Northern District of California
Press releases recorded for this federal judicial district.
Oakland Woman Charged in Million Dollar Scheme to Defraud Pandemic Relief Programs for Struggling BusinessesRead the Press Release
OAKLAND – Christina Burden was arrested today on a federal criminal complaint charging her with bank fraud in connection with a scheme to illegally obtain more than $4.5 million in pandemic relief loans, announced United States Attorney David L. Anderson; Treasury Inspector General for Tax Administration J. Russell George; Federal Bureau of Investigation, Special Agent in Charge Craig D. Fair; and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Michael Daniels.
Christina Burden, 31, of Oakland, is charged in the complaint with one count of committing bank fraud on or about June 20, 2020, when she applied for and later received $684,375 in a forgivable loan from the government’s Paycheck Protection Program (PPP) for her shell entity “Blessing Box Co LLC.” The complaint further describes a scheme in which Burden submitted nine other fraudulent applications for PPP loans between April and June of 2020, one of which resulted in her receiving an additional $307,916 in PPP funds. In total, Burden attempted to obtain over $4.5 million in PPP forgivable loans for four different shell entities.
During this time, Burden also submitted one fraudulent Economic Injury Disaster Loan Program (EIDL) application for one of the same shell entities, for which she received $150,900 in funds. The four entities had recently been created by Burden, according to the complaint, and do not appear to engage in any legitimate business nor to have any employees. Loan applications for both PPP and EIDL loans are required to be certified by the applicant as true, and the criminal complaint describes how Burden’s applications contained false information and misleading statements as well as doctored bank statements and fictitious tax forms.
Burden ultimately obtained a total of over $1 million in fraudulent pandemic relief loans, including almost $1 million in PPP funds. The PPP requires that its funds be used for legitimate business and payroll expenses, and the complaint describes how Burden spent the bulk of the loan money on personal indulgences, including private jet travel, hotel stays, boat rentals, expensive automobiles, luxury goods purchased from Louis Vuitton and Neiman Marcus, and specialty items purchased from the Sunglass Hut and the San Francisco Giants Dugout Store.
“The Paycheck Protection Program provides a financial lifeline to needy businesses and their employees,” said U.S. Attorney Anderson. “We allege that Christina Burden obtained PPP funds by fraud, submitting false business information, false employee numbers, false bank statements, and false tax returns. She used those funds for a spending spree on entertainment, luxury goods, and high end excursions, including travel by private jet.”
“The Treasury Inspector General for Tax Administration aggressively pursues those who endeavor to defraud taxpayer-funded Coronavirus Aid, Relief, and Economic Security Act programs, which were established to provide assistance to American business owners during these unprecedented times,” said J. Russell George, the Treasury Inspector General for Tax Administration. “We appreciate the efforts of the U.S. Department Justice and our law enforcement partners in this effort.”
“As we begin a second round of PPP loans for small businesses who are struggling during this pandemic, we will be on alert for fraudsters who seek to take advantage of the program,” said FBI San Francisco Special Agent in Charge Craig Fair. “Those who wish to defraud programs designed to help those in need should know that the FBI and our partners will pursue every investigative tool available to us to ensure the integrity of those programs and that they remain available to our community’s small business owners.”
“Christina Burden allegedly used fraudulently obtained funds from the Paycheck Protection Program and Economic Injury Disaster Loan program to unjustly enrich herself. According to the criminal complaint, she submitted false documents and records to banks showing that she had employees, paid wages to those employees, and paid employment tax payments to the IRS – none of which is true,” said Michael Daniels, Acting Special Agent in Charge of IRS Criminal Investigation's Oakland Field Office. “IRS-CI is proud to work with our law enforcement partners by lending our expertise in complex financial cases like this one.
As outlined in the complaint, the PPP is administered by the U.S. Small Business Administration (SBA) as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act is a federal law enacted in March 2020 to provide emergency financial assistance to the millions of Americans suffering from the economic effects caused by the COVID-19 pandemic. PPP loan proceeds must be used by the business on certain permissible business expenses, including payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on a PPP loan to be entirely forgiven if the business spends the loan proceeds on these business expense items within a designated period of time and uses at least 60% of the PPP loan proceeds on payroll expenses. Loans made through the PPP are 100% guaranteed by the SBA.
Similarly, the EIDL Program provides low-interest non-forgivable loans to small businesses, among others, in regions affected by disasters. In March 2020 the President of the United States extended the availability of EIDL funds to all states and territories due to the magnitude and severity of the COVID-19 pandemic.
According the complaint, Burden’s loan applications contained multiple false statements certified as true. Among those, Burden falsely affirmed that each business was in operation before February 15, 2020, and her businesses had up to 89 employees and monthly payroll expenses of over $700,000. The complaint alleges, however, that the entities’ tax records reveal that none of them paid payroll taxes nor submitted any payroll tax forms. Bank records submitted in Burden’s applications as evidence of the four shell entities’ payroll expense payments were revealed to be doctored when compared against the actual bank records, per the complaint’s allegations.
The complaint lastly alleges that once Burden received the funds, she did not use the money to pay allowable PPP business expenses but instead spent it on personal indulgences: $184,000 on airfare, private jet travel, and hotel expenses; $124,000 on luxury purchases from Louis Vuitton and Neiman Marcus as well as purchases from Nordstrom, the San Francisco Giants Dugout Store, Sunglass Hut, Tumi, and Wayfair; $16,000 on boat and car rentals; and $14,000 on various restaurant and entertainment expenses, among other purchases. In addition, the complaint alleges Burden wired hundreds of thousands of dollars to friends and family, $150,000 of which was spent in part on Mercedes and Land Rover vehicles.
The charges in the complaint are merely allegations and the defendant is presumed innocent unless proven guilty in a court of law.
Burden is charged with one count of bank fraud, in violation of 18 U.S.C. § 1344. Burden faces a maximum penalty of 30 years in prison and a one million dollar fine, if convicted. 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.
Burden was arrested this morning in Austin, Texas. Her initial appearance in United States District Court will be in the Western District of Texas on Monday, February 8, 2021, before United States Magistrate Judge Mark Lane, who sits in Austin. It is anticipated that Burden will be ordered at that hearing to appear in the United States District Court in Oakland, California, to face the charge in the federal complaint. The date for her initial appearance in Oakland federal court is as yet unscheduled.
Abraham Fine is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kay Konopaske and Laurie Worthen. The prosecution is the result of an investigation by TIGTA, IRS-CI, and the FBI.
Napa Man Charged with Possession of Five Pipe BombsRead the Press Release
SAN FRANCISCO – Ian Benjamin Rogers was charged yesterday in a federal criminal complaint with possessing five pipe bombs that were unregistered destructive devices, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
“We allege that Ian Benjamin Rogers possessed homemade pipe bombs and the materials to make more,” said U.S. Attorney Anderson. “We draw a bright line between lawlessness and our constitutional freedoms. We will prosecute illegal weapons stockpiles regardless of the motivation of the offender.”
“The FBI’s Joint Terrorism Task Force, the Napa County Sheriff’s Office, and the Napa Special Investigations Bureau discovered five pipe bombs and other explosive material during our joint investigation,” said FBI Special Agent in Charge Craig D. Fair. “The FBI investigates all credible threats, and our highest priority is ensuring public safety. We urge the public to remain vigilant. We need the community’s support in reporting threatening behavior and suspicious activity to local law enforcement or the FBI.”
The criminal complaint alleges that Rogers, 43, of Napa, possessed five pipe bombs discovered by law enforcement officers and agents during a search of his business on January 15, 2021. The complaint states that on that date, Rogers was arrested and a search warrant was served on Roger’s home and business in Napa County. Upon his arrest, at Roger’s business officers found a large gun safe. Inside the safe, the officers and agents discovered and seized several guns and the five pipe bombs. They also identified other materials at the scene that could be used to manufacture destructive devices, including black powder, pipes, endcaps, and manuals, including The Anarchist Cookbook, U.S. Army Improvised Munitions Handbook, and Homemade C-4 A Recipe for Survival.
At least 49 guns were seized from Roger’s home and business along with thousands of rounds of ammunition. Officers and agents also discovered a sticker on Roger’s vehicle window that is commonly used by so-called “Three-Percenters,” people who ascribe to extreme anti-government, pro-gun beliefs.
Rogers was arrested on January 15, 2021, and appeared in Napa County state criminal court on state illegal firearm charges. He is being held in state custody in lieu of a $5 million bail as he awaits a preliminary hearing. Federal prosecutors intend to seek Rogers’s appearance in federal court on the charges in the complaint upon the issuance of a federal order to transfer Rogers to the United States District Court in San Francisco. The date of such appearance has not yet been set.
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.
Rogers is charged with unlawful possession of unregistered destructive devices, in violation of 26 U.S.C. §§ 5861(d), 5845(a)(8), and 5845(f). If convicted, the charge carries a maximum penalty 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 imposition of a sentence, 18 U.S.C. § 3553.
The United States Attorney’s Office Special Prosecutions Section is prosecuting the case. The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Napa County Sheriff’s Office, and the Napa Special Investigations Bureau.
San Francisco Resident Ordered to Return Stolen Cryptocurrency and Cash to Victims of Multi-Million Dollar Cryptocurrency FraudRead the Press Release
SAN JOSE – Jerry Ji Guo was sentenced today for his role is a scheme to defraud his clients of cash and cryptocurrency in connection with an initial coin offering, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. Guo was ordered to pay $4,392,636.14 in restitution, and was sentenced to a term of six months in prison. The sentence was handed down by the Honorable Beth Labson Freeman, U.S. District Judge.Guo, 33, of San Francisco, pleaded guilty to the charge on August 26, 2019. In pleading guilty, Guo admitted he represented himself as an initial coin offering consultant and promised his clients he would perform marketing and publicity services. Rather than perform these services, Guo embezzled the clients’ cash and cryptocurrency.
“Some criminals believe mistakenly that cryptocurrency is beyond the reach of law enforcement,” said U.S. Attorney Anderson. “This case shows we can use criminal forfeiture to compensate fraud victims even when cryptocurrency is used in the fraud.”
“The FBI is tasked with pursuing crimes and the various means and methods that criminals use to commit those crimes,” said FBI San Francisco Special Agent in Charge Craig D. Fair. “In the financial sector, cryptocurrency has emerged as a significant threat as it affords criminals with a space to conduct activity that is particularly difficult to trace and detect,” he said. “In this case, the FBI relied upon partners in the private sector to respond appropriately to legal process so the FBI could make efforts to locate and seize stolen cryptocurrency.”
A federal grand jury indicted Guo on November 15, 2018, charging him with eight counts of wire fraud, in violation of 18 U.S.C. § 1343. Guo pleaded guilty to one count and the remaining counts were dismissed.
In addition to pleading guilty, Guo agreed to cooperate with the government in the identification and return of property through the forfeiture process. On November 14, 2019, the government obtained a stipulated application for a preliminary order of forfeiture. Further, the government obtained warrants to seize the stolen cash and cryptocurrency, and on February 26, 2020, obtained a final order of forfeiture against the stolen property. Accordingly, the government now is in a position to return the stolen property to the victims.
According to papers filed by the government, the current value of the cash and cryptocurrency is now estimated to be more than $20 million. The Money Laundering and Asset Recovery Section, a component of the Department of Justice’s Criminal Division in Washington, D.C., will use the victim restoration process to return stolen property to victims.
In addition to the prison term and restitution, Judge Freeman also sentenced the defendant to a three-year period of supervised release.
Assistant United States Attorneys Daniel Kaleba and Chris Kaltsas prosecuted the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the FBI.
Tenderloin Drug Dealer Sentenced to over 11 Years in Prison for Possessing A Firearm in Furtherance of Drug TraffickingRead the Press Release
SAN FRANCISCO – Jontae Carlos Sandifer was sentenced today to 138 months in prison for possessing a firearm in furtherance of a drug trafficking crime, possession with the intent to distribute heroin, and being a felon in possession of a firearm and ammunition, announced United States Attorney David L. Anderson and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Patrick Gorman. The sentence was handed down by the Honorable Vince Chhabria, United States District Judge.
Sandifer, 40, of Patterson, California, pleaded guilty to the charges on March 10, 2020. As part of the guilty plea, Sandifer admitted in a plea agreement that on August 12, 2019, he was in an argument with a man in the Tenderloin neighborhood of San Francisco and pulled a semiautomatic handgun out of the trunk of his car. He fired one shot across Leavenworth Street in the man’s direction. The bullet missed the man. Sandifer further admitted that he possessed twenty-five plastic twists of heroin found in his nearby parked car and that he intended to distribute that heroin. Sandifer also admitted that he possessed fourteen additional rounds of ammunition with the pistol he fired and that he possessed the weapon and ammunition to further his intended heroin distribution. In addition, Sandifer admitted he knew he previously had been convicted of multiple felony offenses which made it illegal for him to possess firearms or ammunition.
The government filed a sentencing memorandum asserting additional facts providing a broader description of Sandifer’s crimes. The government stated Sandifer fired the shot toward the man at approximately 6:45 p.m. while the man was crossing the street near the corner of Leavenworth Street and Golden Gate Avenue, a time when pedestrians were passing by. The bullet missed the man and all the passers-by, and it struck a building. Inside the building, children were practicing for an upcoming play. The building where the children were practicing is the home of a non-profit tutoring facility for under-resourced students and, according to the government, the bullet struck the outside and narrowly missed hitting the ground floor window. The government’s memorandum further describes that Sandifer left the scene immediately but police shortly detained him. The police located and searched his parked car.
“The Tenderloin belongs to the families, businesses, workers, and others who are fostering a community in this wonderful neighborhood,” said U.S. Attorney Anderson. “For too long drug dealers and users have descended on the Tenderloin as a convenient place to commit their crimes. The Tenderloin desperately needs vigorous prosecutions to carry forward the work of professional law enforcement. We will continue to do all we can in federal court.”
“ATF is committed to making the Tenderloin a safer place for everyone,” said Special Agent in Charge Gorman, San Francisco Field Division, ATF. “Protecting the public is at the core of ATF’s mission. The San Francisco Field Division will continue to work diligently with our partners to eradicate the illegal possession and use of firearms. This investigation is an example of the dedication and importance ATF and our partners place in honoring our commitment to this community.”
A federal grand jury indicted Sandifer on October 10, 2019. He was charged with possession with intent to distribute heroin, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C); possessing a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c)(1)(A); and being a felon in possession of a firearm and ammunition, in violation of 18 U.S.C. § 922(g). He pleaded guilty to all counts. Sandifer has been in custody since August 12, 2019, and will begin serving his sentence immediately.
In addition to the prison term, United States District Judge Chhabria also ordered Sandifer to serve a three-year period of supervised release.
Assistant U.S. Attorney Noah Stern is prosecuting the case with the assistance of Marina Ponomarchuk and Ralph Banchstubbs. The case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the San Francisco Police Department.
This investigation and prosecution is part of the Federal Initiative for the Tenderloin, a multi-agency effort spearheaded by the U.S. Attorney’s Office focusing on fighting crime in the Tenderloin neighborhood of San Francisco.
Michigan Man Indicted for Multi-Million Dollar N95 and N99 Mask FraudRead the Press Release
SAN FRANCISCO – The United States Attorney’s Office for the Northern District of California filed an indictment charging defendant Rodney L. Stevenson II with wire fraud, mail fraud, and money laundering for his operation of an e-commerce site that claimed to have N95 masks for sale during the current COVID-19 epidemic, announced United States Attorney David L. Anderson, U.S. Postal Inspector in Charge Rafael E. Nuñez, and Federal Bureau of Investigation Special Agent in Charge Craig Fair. Stevenson was previously arrested and charged via criminal complaint.
According to the indictment, Stevenson operated EM General, a Michigan limited liability company created in September 2019, which purported to sell N95 masks with N99 filters. At the onset of the COVID-19 pandemic in February 2020, EM General and its website, controlled by Stevenson, advertised that it had N95 masks “in stock” and available for shipping. EM General sold many of these masks for as much as $24.95 each. Also according to the indictment, to bolster the legitimacy of EM General, Stevenson created a professional-looking website that included the names, backstories, and stock photographs of a group of fake EM General executives. It also falsely described how long the company had been in business, its sales volume, and its reputation. Stevenson also used fictitious names in emails to customers.
The indictment alleges that, as the pandemic worsened and demand for N95 masks increased dramatically, EM General’s sales skyrocketed. EM General’s total sales from approximately on or about February 11, 2020, to approximately on or about March 8, 2020, were approximately $3,500,000 involving over 25,000 customers, the vast majority of which were sales of N95 masks that were never delivered to customers. This amount included over $900,000 in sales on February 28, 2020, alone.
According to the indictment, Stevenson and EM General delivered almost none of the masks. Instead, when customers complained and asked for refunds, Stevenson, at times communicating with Gmail accounts he created under the names of fake identities, generally refused to refund customers and instead offered a series of lies to fraudulently prolong his scheme while he continued selling masks. These lies included that EM General could not offer refunds because it had already paid for the customer’s order from a manufacturer, that products would ship soon, and that customers would receive tracking orders soon. For a small number of customers, Stevenson eventually fraudulently substituted masks that did not meet the standards set by the National Institutes of Occupational Safety and Health for N95 or N99 masks, meaning that they did not filter out 95 or 99 percent of particulate matter from the air.
Stevenson is charged with nine counts of wire fraud, in violation of 21 U.S.C. § 1343; one count of mail fraud, in violation of 18 U.S.C. § 1341; five count of laundering of monetary instruments, in violation of 18 U.S.C. § 1956(a)(1)(A)(i); and one count of money laundering, in violation of 18 U.S.C. § 1957.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of 20 years of prison, 5 years of probation, and a fine of $250,000 for each count of wire fraud or mail fraud, and a maximum sentence of 10 years of prison, 3 years of probation, and a fine of $250,000 for each count of laundering of monetary instruments or money laundering. 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.
Stevenson was charged by criminal complaint with one count of wire fraud on April 22, 2020. He is currently scheduled for arraignment on the indictment on January 15, 2021, before Alex Tse, U.S. Magistrate Judge.
The case is being prosecuted by the Special Prosecutions Section the United States Attorney’s Office for the Northern District of California.
San Mateo Man Charged with Distribution of Child PornographyRead the Press Release
SAN FRANCISCO - A federal grand jury in San Francisco indicted Christian Guardado on one count of the distribution of child pornography, announced United States Attorney David L. Anderson and Homeland Security Investigations NorCal Special Agent in Charge Tatum King. Guardado made his initial appearance in federal court on the indictment yesterday.
According to the indictment, Guardado, 24, of San Mateo, is alleged to have distributed a video on or about February 21, 2019, of a minor engaged in sexually explicit conduct.
The government filed a motion, now unsealed, to detain Guardado in custody pending trial. In the motion, the government asserts that Guardado sexually abused a 15 year old male victim during the fall of 2018 and filmed video of the minor victim engaged in sex acts. The government alleges Guardado distributed one of the videos to another adult male, then followed up with the message, “This is some other 15 year old.” The government also alleges Guardado filmed a pornographic video with at least one other suspected underage male victim and sent it to another person in exchange for payment.
The government further states that Guardado traveled to Spain in part because of Spain’s lower age of sexual consent than the United States.
The government also asserts that Guardado contacted other suspected minor victims online on social media applications and that he formerly was associated with a children’s camp.
Investigators are asking anyone who has further information about Christian Guardado or his activities that may be relevant to this case to call Homeland Security Investigations tip line at (866) 347-2423.
Guardado has been charged with distribution of child pornography, in violation of 18 U.S.C. 2252(a)(2). Defendant was arrested on Friday, January 8, 2021, and made his initial appearance in federal court yesterday in San Francisco before United States Magistrate Judge Alex G. Tse. Defendant is currently being held at Santa Rita Jail pending a detention hearing scheduled for January 14, 2021, before United States Magistrate Judge Alex G. Tse.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted on the distribution of child pornography charge, the defendant faces a minimum sentence of five years imprisonment, a maximum sentence of 20 years imprisonment, a supervised release term of five years, a fine of $250,000, a special assessment of $100, possible criminal 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.
Yoosun Koh is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Jasmine Sanders and Daniel Fuentes. The prosecution is the result of an ongoing investigation by Homeland Security Investigations NorCal and the San Mateo Police Department.
Convicted Hacker Charged with Fraud and Identity Theft Committed While Incarcerated in Federal PrisonRead the Press Release
SAN FRANCISCO - A federal complaint was unsealed today charging Ardit Ferizi with wire fraud and aggravated identity theft, announced United States Attorney David L. Anderson and Federal Bureau of Investigation, Special Agent in Charge Rachel L. Rojas, of the Jacksonville, Florida, FBI Division.
Ardit Ferizi, 25, a Kosovo citizen, last resided in Malaysia before being brought to the Eastern District of Virginia (EDVA) in 2016 to face federal criminal charges. Ferizi pleaded guilty to unauthorized access of computer information and to providing material support to a foreign terrorist group by providing personally identifiable information of United States government personnel to the Islamic State of Iraq and al-Sham (ISIS). He was sentenced to 20 years incarceration in the federal Bureau of Prisons.
According to the complaint, Ferizi’s sentence was reduced in December 2020 to time-served, plus 10 years of supervised release to be served in Kosovo, following the granting of a motion for compassionate release by an EDVA federal judge. Ferizi was awaiting deportation when the FBI determined he continued his criminal activities and had committed multiple new federal offenses while incarcerated at the Federal Correctional Institute in Terre Haute, Indiana.
“We allege Ferizi provided access to personal information of U.S. citizens, even as he was serving his prison sentence for providing similar information to ISIS,” said U.S. Attorney Anderson. “Ferizi’s alleged criminal conduct continued in prison notwithstanding his petition for an early prison release.”
"Ardit Ferizi is an admitted criminal who endangered the lives of over 1,000 Americans by sharing their personal information with members of a dangerous terrorist organization," said Special Agent in Charge Rojas, in charge of the FBI Jacksonville Division. “The FBI has never wavered in our commitment to seek justice for his innocent victims, and we will continue to vigorously investigate him and anyone else who is intent on harming our nation and citizens.”
According to an FBI agent’s affidavit filed in support of the criminal complaint, in 2017 and 2018 Ferizi had been involved in multiple fraudulent schemes from prison by coordinating with a family member who was operating Ferizi’s email accounts while Ferizi was incarcerated. Ferizi instructed the family member to “keep my email alive and not expiring” and passed his email addresses and passwords on to his family member. The FBI was able to determine that at least one email account included large databases of stolen personally identifiable information, extensive lists of stolen email accounts, partial credit card numbers, passwords, and other confidential information. According to the complaint affidavit, the databases of stolen personal information were the fruits of Ferizi’s criminal hacking activity. Based on an IP address resolving to Kosovo, login activity to Ferizi’s other e-mail accounts, and other investigative information, it was determined the family member downloaded the databases of stolen information to liquidate the proceeds of Ferizi’s previous criminal hacking activity.
In the course of these new crimes, Ferizi and his family member are alleged to have used electronic services of Google, PayPal, and Coinbase, each of which is located in the Northern District of California. The affidavit further alleges that Ferizi continued to communicate with others to further this scheme while in custody. It is alleged that electronic communications were used to further the scheme and that personal data and information used belonged to real individuals who were victimized.
Ferizi is charged with one count of aggravated identity theft in violation of Title 18, United States Code, Section 1028A, and one count of wire fraud in violation of Title 18, United States Code, Section 1343. If convicted of wire fraud, he faces a maximum penalty of 20 years in prison and a fine of $250,000. If convicted of aggravated identity theft, he faces a mandatory penalty of 2 years in prison in addition to the punishment imposed for a wire fraud conviction. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
The charges contained in the criminal complaint are mere allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Ferizi currently is in federal custody and will be transported to the Northern District of California to face the new federal charges. His initial federal court appearance to face the new charges has not yet been scheduled.
The Corporate Fraud Strike Force of the Northern District of California U.S. Attorney’s Office is prosecuting the case. The prosecution is the result of an investigation by the Federal Bureau of Investigation Jacksonville and Washington field offices.
Antioch Nurse Charged with Possession of Child PornographyRead the Press Release
OAKLAND –Shawn Jamison Prichard was charged in a criminal complaint with possession of child pornography announced United States Attorney David L. Anderson and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King.
According to the complaint filed December 22, 2020, and unsealed this morning, Prichard, 41, of Antioch, allegedly possessed at least one image of child pornography involving the use of a prepubescent minor engaged in sexually explicit conduct. Prichard is a licensed nurse in California. The criminal investigation in this case began with a tip from a social media company based on defendant’s use of a messaging service to send images of child pornography. Prichard is charged with possession of child pornography, in violation of 18 U.S.C. § 2252.
Prichard made his initial federal court appearance in federal court this morning before U.S. Magistrate Judge Susan van Keulen. His next appearance is a detention hearing scheduled for December 29, 2020, at 10:30 a.m., before U.S. Magistrate Judge Laurel Beeler.
A criminal complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of 10 years (20 years if the images depict pre-pubescent children), and a fine of $250,000, plus restitution, if appropriate. 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 Jonathan U. Lee is prosecuting the case with the assistance of Jessica Rodriguez Gonzalez and Kathleen Turner. The prosecution is the result of an investigation by the Silicon Valley Internet Crimes Against Children Task Force and HSI.
Oakland Man Charged in One of Multiple Robberies with A Firearm of U.S. Mail CarriersRead the Press Release
OAKLAND - David Leveren Quinn has been charged in a federal criminal complaint with robbery affecting interstate commerce, announced United States Attorney David L. Anderson and United States Postal Inspection Service Inspector in Charge Rafael Nunez.
The criminal complaint alleges that between August 11, 2020, and September 25, 2020, Quinn, 31, of Oakland, committed at least six robberies or attempted robberies of United States Postal Service (USPS) letter carriers in East Oakland with one or more unknown conspirators. While the circumstances vary, the complaint alleges that in most of the robberies Quinn and one other person surveilled a USPS letter carrier and then parked near the letter carrier’s mail truck. Quinn or his co-conspirator would get out of their vehicle, confront the letter carrier, and take or attempt to take trays of mail and packages from the mail truck. In several of the robberies, Quinn or his co-conspirator carried, showed, or pointed a suspected firearm at the letter carrier during the robbery. The complaint alleges that Quinn committed the robberies, at least in part, to engage in identity theft, including by stealing unemployment benefits issued during the COVID-19 global pandemic.
The complaint specifically charges Quinn with a September 19, 2020, robbery of a USPS letter carrier near the corner of 66th Avenue and Avenal Avenue in Oakland. At around three in the afternoon, according to the complaint, a silver Infinity sedan, with its front license plate removed, parked near a letter carrier who was at the back of his mail truck retrieving mail. Quinn got out of the Infinity, approached the letter carrier, and placed a suspected firearm at the letter carrier’s right side and told him not to move. Quinn was joined by his crime partner, and they took mail trays from the mail truck and fled in the Infinity sedan.
According to the complaint, shortly after the robbery, surveillance footage from an ATM in Oakland shows Quinn using a California Employment and Development Department (EDD) debit card to withdraw $1,000 in cash. That debit card had been mailed to an address on the mail route of the letter carrier who Quinn had just robbed. The next day Quinn used the same prepaid debit card to purchase a Cadillac SUV that he used in a subsequent attempted robbery. A law enforcement search of Quinn’s phone showed that Quinn also tried to activate another EDD debit card that had been mailed to an address also on the mail route of the letter carrier that Quinn had robbed on September 19, 2020.
Quinn made his initial appearance in federal court today before United States Magistrate Judge Laurel Beeler. Quinn is in custody and his next scheduled appearance is at 10:30 am on December 22, 2020, before United States Magistrate Judge Beeler for a status hearing regarding his detention.
A complaint merely alleges that crimes have been committed, and Quinn is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Quinn faces a maximum sentence of 20 years in prison and a maximum fine of $250,000, or twice the gross pecuniary gain to the defendant or twice the gross pecuniary loss inflicted on victims, 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.
Noah Stern is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kay Konopaske and Kathleen Turner. The prosecution is the result of an investigation by the United States Postal Inspection service and the Oakland Police Department.
Lewis Wallach Admits to Defrauding Investors and Embezzling $26 Million from Marin Real Estate CompanyRead the Press Release
SAN FRANCISCO – Lewis Wallach pleaded guilty today in federal court to fraud charges for his role in a large-scale fraud involving the Marin County real estate company Professional Financial Investors, or PFI, announced United States Attorney David L. Anderson and Federal Bureau Investigation Special Agent in Charge Craig D. Fair. The plea was accepted by the Hon. Maxine M. Chesney, U.S. District Judge.
Wallach, 64, of Los Angeles, is the former CEO of PFI. He was charged in a criminal information filed on September 29, 2020, alleging that he and PFI’s now-deceased founder ran the company as a Ponzi scheme. The information charged Wallach with one count of wire fraud and one count of conspiracy to commit wire fraud, in a scheme to defraud and conspiracy that went back to at least 2015.
According to his plea agreement, Wallach admitted that he was hired by the founder of PFI and related entity Professional Investors Security Fund, or PISF, in 1990, and that he was later named president and CEO of PFI. Both companies were based in Novato, California. Wallach admitted that PFI and PISF investors were told that the investors’ regular interest and distribution payments would be paid from income on the residential and commercial properties owned and managed by PFI. In fact, as Wallach admitted, he knew that PFI was not profitable and that income from the properties was not sufficient to pay both interest and distributions. In fact, both Wallach and the company founder knew that PFI and PISF had to raise new investments to pay existing investors.
Wallach admitted that he lied to investors, including falsely telling investors that PFI had significant reserves to allow it to survive and expand during the economic downturn caused by the COVID 19 pandemic. He admitted that he conspired with the PFI founder to mislead investors and solicit investor funds using false statements.
Wallach also admitted that he engaged in a years-long scheme to embezzle funds from PFI and PISF in which he took more than $26 million from 2015 until June 2020, including money he used for large investments, the purchase of real estate, and payment of personal expenses.
Under a plea agreement entered by Wallach and the United States Attorney’s Office, Wallach agrees to the entry of an order by the court requiring him to pay restitution of no less than $26.7 million. Pursuant to the agreement, Wallach also agrees to continue to cooperate in the criminal investigation and to assist prosecutors with identifying, securing, and transferring any assets derived from or related to the charged offense.
Wallach was charged by information on September 29, 2020, with one count of wire fraud, in violation of 18 U.S.C. § 1343, and one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349. Wallach pleaded guilty to both counts.
The maximum statutory penalties for each of the two counts, wire fraud under 18 U.S.C. § 1343 and conspiracy to commit wire fraud under 18 U.S.C. § 1349, are 20 years in prison, a fine of $250,000, 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.
Wallach is currently on pretrial release after posting a $500,000 bond. The case was set for a status hearing on March 24, 2020, at 2:15 p.m., before the Honorable Maxine M. Chesney, U.S. District Judge; no sentencing hearing has been scheduled.
The case is being 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 also thank the San Francisco Regional Office of the Securities and Exchange Commission.
Eight East Bay Residents Charged with Crimes Related to Drug Distribution SchemeRead the Press Release
SAN FRANCISCO – A federal grand jury indicted seven East Bay residents, charging them with crimes related to a scheme to supply drug users and dealers in San Francisco’s Tenderloin District with narcotics, including fentanyl and heroin, announced United States Attorney David L. Anderson, Drug Enforcement Administration (DEA) Special Agent in Charge Daniel C. Comeaux, Homeland Security Investigations (HSI) NorCal Special Agent in Charge Tatum King, and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. In a press conference earlier today, U.S. Attorney Anderson announced the indictment and announced that charges were filed in a related criminal complaint against an eighth defendant.
The seven indicted defendants are Emilson Jonathan Cruz Mayorquin, aka “Playboy” (Cruz), 23; Leydis Yaneth Cruz (Leydis), 42; Ivan Mauro Mayorquin (Mayorquin), 35; Pamela Carrero aka “Nicole,” aka “Kendra,” 20; Ana Maldonado, 22; Adonis Torres, 33; and Mayer Benegas-Medina, 27. According to the indictment, from at least July to December 2020, the defendants conspired to distribute fentanyl. Court documents describe how defendants were members of a drug trafficking organization (DTO) being run primarily by Cruz and his mother, Leydis. Cruz and Leydis allegedly worked with other associates including Cruz’s significant other (Maldonado); Cruz’s sister (Carrero) and her significant other (Torres); and another family member (Mayorquin) to engage in street level drug sales and to supply narcotics for resale to multiple local narcotics re-distributors. The defendants allegedly lived in the East Bay, but routinely traveled to the Tenderloin to sell drugs, primarily fentanyl, on the streets of San Francisco.
“Parents and children who are sheltering in place against the Covid virus find it impossible to leave their own homes because of open-air drug use and drug trafficking by people who have come to the Tenderloin from outside the neighborhood,” said U.S. Attorney Anderson. “No neighborhood should be designated a law-free zone where dangerous drugs can be bought and sold with impunity.”
“The Federal Initiative in the Tenderloin began more than a year ago with a focus on eradicating the open air drug markets operating in the area with impunity. This case is another example that our sustained efforts are making a difference and we do not intend to take our foot off the gas,” stated DEA Special Agent in Charge Daniel C. Comeaux. “The people who live and work in this community deserve a neighborhood in which the rule of law prevails.”
“Fentanyl and heroin are a scourge on our nation, poisoning and killing our family and friends. The trail of destruction in human lives and community blight inevitably leads to the doorsteps of the criminals illegally trafficking these narcotics. Anyone involved in destroying lives just to make an illicit profit by selling drugs in Northern California will not remain free,” said Special Agent in Charge King. “Homeland Security Investigations Special Agents worked closely with our partners at the DEA, FBI, U.S. Customs and Border Protection, San Francisco Police Department, and San Ramon Police Department to disrupt and take down this criminal enterprise. Through U.S. Attorney Anderson’s Federal Initiative for the Tenderloin, HSI agents will continue leading and supporting this and other federal criminal investigations in the region.”
In court documents, the government has alleged that multiple members of the DTO sold a variety of drugs—including powder fentanyl, counterfeit pharmaceutical pills containing fentanyl, and heroin—to a DEA agent acting in an undercover capacity. The documents describe how members of the DTO often referred to the diverse types of fentanyl being sold by their various colors, such as blue, pink, and yellow. Further, the government has alleged that members of the DTO communicated by cell phone to discuss all aspects of running the drug business, including the availability of the various types of fentanyl, the public demand for different varieties of drugs, and the price at which drugs could be sold. They even discussed how they could grow their drug business (e.g., “the gram customers recommended other good customers who got more.”) The members of the organization also discussed the presence of police in the Tenderloin, the amounts of each type of fentanyl they had available for sale, and, on at least one occasion, whether another member of the organization could travel to San Francisco to bring a particular variety of fentanyl that another member forgot on his commute from the East Bay.
Papers filed in the case also describe the dangers of fentanyl in stark terms. Fentanyl is about 50 times stronger than heroin and about 100 times stronger than morphine. Further, according to the Centers of Disease Control and Prevention, two out of three of the 46,802 opioid overdose deaths in 2018 involved synthetic opioids such as fentanyl. In addition, the San Francisco Office of the Medical Examiner published data indicating that approximately 300 people in city of San Francisco died between January and August 2020 due to accidental overdoses from fentanyl. According to the DEA, two milligrams of fentanyl can be a fatal dose. In this case, the DTO allegedly sold approximately $45,000 worth of drugs to an undercover agent, including over 200 grams of powder fentanyl.
Court documents describe how federal investigators used a variety of tools including physical surveillance, undercover purchases, and interception of communications on cell phones used by Cruz, Leydis, and Carrero, to further the investigation. In one example of an October 2020 cell phone exchange between Mayorquin and Cruz, Mayorquin reported that another individual wanted to work for Cruz as a street-level dealer. Cruz responded that he could keep the person busy. During the same call, Cruz asked Mayorquin to lend him (Cruz) an ounce of yellow fentanyl for resale.
Court documents also describe how Mayer Benegas-Medina was arrested as part of the law enforcement operation that led to the indictment. Benegas was arrested in the Oakland residence where Ivan Mauro Mayorquin also was arrested. The indictment alleges Benegas used a cellular telephone to facilitate drug transactions.
In addition to the seven defendants in the indictment, Gustabo Alfonso Ramos, 22, was arrested in Oakland and charged in connection with a drug sale that occurred near the corner of Franklin Street and Golden Gate Avenue in San Francisco. According to the complaint, on October 8, 2020, Ramos distributed approximately four ounces of fentanyl in exchange for $4,000.
In sum, the defendants are charged with the crimes and face maximum penalties as indicted in the chart below:
Charges
Statute
Defendant(s)
Maximum Penalties
(per count)
Conspiracy to Distribute and Possess with Intent to Distribute Fentanyl
21 U.S.C.
§§ 846, 841(a)(1) and (b)(1)(C)
All defendants
except Gustabo Alfonso Ramos
20 years in prison and a $1,000,000 fine
Distribution of Fentanyl
21 U.S.C. §§ 841(a)(1) and (b)(1)(C)
Pamela Carrero (5 counts)
Leydis Yaneth Cruz
20 years in prison and a $1,000,000 fine
Distribution of 40 Grams or More of Fentanyl
21 U.S.C. §§ 841(a)(1) and (b)(1)(B)
Pamela Carrero
Leydis Yaneth Cruz
40 years in prison (maximum), a minimum of 5 years in prison, and a $5,000,000 fine
Distribution of 100 Grams or More of Heroin
21 U.S.C. §§ 841(a)(1) and (b)(1)(B)
Emilson Jonathan Cruz Mayorquin
40 years in prison (maximum), a minimum of 5 years in prison, and a $5,000,000 fine
Illegal Use of a Communication Facility
21 U.S.C. § 843(b)
Mayer Benegas-Medina
4 years in prison and a
$250,000 fine
Distribution of Fentanyl
21 U.S.C. §§ 841(a)(1) and 841(b)(1)(C)
Gustabo Ramos
20 years in prison and a $1,000,000 fine
An indictment and a criminal complaint merely allege that crimes have been committed, and each defendant must be presumed innocent until proven guilty beyond a reasonable doubt. The court may order additional terms of supervised release and restitution, if appropriate; however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The defendants are scheduled for court appearances as follows:
Defendant
Next Court Date
Emilson Cruz Mayorquin
December 21, 2020, at 10:30 a.m.
Leydis Yaneth Cruz
December 18, 2020, at 10:30 a.m.
Pamela Carrero
December 18, 2020, at 10:30 a.m.
Ivan Mauro Cruz Mayorquin
December 21, 2020, at 10:30 a.m.
Ana Maldonado
December 22, 2020, at 10:30 a.m.
Adonis Torres
December 17, 2020, at 10:30 a.m.
Mayer Benegas-Medina
December 17, 2020, at 10:30 a.m.
Gustabo Ramos
December 22, 2020 at 10:30 a.m.
The case is being prosecuted by the Organized Crime Drug Enforcement Task Force (OCDETF) of the United States Attorney’s Office for the Northern District of California. The investigation of this case was conducted by the DEA, HSI, the FBI, U.S. Customs and Border Patrol, the San Francisco Police Department, and the San Ramon Police Department.
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.
Three San Francisco Mission District Norteño Gang Members Charged with Racketeering Conspiracy Involving Murders and Attempted Murder and Weapons ViolationsRead the Press Release
SAN FRANCISCO - A federal grand jury in San Francisco charged Fernando Madrigal, AKA “Nando,” Alvaro Reina Cordero, AKA “G-Boy,” and Oscar Guadron Diaz, AKA “Cutty,” in a superseding indictment with charges of a racketeering conspiracy involving three murders and a shooting; the use and the discharge of a firearm during violent offenses; and the possession of a machinegun, announced United States Attorney David L. Anderson, and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
In the original indictment filed August 20, 2020, the defendant Madrigal, 22, of San Francisco, was identified as a member of a street gang known as the San Francisco Mission District (SFMD) Norteños and charged with the July 8, 2019, shooting murder in the Mission District of a 15 year old who was mistaken as a rival gang member.
In the superseding indictment unsealed December 11, 2020, the federal grand jury charged Madrigal and two others, Reina Cordero, 23, of Daly City and Guadron Diaz, 21, of Oakland, with charges of firearm violence and of engaging in a racketeering conspiracy that involved committing multiple violent acts to support the SFMD Norteño gang, of which they are alleged to be members. Norteño gang members work together to support their gang by acts such as “hunting” to find and kill members of rival gangs, armed robberies, shootings, and other violence, all of which enhances the gang’s reputation as being strong, powerful, and dominant. Norteño gang members also commit crimes to enhance the financial strength of their gang, such as drug trafficking, theft, and firearms trafficking.
The racketeering conspiracy charge against the three defendants Madrigal, Reina Cordero, and Guadron Diaz describes the violent acts the defendants engaged in as part of and in furtherance of the conspiracy to support their Norteño gang.
The superseding indictment charges that on or about January 23, 2018, Reina Cordero and Guadron Diaz, with others, murdered one victim and attempted to murder a second victim, who are identified in the superseding indictment as Victim-1 and Victim-2, respectively.
The superseding indictment alleges that the attack occurred at approximately 5:11 pm near Leese Street and Richland Avenue, an intersection near Mission Street in San Francisco, while vehicle traffic and pedestrians were nearby. Multiple gunshots were fired during the attack.
The superseding indictment alleges Reina Cordero and Guadron Diaz targeted and murdered Victim-1 because they believed he associated with a rival Sureño gang. Victim-2, who was with Victim-1, suffered a gunshot wound to the face but survived.
The superseding indictment also charges that on July 12, 2018, Madrigal, with others, murdered Victim-3. The superseding indictment alleges that on the date of July 12, 2018, Victim-3’s car was located unattended near Candlestick Park in San Francisco. Days later, Victim-3’s cell phone was recovered near the San Mateo Bridge. It had blood on it. Over a year later, on February 20, 2020, tree trimmers found human remains in a wooded area in Oakland. The body’s skull was missing but located later, on or about March 25, 2020. The remains were submitted for DNA comparisons and determined to be those of Victim-3. Information from Victim-3’s cell phone indicates that Madrigal had arranged to meet Victim-3 at Candlestick Park, claiming he wanted to buy marijuana from the victim.
The superseding indictment further charges the murder of July 8, 2019 – charged earlier in the original indictment – in which Madrigal, with others, shot and killed Victim-4. The superseding indictment details that this murder occurred just after midnight and within two blocks of the 24th Street and Mission Street BART station in San Francisco. Police identified the 15-year old murder victim by a student identification card in his pocket and determined that he lived in the area claimed by Army Street. The superseding indictment alleges Madrigal targeted Victim-4 because Madrigal believed Victim-4 was associated with the Army Street gang. Nine rifle casings were recovered from the scene. Immediately after the murder on July 8, Madrigal and others allegedly drove to the Bernal Dwellings Apartments, which is claimed by the Army Street gang as its territory, and fired another shot from the same gun used in the murder, and immediately thereafter led San Francisco Police Department officers on a high-speed chase down Highways 101 and 280 before getting away near John Daly Boulevard.
The superseding indictment also charges Reina Cordero and Guadran Diaz together in a separate count with the crime of the use of a firearm in the murder of Victim 1 and in another count charges them with the discharge of a firearm in the attempted murder of Victim-2. The superseding indictment also separately charges Madrigal with the use of a firearm in the murder of Victim-3 and in another count charges Madrigal with the use of a firearm in the murder of Victim-4.
The superseding indictment further charges Guadron Diaz with possession of a machinegun on January 25, 2018.
Reina Cordero was arrested and made his initial appearance on these charges in federal court on December 11, 2020. He remains in custody and is set for a detention hearing on December 18. Guadron Diaz went into FBI custody last night and made his initial appearance today in federal court before United States Magistrate Judge Laurel Beeler. He remains in custody, and his next appearance is scheduled on December 18 for a detention hearing. Madrigal remains in federal custody and is scheduled for his next appearance on December 17.
A superseding indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The following chart outlines the charges and maximum sentences:
Fernando Madrigal,
AKA “Nando”
18 U.S.C. § 1962(d) – Racketeering Conspiracy
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-3
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-4
Death or life imprisonment
Alvaro Reina Cordero, AKA “G-Boy”
18 U.S.C. § 1962(d) – Racketeering Conspiracy
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-1
18 U.S.C. §§ 924(c)(1)(A) and 2 – Discharge of a Firearm in Furtherance of the Attempted Murder of Victim-2
Death or life imprisonment
Oscar Guadron Diaz,
AKA “Cutty”
18 U.S.C. § 1962(d) – Racketeering Conspiracy
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-1
18 U.S.C. §§ 924(c)(1)(A) and 2 – Discharge of a Firearm in Furtherance of the Attempted Murder of Victim-2
8 U.S.C. §§ 922(o) – Possession of a Machinegun
Death or life imprisonment
The maximum sentences are reflected above; 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 United States Attorney’s Office Organized Crime Gang Strike Force is prosecuting this case. The prosecution is the result of a multi-year investigation by the FBI, together with San Francisco Police Department’s Gang Task Force and Homicide Detail
Fremont Resident Pleads Guilty to Smuggling Illegal High-Intensity Discharge Headlights into the U.S.Read the Press Release
OAKLAND - Chu-Chiang Ho, a/k/a Kevin Ho, pleaded guilty in federal court today to illegally importing automobile headlights that failed to meet U.S. safety standards, announced United States Attorney David L. Anderson and Homeland Security Investigations (HSI) Special Agent in Charge (San Francisco and Northern California) Tatum King. The plea was accepted by the Honorable Jon S. Tigar, U.S. District Judge.
Ho, 44, of Fremont, Calif., admitted that he has known since 2005 that the headlights and other headlight kit parts he had been importing from China were illegal, when he acknowledged in a report to the National Highway Transportation Safety Administration that the High-Intensity Discharge (“HID”) lights he imported from China were too bright and that they did not meet regulatory photometric requirements. Ho claimed at the time that he was discontinuing the sale of all illegal headlights. Nevertheless, for more than 13 years thereafter, he continued to smuggle the illegal parts into the United States and sell them through websites including HIDExtra.com, kalex.us, and opt7.com.
In the plea agreement, Ho admitted that the HID kit components that he imported are prohibited from importation into the United States under 49 U.S.C. §§ 30112 and 30115 because they violate Department of Transportation (DOT) safety laws, including those promulgated at 49 C.F.R. § 571.108, as they emit much brighter light than conventional headlights and can create a public safety hazard.
Ho also admitted that for more than a decade he engaged in various acts designed to conceal his scheme. For example, Ho changed company names numerous times to avoid detection by U.S. Customs and Border Protection (CBP) and he listed a variety of family members as corporate officers of his companies despite maintaining control over the business at all times. Ho also admitted that he misstated to CBP the nature of the merchandise he was importing to deceive the agency into believing the merchandise was legal.
Ho admitted that he profited from his scheme and used the proceeds of the illegal HID Kits to assist in his purchase of various properties in the Bay Area. He admitted that at least $1.7 million in proceeds from sales of his businesses was traceable to products he illegally smuggled into the United States.
A federal grand jury indicted Ho on March 14, 2019, charging him with seven counts of smuggling illegal headlights into United States, in violation of 18 U.S.C. § 545. Under the plea agreement, Ho pleaded guilty to one count. If Ho complies with the plea agreement, the remaining counts will be dismissed. Also as part of the plea agreement, Ho agreed to forfeit at least $1.7 million in criminal proceeds and all of the property he had smuggled into the United States that failed to meet the safety standards of 49 CFR 571.108.
Defendant was released on a bond secured by real property. Bail was set at $750,000.
Judge Tigar scheduled Ho’s sentencing for March 19, 2020. The maximum statutory penalty for a violation of 18 U.S.C. § 545 is twenty years’ imprisonment and a fine of $250,000. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Thomas R. Green is prosecuting the case with the assistance of Noble Hughes and Kay Konopaske. The prosecution is the result of an investigation by the Department of Homeland Security, Homeland Security Investigations.
Cupertino Man Sentenced to Four Years in Prison for Embezzling More Than $7.5 Million in Church FundsRead the Press Release
SAN JOSE - Jonathan Chang, an elder at a South Bay church, was sentenced to 48 months in prison for stealing more than $7.5 million in donated funds intended for the church, announced United States Attorney David L. Anderson and Federal Bureau of Investigation and Special Agent in Charge Craig D. Fair. The sentence was handed down by the Honorable Edward J. Davila, United States District Judge.
The sentence follows a guilty verdict after a five-week trial in United States District Court. The evidence at trial demonstrated that Jonathan Chang, 64, of Cupertino, California, engaged in a scheme to defraud a wealthy donor of money intended to support the Home of Christ 4 Christian Church (HOC4), located in Saratoga, California. Chang, who served as an elder responsible for managing the finances of the church, furthered his scheme by creating entities with names similar to the church. He then directed more than $6.7 million from the donor to his own organizations rather than to the HOC4. In addition, Chang embezzled more than $750,000 from HOC4-related bank accounts in his scheme to defraud.
The jury concluded that Chang solicited funds from the wealthy donor for the stated purpose of acquiring a new HOC4 church house and conducting missionary work. In response to Chang’s requests, the donor provided $2.25 million in one-time donations, a $3 million loan to acquire the new building, and approximately $1.5 million total in monthly donations.
Chang did not use the funds as intended and directed by the donor. Instead, he personally enriched himself with the money. For example, Chang used the funds to make all-cash purchases of multiple houses for himself in the Bay Area, to purchase luxury vehicles, to obtain 15 timeshare interests, to invest in commercial real estate, and to pay for his health insurance and athletic club dues. The evidence also showed that Chang purchased a home in Fremont with the donor’s funds and then leased the house to one of the donor’s companies, thereby personally collecting rent on a house purchased with stolen funds the donor earmarked for the church. Similarly, Chang purchased another home with donor funds intended for religious purposes but ultimately rented the home to his son and collected the rent. With an average annual salary reported as $65,000, Chang purchased millions of dollars in real property, owned a Mercedes, and lived a luxurious life. In total, between 2004 and January 2016, Chang obtained more than $7.5 million in funds from the donor and HOC4.
The evidence at trial demonstrated that Chang created fraudulent entities to conceal the wire fraud scheme and forwarded the funds to a variety of bank accounts he controlled before spending the money on personal purchases and investments. Documents submitted in connection with the sentencing established that Chang was able to buy three additional houses with over $1.6 million in a money laundering scheme that involved transferring funds back to the United States from overseas bank accounts.
When discussing the reasons for imposing the 48-month prison term, Judge Davila made clear that Chang’s decade long scheme was an “enormous betrayal” of his church and his community.
On February 4, 2016, a federal grand jury indicted Chang and his wife, Grace Chang, 60, charging each with one count of conspiracy to commit wire or mail fraud, in violation of 18 U.S.C. § 1349; four counts of wire fraud, in violation of 18 U.S.C. § 1343; one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h); and three counts of money laundering, in violation of 21 U.S.C. § 1956(a). The jury found Jonathan Chang guilty of all the wire fraud and money laundering counts. The jury did not reach a verdict as to the two charged conspiracy counts, nor did the jury reach a verdict as to the counts filed against Grace Chang.
In addition to the prison term, Judge Davila also ordered Jonathan Chang to serve a three year term of supervised release to begin after the prison term. He was also ordered Chang to pay $11,701,262 in restitution to his victims and to forfeit his interest in five real properties which will result in a forfeited amount of at least $8,841,749.
Assistant U.S. Attorneys Patrick R. Delahunty and Sarah E. Griswold are prosecuting the case with the assistance of Susan Kreider. Assistant U.S. Attorney David Countryman assisted in the forfeiture. The prosecution is the result of an investigation by the FBI.
East Bay Man Sentenced to Four Years in Prison for Embezzlement Scheme from His EmployerRead the Press Release
SAN FRANCISCO – Michael Livingston Henry was sentenced yesterday to 48 months in prison and ordered to pay restitution for stealing more than $800,000 from his former employer and her family’s charitable foundation, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The sentence was handed down by United States District Judge Charles R. Breyer.
Henry, 45, of Oakland, pleaded guilty on January 22, 2020. According to the plea agreement, Henry worked from June 2006 to August 2018 as an assistant to a Marin-based philanthropist, assisting her with personal matters and administration of her family’s charitable foundation. While employed there, Henry stole in excess of $800,000 by forging the philanthropist’s signature on hundreds of checks, many of which were made out to Henry personally or to his side business, Hella. The philanthropist was seriously ill with cancer in 2016 and 2017 – a time when Henry continued to be entrusted with full access to financial and account records – and she discovered the embezzlement only after her recovery in 2018.
Henry was indicted by a federal grand jury on February 28, 2019. The fourteen-count Indictment charged him with ten counts of bank fraud, in violation of 18 U.S.C. § 1344(2), and four counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A. Pursuant to the plea agreement, Henry pleaded guilty to two counts of bank fraud, and the government agreed to dismiss the remaining charges.
United States District Court Judge Charles R. Breyer also sentenced the defendant to a five-year period of supervised release to begin at the completion of the prison term and ordered him to pay restitution to the charitable foundation and the philanthropist personally. The defendant will begin serving his sentence on April 19, 2021.
Katherine L. Wawrzyniak is the Assistant U.S. Attorney prosecuting the case, with the assistance of Claudia Hyslop and Kimberly Richardson. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Six South Bay Residents Indicted in Alleged Stolen Mail and Fraud SchemeRead the Press Release
Defendants allegedly used real and counterfeit mailbox keys to gain access to identification documents for fraudulent use.
SAN FRANCISCO - A federal grand jury in San Francisco has returned an indictment charging six individuals with numerous crimes associated with a long-running conspiracy to steal mail and commit fraud in connection with identification documents, announced United States Attorney David L. Anderson and United States Postal Inspection Service Inspector in Charge Rafael Nuñez. The indictment was filed on November 17, 2020, and unsealed today.
The six defendants are Mark Guardado, Jr., 38, of San Jose; Ashley Overton, 34, of Palo Alto; Juan Dagio, 40, of San Jose; Brian Clapp, 37, of San Jose; Andrew Perez, 30, of San Jose; and Jaime Valencia-Arias, 23, of San Jose. According to the 18-count indictment, beginning no later than January of 2018, and continuing through August of 2019, the defendants conspired to steal mail and commit fraud in connection with hundreds of stolen or fraudulent identification documents. Specifically, the indictment alleges that the defendants conspired to steal United States mail by using actual or counterfeit postal keys to gain access to cluster mailboxes in apartment buildings. The defendant allegedly raided mailboxes throughout the South Bay, including in Sunnyvale, Palo Alto, Santa Clara, Redwood City, Menlo Park, and San Jose. The indictment describes text messages exchanged between the defendants regarding the use of real or counterfeit postal keys—some of which Guardado is alleged to have discussed making himself—to go out on “missions,” meaning outings in which they stole mail in bulk from apartment buildings. Defendants then obtained personal identifying information, such as names, addresses, telephone numbers, and dates of birth, from the stolen mail and other sources and used that information to create counterfeit California state driver’s licenses in the names of the victims of the stolen mail. The counterfeit licenses had photographs depicting the defendants. Using the counterfeit driver’s licenses, defendants activated and used stolen or fraudulent credit cards, negotiated checks, and used other stolen or fraudulently obtained access devices to obtain money and other things of value, including hotel rooms and cash advances at a casino.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The indictment charges the defendants with the crimes and maximum statutory sentences as follows:
Count
Defendant
Charge
Statute
Maximum Sentence
One
Guardado
Overton
Dagio
Clapp
Perez
Conspiracy to Commit Mail Theft and to Commit Fraud in Connection with Identification Documents
18 U.S.C. § 371
5 years’ imprisonment; $250,000 fine
Two
Guardado
Fraud in Connection with Identification Documents – Production
18 U.S.C. § 1028(a)(1)
15 years’ imprisonment; $250,000 fine
Three
Guardado
Overton
Fraud in Connection with Identification Documents – Possession of Five or More
18 U.S.C. § 1028(a)(3)
5 years’ imprisonment; $250,000 fine
Four
Guardado
Fraud in Connection with Identification Documents – Document-Making Implements
18 U.S.C. § 1028(a)(5)
15 years’ imprisonment; $250,000 fine
Five
Guardado
Fraud in Connection with Identification Documents – Trafficking
18 U.S.C. § 1028(a)(8)
15 years’ imprisonment; $250,000 fine
Six
Guardado
Overton
Possession of 15 or More Unauthorized Access Devices
18 U.S.C. § 1029(a)(3)
10 years’ imprisonment; $250,000 fine
Seven
Dagio
Fraudulent Use of Unauthorized Access Devices
18 U.S.C. § 1029(a)(2)
10 years’ imprisonment; $250,000 fine
Eight
Guardado
Unlawful Possession of Postal Keys and Locks
18 U.S.C. § 1704
10 years’ imprisonment; $250,000 fine
Nine
Guardado
Valencia-Arias
Mail Theft
18 U.S.C. § 1708
5 years’ imprisonment; $250,000 fine
Ten
Guardado
Possession of Stolen Mail
18 U.S.C. § 1708
5 years’ imprisonment; $250,000 fine
Eleven
Overton
Possession of Stolen Mail
18 U.S.C. § 1708
5 years’ imprisonment; $250,000 fine
Twelve
Overton
Possession of Stolen Mail
18 U.S.C. § 1708
5 years’ imprisonment; $250,000 fine
Thirteen
Dagio
Possession of Stolen Mail
18 U.S.C. § 1708
5 years’ imprisonment; $250,000 fine
Fourteen
Overton
Aggravated Identity Theft
18 U.S.C. § 1028(A)
2 years’ imprisonment consecutive to any other sentence; $250,000 fine
Fifteen
Overton
Aggravated Identity Theft
18 U.S.C. § 1028(A)
2 years’ imprisonment consecutive to any other sentence; $250,000 fine
Sixteen
Guardado
Aggravated Identity Theft
18 U.S.C. § 1028(A)
2 years’ imprisonment consecutive to any other sentence; $250,000 fine
Seventeen
Guardado
Aggravated Identity Theft
18 U.S.C. § 1028(A)
2 years’ imprisonment consecutive to any other sentence; $250,000 fine
Eighteen
Dagio
Aggravated Identity Theft
18 U.S.C. § 1028(A)
2 years’ imprisonment consecutive to any other sentence; $250,000 fine
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.
All the defendants are in either federal or state custody except Perez, who remains at large. Guardado and Clapp made their initial federal court appearances this morning before U.S. Magistrate Judge Laurel Beeler. Judge Beeler ordered that Guardado be detained pending a bail study and a further hearing for December 14, 2020. Clapp was released on a $25,000 bond. Valencia-Arias will make his initial appearance before U.S. Magistrate Judge Susan van Keulen on Thursday, December 10, 2020. The defendants next scheduled appearance is at 10:30 a.m. on January 12, 2021, for a status hearing before the before the Honorable Vince Chhabria, U.S. District Judge.
The prosecution is being handled by the Special Prosecutions Section of the United States Attorney’s Office. The prosecution is the result of an investigation by the United States Postal Inspection Service.
San Jose Man Sentenced to Two Years Imprisonment for Damaging Cisco’s NetworkRead the Press Release
SAN JOSE – Sudhish Kasaba Ramesh was sentenced today to 24 months in prison and ordered to pay a $15,000 fine for intentionally accessing a protected computer without authorization and recklessly causing damage, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge.
Ramesh, 31, of San Jose, pleaded guilty on August 26, 2020, to one count of intentionally accessing a protected computer without authorization and recklessly causing damage to Cisco. Ramesh worked for Cisco but resigned in approximately April 2018. According to the plea agreement, Ramesh admitted to intentionally accessing the Cisco Systems cloud infrastructure that was hosted by Amazon Web Services without Cisco’s permission on September 24, 2018. Ramesh further admitted that during his unauthorized access he deployed a code from his Google Cloud Project account that resulted in the deletion of 456 virtual machines for Cisco’s WebEx Teams application, which provides video meetings, video messaging, file sharing, and other collaboration tools. He admitted that he acted recklessly in deploying the code and consciously disregarded the substantial risk that his conduct would harm Cisco. As a result of Ramesh’s conduct, over 16,000 WebEx Teams accounts were shut down for up to two weeks and caused Cisco to spend approximately $1,400,000 in employee time to restore the damage to the application and refund over $1,000,000 to affected customers. No customer data was compromised as a result of the defendant’s conduct.
Ramesh was charged by an information on July 13, 2020, with one count of Intentionally Accessing a Protected Computer Without Authorization and Recklessly Causing Damage, in violation of 18 U.S.C. §§ 1030(a)(5)(B) and (c)(4)(A)(i)(I).
U.S. District Judge Koh sentenced Ramesh today, following his guilty plea on August 26, 2020, to one count of Intentionally Accessing a Protected Computer Without Authorization and Recklessly Causing Damage, in violation of 18 U.S.C. §§ 1030(a)(5)(B) and (c)(4)(A)(i)(I). The defendant was further sentenced to serve a one year period of supervised release following the 24 months in prison and to pay a $15,000 fine. The defendant is out of custody and will begin serving the sentence on February 10, 2021.
Susan Knight is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the Federal Bureau of Investigation. Cisco Systems, Inc. fully cooperated with the U.S. Attorney’s Office and Federal Bureau of Investigation.
Redwood City Man Sentenced to 15 Years in Prison for Trafficking Drugs and Illegal GunsRead the Press Release
SAN FRANCISCO – Ismael Garcia, a/k/a “Playboy,” was sentenced to 15 years in prison for trafficking methamphetamine, dealing in firearms without a license, and being a felon in possession of firearms, announced United States Attorney David L. Anderson, Drug Enforcement Administration (DEA) Special Agent in Charge Daniel C. Comeaux, and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Patrick Gorman. The sentence was handed down by the Honorable Richard Seeborg, U.S. District Judge.
Garcia, 35, of Redwood City, pleaded guilty to the charges on January 17, 2020. According to his application to the court to plead guilty, Garcia admitted that between June and August of 2019 he was a member of a conspiracy to traffic methamphetamine. Garcia’s participation in the conspiracy included arranging three one-pound methamphetamine transactions that took place on June 19, July 24, and August 20, 2019. In each instance, Garcia worked with his co-conspirator to obtain the methamphetamine, which Garcia sold to an undercover law enforcement agent.
Garcia also admitted that on June 13, 2019, he sold a fully-automatic machine gun pistol and a 30-round magazine to the same undercover agent. During additional transactions in June of 2019, Garcia sold the undercover agent more illegal guns. At the time, Garcia was a convicted felon and did not have a license to sell firearms.
A federal grand jury indicted Garcia on November 12, 2019, charging him with one count of conspiracy to distribute and possess with intent to distribute 500 grams and more of a mixture and substance containing a detectable amount of methamphetamine, in violation of 21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(A)(viii); three counts distribution of fifty grams and more of a mixture and substance containing a detectable amount of methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(B)(viii); one count of dealing in firearms without a license, in violation of 18 U.S.C. § 922(a)(1)(A); one count of possession and transfer of a machine gun, in violation of 18 U.S.C. § 922(o); and one count of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1). Garcia pleaded guilty to all charges.
In addition to the prison term, Judge Seeborg also ordered the defendant to serve a five-year period of supervised release. The defendant will begin serving the sentence immediately.
The case is being prosecuted by the Organized Crime Drug Enforcement Task Force (OCDETF) of the United States Attorney’s Office for the Northern District of California. The investigation of this case was conducted by the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the San Mateo County Sheriff’s Office Narcotics Task Force.
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.
East Bay Man Charged with Selling Fentanyl-Laced Pills That Killed BuyerRead the Press Release
SAN FRANCISCO – The United States Attorney’s Office charged Gage Pascoe with the distribution of pills containing fentanyl that resulted in the overdose death of his customer, announced United States Attorney David L. Anderson and Special Agent in Charge Daniel C. Comeaux, Drug Enforcement Administration (DEA).
The federal complaint alleges that Pascoe, 22, of Pittsburg, California, sold counterfeit pills that appeared to be Oxycodone but instead contained the lethal drug fentanyl. The young adult customer purchased the pills from Pascoe and shortly after taking the apparent Oxycodone pills at a Walnut Creek home died from an overdose of fentanyl.
“This sad, tragic death shows how easy it is to die from drugs bought from drug dealers,” said U.S. Attorney Anderson. “Counterfeit pills marked and sold as one drug, such as Oxycodone pills with “M30” stamps, commonly contain fentanyl instead. Even a tiny amount of fentanyl is deadly. Drug buyers must be aware that pills bought from drug dealers may be laced with fentanyl. Drug dealers should know we vigorously prosecute those who sell drugs that cause fentanyl overdoses.”
“Fentanyl is cheap, man-made and potent. Overdose can occur in the smallest amount and in this case it left a family with unimaginable loss,” stated DEA Special Agent in Charge Daniel C. Comeaux. “We will pursue those who distribute this deadly drug and continue to seek justice for those lives that have been lost.”
The complaint charging Pascoe describes how he was a repeat dealer of illegal drugs to the victim. The complaint outlines that Pascoe communicated in the days before the death through a series of text messages with the victim, who he knew from attending the same high school, to sell Oxycodone to the victim. The texts, outlined in the complaint, show that Pascoe offered “more oxy” to his victim customer and they eventually met up in Pittsburg at night for Pascoe to sell the purported Oxycodone pills to the victim. The next day, June 17, 2020, the victim was found dead at a Walnut Creek home. The complaint describes how the victim’s father found pills in the victim’s room with “M30” stamped on them, which is a common stamp on counterfeit Oxycodone pills containing fentanyl. A lab analysis found those pills to contain fentanyl. As the complaint further describes, an analysis of the victim’s body showed the victim died from a fatal fentanyl overdose.
Pascoe was arrested on Saturday, December 5, 2020, and made an initial appearance today in San Francisco federal court before United States Magistrate Judge Laurel Beeler. Pascoe is currently being held in custody pending further proceedings. He is scheduled to appear for a detention hearing before United States Magistrate Laurel Beeler on December 14, 2020, at 10:30 am.
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.
Pascoe is charged with one count of distribution of fentanyl resulting in death or great physical injury, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C). If convicted of this count, he faces a maximum penalty of life in prison and a mandatory minimum of 20 years in prison, and a maximum fine of $1,000,000. 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.
The case is being prosecuted by the Organized Crime Drug Enforcement Task Force (OCDETF) of the United States Attorney’s Office for the Northern District of California. The investigation of this case was conducted by the Drug Enforcement Administration, the Concord Police Department, and the Walnut Creek Police Department.
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.
Two Bay Area Residents Charged in Nationwide Scheme to Engineer Fraudulent Credit and Debit Card RefundsRead the Press Release
SAN FRANCISCO – Robert Kohlman and Gabriel Riddle have been charged in a criminal complaint with wire fraud in connection with a scheme to use dozens of fraudulently programmed credit and debit terminals to make unlawful transactions, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
The criminal complaint, filed August 19, 2020, was accompanied by an affidavit filed by an FBI agent. According to the affidavit, Kohlman, 38, and Riddle, 34, both of Novato, Calif., obtained more than 90 point-of-sale terminals, which are devices used by merchants to read and process credit or debit cards to accept payments for goods or services. Kohlman and Riddle then programmed the terminals to believe they were associated with an actual merchant, and then submitted requests for refunds even though there was no initial purchase. The merchant’s bank or processing company, believing a legitimate refund was being requested, then transmitted money to accounts controlled by Kohlman and Riddle. Kohlman and Riddle then depleted the accounts by making purchases, making ATM cash withdrawals, or purchasing money orders. The affidavit indicates that Kohlman and Riddle initiated at least 100 fraudulent refunds that transferred more than $400,000 to their personal bank accounts.
Kohlman and Riddle allegedly used this scheme to defraud numerous victims around the country, including a U.S. Army Hospital dining facility. The affidavit describes transactions involving the dining facility at the Winn Army Community Hospital at Fort Stewart in Fort Stewart, Georgia, which is operated by the United States Army. According to the affidavit, the dining facility was tricked into issuing a refund worth $7,925.03 on December 3, 2018, to a debit card controlled by Riddle and a second refund, on December 16, 2018, worth $9,989.39 to a debit card controlled by Kohlman.
The defendants were charged with wire fraud, in violation of 18 U.S.C. § 1343.
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. The defendants face a maximum sentence of 20 years in prison, and a fine of $250,000, plus restitution if appropriate. 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.
Defendants were arrested on August 26, 2020 in Las Vegas, Nevada, and made their initial appearance in federal court there on August 27, 2020. They made their initial appearance in San Francisco on November 27, 2020. Defendants’ next scheduled appearance is on December 16, 2020 for a status conference before the Honorable Laurel Beeler, U.S. Magistrate Court Judge.
Assistant U.S. Attorneys Kevin Rubino and Ross Weingarten are prosecuting the case with the assistance of Morgan Byrne. The prosecution is the result of an investigation by the FBI, along with the Army Criminal Investigation Command, Major Procurement Fraud Unit, and the Marin County Coordination of Probation Enforcement Team.
San Francisco Substitute Teacher Charged with Possession of Child PornographyRead the Press Release
SAN FRANCISCO – Marc Nunez made an initial appearance today in federal court on a criminal complaint for possession of child pornography, announced David L. Anderson and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King. Nunez made his initial appearance before U.S. Magistrate Judge Laurel Beeler.
According to the complaint filed December 1, 2020, and unsealed today, on August 27, 2019, agents from HSI served a federal search warrant at a residence in San Francisco and seized, among other things, a cell phone containing communications between the person whose residence was being searched and Nunez. As the investigation proceeded, federal agents uncovered additional evidence that Nunez was a substitute teacher, after school helper, and kindergarten assistant at a private elementary school for boys in San Francisco. In addition, federal investigators discovered Nunez corresponded with several individuals with whom he traded sexually explicit files of children. The complaint further describes cell phone messages and Skype messages in which Nunez received and discussed pornographic images of minors. Nunez believed that at least one of the persons with whom he was corresponding was a minor.
Nunez is charged with possession of child pornography, in violation of 18 U.S.C. §§ 2252(a)(4)(B) and (b)(2).
The charges contained in the criminal complaint are mere allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
If convicted of the charge, Nunez faces a maximum statutory sentence of 10 years in prison, 3 years’ supervised release, and a $250,000 fine.
Magistrate Judge Laurel Beeler ordered Nunez released on a $50,000. Nunez’s next court appearance is scheduled for December 15, 2020, before Judge Beeler, for a bond hearing.
Assistant U.S. Attorney Ankur Shingal is prosecuting the case with the assistance of Alexa Leisure. The prosecution is the result of an investigation by the HSI with assistance from the San Francisco Police Department, the office of the Contra Costa District Attorney, and the United States Secret Service.
Workrite Companies to Pay $7.1 Million to Settle Alleged Furniture OverchargesRead the Press Release
SAN FRANCISCO – Ergonomic office furniture maker Workrite Ergonomics LLC, a Delaware company, and its parent, Knape & Vogt Manufacturing Co. (collectively, Workrite), have agreed to pay $7.1 million to resolve allegations under the False Claims Act that they overcharged the federal government for office furniture under General Services Administration (GSA) contracts, the Department of Justice announced today.
“Companies that do business with the United States are expected to charge the government appropriately for their services,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Civil Division. “We will continue to protect the American taxpayers and hold accountable those who misuse federal funds.”
“Federal contractors must be honest and forthcoming,” said U.S. Attorney David L. Anderson of the Northern District of California. “Contractors that overcharge the American taxpayer will be held accountable.”
“American taxpayers deserve fair prices and accurate information from GSA contractors,” said GSA Inspector General Carol Fortine Ochoa. “I appreciate the hard work and dedication that led to this significant recovery.”
“The settlement is a positive outcome that holds Workrite accountable for its questionable business practices,” said Special Agent in Charge Bryan D. Denny, Defense Criminal Investigative Service (DCIS), Western Field Office. “This is but one example of the law enforcement and oversight communities’ on-going, joint efforts to be good stewards of American taxpayer dollars.”
This settlement relates to a contract under which Workrite provided office furniture to government entities from 2009 to 2017 through GSA’s Multiple Award Schedule (MAS) program. The MAS program provides the government with a streamlined process to procure commonly used commercial goods and services. The settlement resolves allegations that Workrite did not fulfill its contractual obligations to provide GSA with accurate information about its commercial sales practices during contract negotiations, and did not subsequently extend lower prices to government customers as required by the GSA contract’s price reduction clause.
The allegations were originally made in a lawsuit filed under the whistleblower provisions of the False Claims Act by Michael J. Franchek, of Park City, Utah, a former Workrite sales manager. The Act permits private parties to sue for false claims on behalf of the United States and to share in any recovery. Franchek will receive approximately $1.27 million from the settlement proceeds.
The settlement with Workrite was the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Northern District of California, the GSA’s Office of the Inspector General, the Department of State’s Office of Inspector General, the DCIS, the Defense Contract Audit Agency, and the U.S. Department of Veterans Affairs’ Office of Inspector General.
The lawsuit is captioned United States ex rel. Franchek v. Workrite Ergonomics, LLC, No. 16-cv-02789 (N.D. Cal.). The claims resolved by the settlement are allegations only and there has been no determination of liability.
Member of “Boogaloo” Movement Group Charged with Enticement of A Minor to Engage in Sexual ActivityRead the Press Release
SAN FRANCISCO – Robert Jesus Blancas, a/k/a “Orgotloth” a/k/a “MuskOx,” made his initial appearance today after being charged in a federal criminal complaint alleging the enticement of a minor to engage in sexual activity, that is, the production of child pornography, announced U.S. Attorney David L. Anderson and FBI Special Agent in Charge Craig D. Fair.
According to the criminal complaint, Blancas, 33, a transient resident of the Bay Area, was identified as a member of an anti-government citizen militia group associated with the so-called “boogaloo” movement. A search of his electronic devices revealed not only evidence of his association with this group and communications related to acts of violence against law enforcement, but also evidence of his activities related to child pornography.
The criminal complaint alleges that in or about May 2020, Blancas met a 15-year-old minor female on an online forum. Through at least August 2020, Blancas exchanged thousands of text messages over multiple online and text message platforms with the minor victim, instructing her to send him pornographic photographs and videos of herself.
The criminal complaint further alleges that photographs and videos of the minor victim sent to Blancas depict a young girl and the bedroom of a young girl. The criminal complaint also describes examples of Blancas’s prior conversations of a sexually explicit nature with additional users who identified their ages to him as 13, 15, and 16.
Blancas is charged with the enticement of a minor to engage in sexual activity in violation of 18 U.S.C. § 2422(b). If convicted, Blancas faces a minimum penalty of 10 years to a maximum of lifetime in prison, a minimum of 5 years to a maximum of lifetime of supervised release, and a maximum of 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.
A complaint merely alleges that a crime has been committed, and the defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
Blancas was arrested on December 1, 2020, and made his initial appearance in federal court earlier today before U.S. Magistrate Judge Laurel Beeler. Blancas is currently held in custody pending further proceedings. His next federal court appearance is scheduled for a detention hearing on December 8, 2020, before U.S. Magistrate Judge Laurel Beeler.
The prosecution is being handled by the Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District of California. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
General Manager of San Francisco Public Utilities Commission Charged with Honest Services Wire Fraud for Taking Bribes in Public Bidding ProcessRead the Press Release
SAN FRANCISCO – Harlan Kelly, the General Manager of the San Francisco Public Utilities Commission (SF PUC), has been charged in a federal criminal complaint with honest services wire fraud, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
The complaint alleges that Kelly, 58, of San Francisco, engaged in a long-running bribery scheme and corrupt partnership with Walter Wong, a San Francisco construction company executive and permit expediting consultant who ran or controlled multiple entities doing business with the City of San Francisco. The complaint alleges that as part of the scheme, Wong provided items of value to Kelly in exchange for official acts by Kelly that benefited or attempted to benefit Wong’s business ventures.
“Public officials owe their honest services to the people of San Francisco,” said U.S. Attorney Anderson. “Bribery scams undermine our faith in City government. Our investigation into City Hall corruption will continue.”
“The allegations against Harlan Kelly and the nine other individuals charged in this case are extremely troubling. The citizens of San Francisco deserve nothing less than transparency, honesty, and integrity from their city officials. However, through the course of this ongoing investigation, the FBI has uncovered a pattern of criminal activity committed by those in positions of trust,” said FBI Special Agent in Charge Craig D. Fair. “The FBI is surging our resources in this investigation, and we urge anyone with information on this matter, or any other suspected public corruption, to come forward and contact the FBI.”
The complaint alleges that Kelly, appointed in 2012 to be the SF PUC’s General Manager by Mayor Ed Lee, developed an extensive relationship with Wong that involved coded text messages, multiple international trips paid for or subsidized by Wong, cash exchanges, free meals, and even personal car service provided by Wong or by Wong’s employees to Kelly. One example in the complaint alleges that Wong paid travel and expenses for Kelly and his family during a March 2016 vacation that the Kelly family took to Hong Kong and China. The complaint alleges Wong paid for hotel expenses and incidentals such as meal and jewelry purchases. The complaint also alleges that Kelly’s airfare was purchased with a credit card to create a record of the expense, but the airfare was later reimbursed by Wong with cash deposited into Kelly’s bank account. The complaint further alleges that Kelly acknowledged the gifts he received from Wong in China using an encrypted messaging application, writing to Wong: “Thank you for the best family vacation ever! A little something for everyone!”
The complaint further alleges that during this same time Wong was seeking a multi-million dollar contract from the SF PUC for Green Source Trading, LLC, a company Wong ran through his son, to convert thousands of San Francisco city streetlights to smart LED technology. Shortly after the bidding for that contract ended, the complaint alleges Wong performed extensive repair work on Kelly’s personal residence, provided to Kelly at a substantial discount.
As part of Wong’s agreement with the government, he pleaded guilty to conspiracies to commit honest services fraud and money laundering and is now providing information to the government. According to the complaint, Wong provided evidence that he gave these benefits to Kelly because of Kelly’s position at the PUC, and Wong expected that Kelly would in return use his official position to benefit Wong’s business ventures, including helping Wong’s attempts to win business from the PUC to convert streetlights to LED. The complaint alleges Kelly and Wong repeatedly communicated about the project before it was bid, and during the bid process Kelly provided Wong with confidential non-public information, including documents containing inside information that were hand-delivered to Wong. Kelly engineered at least one delay in the process, the complaint alleges, to benefit Wong. These acts gave Wong an unfair competitive advantage in the bid process, though in the end Wong withdrew his bid due to multiple contract changes.
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.
Kelly is charged with one count of honest services wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346. If convicted of this count, he faces a maximum penalty of 20 years in prison and a fine of $250,000, or not more than the greater of twice the gross gain or twice the gross loss. 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.
Kelly is out of custody and is expected to make his initial appearance in federal court in San Francisco on December 8, 2020, before U.S. Magistrate Judge Laurel Beeler.
The case is being prosecuted by the Corporate Fraud Strike Force of the U.S. Attorney’s Office. The case is being investigated by the FBI and IRS Criminal Investigation.
CEO Charged with Securities and Bank Fraud in Alleged Scheme to Raise Funds for Digital Advertising CompanyRead the Press Release
SAN FRANCISCO – Andrew Chapin has been charged in a criminal complaint with multiple counts of fraud in connection with a multi-million-dollar scheme to amass funds for a digital advertising company based on false information, announced U.S. Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge Craig Fair.
Chapin, 32, of San Francisco, was the co-founder and Chief Executive Officer of Benja, a digital advertising company. Benja created “shoppable media”, placing digital ads on websites that allowed a shopper to purchase products in the ad itself without being redirected to another website. Benja claimed to help well-known companies sell overstock inventory through these ad placements. According to the criminal complaint unsealed today, since July of 2019, Chapin engaged in a number of ploys to lure potential investors to provide over a million dollars worth of capital to Benja on the basis of false information and to obtain fraudulent bank loans. Chapin portrayed Benja as a successful company to investors and creditors, claiming Benja generated $6.2 million in revenue in 2018 and $13.2 million in revenue in 2019. The complaint charges Chapin with bank fraud, wire fraud, and securities fraud.
“We cannot allow tech financing to become a lemon’s market,” said U.S. Attorney Anderson. “Silicon Valley needs capital, and investors need facts not fiction. We will prosecute lies, omissions and frauds. Investors must have confidence in the truthfulness of startup representations.”
“This morning, the FBI arrested Mr. Chapin for allegedly running an elaborate, multimillion-dollar scheme to mislead investors and creditors,” said Special Agent in Charge Fair. “FBI San Francisco, along with our partners at the SEC and the U.S. Attorney’s Office, actively investigates these types of financial crimes to ensure that corporate fraud is uncovered, disrupted, and punished under the federal legal system.”
With respect to the bank fraud charge, the complaint alleges Chapin made false statements to a bank to secure a line of credit that grew from $1 million to $5 million. The line of credit was primarily secured by Benja’s account receivables. The account receivables and financial statements Chapin provided to the bank were misstated and false and a majority of the purported revenue was fabricated. Bank records from 2018 to 2020 indicate that Benja was generating almost no revenue from its purported ad placement business and almost all the customers Chapin claimed Benja had were lies. For example, Chapin falsely claimed to have revenue from Nike, Patagonia, and other well-known companies when, in truth, Benja had no relationship with those companies. Chapin used almost the full $5 million line of credit to pay off other creditors and investors, to pay Chapin’s credit cards and personal expenses, and to send funds to a personal crypto-currency exchange account.
With respect to wire fraud, the complaint alleges Chapin used an elaborate ruse to convince a venture capital firm in New York to provide Benja $1 million in funding. Chapin presented the same false account receivables and financial statements to the venture capital firm, and fabricated millions in revenue/account receivables from well-known companies with which Benja never did business. Chapin also had individuals pose as employees from the well-known companies in order to provide false references about Benja to investors.
With respect to securities fraud, the complaint describes how in December of 2018, Chapin allegedly convinced an investor to purchase $100,000 worth of securities in Benja by representing, among other things, that a venture capitalist would soon be making a $1.5 million investment in the company. When the investor asked to communicate with the venture capitalist directly, Chapin allegedly created a bogus email address and provided it to the investor. The investor emailed who he believed was the venture capitalist a series of questions about the shareholder’s agreement and the phony email account responded to the questions. After receiving satisfactory answers, the investor purchased the securities.
In sum, Chapin is charged with 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.
A complaint merely alleges that crimes have been committed, and Chapin is presumed innocent until proven guilty beyond a reasonable doubt. If convicted of bank fraud under 18 U.S.C. § 1344, Chapin faces a maximum sentence of 30 years’ imprisonment, a fine of $1,000,000, and restitution, if appropriate. If convicted of wire fraud under 18 U.S.C. § 1343, Chapin faces a maximum sentence of 20 years’ imprisonment, a fine of $250,000, and restitution, if appropriate. If convicted of securities fraud under 15 U.S.C. § 78j(b) and 78ff, and 17 C.F.R. § 240.10b-5, Chapin faces a maximum sentence of 20 years’ imprisonment, a fine of $5,000,000, and restitution, if appropriate. 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.
Chapin is scheduled to make his initial federal court appearance on November 24, 2020, before U.S. Magistrate Judge Jacqueline S. Corley.
The case is being 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 also thank the San Francisco Regional Office of the Securities and Exchange Commission, which conducted a parallel investigation that was also announced today.
San Francisco Trash Company Executive Charged with Bribing Company’s Chief San Francisco Government RegulatorRead the Press Release
SAN FRANCISCO - Paul Fredrick Giusti, the former Group Government & Community Relations Manager for Recology’s San Francisco Group, has been charged in a federal criminal complaint with bribery and money laundering, announced United States Attorney David L. Anderson, IRS Criminal Investigation Special Agent in Charge Kareem Carter, and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair.
The complaint alleges that Giusti, 64, of San Francisco, engaged in a long-term scheme to defraud the public of its rights to honest services and laundered money in the process. The complaint alleges that Giusti was a central actor in Recology providing Mohammed Nuru, then San Francisco’s Director of Public Works, with a continuous stream of money and benefits, ultimately worth over $1 million, to influence Nuru to act in Recology’s favor. According to the complaint, among other payments, Giusti agreed to give $20,000 to Nuru to secure his support for Recology’s efforts to implement a price increase on the “tipping fees” it charged the City to dump materials at a Recology facility. As part of the scheme, Giusti concealed the bribe as a “holiday donation” from Recology to the Lefty O’Doul’s Foundation for Kids, a non-profit organization for underprivileged children in San Francisco. Nick Bovis, the head of the Foundation, used the money to pay for an annual holiday party organized by Nuru for select DPW employees and other invited guests. The payment was one of several over the years intended to influence Nuru with respect to official actions important to Recology.
“Today's complaint alleges that Paul Giusti bribed Mohammed Nuru with more than $1 million of party funds and other benefits,” said U.S. Attorney David L. Anderson. “These bribes were laundered through non-profit organizations to disguise their source and to create the false appearance of a legitimate charitable intent. In return for these bribes, Nuru helped Recology obtain garbage fee increases approved by the City but paid by an unsuspecting public. As our investigation continues, each charge sheds new light on the ways and means of City Hall corruption.”
“Following the money is key in a case like this,” said Kareem Carter, Special Agent in Charge IRS Criminal Investigation. “The defendant used non-profit organizations to layer complex financial transactions in an attempt to conceal the payments to a city official. IRS CI will continue to work with our law enforcement partners to ensure that any individual or company involved in this scheme shall be held accountable for their actions and not go unpunished.”
“The FBI takes seriously any actions of individuals who seek to improperly influence public officials at the expense of the rate-paying public, and will hold accountable those who attempt to gain an unfair advantage in the public contracting process,” said Craig D. Fair, FBI Special Agent in Charge.
According to the complaint, Giusti disguised several Recology payments as charitable donations. Part of the alleged scheme involved Giusti arranging for Recology to “donate” to the Lefty O’Doul’s Foundation for Kids from 2016 to 2019, money which was used at Nuru’s direction to pay for DPW holiday parties. Another part of the scheme involved Giusti, also at Nuru’s direction, arranging for Recology to provide approximately $1 million in regular payments over several years to a local non-profit organization. This non-profit immediately funneled the payments to a second non-profit organization, and those funds were then controlled and used by Nuru. In yet another part of the scheme, Giusti arranged a job for Nuru’s son at Recology and, once that benefit was discovered, terminated him and promptly secured for him a Recology-funded internship at yet another non-profit, paid for by a grant for a summer youth internship program. Finally, the complaint alleges Giusti arranged for Recology to secretly pay for the funeral of a DPW employee by having a non-profit pay the mortuary bill and creating a fake donation invoice. The complaint outlines that Giusti timed several “donations” and other benefits to coordinate with key decision points in Recology’s requests for assistance and approvals from DPW, particularly Recology’s successful 2017 application to increase rates to San Francisco residents for garbage service.
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.
Giusti is charged with one count of bribery, in violation of 18 U.S.C. § 666(a)(2), and one count of laundering the proceeds of honest services fraud, in violation of 18 U.S.C. § 1956(a)(1)(B)(i). If convicted of bribery, he faces a maximum penalty of 10 years in prison and a fine of $250,000. If convicted of concealment money laundering, he faces a maximum penalty of 20 years in prison, a fine of $500,000 or twice the value of the property involved in the transaction, or both. 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.
Giusti is expected to be scheduled to make his initial appearance in federal court in San Francisco on November 23, 2020 before U.S. Magistrate Judge Jacqueline Scott Corley.
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.
Convicted Child Sex Trafficker Sentenced to 10 Years in PrisonRead the Press Release
OAKLAND – Kevin Fuqua was sentenced to 120 months in prison after pleading guilty to sex trafficking of children, announced United States Attorney David L. Anderson and Homeland Security Investigations (NorCal) Special Agent in Charge Tatum King. The sentence was handed down by the Honorable James Donato, U.S. District Judge.
In pleading guilty, Fuqua, 33, of Oakland, admitted that between August 8, 2018, and January 1, 2019, he caused a minor to engage in sex in exchange for money.
“No girl’s teenage years should be spent on the streets of Oakland turning tricks to satisfy her pimp,” said U.S. Attorney Anderson. “Fuqua’s case demonstrates how important it is for us all to be on the lookout for child sex trafficking. Sadly, this case demonstrates that there will always be those in our community who will take advantage of minors to profit from the commercial sex trade.”
“Human trafficking, especially of minors, is a reprehensible crime and the facts of this case are truly alarming,” said Special Agent in Charge King. “Homeland Security Investigations and our dedicated law enforcement partners, including the Alameda County Sheriff’s Office, will never stop our determined pursuit of anyone who thinks they can abuse and force a child into prostitution here in America or in any corner of the world. Justice was brought to bear through the vigorous prosecution by the U.S. Attorney’s Northern District of California Office, which led to this important sentencing. Now the victim can begin the process of recovery.”
Fuqua admitted that he prostituted the minor victim by driving her to an area in Oakland known for prostitution and dropping her off. Fuqua then monitored the minor’s location by requiring her to share cell phone location data with him. Fuqua admitted that he required the minor victim to earn $500 a night before allowing her to come in. Fuqua admitted that he knew that the victim was under 18 at the time. The government submitted documents in connection with Fuqua’s sentencing that described how Fuqua and his minor victim exchanged text messages describing his physical abuse of her. For example, the messages describe how Fuqua justified hitting and choking her to demonstrate he had control of her.
Fuqua was charged by Information on August 27, 2020, with one count of sex trafficking of children, in violation of 18 U.S.C. §§ 1591(a)(1) and (b)(2). Fuqua pleaded guilty to the charge.
At the time of the offense, Fuqua was on supervised release for a 2014 conviction for illegally possessing a firearm in violation of 18 U.S.C. § 922(g)(1).
In addition to the prison term, Judge Donato also ordered Fuqua to a 5-year term of supervised release. A hearing to determine the amount of restitution owed to the minor victim is set for February 17, 2020.
Assistant U.S. Attorney Maya Karwande is prosecuting the case with the assistance of Ralph Banchstubbs. The prosecution is the result of an investigation by the HSI and the Alameda County Sheriff’s Office.
Salinas Norteño Gang Member Sentenced to 30 Years in Prison for His Participation in Federal RICO ConspiracyRead the Press Release
SAN JOSE – Johnny Magdaleno, a/k/a “Soldier Boy,” was sentenced today to 30 years in prison for his federal RICO conspiracy conviction, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. Magdaleno was a high-ranking Norteño gang member who orchestrated and participated in multiple attempted murders in the Monterey County Jail.Magdaleno, 33, of Salinas, pleaded guilty on February 13, 2020, to a RICO conspiracy charge and admitted in his plea agreement to being a member of the Nuestra Familia/Salinas Norteños, known legally as an enterprise. The enterprise consisted of members and associates of the Nuestra Familia prison gang as well as Norteño street gangs in Salinas and the surrounding areas. Norteño gang members pledge their allegiance and loyalty to Nuestra Familia and are instructed on its rules, rituals, and obligations. Members agree to commit crimes such as murder, narcotics trafficking, and other acts of violence as a pattern of their racketeering activity.
Gang rules and discipline are maintained by threatening and assaulting those individuals who violate the rules or pose a threat to the organization. Inside prisons and local jails, all members and associates of Nuestra Familia and the Norteños work together to maintain the structure and follow the rules of the enterprise.
In his plea agreement, Magdaleno admitted that while in jail he conspired with enterprise members to commit murder by approving “removals” of inmates as a means of enforcing the gang’s most important rules. The term “removal” refers to a weapons-based assault designed to remove (from both the custodial housing unit and the gang itself) a member of the gang who committed a serious violation of the gang’s rules. A removal is accomplished by having one or more “hitters” stab the victim and then having at least two “bombers” assault the target by punching and kicking the victim. The purpose of the subsequent bombers’ beating is to inflict maximum injury on the victim while giving time to the hitters to wash blood off of themselves and to get rid of the weapons.
Magdaleno admitted that during the RICO conspiracy period he was a high-ranking member of the Norteños group called La Casa. In that role, he had the power, authority, and responsibility to authorize removals in the Monterey County Jail. Magdaleno admitted that while in custody at the Monterey County jail he committed the following removals:o On December 2, 2012, Magdaleno orchestrated and directly participated in the removal of an inmate referred to as Victim-1 by stabbing Victim-1 in the chest and back over 20 times. Immediately thereafter two bombers punched and kicked the victim to inflict maximum damage and to allow Magdaleno to escape from being caught with the stabbing weapon by guards.
o On February 25, 2013, Magdaleno orchestrated and directly participated in the removal of Victim-2 by first giving marijuana to the victim so that he would let his guard down and then stabbing the victim in the head with a shank made from an electrical outlet plate sharpened into a stabbing instrument. Three bombers then punched and kicked the victim to allow Magdaleno to take the shank away. Magdaleno disposed of the shank and returned to join the bombers in beating Victim-2.
o On April 29, 2013, Magdaleno orchestrated the removal of Victim-3 by falsely assuring him that he would not be harmed if he returned to his housing pod and by directing others also to assure the victim of his safety. During the ensuing removal, Victim-3 was stabbed in the head several times by a hitter using a metal shank and punched and kicked by bombers to allow the hitter to dispose of the shank.
o On November 13, 2013, Magdaleno orchestrated the removal of Victim-6 that resulted in the hitter stabbing Victim-6 in the head, torso, and arms approximately ten times and two bombers setting upon the victim, punching and kicking him.
o On April 14, 2014, Magdaleno orchestrated and directly participated in the removal of Victim-7 in the Monterey County Jail Main Yard by stabbing the inmate in the head and thereafter joining two bombers in punching and kicking the victim.
Magdaleno further admitted to overseeing and actively participating in a narcotics distribution conspiracy within Monterey County Jail.
Magdaleno and 14 other Norteño gang members were indicted by a federal grand jury on September 27, 2018. They were charged with one count of a RICO racketeering conspiracy, in violation of 18 U.S.C. § 1962(d); one count of conspiracy to commit attempted murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(5); and one count of conspiracy to commit assault with a dangerous weapon in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(6). In addition, some of the defendants, but not Magdaleno, were charged with attempted murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(5) and assault with a dangerous weapon, in violation of 18 U.S.C. § 1959(a)(3).
To date, 11 of the charged defendants have pleaded guilty and nine have been sentenced, while four defendants remain scheduled for a trial set to commence on August 30, 2021. Each of the 11 defendants listed below pleaded guilty to a RICO conspiracy, and their status is as follows:
Defendant
Date of Sentencing
Sentence
JOHNNY MAGDALENO, a/k/a “Soldier Boy”
November 10, 2020
30 years in prison
RODNEY LUIS ROMERO,
a/k/a “Speedy”
November 17, 2020
TBD – pending sentencing
RAMON MONTOYA, a/k/a “Ray Ray”
October 27, 2020
10 years in prison
MICHAEL JAMES RICE,
a/k/a “Redwood”
March 3, 2020
156 months in prison
ALEJO ALEX ALEGRE, IV,
a/k/a “Chino”
October 13, 2020
10 years in prison
CARLOS CERVANTES, a/k/a “Lil Huero”
September 22, 2020
10 years in prison
ALBERTO MORENO,
a/k/a “Doughboy”
January 7, 2020
7 years in prison
STEVEN ANTHONY DORADO,
a/k/a “Castro”
July 14, 2020
7 years in prison
JEFFREY LOPEZ,
a/k/a “T-Bone”
May 11, 2020
7 years in prison
JUAN ALVAREZ,
a/k/a “Chucky”
January 5, 2021
TBD – pending sentencing
ERIK LOPEZ,
a/k/a “Bimbo”
August 18, 2020
10 years in prison
The sentence for Magdaleno was handed down today by The Honorable Beth Labson Freeman, U.S. District Court Judge, following a guilty plea on one count of engaging in a racketeering conspiracy, in violation of 18 U.S.C. § 1962(d). Judge Freeman also sentenced the defendant to a five year period of supervised release following release from prison.
Assistant U.S. Attorneys Claudia Quiroz and Stephen Meyer are prosecuting the case. The prosecution is the result of an investigation by the FBI with assistance from the Salinas Police Department, the Monterey County Sheriff’s Office, the California Highway Patrol, and the California Department of Corrections and Rehabilitation.
San Bruno Man Sentenced to 12 Years in Prison for Distribution and Receipt of Child PornographyRead the Press Release
SAN FRANCISCO – James Calvert was sentenced today to 12 years in prison followed by a lifetime of supervised release for distribution and receipt of child pornography, announced United States Attorney David L. Anderson and FBI Special Agent in Charge Craig D. Fair. The sentence was handed down by the Honorable Susan Illston, U.S. District Judge.
Calvert, 27, of San Bruno, California, pleaded guilty to the charges on August 14, 2020. According to the plea agreement, Calvert admitted that in May of 2019, he posted a video that depicted a prepubescent minor female performing oral sex on an adult male and a video of a prepubescent minor being raped by an adult male in the “Babyprn” group chat-room of Kik, an instant messaging application used on mobile telephones.
Calvert also admitted in the plea agreement that in December 2019, he encouraged a fifteen-year-old female victim to perform a sex act on camera and to send him a video of her performing that sex act to his Kik account. Calvert admitted that he knew the victim was a minor when he encouraged her to send him the video. The government pointed out in additional filed papers that Calvert engaged in the December 2019 conduct after he had been charged with the May 2019 offense and had been released under supervision.
Calvert was arraigned on August 13, 2020, on a Superseding Information charging him with one count of distribution of child pornography, in violation of 18 U.S.C. §§ 2252(a)(2) and (b)(2), and one count of receipt of child pornography, in violation of 18 U.S.C. §§ 2252(a)(2) and (b)(2).
In addition to the 12 year prison term, Judge Illston ordered Calvert to serve a lifetime term of supervised release, to begin after the prison term ends. The defendant, who has been in custody since February of 2020, is presently serving his sentence.
Ajay Krishnamurthy and Barbara J. Valliere are the Assistant U.S. Attorneys who prosecuted the case with the assistance of Margoth Turcios. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Pottawatomie County Sheriff’s Office in Oklahoma.
United States Files A Civil Action to Forfeit Cryptocurrency Valued at over One Billion U.S. DollarsRead the Press Release
SAN FRANCISCO - The United States filed a civil complaint today to forfeit thousands of Bitcoins, valued at over $1 billion dollars, seized by law enforcement on November 3, 2020, announced United States Attorney David L. Anderson of the Northern District of California and Special Agent in Charge of the Washington DC Field Office, Internal Revenue Service Criminal Investigation (IRS-CI) Kelly R. Jackson. The seizure represents the largest seizure of cryptocurrency in the history of the Department of Justice.
“Silk Road was the most notorious online criminal marketplace of its day,” said U.S. Attorney Anderson. “The successful prosecution of Silk Road’s founder in 2015 left open a billion-dollar question. Where did the money go? Today’s forfeiture complaint answers this open question at least in part. $1 billion of these criminal proceeds are now in the United States’ possession.”
“Criminal proceeds should not remain in the hands of the thieves. Through CI’s expertise in following the money, we were able to track down the illicit funds,” said IRS-CI Special Agent in Charge Kelly R. Jackson. “The Washington DC Cyber Crimes Unit is uniquely specialized in tracing virtual currency transactions and we will continue to hone our skills to combat illegal activity.”
According to the allegations of the civil forfeiture complaint, from 2011 until October 2013 when it was seized by law enforcement, Silk Road was the most sophisticated and extensive criminal marketplace on the Internet. It served a sprawling black market bazaar where unlawful goods and services were bought and sold regularly by the site’s users. The complaint alleges that while in operation, Silk Road was used by thousands of drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs as well as other unlawful goods and services to well over 100,000 buyers, and to launder hundreds of millions of dollars derived from these unlawful transactions. At the time it was taken down in 2013, Silk Road had nearly 13,000 listings for controlled substances and many more listings offering illegal services, such as computer hacking and murder for hire, which generated sales revenue totaling over 9.5 million Bitcoins and commissions from these sales totaling over 600,000 Bitcoins. The complaint further alleges that Silk Road used a so-called “tumbler” to process Bitcoin transactions in a manner designed to frustrate the tracking of individual transactions through the cryptocurrency Blockchain.
The Silk Road creator Ross Ulbricht, following his arrest in San Francisco, was convicted in 2015 by a New York federal jury of seven criminal counts, including conspiracy to distribute narcotics and money laundering.
The complaint further alleges that in 2020 agents of the IRS CI used a third party bitcoin attribution company to analyze bitcoin transactions executed by Silk Road and were able to identify 54 previously undetected bitcoin transactions executed by Silk Road, all of which appear to represent bitcoin, which was the proceeds of unlawful activity, that was stolen from Silk Road in or about 2012 and 2013.
The complaint alleges that these funds were traced to a bitcoin address. Further investigation of that bitcoin address by the United States Attorney’s Office and IRS CI agents revealed that the funds were connected to Individual X. It was further determined that Individual X had hacked the funds from Silk Road. Pursuant to that investigation of the hack, law enforcement seized several thousand Bitcoins on November 3, 2020. On November 4, 2020, the seized Bitcoin had a value of over $1 billion.
The civil complaint merely alleges that certain property is subject to forfeiture. The United States must prove, by a standard of preponderance of the evidence, that the items are subject to forfeiture. If the United States prevails, the court will order all interests of any potential claimant forfeited.
Assistant U.S. Attorneys Claudia Quiroz, William Frentzen, David Countryman, and Chris Kaltsas of the Northern District of California are prosecuting the forfeiture with the assistance of Carolyn Jusay. The forfeiture action is the result of an investigation by IRS – Criminal Investigation Cyber Crimes Unit with assistance from Chainalysis and Excygent.
Former CEO of Bay Area Medical Device Startup Sentenced to More Than 11 Years in Prison for Fraud and Money LaunderingRead the Press Release
SAN FRANCISCO – Lawrence J. Gerrans, former chief executive officer of a San Rafael-based medical device company, was sentenced to 135 months in prison for wire fraud, money laundering, and related charges announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge Craig D. Fair. The sentence was handed down by the Honorable Edward M. Chen, U.S. District Judge.
The sentence follows a guilty verdict after a two-week trial in January 2020. Evidence at trial showed that Gerrans, 50, of San Anselmo, Calif., was the president and chief executive officer of San Rafael-based medical device company Sanovas. From January 12, 2015, through March 16, 2015, Gerrans employed a number of fraudulent methods to siphon funds out of Sanovas. For example, Gerrans systematically transferred more than $2.6 million from Sanovas to himself and two shell companies he controlled, Halo Management Group and Hartford Legend Capital Enterprises, and then used the money to make an all-cash purchase of a luxury home in San Anselmo. The home was purchased for more than $2.5, at least $2.3 million of which was laundered through Hartford Legend before being paid to the escrow account for the purchase.
Evidence at trial also showed that Gerrans made false statements to a newly-created board of directors to seek their approval for a lucrative compensation plan and for reimbursement of retirement account funds that Gerrans had liquidated in 2013 and 2014. Evidence at trial showed that Gerrans had used the retirement account funds for personal expenditures, including a Maserati, a diamond ring, and rent on his personal residence, but he told the board of directors he had used the retirement account funds to benefit Sanovas. In another part of the scheme to defraud, evidence also showed that in 2017 Gerrans used a Sanovas corporate credit card for lavish personal expenditures, including a $44,000 vacation timeshare, $12,500 for high-end carpets for his home, and $32,000 to pay the property taxes on his personal residence.
Evidence at trial further showed that Gerrans provided false documents to the FBI during the criminal investigation, and that after he was first charged in the case he violated a court-ordered bond condition, attempted to tamper with a witness, and obstructed justice.
A federal grand jury indicted Gerrans on August 27, 2019, by a second superseding indictment, charging him with five counts of wire fraud, in violation of 18 U.S.C. § 1343; one count of engaging in monetary transactions in criminally derived property, in violation of 18 U.S.C. § 1957; three counts of making false statements to a government agency, in violation of 18 U.S.C. § 1001(3); one count of contempt of court, in violation of 18 U.S.C. § 401(3); one count of witness tampering, in violation of 18 U.S.C. § 1512(b)(1); and one count of obstruction of justice, in violation of 18 U.S.C. § 1503. The jury convicted Gerrans on all counts.
In addition to the prison term, Judge Chen also ordered Gerrans to serve a three-year term of supervised release to begin after the prison term.
Assistant U.S. Attorneys Robin Harris and Lloyd Farnham are prosecuting the case with the assistance of Patricia Mahoney and Kimberly Richardson. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
United States Seizes 27 Additional Domain Names Used by Iran’s Islamic Revolutionary Guard Corps to Further a Global, Covert Influence CampaignRead the Press Release
The United States has seized 27 domain names that Iran’s Islamic Revolutionary Guard Corps (IRGC) unlawfully used to further a global covert influence campaign.
As described in the seizure documents, all 27 domains were being used in violation of U.S. sanctions targeting both the Government of Iran and the IRGC. Four of the domains purported to be genuine news outlets but were actually controlled by the IRGC and targeted audiences in the United States, to covertly influence United States policy and public opinion, in violation of the Foreign Agents Registration Act (FARA). The remainder targeted audiences in other parts of the world. This seizure warrant follows an earlier seizure of 92 domains used by the IRGC for similar purposes.
“Within the last month we have announced seizures of Iran’s weapons, fuel, and covert influence infrastructure,” said John C. Demers, Assistant Attorney General for National Security. “As long as Iran’s leaders are trying to destabilize the world through the state-sponsorship of terrorism and the taking of hostages, we will continue to enforce U.S. sanctions and take other legal steps to counter them.”
“Today's 29 seizures are another important step against Iran's worldwide disinformation campaign,” said U.S. Attorney Anderson. “This work will continue. We cannot allow Iran's attachment to fake news to overtake our commitment to the rule of law.”
“The FBI is aggressively investigating any evidence of foreign influence and the unlawful spread of disinformation by hostile nations. Today, we seized 27 additional domains that Iran’s IRGC was illegally using in attempt to manipulate public opinion in other countries, including the United States,” said FBI Special Agent in Charge Craig D. Fair. “Thanks to our ongoing collaboration with Google, Facebook, and Twitter, the FBI was able to disrupt this Iranian propaganda campaign and we will continue to pursue any attempts by foreign actors to spread disinformation in our country.”
The seizure warrant, issued on Nov. 3, 2020, describes how the 27 seized domain names were being operated in violation of federal law. Control of the domains by the IRGC violated the International Emergency and Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSR), which prohibit U.S. persons from providing services to the Government of Iran without a license. Further, the United States has found that the IRGC has provided material support to a number of terrorist groups, including Hizballah, Hamas, and the Taliban. As such, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) added the IRGC to its list of Specially Designated Nationals, imposing additional licensing requirements. As described in the seizure documents, the 27 domains were registered with U.S.-based domain registrars and used top-level domains owned by U.S.-based registries. Neither the IRGC nor the Government of Iran obtained a license from OFAC prior to using the domain names and obtaining services from the U.S. providers.
In addition, four of the 27 domain names, “rpfront.com,” “ahtribune.com,” “awdnews.com,” and “criticalstudies.org,” were also seized pursuant to FARA. FARA establishes a registration, reporting, and disclosure regime for agents of foreign principals (including foreign governments and their agencies) so that the U.S. government and the people of the United States are informed of the source of information and the identity of persons attempting to influence U.S. public opinion, policy, and law.
FARA requires, among other things, that persons subject to its requirements submit periodic registration statements containing truthful information about their activities and the income earned from them. Disclosure of the required information allows the federal government and the American people to evaluate the statements and activities of such persons in light of their function as foreign agents. Here, the four domains purported to be independent news outlets, but they were actually operated by or on behalf of the IRGC to target the United States with pro-Iranian propaganda in an attempt to covertly influence the American people to change United States policy concerning Iran and the Middle East.
These domains targeted a United States audience without proper registration pursuant to FARA and without notifying the American public with a conspicuous label that the content of the domains was being published on behalf of foreign principals, the IRGC and the Government of Iran.
Visitors to the sites received the following message:
This seizure was investigated by the Federal Bureau of Investigation.
The Special Prosecutions Section and Asset Forfeiture Unit of the United States Attorney’s Office for the Northern District of California, and the Counterespionage Section of the Department of Justice’s National Security Division, are prosecuting the seizure.
United States Seizes 27 Additional Domain Names Used by Iran’s Islamic Revolutionary Guard Corps to Further A Global, Covert Influence CampaignRead the Press Release
SAN FRANCISCO – The United States has seized 27 domain names that Iran’s Islamic Revolutionary Guard Corps (IRGC) unlawfully used to further a global covert influence campaign.
As described in the seizure documents, all 27 domains were being used in violation of U.S. sanctions targeting both the Government of Iran and the IRGC. Four of the domains purported to be genuine news outlets but were actually controlled by the IRGC and targeted audiences in the United States, to covertly influence United States policy and public opinion, in violation of the Foreign Agents Registration Act (FARA). The remainder targeted audiences in other parts of the world. This seizure warrant follows an earlier seizure of 92 domains used by the IRGC for similar purposes.
“Today's 27 seizures are another important step against Iran's worldwide disinformation campaign,” said U.S. Attorney Anderson. “This work will continue. We cannot allow Iran's attachment to fake news to overtake our commitment to the rule of law.”
“Within the last month we have announced seizures of Iran’s weapons, fuel, and covert influence infrastructure,” said John C. Demers, Assistant Attorney General for National Security. “As long as Iran’s leaders are trying to destabilize the world through the state-sponsorship of terrorism and the taking of hostages, we will continue to enforce U.S. sanctions and take other legal steps to counter them.”
“The FBI is aggressively investigating any evidence of foreign influence and the unlawful spread of disinformation by hostile nations. Today, we seized 27 additional domains that Iran’s IRGC was illegally using in attempt to manipulate public opinion in other countries, including the United States,” said FBI Special Agent in Charge Craig D. Fair. “Thanks to our ongoing collaboration with Google, Facebook, and Twitter, the FBI was able to disrupt this Iranian propaganda campaign and we will continue to pursue any attempts by foreign actors to spread disinformation in our country.”
The seizure warrant, issued on Nov. 3, 2020, describes how the 27 seized domain names were being operated in violation of federal law. Control of the domains by the IRGC violated the International Emergency and Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSR), which prohibit U.S. persons from providing services to the Government of Iran without a license. Further, the United States has found that the IRGC has provided material support to a number of terrorist groups, including Hizballah, Hamas, and the Taliban. As such, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) added the IRGC to its list of Specially Designated Nationals, imposing additional licensing requirements. As described in the seizure documents, the 27 domains were registered with U.S.-based domain registrars and used top-level domains owned by U.S.-based registries. Neither the IRGC nor the Government of Iran obtained a license from OFAC prior to using the domain names and obtaining services from the U.S. providers.
In addition, four of the 27 domain names, “rpfront.com,” “ahtribune.com,” “awdnews.com,” and “criticalstudies.org,” were also seized pursuant to FARA. FARA establishes a registration, reporting, and disclosure regime for agents of foreign principals (including foreign governments and their agencies) so that the U.S. government and the people of the United States are informed of the source of information and the identity of persons attempting to influence U.S. public opinion, policy, and law.
FARA requires, among other things, that persons subject to its requirements submit periodic registration statements containing truthful information about their activities and the income earned from them. Disclosure of the required information allows the federal government and the American people to evaluate the statements and activities of such persons in light of their function as foreign agents. Here, the four domains purported to be independent news outlets, but they were actually operated by or on behalf of the IRGC to target the United States with pro-Iranian propaganda in an attempt to covertly influence the American people to change United States policy concerning Iran and the Middle East.
These domains targeted a United States audience without proper registration pursuant to FARA and without notifying the American public with a conspicuous label that the content of the domains was being published on behalf of foreign principals, the IRGC and the Government of Iran.
Visitors to the sites received the following message:
This seizure was investigated by the Federal Bureau of Investigation.The Special Prosecutions Section and Asset Forfeiture Unit of the United States Attorney’s Office for the Northern District of California, and the Counterespionage Section of the Department of Justice’s National Security Division, are prosecuting the seizure.
South Bay Resident Charged with Wire Fraud in Alleged Scheme to Convert Funds Intended for Foster ChildrenRead the Press Release
SAN JOSE – Annie Corbett has been charged in a criminal complaint with wire fraud in connection with a scheme to defraud local county governments of funds entrusted to her for the benefit of foster children, announced U.S. Attorney David L. Anderson; FBI Special Agent in Charge Craig Fair; Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI), Kareem Carter; and U.S. Department Health and Human Services – Office of Inspector General (HHS-OIG) Special Agent in Charge Steven J. Ryan.
According to the complaint, Corbett, 53, of Redwood City, Calif., owned and operated Corbett Group Homes, Inc. (CGH), a company with the stated mission to provide residential care for children and adolescents. According to the complaint, CGH received funds from local county governments, including Santa Clara County, for the benefit of foster children. The complaint explains that from 2011 through 2018, CGH operated three group homes and received funds from local county governments under a federal program entitled Title IV-E, Aid to Families with Dependent Children- Foster Care.
Under the program, the local county governments provided the funds to CGH that received the funds on behalf of minors residing in the group homes. The complaint alleges that Corbett used wire transfers to convert funds intended for foster children and to use the money for her personal enrichment, including credit card payments, personal expenses, and personal retail business payments. Corbett is charged with wire fraud, in violation of 18 U.S.C. § 1343.
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, Corbett faces a maximum statutory sentence of 20 years imprisonment, a three-year term of supervised release, and a $1,000,000 fine.
Corbett is scheduled to make her initial federal court appearance on November 19, 2020, before U.S. Magistrate Judge Virginia K. DeMarchi.
Assistant U.S. Attorney Chinhayi Cadet is prosecuting the case with the assistance of Jessica Leung. The prosecution is the result of an investigation by the FBI, IRS-CI, and HHS-OIG with assistance from the office of Santa Clara County District Attorney Jeffrey F. Rosen.
Salinas Man Charged with Illegally Possessing A Firearm Silencer Located in His Storage LockerRead the Press Release
SAN JOSE – Rufino Costales Jr. made his initial appearance today after being charged in a criminal complaint alleging he possessed an unregistered firearm silencer, announced United States Attorney David L. Anderson and Bureau of Alcohol, Tobacco, Firearms, and Explosives Special Agent in Charge Patrick Gorman.
An affidavit filed by an agent of the Bureau of Alcohol, Tobacco, Firearms, and Explosives in connection with the criminal complaint alleges that Costales, 45, of Salinas, claimed to own firearms and to manufacture firearm silencers, also known as sound suppressors. The complaint further alleges Costales made a series of threats to the safety of law enforcement officers and other people. Costales threatened to use self-manufactured weapons, including an explosive device.
Law enforcement officers discovered the silencer in a storage unit rented to Costales. The silencer bore no manufacturer mark nor any serial number and was not registered as required by law.
Costales was arrested on October 30, 2020, and had his initial appearance in federal court in San Jose this morning. His next scheduled appearance is at 10:30 a.m. on Thursday, November 5, 2020, for a detention hearing before U.S. Magistrate Judge Virginia K. DeMarchi.
Costales is charged with possession of an unregistered firearm silencer, in violation of 26 U.S.C. § 5861(d). If convicted of the offense charged in the complaint, he faces a maximum sentence of 10 years and a 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.
The charges contained in the 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.
Assistant U.S. Attorney Patrick R. Delahunty is prosecuting the case with the assistance of Susan Kreider. The prosecution is the result of an investigation by Bureau of Alcohol, Tobacco, Firearms, and Explosives.
East Bay Residents Charged with Mail Fraud Conspiracy in Connection with Alleged Identity Theft SchemeRead the Press Release
OAKLAND – Dayna Lynn Alexander, also known as Dayna Lyn Huntsman, and Alicia Amanda Roberts, also known as Alicia Roberts Canal, have been charged in a criminal complaint with an alleged conspiracy to commit mail fraud, announced United States Attorney David L. Anderson and United States Postal Inspection Service San Francisco Division Inspector in Charge Rafael Nunez. Alexander made her initial federal court appearance today before U.S. Magistrate Judge Nathanael M. Cousins.
According to the affidavit filed with the criminal complaint, Alexander, 47, of Vallejo and San Pablo, reviewed obituaries in order to identify individuals who had recently suffered “sudden deaths.” Alexander would then find their personal identifying information from online sources and use that information to place holds on their U.S. Postal Service mail and to change their mailing addresses. Alexander would cause checks and debit cards to be mailed from the victims’ accounts, and she would obtain them from the victims’ new mailing address. Alexander also opened bank accounts using the victims’ information. She and her co-conspirators would deposit funds into these accounts and write checks to themselves from the accounts. Alexander would then assume yet another victim’s identity in order to obtain and spend those funds.
Alexander and her co-conspirators, including Roberts, 41, of San Pablo, would also use the victims’ legitimate credit cards and other online payment accounts, including PayPal, to make purchases at Amazon and other vendors. Roberts assumed one victim’s identity in order to rent storage units in which Alexander and Roberts stored stolen access devices and counterfeit identification cards as well as stolen mail and financial documents in the names of the victims.
While incarcerated in county facilities, Alexander continued to identify potential victims and relayed that information to Roberts. Alexander discussed using the deceased victims as potential sureties for bail bonds in order to secure her release from custody. Alexander also drafted a handwritten guide to educate others on how to commit the fraud scheme, which she mailed to a co-conspirator.
Alexander and Roberts are charged with conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349. If convicted, they will face a maximum statutory sentence of 20 years. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Alexander is scheduled to appear before Magistrate Judge Virginia K. DeMarchi on November 5, 2020, at 10:30 a.m., for a detention hearing.
Alicia Amanda Roberts, who is also known as Alicia Roberts Canal, has not been arrested nor made an initial appearance. Anyone with information regarding her location is encouraged to contact the U.S. Postal Inspection Service.
The charges contained in the 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.
Assistant U.S. Attorney Samantha Bennett is prosecuting the case with the assistance of Jessica Rodriguez Gonzalez. The prosecution is the result of an investigation by the U.S. Postal Inspection Service, the U.S. Postal Service Office of Inspector General, and the Danville Police Department.
Taiwan Company Pleads Guilty to Trade Secret Theft in Criminal Case Involving PRC State-Owned CompanyRead the Press Release
The Department of Justice today announced that United Microelectronics Corporation, Inc. (UMC), a Taiwan semiconductor foundry, pleaded guilty to criminal trade secret theft and was sentenced to pay a $60 million fine, in exchange for its agreement to cooperate with the government in the investigation and prosecution of its co-defendant, a Chinese state-owned-enterprise.
A federal grand jury had indicted UMC in September 2018, along with Fujian Jinhua Integrated Circuit Co., Ltd. (Fujian Jinhua), a state-owned enterprise of the People’s Republic of China (PRC), and three individuals for conspiracy to steal, convey, and possess stolen trade secrets of an American semiconductor company (Micron Technology, Inc. (Micron)) for the benefit of a state-owned enterprise of the PRC (Fujian Jinhua). As a result of today’s guilty plea, and in accordance with an accompanying plea agreement, UMC, whose American Depository Receipts are publicly traded on the New York Stock Exchange, will pay the fine—the second largest ever in a criminal trade secret prosecution, be subject to a three-year term of probation, and cooperate with the United States.
“UMC stole the trade secrets of an American leader in computer memory to enable China to achieve a strategic priority: self-sufficiency in computer memory production without spending its own time or money to earn it,” said Deputy Attorney General Jeffrey A. Rosen. “This prosecution is an example of the Department of Justice’s successful efforts to defend American companies from those who try to cheat and steal their technology.”
UMC pleaded guilty to a superseding information charging the company with one count of criminal trade secret theft in violation of 18 U.S.C. § 1832(a)(3). The other criminal charges and a parallel civil suit by the United States against UMC will be dismissed. The criminal prosecution of Fujian Jinhua and the three individual defendants will continue, as will a civil action seeking to enjoin Fujian Jinhua from the further transfer of stolen trade secrets and the export to the United States of products manufactured by Fujian Jinhua that were made using the stolen trade secrets.
“UMC's guilty plea points this case towards trial against Fujian Jinhua in 2021,” said U.S. Attorney David L. Anderson. “Criminal trade secrets cases protect freedom and innovation. These cases have global significance when a foreign defendant is charged with stealing intellectual property protected by U.S. law.”
“Protecting American intellectual property and trade secrets is a top priority for the FBI. This is especially true for the FBI’s San Francisco Division, with Silicon Valley in our area of responsibility, and we will continue to lead the fight in safeguarding U.S. innovation from foreign adversaries,” said FBI Special Agent in Charge Craig Fair. “This case sends an important message to Bay Area companies: if you report suspicious activity to the FBI, we will follow all investigative leads to identify and prosecute those responsible.”
According to the facts admitted in connection with the guilty plea, UMC hired the three individual defendants—Chen Zhengkun, a.k.a. Stephen Chen; He Jianting, a.k.a. J.T. Ho; and Wang Yungming, a.k.a. Kenny Wang—from Micron’s Taiwan subsidiary. UMC made Chen a senior vice president and assigned him to lead negotiation of an agreement with Fujian Jinhua to develop Dynamic Random Access Memory (DRAM) technology for Fujian Jinhua. As a foundry company, UMC previously made logic chips designed by other companies but did not make DRAM memory chips. Chen hired Ho and Wang to join the DRAM development team, and Ho and Wang brought Micron’s confidential information to UMC from Micron’s Taiwan subsidiary. After UMC’s Information Technology Department found Micron’s intellectual property on Ho’s UMC computer, Chen approved the issuance of two “off network” laptop computers that allowed UMC employees to access Micron confidential information without further detection by UMC’s IT department. In particular, Wang used one file containing Micron’s trade secrets to adjust UMC’s design rules for the memory in question. Later, when Taiwan authorities searched UMC’s offices, Ho and Wang asked another UMC employee to hide papers, notes, USB drives, a personal phone, and a laptop computer while the Taiwan authorities executed their search warrants. Taiwan authorities recovered only one of the two off-network laptops. The hard drive of the other was reformatted and concealed from Taiwan authorities. Beginning in the month of the Taiwan raids, Chen became president of Fujian Jinhua and took charge of its memory production facility.
This prosecution is a result of an investigation by the FBI. Substantial assistance was provided by Taiwan’s Ministry of Justice, its Ministry of Justice Investigation’s Bureau (MJIB), and the Taichung District Prosecutor’s Office (TDPO).
Taiwan Company Pleads Guilty to Trade Secret Theft in Criminal Case Involving PRC State-Owned CompanyRead the Press Release
SAN FRANCISCO – The Department of Justice today announced that United Microelectronics Corporation, Inc. (UMC), a Taiwan semiconductor foundry, pleaded guilty to criminal trade secret theft and was sentenced to pay a $60 million fine, in exchange for its agreement to cooperate with the government in the investigation and prosecution of its co-defendant, a Chinese state-owned-enterprise. The plea was accepted by the Hon. Maxine M. Chesney, U.S. District Judge.
A federal grand jury had indicted UMC in September 2018, along with Fujian Jinhua Integrated Circuit Co., Ltd. (Fujian Jinhua), a state-owned enterprise of the People’s Republic of China (PRC), and three individuals for conspiracy to steal, convey, and possess stolen trade secrets of an American semiconductor company (Micron Technology, Inc. (Micron)) for the benefit of a state-owned enterprise of the PRC (Fujian Jinhua). As a result of today’s guilty plea, and in accordance with an accompanying plea agreement, UMC, whose American Depository Receipts are publicly traded on the New York Stock Exchange, will pay the fine—the second largest ever in a criminal trade secret prosecution, be subject to a three-year term of probation, and cooperate with the United States.
“UMC's guilty plea points this case towards trial against Fujian Jinhua in 2021," said U.S. Attorney David L. Anderson. "Criminal trade secrets cases protect freedom and innovation. These cases have global significance when a foreign defendant is charged with stealing intellectual property protected by U.S. law.”
“UMC stole the trade secrets of an American leader in computer memory to enable China to achieve a strategic priority: self-sufficiency in computer memory production without spending its own time or money to earn it,” said Deputy Attorney General Jeffrey A. Rosen. “This prosecution is an example of the Department of Justice’s successful efforts to defend American companies from those who try to cheat and steal their technology.”
“U.S. companies possess some of the most sensitive and valuable intellectual property in the world. That’s why the Government of China continues to incentivize its theft. The FBI and its law enforcement partners here and around the world are working to combat the Government of China’s rampant theft of technology,” said FBI Deputy Director David L. Bowdich. “We won’t stop investigating these crimes, and we won’t stop partnering with the private sector to protect our nation’s economic and national security.”
UMC pleaded guilty to a superseding information charging the company with one count of criminal trade secret theft in violation of 18 U.S.C. § 1832(a)(3). The other criminal charges and a parallel civil suit by the United States against UMC will be dismissed. The criminal prosecution of Fujian Jinhua and the three individual defendants will continue, as will a civil action seeking to enjoin Fujian Jinhua from the further transfer of stolen trade secrets and the export to the United States of products manufactured by Fujian Jinhua that were made using the stolen trade secrets.
“Protecting American intellectual property and trade secrets is a top priority for the FBI. This is especially true for the FBI’s San Francisco Division, with Silicon Valley in our area of responsibility, and we will continue to lead the fight in safeguarding U.S. innovation from foreign adversaries,” said FBI Special Agent in Charge Craig Fair. “This case sends an important message to Bay Area companies: if you report suspicious activity to the FBI, we will follow all investigative leads to identify and prosecute those responsible.”
According to the facts admitted in connection with the guilty plea, UMC hired the three individual defendants—Chen Zhengkun, a.k.a. Stephen Chen; He Jianting, a.k.a. J.T. Ho; and Wang Yungming, a.k.a. Kenny Wang—from Micron’s Taiwan subsidiary. UMC made Chen a senior vice president and assigned him to lead negotiation of an agreement with Fujian Jinhua to develop Dynamic Random Access Memory (DRAM) technology for Fujian Jinhua.
As a foundry company, UMC previously made logic chips designed by other companies but did not make DRAM memory chips. Chen hired Ho and Wang to join the DRAM development team, and Ho and Wang brought Micron’s confidential information to UMC from Micron’s Taiwan subsidiary. After UMC’s Information Technology Department found Micron’s intellectual property on Ho’s UMC computer, Chen approved the issuance of two “off network” laptop computers that allowed UMC employees to access Micron confidential information without further detection by UMC’s IT department. In particular, Wang used one file containing Micron’s trade secrets to adjust UMC’s design rules for the memory in question. Later, when Taiwan authorities searched UMC’s offices, Ho and Wang asked another UMC employee to hide papers, notes, USB drives, a personal phone, and a laptop computer while the Taiwan authorities executed their search warrants. Taiwan authorities recovered only one of the two off-network laptops. The hard drive of the other was reformatted and concealed from Taiwan authorities. Beginning in the month of the Taiwan raids, Chen became president of Fujian Jinhua and took charge of its memory production facility.
This prosecution is a result of an investigation by the FBI. Substantial assistance was provided by Taiwan’s Ministry of Justice, its Ministry of Justice Investigation’s Bureau (MJIB), and the Taichung District Prosecutor’s Office (TDPO).
United States Files Civil Action to Repatriate Thai Religious Relics Housed at the San Francisco Asian Art MuseumRead the Press Release
SAN FRANCISCO – The United States filed a civil complaint to forfeit and repatriate two religious relics identified as having been illegally exported from Thailand, announced United States Attorney David L. Anderson of the Northern District of California and Homeland Security Investigations (NorCal) Special Agent in Charge Tatum King. The civil complaint can be viewed here: https://go.usa.gov/x7TKF
According to the complaint, the two 1,500-pound hand-carved decorative lintels originally were located in ancient religious temples in Thailand, were removed illegally, and thereafter were exported from Thailand without a license. The complaint alleges the Thai lintels became part of a large collection held by a noted collector of South and Southeast Asian art. The collection was bequeathed to the City and County of San Francisco, which used the collection, including the lintels, for display in the Asian Art Museum. In 2017, the federal government learned that these lintels had been illegally exported from Thailand, rendering them forfeitable as property present in the United States “contrary to law,” and reached out to the Asian Art Museum to negotiate their return.
“U.S. law requires U.S. museums to respect the rights of other countries to their own historical artifacts,” U.S. Attorney Anderson said. “For years we have tried to get the Asian Art Museum to return this stolen artwork to Thailand. With this federal filing, we call on the Museum’s Board of Directors to do the right thing.”
“Returning a nation’s cultural antiquities promotes goodwill with foreign governments and citizens, while significantly protecting the world’s cultural history and knowledge of past civilizations,” said Special Agent in Charge King. “The theft and trafficking of cultural artifacts is a tradition as old as the cultures they represent. Federal importation laws provide HSI the authority to take a leading role in investigating crimes involving the illicit importation and distribution of cultural property and art. Customs laws allow HSI to seize cultural property and art that are brought into the United States illegally, especially when objects have been reported lost or stolen. Through our work in this investigation, we hope to ensure the relationship between the United States and Thailand remains one of mutual respect and admiration. This will help Thailand’s cultural heritage to be fully restored for the appreciation of this and future generations.”
The civil complaint merely alleges that certain property is subject to forfeiture. The United States must prove, by a standard of preponderance of the evidence, that the items are subject to forfeiture. If the United States prevails, the court will order all interests of any potential claimant forfeit, including the City and County of San Francisco, and the United States will provide Thai officials with information as to the Department of Justice’s remission and restoration process via the Money Laundering and Asset Recovery Section.
Assistant U.S. Attorneys Chris Kaltsas of the Northern District of California and Amanda M. Bettinelli of the Central District of California are prosecuting the forfeiture with the assistance of Irene Zhu. The forfeiture action is the result of an investigation by Homeland Security Investigations.
Self-Styled Diamond and Gold Exporter Sentenced to Nine Years in Prison for Wire Fraud and Commodities FraudRead the Press Release
SAN JOSE—Fritz Kramer was sentenced today to 108 months in prison, and ordered to pay $7,956,267 in restitution, following convictions for wire fraud and commodities fraud, announced U.S. Attorney David L. Anderson and Federal Bureau of Investigation (FBI) Special Agent in Charge Craig Fair. The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge.
After a six-week trial, on March 19, 2019, a federal jury convicted Kramer, 72, with a last known residence in Norway, of eleven counts of wire fraud and one count of commodities fraud. Evidence at trial showed that Kramer fraudulently solicited funds from dozens of investors, several of whom resided in the Bay Area. Kramer told the investors that their money would be invested in an export project in which Kramer would export gold and diamonds from the Democratic Republic of Congo to Europe, Asia, and the United States. The evidence at trial showed that Kramer falsely promised investors returns of up to ten times the amount invested in as short a time as one month, though no investor ever received a return on their investment. Trial evidence demonstrated that numerous investors sent Kramer millions of dollars based upon Kramer’s false representations regarding the export project.
A federal grand jury indicted Kramer on July 21, 2016, charging him with eleven counts of wire fraud and one count of commodities fraud. The jury convicted Kramer of all counts.
In addition to the prison term and restitution order, Judge Davila ordered Kramer to serve a five-year term of supervised release for the commodities fraud count, and a three-year term of supervised release for the wire fraud counts. The terms of supervised release will run concurrently. The defendant is in custody and will immediately begin serving his sentence.
Assistant U.S. Attorneys Maia Perez and Jeff Nedrow are prosecuting the case with the assistance of Susan Kreider and Nina Burney-Williams. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Susanville Woman Sentenced to More Than Two Years in Prison for Bank Fraud and Related OffenseRead the Press Release
SAN FRANCISCO– Generose Casiano Yambao was sentenced to 27 months in prison for bank fraud and making false statements on a loan application in connection with a scheme to defraud a Santa Rosa credit union, announced United States Attorney David L. Anderson and FBI Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge.
Yambao, 41, of Susanville, California, pleaded guilty to the charges on October 21, 2020. According to her plea agreement, Yambao admitted that on March 27, 2017, she mailed a Member Business Loan Application to a credit union in Santa Rosa, Calif., attempting to obtain a $49,500 loan for an existing company. The application was made in the name of one company that purportedly was doing business under the name of another company. Yambao represented that she was the managing partner and co-owner of one of the companies, however, she did not have authorization or permission to act on behalf of either company. Documents filed in the case by the government establish that the credit union detected that the application was fraudulent after discovering that it was mailed from a county jail where Yambao was serving a sentence for a prior offense.
A federal grand jury indicted Yambao on August 29, 2019, charging her with one count each of bank fraud, in violation of 18 U.S.C. § 1344(1); making a false statement on a loan and credit application, in violation of 18 U.S.C. § 1014; and aggravated identity theft, in violation of 18 U.S.C. § 1028A. Yambao pleaded guilty to the first two counts.
In addition to the prison term, Judge Breyer also ordered Yambao to serve three years of supervised release, to begin after the prison term ends. Judge Breyer ordered Yambao to surrender to the Bureau of Prisons on or before February 15, 2021, to begin serving her prison term.
Assistant U.S. Attorney Daniel Pastor is prosecuting the case with the assistance of Marina Ponomarchuk. The prosecution is the result of an investigation by the FBI with assistance from the Contra Costa County Sheriff’s Office.
Six Members of Salinas-Based “Murder Squad” Indicted on Federal Racketeering ChargesRead the Press Release
SAN FRANCISCO – A federal grand jury has indicted six Salinas-based street gang members, charging them with racketeering conspiracy, use of a firearm causing murder, and related crimes, announced United States Attorney David L. Anderson, Homeland Security Investigations (HSI) Special Agent in Charge Tatum King, and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. The charges were announced in a press conference attended by U.S. Attorney Anderson and Special Agent in Charge King, as well as Monterey County District Attorney Jeannine Pacioni and Salinas Police Department (SPD) Chief Adele Fresé.
The defendants are Siaki Tavale, 24, Andrew Alvarado, 29, John Magat, 33, Anthony Valdez, 23, Mark Anthony Garcia, 29, and Anelu Tavale, 24. According to the Second Superseding Indictment filed October 15, 2020, and unsealed today, the defendants were members of a violent hit crew also referred to as the “murder squad.” The indictment describes how the murder squad orchestrated seven shootings, killing eight people and injuring several others. According to the indictment, seven of the eight homicide victims had no known gang affiliation.
“The indictment alleges a pattern of horrific violence,” said U.S. Attorney Anderson. “This violence destroys lives. This violence holds our community hostage. In announcing today’s charges, we reaffirm the importance of professional law enforcement. We need professional law enforcement to protect the community where we live and work and raise our families.”
“The family and friends of the men murdered by this heinous criminal enterprise have suffered profound loss. The inability for these men to live out their lives is extremely disturbing to a law abiding community, all of whom have a fundamental right to be safe in their homes,” said Special Agent in Charge King. “Working together in a collaborative effort with the U.S. Attorney, Northern District, the Salinas Police Department, the FBI, and the Monterey County District Attorney’s Office ensured that these criminals are afforded the most expeditious justice and will help protect the community from their wrath of terror.”
“Over the past three years, the FBI San Francisco Division has worked to link this murder squad with the Nuestra Familia and Norteno street gangs,” said Special Agent in Charge Bennett. “I would like to recognize the work of the members of the FBI throughout this investigation. This case is another example of how strong collaboration between federal, state, and local law enforcement is so effective in keeping our communities safe."
“Violent crimes committed by gang members continue to plague our community,” said DA Pacioni. “Awareness that innocent members of our community may be targeted affects the quality of all of our lives. That is why our office works hand-in-hand with the esteemed members of our law enforcement community to investigate such cases aggressively and bring justice to victims of such crimes.”
The indictment explains that a violent group of Norteno street gang members and others coordinated and executed missions to hunt and kill rival Sureno street gang members – or those the group perceived to be Surenos – in the neighborhoods of Salinas, Calif. The indictment describes murder squad’s use of multi-vehicle caravans that often included one vehicle with designated shooters and at least one spotter or security vehicle to help spot victims and avoid law enforcement detection. The indictment describes that the murder squad identified victims by characteristics they associated with rival Surenos – for example, Hispanic males, persons with shaved heads, and/or persons wearing blue. Once a victim was targeted, the shooters would allegedly fire until their firearms’ magazines were emptied. The indictment alleges that some shooters “hit up” their victims – or, confirmed their gang status – before shooting them, but that members of the murder squad did not always do this, and did not always wait for an answer, before shooting. The indictment alleges that this practice led to the shooting and killing of victims who were not, in fact, gang members. The indictment further alleges that the more “bodies” accumulated by a murder squad member, the higher status conferred on that member.
The indictment specifically provides descriptions of seven hunts in Salinas that culminated in injury and death between January 2017 and November 2018:
- On January 12, 2017, Siaki Tavale, Alvarado, Garcia, and others went hunting for rival gang members to kill. Their hunt led them to Sunrise Street and to a group of Hispanic men outside a house party. The shooters opened fire at the group. Four victims were shot, two were killed. There was no evidence the victims were actually gang members. After the shooting, the shooters led police officers on a high speed chase, crashed and abandoned their vehicle, and fled on foot.
- On February 11, 2017, Siaki Tavale, Alvarado, and others again went hunting in Salinas. This time, the defendants encountered a small group of Hispanic men outside the Hebbron Heights Community Center. The shooters fired at least 18 shots at the men, striking one victim in the head and killing him. The shooters were driving in a stolen SUV that had been doused in gasoline earlier that day, as a precaution in case it needed to be set on fire.
- The next day, on February 12, 2017, Siaki Tavale and Alvarado were joined by Anelu Tavale and others as they again hunted for rival Sureno gang members to kill. The group was driving in the same stolen SUV as the day before when they encountered two Hispanic men in another vehicle. The defendants perceived the men in the other vehicle to be rival Sureno gang members, and followed the vehicle to a residence on Orchard Avenue. After the vehicle pulled into the driveway, the shooters opened fire. The shooters fired at least 20 shots at the two victims. The victims survived, but suffered gunshot wounds to the neck, torso, and upper back.
- On March 25, 2017, Alvarado, Magat, Garcia, and others again went hunting for rival gang members to kill. This hunt was organized to retaliate for the recent killing of a fellow Norteno gang member. While driving on Dennis Avenue, the hunters happened upon two Hispanic men in the driveway of a residence. The shooters fired at least 32 shots at these men, killing them. One victim was killed in the driveway, while the other was chased to the backyard of the residence. There was no evidence either of the victims was actually a gang member.
- On May 13, 2017, Alvarado, Magat, and others again went hunting for rival gang members to kill. When they reached Paloma Avenue in Salinas, they spotted a young Hispanic man standing on the front porch of a residence. The shooters fired at least 15 shots at the victim, hitting him in the head and killing him. There was no evidence the victim was a gang member.
- On June 11, 2018, Magat, Valdez, Anelu Tavale, and others again went hunting for rival gang members to kill. The group spotted a man walking down Center Street, fired at least 19 shots, and killed him. As before, there was no evidence the victim was a member of a rival gang.
- On November 3, 2018, Valdez, Anelu Tavale, and others again went hunting for rival Sureno gang members to kill. This time, the purpose of the hunt was to commemorate the birthday of a deceased gang member. The shooters spotted a man walking on North Hebbron Avenue, and fired at least 35 shots at him. The victim was shot in the head and killed. Again, there was no evidence that this victim was actually a gang member.
In sum, the defendants are charged with the following crimes and, if convicted of all charged offenses, face the below-listed maximum penalties:
Defendant
Charges
Maximum Statutory Penalty
Siaki Tavale aka “Shocky” aka “Gunner”
18 U.S.C. § 1962(d) – Racketeering Conspiracy
18 U.S.C. § 1959(a)(5) – Conspiracy to Murder in Aid of Racketeering
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-1
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-2
18 U.S.C. §§ 924(c) and 2 – Possession/Use of a Firearm in Furtherance of and During and in Relation to a Crime of Violence re: Attempted Murders of Victim-3 and Victim-4
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-5
18 U.S.C. §§ 924(c) and 2 – Possession/Use of a Firearm in Furtherance of and During and in Relation to Crime of Violence re: Attempted Murder of Victim-6
18 U.S.C. §§ 924(c) and 2 – Possession/Use of a Firearm in Furtherance of and During and in Relation to Crime of Violence re: Attempted Murders of Victim-7 and Victim-8
Death or life imprisonment
Andrew Alvarado aka “Oso” aka “Banger”
18 U.S.C. § 1962(d) – Racketeering Conspiracy
18 U.S.C. § 1959(a)(5) – Conspiracy to Murder in Aid of Racketeering
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-1
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-2
18 U.S.C. §§ 924(c) and 2 – Possession/Use of a Firearm in Furtherance of and During and in Relation to Crime of Violence re: Attempted Murders of Victim-3 and Victim-4
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-5
18 U.S.C. §§ 924(c) and 2 – Possession/Use of a Firearm in Furtherance of and During and in Relation to Crime of Violence re: Attempted Murder of Victim 6
18 U.S.C. §§ 924(c) and 2 – Possession/Use of a Firearm in Furtherance of and During and in Relation to Crime of Violence re: Attempted Murders of Victim-7 and Victim-8
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-9
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-10
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-11
Death or life imprisonment
John Magat aka “Romeo”
18 U.S.C. § 1962(d) – Racketeering Conspiracy
18 U.S.C. § 1959(a)(5) – Conspiracy to Murder in Aid of Racketeering
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-9
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-10
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder of Victim-11
Death or life imprisonment
Anthony Valdez aka “Hitter” aka “Tony Boronda”
18 U.S.C. § 1962(d) – Racketeering Conspiracy
18 U.S.C. § 1959(a)(5) – Conspiracy to Murder in Aid of Racketeering
18 U.S.C. §§ 1959(a)(1) and 2 – Murder in Aid of Racketeering of Victim-13
18 U.S.C. §§ 924(c) and 2 – Possession/Use of a Firearm in Furtherance of and During and in Relation to Crime of Violence
18 U.S.C. §§ 924(j)(1) and 2 – Use of a Firearm Causing Murder
Death or life imprisonment
Mark Anthony Garcia aka “Tony from Santa Rita”
18 U.S.C. § 1962(d) – Racketeering Conspiracy
18 U.S.C. § 1959(a)(5) – Conspiracy to Murder in Aid of Racketeering
Life imprisonment
Anelu Tavale aka “Angel”
18 U.S.C. § 1962(d) – Racketeering Conspiracy
18 U.S.C. § 1959(a)(5) – Conspiracy to Murder in Aid of Racketeering
18 U.S.C. §§ 924(c) and 2 – Possession/Use of a Firearm in Furtherance of and During and in Relation to Crime of Violence re: Attempted Murders of Victim-7 and Victim-8
Life imprisonment
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 contains allegations only and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
All the defendants are in custody. Mark Anthony Garcia and Anelu Tavale are scheduled for initial appearances on October 22, 2020, at 10:30 a.m., before the Honorable Nathanael Cousins, United States Magistrate Judge.
The case is being prosecuted by the Organized Crime Strike Force of the United States Attorney’s Office for the Northern District of California. The investigation of this case was conducted by the Salinas Police Department, together with the Homeland Security Investigations and the Federal Bureau of Investigation, with assistance from the Monterey County District Attorney’s Office. The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force (OCDETF), a multi-agency task force that coordinates long-term narcotics trafficking investigations.
San Rafael Man Sentenced to Ten Years in Prison for Possession with Intent to Distribute MethamphetamineRead the Press Release
SAN FRANCISCO – Timothy Melchior was sentenced to 120 months in prison for possession with intent to distribute methamphetamine, announced United States Attorney David L. Anderson and Drug Enforcement Administration (DEA) Special Agent in Charge Daniel C. Comeaux. The sentence was handed down by the Honorable William H. Alsup, U.S. District Judge.
Melchior, 33, of San Rafael, Calif., pleaded guilty to the charge on January 28, 2020. In pleading guilty, Melchior admitted he possessed methamphetamine with the intent to distribute it. According to the United States’ sentencing memorandum, law enforcement agents executed a search warrant at Melchior’s residence on October 30, 2018. Inside the residence, agents found almost 200 grams of pure methamphetamine, along with distribution amounts of heroin and marijuana; multiple cell phones and laptops; a digital scale and drug packaging materials; approximately $12,000 in cash; and bank records showing that, despite being unemployed, the defendant possessed approximately $85,000 in his bank account.
A federal grand jury indicted Melchior on December 20, 2018, charging him with possessing with intent to distribute methamphetamine, in violation of 18 U.S.C. §§ 841(a)(1) and (b)(1)(A)(viii). Melchior pleaded guilty to the sole count in the indictment.
In addition to the prison term, Judge Alsup also sentenced the defendant to a five-year period of supervised release. Melchior’s next court appearance is scheduled for January 26, 2021, to set a date to surrender to the Bureau of Prisons.
Assistant U.S. Attorneys Ross Weingarten and David Ward are prosecuting the case with the assistance of Margoth Turcios. The prosecution is the result of an investigation by the Drug Enforcement Administration, the Marin County Major Crimes Task Force, and the Marin County Sheriff’s Office.
DOJ Charges More Than 14,200 Defendants with Firearms-Related Crimes in FY20Read the Press Release
SAN FRANCISCO – The Department of Justice announced it has charged more than 14,200 defendants with firearms-related crimes during Fiscal Year (FY) 2020, despite the challenges of COVID 19 and its impact on the criminal justice process. These cases have been a Department priority since November 2019 when Attorney General William P. Barr announced his commitment to investigating, prosecuting, and combatting gun crimes as a critical part of the Department’s anti-violent crime strategy. These firearms-related charges are the result of the critical law enforcement partnership between United States Attorneys’ Offices and the Bureau of Alcohol, Tobacco, Firearms and Explosives, led by Acting Director Regina Lombardo, who has made firearms-related investigations a priority.
“The number one priority of government is to keep its citizens safe,” said Attorney General Barr. “By preventing firearms from falling into the hands of individuals who are prohibited from having them, we can stop violent crime before it happens. Violating federal firearms laws is a serious crime and offenders face serious consequences. The Department of Justice is committed to investigating and prosecuting individuals, who illegally buy, sell, use, or possess firearms. Reducing gun violence requires a coordinated effort, and we could not have charged more than 14,000 individuals with firearms-related crimes without the hard work of the dedicated law enforcement professionals at the ATF, our U.S. Attorneys’ Offices across the country, and especially all of our state and local law enforcement partners.”
“Protecting the public from violent crime involving firearms is at the core of ATF’s mission,” commented ATF Acting Director Regina Lombardo. “Every day the men and women of ATF pursue and investigate those who use firearms to commit violent crimes in our communities, many of whom are prohibited from possessing firearms from previous convictions. ATF, in collaboration with the U.S. Attorneys’ Offices across the nation, is committed to bringing these offenders to justice for their egregious and violent criminal acts.”
“Removing an illegal firearm from the street can be the most dangerous thing a law-enforcement officer ever does,” said U.S. Attorney Anderson. “Our community depends on federal, state and local law-enforcement cooperation to enforce our gun laws. We are all safer when we work together.”
Of the more than 14,200 cases charged, 113 cases have been brought by the Northern District of California, announced U.S. Attorney Anderson.
Under federal law, it is illegal to possess a firearm if you fall into one of nine prohibited categories including being a felon, illegal alien, or unlawful user of a controlled substance. Further, it is unlawful to possess a firearm in furtherance of a drug trafficking offense or violent crime. It is also illegal to purchase – or even to attempt to illegally purchase - firearms if the buyer is a prohibited person or illegally purchasing a firearm on behalf of others. Lying on ATF Form 4473, which is used to lawfully purchase a firearm, is also a federal offense. The Department is committed to prosecuting these firearms offenses as well as using all modern technologies available to law enforcement such as the National Integrated Ballistic Information Network, known as NIBIN, to promote gun crime intelligence. Keeping illegal firearms out of the hands of violent criminals will continue to be a priority of the Department of Justice and we will use all appropriate, available means to keep the law abiding people of this country safe from gun crime.
Private Equity CEO Enters into Non-prosecution Agreement on International Tax Fraud Scheme and Agrees to Pay $139 Million, to Abandon $182 Million in Charitable Contribution Deductions, and to Cooperate with Government InvestigationsRead the Press Release
Robert F. Smith, the Chairman and Chief Executive Officer of a San Francisco based private equity company, entered into a Non-Prosecution Agreement (the agreement) with the Department of Justice, for his involvement from 2000 through 2015 in an illegal scheme to conceal income and evade millions in taxes by using an offshore trust structure and offshore bank accounts, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Tax Division, U.S. Attorney David L. Anderson for the Northern District of California, and Chief of Internal Revenue Service (IRS) Criminal Investigation Jim Lee. In that agreement, Smith admits his involvement in the illegal scheme and agrees to cooperate with ongoing investigations and to pay back taxes and penalties in full.
“It is never too late to do the right thing,” said U.S. Attorney Anderson. “It is never too late to tell the truth. Smith committed serious crimes, but he also agreed to cooperate. Smith’s agreement to cooperate has put him on a path away from indictment.”
According to the agreement, Smith, a resident of Austin, Texas, formed the Excelsior Trust in Belize, and a shell company, Flash Holdings, in Nevis in 2000. Smith used third-parties to conceal his beneficial ownership and control of the Excelsior Trust and Flash Holdings. In reality, Smith controlled both offshore structures and made all substantive decisions regarding Flash Holdings’ operations, transactions, income, investments and assets. Smith used the Excelsior Trust to conceal his ultimate ownership and control over Flash Holdings. He further used Flash Holdings to hide his interest in private equity investments. Smith admits that he formed these foreign entities in order to use them to avoid the payment of U.S. taxes.
Furthermore, Smith admits that he knowingly and intentionally used the Excelsior Trust and Flash Holdings and their associated foreign bank accounts in the British Virgin Islands and Switzerland to conceal from the IRS, and the U.S. Treasury Department, income earned and distributed to Flash Holdings from private equity funds. As a result of the overall scheme, Smith willfully did not report to the IRS over $200 million of partnership income. Smith also failed to report his ownership of his foreign bank accounts in BVI and Switzerland as required by law.
Over the years, Smith used millions of this unreported income to acquire and make improvements to real estate used for his personal benefit. Smith admits that, in 2005, he used approximately $2.5 million in untaxed funds to purchase and renovate a vacation home in Sonoma, California. In 2010, Smith again used untaxed funds to purchase two ski properties and a piece of commercial property in France. In 2011 and 2012, Smith used approximately $13 million of untaxed funds to build and make improvement to a residence in Colorado and to fund charitable activities at the property.
Under the terms of the agreement, Smith has agreed to continue cooperating with the Department of Justice in other related investigations. Further, Smith has agreed to pay approximately $56 million in taxes and penalties stemming from the unreported income and another $82 million in penalties stemming from his concealment of his offshore bank accounts. Taken altogether, Smith will pay more than $139 million in taxes and penalties.
Additionally, Smith agrees to abandon his protective claims for a refund totaling approximately $182 million that were filed with the IRS. The protective refund claims consisted, in part, of claims filed with the IRS for charitable contribution deductions on Sept. 21, 2018, and Oct. 11, 2019. As a result of the agreement, Smith shall take no further direct or indirect tax benefit from such claims.
Principal Deputy Assistant Attorney General Zuckerman, U.S. Attorney Anderson, and Jim Lee, Chief of IRS-Criminal Investigation, commended special agents of IRS-Criminal Investigation, who conducted the investigation, and thanked Senior Litigation Counsel Corey Smith of the Tax Division, Assistant U.S. Attorney Michael G. Pitman, and Trial Attorneys Lee Langston and Christopher Magnani of the Tax Division, who handled the case. The Justice Department’s Office of International Affairs of the Department’s Criminal Division also provided extensive assistance in this matter.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Private Equity CEO Enters into Non-Prosecution Agreement on International Tax Fraud Scheme and Agrees to Pay $139 Million, to Abandon $182 Million in Charitable Contribution Deductions, and to Cooperate with Government InvestigationsRead the Press Release
SAN FRANCISCO – Robert F. Smith, the Chairman and Chief Executive Officer of a San Francisco based private equity company, entered into a Non-Prosecution Agreement (the agreement) with the Department of Justice, for his involvement from 2000 through 2015 in an illegal scheme to conceal income and evade millions in taxes by using an offshore trust structure and offshore bank accounts, announced U.S. Attorney David L. Anderson for the Northern District of California, Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Tax Division, and Chief of Internal Revenue Service (IRS) Criminal Investigation Jim Lee. In that agreement, Smith admits his involvement in the illegal scheme and agrees to cooperate with ongoing investigations and to pay back taxes and penalties in full.
“It is never too late to do the right thing,” said U.S. Attorney Anderson. “It is never too late to tell the truth. Smith committed serious crimes, but he also agreed to cooperate. Smith’s agreement to cooperate has put him on a path away from indictment.”
According to the agreement, Smith, a resident of Austin, Texas, formed the Excelsior Trust in Belize, and a shell company, Flash Holdings, in Nevis in 2000. Smith used third-parties to conceal his beneficial ownership and control of the Excelsior Trust and Flash Holdings. In reality, Smith controlled both offshore structures and made all substantive decisions regarding Flash Holdings’ operations, transactions, income, investments and assets. Smith used the Excelsior Trust to conceal his ultimate ownership and control over Flash Holdings. He further used Flash Holdings to hide his interest in private equity investments. Smith admits that he formed these foreign entities in order to use them to avoid the payment of U.S. taxes.
Furthermore, Smith admits that he knowingly and intentionally used the Excelsior Trust and Flash Holdings and their associated foreign bank accounts in the British Virgin Islands and Switzerland to conceal from the IRS, and the U.S. Treasury Department, income earned and distributed to Flash Holdings from private equity funds. As a result of the overall scheme, Smith willfully did not report to the IRS over $200 million of partnership income. Smith also failed to report his ownership of his foreign bank accounts in BVI and Switzerland as required by law.
Over the years, Smith used millions of this unreported income to acquire and make improvements to real estate used for his personal benefit. Smith admits that, in 2005, he used approximately $2.5 million in untaxed funds to purchase and renovate a vacation home in Sonoma, California. In 2010, Smith again used untaxed funds to purchase two ski properties and a piece of commercial property in France. In 2011 and 2012, Smith used approximately $13 million of untaxed funds to build and make improvement to a residence in Colorado and to fund charitable activities at the property.
Under the terms of the agreement, Smith has agreed to continue cooperating with the Department of Justice in other related investigations. Further, Smith has agreed to pay approximately $56 million in taxes and penalties stemming from the unreported income and another $82 million in penalties stemming from his concealment of his offshore bank accounts. Taken altogether, Smith will pay more than $139 million in taxes and penalties.
Additionally, Smith agrees to abandon his protective claims for a refund totaling approximately $182 million that were filed with the IRS. The protective refund claims consisted, in part, of claims filed with the IRS for charitable contribution deductions on Sept. 21, 2018, and Oct. 11, 2019. As a result of the agreement, Smith shall take no further direct or indirect tax benefit from such claims.
U.S. Attorney Anderson; Principal Deputy Assistant Attorney General Zuckerman; and Jim Lee, Chief of IRS-Criminal Investigation, commended special agents of IRS-Criminal Investigation, who conducted the investigation, and the attorneys who handled the case. The case is being handled by Assistant U.S. Attorney Michael G. Pitman, Senior Litigation Counsel Corey Smith of the Tax Division, and Trial Attorneys Lee Langston and Christopher Magnani of the Tax Division. The Justice Department’s Office of International Affairs of the Department’s Criminal Division also provided extensive assistance in this matter.
CEO of Multibillion-dollar Software Company Indicted for Decades-long Tax Evasion and Wire Fraud SchemesRead the Press Release
A federal grand jury in San Francisco, California, returned a 39 count indictment charging Robert T. Brockman, the Chief Executive Officer of an Ohio-based software company, with tax evasion, wire fraud, money laundering, and other offenses, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Tax Division, U.S. Attorney David L. Anderson for the Northern District of California, and Chief of Internal Revenue Service (IRS) Criminal Investigation Jim Lee. The charges stem from an alleged decades-long scheme to conceal approximately $2 billion in income from the IRS as well as a scheme to defraud investors in the software company’s debt securities.
“Today’s indictment reflects the Department of Justice’s commitment to finding and prosecuting the costliest and most sophisticated tax crimes in the United States,” said Principal Deputy Assistant Attorney General of the Tax Division Richard E. Zuckerman.
“Complexity will not hide crime from law enforcement,” said U.S. Attorney Anderson. “Sophistication is not a defense to federal criminal charges. We will not hesitate to prosecute the smartest guys in the room.”
“As alleged, Mr. Brockman is responsible for carrying out an approximately two billion dollar tax evasion scheme,” said Jim Lee, Chief of IRS Criminal Investigation. “IRS Criminal Investigation aggressively pursues tax cheats domestically and abroad. No scheme is too complex or sophisticated for our investigators. Those hiding income or assets offshore are encouraged to come forward and voluntarily disclose their holdings.”
According to the indictment, Brockman, a resident of Houston, Texas, and Pitkin County, Colorado, used a web of offshore entities based in Bermuda and Nevis to hide from the IRS income earned on his investments in private equity funds which were managed by a San Francisco-based investment firm. As part of the alleged scheme, Brockman directed untaxed capital gains income to secret bank accounts in Bermuda and Switzerland. The indictment further alleges that to execute the fraud, between 1999 and 2019, Brockman took measures such as backdating records and using encrypted communications and code words to communicate with a co-conspirator, among other alleged actions.
In addition to the tax offenses, the indictment alleges that, between 2008 and 2010, Brockman engaged in a fraudulent scheme to obtain approximately $67.8 million in the software company’s debt securities. As CEO, Brockman was contractually restricted from purchasing any of the software company’s debt securities without prior notice, full disclosure, and amending the associated credit agreements. The indictment alleges that Brockman used a third-party to circumvent those requirements, to acquire the debt securities, and to conceal from the sellers valuable economic information. The indictment further alleges that Brockman used material, non-public information about the software company to make decisions about purchasing the debt. In addition, Brockman allegedly persuaded another individual to alter, destroy, and mutilate documents and computer evidence with the intent to impair the use of such evidence in a grand jury investigation.
Brockman is charged with conspiracy, in violation of 18 U.S.C. § 371; seven counts of tax evasion, in violation of 26 U.S.C. § 7201; six counts of failing to file foreign bank account reports, in violation of 31 U.S.C. §§ 5314 & 5322(b); 20 counts of wire fraud affecting a financial institution, in violation of 18 U.S.C. § 1343; two counts of concealment money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i)), and tax evasion money laundering, in violation of 18 U.S.C. § 1956(a)(1)(A)(ii)); and one count each of international concealment money laundering, in violation of 18 U.S.C. § 1956(a)(2)(B)(i)); evidence tampering, in violation of 18 U.S.C. § 1512(b)(2)(B), and destruction of evidence, in violation of 18 U.S.C. § 1512(c)(1).
An indictment merely alleges that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Brockman potentially faces a substantial period of incarceration, as well as restitution and criminal forfeiture. 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.
Brockman is scheduled to make his initial federal court appearance before U.S. Magistrate Judge Nathanael M. Cousins today.
The case is being prosecuted by Senior Litigation Counsel Corey Smith of the Tax Division, Assistant U.S. Attorney Michael G. Pitman, and Trial Attorneys Lee Langston and Christopher Magnani of the Tax Division. The Justice Department’s Office of International Affairs of the Department’s Criminal Division also provided extensive assistance in this matter.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
CEO of Multi-Billion-Dollar Software Company Indicted for Decades-Long Tax Evasion and Wire Fraud SchemesRead the Press Release
A federal grand jury in San Francisco, California, returned a thirty-nine count indictment charging Robert T. Brockman, the Chief Executive Officer of an Ohio-based software company, with tax evasion, wire fraud, money laundering, and other offenses, announced U.S. Attorney David L. Anderson for the Northern District of California, Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Tax Division, and Chief of Internal Revenue Service (IRS) Criminal Investigation Jim Lee. The charges stem from an alleged decades-long scheme to conceal approximately $2 billion in income from the IRS as well as a scheme to defraud investors in the software company’s debt securities.
“Complexity will not hide crime from law enforcement,” said U.S. Attorney Anderson. “Sophistication is not a defense to federal criminal charges. We will not hesitate to prosecute the smartest guys in the room.”
“Today’s indictment reflects the Department of Justice’s commitment to finding and prosecuting the costliest and most sophisticated tax crimes in the United States,” said Principal Deputy Assistant Attorney General of the Tax Division Richard E. Zuckerman.
“As alleged, Mr. Brockman is responsible for carrying out an approximately two billion dollar tax evasion scheme,” said Jim Lee, Chief of IRS Criminal Investigation. “IRS Criminal Investigation aggressively pursues tax cheats domestically and abroad. No scheme is too complex or sophisticated for our investigators. Those hiding income or assets offshore are encouraged to come forward and voluntarily disclose their holdings.”
According to the indictment, Brockman, a resident of Houston, Texas, and Pitkin County, Colorado, used a web of offshore entities based in Bermuda and Nevis to hide from the IRS income earned on his investments in private equity funds which were managed by a San Francisco-based investment firm. As part of the alleged scheme, Brockman directed untaxed capital gains income to secret bank accounts in Bermuda and Switzerland. The indictment further alleges that to execute the fraud, between 1999 and 2019, Brockman took measures such as backdating records and using encrypted communications and code words to communicate with a co-conspirator, among other alleged actions.
In addition to the tax offenses, the indictment alleges that, between 2008 and 2010, Brockman engaged in a fraudulent scheme to obtain approximately $67.8 million in the software company’s debt securities. As CEO, Brockman was contractually restricted from purchasing any of the software company’s debt securities without prior notice, full disclosure, and amending the associated credit agreements. The indictment alleges that Brockman used a third-party to circumvent those requirements, to acquire the debt securities, and to conceal from the sellers valuable economic information. The indictment further alleges that Brockman used material, non-public information about the software company to make decisions about purchasing the debt. In addition, Brockman allegedly persuaded another individual to alter, destroy, and mutilate documents and computer evidence with the intent to impair the use of such evidence in a grand jury investigation.
Brockman is charged with conspiracy, in violation of 18 U.S.C. § 371; seven counts of tax evasion, in violation of 26 U.S.C. § 7201; six counts of failing to file foreign bank account reports, in violation of 31 U.S.C. §§ 5314 & 5322(b); 20 counts of wire fraud affecting a financial institution, in violation of 18 U.S.C. § 1343; two counts of concealment money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i)), and tax evasion money laundering, in violation of 18 U.S.C. § 1956(a)(1)(A)(ii)); and one count each of international concealment money laundering, in violation of 18 U.S.C. § 1956(a)(2)(B)(i)); evidence tampering, in violation of 18 U.S.C. § 1512(b)(2)(B), and destruction of evidence, in violation of 18 U.S.C. § 1512(c)(1).An indictment merely alleges that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Brockman potentially faces a substantial period of incarceration, as well as restitution and criminal forfeiture. 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.
Brockman is scheduled to make his initial federal court appearance before U.S. Magistrate Judge Nathanael M. Cousins this morning.
The case is being prosecuted by Assistant U.S. Attorney Michael G. Pitman, Senior Litigation Counsel Corey Smith of the Tax Division, and Trial Attorneys Lee Langston and Christopher Magnani of the Tax Division. The Justice Department’s Office of International Affairs of the Department’s Criminal Division also provided extensive assistance in this matter.
East Bay Man Convicted of United States Postal Service Mail BombingRead the Press Release
SAN FRANCISCO – A federal jury convicted Ross Gordon Laverty of multiple felonies in connection with mailing two explosive devices with the intent to injure or kill his targets, announced United States Attorney David L. Anderson and U.S. Postal Inspection Service Inspector in Charge Rafael Nuñez. The verdict was delivered after a one-week trial before the Hon. William H. Orrick, United States District Judge.
“A federal jury convicted Ross Laverty of mailing two bombs through United States Post Office to homes in East Palo Alto and Alameda. In addition to his intended victims, Laverty put others, including postal workers and mail carriers in grave danger,” said U.S. Attorney Anderson. “The guilty verdicts are a reminder that law enforcement will investigate unlawful use of the mail, whether for the violent ends Laverty sought, or other illegal purposes.”
“As the law enforcement and security arm of the U.S. Postal Service, the safety of postal employees and the public is our top priority,” said Postal Inspector in Charge Nuñez. “Postal Inspectors worked closely with the U.S. Attorney’s Office, the East Palo Alto Police Department, the San Mateo County Sheriff’s Department, the Alameda Police Department, the Oakland Police Department, the Alameda County Sheriff’s Department, the FBI, the Verdugo Crime Laboratory, and especially the Bureau of Alcohol, Tobacco, Firearms and Explosives to arrest and prosecute the individual responsible for mailing two explosive devices, one to East Palo Alto, CA and one to Alameda, CA, endangering U.S. Postal Service employees and the public.”
The evidence at trial established that on or about October 9, 2017, Laverty, 59, of Oakland, mailed an improvised explosive device to an address in East Palo Alto, Calif., that the victim opened on October 19. The victim carried the package outside of his home and opened it in his back yard, causing it to detonate, inflicting injuries to him, and blasting a hole through a wood frame and fence. Further, the evidence at trial established that on or about November 24, 2017, Laverty mailed an identical explosive device to an address in Alameda. The intended victim’s wife opened the package inside of her home, causing it to explode. Additional evidence proved Laverty’s motives for mailing the devices. First, evidence demonstrated Laverty sought revenge against a corrections officer sharing the same name as the East Palo Alto victim who had strip searched Laverty while he was incarcerated at San Mateo jail in April of 2014. Second, the evidence demonstrated Laverty sought revenge against an Alameda Police Department Officer involved in the probation search of his residence and his arrest in October of 2013.
On May 21, 2019, a federal grand jury handed down a superseding indictment charging Laverty with two counts of mailing an explosive devise with the intent to injure or kill, in violation of 18 U.S.C. § 1716(a) and (j)(2); two counts of possession of an unregistered firearm, in violation of 26 U.S.C. § 5861(d); and two counts of using an explosive during the commission of a felony, in violation of 18 U.S.C. § 844(h)(1) and (2). Laverty was found guilty on all counts.
Laverty faces a mandatory minimum sentence of 20 years’ imprisonment, maximum fines of $10,000 to $250,000 per count, a term of supervised release, and restitution. The sentence following conviction will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The prosecution was handled by the Special Prosecutions Unit at the United States Attorney’s Office. The prosecution is the result of an investigation by the U.S. Postal Inspection Service with assistance from numerous local and federal law enforcement agencies.
Two Members of Racketeering Enterprise Each Sentenced to More Than 30 Years in PrisonRead the Press Release
SAN FRANCISCO – Marcus Etienne, a/k/a “Hitler,” and Mario Robinson were sentenced today to 34 and 32 years in prison, respectively, for their roles in a wide-ranging criminal conspiracy, announced United States Attorney David L. Anderson and FBI Special Agent in Charge John F. Bennett. The sentences were handed down by the Honorable William Alsup, U.S. District Judge.
The sentences follow guilty pleas by both defendants. According to their plea agreements, Etienne, 39, of St. Martin Parish, La., and Robinson, 37, of Opelousas, La., and Oakland, Calif., were involved in an enterprise based in St. Martin Parish consisting of more than seven members who conducted a continuing and extensive narcotics distribution conspiracy. Etienne admitted that he was the leader of the enterprise beginning as early as 2009. The defendants both acknowledged that the enterprise engaged in narcotics distribution, assault, robbery, extortion, extortionate collection of extensions of credit, murder for hire, murder, money laundering, illegal firearms possession, gambling on dogfighting, and obstruction of justice. Robinson further admitted that in 2015, he moved from California to Louisiana and began receiving marijuana from the enterprise to distribute in Louisiana.Etienne and Robinson admitted their respective roles in the 2016 murder of another enterprise member, Trince Thibodeaux. According to the plea agreements, Etienne ordered the murder of Thibodeaux because Etienne believed Thibodeaux had stolen money and narcotics from the enterprise. Etienne offered Robinson $5,000 to murder Thibodeaux, and Robinson accepted. Robinson then contracted with a third party to complete the murder. On March 22, 2016, Robinson lured Thibodeaux to a location in Oakland where the third party shot and killed Thibodeaux. A week later, Robinson sent a $1,250 wire transfer to the individual who shot Thibodeaux. Robinson acknowledged that he expected to remain in good standing with Etienne and the enterprise by completing the murder at Etienne’s direction.
The plea agreements describe additional activities the defendants engaged in to promote the enterprise. For example, the plea agreements describe how the enterprise purchased marijuana in California and used the United States Postal Service to ship the drugs to Louisiana and Texas. Robinson admitted he received packages containing between one and ten pounds of marijuana every one or two months. Robinson and Etienne used cash proceeds from the narcotics trafficking to purchase marijuana and other controlled substances in California. Robinson also purchased money orders in Louisiana to pay the enterprise’s marijuana suppliers in California. Both Etienne and Robinson admitted that they conducted financial transactions with proceeds of narcotics trafficking to conceal the nature, source, and ownership of the enterprise’s profits.
In addition, Etienne admitted he purchased and maintained dogs used for fighting in Breaux Bridge, Louisiana, on a property owned by another member of the enterprise. At the property, Etienne and other members of the enterprise hosted dog-fighting events at which attendees would pay a cover fee and bet money on the dogfights. Dogs, including dogs owned by Etienne, were seriously injured and even killed either during the events or as a result of the training leading up to the events.
On December 18, 2018, a federal grand jury indicted Etienne, Robinson, and one other individual for their respective roles in the enterprise. Both Etienne and Robinson pleaded guilty to conspiracy to distribute marijuana, in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(A)(vii), and 846; racketeering conspiracy, in violation of 18 U.S.C. § 1962(d); and conspiracy to launder monetary instruments, in violation of 18 U.S.C. § 1956(h).
When discussing the reasons for sentencing Etienne and Robinson to lengthy terms of incarceration, Judge Alsup made clear that he was moved by the statements of Mr. Thibodeaux’s mother as well as the mother of Mr. Thibodeaux’s child, both of whom addressed the Court at today’s hearing.
Etienne and Robinson have been in U.S. custody and will begin serving their sentences immediately.
The United States Attorney’s Office’s Organized Crime Strike Force is prosecuting the case. The prosecution is the result of an investigation by the Federal Bureau of Investigation’s Oakland Division, the Internal Revenue Service, and the Oakland Police Department, with assistance from the St. Landry Parish, Louisiana, Sheriff’s Office, and the Opelousas, Louisiana, Police Department.