Northern District of California
Press releases recorded for this federal judicial district.
Richmond Man Pleads Guilty to Producing Child PornographyRead the Press Release
OAKLAND – Ranbir Singh pleaded guilty yesterday in federal court in Oakland to the production of child pornography, announced Acting United States Attorney Stephanie M. Hinds and Homeland Security Investigations Special Agent in Charge Tatum King.
In his plea agreement, Singh, 47, of Richmond, admitted that on March 13, 2013, he engaged in sexual acts in an Alameda County hotel room with a female whom he knew to be 16 years old at the time. The plea agreement describes that Singh set up a video camera in the hotel room before the crime occurred. Singh admitted he persuaded the minor female. At one point the minor female protested, but Singh continued. During the recordings, Singh admitted that he positioned the camera to record the acts.
Singh also admitted in his plea agreement that earlier, in January 2013, he video recorded the same minor female sitting in a car’s backseat in a compromising and exposed position.
Singh further admitted that in May 2013 he traveled with a different minor female to a casino hotel in Placer County. Singh admits that he knew this female was a minor. The plea agreement describes that in a hotel room at the casino Singh engaged in sex acts with the minor female, after he showed her a video he recorded depicting his acts with the minor female in the Alameda County hotel room on March 13, 2013.
The initial federal charges were brought against Singh in a complaint filed March 1, 2021. The complaint reflects that the investigation began when the two minor female victims came forward, though initially they did not know Singh’s true name, and later developed when the sexually explicit videos were discovered.
Singh was indicted on March 23, 2021, on the charge of production of child pornography in violation of 18 U.S.C. 2251(a). The maximum penalty for a violation of production of child pornography in violation of 18 U.S.C. 2251(a) is imprisonment for 30 years, with a minimum mandatory term of imprisonment of 15 years, and a fine of $250,000. However, any sentence will be imposed by a court only after the court’s consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Singh’s sentencing hearing is scheduled for December 8, 2021, in Oakland federal court before the Honorable Haywood S. Gilliam, Jr., United States District Judge. Singh remains in custody awaiting sentencing.
Jonathan U. Lee is the Assistant U.S. 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 and the Richmond Police Department.
Public Contractor Sentenced to Two Years in Federal Prison for Bribing San Francisco Public OfficialRead the Press Release
SAN FRANCISCO – Alan Varela was sentenced today in federal court to 24 months in prison and ordered to pay a $127,000 fine for a seven year conspiracy to commit honest services wire fraud by bribing a San Francisco public official, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The sentence was handed down by the Honorable William H. Orrick, United States District Judge.
A federal complaint filed September 17, 2020, charged Varela, 60, of Orinda, and William Gilmartin, 61, of San Mateo, with bribery of a public official. In 1991, Varela founded ProVen Management, a Bay Area civil engineering and construction firm that engaged in large scale infrastructure projects. Varela and Gilmartin acted as the firm’s president and vice-president, respectively, during the conspiracy time period. According to the complaint, Varela and Gilmartin provided a stream of benefits to Mohammed Nuru, then the Director of San Francisco’s Department of Public Works (DPW), in exchange for favorable treatment of their business interests, including non-public inside information.
Upon entering his guilty plea to conspiring to commit honest services wire fraud on May 27, 2021, Varela described in his plea agreement his role in the bribery conspiracy of then-DPW Director Nuru. The bribery’s goal was to use Nuru’s prominence as a powerful San Francisco public official to ensure the success of Varela and his co-conspirators’ business ventures. Nuru’s position as DPW Director provided him with great influence over San Francisco public contracts, permits, and construction projects, as well as over other City departments and private companies seeking DPW contracts. In his plea agreement, Varela admitted that for seven years, from 2013 until the day of Nuru’s arrest on federal charges January 27, 2020, he conspired with his co-defendant Gilmartin, with Balmore Hernandez – a construction company CEO who pled guilty earlier and is cooperating with the FBI – and with others to pay bribes to Nuru consisting of cash, free meals and entertainment, equipment for Nuru’s ranch, and the prospect of a cut of future profits from expected City contracts.
Varela’s plea agreement detailed a scheme in which he and his co-conspirators focused on winning a lucrative DPW contract and its related Port of San Francisco lease to operate an asphalt recycling plant and a concrete plant on the Port’s land. The plea agreement describes that Nuru agreed, in exchange for cash and other valuables, to use his official position to get Varela and his co-conspirators’ proposal selected. Gilmartin arranged to compensate Nuru by asking an unnamed company to award a $100,000 contract to Hernandez and, in turn, Hernandez used the contract’s proceeds for Nuru. For his part, Nuru sent early drafts of San Francisco’s Request for Proposals for the project and other inside information to the conspirators to improve their likelihood of being selected. Nuru also regularly discussed the plans and inside information with Gilmartin and Hernandez over expensive restaurant dinners, always paid for by Gilmartin and ultimately totaling approximately $20,000.
The conspirators’ proposal was selected in September 2015. According to the plea agreement, Nuru continued to meet with the group to supply additional inside information during the expensive meals paid for by Gilmartin. At one of their meetings, Nuru requested a tractor for his ranch. Varela coordinated with Gilmartin and Hernandez to deliver the tractor to Nuru.
Nuru was arrested on federal bribery-related charges on January 27, 2020, before the negotiations to finalize the asphalt recycling plant agreements with DPW and the Port of San Francisco reached completion.
In a filed memorandum addressing Varela’s sentencing, the government argued that Varela’s conduct with Nuru was business as usual for Varela. The government asserted that Varela, whose business success had gained him a life of luxury including 50 acres in Napa, for years facilitated a casual culture of corruption, a culture that ultimately undermines the public’s faith in their government and the rule of law. Elaborating on the tractor bribe, the sentencing memorandum points out that the value of the new John Deere tractor, including its attachments, approximated $40,000. Varela lined up the purchase of the tractor and rushed to get it delivered to Nuru at Nuru’s ranch on February 18, 2019. The delivery led to Nuru to happily text “Work begins at the ranch” along with a photo of the tractor being unloaded at his ranch. The government, after outlining this and other acts of bribery, submitted a sentence recommendation of 30 months imprisonment.
This case is part of a larger federal investigation targeting public corruption in the City and County of San Francisco. To date, eleven individuals have been charged, including two high-ranking San Francisco public officials, Mohammed Nuru and Harlan Kelly. Multiple city contractors and facilitators have been charged. According to the charges earlier filed against Mohammed Nuru and others, Nuru allegedly took hundreds of thousands of dollars in bribes in cash, meals, and work on his vacation home from contractors who obtained San Francisco public contracts. Allegations in the complaint filed against Harlan Kelly assert he received thousands of dollars in airfare, meals, jewelry, and travel expenses, along with repair work on his house.
In addition to the prison term and fine, United States District Judge Orrick also sentenced the defendant to a three-year period of supervised release. Varela will begin serving his sentence on January 2022.
The case is being prosecuted by the Corporate and Securities Fraud section of the U.S. Attorney’s Office. The case is being investigated by the FBI.
Acting U.S. Attorney Announces Major Law Enforcement Initiative to Combat Violence and Drug Distribution from La Nuestra Familia GangRead the Press Release
SAN FRANCISCO – Acting United States Attorney Stephanie M. Hinds held a press conference today to announce the unsealing of federal charges filed against 55 defendants, many of whom were members of, or affiliated with, the Nuestra Familia prison gang and its subservient street gangs. Acting U.S. Attorney Hinds was joined in making the announcement by Federal Bureau of Investigation Special Agent in Charge Craig D. Fair, Drug Enforcement Administration Special Agent in Charge Wade R. Shannon, California Department of Corrections and Rehabilitation Chief Office of Correctional Safety Derrick Marion, Santa Clara Sheriff Laurie Smith, and San Jose Deputy Chief of Police Elle Washburn.
The focus of the press conference was the unsealing of 17 charging documents, including 14 indictments and 7 criminal complaints, setting out a broad array of charges against the defendants.
“No single defendant is responsible for all the conduct I am describing,” said Acting U.S. Attorney Hinds. “The charges against each defendant are described in a charging document that is unique to each defendant. By disrupting gang leadership, we reduce violence on our streets. By removing violent actors and crime drivers from the streets, we make our neighborhoods safer.”
According to the documents unsealed today, La Nuestra Familia – Spanish for “Our Family”– was a prison gang operating in the California state prison system. Falling under the gang’s supervision are Norteño street gangs established in numerous cities and counties, and in jails and prisons, throughout Northern California and elsewhere. Several of the charging documents unsealed today describe various aspects of the gang. For example, one indictment (here (Leadership)) describes the largely-incarcerated leadership, while another (here (SJG)) describes the activities of a street gang called the San Jose Grande and yet another (here (EHP)) describes a group referred to as El Hoyo Palmas Street Gang. The picture that emerges is one of a violent and structured organization that finances its activities through crime and encourages its members to visit violence upon anyone who threatens the gang’s existence, including members who break gang rules, members who attempt to leave the gang, and rival gang members.
According to the documents unsealed today, of the 55 defendants, 28 individuals were charged with racketeering crimes, while the remaining individuals were charged with drug trafficking and firearms offenses. Conspiracies alleged in the indictments include agreements to distribute drugs including heroine, methamphetamine, and cocaine; to commit armed robberies; and to commit murder. Additional defendants were charged with other related crimes ranging from drug distribution to armed robbery.
Acting U.S. Attorney Hinds emphasized the goal to “fish with a spear, not a net.” “Working with our federal and state, local, and tribal law enforcement partners, as well as impacted communities, our law enforcement efforts have focused on addressing violent crime driven by gangs,” said Acting U.S. Attorney Hinds. “We will continue to work with our law enforcement partners, as well as members of our community, to identify and address the drivers of crime in our neighborhoods. We intend to continue to deliver results by focusing on the needs of our communities.”
“Operation Quiet Storm was one of the largest gang takedowns in FBI San Francisco division’s history," said FBI San Francisco Special Agent in Charge Craig D. Fair. "The coordinated efforts of this operation were done with one goal in mind: to disrupt the communications and organizational structure of a criminal network who has terrorized our neighborhoods for far too long.”
“Today’s operation strikes a substantial blow to Nuestra Familia leadership. This investigation revealed the wide-ranging influence of the gang that extends far beyond prison walls. It is clear they have hard and fast rules, and those who run afoul are met with intimidation and violence that spills into our communities,” said DEA Special Agent in Charge Shannon. “We will continue to look at these organizations structurally to disrupt and dismantle them.”
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.
This case is being prosecuted by the Organized Crime Strike Force of the United States Attorney’s Office for the Northern District of California. The prosecution is the result of an investigation by the FBI (San Francisco, Sacramento, and Phoenix Divisions) and the DEA, with the assistance of the Santa Clara County Sheriff’s Office, the California Department of Corrections and Rehabilitation, the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives, the U.S. Marshal Service, the Santa Clara County District Attorney’s Office, and the San Jose Police Department, as well as the support of the Alameda County Sheriff's Office, Antioch Police Department, Campbell Police Department, Fremont Police Department, King’s County Sheriff’s Office, Monterey County Sheriff’s Office, Mountain View Police Department, Sacramento Police Department, Salinas Police Department, Menlo Park Police Department, Santa Clara County Parole Department, Santa Clara County Probation Department, Santa Clara Police Department, Santa Cruz County District Attorney's Office, Santa Cruz County Sheriff's Office, Modesto Police Department, San Francisco Police Department, and Stanislaus County Sheriff's Department, and Sunnyvale Department of Public Safety.
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.
12 Alleged Members of Two San Jose-Based Norteño Street Gangs Charged with Racketeering-Related CrimesRead the Press Release
SAN FRANCISCO - A federal grand jury indicted twelve California residents, charging each with joining criminal conspiracies as part of their alleged membership in San Jose-based Norteño street gangs. The crimes were set out in two separate indictments, both of which were unsealed today. The indictments describe defendants’ alleged membership in or affiliation with one of two gangs, known as El Hoyo Palmas and San Jose Grande, both of which fall under the prison gang, the Nuestra Familia. The announcement was made by Acting United States Attorney Stephanie Hinds, Federal Bureau of Investigation Special Agent in Charge Craig D. Fair, and Drug Enforcement Administration Special Agent in Charge Wade R. Shannon at a press conference held earlier today. Appearing at the press conference were Chief of the Office of Correctional Safety for the California Department of Corrections and Rehabilitation Derrick Marion, Santa Clara Sheriff Laurie Smith, and San Jose Deputy Chief of Police Elle Washburn.
According to the indictments, the Nuestra Familia is a prison gang whose members are housed in various California state prisons but whose power and authority extends well beyond the prison walls. Outside of custodial settings, the Nuestra Familia organizes geographic territories throughout Northern California into groups known as “street regiments.” The indictments further describe how street regiments are divided into smaller subsets, or “hoods,” based on the local neighborhoods where their members reside or where the gangs operate. Street regiments then collect money from these “hoods,” typically in the form of monthly “dues” or taxes on profits from illegal activities, such as drug dealing, some of which is then to be provided to the Nuestra Familia.
“These two indictments represent a major law enforcement effort to curb street gang violence,” said Acting U.S. Attorney Hinds. “ A principal objective of San Jose Grande and El Hoyo Palmas street gangs was to generate profits through narcotics trafficking, robbery, and other criminal activities. The operation demonstrates that this office, in coordination with our law enforcement partners, will use all the tools at our disposal to quell the violence in our streets.”
"The arrests made yesterday, most significantly the arrests of the Nuestra Familia leadership, will severely cripple the ability of this criminal enterprise to continue to facilitate crimes in communities throughout the state and help break a decades-old cycle of violence," said FBI San Francisco Special Agent in Charge Fair.
“The intersection of drug trafficking and violence perpetuated by gangs is all too common, it is a continual cycle of lawlessness that plagues many of our Bay Area communities. It is unacceptable.” said DEA Special Agent in Charge Shannon. “By putting together our collective authorities we are in a better position to systematically target and bring to justice those responsible for violent crime on our streets.”
The first indictment, filed August 12, 2021, addresses the San Jose-based street gang known as El Hoyo Palmas. The six defendants in that indictment are Jose Garcia, aka “Bones,” 33; Juan Gonzalez, aka “Crazy Indian,” aka “Trigger,” 48; Paul Valenzuela, aka “One Eye,” 41; Caleb Eller, aka “Chuckles,” aka “Shank,” 33; Kyle Leonis, aka “Little Green,” 26; and Juan Dominguez, aka “Green Eyes,” aka “Nito,” 38. The indictment alleges that El Hoyo Palmas is a multi-generational Norteño gang that is a sub-group of the Santa Clara County Regiment and operates in and around the San Jose area. According to the indictment, El Hoyo Palmas derives profits from illicit activity and its members provide monthly “dues” or “contributions” to the Santa Clara County Regiment for distribution to the Nuestra Familia. The indictment alleges defendants conspired to commit crimes, including acts of violence, to make money, benefit El Hoyo Palmas, and increase their status within the gang.
The El Hoyo Palmas indictment has three counts. Count one of the indictment charges Garcia, Gonzalez, Valenzuela, Eller, and Leonis, with conspiracy to commit Hobbs Act robbery, in violation of 18 U.S.C. § 1951(a). According to the indictment, these five defendants conspired in September and October of 2018 to commit a robbery that would have obstructed, delayed, and affected interstate commerce. Counts two and three of the indictment allege that in October of 2018, Garcia, Gonzalez, Valenzuela, Leonis, and Dominguez conspired to commit murder and assault. Count two alleges that the defendants conspired to commit murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(5), while count three alleges the defendants conspired to commit assault with a dangerous weapon in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(6).
If convicted, the defendants charged with (1) conspiracy to commit Hobbs Act robbery face a statutory maximum of 20 years in prison, (2) conspiracy to commit murder face a statutory maximum of 10 years in prison, and (3) conspiracy to commit assault face a statutory maximum of 3 years in prison. The court also may order additional terms of supervised release, fines, and restitution. Nevertheless, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The second indictment, also filed August 12, 2021, addresses the street gang known as San Jose Grande. The defendants in the San Jose Grande indictment are Joshua Hernandez, aka “Sleepy G,” 39; Giovanni Coria, aka “Gio,” 24; Andrew Anchondo, aka “Indo,” aka “Lil Indo,” 23; Charles Pineda, aka “Taco,” 43; Eliseo Martinez, aka “Snow,” aka “Snowman,” 27; and Nicholas Mendez, aka “Prime Time,” 45. Like the El Hoyo Palmas indictment, this indictment alleges that San Jose Grande is a multi-generational Norteño street gang that is a sub-group of the Santa Clara County Regiment to which its members pay “dues” or “contributions.” At the center of the indictment is a list of more than two dozen transactions in which one or more of the defendants allegedly engaged in activities to promote the aims of San Jose Grande. The list includes alleged participation in the sale of narcotics, the sale of firearms, armed robberies, a stabbing, a home invasion robbery, and other acts of violence. The defendants all are charged in a single count of racketeering conspiracy in violation of 18 U.S.C. § 1962(d).
If convicted, the defendants in the second indictment face a maximum statutory sentence of life in prison. In addition, the court may order terms of supervised release, fines, and restitution. Nevertheless, 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.
Regarding the defendants in both indictments, an indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The defendants are scheduled to make initial federal court appearances before U.S. Magistrate Court Judge Nathanael Cousins today.
This case is being prosecuted by the Organized Crime Strike Force of the United States Attorney’s Office for the Northern District of California. The prosecution is the result of an investigation by the FBI (San Francisco, Sacramento, and Phoenix Divisions) the DEA, the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the U.S. Marshal Service, and with the assistance of the Santa Clara County Sheriff’s Office, the California Department of Corrections and Rehabilitation, ,the Santa Clara County District Attorney’s Office, and the San Jose Police Department, as well as with the support of the Alameda County Sheriff's Office, Antioch Police Department, Campbell Police Department, Fremont Police Department, King’s County Sheriff’s Office, Monterey County Sheriff’s Office, Mountain View Police Department, Sacramento Police Department, Salinas Police Department, Menlo Park Police Department, Santa Clara County Parole Department, Santa Clara County Probation Department, Santa Clara Police Department, Santa Cruz County District Attorney's Office, Santa Cruz County Sheriff's Office, Modesto Police Department, San Francisco Police Department, and Stanislaus County Sheriff's Department, and Sunnyvale Department of Public Safety.
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..
Quebec Resident Sentenced to 30 Months in Prison for Multimillion Dollar Telemarketing SchemeRead the Press Release
SAN FRANCISCO – Athanasios Vouloukos was sentenced yesterday to imprisonment for 30 months for his role in a five year conspiracy to commit mail fraud that deceived thousands of United States businesses, announced Acting United States Attorney Stephanie M. Hinds, U.S. Postal Inspection Service Inspector in Charge Rafael Nunez, and Internal Revenue Service, Criminal Investigation Special Agent in Charge Michael Daniels. As part of his sentence, Vouloukos will be ordered to pay at least $1.4 million in restitution to his victims. The sentence was handed down by the Honorable Susan Illston, United States District Judge.
Vouloukos, 48, of Ville St. Laurent, Quebec, Canada, pleaded guilty to the mail fraud conspiracy charge on January 28, 2020. According to his plea agreement, Vouloukos admitted that he and others took part in a Canada-based telemarketing scheme over a five year period to defraud small United States businesses into paying for a service that purported to enhance their online profile. The service was variously described as “business listing optimization,” “business profile optimization” and “online business listing optimization.” In reality, no such service existed.
As described in his plea agreement, Vouloukos operated a call center in Canada with his co-conspirator. United States businesses were cold-called from Canada in conjunction with sending them bogus invoices. The telemarketing scheme involved calling the businesses about the fraudulent invoices and falsely asserting that the businesses had ordered the “business listing optimization” service or other phony service and therefore owed the invoice amount. Over the five year period, thousands of small United States businesses paid approximately $500 each for these non-existent services. Victims were directed to mail their checks to addresses in the United States. These addresses were United Parcel Service (UPS) mailboxes or virtual offices, including one at a San Francisco UPS store, which were instructed to forward the mail to Canada. The majority of the proceeds were ultimately deposited into Canadian bank accounts.
According to a memo filed by the government for sentencing, Vouloukos and others collected more than $3 million in victim deposits. While Vouloukos agreed in his plea agreement to pay at least $1.4 million in restitution, the Court ordered a restitution hearing on October 8, 2021, to determine the full amount of restitution to be paid.
In addition to his 30 month prison sentence for mail fraud conspiracy in violation of 18 USC § 1349, United States District Judge Illston sentenced Vouloukos to a three-year period of supervision following his release from prison.
Vouloukos was ordered to surrender immediately into custody.
The case is being prosecuted by the Corporate and Securities Fraud section of the U.S. Attorney’s Office. The prosecution is the result of an investigation by the United States Postal Inspection Service and IRS Criminal Investigation.
Three San Francisco Garbage Companies Admit Bribery and Pay $36 Million to Resolve Federal InvestigationRead the Press Release
SAN FRANCISCO – Three trash disposal companies that serve San Francisco, all subsidiaries of Recology Inc., were charged today in federal court with conspiracy to commit honest services fraud and have agreed to pay $36 million in criminal penalties, to revamp their corporate structure, and to cooperate fully in ongoing law enforcement and regulatory investigations, announced Acting United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Craig D. Fair, and Internal Revenue Service Criminal Investigation Acting Special Agent in Charge Michael Daniels.
“San Francisco citizens were victimized for years in a bribery scheme involving public contractors and a powerful, corrupt San Francisco public official,” announced Acting United States Attorney Stephanie M. Hinds. “San Francisco citizens expect and deserve honest services from its government. Today, the SF Recology Group and its parent company Recology, Inc. are taking positive steps to rectify that flagrant wrong and have committed to full cooperation in the ongoing investigation into San Francisco City Hall corruption.”
“Today’s resolution is the result of years of hard work by the FBI and its partners to combat corruption in San Francisco,” said Craig D. Fair, Special Agent in Charge of the FBI San Francisco Field Office. “While engaging in bribery, SF Recology Group prioritized money over the trust of their customers. The FBI remains committed to seeking out instances of public corruption and holding those who violate federal law accountable for their actions.”
“The significant amount of illegal kickbacks SF Recology Group paid to Mohammed Nuru demonstrates a corrupt and reprehensible cheating of the American public,” said IRS Criminal Investigation Acting Special Agent in Charge Michael Daniels. “It is unacceptable and illegal to help yourself to public funds, but if you do, know this: IRS Criminal Investigation will be there waiting to seek justice on behalf of the citizens of San Francisco.”
The federal information filed today alleges that the companies Recology San Francisco, Sunset Scavenger Company, and Golden Gate Disposal & Recycling Company – collectively referred to as the SF Recology Group – conspired to bribe the former Director of San Francisco’s Department of Public Works (DPW), Mohammed Nuru. The entities of the SF Recology Group are each privately-held companies of their parent company Recology Inc., which is headquartered in San Francisco (the City) and provides trash collection services for the City’s residents, businesses, and government. During the conspiracy, Mohammed Nuru presided as Director over DPW. DPW had an annual budget of more than $350 million and was one of San Francisco’s largest municipal operations. Nuru had substantial influence over the SF Recology Group’s business with the City, including the ability to influence its contract rates and to approve or deny its proposed operational changes.
The criminal investigation and prosecution against the SF Recology Group is being resolved with a deferred prosecution agreement. In the agreement, which is subject to court approval, the SF Recology Group admits the allegations against it and that it conspired to bribe DPW Director Nuru from 2014 through January 2020, when Nuru was arrested and charged. The SF Recology Group at the time employed Paul Giusti as its Group Government and Community Relations Manager. Giusti reported to John Porter, the Vice President and General Manager of the Group and, before Porter assumed that position, to Porter’s predecessor.
In the agreement, the SF Recology Group admits that Giusti and others directed a stream of benefits to Nuru, including financial contributions, services, gifts, and other things of value, in exchange for Nuru taking official actions and positions favoring the SF Recology Group’s business and contracts with the City. The payments and benefits that the SF Recology Group provided to Nuru included the following: (1) $150,000 per year, in $30,000 installments, from 2014 through the end of 2019, to a San Francisco non-profit organization knowing that Nuru could ultimately control how the money was spent; (2) $60,000 to fund Nuru’s annual DPW holiday bash from 2016 to 2019, disguised as “holiday donations” to the Lefty O’Doul’s Foundation for Kids; (3) a job for Nuru’s son at a SF Recology Group company; (4) SF Recology Group-funded internships for Nuru’s son in the summers of 2017 and 2018 at a San Francisco non-profit on whose board Giusti served; and (5) other gifts, including a two-night stay at a New York hotel for Nuru and another high-ranking city official totaling $865.34 per room. The SF Recology Group admits that Giusti made these bribes with the knowledge and approval of his supervisor Porter and, before Porter was Giusti’s supervisor, with the knowledge and approval Porter’s predecessor.
The deferred prosecution agreement requires the SF Recology Group to pay a $36 million criminal fine. In addition to the $36 million fine, the deferred prosecution agreement obligates Recology, Inc. to fully cooperate with government investigations, to implement an enhanced corporate compliance program, and to provide annual reports to the United States Attorney’s Office on implementation and remediation.
If Recology, Inc. or the SF Recology Group fail to completely perform or fulfill each of their obligations under the agreement during the agreement’s three year term, the U.S. Attorney’s Office can pursue criminal charges for the charged offense and other conduct.
Dates for arraignment of the SF Recology Group and further proceedings before the United States District Court have not yet been set.
Giusti and Porter were each charged earlier in this investigation. Giusti was charged with bribery and money laundering on November 18, 2020, and he recently pleaded guilty to one count of conspiracy to bribe a local official and commit honest services fraud and agreed to cooperate with federal investigators (case # 21-0294 WHO). On April 13, 2021, Porter was also charged with bribery and money laundering (case # CR 21-70609 MAG). Porter’s criminal prosecution remains underway.
The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office. The case is being investigated by the FBI and IRS Criminal Investigation.
San Quentin Prison Guard and Two Others Charged in Scheme to Smuggle Contraband into Death RowRead the Press Release
SAN FRANCISCO - Keith Christopher and Isaiah Wells appeared in federal court today to face the charge of conspiracy to commit honest services fraud using interstate wires, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. A third co-defendant, Tanisa Smith-Symes, will appear tomorrow in federal court in Las Vegas, Nevada, where she was arrested today.
According to the complaint, Christopher, 37, of Pittsburg, California, Smith-Symes, 45, of Las Vegas, Nevada, and Wells, 32, of Tracy, California, conspired to smuggle cell phones into San Quentin State Prison’s East Block, where condemned inmates are housed. Cell phones create safety and security risks for prison employees and other inmates, and state law deems them contraband and prohibits their possession by inmates. Christopher is a Corrections Officer at San Quentin State Prison in Marin County. The complaint alleges that Smith-Symes worked with a Death Row inmate with whom she had a relationship to obtain the contraband phones and ship them to Wells, who then provided the phones to Christopher, who in turn smuggled them into the prison. Using this scheme, the complaint alleges that the conspirators successfully smuggled at least 25 phones into the prison and that the inmate working with Smith-Symes sold the phones inside the prison for up to $900 each. Smith-Symes sent bribery payments to Christopher through Wells and others whom Christopher had appointed to receive the money. The complaint further alleges that Christopher charged $500 as payment for each phone he smuggled into the prison.
The complaint filed against Christopher, Smith-Symes, and Wells charges each defendant with one count of conspiracy to commit honest services fraud using interstate wires in violation of 18 USC §§ 1343, 1346, and 1349. The charge carries a maximum sentence of 20 years in prison and a $250,000 fine. Any sentence following conviction, however, is imposed by a court only after the court’s consideration of the United States Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 USC § 3553.
Christopher and Wells appeared today on the charges before United States Magistrate Judge Sallie Kim, who sits in San Francisco. They were released on bond and are scheduled to next appear in federal court on September 17, 2021.
Charges contained in a criminal complaint are mere allegations. As in any criminal case, the defendants are presumed innocent unless and until proven guilty in a court of law.
The prosecution is the result of an investigation by the FBI and the California Department of Corrections and Rehabilitation’s Office of Internal Affairs.
San Pablo Man Pleads Guilty to Sexual Coercion of A 3-Year-Old GirlRead the Press Release
OAKLAND – Adalberto Borja Guardado pleaded guilty yesterday in Oakland federal court to enticement and coercion of a minor, announced Acting United States Attorney Stephanie M. Hinds and Homeland Security Investigations Special Agent in Charge Tatum King.
In his plea agreement, Guardado, 67, of San Pablo, admitted that on September 9, 2019, a three-year-old girl visited his residence with her mother, who provided home health care to Guardado’s elderly mother. Guardado agreed to watch the girl while the girl’s mother provided the home care in another part of the residence. Guardado admitted in his plea agreement that within minutes of watching the girl, he pulled down the girl’s pants and molested her. He further admitted that he used his cell phone to record his molestation.
Guardado was charged by criminal information in federal court on June 10, 2021, with enticement and coercion of a minor, in violation of 18 U.S.C. § 2422(b). The penalty for a violation of 18 U.S.C. § 2422(b) is a maximum imprisonment term of life in prison, with a mandatory minimum imprisonment term of ten years, and a fine of $250,000. However, any sentence imposed by a court will occur only after the court’s consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Guardado’s sentencing hearing is scheduled for January 11, 2022, in United States District Court in Oakland before the Honorable Jeffrey S. White, United States District Judge. Guardado remains in custody while awaiting his sentencing.
Jonathan U. Lee is the Assistant U.S. 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.
Sutter Health and Affiliates to Pay $90 Million to Settle False Claims Act Allegations of Mischarging the Medicare Advantage ProgramRead the Press Release
SAN FRANCISCO- Sutter Health, a California-based health care services provider, and several affiliated entities including Sutter Bay Medical Foundation (dba Palo Alto Medical Foundation, Sutter East Bay Medical Foundation, and Sutter Pacific Medical Foundation) and Sutter Valley Medical Foundation (dba Sutter Gould Medical Foundation and Sutter Medical Foundation) (collectively, “Sutter Health”), have agreed to pay $90 million to resolve allegations that Sutter Health violated the False Claims Act by knowingly submitting inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans.
Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed health care insurance plans called Medicare Advantage Plans. The Plans are paid a capitated, or per-person, amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans. Payments to Plans are based on demographic information and the health status of each plan beneficiary. In general, Plans receive larger payments for beneficiaries with more severe diagnoses.
Sutter Health, headquartered in Sacramento, contracted to provide health care services to California beneficiaries enrolled in certain Plans. In exchange, Sutter Health received a portion of the payments for treating the beneficiaries under its care.
The government alleged that Sutter Health knowingly submitted unsupported diagnosis codes for certain patient encounters for beneficiaries under its care. These unsupported diagnosis codes caused inflated payments to be made to the Plans and to Sutter Health. The lawsuit further alleged that, once Sutter Health became aware of these unsupported diagnosis codes, it failed to take sufficient corrective action to identify and delete additional unsupported diagnosis codes.
“Today’s settlement exemplifies our commitment to fighting fraud in the Medicare program,” said Acting U.S. Attorney Stephanie M. Hinds for the Northern District of California. “Health care providers who flout the law need to know that my office will hold accountable those who pad their bottom line at taxpayer expense.”
“The government relies on health care providers, including those furnishing services to Medicare Part C beneficiaries, to submit accurate information to ensure proper payment,” said Deputy Assistant Attorney General Sarah E. Harrington of the Justice Department’s Civil Division. “Today’s result sends a clear message that we will hold health care providers responsible if they knowingly provide or fail to correct information that is untruthful.”
“The knowing submission of inaccurate information to Medicare diverts funds from this vital health care program, which is a disservice to patients needing care,” said Steven J. Ryan, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “We will continue to work with our law enforcement partners to protect the integrity of federal health care programs and hold accountable entities who engage in false claims practices.”
In connection with the settlement, Sutter Health, Sutter Bay Medical Foundation, and Sutter Valley Medical Foundation entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). The CIA requires, among other things, that Sutter Health implement a centralized risk assessment program as part of its compliance program and hire an Independent Review Organization to annually review a sample of Sutter Health’s Medicare Advantage patients’ medical records and associated diagnoses data.
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Kathy Ormsby, a former employee of Palo Alto Medical Foundation. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The Act permits the government to intervene in such lawsuits, as it has done in this case as to claims submitted for the Palo Alto Medical Foundation. Although the United States did not intervene as to claims submitted by the remaining Sutter affiliates, Ms. Ormsby continued to pursue those claims, some of which are also being resolved by this settlement. The qui tam case is captioned United States ex rel. Ormsby v. Sutter Health, et al., No. 15-CV-01062-LB (N.D. Cal.).
The resolution obtained in this matter resulted from a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Northern District of California, with assistance from HHS-OIG.
The investigation and resolution of this matter illustrate the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
The matter was handled by Assistant U.S. Attorney Benjamin Wolinsky, with assistance from Jonathan Birch, and Department of Justice Fraud Section Attorneys Olga Yevtukhova, Jennifer J. Koh, Thomas Morris, and Lyle Gruby.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
Sutter Health and Affiliates to Pay $90 Million to Settle False Claims Act Allegations of Mischarging the Medicare Advantage ProgramRead the Press Release
Sutter Health, a California-based health care services provider, and several affiliated entities including Sutter Bay Medical Foundation (dba Palo Alto Medical Foundation, Sutter East Bay Medical Foundation, and Sutter Pacific Medical Foundation) and Sutter Valley Medical Foundation (dba Sutter Gould Medical Foundation and Sutter Medical Foundation) (collectively, “Sutter Health”), have agreed to pay $90 million to resolve allegations that Sutter Health violated the False Claims Act by knowingly submitting inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans.
Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed health care insurance plans called Medicare Advantage Plans. The plans are paid a capitated, or per-person, amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans. Payments to plans are based on demographic information and the health status of each plan beneficiary. In general, plans receive larger payments for beneficiaries with more severe diagnoses.
Sutter Health, headquartered in Sacramento, contracted to provide health care services to California beneficiaries enrolled in certain plans. In exchange, Sutter Health received a portion of the payments for treating the beneficiaries under its care.
The government alleged that Sutter Health knowingly submitted unsupported diagnosis codes for certain patient encounters for beneficiaries under its care. These unsupported diagnosis codes caused inflated payments to be made to the plans and to Sutter Health. The lawsuit further alleged that, once Sutter Health became aware of these unsupported diagnosis codes, it failed to take sufficient corrective action to identify and delete additional unsupported diagnosis codes.
“The government relies on health care providers, including those furnishing services to Medicare Part C beneficiaries, to submit accurate information to ensure proper payment,” said Deputy Assistant Attorney General Sarah E. Harrington of the Justice Department’s Civil Division. “Today’s result sends a clear message that we will hold health care providers responsible if they knowingly provide or fail to correct information that is untruthful.”
“Today’s settlement exemplifies our commitment to fighting fraud in the Medicare program,” said Acting U.S. Attorney Stephanie M. Hinds for the Northern District of California. “Health care providers who flout the law need to know that my office will hold accountable those who pad their bottom line at taxpayer expense.”
“The knowing submission of inaccurate information to Medicare diverts funds from this vital health care program, which is a disservice to patients needing care,” said Special Agent in Charge Steven J. Ryan for the Office of Inspector General of the U.S. Department of Health and Human Services. “We will continue to work with our law enforcement partners to protect the integrity of federal health care programs and hold accountable entities who engage in false claims practices.”
In connection with the settlement, Sutter Health, Sutter Bay Medical Foundation and Sutter Valley Medical Foundation entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). The CIA requires, among other things, that Sutter Health implement a centralized risk assessment program as part of its compliance program and hire an Independent Review Organization to annually review a sample of Sutter Health’s Medicare Advantage patients’ medical records and associated diagnoses data.
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Kathleen Ormsby, a former employee of Palo Alto Medical Foundation. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The Act permits the government to intervene in such lawsuits, as it has done in this case as to claims submitted for the Palo Alto Medical Foundation. Although the United States did not intervene as to claims submitted by the remaining Sutter affiliates, Ms. Ormsby continued to pursue those claims, some of which are also being resolved by this settlement. The qui tam case is captioned United States ex rel. Ormsby v. Sutter Health, et al., No. 15-CV-01062-LB (N.D. Cal.).
The resolution obtained in this matter resulted from a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Northern District of California, with assistance from HHS-OIG.
The investigation and resolution of this matter illustrate the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).
The matter was handled by Attorneys Olga Yevtukhova, Jennifer J. Koh, Thomas Morris and Lyle Gruby of the Civil Division's Fraud Section and by Assistant U.S. Attorney Benjamin Wolinsky for the Northern District of California, with assistance from Jonathan Birch.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
Former Cisco Executive Sentenced to 36 Months in Prison for Fraud Scheme and Filing False Tax ReturnsRead the Press Release
SAN FRANCISCO – Prithviraj “Roger” Bhikha, a former Senior Director of Global Supplier Management of Cisco Systems, Inc. (Cisco), was sentenced to 36 months in prison and ordered to pay more than $3 million in restitution to Cisco and the U.S. Internal Revenue Service following his wire fraud and tax convictions, announced Acting United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Craig D. Fair, and Internal Revenue Service-Criminal Investigation Special Agent in Charge Michael Daniels. The sentence was handed down on August 25, 2021, by the Honorable Charles R. Breyer, Senior United States District Judge.
Bhikha, 52, of San Francisco, was convicted of conspiracy to commit wire fraud and aiding and assisting in the filing of a false and fraudulent tax return. He pleaded guilty to these crimes earlier pursuant to a plea agreement filed November 19, 2020.
In his November 2020 plea agreement, Bhikha stated he was employed at Cisco from 1999 to 2017, and in about 2013 Cisco assigned him to lead a new project called “Project New York.” Project New York’s goal was to enable Cisco to retain third-party vendors to negotiate savings with manufacturers on certain parts used by Cisco to assemble Cisco products. Bhikha admitted in his plea agreement that he received kickback payments from a vendor retained by Cisco to do Project New York work. Bhikha further admitted that he created his own company to serve as a vendor for Project New York – despite Cisco’s prohibition against purchasing goods or services from its own employees – and concealed it from Cisco.
As to kickback payments, Bhikha met in early 2014 with the president of one of Project New York’s first two vendors. In his plea agreement, Bhikha admitted he asked the executive to provide kickbacks to him from Cisco’s payments to the vendor. The vendor’s president complied and ultimately paid a total of $1.15 million to a bank account bearing the name of a company Bhikha formed in Hong Kong: Lucena Limited (Lucena).
Bhikha further admitted in his plea agreement that, following transfer of official control of Lucena to his wife, he arranged for Lucena to become the third vendor retained by Cisco for Project New York. Between August 2014 and April 2017 Cisco paid Lucena, and its related company Bhikha established in Singapore, a total of $10.06 million for performing price-negotiation services under Project New York. Bhikha admitted in his plea agreement that he actively concealed his connection with Lucena from Cisco, including going so far as to having an imposter pose as Lucena’s CEO in a 2016 Cisco meeting held in Northern California. At the meeting, which Bhikha attended, the imposter presented false information about Lucena that was material to Cisco in its determination to continue business with Lucena.
Cisco terminated Bhikha when his connection to Lucena came to light in 2017. In his plea agreement Bhikha admitted that prior to his termination he never advised Cisco: (a) that he or his wife were employed by or had an ownership, control, or financial interest in the Lucena entities; (b) that Bhikha or his wife had a personal interest in or personally benefitted from the payments that Cisco made to those entities; or (c) that he had requested and received kickback payments from a Cisco vendor. Bhikha further admitted he knew that if Cisco discovered these facts, Cisco would likely terminate his employment and any business relationship Cisco had with Lucena entities.
Bhikha also admitted in his plea agreement that he and his wife repatriated more than $9 million from foreign accounts held in the Lucena entities’ names and that he intentionally failed to inform his tax preparers of the repatriated income, meaning that those amounts would not be included in his tax returns for 2014 through 2017. Bhikha admitted and the Court concluded that this omission resulted in Bhikha’s underpayment of federal income taxes by more than $2.5 million.
In addition to a 36-month prison term, United States District Judge Breyer ordered Bhikha to pay $1.15 million in restitution to Cisco and more than $2.5 million to the IRS. Judge Breyer further ordered the forfeiture of two pieces of real estate in San Francisco as proceeds of Bhikha’s crimes. Bhikha remains out of custody on bond and is ordered to surrender into custody on October 28, 2021.
Assistant U.S. Attorneys Kyle F. Waldinger and Chris Kaltsas prosecuted the case with the assistance of Kathy Tat, Claudia Hyslop, and Carolyn Caparas. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation.
Marin Man Charged with Firearms Trafficking and Being A Felon in Possession of A FirearmRead the Press Release
SAN FRANCISCO – James William Palmer was arrested yesterday and arraigned today on charges of engaging in the unlicensed manufacturing and dealing of firearms and of being a felon in possession of a firearm, announced Acting United States Attorney Stephanie M. Hinds and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Patrick T. Gorman.
In a federal criminal complaint unsealed today, Palmer, 36, of Mill Valley, is alleged to be an unlicensed manufacturer and dealer of privately manufactured firearms and a convicted felon who possessed a firearm. The complaint charges that Palmer was manufacturing and selling firearms from as early as May 2020 through to January 2021. Law enforcement began investigating Palmer for firearms violations after examining text messages involving Palmer in an unrelated investigation. On January 27, 2021, police detained Palmer and found him in possession of a Glock semi-automatic .45 caliber pistol and two loaded ammunition clips. On the same date, police seized a number of items from Palmer’s home related to firearms manufacturing and trafficking.
This case follows the U.S. Department of Justice’s launch in five key regions of Cross-Jurisdictional Firearms Trafficking Strike Forces that are focused on disrupting illegal firearms trafficking. One of the five Strike Forces was launched here, in the San Francisco Greater Bay Area and Sacramento Region. The Strike Force identifies sources of illegally trafficked firearms and disrupts straw purchasing as well as firearms trafficking networks by collaborating in cross-jurisdictional efforts that include multiple federal agencies and multiple states and their local law enforcement agencies.
Palmer made his initial appearance to face these charges today in federal court before United States Magistrate Judge Joseph C. Spero. He was released on bond and is scheduled to return to court for his next appearance on October 7, 2021.
Palmer is charged with one count of unlicensed firearms manufacturing and dealing in violation of 18 U.S.C. § 922(a)(1)(A) and with one count of being a felon in possession of a firearm in violation of 18 U.S.C. § 922(g)(1). Each count carries a maximum sentence of 10 years imprisonment and a fine of $250,000. Any sentence following conviction, however, 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.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Assistant U.S. Attorney Alexis James is prosecuting the case with the assistance of Maribel Gallegos. The prosecution is the result of an investigation by ATF and the Marin County Sheriff’s Office.
Former CEO and COO of JHL Biotech Convicted of Conspiracy to Steal Trade Secrets and Commit Wire Fraud Exceeding $101 MillionRead the Press Release
SAN FRANCISCO – Following a change of plea hearing for each defendant, 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, each were convicted of conspiracy to commit trade secret theft and wire fraud, announced Acting United States Attorney Stephanie M. Hinds, Internal Revenue Service ̶ Criminal Investigation (IRS-CI), Special Agent in Charge Michael Daniels, and Federal Bureau of Investigation, Special Agent in Charge Craig D. Fair. The defendants’ guilty pleas were accepted by the Hon. William Alsup, Senior U.S. District Judge, on August 24, 2021.
Both defendants submitted written plea agreements to the Court. According to the plea agreements, in 2012, Raco Ivanov Jordanov, also known as “Racho” Jordanov, 73, of Rancho Santa Fe, Calif., and Rose Lin, also known as Rose Sweihorn Tong, 72, 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. If the defendants comply with the terms of the plea agreements, the remaining charges will be dismissed at sentencing.
The criminal case against each defendant was adjourned for sentencing before Judge Alsup, on December 7, 2021. For their convictions, Jordanov and Lin each face possible prison sentences controlled by the terms of their respective plea agreements. The court also may order additional assessments, forfeiture, and restitution; however, any sentence would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
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 Sheila A.G. Armbrust, Adam A. Reeves, and Claudia A. Quiroz are prosecuting the case with the assistance of Beth Margen and Morgan Byrne. The prosecution is the result of an investigation by the Internal Revenue Service ̶ Criminal Investigations and the Federal Bureau of Investigation.
Co-Founder and Former CEO of Palo Alto-Based Start-Up Technology Company Headspin Charged with Securities Fraud and Wire FraudRead the Press Release
SAN FRANCISCO - Manish Lachwani, co-founder and former CEO of technology company Headspin, was arrested today on charges of securities fraud and wire fraud perpetrated to raise money from investors, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
According to the federal complaint unsealed today, Lachwani, 45, of Santa Clara County, is a co-founder of the Palo Alto-based technology company Headspin and acted as its CEO from its inception in 2015 until approximately May 2020. Headspin provides a remote service that allows customers to access mobile devices around the world and remotely test their applications across different communications networks and in different locations. Headspin earns revenue by selling subscriptions to its services, according to the complaint.
The complaint alleges that from its 2015 inception until about March 2020, Headspin raised millions of dollars from investors during four major rounds of financing. At its inception, Headspin raised approximately $11 million through the sale of Series A preferred shares. Later, in April 2017 to May 2018, Headspin raised approximately $24.7 million selling promissory notes convertible into future Series B preferred stock. During September to October 2018, Headspin raised approximately $20 million dollars in the sale of Series B preferred shares. The fourth round of fundraising occurred from November 2019 to early 2020, and Headspin raised approximately $60 million in selling Series C preferred shares.
During the Series C fund raising round – starting no later than November 1, 2019, through at least January 30, 2020 – the federal complaint charges that Lachwani engaged in a scheme of securities fraud and wire fraud. The complaint alleges that in materials and presentations to potential investors, Lachwani reported false revenue and overstated key financial metrics of the company. According to the complaint, Lachwani maintained control over operations, sales, and record-keeping, including invoicing, and he was the final decision maker on what revenue was booked and included in the company’s financial records. Multiple examples are alleged in the complaint of Lachwani instructing employees to include revenue from potential customers that inquired but did not engage Headspin, from past customers who no longer did business with Headspin, and from existing customers whose business was far less than the reported revenue. Among other information, Lachwani provided investors false information that overstated Headspin’s annual recurring revenue (ARR) – a key metric for evaluating the success of companies that provide “software as a service” – by approximately $51 to $55 million.
The company’s unaudited financial statements were reviewed by an auditing firm in May 2020. According to the complaint, the review concluded that Headspin’s cumulative revenues from inception through the first half of 2020 totaled only approximately $26.3 million, instead of the $95.3 million originally reported by the company. The review also calculated the cumulative net loss from Headspin’s inception through the first half of 2020, totaling approximately $15.9 million, instead of the $3.7 million net income originally reported by the company.
The complaint alleges that in the fall of 2018, during Headspin’s Series B fundraising round, investors agreed to purchase shares at prices that valued the company at approximately $500 million dollars. By late 2019, during the Series C fundraising round, investors agreed to purchase shares at prices that valued the company at approximately $1.1 billion. According the allegations in the complaint, after the company discovered the overstated revenue and recapitalized the company’s investors, the valuation of the company dropped to approximately $300 million.
Lachwani will make an initial appearance in federal court to face the charges in the complaint on date and time to be set by the court.
Lachwani is charged in the complaint with one count of wire fraud in violation of 18 U.S.C. § 1343 and one count of securities fraud in violation of 15 U.S.C. §§ 78j(b) and78ff and Title 17 C.F.R. § 240.10b-5. If convicted of wire fraud, he faces a maximum sentence of 20 years in prison and a fine of $250,000. If convicted of securities fraud, he faces a maximum sentence of 20 years in prison and a fine of $5,000,000. If convicted of either count, Lachwani is required to pay restitution. Any sentence following conviction, however, would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office for the Northern District of California. The prosecution is the result of an investigation by the FBI. The U.S. Attorney’s Office and the FBI thank the San Francisco Regional Office of the Securities and Exchange Commission (SEC). The SEC announced today the filing of a civil enforcement action against Lachwani in the Northern District of California.
Former San Francisco Senior Building Inspector and Former San Francisco Building Inspection Commission President Charged with Building-Permit FraudRead the Press Release
SAN FRANCISCO - A federal complaint filed today charges Bernard Curran and Rodrigo Santos with honest services wire fraud, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
According to the complaint, Curran, 60, of San Francisco, was employed at the San Francisco Department of Building Inspection (DBI) from 2005 until he resigned from his supervisory position as Senior Building Inspector while on administrative leave in May 2021. Santos, 63, also of San Francisco, is a co-founder of the San Francisco-based Santos & Urrutia Structural Engineers who was appointed to the San Francisco Building Inspection Commission in 2000 by Mayor Willie Brown and promoted in 2004 by Mayor Gavin Newsom to be the Commission’s President. In 2012, Mayor Ed Lee appointed Santos to the San Francisco City College Board of Trustees. Santos’s day-to-day work involved providing engineering services to construction project owners and contractors through his structural engineering company. His services included obtaining building permits for his clients from DBI.
Santos was earlier indicted on July 1, 2021, in a federal indictment, case number CR 21-0268 SI, alleging bank fraud, aggravated identity theft, and obstruction of justice in a scheme to obtain and wrongfully divert money from clients into his own account. That criminal prosecution remains underway.
Today’s federal complaint describes that a major hurdle any San Francisco real property owner must clear to shepherd a construction or remodeling project from inception to completion is to obtain and comply with a permit from DBI. A critical step in that process is the on-site physical inspection by a DBI inspector, who inspects and determines if the work completed at the site complies with work authorized and mandated by the permit. If so, approval is issued by the inspector.
The complaint alleges that Santos requested his clients make charitable contributions attributable to Curran to a local non-profit athletic organization favored by Curran. These checks, in the amounts of $500 to $1,500, were written to the athletic organization on numerous occasions during the scheme. Curran is alleged in the complaint to have been aware of these donations and understood that the payments were in furtherance of the permit-approval scheme. In exchange for this stream of benefits flowing to Curran’s favored athletic organization, Curran repeatedly acted in his position as a DBI Senior Building Inspector to provide Santos’ clients with favorable official treatment. In one of several incidents outlined in the complaint, Curran inspected and issued a final approval of the work done under a DBI permit issued to a Santos client though work required to comply with the permit was never done. The complaint further alleges that most of the permits that Curran approved for Santos’ clients who donated were on properties outside of Curran’s DBI-assigned district and were the responsibility of other inspectors.
The initial federal court appearances for Santos and Curran have not yet been scheduled.
Santos and Curran are charged in the complaint with honest services wire fraud in violation of Title 18, United States Code, Sections 1343 and 1346. They face a maximum sentence of 20 years imprisonment and a fine equal to the greater of $250,000 or twice the gross gain or loss from the crime. However, any sentence following a 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.
The charges contained in a criminal complaint merely allege that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Casey Boome is the Assistant U.S. Attorney prosecuting the case with the assistance of legal assistants Ralph Banchstubbs and Kathy Tat. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Former San Francisco Senior Building Inspector and Former San Francisco Building Inspection Commission President Charged with Building-Permit FraudRead the Press Release
SAN FRANCISCO - A federal complaint filed today charges Bernard Curran and Rodrigo Santos with honest services wire fraud, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
According to the complaint, Curran, 60, of San Francisco, was employed at the San Francisco Department of Building Inspection (DBI) from 2005 until he resigned from his supervisory position as Senior Building Inspector while on administrative leave in May 2021. Santos, 63, also of San Francisco, is a co-founder of the San Francisco-based Santos & Urrutia Structural Engineers who was appointed to the San Francisco Building Inspection Commission in 2000 by Mayor Willie Brown and promoted in 2004 by Mayor Gavin Newsom to be the Commission’s President. In 2012, Mayor Ed Lee appointed Santos to the San Francisco City College Board of Trustees. Santos’s day-to-day work involved providing engineering services to construction project owners and contractors through his structural engineering company. His services included obtaining building permits for his clients from DBI.
Santos was earlier indicted on July 1, 2021, in a federal indictment, case number CR 21-0268 SI, alleging bank fraud, aggravated identity theft, and obstruction of justice in a scheme to obtain and wrongfully divert money from clients into his own account. That criminal prosecution remains underway.
Today’s federal complaint describes that a major hurdle any San Francisco real property owner must clear to shepherd a construction or remodeling project from inception to completion is to obtain and comply with a permit from DBI. A critical step in that process is the on-site physical inspection by a DBI inspector, who inspects and determines if the work completed at the site complies with work authorized and mandated by the permit. If so, approval is issued by the inspector.
The complaint alleges that Santos requested his clients make charitable contributions attributable to Curran to a local non-profit athletic organization favored by Curran. These checks, in the amounts of $500 to $1,500, were written to the athletic organization on numerous occasions during the scheme. Curran is alleged in the complaint to have been aware of these donations and understood that the payments were in furtherance of the permit-approval scheme. In exchange for this stream of benefits flowing to Curran’s favored athletic organization, Curran repeatedly acted in his position as a DBI Senior Building Inspector to provide Santos’ clients with favorable official treatment. In one of several incidents outlined in the complaint, Curran inspected and issued a final approval of the work done under a DBI permit issued to a Santos client though work required to comply with the permit was never done. The complaint further alleges that most of the permits that Curran approved for Santos’ clients who donated were on properties outside of Curran’s DBI-assigned district and were the responsibility of other inspectors.
The initial federal court appearances for Santos and Curran have not yet been scheduled.
Santos and Curran are charged in the complaint with honest services wire fraud in violation of Title 18, United States Code, Sections 1343 and 1346. They face a maximum sentence of 20 years imprisonment and a fine equal to the greater of $250,000 or twice the gross gain or loss from the crime. However, any sentence following a 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.
The charges contained in a criminal complaint merely allege that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Casey Boome is the Assistant U.S. Attorney prosecuting the case with the assistance of legal assistants Ralph Banchstubbs and Kathy Tat. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Bay Area Physician Charged with Possession of Child PornographyRead the Press Release
SAN FRANCISCO– Joseph Andrew Mollick was charged in a federal complaint with possession of child pornography, announced Acting United States Attorney Stephanie M. Hinds and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King.
According to the federal complaint filed July 13, 2021, and unsealed today, Mollick, 58, of Menlo Park, used the social media application Kik to upload an image depicting child pornography. The complaint alleges that Mollick possessed, on his Apple icloud account, at least 2000 images and videos of child pornography.
The complaint charges Mollick with one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B).
Mollick made his initial federal court appearance on the complaint this morning before United States Chief Magistrate Judge Joseph C. Spero. Chief Magistrate Judge Spero ordered Mollick released on an unsecured bond of $50,000 with special conditions imposed.
A complaint merely alleges that a crime has been committed. Mollick 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.
Assistant U.S. Attorney Kenneth Chambers is prosecuting the case with the assistance of Ralph Banchstubbs and Claudia Hyslop. The prosecution is the result of an investigation by HSI.
East Bay Man Sentenced to over Six Years in Prison for Possessing Child PornographyRead the Press Release
OAKLAND – Shawn Jamison Prichard was sentenced today to 78 months in prison, for possession of child pornography, announced Acting United States Attorney Stephanie M. Hinds and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King. The sentence was handed down by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge.
Prichard, 42, of Antioch, pleaded guilty to the charge on March 31, 2021. According to the plea agreement, Prichard admitted that he knew he was in possession of sexually explicit images of children. The images included videos and images showing prepubescent children engaged in sexually explicit conduct as well as images of sadistic or masochistic depictions of children engaged in sexually explicit conduct and visual depictions of sexually explicit conduct perpetrated by adults on infants or toddlers. Prichard admitted to possessing more than 600 images of child pornography. Documents filed by the government in the case establish that an investigation into Prichard began after the National Center for Missing and Exploited Children received a Cybertip from a social media company. At the time the Cybertip was made, Prichard worked as a registered nurse for a hospital in the East Bay.
On February 12, 2021, Prichard was charged by information with a single count of possession of child pornography, in violation of 18 U.S.C. §§ 2252(a)(4)(B) and (b)(2). He pleaded guilty to the count.
In addition to the prison term, Judge Gilliam also sentenced the defendant to a five-year term of supervised release and scheduled a hearing for October 20, 2021, to consider issues regarding restitution. Judge Gilliam ordered the defendant to begin serving his prison term on or before September 29, 2021.
Assistant U.S. Attorney Jonathan U. Lee is prosecuting the case with the assistance of Kay Konopaske, Kathleen Turner, and Leeya Kekona. The prosecution is the result of an investigation by HSI, the Silicon Valley Internet Crimes Against Children Task Force, the Contra Costa County Sheriff’s Office.
New Jersey Resident Sentenced to 10 Years in Prison for Child Pornography and Cyberstalking a San Mateo TeenagerRead the Press Release
SAN FRANCISCO – Barry David Goldberg was sentenced today to 120 months in prison on charges of distribution of child pornography and cyberstalking in a “sextortion” scheme targeting a minor victim, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge.
Goldberg, 57, a resident of Cherry Hill, New Jersey, pleaded guilty to the charges on January 27, 2021. According to the plea agreement, Goldberg admitted he used the internet to misrepresent himself as a minor to a 15-year-old. Goldberg manipulated his victim into sending him images and videos of her engaging in sexually explicit activities. Goldberg acknowledged that he knew at the time the victim was a minor. Goldberg also admitted that once he was in possession of the images and videos, he threatened to post on social media sexually explicit depictions of the minor female victim and to show the materials to her friends and family. Goldberg eventually did post images of the victim on Snapchat and communicated with the minor victim's parents about the sexually explicit photos and videos he had of the minor victim. Goldberg admitted that he did all this intending to injure, harass, and intimidate the minor victim and that he knew his conduct would cause substantial emotional distress.
A further description of Goldberg’s conduct appears in documents filed by the government in the case. In its sentencing memorandum, the government detailed how Goldberg sent to his victim a photo of a random boy he downloaded from the internet to convince her of his false identity. Once Goldberg obtained sexually explicit pictures of his victim, he told her he would disclose her sexual behavior to others including her parents, her high school, and the colleges to which she was applying. Goldberg also created multiple Snapchat usernames, began befriending the victim's schoolmates and friends, and then posted on Snapchat numerous sexually explicit photos and videos of the victim.
Goldberg was charged with distribution of child pornography, in violation of 18 U.S.C. §§ 2252(a)(2) and (b), and cyberstalking, in violation of 18 U.S.C. § 2261A (2). He pleaded guilty to both counts.
In addition to the prison term, Judge Breyer also ordered defendant to serve a 10-year period of supervised release. Judge Breyer ordered the defendant to surrender on or before October 20, 2021, to begin serving his prison term.
Assistant U.S. Attorney Andrew Paulson is prosecuting the case with the assistance of Jasmine Sanders. The prosecution is the result of an investigation by the FBI.
Three East Bay Men Charged with Conspiracy to Traffic FirearmsRead the Press Release
OAKLAND – A federal criminal complaint charging Troy Elias Walker, David Michael Rembert, and Daljit Kamal Singh with a conspiracy to deal firearms without a license was unsealed today, announced Acting United States Attorney Stephanie M. Hinds, Special Agent in Charge Patrick Gorman of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), San Francisco Division Inspector in Charge Rafael Nunez of the U.S. Postal Inspection Service, and Special Agent in Charge Wade R. Shannon of the Drug Enforcement Administration (DEA). The three defendants initially appeared last Friday, August 13, in federal court to face those charges.
According to the allegations in the complaint, ATF engaged in an investigation into unlicensed and illegal firearms trafficking conducted via Instagram and also in-person by a group of individuals, including Walker, 24 years old, and Rembert, 40 years old, who are both from Concord, and Singh, who is 27 years old and from Hercules. During the investigation, law enforcement conducted multiple undercover buys resulting in the purchase of 13 firearms and 17 Glock conversion switches, collectively. A Glock conversion switch, as the complaint describes, is a device that modifies a Glock-style pistol so that it fires multiple bullets in rapid succession by a single pull of the trigger. The complaint also alleges the undercover purchases netted commercial factory firearms as well as privately made firearms (PMFs). PMFs – colloquially referred to as “ghost guns” – are firearms made from unfinished receivers in which manufacturer’s marks and serial numbers are absent. According to the complaint, none of the defendants had a license to import, manufacture, or deal in firearms.
This case follows the launch by the U.S. Department of Justice of cross-jurisdictional 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.
“Collaboration with our local law enforcement partners is key to disrupting illegal firearms trafficking,” said Acting United States Attorney Stephanie M. Hinds. “Working with our partners to combat illicit firearms trafficking is and will remain a high priority in our region.”
“Illegal firearms trafficking is a primary focus of ATF and one of the most pressing problems we face today,” said ATF Special Agent in Charge Patrick Gorman. “This regional strike force is designed to disrupt such trafficking, and we will continue to work alongside our law enforcement partners to ensure crimes of this nature are investigated and prosecuted.
“Postal Inspectors are continuously working with the U.S. Attorney’s Office and our partners in law enforcement in operations just like this one to keep dangerous items out of the mail, protecting U.S. Postal Service Employees and the public we serve,” said San Francisco Division Inspector in Charge Rafael Nunez of the U.S. Postal Inspection Service.
“Our greatest tool in combatting violent crime is to combine our diverse resources and expertise,” said DEA Special Agent in Charge Wade R. Shannon. “By leveraging our collective authorities and capabilities we underscore our commitment to the communities we serve.”
Walker, Rembert, and Singh made their initial appearances Friday, August 13, in federal court before United States Magistrate Virginia K. DeMarchi. The next appearances in the case are scheduled for Tuesday, August 17, at 1 p.m. before United States Magistrate Judge DeMarchi.
The complaint charges Walker, Rembert, and Singh with a single count of conspiracy to deal firearms without a license in violation of 18 U.S.C. §§ 371 and 922(a)(1)(A). The 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.
A complaint merely alleges that crimes have been committed, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Jonathan U. Lee and Abraham Fine 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.
Federal Jury Convicts South Bay Man of Child Pornography and Child Enticement ChargesRead the Press Release
SAN JOSE – A federal jury today convicted Johnny Ray Wolfenbarger of attempted production of child pornography, the attempted coercion and enticement of a minor to engage in child pornography production, and the receipt of child pornography, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Craig D. Fair. The verdict follows a one week trial before the Honorable Lucy H. Koh, United States District Judge.
Wolfenbarger, 64, of the South Bay, proceeded to trial for the offenses charged in a February 6, 2020, superseding indictment, that is, one count of the attempted production of child pornography, in violation of Title 18, United States Code, Sections 2251(a) and (e); one count of the attempted coercion and enticement of a minor (defined as an individual under 18 years of age) to engage in attempted child pornography production, in violation of Title 18, United States Code, Section 2422(b); and the receipt of child pornography, in violation of Title 18, United States Code, Section 2252(a)(2). The jury returned guilty verdicts on all counts.
According to the evidence presented at trial to the federal jury, the FBI received a CyberTipline report from the National Center for Missing and Exploited Children (NCMEC). A web services provider earlier had notified NCMEC of child pornography that was attached to an email and identified the user of the e-mail address as a person receiving or distributing child pornography. In 2016, FBI agents were granted a federal search warrant to examine the contents of the email account for child pornography. The email account was determined to belong to Wolfenbarger. Upon executing the warrant, the FBI identified numerous additional images of child pornography that had been sent to Wolfenbarger by other people. The search warrant further revealed evidence that, in 2013, Wolfenbarger solicited and paid individuals in the Philippines to create custom-made child pornography at his direction, which was transmitted to him live via webcam.
Among further evidence presented to the jury, records indicated that Wolfenbarger traveled to the Philippines throughout 2015 and early 2016. Wolfenbarger returned to the United States on August 2, 2016. Upon his arrival at San Francisco International Airport, he was referred for a customs inspection and met with an FBI Special Agent. Wolfenbarger was interviewed, and he admitted requesting and watching sex acts carried out by children between the ages of three and twelve years old during his webcam viewing sessions. Wolfenbarger stated that he would typically request that the children masturbate, perform oral sex on each other or an adult, or request adults use sex toys on the children. Wolfenbarger admitted he watched these sex acts on a desktop and laptop computer at his home. Wolfenbarger stated that he paid for the child pornography transmissions via Western Union and by using the tip function of the webcam service. Western Union records produced at trial documented over $25,000 in money transfers from Wolfenbarger to individuals in the Philippines.
Further evidence presented at trial indicated that on August 25, 2016, Wolfenbarger called the FBI Special Agent and requested another meeting. The meeting occurred on August 31, 2016, and the conversation was recorded. During the meeting, Wolfenbarger provided additional information about his email accounts and passwords.
The total evidence presented by the government at trial included Wolfenbarger’s recorded statements, his chats and e-mails, the images of child pornography attached to the e-mails Wolfenbarger received and sent, and records of the Western Union money transfers sent by Wolfenbarger to pay for the child pornography that was created at his direction.
The statutory sentences are as follows:
• for attempted production of child pornography in violation of Title 18, United States Code, Sections 2251(a) and (e): imprisonment for a minimum term of 15 years and a maximum term of 30 years, a maximum fine of $250,000, and a minimum term of supervised release of 5 years and a maximum of life;
• for attempted coercion and enticement of a minor to engage in the charged attempted child pornography production in violation of Title 18, United States Code, Section 2422(b): imprisonment for a minimum term of 10 years and a maximum term of life, a maximum fine of $250,000, and a minimum term of supervised release of 5 years and a maximum of life; and
• for the receipt of child pornography in violation of Title 18, United States Code, Section 2252(a)(2): imprisonment for a minimum term of 5 years and a maximum term of 20 years, a maximum fine of $250,000, and a minimum term of supervised release of 5 years and a maximum of life.Any sentence following conviction would be imposed by the Court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
United States District Judge Lucy H. Koh scheduled a sentencing hearing on December 8, 2021, at 9:15 a.m. Wolfenbarger was remanded into the custody pending sentencing.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys' Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit http://www.justice.gov/psc.
Assistant U.S. Attorneys Marissa Harris and Maia Perez prosecuted the case with the assistance of paralegal Mimi Lam and legal assistants Susan Kreider and Sahib Kaur. The prosecution is the result of an investigation by the Federal Bureau of Investigation and United States Customs and Border Protection.
County Medical Center and County Agree to Pay $11.4 Million to Resolve False Claims Act Allegations Relating to Medically Unnecessary Inpatient AdmissionsRead the Press Release
SAN FRANCISCO – San Mateo County Medical Center and San Mateo County (collectively SMMC), located in California, have agreed to pay approximately $11.4 million to resolve alleged violations of the False Claims Act for submitting or causing the submission of claims to Medicare for non-covered inpatient admissions.
Medicare reimburses only services that are reasonable and necessary for the diagnosis or treatment of illness or injury. The United States alleged that, from Jan. 1, 2013, through Feb. 28, 2017, SMMC admitted certain patients for whom inpatient care was not medically reasonable or necessary, including patients who were admitted for reasons other than medical status, including social reasons and lack of available alternative placements. SMMC billed Medicare for such patients despite SMMC’s knowledge that the costs for admitting them were not reimbursable by Medicare.
“The financial viability of our Medicare program must be protected for current and future generations,” said Acting U.S. Attorney Stephanie M. Hinds for the Northern District of California. “Medical providers, such as SMMC, who seek to pass on the financial burden of their medically unnecessary hospital admissions to the federal government will be pursued, as today’s settlement reflects.”
“Billing for non-covered hospital stays results in a misuse of federal dollars,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “Today’s settlement demonstrates our continuing commitment to ensure that Medicare pays only for services that are eligible for reimbursement.”
“Our agency will continue to aggressively investigate health care providers who bill Medicare for medically unnecessary services. These unlawful actions divert funds for needed care,” said Special Agent in Charge Steven J. Ryan of the U.S. Department of Health and Human Services Office of Inspector General. “Working with our law enforcement partners, we will continue to root out such schemes.”
In connection with the settlement, SMMC entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General. The CIA requires SMMC to engage an independent review organization that will perform annual reviews of inpatient admissions that SMMC bills to federal health care programs.
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Felix Levy, a former employee of San Mateo County Medical Center. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Levy v. San Mateo County and the San Mateo County Medical Center, C.A. No. 16-CV-5881 (N.D. Cal.).
The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section; the U.S. Attorney’s Office for the Northern District of California; and the Department of Health and Human Services Office of Inspector General.
The matter was handled by Trial Attorneys Danielle Sgro and Diana Cieslak and Assistant U.S. Attorneys Michael Pyle, Sharanya Sai Mohan and Jonathan Lee, with assistance from Jonathan Birch and Garland He.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
East Bay Man is Sentenced to 18 Years in Prison for Conspiracy to Commit Arson in Connection with Scheme to Firebomb People on His Enemies ListRead the Press Release
SAN FRANCISCO – David Jah was sentenced today to 216 months in prison for conspiracy to commit arson, in connection with a scheme to firebomb the properties of several people on his enemies list, announced Acting United States Attorney Stephanie M. Hinds; United States Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge, San Francisco Division, Patrick T. Gorman; and Federal Bureau of Investigation (FBI) Special Agent in Charge Craig D. Fair. The sentence was handed down by the Honorable William H. Alsup, U.S. District Judge.
"When Mr. Jah was unable to achieve his objectives in court, he turned to violence,” said Acting U.S Attorney Hinds. “That is never acceptable. Upholding the rule of law and the safety of the community is of the utmost importance, which is why we will continue to aggressively investigate and punish those who attempt to impede justice through violent intimidation.”
“Arson is a dangerous act of violence which poses a significant threat to the community,” said Special Agent in Charge Gorman. “ATF continuously works diligently toward securing public safety. The defendant in this case conspired to commit horrific acts of violence on unsuspecting members of this community. I am thankful that no one was seriously injured or killed as a result of these crimes. This sentencing will undoubtedly send a message to anyone who considers conducting these types of violent acts that they will not be tolerated. ATF will continue to work alongside our law enforcement partners to ensure crimes of this nature are investigated and prosecuted.”
"David Jah conspired to use extreme levels of violence to intimidate and retaliate against his perceived enemies. Thanks to the collaboration between the FBI, ATF, and our local law enforcement partners, we were able to put a stop to these violent attacks," said FBI Special Agent in Charge Craig Fair.
According to the evidence submitted at trial, Jah, 47, of Concord, conspired with Kristopher Alexis-Clark, 27, of Vallejo, and Dennis Williams, 41, of Fairfield, to conduct multiple firebombings targeting the residences of people on Jah's enemies list. The list contained the addresses of six individuals who Jah believed had wronged him, including the following:
• Two attorneys involved in the sale of his childhood home, to which Jah objected.
• The attorney who prosecuted the forcible detainer action removing Jah from his childhood home.
• The purchaser of Jah's childhood home.
• Jah's former neighbor at that home, with whom Jah had had several disagreements.
• A San Francisco Deputy City Attorney who represented the San Francisco Police Department in an excessive force lawsuit filed by Jah's son.The evidence at trial demonstrated that the charged conspiracy began in October 2018, when Jah met a prostitute on a mobile dating application, who put him in touch with Alexis-Clark. Jah then provided the enemies list to Alexis-Clark, who recruited Williams to join the scheme. Over the next three weeks, Alexis-Clark and Williams drove by three of the homes on Jah’s enemies list in the middle of the night and attempted to throw Molotov cocktails through their windows. According to text messages found on Jah’s phone, Jah offered them $800 to $5,000 to carry out these attacks.
Hours before the first attack, Jah instructed an associate of his to send a text message to Alexis-Clark that read: “Light it up, call when done completely.” Shortly thereafter, on October 21, 2018, Alexis-Clark and Williams mistakenly firebombed the next-door neighbor of one of the intended victims by throwing a lit Molotov cocktail through the front window of their home, setting the living room on fire.
Then, on October 31, 2018, all three co-conspirators met in a casino in Pacheco to discuss further attacks. A few days later, on November 3, 2018, Alexis-Clark and Williams firebombed the homes of two more victims.
Aside from the three arson attacks carried out by Alexis-Clark and Williams, the jury heard evidence of two additional prior Molotov cocktail attacks against individuals on Jah’s enemies list. In addition, in its sentencing memorandum, the government requested that the court also consider evidence that Jah had orchestrated four additional arson attacks (for a total nine arson attacks) as well as two drive-by shootings over the period from March 2016 through November 2018. The attacks occurred throughout the Bay Area at addresses in San Francisco, Lafayette, Danville, and Oakland. The government’s sentencing memorandum provides a description of each of Jah’s attacks. According to the government, no one was seriously hurt, but the absence of physical injuries was “solely due to the incompetence of the men [Jah] hired to carry out these attacks.”
The evidence showed that Jah orchestrated these attacks in an attempt to punish and intimidate those he held responsible for removing him from his childhood home in the Richmond District of San Francisco.
According to the memorandum, Jah explained in a social media post that, at least with respect to one of his victims, his intention was to “terrorize.” The sentencing memorandum also argues that, after arranging for the attacks, Jah took multiple steps to impede the administration of justice by, among other things, intimidating his co-defendants to give false testimony, and directing one co-defendant to sign a declaration falsely denying he conspired with Jah.
On October 29, 2020, a federal grand jury issued a second superseding indictment charging Jah with one count of conspiring to commit arson, in violation of 18 U.S.C. §§ 844(i) and (n). On May 13, 2021, after a week-long trial, a federal jury found Jah guilty of the charge.
In addition to the prison term, Judge Alsup also sentenced the defendant to a 3-year term of supervised release. The defendant has been in federal custody since January of 2019 and will begin serving the prison term immediately.
Alexis-Clark and Williams both have pleaded guilty to, but have not yet been sentenced for, crimes regarding their respective roles in the scheme.
Assistant U.S. Attorneys Kevin Rubino and Kevin Barry are prosecuting this case with assistance from Ralph Banchstubbs. The prosecution results from an investigation by the ATF and FBI with help from the police departments of San Francisco, Vallejo, Lafayette, Tiburon, and Danville.
Government Intervenes in False Claims Act Lawsuits Against Kaiser Permanente Affiliates for Submitting Inaccurate Diagnosis Codes to the Medicare Advantage ProgramRead the Press Release
SAN FRANCISCO – The United States has intervened in six complaints alleging that members of the Kaiser Permanente consortium violated the False Claims Act by submitting inaccurate diagnosis codes for its Medicare Advantage Plan enrollees in order to receive higher reimbursements.
The Kaiser Permanente consortium members (collectively Kaiser) are Kaiser Foundation Health Plan Inc., Kaiser Foundation Health Plan of Colorado, The Permanente Medical Group Inc., Southern California Permanente Medical Group Inc. and Colorado Permanente Medical Group P.C. Kaiser is headquartered in Oakland, California.
“The integrity of government health care programs must be protected,” said Acting U.S. Attorney Stephanie Hinds for the Northern District of California. “The Medicare Advantage Program maintains the health of millions, and wrongful acts that defraud the program cannot continue and will be pursued.”
“Medicare’s managed care program relies on the accuracy of information submitted by health care providers and plans to ensure that patients receive the appropriate level of care, and that plans receive the appropriate compensation,” said Deputy Assistant Attorney General Sarah E. Harrington of the Justice Department’s Civil Division. “Today’s action sends a clear message that we will hold health care providers and plans accountable if they seek to game the system by submitting false information.”
“The federal government pays hundreds of billions of dollars every year to Medicare Advantage Plans,” said Acting U.S. Attorney Matt Kirsch for the District of Colorado. “The District of Colorado will vigorously pursue investigations with our partners to make sure that money supports necessary health care, not fraud.”
Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed care insurance plans called Medicare Advantage Plans (MA Plans). MA Plans are paid a per-person amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans. The Centers for Medicare and Medicaid Services (CMS), which oversees the Medicare program, adjusts the payments to MA Plans based on demographic information and the diagnoses of each plan beneficiary. The adjustments are commonly referred to as “risk scores.” In general, a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary.
Medicare requires that, for outpatient medical encounters, MA Plans submit diagnoses to CMS only for conditions that required or affected patient care, treatment or management during an in-person encounter in the service year. In order to increase its Medicare reimbursements, Kaiser allegedly pressured its physicians to create addenda to medical records after the patient encounter, often months or over a year later, to add risk-adjusting diagnoses that patients did not actually have and/or were not actually considered or addressed during the encounter, in violation of Medicare requirements.
The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The False Claims Act also permits the government to intervene in such lawsuits, as it has done, in part, in these cases. The cases are consolidated in the Northern District of California and captioned United States ex rel. Osinek v. Kaiser Permanente, 3:13-cv-03891 (N.D. Cal.); United States ex rel. Taylor v. Kaiser Permanente, et al., 3:21-cv-03894 (N.D. Cal.); United States ex rel. Arefi, et al. v. Kaiser Foundation Health Plan, Inc., et al., 3:16-cv-01558 (N.D. Cal.); United States ex rel. Stein, et al. v. Kaiser Foundation Health Plan, Inc., et al., 3:16-cv-05337 (N.D. Cal.); United States ex rel. Bryant v. Kaiser Permanente, et al., 3:18-cv-01347 (N.D. Cal.); and United States ex rel. Bicocca v. Permanente Med. Group, Inc., et al., No. 3:21-cv-03124 (N.D. Cal.).
This matter was investigated by the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Offices for the Northern District of California and the District of Colorado, with assistance from HHS-OIG.
The claims in which the United States has intervened are allegations only, and there has been no determination of liability.
Trash Company Executive Agrees to Plead Guilty to Conspiracy and to Cooperate with Federal Investigation into City Hall CorruptionRead the Press Release
SAN FRANCISCO - Paul Fredrick Giusti, the former Group Government & Community Relations Manager for the San Francisco group of a waste management company, was charged in an information filed yesterday with one count of conspiracy to bribe a local official and commit honest services fraud and has agreed in a plea agreement to plead guilty and cooperate with federal investigators in the corruption investigation into San Francisco City Hall, announced Acting United States Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Craig D. Fair, and Internal Revenue Service Criminal Investigation Acting Special Agent in Charge Michael Daniels.
Giusti, 65, of San Francisco, was originally charged in a federal criminal complaint filed on November 18, 2020, that alleged Giusti, who worked in the San Francisco group of the waste management company, was a central player in helping the company bribe Mohammed Nuru, then San Francisco’s Director of the Department of Public Works (DPW), with a continuous stream of benefits and money, ultimately worth over $1 million, to influence Nuru to perform official acts that would favor the waste management company.
The federal information filed yesterday elaborates on the steps Giusti allegedly took to bribe Nuru. According to the information’s allegations, Nuru was a powerful San Francisco public official who, in his position as DPW Director, presided over the rate process governing how much the waste management company could charge residents of San Francisco for solid waste collection services. Nuru further influenced rates known as “tipping fees” that the company charged DPW when DPW dumped materials at one of the company’s facilities. Nuru’s power and influence over City business also extended beyond DPW matters to other City departments and agencies.
The information alleges that between 2014 and January 2020, Giusti conspired with others to direct a stream of payments and benefits from the waste management company to Nuru, directly or through his designees. The payments and benefits included gifts, services, financial contributions to organizations, and other things of value including the following: (1) payments of approximately $150,000 per year, in $30,000 installments, from 2014 into 2019 to a San Francisco non-profit organization, knowing that Nuru ultimately controlled this money; (2) $60,000 from 2016 to 2019 to fund the annual DPW holiday party, made as “holiday donations” to the Lefty O’Doul’s Foundation for Kids; (3) a job provided to Nuru’s son at the waste management company’s subsidiary; and (4) internships funded by the waste management company for Nuru’s son in the summer of 2017 and summer of 2018 at a San Francisco non-profit on whose board Giusti served. The information alleges these payments and benefits were made with the knowledge and approval of Giusti’s supervisor and were intended to reward or influence Nuru in exchange for official acts or influence in matters that would benefit the waste management company, all while depriving San Francisco of the honest services of its DPW Director.
Giusti has agreed to cooperate with federal investigators in the ongoing federal investigation. According to a court filing, “Mr. Giusti has signed a cooperation plea agreement in which he has agreed to plead guilty and testify, provide documents, and otherwise assist in the government’s investigation.”
Giusti was arraigned today on the information in federal magistrate court before United States Magistrate Judge Alex G. Tse. He is currently scheduled to make his initial appearance on August 9, 2021, before United States District Judge Chhabria in San Francisco, however, a notice of related case has been filed, the ultimate result of which may be a change in time and place of the hearing. Giusti remains out of custody on bond.
The charges contained in the information are mere allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Giusti is charged with one count of conspiracy to bribe a local official and to commit honest services fraud, in violation of 18 U.S.C. § 371. If convicted of this charge, he faces a maximum penalty of 5 years in prison and a fine of $250,000 or twice the gross gain or gross loss, whichever is higher. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by the Corporate Fraud Strike Force of the U.S. Attorney’s Office. The case is being investigated by IRS Criminal Investigation and the FBI.
Virginia-Based Crip Gang Member Sentenced to 15-Years in Prison for Participating in Armed Home Invasion Robbery Conspiracy in Sonoma CountyRead the Press Release
SAN FRANCISCO – Aaron McArthur, aka Gangster Boogie, aka “G Boogie,” aka “Boogie,” aka “Suave,” was sentenced today to 15 years in prison and ordered to pay over $20,000 in restitution for his role in a conspiracy to commit armed home invasion robberies in Sonoma County, announced Acting United States Attorney Stephanie M. Hinds and FBI Special Agent in Charge Craig D. Fair. The sentence was handed down by the Honorable Edward M. Chen, U.S. District Judge.
McArthur, 31, of Virginia, pleaded guilty to the charge on April 21, 2021. According to his plea agreement, McArthur admitted that beginning in January 2018, he agreed with others to commit home invasion robberies in Northern California. The object of the robberies was to steal marijuana and the cash proceeds of marijuana sales. McArthur acknowledged that he recruited two groups of co-conspirators to travel from his home state of Virginia to meet with additional co-conspirators in Northern California where home invasion robberies would be committed. According to the plea agreement, McArthur explained to recruits how he previously had obtained marijuana and firearms from participating in Northern California home invasion robberies including how he coordinated the robberies with a contact in California, how the robberies were conducted, and how the marijuana and guns were shipped back to him in Virginia. McArthur admitted he knew it was reasonably foreseeable his co-conspirators would possess and use firearms to carry out the crimes.
The plea agreement describes how the two sets of McArthur’s recruits each participated in two home invasion robberies. The first pair of robberies occurred on February 8, 2018. After recruiting four individuals and helping to organize their travel from Virginia to Northern California, McArthur’s recruits were joined in California by a California-based co-conspirator. At approximately 4:22 a.m., the co-conspirators, wearing masks and carrying guns, kicked in the door of a residence in Santa Rosa and demanded money and marijuana from the residents. A co-conspirator struck one of the residents with a pistol, shot another resident in the arm, and stole several pounds of marijuana. Later the same morning, the robbers invaded a second home, shot and killed one of the residents in the house, and stole several firearms. Four of the co-conspirators were captured by law enforcement the same day and the fifth was captured about four months later.
The second pair of robberies occurred March 12, 2018. McArthur admitted that he again recruited four co-conspirators and arranged for their transportation to Northern California. McArthur assigned one individual to take the lead and maintained constant communication with the co-conspirators leading to the home invasion robberies. The first robbery occurred at 3:00 AM; the co-conspirators entered a residence in Petaluma, struck and tied up an occupant, and searched for marijuana and cash. After leaving the home, the co-conspirators entered a second home, tied up the occupant, and again demanded marijuana and cash. During the robbery, the co-conspirators encountered a neighbor who was brought inside the residence, tied up, and struck several times.
A federal grand jury indicted McArthur on June 13, 2019, charging him with one count of conspiracy to commit robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a); one count of conspiracy to possess with intent to distribute marijuana, in violation of 21 U.S.C. § 846; and four substantive counts of robbery and attempted robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a). McArthur pleaded guilty to the conspiracy count and the remaining counts were dismissed.
In addition to the prison term, Judge Chen also sentenced the defendant to a three-year period of supervised release and ordered that the defendant pay restitution of $20,275.73 to the victims of his crimes. The defendant was arrested in Virginia on August 16, 2019, and has been in continuous federal custody since his arrest; he will begin to serve his prison term immediately.
Assistant U.S. Attorney Christiaan H. Highsmith is prosecuting the case with the assistance of Alice Pai. The prosecution is the result of an investigation by the FBI, the Drug Enforcement Administration, and the Sonoma County Sheriff’s Office.
This investigation and prosecution is part of 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.
U.S. Department of Justice Announces Launch of Firearms Trafficking Strike Forces to Crack Down on Sources of Crime GunsRead the Press Release
SAN FRANCISCO –The U.S. Department of Justice today launched five cross-jurisdictional strike forces to help reduce gun violence by disrupting illegal firearms trafficking in key regions across the country. Leveraging existing resources, the regional strike forces will better ensure sustained and focused coordination across jurisdictions and help stem the supply of illegally trafficked firearms from source cities, through other communities, and into five key market regions: New York, Chicago, Los Angeles, the San Francisco Bay Area/Sacramento Region and Washington, D.C.
Each strike force region will be led by designated United States Attorneys, who will collaborate with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and with state and local law enforcement partners within their own jurisdiction where firearms are used in crimes as well as with law enforcement partners in areas where illegally trafficked guns originate. Officials will use the latest data, evidence, and intelligence from crime scenes to identify patterns, leads, and potential suspects in violent gun crimes.
“All too often, guns found at crime scenes come from hundreds or even thousands of miles away. We are redoubling our efforts as ATF works with law enforcement to track the movement of illegal firearms used in violent crimes. These strike forces enable sustained coordination across multiple jurisdictions to help disrupt the worst gun trafficking corridors,” said Attorney General Merrick B. Garland. “The Department of Justice will use all of its tools – enforcement, prevention, intervention, and investment – to help ensure the safety of our communities – the department’s highest priority.”
According to gun trace data, a significant number of firearms recovered in the San Francisco Bay Area and the greater Sacramento region originate outside of California and are illegally trafficked into the state. The new San Francisco Bay Area/Sacramento Region Strike Force is jointly helmed by the United States Attorney’s Offices of the Northern and Eastern Districts of California, led by Acting United States Attorneys Stephanie M. Hinds in San Francisco and Phillip A. Talbert in Sacramento, respectively. The ATF San Francisco Field Office, led by Special Agent in Charge Patrick T. Gorman, will support and be integral to the strike force. The strike force will help ensure sustained and focused coordination between law enforcement and prosecutors in San Francisco Bay Area and the Sacramento region with their counterparts in locations where many of the firearms originate.
“Firearms illegally imported into California commonly contribute to violence in crimes committed on the streets of our communities,” said Acting United States Attorney Stephanie M. Hinds for the Northern District of California. “Enhancing our focus on tracing and tracking the source of these illegally trafficked firearms will help stem their flow and assist in combatting violent crime. Our strike force, which I am honored to co-chair with Acting United States Attorney Phillip A. Talbert from the Eastern District of California, and with the critical support of ATF San Francisco Field Office Special Agent in Charge Patrick T. Gorman, is a strong step in the right direction. Because many of the firearm source locations for our Bay Area and Sacramento regions overlap with the source locations for firearms recovered in Southern California, our strike force will work closely with the Los Angeles Strike Force.”
The strike forces represent one important, concrete step in implementing the Department’s Comprehensive Violent Crime Reduction Strategy, which was announced on May 26, 2021. The comprehensive strategy supports local communities in preventing, investigating, and prosecuting gun violence and other violent crime—and requires U.S. Attorneys’ offices to work with federal, state, local and tribal law enforcement, as well as the communities they serve, to address the most significant drivers of violence in their districts. In guidance to federal agents and prosecutors as part of that comprehensive strategy, the Deputy Attorney General made clear that firearms traffickers providing weapons to violent offenders are an enforcement priority across the country.
Department of Justice Efforts to Address Violent Crime
Since April 2021, the Department has taken the following steps to reduce and prevent violent crime, especially the gun crime that is often at the core of the problem:
- On April 8, Attorney General Garland, alongside President Biden, announced four concrete steps for addressing gun violence: ATF would propose a new rule within 30 days to help curb the proliferation of so-called ghost guns, ATF would propose a new rule within 60 days on stabilizing braces used to convert pistols into short-barreled rifles, the Department would publish model state extreme risk protection order legislation within 60 days; and ATF would begin preparing a thorough and detailed new public study of firearms trafficking for the first time in 20 years.
- In April 2021, the Office of Justice Programs also made clear when existing grant funds could be used to support Community Violence Intervention (CVI) programs.
- On May 7, meeting the Attorney General’s announced timeline, ATF issued a notice of proposed rulemaking to update outdated firearms definitions and to help address the proliferation of ghost guns.
- On May 26, the Attorney General announced the Department’s comprehensive strategy to reduce violent crime, including an overall Department Violent Crime Reduction Strategy, the strengthening of Project Safe Neighborhoods (PSN), and a directive to the U.S. Attorneys to work with their local partners in addressing the increase in violence that typically occurs over the summer (with specific support from DOJ law enforcement agencies)
- On June 7, meeting the Attorney General’s announced timeline, ATF issued a notice of proposed rulemaking to clarify that the restrictions imposed by the National Firearms Act apply when stabilizing braces are used to convert pistols into short-barreled rifles.
- On June 8, meeting the Attorney General’s announced timeline, the Department published model state extreme risk protection order legislation.
- On June 22, the Attorney General announced that the Department would be forming five Firearms Trafficking Strike Forces within 30 days.
- On, June 23, the Attorney General, alongside President Biden, announced steps that ATF would take to hold rogue gun dealers accountable for their actions. They include applying a “no tolerance” policy for federal firearms licensers (FFLs) that willfully commit violations that endanger public safety; designating points of contact for state and local government officials to report concerns about rogue FFLs; formalizing the use of public safety factors for inspection prioritization; sharing inspection information with states that regulate firearms dealers themselves; resuming the practice of notifying revoked dealers on how to dispose of their inventory and the potential criminal consequences of continuing to engage in the business; increasing ATF’s resources for inspections (see, FY 2022 Budget request); and publicly posting disaggregated inspection information to ATF’s website.
Two Defendants Plead Guilty to Federal Charges Filed in Connection with Oakland-Based EB-5 Visa Investment SchemeRead the Press Release
OAKLAND - Thomas Henderson pleaded guilty in federal court today to one count of conspiracy to commit wire fraud and one count of making a false statement to a government agency related to his role in deceiving investors in various Oakland, California-based businesses, announced Acting United States Attorney Stephanie M. Hinds; U.S. Department of State’s Diplomatic Security Service (DSS) Special Agent in Charge William Chang; Homeland Security Investigations Special Agent in Charge Tatum King; and Federal Bureau of Investigation Special Agent in Charge Craig Fair. A second defendant, Cooper Lee, also pleaded guilty to one count of conspiracy for his role in diverting certain investor funds. The guilty pleas were accepted by the Hon. Richard Seeborg, Chief U.S. District Judge.
Henderson, 72, of Oakland, and Lee, 44, formerly of Oakland, pleaded guilty to charges pursuant to separate plea agreements entered by the court. According to Henderson’s plea agreement, Henderson admitted he formed the San Francisco Regional Center, LLC (SFRC) in 2010 to raise money from foreign investors through the “EB-5” visa program, a job-creation and immigration program administered by U.S. Citizenship and Immigration Services (USCIS). From 2011 to 2017, SFRC raised more than $100 million from foreign investors for seven commercial enterprises approved under the EB-5 program. Henderson admitted that by at least the middle of 2014, SFRC began using investor funds for purposes and projects other than the specific enterprise corresponding to the investment, and that investors were not specifically told that their investment funds would be or were used for those purposes. For example, Henderson admitted that funds raised from 42 investors for the enterprise North America 3PL LP were used for other projects and businesses, including to fund the operation of earlier struggling projects. Henderson also admitted that he made false statements to USCIS when he submitted a declaration to the agency regarding the use of North America 3PL investor funds.
According to Lee’s plea agreement, from about August 2016 to January 2017, Lee conspired with Henderson to divert some funds raised for the EB-5 enterprise operating as California Gold Medal LP to other EB-5 enterprises and businesses controlled by Henderson. Lee admitted that he transferred funds and prepared documents to make it appear that the transfers were for legitimate business transactions.
USCIS administers the EB-5 visa program. Under the program, foreign nationals may obtain permanent United States residency, commonly known as a Green Card, by investing in qualifying U.S. businesses and creating jobs for U.S. citizens and residents. To receive a two-year grant of conditional permanent residency status, foreign investors must meet certain requirements for an entry visa, comply with program requirements and make an investment of a minimum of $1 million, or $500,000 if the investment is made in certain areas of high unemployment. After two years, the foreign investor and immediate family can petition for permanent residency after meeting program requirements, including the creation of at least 10 jobs for United States citizens and residents through the business funded by the investment.
Chief Judge Seeborg scheduled Lee’s sentencing for December 7, 2021, and Henderson’s sentencing for June 7, 2022.
Henderson pleaded guilty to one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and one count of making a false statement to a government agency, in violation of 18 U.S.C. § 1001(a)(2). The conspiracy charge carries a maximum statutory penalty of 20 years in prison and a fine of up to $250,000. The false statement charge carries a maximum penalty of 5 years in prison and a fine of up to $250,000. Lee pleaded guilty to one count of conspiracy, in violation of 18 U.S.C. § 371, which carries a maximum penalty of 5 years in prison and $250,000. Under the terms of each plea agreement, other charges will be dismissed at sentencing if the defendant complies with the agreement. 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 Lloyd Farnham and Sheila A.G. Armbrust are prosecuting the case, with the assistance of Patricia Mahoney. The prosecution was the result of an investigation led by the U.S. Department of State Diplomatic Security Service’s representative to the Document and Benefit Fraud Task Force (DBFTF), overseen by the HSI, with the participation of the Federal Bureau of Investigation. 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. Additional assistance was provided by the San Francisco Regional Office of the Securities and Exchange Commission.
Man Arrested in Connection with Alleged Role in Twitter HackRead the Press Release
A citizen of the United Kingdom was arrested today in Estepona, Spain, by Spanish National Police pursuant to a U.S. request for his arrest on multiple charges in connection with the July 2020 hack of Twitter that resulted in the compromise of over 130 Twitter accounts, including those belonging to politicians, celebrities and companies.
Joseph O’Connor, 22, is charged by criminal complaint filed in the U.S. District Court for the Northern District of California.
According to court documents, in addition to the July 15, 2020, hack of Twitter, O’Connor is charged with computer intrusions related to takeovers of TikTok and Snapchat user accounts. O’Connor is also charged with cyberstalking a juvenile victim.
O’Connor is charged with three counts of conspiracy to intentionally access a computer without authorization and obtaining information from a protected computer; two counts of intentionally accessing a computer without authorization and obtaining information from a protected computer; one count of conspiracy to intentionally access a computer without authorization and, with the intent to extort from a person a thing of value, transmitting a communication containing a threat; one count of making extortive communications; one count of making threatening communications; and two counts of cyberstalking. If O'Connor is convicted, a federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Hinds for the Northern District of California and Special Agent in Charge Craig D. Fair of the FBI San Francisco Field Office made the announcement.
The FBI San Francisco Division is investigating the case, with assistance from the IRS-Criminal Investigation Cyber Unit; the U.S. Secret Service, San Francisco and Headquarters; and the Santa Clara County Sheriff’s Office and its REACT task force.
Assistant Deputy Chief Adrienne Rose of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys William Frentzen and Andrew Dawson of the U.S. Attorney’s Office for the Northern District of California are prosecuting the case.
The Justice Department’s Office of International Affairs is providing significant assistance. The U.K.’s National Crime Agency and the Spanish National Police provided assistance in the investigation and arrest.
The allegations of a criminal complaint are merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Man Arrested in Connection with Alleged Role in July 2020 Twitter HackRead the Press Release
SAN FRANCISCO - A citizen of the United Kingdom was arrested today in Estepona, Spain by Spanish national police pursuant to a U.S. request for his arrest on multiple charges in connection with the July 2020 hack of Twitter that resulted in the compromise of over 130 Twitter accounts, including those belonging to politicians, celebrities, and companies.
Joseph O’Connor, 22, is charged by criminal complaint filed in the U.S. District Court for the Northern District of California.
According to court documents, in addition to the July 15, 2020, hack of Twitter, O’Connor is charged with computer intrusions related to takeovers of TikTok and Snapchat user accounts. O’Connor was also charged with cyberstalking a juvenile victim.
O’Connor is charged with three counts of conspiracy to intentionally access a computer without authorization and obtaining information from a protected computer; two counts of intentionally accessing a computer without authorization and obtaining information from a protected computer; one count of conspiracy to intentionally access a computer without authorization and, with the intent to extort from a person a thing of value, transmitting a communication containing a threat; one count of making extortive communications; one count of making threatening communications; and two counts of cyberstalking. If convicted, a federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting U.S. Attorney Stephanie Hinds for the Northern District of California, Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division, and Special Agent in Charge Craig D. Fair of the FBI San Francisco Field Office made the announcement.
The FBI San Francisco Division is investigating the case, with assistance from the IRS-Criminal Investigation Cyber Unit; the U.S. Secret Service, San Francisco and Headquarters; and the Santa Clara County Sheriff’s Office and their REACT task force.
Assistant U.S. Attorneys William Frentzen and Andrew Dawson of the U.S. Attorney’s Office for the Northern District of California and Assistant Deputy Chief Adrienne Rose of the Criminal Division’s Computer Crime and Intellectual Property Section are prosecuting the case.
The Justice Department’s Office of International Affairs is providing significant assistance. The U.K.’s National Crime Agency and the Spanish National Police provided assistance in the investigation and arrest.
Two South Bay Residents Plead Guilty to Securities FraudRead the Press Release
SAN FRANCISCO – Benjamin J. Wylam and Nathaniel A. Brown each pleaded guilty in federal court today to one count of securities fraud related to Wylam’s engaging in transactions in corporate securities after receiving from Brown material nonpublic information about the corporation issuing the securities, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig Fair. Wylam’s and Brown’s plea agreements were accepted by the Honorable Edward M. Chen, United States District Judge.
Brown, 49, and Wylam, 42, both of San Jose, Calif., pleaded guilty to the charge signing separate plea agreements. According to Brown’s plea agreement, Brown admitted that, between 2011 and 2017, he was employed as a Senior Revenue Manager at Infinera Corporation (“Infinera”), a Sunnyvale-based technology company. Infinera’s common shares were registered pursuant to Section 12(b) of Securities Exchange Act of 1934 and publicly traded on the NASDAQ Stock Market under the ticker symbol INFN. During Brown’s employment at Infinera, he was regularly privy to material nonpublic information about Infinera’s financial performance and financial projections. Beginning in or about April 2016 and continuing until the termination of his employment from Infinera in November 2017, Brown admitted that he regularly shared material nonpublic information that he obtained during his employment with Wylam. Brown admitted he knew Wylam intended to, and did, use the material nonpublic information to purchase Infinera securities in advance of Infinera’s quarterly public earnings announcements.
According to Wylam’s plea agreement, Wylam admitted that between April 2016 and November 2017, he obtained material nonpublic information about Infinera, and then engaged in transactions in Infinera securities. Wylam admitted that he obtained this material nonpublic information directly from Brown. As with Brown, Wylam admitted Infinera’s common shares were registered pursuant to section 12(b) of Securities Exchange Act of 1934 and publicly traded on the NASDAQ Stock Market under the ticker symbol INFN. Wylam acknowledged the gross gains he made from trading based on material nonpublic information belonging to Infinera that he received from Brown amounted to approximately $999,959.
The plea agreements further revealed the steps Brown and Wylam took to conceal their actions and relationship. Both men admitted to having begun using the messaging application WhatsApp to communicate with each other because of its encrypted communications and as an extra measure to conceal the facts that Brown was providing Wylam with material nonpublic information and that the two were friends. Both men admitted that Wylam also “unfriended” Brown on Facebook to achieve these ends.
In sum, Brown and Wylam were each charged with one count of securities fraud, in violation of 18 U.S.C. § 1348. The maximum statutory penalties for a violation of 18 U.S.C. § 1348 is 25 years in prison and the greater of either $250,000 or twice the gross gain made from the offense. 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. Judge Breyer scheduled the sentencing hearing for both defendants for October 28, 2021, at 10:30 a.m.
The Securities and Exchange Commission has filed a separate enforcement action against Brown and Wylam and four others. The announcement of that action can be viewed here.
Assistant U.S. Attorney Kyle Waldinger is prosecuting the case with assistance from Kathy Tat. This case was investigated by the FBI. The Department of Justice appreciates the assistance of the Securities and Exchange Commission.
San Francisco Resident Convicted of Robbery Affecting Interstate Commerce in Scheme to Steal Merchandise While Threatening to Spread Covid-19Read the Press Release
SAN FRANCISCO – A federal jury convicted Carmelita Barela today of committing robbery affecting interstate commerce in connection with a scheme to steal merchandise from a Walgreens while claiming to have COVID-19, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The conviction follows a 2-day trial before the Honorable Charles R. Breyer, United States District Judge.
“The spread of COVID-19 has forced almost all of us to make sacrifices and to rely on each other to maintain our safety and good health,” said Acting U.S. Attorney Hinds. “Unfortunately, some people have tried to use the crisis to intimidate essential workers and to commit crimes. This conviction demonstrates that those who seek to exploit the pandemic and commit crimes for their own personal gain will be held accountable.”
"The FBI did not stand by while criminals were using the COVID-19 pandemic to threaten and intimidate frontline workers," said Special Agent in Charge Craig Fair. "People working in grocery stores and convenience stores were risking going to work so the rest of us could get the food and medicine we needed. The FBI has remained committed to this case to protect the essential workers in our community."
At trial, the government submitted evidence that on April 6, 2020, Barela, 36, of San Francisco, and another woman entered a Walgreens near San Francisco’s Civic Center with empty bags and without wearing masks. After the store manager offered assistance, the other woman began to cough without covering her mouth. The store manager asked the other woman to leave the store if she was sick. Instead, the woman walked over to Barela and both defendants began to cough audibly while taking merchandise off the shelves and placing it into their bags. The manager told the defendants to leave the store, to which they responded by saying, “We have COVID.” Barela continued to cough audibly and eventually left the store without paying for the merchandise the defendants placed into their bags.
A grand jury indicted Barela on June 22, 2020, charging her with robbery affecting interstate commerce (Hobbs Act Robbery), in violation of 18 U.S.C. § 1951. The jury convicted Barela of the charge.
Barela faces a maximum sentence of 20 years of prison and a $250,000 fine. In addition, the court may order restitution and an additional term 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.
Judge Breyer ordered the Barela detained pending sentencing and scheduled a sentencing hearing for August 4, 2021.
Assistant United States Attorneys Abraham Fine and Leif Dautch are prosecuting the case with assistance from Soana Katoa and Margoth Turcios. The prosecution is a result of an investigation by the FBI.
Woman Arrested for Fake COVID-19 Immunization and Vaccination Card SchemeRead the Press Release
A California-licensed naturopathic doctor was arrested today for her alleged scheme to sell homeoprophylaxis immunization pellets and to falsify COVID-19 vaccination cards by making it appear that customers had received the U.S. Food and Drug Administration (FDA) authorized Moderna vaccine.
Juli A. Mazi, 41, of Napa, is charged with one count of wire fraud and one count of false statements related to health care matters. The case is the first federal criminal fraud prosecution related to homeoprophylaxis immunizations and fraudulent Centers for Disease Control and Prevention (CDC) COVID-19 vaccination record cards.
“This defendant allegedly defrauded and endangered the public by preying on fears and spreading misinformation about FDA-authorized vaccinations, while also peddling fake treatments that put people’s lives at risk. Even worse, the defendant allegedly created counterfeit COVID-19 vaccination cards and instructed her customers to falsely mark that they had received a vaccine, allowing them to circumvent efforts to contain the spread of the disease,” said Deputy Attorney General Lisa O. Monaco. “The Department of Justice and its law enforcement partners are committed to protecting the American people from fraudsters during this national emergency. This commitment is evident in this prosecution as well as in the ongoing work of the Department and our agency partners in the COVID-19 Fraud Enforcement Task Force established by the Attorney General earlier this year.”
According to court documents, in April 2021, an individual submitted a complaint to the Department of Health and Human Services Office of Inspector General (HHS-OIG) hotline stating that family members purchased from Mazi COVID-19 homeoprophylaxis immunization pellets. The complainant stated that the family members had told her/him that Mazi stated that the pellets contained the COVID-19 virus and would create an antibody response in the immune system. The complainant reported that her/his family did not receive injections of any of the three FDA-authorized COVID-19 vaccines. However, in connection with the delivery of the homeoprophylaxis immunization pellets, Mazi sent COVID-19 Vaccination Record cards, with Moderna listed, to the complainant family. Mazi allegedly instructed the complainant family to mark the cards to falsely state that they received the Moderna vaccine on the date that they ingested the COVID-19 homeoprophylaxis immunization pellets.
“Steering through the challenges presented by COVID-19 requires trust and reliance on our medical professionals to provide sage information and guidance,” said Acting U.S. Attorney Stephanie Hinds for the Northern District of California. “According to the complaint, instead of disseminating valid remedies and information, Juli Mazi profited from unlawfully peddling unapproved remedies, stirring up false fears, and generating fake proof of vaccinations. We will act to protect trust in the medical developments that are enabling us to emerge from the problems presented by the pandemic.”
According to court documents, Mazi offered homeoprophylaxis immunizations for childhood illnesses that she falsely claimed would satisfy the immunization requirements for California schools, and falsified immunization cards that were submitted by parents to California schools. Homeoprophylaxis involves the exposure of an individual to dilute amounts of a disease, purportedly to stimulate the immune system and confer immunity. Mazi is alleged to have falsely claimed that orally ingesting pellets with small amounts of COVID-19 would result in full lifelong immunity from COVID-19.
“This doctor violated the all-important trust the public extends to healthcare professionals — at a time when integrity is needed the most,” said Special Agent in Charge Steven J. Ryan of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “Working closely with our law enforcement partners, our agency will continue to investigate such fraudsters who recklessly endanger the public’s health during the unprecedented COVID-19 crisis.”
The affidavit alleges that Mazi used the COVID-19 pandemic to expand the pre-existing immunization scheme by selling immunization pellets that she fraudulently claimed, in written documents and consensually monitored recordings, would provide “lifelong immunity to COVID-19.” Mazi explained that the pellets contained a “very minute amount of this [COVID-19] disease” that can result in “infectious symptoms” of COVID-19 or “automatically flag[] the immune system’s attention, inducing immunity.” To encourage customers to purchase the pellets, Mazi allegedly exploited disinformation and fear by falsely claiming that the FDA-authorized COVID-19 vaccines contain “toxic ingredients.” Mazi further stated that her customers could provide the pellets to children for COVID-19 immunity, and that the “dose is actually the same for babies.”
“Spreading inaccurate or false medical information about COVID-19 for personal gain, as the complaint alleges, is dangerous and only seeds skepticism among the public,” said Special Agent in Charge Craig D. Fair of the FBI's San Francisco Field Office. “As the government continues to work to provide current and accurate information to help slow the spread of COVID-19, the FBI will continue to pursue those who attempt to fraudulently profit from spreading misinformation and providing false documentation.”
Mazi also provided CDC COVID-19 vaccination record cards to her customers with instructions on how to fraudulently complete the cards to falsely make it appear as if a customer had received two doses of the Moderna vaccine. As part of her scheme, Mazi provided customers with specific Moderna vaccine lot numbers to enter onto the cards and with instruction on how to select the purported dates on which they had received the Moderna vaccines to evade suspicion.
HHS-OIG’s San Francisco Regional Office and the FBI’s San Francisco Field Office are investigating the case.
Trial Attorney Sridhar Babu Kaza of the Criminal Division’s Fraud Section’s National Rapid Response Strike Force and Assistant U.S. Attorney Christiaan Highsmith of the U.S. Attorney’s Office for the Northern District of California 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 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 HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
In May, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or 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.
A criminal complaint is merely an allegation and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Napa Woman Arrested for Fake Covid-19 Immunization and Vaccine Card SchemeRead the Press Release
SAN FRANCISCO – A California licensed naturopathic doctor was arrested today for her alleged scheme to sell homeoprophylaxis immunization pellets and falsify COVID-19 vaccination cards by making it appear that customers received the U.S. Food and Drug Administration (FDA) authorized Moderna vaccine. The announcement was made by Deputy Attorney General Lisa O. Monaco; Acting U.S. Attorney Stephanie M. Hinds; Special Agent in Charge Steven J. Ryan of the Department of Health and Human Services Office of Inspector General (HHS-OIG); and FBI Special Agent in Charge of the San Francisco Division, Craig D. Fair.
Juli A. Mazi, 41, of Napa, is charged with one count of wire fraud and one count of false statements related to health care matters. The case is the first federal criminal fraud prosecution related to homeoprophylaxis immunizations and fraudulent Centers for Disease Control and Prevention (CDC) COVID-19 vaccination record cards.
“This defendant allegedly defrauded and endangered the public by preying on fears and spreading misinformation about FDA-authorized vaccinations, while also peddling fake treatments that put people’s lives at risk. Even worse, the defendant allegedly created counterfeit COVID-19 vaccination cards and instructed her customers to falsely mark that they had received a vaccine, allowing them to circumvent efforts to contain the spread of the disease,” said Deputy Attorney General Lisa O. Monaco. “The Department of Justice and its law enforcement partners are committed to protecting the American people from fraudsters during this national emergency. This commitment is evident in this prosecution as well as in the ongoing work of the Department and our agency partners in the COVID-19 Fraud Enforcement Task Force established by the Attorney General earlier this year.”
“Steering through the challenges presented by COVID-19 requires trust and reliance on our medical professionals to provide sage information and guidance,” said Acting U.S. Attorney Hinds. “According to the complaint, instead of disseminating valid remedies and information, Juli Mazi profited from unlawfully peddling unapproved remedies, stirring up false fears, and generating fake proof of vaccinations. We will act to protect trust in the medical developments that are enabling us to emerge from the problems presented by the pandemic.”
According to court documents, in April 2021, an individual submitted a complaint to the Department of Health and Human Services Office of Inspector General (HHS-OIG) hotline stating that family members purchased from Mazi. The complainant stated that the family members had told her/him that Mazi stated that the pellets contained the COVID-19 virus and would create an antibody response in the immune system. The complainant reported that her/his family did not receive injections of any of the three FDA-authorized COVID-19 vaccines. However, in connection with the delivery of the homeoprophylaxis immunization pellets, Mazi sent COVID-19 Vaccination Record cards, with Moderna listed, to the complainant family. Mazi allegedly instructed the complainant family to mark the cards to falsely state that they received the Moderna vaccine on the date that they ingested the COVID-19 homeoprophylaxis immunization pellets.
According to court documents, Mazi offered homeoprophylaxis immunizations for childhood illnesses that she falsely claimed would satisfy the immunization requirements for California schools, and falsified immunization cards that were submitted by parents to California schools. Homeoprophylaxis involves the exposure of an individual to dilute amounts of a disease, purportedly to stimulate the immune system and confer immunity. Mazi is alleged to have falsely claimed that orally ingesting pellets with small amounts of COVID-19 would result in full lifelong immunity from COVID-19.
“This doctor violated the all-important trust the public extends to healthcare professionals — at a time when integrity is needed the most,” said Special Agent in Charge Steven J. Ryan of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “Working closely with our law enforcement partners, our agency will continue to investigate such fraudsters who recklessly endanger the public’s health during the unprecedented COVID-19 crisis.”
The affidavit alleges that Mazi used the COVID-19 pandemic to expand the pre-existing immunization scheme by selling immunization pellets that she fraudulently claimed, in written documents and consensually monitored recordings, would provide “lifelong immunity to COVID-19.” Mazi explained that the pellets contained a “very minute amount of this [COVID-19] disease” that can result in “infectious symptoms” of COVID-19 or “automatically flag[] the immune system’s attention, inducing immunity.” To encourage customers to purchase the pellets, Mazi allegedly exploited disinformation and fear by falsely claiming that the FDA-authorized COVID-19 vaccines contain “toxic ingredients.” Mazi further stated that her customers could provide the pellets to children for COVID-19 immunity, and that the “dose is actually the same for babies.”
“Spreading inaccurate or false medical information about COVID-19 for personal gain, as the complaint alleges, is dangerous and only seeds skepticism among the public,” said Special Agent in Charge Craig D. Fair of the FBI's San Francisco Field Office. “As the government continues to work to provide current and accurate information to help slow the spread of COVID-19, the FBI will continue to pursue those who attempt to fraudulently profit from spreading misinformation and providing false documentation.”
Mazi also provided CDC COVID-19 vaccination record cards to her customers with instructions on how to fraudulently complete the cards to falsely make it appear as if a customer had received two doses of the Moderna vaccine. As part of her scheme, Mazi provided customers with specific Moderna vaccine lot numbers to enter onto the cards and with instruction on how to select the purported dates on which they had received the Moderna vaccines to evade suspicion.
Mazi is charged with wire fraud, in violation of 18 U.S.C. § 1343, and making false statements related to health case, in violation of 18 U.S.C. § 1035. If convicted, 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 Christiaan Highsmith of the U.S. Attorney’s Office for the Northern District of California and Trial Attorney Sridhar Babu Kaza of the Department of Justice Criminal Division 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 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 HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
In May, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or 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.
A criminal complaint is merely an allegation and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
California Man Arrested for $3.6 Million PPP and EIDL Loan FraudRead the Press Release
A California man was arrested Thursday on criminal charges related to his alleged scheming to submit fraudulent loan applications seeking millions of dollars in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) COVID-19 relief funds.
According to an indictment returned last week by a federal grand jury in San Francisco, and unsealed today, Lebnitz Tran, 40, of San Jose, submitted at least 27 PPP loan applications and at least seven EIDL loan applications on behalf of multiple persons and business entities, using false and fictitious information and documents, including falsified employee information, fictitious or grossly exaggerated payroll figures, and fake tax documents. The indictment alleges that Tran sought in excess of $8 million in PPP and EIDL funds, obtained over $3.6 million in illicit loan proceeds, and ultimately netted approximately $2 million from the scheme. The indictment further alleges that Tran and others used these illicit loan proceeds to make purchases at restaurants and retail stores, make deposits into personal investment accounts, buy cryptocurrency, and, in one instance, to purchase a $100,000 Tesla from a luxury car dealership.
Tran is charged with six counts of wire fraud and three counts of bank fraud. If convicted, he faces a maximum penalty of 30 years in prison as to each count of bank fraud, and 20 years in prison as to each count of wire fraud.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Stephanie M. Hinds of the Northern District of California; and Special Agent in Charge Craig D. Fair of the FBI’s San Francisco Field Office; and Special Agent in Charge Weston King of the Small Business Administration’s Office of Inspector General (SBA-OIG) Western Region made the announcement.
The FBI and SBA-OIG are investigating the case.
Trial Attorney Christopher Jackson of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Sarah Griswold of the Northern District of California are prosecuting the case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
California Man Arrested for $3.6 Million Paycheck Protection Program and Economic Injury Disaster Loan FraudRead the Press Release
SAN JOSE –A California man was arrested today on criminal charges related to his alleged scheming to submit fraudulent loan applications seeking millions of dollars in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) COVID-19 relief funds.
According to an indictment returned last week by a federal grand jury in San Francisco and unsealed today, Lebnitz Tran, 40, of San Jose, submitted at least 27 PPP loan applications and at least seven EIDL loan applications on behalf of multiple persons and business entities, using false and fictitious information and documents, including falsified employee information, fictitious or grossly exaggerated payroll figures, and fake tax documents. The indictment alleges that Tran sought in excess of $8 million in PPP and EIDL funds, obtained over $3.6 million in illicit loan proceeds, and ultimately netted approximately $2 million from the scheme. The indictment further alleges that Tran and others used these illicit loan proceeds to make purchases at restaurants and retail stores, make deposits into personal investment accounts, buy cryptocurrency, and, in one instance, to purchase a $100,000 Tesla from a luxury car dealership.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Tran is charged with six counts of wire fraud and three counts of bank fraud. If convicted, he faces a maximum penalty of 30 years in prison as to each count of bank fraud, and 20 years in prison as to each count of wire fraud. The court also may order additional assessments, forfeiture, and restitution; 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.
Acting U.S. Attorney Stephanie M. Hinds of the Northern District of California, Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division, and Federal Bureau of Investigation, Special Agent in Charge of the San Francisco Division Craig D. Fair made the announcement.
The FBI and the Small Business Administration’s Office of Inspector General are investigating the case.
Assistant U.S. Attorney Sarah Griswold of the Northern District of California and Trial Attorney Christopher Jackson of the Criminal Division’s Fraud Section are prosecuting the case.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
Cryptocurrency Fraudster Sentenced for Money Laundering and Securities Fraud in Multi-Million Dollar Investment SchemeRead the Press Release
A Swedish man was sentenced today to 15 years in prison for securities fraud, wire fraud and money laundering charges that defrauded thousands of victims of more than $16 million.
Roger Nils-Jonas Karlsson, 47, pleaded guilty on March 4. According to court documents, Karlsson ran an investment fraud scheme from 2011 until his arrest in Thailand in June 2019. Karlsson induced victims to purchase shares in the scheme called “Eastern Metal Securities” using cryptocurrency such as Bitcoin and other online payment platforms. Karlsson promised victims astronomical returns tied to the price of gold. Instead, the funds provided by victims were transferred to Karlsson’s personal bank accounts, and he then used proceeds to purchase expensive homes, a racehorse and a resort in Thailand. Karlsson’s fraud targeted financially insecure investors, causing severe financial hardship for many of them. Meanwhile, Karlsson went to great lengths to prolong his scheme, including rebranding, offering updates and account statements that provided assurances to the victims of the states of their assets, and offering explanations for the payout delays – including falsely claiming to be working with the Securities and Exchange Commission (SEC).
As part of the sentence, Karlsson was also ordered to forfeit a Thai resort and various other properties and accounts, and issued a money judgment in the amount of $16,263,820. The United States is seeking restitution on behalf of Karlsson’s victims. A restitution order is expected to be entered by the court within 90 days. Victims of Roger Karlsson and Eastern Metal Securities who have not been in contact with the U.S. Attorney’s Office for the Northern District of California are encouraged to submit information as soon as possible. Additional information for victims and a victim form are available at https://www.justice.gov/usao-ndca/united-states-vs-roger-karlsson-and-eastern-metal-securities.
Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Stephanie Hinds of the Northern District of California; and Acting Special Agent in Charge Darrell J. Waldon of the IRS-Criminal Investigation (IRS-CI) Washington, D.C., Field Office made the announcement.
IRS-CI Washington, D.C. Cyber Crimes Unit investigated the case. The Justice Department’s Office of International Affairs, the FBI Legal Attaché Office in Thailand, the IRS-CI Attaché Office in Hong Kong and the Royal Thai Police Crime Suppression Division provided significant assistance. The SEC’s New York Regional Office also provided substantial support.
Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney William Frentzen of the U.S. Attorney's Office for the Northern District of California prosecuted the case. Assistant U.S. Attorney Karen Beausey of the Asset Forfeiture Unit of the U.S. Attorney’s Office handled the forfeiture proceedings, and Victim Specialist Maria Sunga provided support. Law clerks and interns Seamus Lynch, John Paul, Kate Kaplan and Edward Percarpio also provided essential assistance in support of the sentencing.
Cryptocurrency Fraudster Sentenced to 15 Years for Money Laundering and Securities Fraud in Multi-Million Dollar Investment SchemeRead the Press Release
SAN FRANCISCO – Roger Nils-Jonas Karlsson, citizen of Sweden, was sentenced today to 15 years in prison for securities fraud, wire fraud, and money laundering charges that defrauded thousands of victims. The court also ordered the defendant to forfeit several properties in Thailand, including a resort, and a forfeiture money judgment of more than $16 million. The sentence was handed down by the Hon. Charles R. Breyer, U.S. District Judge.
Karlsson, 47, pleaded guilty to the charges on March 4, 2021, without a written plea agreement. According to court documents, Karlsson ran an investment fraud scheme from 2011 until his arrest in Thailand in June 2019. Karlsson induced victims to use cryptocurrency such a Bitcoin and other online payment platforms to purchase shares in a scheme he called “Eastern Metal Securities.” Karlsson promised victims astronomical returns tied to the price of gold. Instead, the funds provided by victims were transferred to Karlsson’s personal bank accounts, and he then used proceeds to purchase personal items including expensive homes, a racehorse, and a resort in Thailand. Karlsson’s fraud targeted financially insecure investors, causing severe financial hardship for many of them. Meanwhile, Karlsson went to great lengths to prolong his scheme, including rebranding, offering updates and account statements that provided assurances to the victims that their assets were secure, and offering explanations for the payout delays – including falsely claiming to be working with the Securities and Exchange Commission. In addition, the government’s filings in the case describe Karlsson’s attempt to launder the proceeds of his fraud by using multiple aliases and shell companies, layering transactions through cryptocurrency wallets and exchanges, and using offshore accounts and properties. The government argued in its sentencing memorandum that Karlsson’s cryptocurrency Ponzi scheme is one of the largest such schemes the government knows to have been sentenced.
“The investigation into Roger Karlsson’s fraud uncovered a frighteningly callous scheme that lasted more than a decade during which Karlsson targeted thousands of victims, including financially vulnerable seniors, to callously rob them of their assets and all to fuel an extravagant lifestyle surrounded by luxury condominiums and lavish international vacations,” said Acting U.S. Attorney Hinds. “The court’s decision to order a 180-month prison term reflects the fact that Karlsson’s cryptocurrency Ponzi scheme is one of the largest to be sentenced to date and ensures that Karlsson now will have plenty of time to think about the harm he has caused to his victims.”
The judge ordered forfeited various Thai resort properties and accounts and issued a money judgment in the amount of $16,263,820. The United States is seeking restitution on behalf of Karlsson’s victims. A restitution order is expected to be entered by the Court within 90 days. Victims of Roger Karlsson and Eastern Metal Securities who have not been in contact with the U.S. Attorney’s Office for the Northern District of California are encouraged to submit information as soon as possible. Additional information for victims and a victim form are available at https://www.justice.gov/usao-ndca/united-states-vs-roger-karlsson-and-eastern-metal-securities.
Acting U.S. Attorney Stephanie Hinds of the Northern District of California; Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; and Acting Special Agent in Charge Darrell J. Waldon of the IRS-Criminal Investigation (IRS-CI) Washington, D.C. Field Office made the announcement.
IRS-CI Washington, D.C. Cyber Crimes Unit investigated the case. The Justice Department’s Office of International Affairs, the FBI Legal Attaché Office in Thailand, the IRS-CI Attaché Office in Hong Kong and the Royal Thai Police Crime Suppression Division provided significant assistance.The Securities and Exchange Commission has filed a separate enforcement action against Karlsson. The announcement of that action can be viewed here.
Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney William Frentzen prosecuted this case. Assistant U.S. Attorney Karen Beausey of the Asset Forfeiture Unit of the U.S. Attorney’s Office for the Northern District of California (USAO) handled the forfeiture proceedings and Victim Specialist Maria Sunga provided support. Seamus Lynch, John Paul, Kate Kaplan, and Edward Percarpio also provided essential assistance in support of the sentencing. The Department of Justice also appreciates the assistance of the Securities and Exchange Commission.
The Securities and Exchange Commission's Office of Investor Education and Advocacy warns investors to scrutinize investment “opportunities” offered through websites purporting to operate advisory and trading businesses related to digital assets. Additional information is available in the SEC’s Investor Alert on the topic. Victims of investment fraud schemes, including those involving cryptocurrency, are encouraged to report their loss to law enforcement.
Former Genentech Principal Scientist and Her Husband Convicted of Crimes Related to Pilfering Corporate SecretsRead the Press Release
SAN FRANCISCO – Former Genentech Principal Scientist Xanthe Lam, and her husband Allen Lam, pleaded guilty to conspiracy and other charges related to the theft of trade secrets from Genentech for use by other companies, announced Acting United States Attorney Stephanie M. Hinds, Internal Revenue Service ̶ Criminal Investigations, Special Agent in Charge Michael Daniels, and Federal Bureau of Investigation, Special Agent in Charge Craig D. Fair. The pleas were accepted by the Honorable William Alsup, United States Senior District Judge.
According to the plea agreements filed yesterday and made public today, both Xanthe Lam and Allen Lam conspired to commit theft of trade secrets by stealing confidential, proprietary, and trade secret information from Genentech. Specifically, starting in 2009, Xanthe Lam, an experienced and accomplished scientist then working at Genentech, and her husband, Allen Lam, worked as a team to purloin confidential information from within Genentech and to pass the information on to a number of scientists working for Genentech’s competitors. For example, beginning in 2013, Xanthe Lam secretly provided Genentech’s high-quality, confidential, intellectual property to help JHL Biotech, Inc., a biopharmaceutical start-up headquartered in Zhubei, Taiwan, with offices in Wuhan, China, and Rancho Santa Fe, Calif., to cut corners, reduce costs, solve problems, save time, and otherwise accelerate product development timelines. Within JHL Biotech, employees were told to refer to Xanthe Lam as “Allen Lam” and email Xanthe Lam using the email address for Allen Lam to conceal the work Xanthe Lam was doing for the company.
In addition to the conspiracy charge, Xanthe Lam pleaded guilty to one count of conspiracy to commit computer fraud and abuse, one count of conspiracy to make false statements to a government agency, and one count of making false statements to a government agency. Allen Lam also pleaded guilty to four counts of filing false tax returns and one count of conspiracy to make false statements to a government agency.
Judge Alsup accepted the Lams’ guilty pleas and ordered the case adjourned until November 9, 2021, at 1:30 p.m.
The court also may order additional assessments, forfeiture, and restitution; 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.
Following nearly three years of cooperation with the government and remedial efforts in connection with its investigation of thefts of trade secrets and wire fraud, JHL Biotech, Inc., now called Eden Biologics, Inc., and Chime Biologics (Wuhan) Co. Ltd., entered into a Non-Prosecution Agreement with the U.S. Attorney’s Office, Northern District of California.
“Defendants Xanthe Lam and Adam Lam have admitted that they used confidential documents and trade secrets stolen from Genentech to aid competitors,” said Acting United States Attorney Hinds. “This United States Attorney’s Office will always aggressively prosecute theft of corporate trade secrets to protect innovation, a crown jewel of our District.”
“Mr. Lam received compensation for his consulting work and failed to report the income he earned for several years on his U.S. Individual Income Tax Return (Form 1040),” said IRS Criminal Investigations, Acting Special Agent in Charge Michael Daniels. “The overarching principle of IRS’ enforcement strategy is simply this: We protect the integrity of the tax system by ensuring everyone pays the right amount of tax.”
“The FBI will not tolerate the stealing of intellectual property and trade secrets to gain an advantage in the private sector,” said FBI Special Agent in Charge Craig D. Fair. “This behavior is contradictory to American values and with our law enforcement partners, we will continue to pursue those who wish to make their profits off the backs of other’s hard work.”
Assistant U.S. Attorneys Sheila A.G. Armbrust, Adam A. Reeves, and Claudia A. Quiroz are prosecuting the case with the assistance of Beth Margen and Morgan Byrne. The prosecution is the result of an investigation by the Internal Revenue Service ̶ Criminal Investigations and the Federal Bureau of Investigation.
Former CEO and COO of JHL Biotech Charged with Conspiracy to Steal Trade Secrets and Commit Wire Fraud Exceeding $101 MillionRead the Press Release
SAN FRANCISCO – Today, the court unsealed an indictment returned by a federal grand jury in San Francisco charging Racho Jordanov, the co-founder and former Chief Executive Office of JHL Biotech, and Rose Lin, another of the company’s co-founders and former Chief Operating Officer, with conspiracy to commit trade secret theft and wire fraud, international money laundering, and related charges including obstruction of justice, announced Acting United States Attorney Stephanie M. Hinds, Internal Revenue Service ̶ Criminal Investigations, Special Agent in Charge Michael Daniels, and Federal Bureau of Investigation, Special Agent in Charge Craig D. Fair.
According to the indictment, in 2012, Raco Ivanov Jordanov, also known as “Racho” Jordanov, 73, of Rancho Santa Fe, Calif., and Rose Lin, also known as Rose Sweihorn Tong, 72, of South San Francisco, Calif., are alleged to have co-founded JHL Biotech, Inc., a biopharmaceutical start-up headquartered in Zhubei, Taiwan, with offices in Wuhan, China, and Rancho Santa Fe, Calif. JHL Biotech is now known as Eden Biologics, Inc. and Chime Biologics (Wuhan), Ltd. The indictment alleges that Jordanov and Lin, beginning as early as 2008, engaged in a fraudulent scheme to steal thousands of confidential and proprietary documents from Genentech that eventually helped JHL Biotech secretly accelerate its development and production of “biosimilars,” or generic versions of Genentech biologics. Some of the confidential documents stolen from Genentech and obtained by Jordanov and Lin allegedly contained trade secrets.
The indictment alleges that, starting in 2009, Lin recruited an experienced and accomplished scientist then working at Genentech and her husband to work as a team to purloin confidential information from within Genentech. Beginning in 2013, Lin and Jordanov allegedly used confidential information from the husband and wife team and other sources to help JHL Biotech cut corners, reduce costs, solve problems, save time, and otherwise accelerate product development timelines, secretly using Genentech’s high-quality, confidential, intellectual property.
In 2014, as alleged in the indictment, Jordanov and Lin supervised and managed a so-called “conversion” project whereby JHL employees converted confidential Genentech standard operating procedures or “SOPs” into JHL Biotech SOPs. For example, JHL employees engaged in the wholesale cutting and pasting of logos from the confidential documents by simply cutting out Genentech logos and pasting in JHL Biotech logos to make the Genentech SOPs appear, falsely, to be JHL Biotech SOPs. JHL Biotech employees allegedly drafted approximately ninety (90) different SOPs using Genentech documents, many of which were confidential and proprietary. JHL Biotech employees maintained a spreadsheet in which they identified Genentech SOPs that JHL Biotech possessed and tracked the progress to convert these into JHL Biotech SOPs. The widespread use of the stolen Genentech SOPs allegedly saved JHL Biotech thousands of dollars.
To profit from the trove of stolen confidential, proprietary, and trade secret information, Jordanov and Lin, according to the indictment, then carried out a scheme to defraud JHL Biotech’s potential investors and strategic partners. To induce investment, and obtain money for JHL Biotech and themselves, Jordanov and Lin allegedly defrauded investors by concealing the extent to which JHL Biotech used stolen intellectual property to start, accelerate, and conduct its business. The indictment alleges that, in late 2016, JHL Biotech entered a strategic partnership with Sanofi S.A., a French multinational pharmaceutical company headquartered in Paris, France, to manufacture and distribute biosimilars in China. As part of the agreement, in December 2016, Sanofi allegedly paid $101 million to JHL Biotech, using foreign and interstate wires to carry out the corporate transaction. This cash payment allegedly was part of a strategic relationship worth potentially $337 million to JHL Biotech. To induce Sanofi’s payment of $101 million in cash, Jordanov allegedly signed representations and warranties that falsely stated that JHL Biotech’s knowledge, research, development, use, and manufacture, of certain biosimilars had been conducted without infringing or misappropriating intellectual property from any third party. Jordanov also allegedly made false and misleading statements about consultants used by JHL Biotech and otherwise concealed from Sanofi the secret work of the Genentech insider for JHL Biotech. In 2019, following the public disclosure of some of the alleged criminal conduct, the value of JHL Biotech, once as high as approximately $916 million, allegedly crashed.
“According to the indictment, JHL Biotech was a nearly $1 billion Taiwanese unicorn built on a foundation of lies,” Acting United States Attorney Hinds stated. “The indictment alleges defendants used confidential documents and trade secrets stolen from Genentech to build a competitor and enrich themselves. This kind of complex intellectual property theft and fraud not only harms victims, it threatens the intellectual property of an industry with strategic importance to the United States. This United States Attorney’s Office will always aggressively prosecute corporate espionage to protect innovation, a crown jewel of our District.”
“The indictment of these two executives alleges the misuse of their positions of trust, within their corporations, to commit financial fraud,” said IRS Criminal Investigation, Acting Special Agent in Charge Michael Daniels. “No matter your career or position we will investigative financial crime wherever it is conducted. We will continue to work with our law enforcement partners to bring this investigation to a thorough and complete conclusion.”
“As alleged in the indictment, the defendants in this case increased their wealth by cutting corners and stealing valuable information from a competitor.” said FBI San Francisco Special Agent in Charge Craig D. Fair. “Rather than excelling at their own scientific research, the defendants instead attempted to excel at theft and fraud.”
The indictment charges Jordanov and Lin with violations of conspiracy to commit trade secret theft and wire fraud, international money laundering, conspiracy to obstruct justice, theft of trade secrets (Jordanov only), and false statements (Lin only). An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face the following maximum statutory sentences:
Raco Ivanov Jordanov
Charge
Maximum Penalties (per count)
Conspiracy to Commit Theft of Trade Secrets and Wire Fraud, 18 U.S.C. § 371
Five years of imprisonment; $250,000 fine; three years of supervised release
Theft of Trade Secrets, Aid and Abet, 18 U.S.C. §§ 1832(a)(1)(2)(3) and 2 (two counts)
Ten years of imprisonment, $250,000 fine, three years of supervised release
Wire Fraud, Aid and Abet, 18 U.S.C. §§ 1343 and 2 (three counts)
Twenty years of imprisonment; $250,000 fine; three years of supervised release
International Money Laundering, 18 U.S.C. § 1956(a)(2)(A) (nine counts)
Twenty years of imprisonment; $500,000 fine; three years of supervised release
Conspiracy to Obstruct Justice, 18 U.S.C. § 371
Five years of imprisonment;
$250,000 fine; three years of supervised release
Rose Lin
Conspiracy to Commit Theft of Trade Secrets and Wire Fraud, 18 U.S.C. § 371
Five years of imprisonment; $250,000 fine; three years of supervised release
Wire Fraud, Aid and Abet, 18 U.S.C. §§ 1343 and 2 (three counts)
Twenty years of imprisonment; $250,000 fine; three years of supervised release
International Money Laundering, 18 U.S.C. § 1956(a)(2)(A) (five counts)
Twenty years of imprisonment; $500,000 fine; three years of supervised release
Conspiracy to Obstruct Justice, 18 U.S.C. § 371
Five years of imprisonment;
$250,000 fine; three years of supervised release
False Statements to a Government Agency, 18 U.S.C. § 1001(a)(2)
Five years of
imprisonment; $250,000 fine; three years of supervised release
The court also may order additional assessments, forfeiture, and restitution; 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.
This morning, Jordanov and Lin made their initial appearances in federal court in San Francisco, where they were arraigned on the indictment and entered pleas of not guilty to all charges. The defendants each were placed on pretrial release with secured bonds in the amount of $1,000 and an agreement to surrender their passports. Jordanov and Lin are next scheduled to appear at 2:00 p.m. on August 24, 2021 for an initial appearance before the Honorable William Alsup, U.S. Senior District Judge.
Assistant U.S. Attorneys Sheila A.G. Armbrust, Adam A. Reeves, and Claudia A. Quiroz are prosecuting the case with the assistance of Beth Margen and Morgan Byrne. The prosecution is the result of an investigation by the Internal Revenue Service ̶ Criminal Investigations and the Federal Bureau of Investigation.
Former San Francisco Building Inspection Commission President Indicted for Bank Fraud, Obstruction of Justice, Aggravated Identity TheftRead the Press Release
SAN FRANCISCO – A federal grand jury indicted Rodrigo Santos yesterday for bank fraud, aggravated identity theft, and obstruction of justice, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
An earlier criminal complaint filed May 11, 2020, against Santos, 61, of San Francisco, alleged that Santos, as the principal and co-founder of the San Francisco-based company Santos and Urrutia Structural Engineers, Inc., engaged in a fraud scheme to obtain and deposit money from his clients into his own bank account and charged him with bank fraud. The complaint also described that Santos was appointed in 2000 to be a member of the San Francisco Building Inspection Commission by Mayor Willie Brown and promoted in 2004 to be the Commission’s President by Mayor Gavin Newsom.
The federal indictment filed yesterday broadened the charges against Santos. The indictment charges ten counts of bank fraud in a scheme that spanned from November 2012 through March 2019. As part of the scheme, the indictment alleges Santos obtained money from clients who wrote checks to pay fees or costs associated with their residential building and construction projects. The indictment asserts that in several instances, Santos manipulated the checks by editing the “pay to the order of” (“payee”) field to make the checks appear to be written to Santos. In other instances, the indictment charges that Santos endorsed the checks to himself without authorization from his clients or the payee indicated on the check, sometimes handwriting the payee’s name on the back of the check’s endorsement field. Santos is alleged to have deposited to his personal bank account approximately 445 such checks written as pay to the order of a third party, totaling $775,412.90.
The indictment also charges two counts of aggravated identity theft, alleging that in February 2017 Santos, while engaging in bank fraud, twice knowingly used the identity of another person without authority.
Lastly, the indictment charges Santos with one count of altering and falsifying records in a federal investigation, alleging that Santos twice submitted altered and false invoices of his company, Santos and Urrutia Structural Engineers, Inc., to the FBI with the intent to obstruct the FBI’s investigation into his bank fraud scheme.
Santos is charged with ten counts of bank fraud, in violation of 18 U.S.C. § 1344; one count of altering or falsifying records in a federal investigation with the intent to obstruct justice, in violation of 18 U.S.C. § 1519; and two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A. If convicted, Santos faces a statutory maximum of 30 years in prison and a $1,000,000 fine for each count of bank fraud; a statutory maximum of 20 years in prison and a $250,000 fine for the obstruction of justice count; and at least two years in prison for a conviction on a count of aggravated identity theft, imposed consecutive to any sentence already imposed on the bank fraud counts. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The charges contained in the indictment are mere allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Santos is scheduled to appear for arraignment on yesterday’s indictment on Tuesday, July 6, 2021, at 10:30 a.m. before the Honorable Alex G. Tse, United States Magistrate Judge. Santos remains out of custody on bond.
This case is being prosecuted by the Special Prosecutions Section of the U.S. Attorney’s Office. The case is being investigated by the FBI. San Francisco City Attorney Dennis Herrera also alleged in a state civil lawsuit unsealed in March 2020 that Santos engaged in check fraud.
Former Bank Vice President and Friend Charged in Insider Trading Securities Fraud ScamRead the Press Release
SAN FRANCISCO – Former Silicon Valley Bank vice president Mounir Gad has agreed to plead guilty to two counts of securities fraud in connection with a scheme to profit by sharing material non-public information regarding the acquisition of companies. The announcement was made by Acting U.S. Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
The Office of the United States Attorney filed an information earlier today charging Gad, 34, of San Jose, and Nathan Guido, 38, of San Jose, with the crimes. According to the information, Gad was a trained investment banking professional who repeatedly received training and guidance about the proper use of material non-public and confidential information. Gad also allegedly received and knew about the prohibitions against the improper use of such information including how the use of such information for personal gain may violate the insider trading laws. According to the information, Gad nevertheless violated the insider trading laws on two occasions. Specifically, in April of 2015 and again in August of 2016, Gad obtained material non-public information through his employer when the bank advised clients about financial matters related to the acquisition of certain companies; Gad allegedly shared the non-public information with Guido, who used the information to execute securities transactions. The information alleges Gad and Guido both personally benefitted from the transactions and shared the profits from the illegal trades.
The information charges Gad and Guido with two counts each of securities fraud, in violation of 15 U.S.C. § 78j(b) and 78ff, 17 C.F.R. §§ 240.10b-5, 240.10b5-1, and 240.10b5-2, 18 U.S.C. § 2.
At an arraignment earlier today before U.S. Magistrate Judge Donna M. Ryu, Gad pleaded not guilty to the charges but informed the court he has signed a written agreement pursuant to which his plea would change to guilty. Gad further informed the court that he is seeking to have the court accept his guilty plea. A change of plea hearing has been scheduled for August 4, 2021, before the Hon. Lucy H. Koh, U.S. District Judge.
Guido also pleaded not guilty to the charges and acknowledged that he entered into an agreement with the government whereby his prosecution by the government will be deferred if he complies with the terms of the agreement.
An information contains allegations only. Gad and Guido are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. If convicted, the maximum statutory penalties for each count of securities fraud is 20 years in prison and a $5,000,000 fine. 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.
The Securities and Exchange Commission has filed a separate enforcement action against Gad and Guido. The announcement of that action can be viewed here.
Assistant U.S. Attorney Sarah E. Griswold is prosecuting this case with assistance from Jessica Leung. The case was investigated by the FBI.
Bureau of Prisons Correctional Officer Charged with Sexual Abuse of A WardRead the Press Release
OAKLAND – Ross Klinger has been charged in a criminal complaint with sexual abuse of a ward, announced Acting U.S. Attorney Stephanie M. Hinds, Department of Justice (DOJ) Office of the Inspector General (OIG) Los Angeles Field Office Special Agent in Charge Zachary Shroyer, and FBI Special Agent in Charge Craig D. Fair.
According to the complaint filed June 25, 2021, and unsealed today, at the time of the offense, Klinger, 36, of Riverside, Calif., was a correctional officer at Bureau of Prisons Federal Correctional Institute Dublin (FCI Dublin), an all-female low security federal correctional institution. As a correctional officer, Klinger had disciplinary authority over inmates incarcerated at FCI Dublin. He received training that inappropriate relationships with inmates, including sexual or financial involvement, were prohibited. According to the complaint, Klinger knowingly had sexual intercourse with at least one inmate while she was incarcerated at FCI Dublin and were under his custodial, supervisory, or disciplinary authority. The complaint further alleges that Klinger was also sexually involved with a second inmate. Klinger told both inmates that he wanted to father their children and that he made plans to marry them. He also gave his victims, and at times their families, either money, gifts, or both.
“Prison officials are given great power over incarcerated individuals and are entrusted to use that power to ensure the care, safety, and control of the people placed under the government’s supervision,” said Acting U.S. Attorney Hinds. “The abuse of these powers echoes through the entire criminal justice system and threatens to compromise the public’s trust in the system’s legitimacy. The allegations in the criminal complaint unsealed today describe a disturbing deviation from the responsibilities of correctional officers. Such an abuse of power will not be tolerated.”
“Correctional Officers wield great power in correctional facilities," said Special Agent in Charge Shroyer. “Klinger allegedly abused his authority to engage in sexual relations with two inmates. Sexual abuse of inmates will never be tolerated.”
“As alleged in the complaint, Klinger took advantage of his role as an officer, entrusted to supervise inmates on behalf of the government, and instead displayed an egregious abuse of power ” said Special Agent in Charge Fair. “The FBI will continue to work with our partners to investigate such violations of the law and hold those responsible accountable.”
The complaint alleges that between April 2020 and October 2020, Klinger repeatedly had sexual intercourse with one of the victims in a storage warehouse at FCI-Dublin. After he transferred to a different BOP prison in San Diego, he allegedly kept in touch with the victim using the alias “Juan Garcia,” and communicated with her via email and video visits. Klinger also gave money to the victim’s mother, and visited her family, including her minor children.
According to the complaint, Klinger also had sexual intercourse with the second victim in a Conex box on FCI Dublin’s campus, while another inmate acted as a lookout. After the victim was released to a halfway house, Klinger remained in contact with her via text message and Snapchat. Klinger visited the victim at the halfway house, where he engaged in sexual intercourse with the victim and proposed to her with a diamond ring.
Klinger is charged with one count of sexual abuse of a ward, in violation of 18 U.S.C. § 2243(b). Klinger was arrested this morning and made an initial federal court appearance in the U.S. District Court for the Central District of California. His first appearance in the Northern District of California has not yet been scheduled.
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, Klinger faces a maximum statutory sentence of 15 years imprisonment, a three-year term of supervised release, and a $250,000 fine. 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. Attorney Molly K. Priedeman is prosecuting the case with the assistance of Kay Konopaske. The prosecution is the result of an investigation by the DOJ OIG and the FBI.
North Bay Accountant Charged with Bank Fraud and Embezzlement in Connection with Alleged Schemes to Defraud Cavallo Point Lodge and Redwood Credit UnionRead the Press Release
SAN FRANCISCO – A federal grand jury has indicted Stephanie Simontacchi on charges of bank fraud, embezzlement, and tax evasion in connection with schemes to use her access as an accountant to enrich herself at the expense of two former employers. The announcement was made by Acting U.S. Attorney Stephanie M. Hinds, Federal Bureau of Investigation Special Agent in Charge Craig D. Fair, and IRS Criminal Investigation Division (IRS-CI) Acting Special Agent in Charge Michael Daniels.
Simontacchi, 48, of Petaluma, was employed as a bookkeeper and assistant controller with Cavallo Point Lodge, a hotel near Sausalito, Calif., from December 2009 through April 2016. While employed at Cavallo Point Lodge, Simontacchi had access to her employer’s accounting records and accounting systems. Simontacchi also had signatory authority over Cavallo Point Lodge’s bank accounts which gave her authority to create and sign checks from the hotel’s bank accounts and to pay the hotel’s legitimate payments and obligations. The indictment alleges that Simontacchi embezzled funds from her employer by stealing accounts receivable checks that had been sent to Cavallo Point Lodge from third parties and depositing the checks into her personal bank accounts. Further, the indictment alleges Simontacchi embezzled accounts payable checks that were drawn from Cavallo Point Lodge’s bank accounts and made payable to third party vendors. Instead of sending these checks to the intended third parties, Simontacchi allegedly deposited them in her own bank accounts. Simontacchi allegedly embezzled at least $384,363.28 from, or owed to, Cavallo Point Lodge and deposited these stolen funds into her own accounts.
In addition, the indictment alleges Simontacchi was employed by Redwood Credit Union from April 2016 through April 2019, during which time she embezzled over $437,000 from the credit union. The financial institution employed Simontacchi as a senior accountant and accounting manager. According to the indictment, Simontacchi’s responsibilities included processing voided official checks (also known as cashier’s checks) and communicating with Redwood Credit Union’s official check vendor regarding issues pertaining to the funding and voiding of these checks. Simontacchi also had access to checks intended for and made payable to Redwood Credit Union that were sent to the accounting department for processing, including reimbursement checks from the official check vendor and reimbursement checks from the United States Treasury Department and the State of California. The indictment alleges Simontacchi embezzled some of these checks, as well as official checks that had been returned to Redwood Credit Union by members and were supposed to have been voided, then deposited the checks into her personal bank accounts. She used the embezzled proceeds for personal expenses, including to make a payment towards her home equity line of credit.
Further, the indictment alleges Simontacchi evaded taxes by failing to pay taxes on additional, unreported income received in years 2015, 2017, 2018, and 2019.
In sum, the indictment charges Simontacchi with seven counts of bank fraud, in violation of 18 U.S.C. § 1344(2); seven counts of misapplication and embezzlement of credit union funds, in violation of 18 U.S.C. § 657; and four counts of tax evasion, in violation of 26 U.S.C. § 7201.
Simontacchi was arrested on June 25, 2021. She made her initial federal court appearance before U.S. Magistrate Judge Tse this morning and was arraigned on the charges. Her next appearance is scheduled for July 15, 2021 before U.S. Federal District Court Judge Orrick.
An indictment contains allegations only. Simontacchi is presumed innocent until proven guilty beyond a reasonable doubt in a court of law. If convicted, the maximum statutory penalties for each violation of 18 U.S.C. § 1344(2) and 18 U.S.C. § 657 is 30 years’ imprisonment and a $1,000,000 fine. The maximum statutory penalty for each violation of 26 U.S.C. § 7201 is 5 years’ imprisonment and a $250,000 fine. 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 Kristina Green and Amani S. Floyd are prosecuting this case. The case was investigated by the FBI and IRS-CI.
Humboldt Man Charged in Federal Court for Being A Felon in Possession of A Loaded Firearm and for Possessing Methamphetamine for DistributionRead the Press Release
San FRANCISCO – Deryl Craig Morse appeared in United States District Court today to face a federal indictment charging him with being a felon who possessed a loaded firearm and also charging him with possessing with intent to distribute 50 grams or more of a mixture or substance containing methamphetamine, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
The indictment alleges that Morse, who is 58 years old and resides in McKinleyville, California, is a convicted felon who on March 10, 2021, possessed a Ruger .357 caliber revolver loaded with six rounds of .357 ammunition. A forfeiture allegation in the indictment asserts the loaded revolver was recovered from Morse’s residence along with more than 50 additional rounds of ammunition. Morse is also charged with possessing on the same date 50 grams or more of a mixture or substance containing methamphetamine with the intent to distribute it.
Morse made his initial appearance in federal court today before United States Magistrate Judge Joseph C. Spero. Morse is out of custody on condition of location monitoring. His next appearance is scheduled for July 14, 2021, for an initial appearance before United States District Judge James Donato.
The indictment charges Morse with possessing with intent to distribute 50 grams or more of a mixture or substance containing a detectable amount of methamphetamine in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(B)(viii). If convicted, Morse faces a mandatory minimum sentence of 5 years in prison and a maximum sentence of 20 years, with a maximum fine of $5,000,000. The indictment also charges Morse with being a felon in possession of a firearm in violation of 18 U.S.C. § 922(g)(1). If convicted of this charge, Morse faces a maximum of 10 years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the Court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
An indictment merely alleges that crimes have been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Ankur Shingal is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Daniel Fuentes and Madeline Wachs. The prosecution is the result of an investigation by the FBI and the Humboldt County Drug Task Force.
Federal Jury Convicts San Jose Man of Methamphetamine Trafficking and Gun ChargesRead the Press Release
Updated as of June 24, 2021.
SAN FRANCISCO – A federal jury today convicted Armando Daniel Calderon of four charges related to methamphetamine trafficking, announced Acting United States Attorney Stephanie M. Hinds and Drug Enforcement Administration (DEA) Special Agent in Charge Wade R. Shannon. The verdict follows a one and a half week jury trial before the Honorable William Alsup, Senior United States District Judge.
Calderon, 35 and most recently known to live in San Jose, was indicted with six co-defendants on October 11, 2018. The superseding indictment charged Calderon with 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), alleged to have occurred 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), alleged to have occurred 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, alleged to have occurred 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), alleged to have occurred on September 25, 2018.
According to the evidence presented to the federal jury at trial, on August 20, 2018, San Jose State University Police Department officers pulled over Calderon’s pickup truck in the vicinity of Keyes Street and South 3rd Street in San Jose. Calderon, who was the driver and sole occupant, had multiple outstanding arrest warrants and was placed under arrest. Officers found $5,363 in cash and six .40 caliber bullets in Calderon’s pants pockets and three bags inside his truck. One bag contained methamphetamine and .40 caliber ammunition, the second contained more methamphetamine, and the third contained a high-capacity pistol magazine loaded with 18 rounds of .40 caliber ammunition. Next to the driver’s seat, officers discovered a .40 caliber pistol loaded with nine rounds of .40 caliber ammunition. Calderon’s truck also contained a drug scale and multiple cell phones. The methamphetamine discovered in Calderon’s truck weighed approximately 1.83 pounds.
Further evidence at trial showed that in September 2018 Calderon conspired with at least one other person to distribute methamphetamine. During that month, Calderon repeatedly spoke on the phone and met in the San Mateo area with a buyer to negotiate the sale of 15 kilograms (33 pounds) of methamphetamine. The negotiations eventually resulted in an agreed-upon price of $4,700 per kilogram of methamphetamine, with a total price of $70,500 for 15 kilograms. Calderon guaranteed the quality of the methamphetamine and agreed to exchange it for additional methamphetamine if the buyer was dissatisfied with the product. On September 25, 2018, Calderon met with the buyer early in the day, ultimately agreeing to deliver the methamphetamine in the parking lot of a Menlo Park shopping center. Later that day, Calderon and two co-defendants were arrested near the shopping center following a short pursuit. Over 989 grams (more than two pounds) of pure methamphetamine was seized by law enforcement at the scene, and another 6,492 grams (over 14 pounds) of pure methamphetamine was seized from a nearby stash house. Agents also located documents bearing Calderon’s name inside the stash house.
Additional evidence at trial showed that on September 25, 2018, prior to his arrest, Calderon secreted methamphetamine inside a red Mustang parked outside the stash house. Law enforcement agents seized the methamphetamine and determined it weighed over 317 grams (over two thirds of a pound).
Senior United States District Judge William Alsup scheduled a sentencing hearing for Calderon on September 14, 2021, at 2 p.m. Calderon remains in custody pending sentencing.
Calderon faces a minimum sentence of 10 years in prison and a maximum of life for each conviction of 21 U.S.C. § 841 and 21 U.S.C. § 846, and a fine of $10,000,000 for each conviction. For his conviction of 18 U.S.C. 924(c), Calderon faces a minimum sentence of 5 years consecutive to any other sentence and a maximum of life, along with a maximum fine of $250,000. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
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.
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 the Drug Enforcement Administration, the San Mateo County Sheriff, the San Mateo County Narcotics Task Force, and San Jose State University Police Department.
Southern California Man Faces Federal Charge for Stealing Endangered Ring-Tailed Lemur from San Francisco ZooRead the Press Release
SAN FRANCISCO - Cory John McGilloway appeared in federal court today and was arraigned on an information charging him with a violation of the Endangered Species Act, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation, Special Agent in Charge Craig D. Fair.
According to the affidavit supporting the information’s warrant, McGilloway, 31 and residing in Los Angeles, is alleged to have entered the San Francisco Zoo on the night of October 13, 2020, and stolen one of the zoo’s four ring-tailed lemurs. The stolen lemur was named “Maki” and was 21 years old at the time.
The affidavit states that on October 15, two days after the theft, a woman reported to the San Francisco Police Department that she had video-recorded a man on Treasure Island the day before walking a lemur on a leash. The video captured images of the lemur and of the man, who had distinctive tattoos and is believed to be McGilloway. The man walked the lemur to a maroon car, according to the allegations, which was identified as a Saab.
Around 5 p.m. on October 15, the affidavit states, a 5-year-old boy spotted the unattended animal at a Daly City playground. Authorities were able to catch and return Maki to the zoo. Maki was hungry, dehydrated, and agitated, according to the affidavit.
McGilloway was arrested in San Rafael shortly before midnight on October 15, the affidavit describes, when police responded to a shoplifting report at the Smart & Final store and found McGilloway driving a stolen sanitary dump truck. The affidavit states that a maroon Saab was parked nearby.
Ring-tailed lemurs (Lemur catta) are native to Madagascar, are listed as an endangered species, and are deemed endangered “wherever found,” under federal regulation 50 C.F.R. § 17.11(h). The charging information contains the photograph of Maki above.
McGilloway is charged in the information with one count of violating the Endangered Species Act, 16 U.S.C. §§ 1538(a)(1)(B) and 1540(b)(1). If convicted, McGilloway faces a maximum sentence of one year in jail and a fine of up to $50,000. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
An information merely alleges that crimes have been committed, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
McGilloway appeared in federal court today before United States Magistrate Judge Jacqueline Scott Corley. McGilloway is currently in custody in Los Angeles, though he is released on bond in the present federal charge. McGilloway’s next scheduled appearance is at 11:00 a.m. on July 22, 2021, for status hearing before United States Magistrate Judge Jacqueline Scott Corley.
Joseph Tartakovsky is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rebecca Shelton. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the San Francisco Police Department.
San Francisco CEO Pleads Guilty to Swindling Banks and Investors Out of More Than $3.5 MillionRead the Press Release
SAN FRANCISCO – Andrew Chapin pleaded guilty today in federal court to wire fraud, bank fraud and securities fraud, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
Chapin, 33, of San Francisco, started a company in Boston that he moved to San Francisco in 2016 and renamed Benja Inc. Chapin was CEO of Benja. Benja was a digital advertising company that provided “shoppable media” by placing digital advertisements for companies with overstocked goods on websites which allowed shoppers to purchase products in the advertisement itself without being redirected to another website.
According to his plea agreement, from June 2019 to September 2020 Chapin was looking for additional investors and lines of credit for Benja. He told creditors and prospective investors that Benja generated $6,200,000 and $13,200,000 in revenue in 2018 and 2019, respectively, and had signed large contracts with numerous well-known national companies to place advertisements for their excess inventory. He admitted today in his plea agreement that he had no contracts with these companies, he falsified Benja’s revenue, and he impersonated corporate representatives, or caused their impersonation, to bolster the appearance of company relationships that did not exist.
Chapin detailed in his plea agreement that he submitted false information about Benja to a victim bank to obtain lines of credit totaling $5,000,000. In one example, Chapin took advances on a line of credit and used the money to pay off creditors and investors as well as his personal credit cards, and he also transferred money to his cryptocurrency exchange account.
Chapin also admitted he made false statements to induce venture capital firms to invest in Benja. His false statements led to investments of $1,000,000 from a venture capital firm and $1,800,000 from a SAFE (simple agreement for future equity) fundraising round from multiple investors. To obtain these investments, he fabricated documents to reflect Benja had millions in revenue and account receivables from companies that never contracted with Benja.
In one example in his plea agreement, Chapin described that on March 23, 2020, he directed a New York venture capital firm to Benja’s virtual data room that displayed a spreadsheet showing Benja’s total 2019 revenue had exceeded $13,000,000 and listed contracts with well-known national sportswear companies that represented more than $7,000,000 of Benja’s total 2019 income. However, Chapin admitted today that Benja had no contracts with the national sportswear companies and that he fabricated the spreadsheet. Chapin further admitted that for reference calls from the venture capital firm, he paid a Benja employee to impersonate a national running shoe company’s representative and instructed another individual to impersonate a national sportswear company’s representative. The venture capital firm relied on these representations and invested $1,000,000 in Benja. Chapin used that money to pay off a creditor.
Chapin also admitted defrauding individual investors. For example, in his plea agreement Chapin stated that in November 2018 he emailed false financial statements to an individual investor reflecting Benja had over $4,000,000 in revenue in 2018. Chapin further told the individual investor that a St. Louis, Missouri, venture capital firm was considering a $1,500,000 investment in Benja, although Chapin already knew the firm had declined to invest in Benja. Chapin also had a person impersonate the St. Louis venture capital firm’s manager during a reference call with the individual investor. In the call, the impersonator told the individual investor that a third party had verified Benja’s financials and had also made customer reference calls about Benja that were positive. Chapin admitted he then provided false contact information for the St. Louis venture capital firm’s manager that allowed Chapin – not the venture capital firm’s manager – to respond to the individual investor’s questions about Chapin’s shareholder agreement. The individual investor signed the shareholder’s agreement, purchasing 1,278 shares of common stock in Benja for $100,000. Chapin admits he used that money to pay personal credit card bills and to transfer the funds to his personal bank and cryptocurrency exchange accounts.
Chapin agreed in his plea agreement that from June 2019 through September 2020, the total loss amount attributable to his fraud scheme exceeded $3,500,000.
Chapin was originally charged by federal complaint on November 23, 2020, and later by information on May 27, 2021. He pleaded guilty today before United States District Judge Maxine M. Chesney to bank fraud in violation of 18 U.S.C. § 1344, wire fraud in violation of 18 U.S.C. § 1343, and securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff, and 17 C.F.R. § 240.10b-5. He remains out of custody on bond.
Chapin’s sentencing hearing is scheduled for October 6, 2021, before United States District Judge Maxine M. Chesney in San Francisco. For bank fraud under 18 U.S.C. § 1344, Chapin faces a maximum sentence of 30 years imprisonment and a fine of $1,000,000. For wire fraud under 18 U.S.C. § 1343, he faces a maximum sentence of 20 years imprisonment and a fine of $250,000. For securities fraud under 15 U.S.C. § 78j(b) and 78ff, and 17 C.F.R. § 240.10b-5, he faces a maximum sentence of 20 years imprisonment and a fine of $5,000,000. 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.
The case is prosecuted by the Corporate Fraud Strike Force of the U.S. Attorney’s Office. The prosecution is the result of an investigation by the Federal Bureau of Investigation. The United States Attorney’s Office and the Federal Bureau of Investigation thank the San Francisco Regional Office of the Securities and Exchange Commission, which conducted a parallel investigation.
Two South Bay Residents to Face Securities Fraud Charges While A Third Defendant Pleads GuiltyRead the Press Release
SAN FRANCISCO –The office of the United States Attorney for the Northern District of California has filed securities fraud charges against Benjamin J. Wylam and Nathaniel A. Brown in connection with the illegal use of insider information obtained from Sunnyvale-based technology company Infinera Corporation. Each defendant was charged in a separate criminal information filed today. In related proceedings, Naveen Sood has pleaded guilty to one count of securities fraud for engaging in transactions in Infinera securities after receiving material nonpublic information about the company. That guilty plea was made public today.
One criminal information was filed against Brown, 49, of San Jose. According to the Brown information, the defendant was a Senior Revenue Manager employed in Infinera’s finance organization from 2011 to 2017. During the period April 2016 through November 2017, Brown allegedly used deceptive or improper means to collect confidential information related to Infinera’s financial performance and financial projections. Once in possession of the nonpublic information, Brown allegedly used the messaging service WhatsApp, among other means, to share the information with an individual Brown knew would use it to execute securities transactions in Infinera stock.
Another criminal information was filed today against Wylam, 42, of San Jose. The Wylam information alleges that during the period April 2016 through November 2017, Wylam used WhatsApp, among other means, to receive confidential information from another individual about Infinera’s financial performance and financial projections. Wylam allegedly knew when he received the information that it had been obtained through deceptive or improper means but nevertheless used the information for his own use while executing securities transactions in Infinera stock. The Wylam information contains a forfeiture allegation seeking a money judgment of $999,000, alleging that that amount constitutes or is derived from proceeds that Wylam obtained as a result of the criminal violation.
On March 31, 2021, Sood, 49, of Campbell, Calif., signed a written agreement in connection with submitting his guilty plea. The plea agreement was accepted by the Honorable Edward M. Chen, United States District Judge, and today, the agreement was unsealed. According to the plea agreement, Sood admitted that he socialized with two individuals, one of whom he knew regularly had access to confidential information about Infinera’s quarterly financial results and financial prospects before that information became available to the public. In the plea agreement, Sood refers to the individuals as Individual 1, to whom Sood owned a debt in April of 2016 of more than $100,000, and Individual 2, who Sood concluded was an employee of Infinera and was the source of the confidential information. Sood acknowledged that in the spring of 2016, Individual 1 presented him with what was described as an opportunity to get cash to pay off the $100,000 debt by trading in Infinera stock. Individual 1 divulged that Infinera was going to report lower-than-expected revenues for the quarter. In addition, Sood admitted that thereafter, Individual 1 regularly provided him with material nonpublic information about Infinera and, over time, the material nonpublic information he received became more detailed. For example, in August of 2017, Individual 1 informed Sood via WhatsApp that Infinera was going to report actual revenues of $176.8 million and projected revenues of $188 million for the second quarter and third quarter of 2017, respectively. Knowing that these figures fell short of Wall Street analysts’ expectations, Sood purchased put options in Infinera prior to its earnings announcement and later sold the options for a profit of $36,455. Sood admitted that he used his own and another person’s brokerage accounts to execute trades based upon material nonpublic information and that he acquired no less than $215,000 in criminal proceeds from the violations of the law described in the plea agreement.
In sum, Brown, Wylam, and Sood each were charged with one count of securities fraud, in violation of 18 U.S.C. § 1348. The informations contain allegations only; Brown and Wylam are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. If convicted, Brown and Wylam face the same maximum statutory penalties as Sood; the maximum statutory penalties for a violation of 18 U.S.C. § 1348 is 25 years in prison and the greater of either $250,000 or twice the gross gain made from the offense. 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.
The next federal court appearance scheduled for Brown is on June 16, 2021, for arraignment and additional proceedings. The next federal court appearance scheduled for Wylam is on June 23, 2021, for arraignment and additional proceedings. The next federal court appearance scheduled for Sood is September 8, 2021, for a status conference.
The Securities and Exchange Commission has filed a separate enforcement action against Brown, Wylam, Sood, and three others. The announcement of that action can be viewed here.
Assistant U.S. Attorney Kyle Waldinger is prosecuting the case with assistance from Kathy Tat. This case was investigated by the FBI. The Department of Justice appreciates the assistance of the Securities and Exchange Commission.
Former Mountain View Resident Christopher Doyon Apprehended in Mexico and Returned to the United StatesRead the Press Release
SAN JOSE - Christopher Doyon appeared today in federal court to face an indictment charging him with failure to appear, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
According to the indictment filed in 2012, Doyon, 56, formerly of Mountain View and now a resident of Mexico City, Mexico, failed to appear at a February 2, 2012, status conference after being placed on pretrial release in a 2011 criminal case. The status conference was set in case number 11-683 when Doyon was ordered to appear before United States District Judge Lowell D. Jensen in United States District Court for the Northern District of California.
Doyon was indicted on September 21, 2011, for conspiracy to cause intentional damage to a protected computer and intentional damage to a protected computer, aiding and abetting. According to the 2011 indictment, Doyon participated in a Distributed Denial of Service (DDoS) attack against Santa Cruz County’s computer servers on Dec. 16, 2010, that caused Santa Cruz County’s website to go offline. A DDoS attack is an attempt to render computers unavailable to users by saturating the target computers or networks with external communication requests, thereby denying service to legitimate users. The indictment further alleges that the People’s Liberation Front (PLF) coordinated and executed the attack. The PLF is associated with other hacking groups such as Anonymous.
According to the 2011 indictment, the December 2010 DDoS attack was orchestrated as part of “Operation Peace Camp 2010” in retaliation for the enforcement of certain camping policies. The City of Santa Cruz enacted Section 6.36.010 of its Municipal Code, entitled “Camping Prohibited,” which contained restrictions and definitions on camping within Santa Cruz City. In response to the legislation, protesters occupied the Santa Cruz County Courthouse premises from approximately July 4, 2011 to Oct. 2, 2011. Law enforcement officers from Santa Cruz County disbanded the protest and several protesters were charged with misdemeanor crimes in Santa Cruz County. In retribution for Santa Cruz City’s enforcement of Section 6.36.010 of the Municipal Code, and Santa Cruz County’s disbandment of the protest, the PLF coordinated and executed a DDoS attack against Santa Cruz County’s computer servers. The County of Santa Cruz, Calif., maintained a website on the Internet allowing for access to the government’s entities and programs, including Emergency Services, Law Enforcement, the Courts, Social Services, Agricultural Extension, Employment, Surplus Sales, Vendor Registration, and Construction Projects and Proposals. According to the 2011 indictment, as part of Operation Peace Camp 2010, Doyon and others allegedly conspired to intentionally damage the protected computers hosting the website for the County of Santa Cruz. Doyon was arraigned on the conspiracy and intentional damage charges and was released pending trial. Doyon then failed to appear for further court proceedings.
On June 11, 2021, Doyon was arrested by Mexican immigration authorities and deported to the United States. On June 12, 2021, he was arrested by the Federal Bureau of Investigation. Today he appeared before Magistrate Judge Donna Ryu and was detained pending further proceedings. Defendant's next appearance is scheduled for June 15, 2021, before Magistrate Judge Ryu for arraignment and identification of counsel.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
With respect to the 2012 indictment, the maximum statutory penalty for failure to appear after pre-trial release, in violation of 18 U.S.C. § 3146(a)(1), is two years’ imprisonment, $250,000 fine, and three years of supervised release. With respect to the 2011 indictment, the maximum statutory penalty for conspiracy to cause intentional damage to a protected computer in violation 18 U.S.C. § 1030(b) is five years’ imprisonment, three years of supervised release and a fine of $250,000, plus restitution if appropriate. The maximum statutory penalty for causing intentional damage to a protected computer and aiding and abetting in violation 18 U.S.C. §§ 1030(a)(5)(A), (c)(4)(A)(i)(I), (c)(4)(B)(i) & 2 is 10 years’ imprisonment, three years of supervised release and a fine of $250,000, plus restitution if appropriate. In the case of both indictments, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The San Jose Branch Office is handling is case. The prosecution is the result of an investigation by the Federal Bureau of Investigation with assistance from the FBI Mexico City legal attache; the Cellular Analysis Survey Team Unit, CID; Mexico City Task Force (which consists of agents from the Mexican Agencia de Investigación Criminal); Mexican State Police and Prosecutors in the State of Morelos (Fiscalia General del Estado de Morelos, Unidad Especializada Contra el Secuestro y Extorsión) and Mexican Immigration (Instituto Nacional de Migración); Interpol; U.S. Department of Homeland Security, Customs and Border Protection, Mexico City Office; and United States Department of State, Office of American Citizen Services, Mexico City office.