentencing.
Assistant U.S. Attorneys Nicholas Parker and Charles Bisesto are prosecuting the case with the assistance of Rebecca Shelton. This case resulted from an investigation by DHS OIG and the DOL OLMS.
Naturopathic Doctor Pleads Guilty to Fake COVID-19 Immunization and Vaccination Card SchemeRead the Press Release
SAN FRANCISCO – A California-licensed naturopathic doctor pleaded guilty today for scheming to sell homeoprophylaxis immunization pellets and for falsifying COVID-19 vaccination cards by making it appear that customers had received the U.S. Food and Drug Administration (FDA)-authorized Moderna vaccine. The Hon. Charles R. Breyer, U.S. District Judge accepted the plea.
“Juli Mazi has admitted that she engaged in a scheme to sell fake health care records to her customers,” said U.S. Attorney Stephanie M. Hinds. “Mazi made profits by selling false immunization cards she knew would be used to mislead schools into believing students had been immunized from childhood illnesses as required by law. Mazi also sold fake COVID-19 Vaccination Record Cards suggesting she administered the Moderna vaccine to her customers when, in fact, she had not. Mazi’s fake health care records scheme endangered the health and well-being of students and the general public at a time when confidence in our public health system is of critical importance.”
“This doctor violated the public’s trust and reliance on health care professionals – during a time when integrity was needed most,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “Instead of providing sage information and guidance, Mazi profited from peddling unapproved remedies, stirring up false fears, and generating fake proof of vaccinations. The Department of Justice and its law enforcement partners are committed to protecting the American people during this national emergency, including protecting trust in the medical developments allowing us to emerge from the pandemic.”
According to court documents, in April 2021, the Department of Health and Human Services Office of Inspector General (HHS-OIG) received a complaint from a member of the public that Juli A. Mazi, 41, of Napa, was offering homeoprophylaxis immunization pellets which she claimed would provide lifelong protection from COVID-19. Mazi also provided fake CDC COVID-19 vaccination record cards with instructions on how to complete the cards to make them falsely appear to be records of the FDA-authorized Moderna vaccine. The investigation revealed that Mazi provided fake CDC COVID-19 vaccination cards for more than 200 individuals.
According to court documents, Mazi also offered homeoprophylaxis immunization pellets in place of childhood vaccinations required for attendance at school. Mazi provided her patients with deceptive “immunization” cards which she knew would be submitted to schools, and which fraudulently indicated that authorized vaccines had been administered. The investigation revealed that Mazi provided these fake immunization cards to more than 100 individuals.
“During a time when the public has been heavily reliant on our medical professionals for advice and guidance, Mazi has brazenly violated the trust of the public by instilling fear and spreading misinformation surrounding COVID-19 immunizations and treatments,” said FBI Assistant Director Luis Quesada of the Criminal Investigative Division. “There is no place for fraudulent activity, and the FBI will continue to investigate and pursue those who abuse their positions of authority to try and profit in this criminal manner.”
“By falsifying vaccine cards, providers not only undermine important measures to address the ongoing public health emergency; they can also endanger the health of their patients and the public,” said Special Agent in Charge Steven Ryan of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG is proud to work with our law enforcement partners to ensure that all health care providers who misuse their medical professional status for financial gain are held accountable.”
“The FDA plays a critical role in protecting public health during the COVID-19 pandemic and continues to take swift action on fraudulent COVID-19 products, such as this unauthorized and unproven purported ‘immunization’,” said Special Agent in Charge Lisa L. Malinowski, FDA Office of Criminal Investigations Los Angeles Field Office. “We will continue to pursue, investigate and bring to justice those whose actions jeopardize the public health.”
“The defendant spread inaccurate medical information about COVID-19 for personal gain, clearly taking advantage of a situation that had made our community vulnerable,” said Acting Special Agent in Charge Tim Stone. “As the government worked to provide accurate and relevant information during the pandemic, Mazi took advantage of the situation and chose to line her own pockets with profits from fraudulent vaccine documents and medicine, abusing the trust placed in her as a medical professional. The FBI will not tolerate such an abuse of trust,” he said.
On February 2, 2022, the Office of the United States Attorney filed an information charging Mazi with one count of wire fraud, in violation of 18 U.S.C. § 1343, and one count of making false statements related to health care matters, in violation of 18 U.S.C. § 1035. Pursuant to today’s plea agreement, Mazi pleaded guilty to both counts.
Judge Breyer scheduled Mazi’s sentencing for July 29, 2022. Mazi faces a maximum statutory prison sentence of 20 years for the wire fraud charge and 5 years for the false statements charge. In addition, each charge carries a maximum $250,000 fine and 3 years of supervised release. 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.
HHS-OIG’s San Francisco Regional Office and the FBI’s San Francisco Field Office are investigating the case.
Assistant U.S. Attorney Katherine Lloyd-Lovett of the U.S. Attorney’s Office for the Northern District of California and Trial Attorney Sridhar Babu Kaza of the Criminal Division’s Fraud Section’s National Rapid Response Strike Force are prosecuting the case.
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.
The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, comprised of 15 strike forces operating in 24 federal districts, has charged more than 4,200 defendants who collectively have billed the Medicare program for more than $19 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at https://www.justice.gov/criminal-fraud/health-care-fraud-unit.
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.
The Fraud Section uses the Victim Notification System (VNS) to provide victims with case information and updates related to this case. Victims with questions may contact the Fraud Section’s Victim Assistance Unit by calling the Victim Assistance phone line at 1-888-549-3945 or by emailing [email protected]. To learn more about victims’ rights, please visit: https://www.justice.gov/criminal-vns/victim-rights-derechos-de-las-v-ctimas.
Justice Department Investigation Leads to Shutdown of Largest Online Darknet MarketplaceRead the Press Release
The Justice Department announced today the seizure of Hydra Market (Hydra), the world’s largest and longest-running darknet market. In 2021, Hydra accounted for an estimated 80% of all darknet market-related cryptocurrency transactions, and since 2015, the marketplace has received approximately $5.2 billion in cryptocurrency.
The seizure of the Hydra servers and cryptocurrency wallets containing $25 million worth of bitcoin was made this morning in Germany by the German Federal Criminal Police (the Bundeskriminalamt), in coordination with U.S. law enforcement.
“The Justice Department will be relentless in our efforts to hold accountable those who violate our laws – no matter where they are located or how they try to hide their crimes,” said Attorney General Merrick B. Garland. “Together with our German law enforcement partners, we have seized the infrastructure of the world’s largest darknet market, but our work is far from over. We will continue to work alongside our international and interagency partners to disrupt and dismantle darknet markets, and to hold those who commit their crimes on the dark web accountable for their acts.”
“The Department of Justice will not allow darknet markets and cryptocurrency to be a safe haven for money laundering and the sale of hacking tools and services,” said Deputy Attorney General Lisa O. Monaco. “Our message should be clear: we will continue to go after darknet markets and those who exploit them. Together with our partners in Germany and around the world, we will continue our work to disrupt the ecosystem that allows these criminal actors to operate.”
Hydra was an online criminal marketplace that enabled users in mainly Russian-speaking countries to buy and sell illicit goods and services, including illegal drugs, stolen financial information, fraudulent identification documents, and money laundering and mixing services, anonymously and outside the reach of law enforcement. Transactions on Hydra were conducted in cryptocurrency and Hydra’s operators charged a commission for every transaction conducted on Hydra.
In conjunction with the shutdown of Hydra, the department also announced criminal charges against Dmitry Olegovich Pavlov, 30, a resident of Russia, for conspiracy to distribute narcotics and conspiracy to commit money laundering, in connection with his operation and administration of the servers used to run Hydra.
“This coordinated action sends a clear message to anyone attempting to operate or support an online criminal enterprise under the cover of the dark web,” said U.S. Attorney Stephanie M. Hinds for the Northern District of California. “The dark web is not a place criminals can operate with impunity or hide from U.S. law enforcement, and we will continue to use our sophisticated tools and expertise to dismantle and disable darknet markets. This action also underscores the importance of international law enforcement collaboration. We thank German authorities and the Bundeskriminalamt, the German Federal Criminal Police Office, for its valued assistance in this case.”
“The darknet has been a key online marketplace for the sale of deadly drugs worldwide,” said Administrator Anne Milgram of the Drug Enforcement Administration (DEA). “The availability of illicit substances and money laundering services offered by Hydra threaten the safety and health of communities far and wide. Criminals on the darknet hide behind the illusion of anonymity, but DEA and our partners across the globe are watching. We will continue to investigate, expose, and take action against criminal networks no matter where they operate. I commend the extraordinary investigative efforts of DEA’s Miami Counternarcotic Cyber Investigations Task Force, Cyber Support Section, and Special Operations Division, and the teamwork from federal and international law enforcement partners that led to this action.”
“The Hydra darknet site provided a platform for criminals who thought they were beyond the reaches of law enforcement to buy and sell illegal drugs and services,” said Chief Jim Lee of IRS-Criminal Investigation. “Our Cyber Crimes Unit once again used their cryptocurrency tracking expertise to help take down this site and identify the criminal behind it. Denying criminals a space to operate freely to conduct their nefarious activities is the first step in stopping this activity from happening altogether.”
“The successful seizure of Hydra, the world's largest darknet marketplace, dismantled digital infrastructures which had enabled a wide range of criminals – including Russian cyber criminals, the cryptocurrency tumblers and money launderers that support them and others, and drug traffickers,” said FBI Director Christopher Wray. “Today’s announcement is a testament to the strength and potency of our law enforcement partnerships here and around the world – and another example of our strategy to broadly target the entire illicit ecosystem that drives and enables crime.”
“The U.S. Postal Inspection Service is dedicated to protecting the United States mail from being used to transport illegal drugs and illicit goods available on the darknet,” said Chief Postal Inspector Gary R. Barksdale of the U.S. Postal Inspection Service National Headquarters. “The seizure of the criminal marketplace, Hydra Market, reflects the effective collaboration of law enforcement to stop criminal enterprises from their illicit activity. The Postal Inspection Service will continue to work with our federal partners to end these criminal organizations regardless of where they are.”
“The dismantling of the Hydra Market, the dark web’s largest supplier of illicit goods and services, sends a message to these electronic criminal kingpins that think they can operate with impunity,” said Special Agent in Charge Anthony Salisbury of Homeland Security Investigations (HSI) Miami. “HSI will continue to work with our U.S. and international law enforcement partners to target these transnational criminal organizations who attempt to manipulate the anonymity of the dark web to push their poison all over the world.”
According to the indictment, vendors on Hydra could create accounts on the site to advertise their illegal products, and buyers could create accounts to view and purchase the vendors’ products. Hydra vendors offered a variety of illicit drugs for sale, including cocaine, methamphetamine, LSD, heroin and other opioids. The vendors openly advertised their drugs on Hydra, typically including photographs and a description of the controlled substance. Buyers rated the sellers and their products on a five-star rating system, and the vendors’ ratings and reviews were prominently displayed on the Hydra site.
Hydra also featured numerous vendors selling false identification documents. Users could search for vendors selling their desired type of identification document – for example, U.S. passports or drivers’ licenses – and filter or sort by the item’s price. Many vendors of false identification documents offered to customize the documents based on photographs or other information provided by the buyers.
Numerous vendors also sold hacking tools and hacking services through Hydra. Hacking vendors commonly offered to illegally access online accounts of the buyer’s choosing. In this way, buyers could select their victims and hire professional hackers to gain access to the victims’ communications and take over the victims’ accounts.
Hydra vendors also offered a robust array of money laundering and so-called “cash-out” services, which allowed Hydra users to convert their bitcoin (BTC) into a variety of forms of currency supported by Hydra’s wide array of vendors. In addition, Hydra offered an in-house mixing service to launder and then process vendors’ withdrawals. Mixing services allowed customers, for a fee, to send bitcoin to designated recipients in a manner that was designed to conceal the source or owner of the bitcoin. Hydra’s money laundering features were so in-demand that some users would set up shell vendor accounts for the express purpose of running money through Hydra’s bitcoin wallets as a laundering technique.
Starting in or about November 2015, Pavlov is alleged to have operated a company, Promservice Ltd., also known as Hosting Company Full Drive, All Wheel Drive and 4x4host.ru, that administered Hydra’s servers (Promservice). During that time, Pavlov, through his company Promservice, administered Hydra’s servers, which allowed the market to operate as a platform used by thousands of drug dealers and other unlawful vendors to distribute large quantities of illegal drugs and other illicit goods and services to thousands of buyers, and to launder billions of dollars derived from these unlawful transactions.
As an active administrator in hosting Hydra’s servers, Pavlov allegedly conspired with the other operators of Hydra to further the site’s success by providing the critical infrastructure that allowed Hydra to operate and thrive in a competitive darknet market environment. In doing so, Pavlov is alleged to have facilitated Hydra’s activities and allowed Hydra to reap commissions worth millions of dollars generated from the illicit sales conducted through the site.
The DEA’s Miami Field Division, FBI, IRS-CI, U.S. Postal Inspection Service, and HSI investigated the case.
The U.S. investigation was conducted with support and coordination provided by the Department of Justice’s multi-agency Special Operations Division and the Joint Criminal Opioid and Darknet Enforcement (JCODE) Team.
Trial Attorneys C. Alden Pelker and Christen M. Gallagher of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Claudia A. Quiroz and Robert S. Leach for the Northern District of California are prosecuting the case.
In addition to the critically important efforts of the German Federal Criminal Police, significant assistance was provided by the Justice Department’s Office of International Affairs and the U.S. Attorney’s Office for the District of Columbia. Assistance was also provided by the Justice Department’s National Cryptocurrency Enforcement Team.
An indictment is merely an allegation, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Justice Department Investigation Leads to Shutdown of Largest Online Darknet MarketplaceRead the Press Release
SAN FRANCISCO – The Justice Department announced today the seizure of Hydra Market (Hydra), the world’s largest and longest-running darknet market. In 2021, Hydra accounted for an estimated 80% of all darknet market-related cryptocurrency transactions, and since 2015, the marketplace has received approximately $5.2 billion in cryptocurrency.
The seizure of the Hydra servers and cryptocurrency wallets was made this morning in Germany by the German Federal Criminal Police (the Bundeskriminalamt), in coordination with U.S. law enforcement.
“The Justice Department will be relentless in our efforts to hold accountable those who violate our laws – no matter where they are located or how they try to hide their crimes,” said Attorney General Merrick B. Garland. “Together with our German law enforcement partners, we have seized the infrastructure of the world’s largest darknet market, but our work is far from over. We will continue to work alongside our international and interagency partners to disrupt and dismantle darknet markets, and to hold those who commit their crimes on the dark web accountable for their acts.”
“The Department of Justice will not allow darknet markets and cryptocurrency to be a safe haven for money laundering and the sale of hacking tools and services,” said Deputy Attorney General Lisa O. Monaco. “Our message should be clear: we will continue to go after darknet markets and those who exploit them. Together with our partners in Germany and around the world, we will continue our work to disrupt the ecosystem that allows these criminal actors to operate.”
“This coordinated action sends a clear message to anyone attempting to operate or support an online criminal enterprise under the cover of the dark web. The dark web is not a place criminals can operate with impunity or hide from U.S. law enforcement, and we will continue to use our sophisticated tools and expertise to dismantle and disable darknet markets,” said Stephanie M. Hinds, U.S. Attorney for the Northern District of California. “This action also underscores the importance of international law enforcement collaboration. We thank German authorities and the Bundeskriminalamt, the German Federal Criminal Police Office, for its valued assistance in this case.”
Hydra was an online criminal marketplace that enabled users in mainly Russian-speaking countries to buy and sell illicit goods and services, including illegal drugs, stolen financial information, fraudulent identification documents, and money laundering and mixing services, anonymously and outside the reach of law enforcement. Transactions on Hydra were conducted in cryptocurrency and Hydra’s operators charged a commission for every transaction conducted on Hydra.
In conjunction with the shutdown of Hydra, the department also announced criminal charges against Dmitry Olegovich Pavlov, 30, a resident of Russia, for conspiracy to distribute narcotics and conspiracy to commit money laundering in connection with his operation and administration of the servers used to run Hydra.
“The darknet has been a key online marketplace for the sale of deadly drugs worldwide,” said Administrator Anne Milgram of the Drug Enforcement Administration (DEA). “The availability of illicit substances and money laundering services offered by Hydra threaten the safety and health of communities far and wide. Criminals on the darknet hide behind the illusion of anonymity, but DEA and our partners across the globe are watching. We will continue to investigate, expose, and take action against criminal networks no matter where they operate. I commend the extraordinary investigative efforts of DEA’s Miami Counternarcotic Cyber Investigations Task Force, Cyber Support Section, and Special Operations Division, and the teamwork from federal and international law enforcement partners that led to this action.”
“The Hydra darknet site provided a platform for criminals who thought they were beyond the reaches of law enforcement to buy and sell illegal drugs and services,” said Chief Jim Lee of IRS-Criminal Investigation. “Our Cyber Crimes Unit once again used their cryptocurrency tracking expertise to help take down this site and identify the criminal behind it. Denying criminals a space to operate freely to conduct their nefarious activities is the first step in stopping this activity from happening altogether.”
“The successful seizure of Hydra, the world's largest darknet marketplace, dismantled digital infrastructures enabling a wide range of criminals – including Russian cyber criminals, the cryptocurrency tumblers and money launderers that support them and others, and drug traffickers” said FBI Director Christopher Wray. “Today’s announcement is a testament to the strength and potency of our law enforcement partnerships here and around the world – and another example of our strategy to broadly target the entire illicit ecosystem that drives and enables crime.”
“The U.S. Postal Inspection Service is dedicated to protecting the United States mail from being used to transport illegal drugs and illicit goods available on the darknet,” said Chief Postal Inspector Gary R. Barksdale of the U.S. Postal Inspection Service National Headquarters. “The seizure of the criminal marketplace, Hydra Market, reflects the effective collaboration of law enforcement to stop criminal enterprises from their illicit activity. The Postal Inspection Service will continue to work with our federal partners to end these criminal organizations regardless of where they are.”
“The dismantling of the Hydra Market, the dark web’s largest supplier of illicit goods and services, sends a message to these electronic criminal kingpins that think they can operate with impunity,” said Special Agent in Charge Anthony Salisbury of Homeland Security Investigations (HSI) Miami. “HSI will continue to work with our U.S. and international law enforcement partners to target these transnational criminal organizations who attempt to manipulate the anonymity of the dark web to push their poison all-over the world.”
According to the indictment, vendors on Hydra could create accounts on the site to advertise their illegal products, and buyers could create accounts to view and purchase the vendors’ products. Hydra vendors offered a variety of illicit drugs for sale, including cocaine, heroin, methamphetamine, LSD, and other opioids. The vendors openly advertised their drugs on Hydra, typically including photographs and a description of the controlled substance. Buyers rated the sellers and their products on a five-star rating system, and the vendors’ ratings and reviews were prominently displayed on the Hydra site.
Hydra also featured numerous vendors selling false identification documents. Users could search for vendors selling their desired type of identification document – for example, U.S. passports or drivers’ licenses – and filter or sort by the item’s price. Many vendors of false identification documents offered to customize the documents based on photographs or other information provided by the buyers.
Numerous vendors also sold hacking tools and hacking services through Hydra. Hacking vendors commonly offered to illegally access online accounts of the buyer’s choosing. In this way, buyers could select their victims and hire professional hackers to gain access to the victims’ communications and take over the victims’ accounts.
Hydra vendors also offered a robust array of money laundering and so-called “cash-out” services, which allowed Hydra users to convert their bitcoin (BTC) into a variety of forms of currency supported by Hydra’s wide array of vendors. In addition, Hydra offered an in-house mixing service to launder and then process vendors’ withdrawals. Mixing services allowed customers, for a fee, to send bitcoin to designated recipients in a manner that was designed to conceal the source or owner of the bitcoin. Hydra’s money laundering features were so in-demand that some users would set up shell vendor accounts for the express purpose of running money through Hydra’s bitcoin wallets as a laundering technique.
Starting in or about November 2015, Pavlov is alleged to have operated a company, Promservice Ltd., also known as All Wheel Drive and 4x4host.ru, that administered Hydra’s servers (Promservice). During that time, Pavlov, through his company Promservice, administered Hydra’s servers, which allowed the market to operate as a platform used by thousands of drug dealers and other unlawful vendors to distribute large quantities of illegal drugs and other illicit goods and services to thousands of buyers, and to launder billions of dollars derived from these unlawful transactions.
As an active administrator in hosting Hydra’s servers, Pavlov allegedly conspired with the other operators of Hydra to further the site’s success by providing the critical infrastructure that allowed Hydra to operate and thrive in a competitive darknet market environment. In doing so, Pavlov is alleged to have facilitated Hydra’s activities and allowed Hydra to reap commissions worth millions of dollars generated from the illicit sales conducted through the site.
The DEA’s Miami Field Division, FBI, IRS-CI, U.S. Postal Inspection Service, and HSI investigated the case.
The U.S. investigation was conducted with support and coordination provided by the Department of Justice’s multi-agency Special Operations Division and the Joint Criminal Opioid and Darknet Enforcement (JCODE) Team.
Assistant U.S. Attorneys Claudia A. Quiroz and Robert S. Leach of the U.S. Attorney’s Office for the Northern District of California and Trial Attorneys C. Alden Pelker and Christen M. Gallagher of the Criminal Division’s Computer Crime and Intellectual Property Section are prosecuting the case.
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.
In addition to the critically important efforts of the German Federal Criminal Police, significant assistance was provided by the Justice Department’s Office of International Affairs and the U.S. Attorney’s Office for the District of Columbia. Assistance was also provided by the Justice Department’s National Cryptocurrency Enforcement Team.
An indictment is merely an allegation, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Fentanyl Dealer Sentenced to Eight Years in Overdose DeathRead the Press Release
SAN JOSE – Xavier Robledo was sentenced in federal court today to 96 months in prison for distributing fentanyl that caused overdoses in two people and killed one, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon. The sentence was handed down by United States District Judge Beth L. Freeman.
“M30 pills sold on the street are often laced with fentanyl, a cheap and deadly substitute,” said U.S. Attorney Stephanie M. Hinds. “These counterfeit pills mimic Oxycodone, but they can be killers in disguise. The mismeasurement of even a microgram of fentanyl can have lethal consequences. We urge all to stay away from fentanyl sold on the street in any form it takes.”
“The death and destruction caused by fentanyl knows no boundaries. From coast to coast this poison is devasting families,” said DEA Special Agent in Charge Wade R. Shannon. “Holding accountable those, like Robledo, who ruin lives with their criminal actions is our priority.”
Robledo, 21, of Seaside in Monterey County, California, pleaded guilty on February 8, 2022, to two counts of distributing fentanyl. In his plea agreement, Robledo admitted that in mid- April 2020, Robledo sold counterfeit, fentanyl-laced pills known as “M30” pills. M30 pills are light blue and imprinted with an “M” on one side and “30” on the other. He arranged the sale of three fentanyl-laced M30 pills via cell phone messages to a customer to whom Robledo had previously sold M30s. This person is identified only as “Individual 1” in the plea agreement. Robledo admitted he personally delivered the M30 pills, which he knew contained fentanyl, to Individual 1 at his house. The M30 pills caused Individual 1 to suffer a fentanyl overdose, and law enforcement officers found Individual 1 in an unresponsive state. Individual 1 was later able to recover from his overdose.
Robledo further admitted in his plea agreement that in early May 2020, he again sold a counterfeit M30 that he knew contained fentanyl. He sold this M30 to a different individual identified in the plea agreement as “Individual 2.” Robledo knew Individual 2 because two weeks earlier Robledo sold and delivered drugs to Individual 2 at a drug rehabilitation facility where Robledo knew Individual 2 was undergoing treatment. In the early May sale, Robledo arranged the sale to Individual 2 using cell phone messages, and Robledo delivered the M30 to Individual 2 at his house. A few hours later Individual 2 ingested the M30 pill. It caused him to overdose on fentanyl. Law enforcement officers found Individual 2 in an unresponsive state and transported him to a hospital. Individual 2 continued to be unresponsive. On or about May 8, 2020, Individual 2 died. Robledo admitted in his plea agreement that Individual 2 died as a result of the fentanyl in the M30 that Robledo sold him.
In addition to the 96 month prison term, U.S. District Judge Beth L. Freeman ordered Robledo to pay restitution for, among other things, the funeral costs of Individual 2. In addition, Robledo was sentenced to serve three years of supervised release following release from federal prison.
Assistant U.S. Attorneys Christina Liu and Casey Boome prosecuted the case with the assistance of Linda Love and Mark DiCenzo. The prosecution is the result of an investigation by DEA and the Pacific Grove Police Department.
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 and can typically be obtained at a lower cost than genuine Oxycodone. However, small variations in the amount or quality of fentanyl can have significant effects on the potency of the counterfeit pills, raising the danger of overdoses. Fentanyl has become the leading cause of drug overdose deaths in the United States. In this case, the counterfeit, fentanyl-laced pills that Robledo distributed were shaped and colored to resemble Oxycodone pills that are sold legitimately in the marketplace. As in this case, counterfeit pills known as M30s are round tablets that are sometimes light blue and with “M” and “30” imprinted on opposite sides of the pill.
This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
San Francisco Teacher Charged with Receipt of Child PornographyRead the Press Release
SAN FRANCISCO – Charles Richard Barrett made an initial appearance today in federal court on a criminal complaint for receipt of child pornography, announced United States Attorney Stephanie M. Hinds and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King. Barrett made his initial appearance before U.S. Magistrate Judge Thomas S. Hixson.
According to the complaint filed March 30, 2022, and unsealed today, Barrett, 33, of San Francisco, is a teacher at a private elementary and middle school in San Francisco. In June of 2020, as part of an investigation into Barrett’s partner, federal agents came into possession of a computer found in Barrett’s residence. The complaint alleges that evidence recently obtained from the computer establishes that Barrett communicated with two suspected minors and received sexually explicit images involving minors from them.
Communications involving the first victim allegedly occurred between December 2013 to February 2014. According to the complaint, during that period, Barrett had a text message conversation with a minor that included sexually explicit images. Specifically, after the minor informed Barrett that he was 16-years-old, Barrett, who was 24 years old at the time, sent the victim sexually explicit images of himself and encouraged the victim to respond with sexually explicit images of himself. The victim complied. Barrett received at least nine sexually explicit images of the victim. The text exchange includes salacious descriptions of the images that were exchanged.
Communications regarding the second victim occurred in a series of text messages in 2013. Again, the victim informed Barrett that he was 16 years old and that he was a high school student in San Francisco. Barrett continued interacting with the victim, sent sexually explicit images of himself to the minor, and encouraged the minor to respond with sexually explicit images of his own. Barrett received at least four sexually explicit images of the victim.
Barrett is charged with receipt of child pornography, in violation of 18 U.S.C. §§ 2252(a)(2).
The charges contained in the criminal complaint are mere allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
If convicted of the charge, Barrett faces a mandatory minimum term of five years’ imprisonment and a maximum statutory sentence of 20 years in prison. As part of a sentence, the court also may order fines, assessments, and a term of supervised release. 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.
Magistrate Judge Hixson ordered Barrett detained pending a detention hearing. Barrett’s next court appearance is scheduled for Tuesday, April 5, 2022, at 12 p.m., before Magistrate Judge Hixson, for the detention hearing.
Assistant U.S. Attorney Kevin Yeh is prosecuting the case with the assistance of Claudia Hyslop. The prosecution is the result of an investigation by the HSI.
Oakland Resident Charged with Fentanyl and Methamphetamine Sales in TenderloinRead the Press Release
SAN FRANCISCO – Jose Alvarado appeared in United States District Court today to face federal charges for the distribution of fentanyl and methamphetamine in San Francisco’s Tenderloin District, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon.
According to allegations in the federal criminal complaint unsealed today, Alvarado, 26, who resides in Oakland, engaged in four narcotics sales on different dates in the Tenderloin area to three separate undercover law enforcement officers. The complaint describes that in the late afternoon of November 30, 2021, at the corner of Eddy Street and Polk Street, Alvarado sold approximately seven grams of fentanyl to an undercover officer. The complaint next alleges that in the afternoon of January 13, 2022, near the corner of Eddy Street and Larkin Street, Alvarado sold just over 12 grams of fentanyl and seven grams of methamphetamine to a different undercover officer. The complaint further alleges that a week later, on January 20, 2022, in the vicinity of Ellis Street and Van Ness Boulevard, Alvarado sold just over two ounces of fentanyl to yet another undercover officer. The complaint lastly charges that Alvarado met up with this same undercover officer on February 10, 2022, at the corner of Golden Gate Avenue and Polk Street – at the corner of a federal law enforcement building – and shortly sold the undercover officer two ounces of fentanyl and one ounce of methamphetamine.
The complaint charges Alvarado with one charge of distributing five or more grams of methamphetamine in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(B)(viii) and with one charge of distributing 40 or more grams of fentanyl in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(B)(vi). The statutory penalty for each charge is a minimum of five years of imprisonment and a maximum of 40 years of imprisonment, a maximum of a 5,000,000 fine, and a minimum of 4 years of supervision following release from prison with a maximum of lifetime 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 criminal complaint are only allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Alvarado made his initial federal court appearance today in United States District Court in San Francisco before United States Magistrate Judge Thomas S. Hixson. Alvarado remains in custody. His next court appearance is scheduled on April 5 for a detention hearing before U.S. Magistrate Judge Hixson.
Assistant U.S. Attorney Ankur Shingal is prosecuting the case with the assistance of Erick Machado and Jessie Chelsea. The prosecution is the result of an investigation by DEA and the San Francisco Police Department.
Salinas Man Charged with Enticing Minor Boy into Sex and ProstitutionRead the Press Release
SAN JOSE – Daniel Philip Aguirre appeared in federal court yesterday to face charges for enticement and sexual exploitation of a minor boy, announced United States Attorney Stephanie M. Hinds and Homeland Security Investigations Special Agent in Charge Tatum King.
According to the allegations in the criminal complaint, Aguirre, 30, of Salinas, used phones and internet applications (including Grindr, Snapchat, and Craigslist) to entice a 14-year-old boy to engage in sex acts with him and ultimately to engage in multiple acts of prostitution, all over the period from April 2017 to September of 2017. The criminal complaint alleges that Aguirre knew of the victim’s age but nevertheless pursued a sexual relationship with him. After establishing his own sexual relationship with the victim, Aguirre is alleged to have prostituted the victim to Aguirre’s associates and others and received payment for the victim’s sex acts. The complaint further alleges Aguirre created and distributed videos of the victim engaged in sex acts with Aguirre and others, including a man who responded to a Craigslist posting created by Aguirre that advertised sex with the victim. The victim later reported Aguirre to law enforcement.
Aguirre was arrested in Salinas and made his initial appearance in federal court in San Jose on March 28, 2022. Aguirre remains in custody and is scheduled for a detention hearing on March 31, 2022.
The complaint charges Aguirre with the sexual enticement and coercion of a minor in violation of 18 U.S.C. § 2422(b). If convicted, Aguirre faces a maximum sentence of life and a minimum sentence of ten years imprisonment, a maximum fine of $250,000, a term of supervised release following imprisonment of up to life, and mandatory restitution to the victim. 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.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Marissa Harris is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Sahib Kaur. The prosecution is the result of a 16-month investigation by HSI and Carmel-by-the-Sea Police Department. Salinas Police Department also assisted with the execution of a search warrant at Aguirre’s home.
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 the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
East Bay Resident Charged in Insider Trading Securities Fraud SchemeRead the Press Release
OAKLAND–A federal grand jury handed down an indictment charging Dileep Kumar Reddy Kamujula with securities fraud in connection with alleged illegal securities trading based on inside information obtained from an employee of San Francisco-based cloud communications company Twilio, Inc. (Twilio), announced U.S. Attorney Stephanie M. Hinds, and Federal Bureau of Investigation Acting Special Agent in Charge Timothy M. Stone.
“The charges in this indictment relate to a scheme to profit on the confidential information of a San Francisco-based public company to gain an illegal edge in the stock market,” said U.S. Attorney Hinds. “This Office will continue to aggressively pursue this type of securities fraud because it threatens the integrity of the markets and hurts everyone who plays by the rules.”
“Insider trading is not a game - it’s a federal crime,” said Acting Special Agent in Charge Stone. “This investigation should be a forceful disincentive for those tempted to commit any type of securities fraud. The FBI and our partners will take decisive action against those who seek to illegally exploit material nonpublic corporate information for their own gain.”
According to the indictment unsealed today, Kamujula, 35, of Fremont, Calif., illegally traded in Twilio stock options after receiving material nonpublic information from an employee identified in the indictment as “Insider One.” The indictment alleges that as part of Insider One’s employment, the employee had regular access to a financial records system used by Twilio to monitor and account for customer sales. Insider One allegedly accessed confidential information concerning Twilio's financial results before those results were made public and passed on the information to Kamujula. The indictment alleges that Twilio maintained written policies prohibiting the dissemination of such material nonpublic and confidential information. Twilio also had policies that restricted all employees from trading in the company’s securities during time periods around earnings releases. In addition, the indictment alleges that the employee breached a duty to maintain the confidentiality of the information and that Kamujula knew Insider One breached that duty when the employee provided the tipped information.
The indictment describes how Kamujula obtained and used insider information in the Spring of 2020 for his own gain. According to the indictment, beginning April of 2020, Insider One provided Kamujula with confidential nonpublic information regarding Twilio's financial results before those results were publicly disclosed. Around this time, Twilio accounting employees were in the process of determining the financial results of the company during that quarter, including the preparation of the SEC Form 10-Q that would be filed with the SEC and contain the financial reports for the quarter. The indictment alleges that between April 9, 2020, and May 6, 2020, Kamujula purchased approximately 257 call options for a total cost of approximately $133,333. Then, on May 6, 2020, Twilio announced its quarterly earnings, and in that press release Twilio reported earnings of $0.06 per share, a profit that exceeded the Wall Street analyst consensus estimate of earnings. On May 7, 2020, the day after the financial results were reported, Twilio's stock price increased by nearly 40 percent. The indictment alleges that after the announcement, on or about May 7 and May 8, 2020, Kamujula sold all 257 Twilio call options he had acquired in the preceding four weeks for a total profit of approximately $961,662.
Kamujula is charged with two counts, and a forfeiture allegation. The first count charges a violation of 18 U.S.C. §§ 1348 and 2, and the second count charges a violation of 15 U.S.C. §§ 78j(b) and 78ff and 17 C.F.R. §§ 240, 10b-5, and 240.10b5-1 (also referred to as Section 10(b) of the Securities Exchange Act of 1933 and Rule 10b-5 thereunder). The maximum statutory penalty for a violation of 18 U.S.C. § 1348 is 25 years in prison and a $250,000 fine (or twice the gross gain made from the offense). The maximum statutory penalty for a violation of 15 U.S.C. §§ 78j(b) and 78ff and 17 C.F.R. §§ 240, 10b-5, and 240.10b5-1 is 20 years in prison and a $5 million fine. The court may order additional terms of supervised release, as well as additional monetary penalties and restitution. 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.
An indictment merely alleges that crimes have been committed, and defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Kamujula made his initial federal court appearance this morning before U.S. Magistrate Judge Donna M. Ryu and was released on secured bond. Magistrate Judge Ryu scheduled Kamujula’s next appearance for April 22, 2022, for a status conference before U.S. District Judge Jon S. Tigar.
In a separate civil action, the United States Securities and Exchange Commission filed civil charges against Kamujula, alleging he engaged in insider trading, and against five other individuals, alleging they violated securities laws in connection with trading in Twilio securities.
The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office for the Northern District of California. The prosecution is the result of an investigation by the FBI. The U.S. Attorney’s Office appreciates the assistance of the San Francisco Regional Office of the Securities and Exchange Commission and FINRA.
Former HP Planning Manager Pleads Guilty to $5+ Million Wire Fraud SchemeRead the Press Release
OAKLAND – Shelbee Szeto pleaded guilty today to wire fraud, money laundering, and a relate tax charge in a 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 guilty plea was accepted by the Honorable Haywood S. Gilliam Jr., United States District Judge.
According to the plea agreement, Szeto, 30, of Fremont, 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.
The plea agreement provides several details of the scheme. For example, the agreement describes 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.
According to the plea agreement, 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. Szeto acknowledged that the total loss and attempted loss from her scheme was at least $5.2 million.
Furthermore, the plea agreement contains a list of items for which Szeto has forfeited her interest. The list includes items such as 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 has 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.”
On February 11, 2022, the Office of the United States Attorney filed an Information charging Szeto 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). According to today’s plea agreement, Szeto pleaded guilty to all five counts.
The maximum statutory sentence for the wire fraud counts is a fine of up to $250,000 and three years of supervised release, per count. The maximum statutory sentence for money laundering counts is ten years in prison, a fine of up to $250,000, and three years of supervised release per count. The maximum statutory sentence for the false tax return charge is three years in prison, a fine of up to $100,000, and one year of supervised release. 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.
Judge Gilliam scheduled Szeto’s sentencing for July 20, 2022.
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.
Former HP Planning Manager Pleads Guilty to $5+ Million Wire Fraud SchemeRead the Press Release
OAKLAND – Shelbee Szeto pleaded guilty today to wire fraud, money laundering, and a relate tax charge in a 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 guilty plea was accepted by the Honorable Haywood S. Gilliam Jr., United States District Judge.
According to the plea agreement, Szeto, 30, of Fremont, 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.
The plea agreement provides several details of the scheme. For example, the agreement describes 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.
According to the plea agreement, 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. Szeto acknowledged that the total loss and attempted loss from her scheme was at least $5.2 million.
Furthermore, the plea agreement contains a list of items for which Szeto has forfeited her interest. The list includes items such as 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 has 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.”
On February 11, 2022, the Office of the United States Attorney filed an Information charging Szeto 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). According to today’s plea agreement, Szeto pleaded guilty to all five counts.
The maximum statutory sentence for the wire fraud counts is a fine of up to $250,000 and three years of supervised release, per count. The maximum statutory sentence for money laundering counts is ten years in prison, a fine of up to $250,000, and three years of supervised release per count. The maximum statutory sentence for the false tax return charge is three years in prison, a fine of up to $100,000, and one year of supervised release. 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.
Judge Gilliam scheduled Szeto’s sentencing for July 20, 2022.
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.
Correctional Officer at FCI Dublin Charged for Abusive Sexual Contact with Female InmateRead the Press Release
OAKLAND – Enrique Chavez appeared yesterday in federal court to face an indictment charging him with two counts of abusive sexual contact against a prison inmate at the Federal Correctional Institute Dublin (FCI Dublin).
“Above all else, the Bureau of Prisons is charged with providing safe and humane treatment of all who are in their custody,” said Deputy Attorney General Lisa O. Monaco. “As this case makes clear, the Department of Justice is committed to holding BOP personnel accountable, including through criminal charges, when they fail to uphold their responsibility. Staff misconduct, at any level, will not be tolerated, and our efforts to root it out are far from over.”
“Correctional officers have a trusted responsibility to protect those under their authority,” said United States Attorney Stephanie M. Hinds. “Sexually abusing inmates is a betrayal of that responsibility and undermines a just penal system. My office is committed to pursuing charges against anyone – including federal employees – who abuse the public’s trust in violation of federal law.”
“Inmates should never experience sexual abuse at the hands of the Bureau of Prisons employees, yet five BOP employee have recently been charged with such abuse of inmates at FCI Dublin. The safety, security, and integrity of federal prisons are of the utmost importance, and the Department of Justice Office of the Inspector General will continue to aggressively pursue allegations of abuse at FCI Dublin and across the BOP,” said Inspector General Michael E. Horowitz.
“Holding a position of power comes with great responsibility. Chavez made a decision to abuse his authority and victimize inmates he was responsible for overseeing,” said FBI Special Agent in Charge Craig D. Fair. “Let this send a clear message that the FBI will investigate and hold accountable any and every individual who commits an act like this, regardless of your title or authority.”
According to the indictment unsealed today, Chavez, 49, of Manteca, California, is employed as a correctional officer at FCI Dublin. FCI Dublin is a correctional institution that houses female prisoners and is operated by the Federal Bureau of Prisons (BOP). On the dates of the charged crimes, Chavez was assigned to the position of Cook Supervisor/Foreman. As a correctional officer, he supervised and had disciplinary authority over the female inmates incarcerated at FCI Dublin. Chavez was trained in BOP policies and procedures, which included instructions that sexual, financial, and social relationships with inmates are prohibited.
The indictment charges two counts of abusive sexual contact by Chavez against a prison inmate occurring on separate occasions in October 2020. In each count, the indictment alleges that Chavez engaged in intentional sexual contact with “Victim 1.” Victim 1 is identified as a female inmate detained at FCI Dublin and thereby under the custodial, supervisory, and disciplinary authority of Chavez.
Chavez was arrested in Arizona on Sunday, March 20. His initial court appearance occurred Tuesday, March 22, in United States District Court in Tucson, Arizona, where he is being held pending transfer to the United States District Court in Oakland to face these charges.
Chavez is charged with abusive sexual contact of a prisoner in violation of 18 U.S.C. § 2244(a)(4). Each of the two counts carries a maximum statutory sentence of two years imprisonment, a three-year term of supervised release, and a $250,000 fine. However, any sentence following a conviction would be imposed by a court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The charges contained in the indictment are allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Deputy Attorney General Lisa O. Monaco for the U.S. Department of Justice, U.S. Attorney Stephanie M. Hinds for the Northern District of California, Department of Justice Inspector General Michael E. Horowitz, and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair made the announcement.
Assistant U.S. Attorneys Mohit Gourisaria, Molly K. Priedeman, and Andrew Paulson are prosecuting the case with the assistance of Kay Konopaske and Leeya Kekona. The prosecution is the result of an investigation by the Department of Justice Office of the Inspector General and the Federal Bureau of Investigation.
Former Employee Charged with Defrauding Apple, Money Laundering, and Tax CrimesRead the Press Release
SAN JOSE – A federal criminal case filed yesterday in the United States District Court for the Northern District of California charges Dhirendra Prasad with defrauding his former employer Apple, Inc. of millions of dollars and with money laundering and tax evasion, announced United States Attorney Stephanie M. Hinds and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge Mark H. Pearson.
The Information filed yesterday charges Prasad, 52, from Mountain House in San Joaquin County, with five crimes. In the first count, Prasad is charged with engaging in a conspiracy to commit wire and mail fraud from 2013 through January 2019. In the second and third counts, Prasad is charged with separate conspiracies to launder fraud proceeds. The fourth count charges Prasad with conspiring to evade a co-conspirator’s tax liabilities for several years, and the fifth count charges Prasad with evading his own income tax liabilities.
In a related case filing, the government alleges that Prasad was employed by Apple from December of 2008 through December of 2018. For most of that time, Prasad was a “buyer” in Apple’s Global Service Supply Chain and responsible for purchasing parts and services from vendors on Apple’s behalf. Prasad is alleged to have exploited his position by engaging in multiple different schemes to defraud Apple, including taking kickbacks, stealing parts, and causing Apple to pay for items and services it never received, resulting in a loss of more than $10,000,000. Prasad is also described as evading tax on the schemes’ proceeds, which he also laundered.
Prasad’s alleged co-conspirators are Robert Gary Hansen and Don M. Baker, both of whom reside in the Central District of California. Hansen and Baker both owned vendor companies that did business with Apple, and the charges allege they each conspired with Prasad to commit fraud and money laundering. Neither Hansen nor Baker were charged with Prasad, but they were each earlier charged in separate federal criminal cases also unsealed yesterday and they have both admitted their involvement.
In addition, the United States filed a civil forfeiture action related to the criminal charges against Prasad in federal court on September 24, 2021. In that suit, the United States seeks to forfeit five pieces of real property and a dozen financial accounts traced to Prasad’s crimes. Those assets – which have an estimated aggregate value of $5,000,000 – have been frozen or otherwise encumbered pursuant to a court-authorized seizure warrant. The civil forfeiture action remains pending.
Prasad is scheduled to make his initial appearance on the criminal charges in San Jose federal court before United States Magistrate Judge Susan van Keulen on March 24, 2022.
The Information charges Prasad with conspiracy to commit wire and mail fraud in violation of 18 U.S.C. § 1349. The maximum statutory sentence of imprisonment for a violation of 18 U.S.C. § 1349 is 20 years. Prasad is also charged with two counts of conspiracy to engage in money laundering in violation of 18 U.S.C. § 1956(h), and the maximum statutory sentence of imprisonment for each violation of 18 U.S.C. § 1956(h) is 20 years. The fourth count against Prasad charges a conspiracy to defraud the United States in violation of 18 U.S.C. § 371. The maximum statutory sentence of imprisonment for a violation of 18 U.S.C. § 371 is five years. Lastly, Prasad is charged with one count of tax evasion in violation of 26 U.S.C. § 7201, which carries a maximum statutory sentence of imprisonment of five years. 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 criminal Information 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 Michael G. Pitman is prosecuting the case, with the assistance of Sahib Kaur. Assistant United States Attorney Karen D. Beausey is representing the United States in the civil forfeiture action, with the assistance of Brenda Lukaitis. The prosecution was the result of an investigation led by Internal Revenue Service, Criminal Investigation.
Serial Offender Sentenced to 9 Years for Medical Frauds Causing More Than $3.5 Million in LossesRead the Press Release
SAN FRANCISCO – Joseph Albert Corey was sentenced in federal court today to 108 months for two separate fraud schemes causing more than $3.5 million in losses, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The sentence was handed down by United States District Judge Edward M. Chen.
Corey, 57, and last known to live in or near Los Angeles, was initially charged in 2019 with depositing fraudulent checks into accounts opened under the false name “Dennis Dupont.” Posing as Dennis Dupont, Corey opened bank accounts for two fake companies, “Medical Practice Management” and “Medtronic Inc.” He funded those accounts by depositing unauthorized checks drawn on a bank account owned by a legitimate company, the government’s sentencing memo describes. Corey wrote checks on the victim company’s account totaling more than $370,000. When he successfully deposited a check, Corey laundered the proceeds by using the stolen money to purchase gold coins from a precious metals company. He picked up the gold coin shipments from rented mailboxes in the Bay Area.
Once arrested, Corey entered a guilty plea in November 2019 to a federal charge of mail fraud. Corey, however, absconded from his February 2020 sentencing hearing.
While a fugitive, Corey continued to commit a second fraud scheme that involved a conspiracy to defraud financial lenders. The conspiracy was underway as early as March 2019 and continued through October 2020. Corey admitted in his current plea agreement that as part of the scheme he assumed the identities of multiple medical doctors. Corey would impersonate a doctor to obtain a loan ostensibly to purchase an expensive medical device from a legitimate supply company. Once the loan was authorized, Corey directed the lender to deposit the loaned purchase funds into a specific bank account. Unbeknownst to the lender, Corey earlier had opened that account in the name of, or in a name similar to, the medical device supply company. When the lender deposited the funds into the account, Corey appropriated the money. Corey then assumed another set of false identities and used the funds to purchase gold from various precious metals dealers, thus obscuring the trail of the stolen loan money.
Corey remained a fugitive until he was detained by Mexican authorities in January 2021 and deported from Mexico to the United States. According to a government filing, when Corey was arrested in Mexico he possessed scores of false identifications, including one identifying him as a “special agent” of the CIA.
Corey admitted in his plea agreement that he defrauded more than 10 victims in this second scheme and caused losses of at least $3.5 million.
In addition to the 108 month prison sentence, United States District Judge Edward M. Chen ordered Corey to pay restitution. The sentence also included a three year period of supervision following Corey’s release from prison. Corey was in custody at the sentencing hearing and begins serving his sentence immediately.
Mohit Gourisaria is the Assistant U.S. Attorney who prosecuted the case, with the assistance of Maddi Wachs, Maribel Gallegos, and Kay Konopaske. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Former General Counsel and Chief Business Officer for Financial Technology Company Sentenced to More Than Three Years in Prison for Embezzlement SchemeRead the Press Release
SAN FRANCISCO—Brooke Campbell Solis was sentenced to 37 months in prison and ordered to pay $500,000 in restitution for wire fraud charges levied in connection with a scheme to embezzle funds from her former employer, announced United States Attorney Stephanie M. Hinds and FBI Special Agent in Charge Craig D. Fair. The sentence was handed down by the Honorable James Donato, U.S. District Judge.
Solis, 51, of Austin, Texas, pleaded guilty to the charges on August 23, 2021. According to the plea agreement, in January of 2018, Solis was an attorney licensed to practice law in the State of California when she was hired by a San Francisco-based financial technology company as its general counsel. For most of her employment, she was permitted to work remotely from her home in Austin, Texas. In her capacity as general counsel, she managed the legal, financial, and accounting practices for the company and in March, 2019, she was promoted to the position of Chief Business Officer at the company. In connection with her job responsibilities, Solis was given “Super Administrative” privileges within the accounting and expense management programs used by her employer. According to the plea agreement, Solis acknowledged that she used these privileges to defraud her former employer and embezzle money from the company.
One method Solis used to defraud her former employer was by preparing and using fraudulent invoices. Specifically, she requested payment from the employer to a shell company, The Paralegal Group LLC, that she created and controlled. On June 2, 2019, Solis entered into a consulting agreement between The Paralegal Group and her employer. Solis used the initials “R.D.,” to sign the agreement. On the same day that Solis signed the consulting agreement—both on behalf of herself as The Paralegal Group and for her employer—Solis also submitted an invoice for $9,222.50 from The Paralegal Group. The invoice was dated May 31, 2019, before the consulting agreement even came into existence.
Another method Solis used to defraud her former employer was to seek reimbursement for fraudulent expenses. For example, on July 24, 2019, two days after ending her employment with her former employer, Solis submitted a personal expense of $4,575, for 61 days of “Jackson and Oliver boarding” at a dog boarding company. In the plea agreement, Solis admitted that the boarding of the dogs was a personal expense. Nevertheless, at the time she submitted the fraudulent expense, she had access to her previous employers account and still exercised super-administrative privileges which had not yet been taken away from her. In sum, Solis caused payment of the $4,575 to be paid by her former employer and the funds to be electronically deposited into her personal account.
Solis also continued to defraud the company after she left. She was charged with, and pled guilty to, four wire fraud transactions, in which she diverted at least $400,000 of the company’s money to her own personal checking account nearly two months after her employment ended. In total, Solis stole more than $500, 000 from the victim company.
On July 29, 2021, the Office of the United States Attorney for the Northern District of California filed an information charging Solis with six counts of wire fraud, in violation of 18 U.S.C. § 1343. Solis pleaded guilty to all six counts.
Solis agreed to surrender her license to practice law as part of her plea agreement. Judge Donato ordered the defendant to self-surrender and begin serving her prison term on March 21, 2022. In addition, Judge Donato ordered Solis to serve a three-year term of supervised release to begin after the prison term has expired.
Assistant U.S. Attorney Robin Harris is prosecuting the case. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Former CEO and COO of JHL Biotech Sentenced for Conspiring to Steal Trade Secrets and Commit Wire Fraud Exceeding $101 MillionRead the Press Release
SAN FRANCISCO – Racho Jordanov, the co-founder and former Chief Executive Officer of JHL Biotech, and Rose Lin, another of the company’s co-founders and former Chief Operating Officer, were sentenced today for their respective roles in conspiring to commit trade secret theft and wire fraud, announced United States Attorney Stephanie M. Hinds, Internal Revenue Service ̶ Criminal Investigation (IRS-CI), Special Agent in Charge Mark H. Pearson, and Federal Bureau of Investigation, Special Agent in Charge Craig D. Fair. Jordanov was sentenced to a term of imprisonment of twelve months and one day, to be followed by a term of supervised release of 36 months, a condition of which shall be to serve nine months in home confinement. Lin was sentenced to a term of imprisonment of twelve months and one day, to be followed by a term of supervised release of 36 months. The sentences were handed down today by the Hon. William Alsup, Senior U.S. District Judge.
Both defendants pleaded guilty to the charges on August 24, 2021. According to the plea agreements, in 2012, Raco Ivanov Jordanov, also known as “Racho” Jordanov, 74, of Rancho Santa Fe, Calif., and Rose Lin, also known as Rose Sweihorn Tong, 73, of South San Francisco, Calif., co-founded JHL Biotech, Inc., a biopharmaceutical startup in Taiwan. Between 2011 and 2019, Jordanov, as President and CEO of JHL Biotech, obtained and possessed confidential, proprietary, and trade secret information from Genentech, and used it to accelerate the timeline for and to reduce the costs of JHL Biotech’s development and production of Genentech biosimilars and to enhance JHL Biotech’s ability to meet various regulatory requirements related to the same. By various means, Jordanov obtained for JHL Biotech’s use many confidential and proprietary documents from Genentech without authorization, some of which contained trade secret information. In so doing, he worked with multiple people within JHL Biotech to possess and use confidential, proprietary, and trade secret information he knew JHL Biotech was not authorized to have.
According to the plea agreement, Jordanov hired former Genentech employees to work at JHL Biotech, several of whom he learned surreptitiously brought, without authorization, confidential and proprietary documents with them from Genentech to JHL Biotech. The company used only some of the stolen documents, but Jordanov tolerated this practice by the employees of JHL Biotech and made no effort to discourage its employees from using the documents or information they brought with them. The employees Jordanov hired provided the Genentech documents and information to JHL Biotech, which, at times, allowed the company to cheat, cut corners, solve problems, provide examples, avoid further experimentation, eliminate costs, lend scientific assurance, and otherwise help JHL Biotech start-up, develop, and operate its business secretly using the intellectual property and scientific know-how taken from Genentech. Jordanov admitted that he suspected that some or all the stolen information was brought to JHL Biotech in violation of relevant Genentech non-disclosure agreements and employment contracts, but he made no effort to verify whether that was true.
In January 2014, Lin arranged for Xanthe Lam, a Principal Scientist working full-time at Genentech, to secretly work as the head of formulation for JHL Biotech. Lin encouraged JHL Biotech scientists to ask Xanthe Lam for assistance or information when they ran into problems. Throughout this time, Lin knew that Xanthe Lam continued to work for Genentech and was not authorized to work for JHL Biotech. Lin also knew that Xanthe Lam did not want Genentech to learn of her work for JHL Biotech. Lin agreed to pay Xanthe Lam’s consultancy fee through her husband, Allen Lam. To further conceal Xanthe Lam’s work for the company, JHL Biotech did not enter a direct contract with Xanthe Lam. Instead, it always paid her through Allen Lam. Lin agreed to conceal Xanthe Lam’s work for JHL Biotech because Lin knew Genentech would not permit Xanthe Lam to work for another biotech company. Lin also directed JHL Biotech employees to use Allen Lam’s JHL email address to email questions to Xanthe Lam. Lin also instructed JHL Biotech employees to refer to Xanthe Lam as “Allen” in these email communications.
In early 2014, Lin learned that JHL Biotech employees were using confidential and proprietary documents, taken without authorization from Genentech, to create a set of JHL Biotech standard operating procedure (“SOPs”). JHL Biotech needed SOPs to apply for the initial Good Manufacturing Practices or “GMP” certification of its manufacturing facility by the Taiwan Food and Drug Administration or “Taiwan FDA.” Lin was in charge of the process for ensuring that JHL Biotech met the deadlines set for the GMP certification process. In that role, Lin was copied on emails where JHL Biotech employees discussed using Genentech documents to create JHL Biotech’s SOPs. Ultimately, 90-100 SOPs were generated in this way. Lin knew the JHL Biotech employees did not have the right to use Genentech’s documents and that their actions constituted theft from Genentech.
Between 2014 and 2018, Jordanov sometimes personally used and instructed others to use confidential, proprietary, trade secret Genentech documents and information relating to Genentech’s complex technology transfer procedures and processes. He used Genentech’s confidential and tech transfer documents in the development, construction, and operation of new facilities for JHL Biotech including its manufacturing facility in Wuhan, China. Jordanov instructed the employees to whom he sent the documents not to share them with others inside the company. Later, in September of 2018, after the criminal investigation had begun, the JHL employee Jordanov tasked with using the Genentech tech transfer documents was instructed by Jordanov to delete the email from Jordanov and its attachment and Jordanov instructed the employee to tell others at JHL Biotech to do the same.
In early-December 2016, Jordanov and Lin met with representatives of Sanofi S.A., the multi-national French pharmaceutical company, for approximately one week, during which they reviewed the strategic partnership agreement to be entered into by Sanofi and JHL Biotech. During this week-long meeting, Jordanov and Lin reviewed each section of the prospective partnership agreements in detail. Some of the sections of the agreements involved JHL Biotech representing to Sanofi that it had developed and was conducting its biosimilar operations without infringing the intellectual property rights of other companies or using other companies’ proprietary information. Jordanov and Lin did not disclose their possession and use of stolen Genentech documents to Sanofi, and instead, Jordanov signed the partnership agreements on behalf of JHL Biotech. By concealing these facts, Jordanov and Lin made it appear, falsely, that JHL Biotech had developed its own, or had lawfully obtained, the intellectual property that the biotech company used when, in fact, JHL Biotech had relied upon intellectual property, including confidential, proprietary, and trade secret information that it stole or received without authorization to obtain regulatory approval for its clinical trials, and build out its manufacturing capability. Jordanov and Lin knew that if they had not concealed these facts, Sanofi would not have agreed to the corporate transaction and invest approximately $80 million in JHL Biotech securities pursuant to the subscription agreement and approximately $21 million pursuant to Biologics Products Options Agreement (BPOA) for a total investment by Sanofi in JHL Biotech of approximately $101 million.
On June 1, 2021, a federal grand jury indicted Jordanov and Lin, charging both defendants with the following charges: (1) conspiracy to commit theft of trade secrets and wire fraud, in violation of 18 U.S.C. § 371; (2) wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (three counts each defendant); (3) international money laundering, in violation of 18 U.S.C. § 1956(a)(2)(A) (nine counts against Jordanov and five counts against Lin); and (4) conspiracy to obstruct justice, in violation of 18 U.S.C. § 371. In addition, the indictment charges Jordanov with two counts of theft of trade secrets, in violation of 18 U.S.C. §§ 1832(a)(1)(2)(3) and 2; and charges Lin with one additional count of making false statements to a government agency, in violation of 18 U.S.C. § 1001(a)(2). Pursuant to the plea agreements, both defendants pleaded guilty to count one of the indictment, conspiracy to commit theft of trade secrets and wire fraud. The remaining charges were dismissed at sentencing.
On July 7, 2021, in a related case, United States v. Xanthe Lam and Allen Lam, Case No. 18-cr-0527 WHA, both Xanthe Lam and Allen Lam pleaded guilty to, among other offenses, conspiracy to commit theft of trade secrets by stealing confidential, proprietary, and trade secret information from Genentech and giving it to JHL Biotech.
Assistant U.S. Attorneys Adam A. Reeves and Claudia A. Quiroz are prosecuting the case with the assistance of Beth Margen and Kathy Tat. The prosecution is the result of an investigation by the Internal Revenue Service ̶ Criminal Investigations and the Federal Bureau of Investigation.
Jose Inez Garcia-Zarate Pleads Guilty to Federal Firearm Charges in Death of Kate SteinleRead the Press Release
SAN FRANCISCO – Jose Inez Garcia-Zarate pleaded guilty today in federal court to being a felon in possession of a firearm and to being an alien unlawfully present in this country in possession of a firearm, announced United States Attorney Stephanie M. Hinds and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Patrick Gorman.
A federal grand jury indicted Jose Inez Garcia-Zarate on December 5, 2017. According to the indictment, on July 1, 2015, Garcia-Zarate, who is a citizen of Mexico and reportedly 51 years old, possessed a semi-automatic pistol and multiple rounds of ammunition in violation of 18 U.S.C. § 922(g)(1) (felon in possession of a firearm) and 18 U.S.C. § 922(g)(5) (possession of a firearm by an alien unlawfully present in the United States). In a public filing in the case, the government described that Garcia-Zarate was on Pier 14 of the Embarcadero in San Francisco on July 1, 2015. Also on the pier were Kathryn “Kate” Steinle, who was 32, her father James Steinle, and Frances “Kaye” Williams, a family friend. The three were sightseeing. At approximately 6:30 p.m., Garcia-Zarate possessed and fired a loaded semi-automatic pistol. The bullet hit Kathryn Steinle in her back, killing her. At the time of the shooting, Garcia-Zarate was a convicted felon and illegally in the United States, having previously been deported. He was also on federal supervised release from a 2011 Texas conviction.
On November 30, 2017, a prosecution by the San Francisco County District Attorney’s Office resulted in a jury convicting Garcia-Zarate of one state violation – being a felon in possession of a firearm in violation of California state law – and acquitting him of homicide charges. On August 30, 2019, a California state Court of Appeals court overturned Garcia-Zarate’s conviction based on the failure of the state trial court to instruct the jury on the state’s affirmative defense of momentary possession. The ruling had no legal effect on the federal prosecution, which had already been initiated.
Garcia-Zarate made his initial appearance in federal court to face federal firearm charges on January 8, 2018, immediately following his release from state custody. A federal jury trial set in January 2020 was delayed when the Court ordered Garcia-Zarate to be evaluated for mental competency to stand trial. Following competency proceedings occurring throughout 2020 and 2021, a change of plea hearing was set for today.
At today’s hearing, Zarate-Garcia pleaded guilty to the two charges in the federal indictment against him, without a plea agreement. He admitted that on July 1, 2015, he was on San Francisco Embarcadero Pier 14 and possessed a semi-automatic pistol loaded with eight rounds. He admitted he knew he was an alien that was unlawfully and illegally in the United States at the time and that he had previously been convicted of a felony, including the felony of Illegal Re-Entry After Deportation for which he spent more than a year in federal prison.
Garcia-Zarate’s sentencing hearing is scheduled for June 6, 2022, at 1 p.m. before United States District Judge Vince Chhabria in San Francisco. Garcia-Zarate remains in custody pending the sentencing hearing.
Each of the two violations of 18 U.S.C. § 922(g) to which Garcia-Zarate pleaded guilty has a maximum statutory penalty of 10 years in prison followed by 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.
The case is being prosecuted by Assistant United States Attorneys Eric Cheng and Kevin Barry, with assistance from Madeline Wachs. The prosecution is the result of an investigation by ATF and the San Francisco Police Department.
Former San Jose State University Director of Sports Medicine Charged with Sexually Assaulting Female Student-AthletesRead the Press Release
SAN JOSE – Scott Shaw, 54, the former Director of Sports Medicine and athletic trainer at San Jose State University, has been charged today with civil rights violations for engaging in sexual misconduct with female student-athletes under the guise of treating them for their injuries.
The charges allege that between 2017 and 2020, Shaw violated the civil rights of four students who played on women’s athletics teams by touching their breasts and buttocks without their consent and without a legitimate purpose. Shaw, as a state employee for the California State University system, is further alleged to have acted under color of law when he sexually assaulted the victims.
Shaw faces a maximum of six years in prison if convicted of all counts. 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.
A charging information, as filed here, is merely a formal accusation of criminal conduct. As with any defendant, Shaw is presumed innocent unless proven guilty.
Shaw is scheduled to appear to face the charges in U.S. District Court in San Jose on March 15, 2022, before United States Magistrate Judge Susan Van Keulen.
United States Attorney Stephanie Hinds of the Northern District of California, Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division, and Special Agent in Charge Craig D. Fair of the FBI made the announcement.
The case is being prosecuted by Assistant U.S. Attorney Michael Pitman of the Northern District of California and Special Litigation Counsel Fara Gold of the Criminal Section of the Justice Department’s Civil Rights Division. This case is being investigated by the FBI San Francisco Field Office.
Anyone with information should contact the FBI at 510-808-2600.
Former Chief of Cardiology at Palo Alto VA Hospital Pleads Guilty to Sexual Battery of Subordinate DoctorRead the Press Release
SAN JOSE – Cardiologist John Giacomini pleaded guilty today to one count of 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 Palo Alto Veterans Affairs Police Service Martin Sizemore. The guilty plea was accepted by the Honorable Beth L. Freeman, United States District Judge.
Giacomini, 73, of Atherton, had practiced medicine and cardiology for over 30 years and from 1985 until 2018 was the Chief of the Cardiology Section at the VA Hospital in Palo Alto, Calif. According to the plea agreement, Giacomini acknowledged he occupied a position of significant authority, prestige, and influence within the VA Healthcare System and at Stanford University, where he had a faculty appointment in the School of Medicine. In addition, Giacomini acknowledged that as the Chief of the Cardiology Section within the VA, he also occupied a position of public trust, with overall responsibility for meeting the needs of the VA patient population.
As a federal employee for well over 30 years, Giacomini was trained throughout his career on the prevention of workplace sexual assault and sexual harassment. He was aware that non-consensual sexual contact between supervisors and subordinates is coercive, unethical, and unlawful. He knew that inappropriate touching, unwanted gifts, and unwelcome sexual comments can create a hostile work environment that unreasonably interferes with the victim’s work performance and adversely affects the victim’s employment opportunities. As a supervisor and manager, Giacomini had an obligation to the VA and to his subordinates to prevent workplace sexual harassment and disclose any harassing behavior of which he became aware.
He failed to do this. Instead, beginning in the fall of 2017, Giacomini 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 explicitly 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 turned out the lights, pulled the victim out of her chair, released the drawstring on her scrub pants and fondled her breast, buttocks, and vagina until a janitor opened the office door and interrupted the encounter. At some point after the event, the victim resigned from her position at the VA, citing Giacomini’s behavior as her principal reason for leaving.
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). Today, Giacomini pleaded guilty to the charge, which is a felony.
Judge Freeman scheduled Giacomini’s sentencing for July 12, 2022. Giacomini faces a maximum sentence of two years of imprisonment, a fine of $250,000, restitution, supervised release, and a special assessment. However, any sentence following conviction will 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.
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.
East Bay Resident Found Guilty of Attempting to Help Smuggle Cocaine Through Bay Area AirportsRead the Press Release
SAN FRANCISCO - A jury found Lemack Bellot guilty of two counts of attempting to aid and abet possession with intent to distribute cocaine in a scheme to smuggle drugs through San Francisco International Airport (SFO), announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration Special Agent in Charge Wade R. Shannon. The verdicts follow a week-long trial before the Honorable Vince Chhabria, United States District Judge.
At trial, the government presented evidence that Bellot, 42, of Hayward, Calif., attempted to facilitate the smuggling of cocaine through SFO in May 2018 and in November 2018. Unbeknownst to Bellot, the shipments were not actually cocaine because he was negotiating with a confidential source (CS) working for the DEA. The DEA was investigating Bellot based on information that Bellot had been paying airport employees to allow drugs to be smuggled past airport security.
The evidence at trial showed that over an eight-month period between March and November of 2018, Bellot made a variety of arrangements to help the CS smuggle cocaine through SFO. The CS was posing as an Atlanta-based drug trafficker who would fly to the Bay Area to buy cocaine and needed a quick way to transport it back to Atlanta for distribution.
The CS initially met with Bellot at the Fogline Sports Bar and Grill in Hayward, Calif., a bar owned by Bellot . The two men discussed smuggling drugs through Bay Area airports, and Bellot told the CS that he used to run “bricks” or kilograms of cocaine from the Bay Area airports to cities across the country until his airport contact was arrested by law enforcement. Bellot also told the CS that although he had taken a break from airport smuggling following the arrest of his airport associate, he had recently found someone new to help him smuggle drugs through SFO and the Oakland International Airport.
Bellot and the CS agreed to use Bellot’s new smuggling connection and remained in contact over the next eight months as Bellot set up various schemes to smuggle cocaine through the airports.
In February 2019, a federal grand jury indicted Bellot for attempting to aid and abet the possession with intent to distribute 500 grams or more of cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(B)(ii)(II), and attempting to aid and abet the possession with intent to distribute 5 kilograms or more of cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(A)(ii)(II). The jury found Bellot guilty of both counts.
Judge Chhabria has not yet set a date for Bellot’s sentencing hearing. Bellot faces a maximum sentence of 40 years in prison, and a fine of $250,000, plus restitution, for the first count and a maximum sentence of life in prison, and a fine of $500,000 for the second count. Bellot also faces a term of supervised release following imprisonment, restitution, and additional assessments. Bellot’s sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the sentencing factors set forth by statute at 18 U.S.C. § 3553.
This investigation and prosecution is part of the Organized Crime and Drug Enforcement (OCDETF) Section, which identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
The prosecution is the result of an investigation by the DEA.
Modesto Woman Admits Submitting 121 Stimulus Check Claims Using PII Provided by Death Row SonRead the Press Release
SAN FRANCISCO – Sheila Denise Dunlap pleaded guilty in federal court today to engaging in a conspiracy to commit wire fraud and to 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.
Dunlap, 51, of Modesto, was charged by a federal indictment on May 13, 2021, with engaging in a wire fraud conspiracy to file scores of fraudulent applications for Economic Impact Payment (EIP) payments, commonly known as stimulus checks. The EIP program was part of the CARES Act, a federal relief bill signed into law on March 27, 2020, to address the economic fallout of the COVID-19 pandemic. 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 (known as 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. Dunlap’s son was serving a capital sentence on Death Row in San Quentin State Prison.
Dunlap admitted in her plea agreement that her son, identified in the agreement only by the 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, thus making them eligible for EIP funds. Dunlap admitted she used that 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 payments.
Dunlap detailed in her plea agreement that in or about April 2020, her son coordinated with another to email her a spreadsheet containing the PII of 9,043 individuals. Her son advised Dunlap to file the fraudulent EIP claims by first using the PII of the youngest adults listed. Both D.W. and Dunlap assessed that these younger, college-aged individuals probably lacked income sufficient to trigger the filing of a 2018 or 2019 tax return and were accordingly likely non-filers eligible for EIP payments.
Dunlap admitted that in May and June 2020 she used the PII of these real individuals – which included their names and social security numbers – to electronically filed 121 EIP claims. Dunlap admitted that each EIP claim contained false statements and directed payment to her bank account. In total, Dunlap filed claims for $145,200 in EIP payments.
Dunlap pleaded guilty to one count of wire fraud conspiracy in violation of 18 U.S.C. § 1349, which carries a maximum statutory penalty of 20 years in prison and a fine of $250,000 or not more than the greater of twice the gross gain or twice the gross loss. Dunlap also pleaded guilty to one count of aggravated identity theft in violation of 18 U.S.C. § 1028A, which carries a penalty of two years imprisonment consecutive to any other sentence imposed and a maximum fine of $250,000. A sentence, however, 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.
Dunlap is scheduled for her sentencing hearing before United States District Judge Susan Illston on June 24, 2022. She remains out of custody.
The case has been prosecuted by Assistant U.S. Attorneys Yoosun Koh 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.
City of Campbell Maintenance Worker Charged with Possession of Child PornographyRead the Press Release
SAN JOSE – Brian Robert Risso appeared in federal court today to face charges that he possessed child pornography announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
According to the federal complaint filed on February 18, 2022, Risso, 61, of San Jose, is alleged to have possessed 513 images and 29 videos of child pornography on his personal Apple iMac computer at his residence. Additional documents filed by the government also describe the discovery of approximately 233,000 “manifest keys” on the iMac computer that are used to download files. In documents related to Risso’s detention, the government argued the keys were linked to files with names that suggest the keys allowed for access to videos of illegal child pornographic materials. The complaint charges Risso with one count of possession of child pornography, in violation of 18 U.S.C. §§ 2252(a)(4)(B) and (b)(2).
At the time of his arrest, Risso was employed by the City of Campbell as a maintenance technician at the Campbell Community Center.
Risso was arrested on February 18, 2022, and appeared this afternoon before United States Magistrate Judge Susan van Keulen to address issues related to his detention before trial. Risso currently is released on bond and is next scheduled to appear on March 15, 2022, before Magistrate Judge van Keulen, to address further issues regarding Risso’s release from detention.
A complaint merely alleges that a crime has been committed. Risso is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, he faces a maximum sentence of 20 years in prison and a $250,000 fine. 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.
Special Assistant U.S. Attorney Daniel N. Kassabian is prosecuting the case with the assistance of Susan Kreider and Claudia Hyslop. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Oakland Woman Sentenced to Three Years in Million Dollar Pandemic Relief FraudRead the Press Release
OAKLAND – A federal court sentenced Christina Burden today to 36 months in prison following her guilty pleas to two counts of bank fraud and two counts of money laundering, announced U.S. Attorney Stephanie M. Hinds; U.S. Department of the Treasury, Treasury Inspector General for Tax Administration (TIGTA) Special Agent in Charge Rod Ammari; Internal Revenue Service, Criminal Investigation (IRS-CI) Special Agent in Charge Mark H. Pearson; and Federal Bureau of Investigation (FBI) Special Agent in Charge Craig D. Fair. The sentence was handed down by United States District Judge Yvonne Gonzalez Rogers.
Christina Burden, 32, of Oakland, was originally charged on February 3, 2021, in a federal complaint alleging bank fraud in obtaining pandemic relief funds from the federal government’s Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Program (EIDL) for her shell entity “Blessing Box Co LLC.” This entity was among multiple shell entities, including the “Burden Consulting Group LLC,” that Burden used in her fraud scheme. As outlined in the complaint, the PPP is administered by the U.S. Small Business Administration as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act was enacted by the U.S. Congress in March of 2020 to provide emergency financial assistance to millions of Americans suffering from dire economic effects caused by the COVID-19 pandemic. PPP loan proceeds were distributed to faltering businesses for limited, identified business expenses such as payroll costs, mortgage interest, rents, and utilities. The PPP allowed the interest and principal on a PPP loan to be entirely forgiven if the business spent the loan proceeds on permissible business expenses and used at least 60% of the PPP loan proceeds on payroll expenses. Similarly, the EIDL Program provided low-interest loans to small businesses in regions affected by disasters, and EIDL funds became available to all states and territories due to the magnitude and severity of the COVID-19 pandemic.
In her plea agreement, Burden admitted she registered multiple fictitious businesses with the California Secretary of State, then modified documents by inserting incorrect dates relating to the purported business operations in order to qualify the fictitious businesses for loans from the PPP or EIDL programs. Along with her fraudulent applications to the relief programs, Burden submitted fake IRS tax documents, such as fake IRS Form 940 and IRS W-3 forms. The IRS tax documents contained false statements about the number of business employees, payroll costs, and wages paid, among other false statements. Burden admitted in her plea agreement she was aware that the availability and amount of PPP and EIDL loans was tied to the creation and operational dates of the businesses, the employee numbers, and the payroll costs, and that she intentionally misrepresented all of that information. In total, Burden fraudulently claimed she had 89 employees and a monthly payroll of more than $700,000 in her fictitious businesses, according to government documentation.
In total, Burden attempted to obtain more than $4.5 million in pandemic relief loans. She admitted that she actually received $992,291 in fraudulent-obtained PPP loans and $150,900 in fraudulently obtained EIDL loans and advances.
After receiving the fraudulently obtained loan proceeds, Burden used the money for a buying spree of high-end luxury items and services. In a brief filed for the sentencing hearing, the government outlined that Burden spent $184,000 on private jet travel, other airfare, and hotel expenses; $124,000 on luxury purchases from Louis Vuitton, Neiman Marcus, and Nordstrom; $16,000 on boat and car rentals; and $14,000 on restaurants and entertainment. Another $150,000 was spent on Mercedes, Land Rover, and Nissan automobiles.
In addition to the 36 month prison sentence imposed for bank fraud and money laundering, United States District Judge Yvonne Gonzalez Rogers ordered that Burden pay restitution in the amount of $1,143,191. The sentence also included a three year period of supervision following Burden’s release from prison. Burden was ordered to surrender into custody to begin her sentence on April 7.
Abraham Fine is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kay Konopaske and Laurie Worthen. The prosecution is the result of an investigation by TIGTA, IRS-CI, the FBI, and the U.S. Small Business Administration, Office of the Inspector General (SBA-OIG).
San Pablo Grandfather Sentenced to More Than 16 Years in Molestation of Three-Year-Old GirlRead the Press Release
OAKLAND – Adalberto Borja Guardado was sentenced today in federal court to 200 months in prison for the sexual coercion of a minor, announced United States Attorney Stephanie M. Hinds and Homeland Security Investigations Special Agent in Charge Tatum King. United States District Judge Jeffrey S. White handed down the sentence.
In his plea agreement, Guardado, a 68-year-old grandfather from San Pablo, admitted that on September 9, 2019, a three-year-old girl visited his residence with her mother. The girl’s mother provided home health care to Guardado’s elderly mother. Guardado told the girl’s mother that he would watch the girl while the mother provided the home care to Guardado’s elderly mother in another part of the residence. Within minutes of watching the girl, Guardado pulled the girl’s pants down and molested her. He used his cell phone to record the molestation.
In a court filing, the government described that the girl disclosed the molestation to her mother the next day, and the mother reported it to San Pablo police. Police investigated the report, seizing three smartphones from Guardado. A video of the molestation was discovered on a smartphone seized from Guardado’s person. Forensic review of all three smartphones revealed multiple additional images of child pornography.
Guardado was arrested on September 14, 2019 – five days after the incident – and has remained in custody since that date. Though originally charged in state court, Guardado was charged on June 10, 2021, in federal court with enticement and coercion of a minor, in violation of 18 U.S.C. § 2422(b). Guardado pleaded guilty to the federal charge on September 7, 2021.
In addition to a 200 month term of imprisonment, United States District Judge Jeffrey S. White sentenced Guardado to a 15 year term of supervision following his prison term. Guardado begins serving his prison sentence immediately.
Jonathan U. Lee is the Assistant United States Attorney who is prosecuting the case, with the assistance of Leeya Kekona, Kay Konopaske, and Kathleen Turner. The prosecution is the result of an investigation by Homeland Security Investigations, the Silicon Valley Internet Crimes Against Children Task Force, and the San Pablo Police Department.
This federal case was brought in United States District Court as part of Project Safe Childhood, a nationwide initiative to combat a growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorney’s Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Oakland Resident Faces Drug Distribution Charges in Alleged Tenderloin Fentanyl and Methamphetamine Distribution SchemeRead the Press Release
SAN FRANCISCO – Dixis Archaga-Reyes appeared today in United States District Court to face federal drug distribution charges for the alleged distribution of methamphetamine and fentanyl in and near the Tenderloin District of San Francisco, announced United States Attorney Stephanie M. Hinds and Special Agent in Charge Wade R. Shannon of the Drug Enforcement Administration (DEA).
The charges were set out in a criminal complaint filed February 15, 2022, and unsealed in federal court today. According to the criminal complaint, Archaga-Reyes, 26, of Oakland, sold drugs on multiple occasions near the Tenderloin area of San Francisco. The complaint describes four transactions between November 2, 2021, and February 4, 2022, in which Archaga-Reyes sold methamphetamine, fentanyl, or both to an undercover Task Force Officer working with the DEA and the San Francisco Police Department. For example, the complaint alleges that on February 4, 2022, Archaga-Reyes communicated with the undercover agent by text and arranged to sell an ounce of fentanyl for $500 and 4 ounces of methamphetamine for $1,000 near 7th and Mission Streets. The complaint alleges that the undercover agent arrived at the area at approximately 4:39 p.m., driving a vehicle into which Archaga-Reyes entered on the passenger side. The transaction, which allegedly was recorded on video, involved Archaga-Reyes allegedly handing to the agent numerous clear plastic bags containing suspected fentanyl and methamphetamine in exchange for $1,500 in pre-marked bills. After the transaction, Archaga-Reyes exited the vehicle and the government took steps to confirm the plastic bags contained methamphetamine and fentanyl.
In sum, the complaint charges Archaga-Reyes with distributing 5 or more grams of methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(B)(viii), and distributing 40 or more grams of fentanyl, in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(B)(vi). The statutory maximum penalty for each of these charges is a minimum of 5 years’ imprisonment and a maximum of 40 years’ imprisonment, a 5,000,000 fine, a minimum of 4 years’ supervised release and a maximum of life, a $100 special assessment, and mandatory and discretionary denial of federal benefits. 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 criminal complaint are only allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Archaga-Reyes made his initial federal court appearance today in United States District Court in San Francisco before United States Magistrate Judge Laurel Beeler. Archaga-Reyes was detained and remains in custody. His next court appearance is scheduled for February 28, 2022, before United States Magistrate Judge Laurel Beeler, for a detention hearing.
Assistant U.S. Attorney Andrew Paulson is prosecuting the case with the assistance of Soana Katoa and Mark DiCenzo. The prosecution is the result of an investigation by DEA and the San Francisco Police Department.
Accountant Charged with Defrauding Two Marin Car Dealerships of $1.7 MillionRead the Press Release
SAN FRANCISCO – Christina Markus appeared in federal court in San Francisco today to face an indictment charging her with four counts of wire fraud, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
According to the indictment, from 2010 to 2018 two Marin County car dealerships employed Markus, age 54 and formerly of Martinez, to perform bookkeeping. She held various titles during her years of employment, including Office Accountant, Payroll Administrator, Payroll Clerk, and Office Manager. Markus’s responsibilities included payroll processing, bank reconciliations, and posting ledgers for the dealerships using their “dealer management system” (DMS). DMS is a software program that performs inventory management, bank reconciliation, finance, and payment and payroll processing.
The indictment alleges that starting in January 2014 and continuing through October 2018, Markus created special payrolls for herself. The indictment charges that Markus, using the DMS software, wrote unauthorized checks to herself and created unauthorized bonuses and vacation pay and then caused these funds to be moved from the dealerships’ bank accounts to personal accounts that she controlled. Markus hid her fraud, according to the indictment, by deleting the record of fraudulent checks, bonuses, vacation pay, and payroll direct deposits within DMS and by manipulating bank reconciliations and ledgers and clearing entries from payroll records.
During the nearly five-year period, the indictment alleges, Markus embezzled more than $1.7 million by causing funds to be moved from her employer’s accounts to her personal bank accounts.
Markus made her initial appearance in San Francisco federal court today before United States Magistrate Laurel Beeler. Her next court appearance is scheduled for April 20 before United States District Judge Charles R. Breyer. She remains out of custody.
The indictment charges Markus with four counts of wire fraud in violation of 18 U.S.C. § 1343. The maximum statutory sentence for a violation of 18 U.S.C. § 1343 is 20 years imprisonment, a fine of $250,000 or twice the gross gain or loss amount, a three year period of supervised release following prison, and the payment of restitution for losses caused. 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.
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 Attorneys Joseph Tartakovsky and Kevin Yeh are prosecuting the case with the assistance of Amala James and Mimi Lam. The prosecution was the result of an investigation by the FBI.
Two South Bay Executives Charged with Fraud in Obtaining “Specialty Occupation” VisasRead the Press Release
SAN JOSE – Namrata Patnaik and Kartiki Parekh appeared in federal court today to face an indictment charging them both with visa fraud and conspiracy to commit visa fraud and further charging Patnaik with money laundering, announced United States Attorney Stephanie M. Hinds, U.S. Department of State Diplomatic Security Service (DSS), San Francisco Field Office, Special Agent in Charge William Chang, and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King.
According to the indictment, PerfectVIPs, Inc. (PerfectVIPs) is headquartered in San Jose and was incorporated in 2010 as a computer chip design product and services company. Patnaik, 42, a resident of Saratoga, acted as CEO of PerfectVIPs. Parekh, 56, a resident of Santa Clara, acted as the company’s human resources manager. The indictment charges that from 2011 through April 2017 Patnaik and Parekh submitted fraudulent H-1B visa applications for foreign workers sponsored by PerfectVIPs and that Patnaik later laundered the proceeds of the visa fraud.
H-1B visas are issued through the United States government’s H-1B Specialty Occupation Workers program. With an H-1B visa, an employer can employ a foreign worker in a “specialty occupation” in the United States on a temporary, nonimmigrant basis. A specialty occupation requires the theoretical and practical application of a body of specialized knowledge and requires the employee in the occupation have a bachelor's degree or its equivalent in the relevant specialty. Each employer seeking to obtain an H-1B visa to employ a nonimmigrant foreign worker is required to submit an application to the U.S. Department of Labor which attests, among other things, to labor conditions and describes the existence, duration, and wages associated with the temporary job. A subsequent petition requires, among other information, biographical data of the proposed foreign worker and identification of the address where the proposed foreign worker will be working.
The indictment charges that from 2011 through April 2017 Patnaik and Parekh submitted approximately 85 fraudulent H-1B visa applications for temporary nonimmigrant workers sponsored by PerfectVIPs. Each application contained representations under penalty of perjury. During the process, Patnaik and Parekh submitted or caused to be submitted statements that the foreign workers would be employed by PerfectVIPs to work on PerfectVIPs’s in-house contracts and projects at PerfectVIPs’s office locations. Once the applications were approved, Patnaik and Parekh instead created a pool of H-1B workers that were placed at employment positions with other employers, not with PerfectVIPs. This practice provided PerfectVIPs an unfair and illegal advantage over employment-staffing firms. During the period of Patnaik’s and Parekh’s conspiracy, the indictment alleges, the other employers paid fees of nearly $7 million to PerfectVIPs to cover the cost of the H-1B workers’ wages and salaries as well as a profit markup for PerfectVIPs.
Patnaik and Parekh made their initial appearances in San Jose federal court today before United States Magistrate Judge Nathanael M. Cousins. Both defendants were ordered to appear in United States District Court in San Jose on April 12 at 9 a.m. before United States District Judge Beth L. Freeman.
The federal indictment charges both Patnaik and Parekh with one count of conspiracy to commit visa fraud in violation of 18 U.S.C. § 371 and two counts of visa fraud in violation of 18 U.S.C. § 1546(a). The indictment also charges Patnaik with one count of money laundering in violation of 18 U.S.C. § 1957. The maximum statutory imprisonment sentence for a violation of 18 U.S.C. § 371 is 5 years in prison. The maximum statutory imprisonment sentence for each violation of 18 U.S.C. §§ 1546(a) and for a violation of 18 U.S.C. § 1957 is 10 years. Each of the charged statutes carry a maximum statutory fine of $250,000 or twice the gross gain or loss amount or, for money laundering, twice the amount of the criminally derived property involved. 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 criminal indictment are only allegations. As in any criminal case, these defendants are presumed innocent unless and until proven guilty in a court of law.
Assistant United States Attorney Sarah Griswold is prosecuting the case with the assistance of Lynette Dixon. The prosecution was the result of an investigation led by the DSS representative to the Document and Benefit Fraud Task Force (DBFTF), overseen by Homeland Security Investigations. The DBFTF is a multi-agency task force that coordinates investigations into fraudulent immigration documents. U.S. Citizenship and Immigration Service’s Office of Fraud Detection and National Security also assisted with the investigation.
Santa Cruz County Resident Pleads Guilty to Murder and Attempted Murder After Drive-By Shooting at Federal CourthouseRead the Press Release
SAN FRANCISCO – Steven Carrillo pleaded guilty today to 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, Calif., an event that resulted in the death of Protective Services Officer Dave Patrick Underwood and the wounding of a second security contractor, 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 Craig D. Fair, and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) San Francisco Field Division Special Agent in Charge Patrick T. Gorman. The plea was received by the Hon. Yvonne Gonzalez Rogers, United States District Judge.
In connection with today’s proceedings, Carrillo, 33, of Ben Lomond, Calif., signed a written agreement that described many of the facts leading up the shooting. According to the plea agreement, Carrillo admitted that he aligned himself with an anti-government movement and wanted to carry out violent acts against federal law enforcement officers. Carrillo admitted that in the months before the shooting, he regularly discussed and encouraged violence against law enforcement; further, in the days before the shooting, he posted several messages on Facebook related to his goals. For example, on May 28, he posted on Facebook, “Anyone down to boog?” and on May 29, he posted “I just wanna perpetuate the hate and violence towards the governments attack dogs” and “[t]his is a great time to perpetuate the destruction of the government.” Carrillo also posted photographs and videos to Snapchat depicting anti-government paraphernalia and firearms.
In the plea agreement, Carrillo admits his role in the shooting. According to the agreement, on May 29, 2020, Carrillo commented on Facebook, “Its kicking off now and if its not kicking off in your hood then start it. Show them the targets.” He also wrote, in reference to the ongoing protests over the killing of George Floyd, “Go to the riots and support our own cause. Show them the real targets. Use their anger to fuel our fire. Think outside the box. We have mobs of angry people to use to our advantage.” He then agreed to meet another individual at the San Leandro BART station and arrived in a white Ford van. Carrillo brought with him firearms and incendiary devices. Carrillo acknowledged that he got into the van and the other individual drove as they surveilled the protest, the federal building, the courthouse, and the surrounding area. At approximately 9:44 p.m., with the other individual driving the van, Carrillo admitted he opened the rear passenger-side sliding door and shot approximately 19 rounds at the officers.
Prior to entering his guilty pleas, Carrillo appeared before the Hon. Thomas S. Hixson, United States Magistrate Judge, for arraignment on a superseding information which charged Carrillo with one count of use of a firearm causing death, in violation of 18 U.S.C. § 924(j), and one count of attempted murder of a person of assisting an officer or employee of the United States Government, in violation of 18 U.S.C. §§ 1114(1), 1114(3), and 2. A federal grand jury had previously indicted Carrillo for his role in the Oakland courthouse murder and attempted murder.
On January 31, 2022, the government filed a notice of intent not to seek the death penalty. 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. Judge Gonzalez Rogers received the plea agreement and scheduled further proceedings to determine whether to accept it.
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.
Conspiring San Jose Fraudsters Sentenced to Prison in Automobile Resale SchemeRead the Press Release
SAN FRANCISCO – Seymur Khalilov, Ramil Heydarov, and Orkhan Aliyev all were sentenced today to 24 months, 20 months, and 20 months in custody, respectively, for their roles in a conspiracy to commit wire fraud, announced United States Attorney Stephanie M. Hinds, Homeland Security Investigations Special Agent in Charge Tatum King, and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The sentences were handed down by the Hon. Susan Illston, United States District Judge.
The defendants pleaded guilty to the charge in October 2021. According to the plea agreements, between 2016 and May 2021, Khalilov, 32; Heydarov, 31; and Aliyev, 32, all of San Jose, conspired to purchase high-mileage vehicles, roll back the odometers, and falsify documentation to make the vehicles appear newer. The co-conspirators then allegedly sold the vehicles on Craigslist at significant profits. The defendants admitted they fraudulently sold at least 78 vehicles in this way for a total of at least $550,000.
Judge Illston sentenced the defendants as follows:
Defendant
Prison Term
Restitution/Forfeiture
Supervised Release
Khalilov
24 months
To Be Determined
3 years
Heydarov
20 months
$379,325 forfeiture
3 years
Aliyev
20 months
$196,578 forfeiture
3 years
Judge Illston has not yet scheduled a date for a hearing to determine Khalilov’s restitution. In addition, Judge Illston ordered that victims of the scheme have one year from the date of judgment to come forward to seek restitution; any forfeited monies remaining after that period will be forfeited to the United States.
According to the defendants’ plea agreements, from at least October 2017 through December 2020, Khalilov, Heydarov, and Aliyev conspired to purchase high-mileage vehicles, roll back the odometers, and falsify documentation to make the vehicles appear newer. Specifically, the co-conspirators altered the odometers of numerous vehicles and altered registrations and titles, among other items, to fraudulently decrease the mileage readings of the vehicles and, thus, increase their sales value.
The government’s sentencing memorandum provides additional details of the scheme. For example, the memorandum provides an example of how Khalilov altered an odometer on a vehicle so that the mileage was reduced from 35,000 to 35 miles. The co-conspirators also admitted they posted advertisements of the vehicles on Craigslist to advertise the vehicles to victims who were not aware of the fraudulent alterations. Additionally, the defendants admitted using doctored driver’s licenses containing their photograph but the names of prior vehicle owners to facilitate the sale of these vehicles. Evidence in the case demonstrated Aliyev possessed multiple driver’s licenses with the same photograph but different people’s names. The co-conspirators each acknowledged that the goal of the conspiracy was to sell vehicles to victims for an increased price based on the fraudulent odometer readings. According to the plea agreements, the co-conspirators sold at least 78 vehicles with rolled back odometer readings, resulting in a total loss to the victims of between $550,000 and $1 million.
All three defendants were charged in a single criminal complaint filed on May 3, 2021, and each was charged with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349.
They each pleaded guilty to the charge.
The National Highway Traffic Safety Administration (NHTSA) estimates that odometer fraud in the United States results in consumer losses of more than $1 billion annually. When purchasing a vehicle, Homeland Security Investigations recommends that people protect themselves by taking the following steps:
• Purchase your own vehicle-history report prior to purchasing a car and compare the mileage on the report to the advertised mileage.
• Check the seller’s physical identification card or driver license and ensure it matches the information on the vehicle’s pink slip.
• Avoid using cash, when possible. Cashier’s checks and other payment methods might be safer and easier to track.
• Conduct transactions at public places where there are cameras and other people around.
• If a deal seems too good to be true, it probably is.
• Individuals with information relating to odometer tampering should call NHTSA’s odometer fraud hotline at (800) 424-9393 or (202) 366-4761.Assistant U.S. Attorneys Ankur Shingal, Leif Dautch, and Christopher Kaltsas are prosecuting the case with the assistance of Marina Ponomarchuk and Soana Katoa. The prosecution is the result of an investigation by Homeland Security Investigations and the Federal Bureau of Investigation with assistance from the California Department of Motor Vehicles Investigations Division in Vallejo, the San Ramon Police Department, and the National Highway Transportation Safety Administration Office of Odometer Fraud Investigations.
California Businessman Indicted for Employment Tax CrimesRead the Press Release
OAKLAND – A federal grand jury in Oakland, Calif., returned an indictment today charging a California businessman with failing to pay over employment taxes to the IRS.
According to the indictment, Larry Kudsk, of Berkeley, operated two construction businesses, M. Gutierrez Inc. and Kudsk Construction Inc. For both companies, Kudsk allegedly was responsible for filing quarterly employment tax returns and collecting and paying to the IRS payroll taxes withheld from employees’ wages. Kudsk allegedly did not timely file employment tax returns, and did not pay withholdings to the IRS, for the last three quarters of 2015 for M. Gutierrez Inc., and for all four quarters of 2016 for Kudsk Construction Inc. In total, Kudsk allegedly caused a tax loss to the IRS of more than $250,000.
Kudsk is scheduled to make his initial court appearance on Feb. 11 before U.S. Magistrate Judge Kandis A. Westmore. If convicted, Kudsk faces a maximum of five years in prison for each of the seven counts of failing to pay over employment taxes. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
U.S. Attorney Stephanie M. Hinds, Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, and Special Agent in Charge Mark H. Pearson of IRS-Criminal Investigation made the announcement.
IRS-Criminal Investigation is investigating the case.
Assistant U.S. Attorney Katherine Lloyd-Lovett of the Northern District of California Corporate and Securities Fraud Section is prosecuting the case with Trial Attorneys Julia M. Rugg and Charles A. O’Reilly of the U.S. Department of Justice Tax Division.
An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Concord Man’s Serial Fraud Nets Him More Than Five Years in Federal PrisonRead the Press Release
SAN FRANCISCO – Jason Blackard was sentenced today in United States District Court to 66 months in federal prison after pleading guilty to bank fraud, aggravated identity theft, fraudulent use of unauthorized access devices, and attempted mail theft, announced United States Attorney Stephanie M. Hinds and United States Postal Inspection Service (USPIS) Inspector in Charge Rafael Nuñez. Senior United States District Judge Maxine M. Chesney handed down the sentence.
Blackard, 38, of Concord, California, pleaded guilty on October 7, 2021. In his plea agreement, Blackard admitted committing a series of frauds and theft that continued from January 2019 through February 2021. On January 9, 2019, U.S. Postal Inspectors were surveilling a U.S. Postal Service (USPS) mail “relay” box at the corner of Sacramento Street and Powell Street in San Francisco. The relay box had been the target of repeated thefts. While watching, they saw Blackard approach and open the box. Blackard was wearing a USPS hat and jacket and used a key belonging to USPS. Blackard admitted in his plea agreement that he intended to steal mail from the relay box.
Blackard further admitted in his plea agreement that he engaged in seven more crimes in the ensuing two years. Three of those crimes involved bank fraud in which Blackard stole other individuals’ identities, impersonated them, and opened loans and wrote checks to buy big ticket items using their names and accounts. Blackard admitted to fraudulently purchasing two automobiles and a new speedboat from dealerships in Chico, Ripon, and Vacaville. Blackard also admitted using stolen identities to buy thousands of dollars in merchandise from large retailers in Walnut Creek, Redding, and Chico.
In a memo filed for sentencing, the government detailed that Blackard’s fraud involved buying a $58,000 Toyota sportscar, a $98,000 speedboat and trailer, a $30,000 Mercedes automobile, $9,000 in goods from a high-end clothes retailer, $67,000 in goods from a big box hardware store, and $9,000 in goods from a tractor supply retailer. Blackard’s crimes continued even after law enforcement executed a search warrant on his home in July 2020 and persisted until law enforcement arrested him in February 2021.
Blackard’s fraud and theft caused losses in excess of $134,000 to identifiable banks, retailers, and individuals. In his plea agreement, Blackard agreed that the total intended losses to his victims exceeded $250,000.
In addition to imposing a 66 month prison term, Senior United States District Judge Maxine M. Chesney sentenced Blackard to a three year term of supervision upon his release from prison and ordered him to pay $134,908.32 in restitution to his victims.
Blackard was in custody at his sentencing hearing and begins his sentence immediately.
Special Assistant U.S. Attorney Christopher Vieira prosecuted the case with the assistance of Marina Ponomarchuk. The federal prosecution arose from investigations by the USPIS, Hillsborough Police Department, California Highway Patrol, Chico Police Department, Ripon Police Department, Antioch Police Department, Walnut Creek Police Department, Pleasanton Police Department, Pleasant Hill Police Department, Vacaville Police Department, and the Danville Police Department, with assistance from the Butte County District Attorney’s Office, Contra Costa District Attorney’s Office, San Joaquin District Attorney’s Office, San Mateo County District’s Attorney Office, Solano County District Attorney’s Office, and the Tehama County District Attorney’s Office.
Castro Valley Resident Charged in Pandemic Relief Fraud SchemeRead the Press Release
SAN FRANCISCO – A criminal complaint unsealed today in federal court charges Idowu Hashim Shittu for fraud in connection with a scheme to obtain pandemic-related unemployment benefits from numerous state agencies, announced United States Attorney Stephanie M. Hinds, United States Department of Labor Office of Inspector General (DOL-OIG) Special Agent in Charge Quentin Heiden, and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
According to the criminal complaint, between March and the end of July 2020, Shittu, 46, of Castro Valley, California, engaged in a scheme to use the personal information of other people to obtain pandemic-related unemployment benefits. The complaint explains that in March of 2020, as part of the Coronavirus Aid, Relief, and Economic Security Act, the federal government authorized the payment of hundreds of billions of dollars in unemployment benefits to those affected by the COVID-19 pandemic and, since then, many state authorities responsible for distributing those unemployment benefits to their residents have been inundated by fraudulent claims. According to the complaint’s allegations, Shittu fraudulently submitted requests for such benefits and then used some of those proceeds for his own personal gain.
The criminal complaint describes three occasions in which Shittu allegedly disposed of fraudulently obtained benefits. In the first instance, the Washington State Employment Security Department (ESD) received a request for unemployment benefits on May 5, 2020. The request was submitted in the name of a resident of Mercer Island, Washington – identified in the complaint only by the initials “S.O.” The request included the supposed applicant’s correct date of birth and social security number. The Washington ESD responded to the request by depositing more than $9,000 in an account linked to a reloadable debit card. A subsequent investigation revealed the account was used by someone in California. Specifically, a person withdrew cash from several automatic teller machines located in the Bay Area, including Hayward, Castro Valley, and San Jose. According to the complaint, S.O. told investigating law enforcement that he was not been in California at any time during 2020. A Walmart customer fitting Shittu’s description was captured on camera using an ATM to withdraw cash from that account.
The criminal complaint describes two additional instances of unemployment benefits being issued by the Washington ESD to Washington residents – one from Seattle and the other from Olympia – after which ATMs in the Bay Area were used to withdraw that money from the accounts or the proceeds from those accounts were spent in Bay Area stores. In each case, a person fitting Shittu’s description was photographed engaging in transactions relating to the accounts. According to the complaint, Shittu fraudulently obtained more than $1 million in unemployment benefits from various state agencies, including the Washington ESD.
In sum, the complaint charges Shittu with three counts of access device fraud, in violation of 18 U.S.C. § 1029(a)(5). Shittu faces a maximum statutory penalty of up to 15 years in prison for each count. In addition, a court may order restitution, fines, a period of supervised release, and other penalties; however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
The charges contained in the criminal complaint are mere allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Shittu made his initial federal court appearance today before United States Magistrate Judge Sallie Kim. Magistrate Judge Kim scheduled Shittu’s next court appearance for Monday, January 31, 2022.
Assistant U.S. Attorneys Andrew Paulson and Kevin Rubino are prosecuting the case with the assistance of Soana Katoa and Mark DiCenzo. The prosecution is the result of an investigation by the U.S. Department of Labor Office of Inspector General and the Federal Bureau of Investigation.
San Jose Man Sentenced to More Than 16 Years Following Jury Convictions for Meth Trafficking and Gun ChargesRead the Press Release
SAN FRANCISCO – Armando Daniel Calderon was sentenced today in United States District Court to 198 months in federal prison following convictions for two counts of methamphetamine trafficking, one count of conspiracy to traffic methamphetamine, and one count of carrying a firearm during drug trafficking, announced United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon. The sentence was handed down by Senior United States District Judge William Alsup.
On June 23, 2021, a federal jury convicted Calderon, 35, most recently from San Jose, of the following four counts:- possession with intent to distribute 500 grams or more of a mixture or substance containing methamphetamine, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(A), on August 20, 2018;
- carrying a firearm during and in relation to a drug trafficking crime, in violation of 18 U.S.C. § 924(c), on August 20, 2018;
- conspiracy to distribute and to possess with intent to distribute 500 grams or more of a mixture or substance containing methamphetamine, in violation of 21 U.S.C. § 846, during the month of September 2018; and
- possession with intent to distribute 50 grams or more of methamphetamine, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(A), on September 25, 2018.
According to evidence presented at trial, on August 20, 2018, San Jose State University Police Department officers stopped Calderon’s pickup truck in the vicinity of Keyes Street and South 3rd Street in San Jose. Calderon was the driver and sole occupant. Police officers learned that Calderon had multiple outstanding arrest warrants and took him into custody. Upon arrest, officers discovered $5,363 in cash and six .40 caliber bullets in Calderon’s pants pockets. Inside the truck, officers found three bags. One bag contained methamphetamine and .40 caliber ammunition. The second contained methamphetamine. The third contained a high-capacity pistol magazine loaded with 18 rounds of .40 caliber ammunition. Officers also discovered a .40 caliber pistol loaded with nine rounds of .40 caliber ammunition next to the driver’s seat.
In total, police recovered approximately 1.83 pounds of methamphetamine from Calderon’s truck.
Further evidence presented at trial showed that in September 2018 – just weeks after the traffic stop – Calderon conspired to distribute a large quantity of methamphetamine. In that month, Calderon repeatedly spoke on the phone and met in the San Mateo area with a prospective buyer to negotiate the sale of 15 kilograms (33 pounds) of methamphetamine. The negotiations settled on a price of $4,700 per kilogram of methamphetamine, for a total price of $70,500 for 15 kilograms. During the negotiations, Calderon guaranteed the quality of the methamphetamine for the buyer and agreed to exchange it for other methamphetamine if the buyer was dissatisfied.On September 25, 2018, Calderon met with the buyer early in the day and agreed to deliver the methamphetamine to the parking lot of a Menlo Park shopping center. Later in the day, Calderon and two others were arrested near that shopping center. Calderon fled on foot when officers approached but was apprehended. Law enforcement seized 989 grams (more than two pounds) of pure methamphetamine at that arrest scene. During their search of a nearby stash house connected to Calderon, agents recovered an additional 6,492 grams (more than 14 pounds) of pure methamphetamine as well as documents bearing Calderon’s name.
Trial evidence also showed that prior to his arrest on September 25, 2018, Calderon hid methamphetamine inside a red Mustang parked outside the stash house. Law enforcement officers seized that methamphetamine too, which weighed 317 grams (more than two-thirds of a pound).In a memorandum filed for sentencing, the government pointed out that Calderon exhibited dangerousness during his encounters with police in August and September of 2018. During the August 20th traffic stop by San Jose University police officers, Calderon had a loaded firearm wedged between his driver’s seat and the truck’s center console. During a September 11th traffic stop by law enforcement in San Mateo County, Calderon fled the scene and left behind a privately-made firearm without a serial number, also known as a “ghost gun.” At his September 25th arrest, Calderon again fled on foot. When apprehended, Calderon struggled with the officers, got his hands on an officer’s gun, and pointed the gun at officers before they overcame Calderon and placed him in handcuffs.
In addition to imposing a 198 month prison term, Judge William Alsup sentenced Calderon to five years of supervision following his release from prison. Calderon has been in custody since his September 25, 2018 arrest. His sentence begins immediately.
Assistant U.S. Attorneys Erin Cornell and Sloan Heffron prosecuted the case with the assistance of Patricia Mahoney, Andy Ding, Hector Lopez, and Madeline Wachs. The prosecution is the result of an investigation by DEA, the San Mateo County Sheriff’s Office, the San Mateo County Narcotics Task Force, and the San Jose State University Police Department.This investigation and prosecution are part of the Organized Crime Drug Enforcement Task Force (“OCDETF”), 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.
Former Bishop, Lay Leader Charged in Fraud Scheme Involving AME Zion Congregations Across CaliforniaRead the Press Release
OAKLAND – Staccato Powell and Sheila Quintana were arrested and appeared in federal court today to face conspiracy, wire fraud, and mail fraud charges stemming from an alleged fraudulent scheme committed upon congregations of the AME Zion Church in California and private lenders, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation (FBI) Special Agent in Charge Craig D. Fair.
According to the federal indictment filed January 6, 2022, and unsealed today, Powell, 62, of Wake Forest, North Carolina, and Quintana, 67, of Vallejo, were officers of the Western Episcopal District, Inc., an entity formed by Powell and Quintana in 2016 after Powell’s selection as bishop to the Western Episcopal District of the African Methodist Episcopal Zion Church (AME Zion Church), an historically African-American denomination of approximately 1.4 million adherents worldwide tracing its history to 1796. The indictment alleges that Powell and Quintana conspired to defraud AME Zion Church congregations in Oakland, San Jose, Palo Alto, and Los Angeles by re-deeding the local congregations’ properties in the name of WED, Inc. The indictment alleges that, prior to Powell and Quintana’s actions, these congregations had little or no mortgage debt on their local church properties, to include sanctuaries, residences for pastoral staff, and other structures used by the local congregations for religious purposes, and in some cases, the congregations had many years earlier paid off their mortgages.
The indictment further alleges that Powell and Quintana used false statements and material omissions to obtain the grant deeds from local pastors, then used fake resolution documents purporting to memorialize the assent of the local congregations to new mortgages on the local church properties. In fact, the local congregations did not authorize the new encumbrances on the local church properties. The indictment further alleges that through WED, Inc., Powell and Quintana conspired, along with others not named in the indictment, to extract cash proceeds by using the fake resolution documents to obtain mortgages from private lenders, usually on terms unfavorable to the borrower. Powell and Quintana did not inform the private lenders of the true facts, and they did not inform the local congregations of the new mortgages using the local church properties as collateral. The indictment alleges that after taking control of the church properties, Powell, Quintana, and others used the real estate as collateral to obtain high interest loans, exceeding $14 million in net proceeds. The indictment further alleges that Powell and Quintana diverted funds from the loans for their benefit, including the acquisition of properties in North Carolina by Powell, retiring mortgage debt on Powell’s personal residence in North Carolina, and cash payments to Quintana’s spouse. On July 30, 2020, WED, Inc. filed for Chapter 11 bankruptcy protection and listed eleven churches in California, Arizona and Colorado among its assets.
In sum, the indictment charges Powell and Quintana each with one count of conspiracy to commit wire fraud and mail fraud, in violation of 18 U.S.C. § 1349, and two counts of wire fraud, in violation of 18 U.S.C. § 1343. In addition, Powell is charged with one count of mail fraud, in violation of 18 U.S.C. § 1341. The maximum statutory sentence for violations of 18 U.S.C. § 1341, 1343 or 1349 is 20 years in prison, a fine up to $250,000, and three 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.
Powell was arrested today in Wake Forest, North Carolina and made his initial appearance in federal court in the Eastern District of North Carolina. Quintana was arrested today in Vallejo, Calif., and made her initial appearance in Sacramento. The defendants were ordered to appear for their initial appearances in the Northern District of California via Zoom on February 2, 2022, before the Honorable Kandis A. Westmore.
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.
This case is being prosecuted by the Oakland Branch of the U.S. Attorney’s Office and is the result of an investigation by the Federal Bureau of Investigation with assistance from the Santa Clara County District Attorney’s Office.
Armed Pharmacy Robbery Results in More Than Seven Year Sentence for Vallejo PerpetratorRead the Press Release
SAN FRANCISCO – Lembrent Rubin was sentenced today in United States District Court to 89 months in federal prison after pleading guilty to robbery of a pharmacy and to brandishing a firearm during the robbery, announced United States Attorney Stephanie M. Hinds and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) San Francisco Field Division Special Agent in Charge Patrick T. Gorman. The sentence was handed down by United States District Judge Charles R. Breyer.
Rubin, 37, of Vallejo, pleaded guilty on October 13, 2021. In a memorandum filed for the sentencing hearing, the government described the crime of Sunday, October 14, 2018. That morning, a pharmacist showed up for work at his pharmacy located in a large grocery store in San Francisco. Rubin was seated alone in the pharmacy’s waiting room. As the pharmacist opened the pharmacy door with his key, the pharmacist turned his back on Rubin. When the pharmacist turned the key, Rubin forced his way into the pharmacy, pushing the pharmacist until they were both inside and behind the main counter. Nobody could see in as the shades were shut. The pharmacist spun around and saw Rubin brandishing a handgun. Rubin demanded drugs and held a black bag. The pharmacist opened the locked cabinet where controlled prescriptions were secured. He began placing bottles of pills into the black bag. A pharmacy alarm system sounded, and Rubin reached into the cabinet and swept more pill bottles into his bag. Rubin fled the pharmacy and the grocery store, taking with him several hundred tablets of oxycodone and generic Vicodin, Adderall, and Ritalin.
Approximately two weeks later Rubin was located and arrested. Officers who arrested him seized a loaded .40 caliber Glock pistol from his waistband. A search of his apartment turned up more ammunition, including a loaded pistol magazine, and pills with imprints that matched the imprints on pills stolen from the pharmacy.
In addition to imposing the 89 month prison term, United States District Judge Charles R. Breyer sentenced Rubin to a three year term of supervision upon his release from prison.
Rubin was in custody at the sentencing hearing. He is now being transferred in custody to face firearm and vehicle theft charges filed in Solano County Superior Court which arose from an arrest that followed the arrest in this case.
Assistant U.S. Attorneys Casey Boome and Sailaja M. Paidipaty prosecuted the case with the assistance of Beth Margen and Ralph Bancshstubbs. The prosecution is the result of an investigation by ATF and the San Francisco Police Department.
Father and Son Plead Guilty to Charge of Conspiracy to Defraud Their Former EmployerRead the Press Release
OAKLAND – Anthony Giovanni Montanelli and his father, Steven John Montanelli each pleaded guilty today to one count of conspiracy to commit mail fraud in connection with a scheme to divert medical equipment owned by Kaiser Foundation Hospitals and Health Plan, Inc. (Kaiser) for use in their own San Jose-based company, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig Fair. The guilty pleas were accepted by the Hon. Jon S. Tigar, U.S. District Judge.
Anthony Montanelli, 34, and his father Steven Montanelli, 63, both of San Ramon, pleaded guilty to the charges pursuant to separate plea agreements entered by the court. 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). They then sold the diverted equipment 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 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 systems as decommissioned when, in fact, the equipment was diverted to PCI. In sum, the defendants both admitted 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 loss to Kaiser resulting from the conspiracy exceeded $1,500,000.
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. The conspiracy charge carries a maximum statutory penalty of 20 years in prison and a fine of up to $250,000. The court also may order additional terms of supervised release, fines, forfeitures, and restitution; 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 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.
Richmond Man Sentenced to 10 Years for Sex Trafficking A Minor and Possessing Child PornographyRead the Press Release
SAN FRANCISCO – Kealeon Shakur Dyer-Hogan was sentenced today in federal court to 120 months following his convictions for sex trafficking of a minor and for possession of child pornography, announced United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The sentence was handed down by United States District Judge Maxine M. Chesney.
On July 13, 2021, a federal jury convicted Dyer-Hogan, 23, of Richmond, California, for the possession of child pornography. Trial evidence revealed that Dyer-Hogan befriended a 16 year old high school sophomore and began to pick her up after her school day in his SUV. One day the 16 year old girl entered Dyer-Hogan’s vehicle after school and saw a minor boy who she did not know sitting in the back. Dyer-Hogan instructed her to get in the back, and once in the back, the boy pulled down his pants. Dyer-Hogan filmed the incident on his cell phone, ignoring the 16 year old girl’s request to stop recording. Later that day Dyer-Hogan asked the 16 year old girl to work for him as a prostitute, which she rejected. The 16 year old eventually found one of the videos, which Dyer-Hogan had assured her were deleted, posted on social media. After Dyer-Hogan’s arrest, police found on his phone five of his video clips depicting sexual activity involving minors.
The jury convicted Dyer-Hogan of possessing child pornography. After his conviction, he was allowed to remain out of custody while awaiting further court proceedings.
On July 22, 2021 – nine days after the jury convicted Dyer-Hogan and while he was awaiting further court proceedings – Dyer-Hogan was arrested again. This time police found a 15 year old girl in his car. The government charged Dyer-Hogan with sex trafficking of the 15 year old minor, and he pleaded guilty to the charge on October 20, 2021. Among other admissions in his plea agreement, Dyer-Hogan admitted that for the three weeks prior to his July 22nd arrest – a time when he was in court during the day on trial for the above child pornography charges – he transported the 15 year old girl to and from an Oakland location where prostitution is commonplace.
In a memorandum filed for sentencing, the government described that the investigation of Dyer-Hogan revealed he had three females working for him as commercial sex workers. At least two of the females were minors. Dyer-Hogan was a controlling, violent, and manipulative pimp, according to the sentencing memo.
In addition to imposing a 120 month prison term, United States District Judge Maxine M. Chesney sentenced Dyer-Hogan to a five year term of supervision upon his release from prison, ordered him to pay $5,000 in restitution, and ordered Dyer-Hogan to stay away from and have no contact with the victims of his crimes.
Assistant U.S. Attorneys Leif Dautch and Mari Overbeck prosecuted the cases with the assistance of Mark DiCenzo. The prosecution is the result of investigations by the Federal Bureau of Investigation, the Richmond Police Department, and the Oakland Police Department.
This federal case was brought in U.S. District Court 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 www.justice.gov/psc.
Firearm and Drug Trafficking Charges Follow Apparent Road Rage Incident in San Francisco’S Tenderloin DistrictRead the Press Release
SAN FRANCISCO – Wilmer Arteaga appeared today in United States District Court to face federal charges of being a felon in possession of a firearm and for possession of more than 40 grams of fentanyl with the intent to distribute it, announced United States Attorney Stephanie M. Hinds and Special Agent in Charge Wade R. Shannon of the Drug Enforcement Administration (DEA).
According to the criminal complaint filed December 27, 2021, and unsealed in federal court today, Arteaga, 29, of Oakland, was arrested next to a white, two door BMW sedan following shots being fired at an apparent road rage incident in San Francisco’s Tenderloin District. According the complaint, on November 9, 2021, at 6:30 p.m., San Francisco Police officers witnessed two cars, one of which was a white, two door BMW sedan, stop on Turk Street at the intersection with Van Ness Avenue in San Francisco. The complaint describes the second car shifting into reverse and driving into the BMW, followed by the BMW’s driver getting out of the BMW with a pistol in hand. Two shots were fired. Both cars sped off. The complaint alleges that 15 minutes later SFPD officers located the BMW parked a few blocks away and arrested Arteaga there. According to the complaint, at Arteaga’s arrest, a loaded pistol was found in his possession and powder weighing approximately 1155 grams and testing positive for fentanyl was found in the BMW.
Arteaga originally was charged in state court before the federal complaint was filed.
Arteaga made his initial federal court appearance today in San Francisco before United States Magistrate Judge Sallie Kim. Arteaga remains in custody; Magistrate Kim scheduled his next federal court appearance for January 20, 2022.
The federal complaint charges Arteaga for being a convicted felon in possession of a firearm in violation of 18 U.S.C. § 922(g)(1), which carries a maximum possible statutory sentence of 10 years imprisonment, a three-year term of supervised release following imprisonment, and a maximum fine of $250,000. The second federal charge in the complaint charges Arteaga with possessing with the intent to distribute 40 grams or more of fentanyl in violation of 21 U.S.C. § 841(a)(1), (b)(1)(B), which carries a maximum possible statutory sentence of 40 years imprisonment with a mandatory minimum imprisonment term of five years, a maximum fine of $5,000,000, and a term of supervised release following imprisonment of at least four years with a maximum of life. However, any sentence following a conviction would be imposed by a court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The charges contained in the criminal complaint are only allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Assistant U.S. Attorney Lauren Harding is prosecuting the case with the assistance of Maribel Gallegos and Amala James. The prosecution is the result of an investigation by DEA and the San Francisco Police Department.