Northern District of California
Press releases recorded for this federal judicial district.
Washington State Resident Charged with Distribution of Child Pornography After Allegedly Sending Videos to Undercover AgentRead the Press Release
SAN FRANCISCO – Christopher Michael David was arrested for distribution of child pornography, announced United States Attorney David L. Anderson and Federal Bureau of Investigation (FBI), Special Agent in Charge John F. Bennett.
According to the criminal complaint filed on October 5, 2020, and unsealed on October 6, 2020, David, 43, of Fife, Washington, allegedly delivered seven videos containing child pornography to an undercover agent.
“This case should serve as a warning to child predators,” said United States Attorney David L. Anderson. “The patience and persistence with which this investigation was pursued demonstrates how relentlessly we will hunt down people who exploit minor children and distribute child pornography. Law enforcement is watching.”
“Fighting child exploitation is a top priority of the FBI,” said FBI Special Agent in Charge Bennett. “We will continue to go after those who prey on society's most vulnerable and hold them accountable for their reprehensible crimes.”
The complaint describes how an individual—subsequently identified as David—used the handle “pervyguy40” to contact individuals on a social media application. In April of 2020, David contacted an undercover agent who claimed to be a “bad momma” looking for a “teacher” for her 7- and 9-year-old daughters. David told the agent that his “dark desires” included “incest and young sharing.” In subsequent chats, David claimed to have had previous sexual contact with at least four minors. David also communicated a desire to travel to the Northern District of California to engage in a long-term sexual relationship with the agent’s purported minor children. David exchanged messages with the undercover agent about the difficulties of arranging travel in light of the Covid-19 pandemic and his difficulties in getting time off from work.
To acclimate the purported children to this idea, he sent pictures of his genitalia. He also repeatedly asked for photos of the purported children. On August 17, 2020, in the context of anticipated travel in September, he asked the agent whether her minor children “would like to see examples of what they will learn?” David then sent seven (7) videos containing child sexual abuse material.
The complaint further describes how David claimed to have collected “hundreds” of pictures and videos containing child pornography. David allegedly obtained the child pornography by trading online. In addition, David sent text messages to coach the agent on how to obtain such images without attracting law enforcement attention.
David is charged with distribution of child pornography, in violation of 18 U.S.C. § 2252(a)(2).
Criminal complaints merely allege 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, a maximum sentence of 20 years imprisonment, a supervised release term of five years to life, a fine of $250,000, a special assessment of $5,000, criminal forfeiture, and restitution. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
David was arrested in Fife, Washington and made his initial federal court appearance before Magistrate Judge J. Richard Creatura in the Western District of Washington. Magistrate Judge Creatura ordered David’s pre-trial detention pending transport to the Northern District of California for his initial appearance in this District.
Assistant U.S. Attorney Christoffer Lee is prosecuting the case with the assistance of Marina Ponomarchuk and Angelica Jao. The prosecution is the result of an investigation by the FBI.
San Francisco Man Sentenced to 100 Months Imprisonment in Credit Card Fraud and Identity Theft CaseRead the Press Release
SAN FRANCISCO – Marcus Dieter Felder was sentenced to 100 months in prison and ordered to pay restitution to numerous victims following his convictions for access device fraud, aggravated identity theft, and other offenses, announced United States Attorney David L. Anderson, Homeland Security Investigations (HSI) Special Agent in Charge Tatum King, and U.S. Secret Service Acting Special Agent in Charge Shawn M. Bradstreet. The sentence was handed down by the Honorable Maxine M. Chesney, U.S. District Judge.
Felder, 54, of San Francisco, was convicted of access device fraud and aggravated identity theft in February 2018, after a six-day jury trial. The jury found that Felder had engaged in numerous instances of credit card fraud in San Francisco, Hawaii, Placer County in Calif., and elsewhere in April 2013, June 2014, and October 2014. In addition, the jury found that Felder committed aggravated identity theft. Specifically, the jury concluded that while Felder committed credit card fraud in June 2014, he illegally used personal information associated with another individual who shared his first and last names.
Evidence at trial showed that Felder used Visa, MasterCard, and American Express credit cards issued to other persons to engage in transactions at high-end or boutique hotels, including the Fairmont Hotel, the Hotel Nikko, the Hilton Union Square, the Grand Hyatt, and the Hotel Metropolis, all in San Francisco, and the Four Seasons Resort in Maui. The evidence at trial also showed that, among other transactions, the defendant used credit cards issued to other persons to pay for first-class air travel from San Francisco to Maui on United Airlines and to rent SUVs from Enterprise Rent-A-Car and Hertz. Felder originally came into federal custody shortly after he was arrested at the Thunder Valley Casino Resort in Placer County on October 30, 2014, for presenting a counterfeit credit card there.
On September 19, 2017, a federal grand jury returned a superseding indictment charging Felder with one count of fraudulent use of unauthorized access devices, in violation of 18 U.S.C. § 1029(a)(2); two counts of effecting transactions with access devices issued to other persons, in violation of 18 U.S.C. § 1029(a)(5); and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1). Felder was released on bond in October 2017, but failed to appear for his sentencing hearing in April 2019. He was then charged in a new indictment with one count of failure to appear for sentencing, in violation of 18 U.S.C. § 3146(a)(1), and one count of contempt of court, in violation of 18 U.S.C. § 401(3). Felder was apprehended in October 2019, and later pleaded guilty to the failure to appear and contempt charges on June 24, 2020.
The 100-month prison sentence was comprised of 66 months imprisonment related to the access device fraud convictions, a consecutive sentence of 10 months for the failure to appear and contempt convictions, and a 24-month sentence for the aggravated identity theft conviction. In addition to the prison term, Judge Chesney sentenced the defendant to a three-year period of supervised release and ordered him to pay more than $60,000 in restitution. The defendant is in custody and will begin serving his prison sentence immediately.
Assistant U.S. Attorneys Kyle F. Waldinger, Katherine M. Lloyd-Lovett, Noah Stern, and Molly Smolen prosecuted the two cases with the assistance of Kathy Tat. The prosecution is the result of an investigation by HSI and the U.S. Secret Service.
Monterey County Drug Dealer and Mexican Pharmacist Charged in Fentanyl Overdose Death CaseRead the Press Release
SAN FRANCISCO – A federal grand jury has charged Matthew Sanchez and Francisco Javier Schraidt Rodriguez with distribution of fentanyl resulting in death and conspiracy to distribute and possess with intent to distribute fentanyl and alprazolam in connection with a scheme to transport the drugs from Mexico to California, announced United States Attorney David L. Anderson and Drug Enforcement Administration (DEA) Special Agent in Charge Daniel C. Comeaux.
According to the indictment filed October 6, 2020 and unsealed today, between about June 2018 and November 2019, Schraidt Rodriguez, 61, a pharmacist in Mexico, smuggled bottles of alprazolam and counterfeit, fentanyl-laced pills across the border from Mexico to California. Once he was in the United States, Schraidt Rodriguez shipped these bottles and pills to a drug dealer in Monterey County. The dealer, in turn, then sold some of the bottles of alprazolam and fentanyl-laced pills to Sanchez. The indictment further describes how Sanchez, 25, of Monterey County, once in possession of the drugs, sold some of the bottles and pills to an individual who also was living in Monterey County. The individual ingested one or more of the fentanyl-laced pills and, as a result, died of a fentanyl overdose on September 5, 2019.
“Fake Oxycodone pills are flooding Monterey County,” said U.S. Attorney Anderson. “These fake pills are laced with fentanyl. The drug dealers who are pushing these fake pills couldn’t control the amount of fentanyl in them even if they cared. Fentanyl is dosed in micrograms. Dealers don’t have the equipment or the ability to control what they are selling. Our young people are dying by the score from ignorance and indifference.”
“Sadly, we are seeing overdose deaths from fake prescription pills dramatically increase. The profit margin for selling these pills is very small, but the lethal margin of error for those who ingest these pills is minute,” stated DEA Special Agent in Charge Comeaux. “A $5 profit from selling one of these pills could also lead to a potential 20 years in prison.”
Fentanyl, a Schedule II controlled substance, is a highly potent opiate that can be diluted with cutting agents to create counterfeit pills that purport to mimic the effects of Oxycodone, and can typically be obtained at a lower cost than genuine Oxycodone. However, small variations in the amount or quality of fentanyl can have significant effects on the potency of the counterfeit pills, raising the danger of overdoses. Fentanyl has become the leading cause of drug overdose deaths in the United States. In this case, the counterfeit, fentanyl-laced pills that Schraidt Rodriguez and Sanchez distributed were shaped and colored to resemble Oxycodone pills that are sold in the legitimate marketplace. The counterfeit pills, known as M30s, are round tablets that are light blue in color with an “M” imprinted on one side and a “30” imprinted on the other.
The indictment alleges that, during Sanchez’s and Schraidt Rodriguez’s drug distribution scheme, Schraidt Rodriguez sold approximately $81,859 worth of counterfeit, fentanyl-laced M30 pills; bottles of alprazolam; and other narcotics to a drug dealer in Monterey County. This drug dealer sold Schraidt Rodriguez’s fentanyl-laced M30 pills and bottles of alprazolam to Sanchez. At the peak of their drug sales, Sanchez bought approximately 100 counterfeit, fentanyl-laced M30 pills at a time from this drug dealer.
The indictment alleges that during the period of the conspiracy, Schraidt Rodriguez confirmed to the Monterey County drug dealer that the counterfeit M30 pills contained fentanyl, and that drug dealer, in turn, told Sanchez that the counterfeit M30 pills contained fentanyl. Sanchez communicated with the decedent by text messages and other means to arrange sales. Certain of these text messages stated that the M30 pills to be provided to the decedent contained fentanyl.
In sum, Sanchez and Schraidt Rodriguez are charged with conspiracy to distribute and possess with intent to distribute fentanyl and alprazolam, in violation of 21 U.S.C. §§ 846 and 841(a)(1) and (b)(1)(C), and distribution of fentanyl resulting in death, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(C).
An indictment contains allegations only and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of the conspiracy charge, the defendants face a maximum statutory penalty of 20 years in prison. If convicted of the distribution resulting in death charge, the defendants face a statutory mandatory minimum sentence of at least 20 years in prison, and a maximum statutory penalty of up to life in prison. In addition, the court may order terms of supervised release, fines, forfeitures, and restitution, However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Both Sanchez and Schraidt Rodriguez are in custody on federal arrest warrants. Sanchez’s next federal court appearance is scheduled for October 9, 2020, at 10:30 a.m. before U.S. Magistrate Judge Kandis A. Westmore. Schraidt Rodriguez’s next appearance in federal court is scheduled for October 13, 2020 in the Southern District of California, where the court will address issues related to his later appearance in the Northern District of California to face these charges.
This case is being prosecuted by the Organized Crime Drug Enforcement Task Force section of the U.S. Attorney’s Office for the Northern District of California. This case is the result of an investigation by member agencies of the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state, and local law enforcement agencies. The case was investigated by the DEA, with assistance from the Customs and Border Protection, Office of Field Operations; the Department of Homeland Security, Homeland Security Investigations; and the Pacific Grove Police Department.
United States Seizes Domain Names Used by Iran’s Islamic Revolutionary Guard CorpsRead the Press Release
SAN FRANCISCO – The United States has seized 92 domain names that were unlawfully used by Iran’s Islamic Revolutionary Guard Corps (IRGC) to engage in a global disinformation campaign, announced United States Attorney for the Northern District of California, David L. Anderson; Assistant Attorney General for National Security John C. Demers; and the Special Agent in Charge of the FBI, San Francisco Division, John F. Bennett. According to the seizure documents, four of the domains purported to be genuine news outlets but were actually controlled by the IRGC and targeted the United States for the spread of Iranian propaganda to influence United States domestic and foreign policy in violation of the Foreign Agents Registration Act (FARA), and the remainder spread Iranian propaganda to other parts of the world. In addition, the seizure documents describe how all 92 domains were being used in violation of U.S. sanctions targeting both the Government of Iran and the IRGC.
“Today we are 92 domains closer to shutting down Iran’s worldwide disinformation campaign,” said U.S. Attorney Anderson. “This important work will continue. Iran cannot be allowed to hide behind fake news sites. If Iran wants to be heard using U.S. facilities, it must reveal its true colors.”
“We will continue to use all of our tools to stop the Iranian Government from misusing U.S. companies and social media to spread propaganda covertly, to attempt to influence the American public secretly, and to sow discord,” said Assistant Attorney General Demers. “Fake news organizations have become a new outlet for disinformation spread by authoritarian countries as they continue to try to undermine our democracy. Today’s actions show that we can use a variety of laws to vindicate the value of transparency.”
“Today, we successfully seized 92 domains involved in a disinformation campaign conducted by Iran-based actors to promote pro-Iranian propaganda. This investigation, initiated by intelligence we received from Google, was a collaborative effort between the FBI and social media companies Google, Facebook, and Twitter,” said FBI Special Agent in Charge Bennett. “This case is a perfect example of why the FBI San Francisco Division prioritizes maintaining an ongoing relationship with a variety of social media and technology companies.
These relationships enable a quick exchange of information to better protect against threats to the nation’s security and our democratic processes. The FBI also urges the public to remain vigilant about the information they find and share on social media. Every citizen must do their part to use a critical eye and look for trusted sources of information. We all have a role to play in protecting the American democratic system from foreign adversaries.”
Pursuant to the International Emergency Economic Powers Act (IEEPA), unauthorized exports of goods, technology or services to Iran, directly or indirectly from the United States or by a United States person are prohibited. Pursuant to the IEEPA, the Secretary of the Treasury promulgated the Iranian Transactions and Sanctions Regulations (ITSR) that prohibit the provision of services to the Government of Iran without a license. The Department of Treasury may issue a license through its Office of Foreign Assets Control (OFAC). 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 and, on April 15, 2019, the IRGC was designated as a Foreign Terrorist Organization by the United States Government.
In this case, the United States seized 92 domain names on October 7, 2020, pursuant to a seizure warrant. The seizure documents describe how the 92 seized domain names were being operated in violation of federal law.
Four of the domain names, “newsstand7.com,” “usjournal.net,” “usjournal.us,” and “twtoday.net,” were seized pursuant to FARA. FARA establishes a registration, reporting, and disclosure regime for agents of foreign principals (which includes foreign non-government individuals and entities) 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 were actually operated by or on behalf of the IRGC to target the United States with pro-Iranian propaganda in an attempt to influence the American people to change United States foreign and domestic policy toward 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 notice that the content of the domains was being published on behalf of the IRGC and the Government of Iran.
In addition, the remaining 88 domains targeted audiences in Western Europe, the Middle East, and South East Asia and masqueraded as genuine news outlets while actually being operated by the IRGC to spread pro-Iranian disinformation around the globe to the benefit of the Government of Iran. The Government of Iran and the IRGC utilized website and domain services in the United States without a license from OFAC. All 92 domains are owned and operated by United States companies. Neither the IRGC nor the Government of Iran obtained a license from the Office of Foreign Assets Control prior to utilizing the domain names. A list of the 92 seized domain names is available here.
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 Domain Names Used by Iran’s Islamic Revolutionary Guard CorpsRead the Press Release
The United States has seized 92 domain names that were unlawfully used by Iran’s Islamic Revolutionary Guard Corps (IRGC) to engage in a global disinformation campaign, announced the Department of Justice.
According to the seizure documents, four of the domains purported to be genuine news outlets but were actually controlled by the IRGC and targeted the United States for the spread of Iranian propaganda to influence United States domestic and foreign policy in violation of the Foreign Agents Registration Act (FARA), and the remainder spread Iranian propaganda to other parts of the world. In addition, the seizure documents describe how all 92 domains were being used in violation of U.S. sanctions targeting both the Government of Iran and the IRGC.
“We will continue to use all of our tools to stop the Iranian Government from misusing U.S. companies and social media to spread propaganda covertly, to attempt to influence the American public secretly, and to sow discord,” said Assistant Attorney General for National Security John C. Demers. “Fake news organizations have become a new outlet for disinformation spread by authoritarian countries as they continue to try to undermine our democracy. Today’s actions show that we can use a variety of laws to vindicate the value of transparency.”
“Today we are 92 domains closer to shutting down Iran’s worldwide disinformation campaign,” said U.S. Attorney David L. Anderson for the Northern District of California. “This important work will continue. Iran cannot be allowed to hide behind fake news sites. If Iran wants to be heard using U.S. facilities, it must reveal its true colors.”
“Today, we successfully seized 92 domains involved in a disinformation campaign conducted by Iran-based actors to promote pro-Iranian propaganda. This investigation, initiated by intelligence we received from Google, was a collaborative effort between the FBI and social media companies Google, Facebook, and Twitter,” said FBI Special Agent in Charge Bennett. “This case is a perfect example of why the FBI San Francisco Division prioritizes maintaining an ongoing relationship with a variety of social media and technology companies. These relationships enable a quick exchange of information to better protect against threats to the nation’s security and our democratic processes. The FBI also urges the public to remain vigilant about the information they find and share on social media. Every citizen must do their part to use a critical eye and look for trusted sources of information. We all have a role to play in protecting the American democratic system from foreign adversaries.”
Pursuant to the International Emergency Economic Powers Act (IEEPA), unauthorized exports of goods, technology or services to Iran, directly or indirectly from the United States or by a United States person are prohibited. Pursuant to the IEEPA, the Secretary of the Treasury promulgated the Iranian Transactions and Sanctions Regulations (ITSR) that prohibit the provision of services to the Government of Iran without a license. The Department of Treasury may issue a license through its Office of Foreign Assets Control (OFAC). 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 and, on April 15, 2019, the IRGC was designated as a Foreign Terrorist Organization by the United States Government.
In this case, the United States seized 92 domain names on Oct. 7, 2020, pursuant to a seizure warrant. The seizure documents describe how the 92 seized domain names were being operated in violation of federal law.
Four of the domain names, “newsstand7.com,” “usjournal.net,” “usjournal.us,” and “twtoday.net,” were seized pursuant to FARA. FARA establishes a registration, reporting, and disclosure regime for agents of foreign principals (which includes foreign non-government individuals and entities) 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 were actually operated by or on behalf of the IRGC to target the United States with pro-Iranian propaganda in an attempt to influence the American people to change United States foreign and domestic policy toward 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 notice that the content of the domains was being published on behalf of the IRGC and the Government of Iran.
In addition, the remaining 88 domains targeted audiences in Western Europe, the Middle East, and South East Asia and masqueraded as genuine news outlets while actually being operated by the IRGC to spread pro-Iranian disinformation around the globe to the benefit of the Government of Iran. The Government of Iran and the IRGC utilized website and domain services in the United States without a license from OFAC. All 92 domains are owned and operated by United States companies. Neither the IRGC nor the Government of Iran obtained a license from the Office of Foreign Assets Control prior to utilizing the domain names. A list of the 92 seized domain names is available here.
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 U.S. Attorney’s Office for the Northern District of California, and the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division, are prosecuting the seizure.
Download List of Domain Names (PDF)
Former Special Police Officer Charged with Wire Fraud in Connection with Fraudulent Online CampaignRead the Press Release
OAKLAND – Dominic Deandre Gregory has been charged in a criminal complaint with wire fraud in connection with a scheme to raise money with an online campaign purporting to raise money for the funeral of fallen officer Patrick Underwood, announced U.S. Attorney David L. Anderson and Acting Special Agent in Charge Shawn M. Bradstreet of the U.S. Secret Service San Francisco Field Office.
According to the complaint filed September 28, 2020, and unsealed today, Gregory, 27, of Washington D.C., was a Special Police Officer in the District of Columbia when he created the online campaign. Gregory used the website GoFundMe to create the campaign and represented on the website and in communications to donors that he was a family member of Officer Patrick Underwood. Gregory also stated on the website that the campaign was created to raise money for Officer Underwood’s funeral.
Officer Underwood was a Federal Protective Service Officer who was shot and killed on May 29, 2020, while on duty guarding the federal building in Oakland, Calif. Gregory allegedly created the campaign on May 30, 2020, the day after the murder, and at times posted pleas for Underwood’s funeral, his wife, and his kids. Gregory set various fundraising goals on the website, including one for up to $90,000. According to the complaint, Gregory has no known connection to the Underwood family; also, Underwood was unmarried, and he had no children. The complaint alleges that even after the GoFundMe account was deactivated, Gregory encouraged donors to make contributions using an alternative payment service.
Gregory 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, Gregory faces a maximum statutory sentence of 20 years imprisonment, a three-year term of supervised release, and a $250,000 fine.
Gregory made his initial federal court appearance this morning before Chief U.S. Magistrate Judge Joseph C. Spero. Chief Magistrate Judge Spero ordered Gregory released on $25,000 bond. Gregory’s next appearance is scheduled for November 2, 2020, before Magistrate Judge Jacqueline Scott Corley for a status conference.
Assistant U.S. Attorney Molly K. Priedeman is prosecuting the case with the assistance of Alexa Leisure. The prosecution is the result of an investigation by the United States Secret Service.
DOJ Charges 500+ Domestic Violence-Related Firearm Cases in FY20Read the Press Release
SAN FRANCISCO – Today, the Department of Justice announced it has charged more than 500 domestic violence cases involving firearms during Fiscal Year (FY) 2020. A Department priority since 2019 when Attorney General William P. Barr created the Department of Justice’s first ever-Domestic Violence Working Group, these 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 domestic violence firearms-related investigations a priority.
“Keeping firearms out of the hands of dangerous criminal offenders is one of the Department of Justice’s top priorities,” said Attorney General Barr. “This is especially important when it comes to individuals with prior domestic violence convictions. The statistics are clear that when domestic violence offenders have access to guns, their partners and their families are at much greater risk of falling victim to gun violence. In fact, in some communities across America, roughly half of the homicides are related to domestic violence. The Department of Justice is committed to keeping guns out of the hands of those who are prohibited from having them, and we will continue investigating and prosecuting all domestic violence firearms related crimes.”
“According to the CDC, data suggests that about one in six homicide victims are killed by an intimate partner,” said ATF Acting Director Lombardo. “Nearly half of female homicide victims in the U.S. are killed by a current or former male intimate partner. ATF is committed to aggressively pursuing prohibited possession of firearms due to domestic violence convictions and certain protective orders. It is another way we prevent violent gun crime within our communities.”
Under federal law, individuals with domestic violence misdemeanor and felony convictions, as well as individuals subject to domestic violence protective orders, are prohibited from possessing firearms. The data shows that offenders with domestic violence in their past pose a high risk of homicide. In fact, domestic violence abusers with a gun in the home are five times more likely to kill their partners.
The Working Group, chaired by U.S. Attorney Erin Nealy Cox, of the Northern District of Texas, disseminates legal guidance on keeping guns out of the hands of domestic violence abusers using three federal statutes:
• 18 USC § 922 (g)(1), felon in possession of a firearm
• 18 USC § 922 (g)(9), possession of a firearm by a prohibited person (misdemeanor crime of domestic violence)
• 18 USC § 922 (g)(8), possession of a firearm while subject to a domestic violence protective orderBased on the Working Group’s guidance, in FY 2020, U.S. Attorneys’ Offices nationwide brought 337 domestic violence felon-in-possession charges, 54 possession while subject to a protective order charges, and 142 possession by a prohibited person charges.
For more information on domestic violence or to get help, visit the National Domestic Violence Hotline website or call 1-800-799-SAFE (7233).
Alameda Home Health Care Aide Charged with Credit Card Fraud in Scheme Targeting Elderly CoupleRead the Press Release
OAKLAND – A criminal complaint was unsealed today in federal court charging Heidi Suzanne Miller with credit card fraud in an alleged scheme to abuse her role as a home health care aide to use the credit cards and take over the financial accounts of an elderly couple in her care, announced United States Attorney David L. Anderson and Federal Bureau Investigation Special Agent in Charge John L. Bennett.
“Older Americans are at great risk from fraudsters,” said U.S. Attorney Anderson. “It is a priority of my Office to identify and prosecute individuals who take advantage of the elderly. In this matter, the exploitation of an elderly couple was even more shameful because the defendant had been hired to help the couple, not harm them.”
"It is particularly disturbing that someone who came into this elderly couple's home as a caregiver, instead capitalized on the couple's vulnerability for her own greed," said FBI Special Agent in Charge Bennett. "The FBI and our partners will continue to work every day to protect our elderly neighbors from fraud and abuse.”
According to the criminal complaint, in 2016, the son of an elderly Moraga, California couple hired Miller to care for his parents because they were suffering from early onset dementia. Within three days of beginning her employment, Miller allegedly began using the couple’s credit cards for her personal benefit. The complaint describs how Miller used checks and credit cards during the next three years to steal over $360,000 from the couple. Miller used the money to pay her living expenses and to maintain her lifestyle by, among other things, buying cars, clothing, and jewelry; taking a cruise and a trip to Disneyland; and caring for her family pets, including purchasing a “14-day dream dog package.” The elderly couple’s son discovered the fraud in 2019 after Miller’s employment ended. Also included in the list of alleged improper purchases was breast augmentation and liposuction. According to the criminal complaint, Miller obtained the plastic surgery and related procedures in January 2018 and paid for them using three credit cards issued to the elderly couple. Miller allegedly paid over $15,000 toward the approximately $26,000 cost of the plastic surgery procedures using the couple’s credit cards. The elderly couple’s son discovered the fraud after Miller’s employment ended.
Miller is charged with credit card fraud, in violation of 18 U.S.C. § 1029(a)(5).
A criminal complaint merely alleges that crimes have been committed, and Miller is presumed innocent until proven guilty beyond a reasonable doubt. If convicted of the charge, Miller faces a maximum sentence of 15 years’ imprisonment, up to three years of supervised release, 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.
Miller made her initial appearance today before Chief U.S. Magistrate Judge Joseph C. Spero. Magistrate Judge Spero ordered Miller released on a $100,000 bond and subjected to certain travel restrictions during the pendency of the case. Miller’s next court appearance is set for November 18, 2020, before U.S. Magistrate Judge Jacqueline Scott Corley, for a status hearing.
The Special Prosecutions Section of the U.S. Attorney’s Office is prosecuting the case. The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Moraga Police Department, and the Contra Costa County District Attorney’s Office.
San Mateo Resident Charged with Receipt of Child PornographyRead the Press Release
SAN FRANCISCO – Adrian Kyle Benjamin made an initial appearance today in federal court on a criminal complaint for receipt of child pornography, announced David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. Benjamin made his initial appearance in federal court today before U.S. Magistrate Judge Kandis A. Westmore.
According to the complaint filed September 30, 2020, and unsealed today, between July 2018 and December 2019, Benjamin, 24, of San Mateo, solicited and received sexually explicit videos constituting child pornography from at least three female minor victims between the ages of 14 and 15. In March 2020, FBI executed a search warrant at Benjamin’s residence and found sexually explicit videos of each of the three minor victims saved on Benjamin’s hard drive in folders labeled with each victim’s name. Benjamin was aware of the minor victims’ ages and engaged in enticement and grooming techniques to solicit child pornography from at least one of the victims.
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. Benjamin is charged with receipt of child pornography, in violation of 18 U.S.C. § 2252(a)(2). If convicted of the charge, Benjamin faces a maximum statutory sentence of 20 years in prison, a lifetime of supervised release, and a $250,000 fine. The charge also carries a mandatory minimum sentence of five years in prison and five years of supervised release.
Benjamin’s next court appearance is scheduled for October 8, 2020, at 10:30, before U.S. Magistrate Judge Nathanael Cousins, for a detention hearing.
Assistant U.S. Attorneys Molly K. Priedeman and Mohit Gourisaria are prosecuting the case with the assistance of Alexa Leisure. The prosecution is the result of an investigation by the FBI.
Justice Department Awards over $295.8 Million to Improve Public Safety, Serve Crime Victims in American Indian and Alaska Native CommunitiesRead the Press Release
SAN FRANCISCO – The Department of Justice announced today that it has awarded over $295.8 million in grants to improve public safety, serve victims of crime, combat violence against women and support youth programs in American Indian and Alaska Native communities.
“American Indian and Alaska Native communities experience rates of violent crime and domestic abuse that are among the highest in the nation,” said Attorney General William P. Barr. “The awards announced today underscore the Department of Justice’s deep commitment to improving public safety in tribal communities throughout the United States. This administration will continue to work closely with our tribal partners to guarantee that they have the resources they need to combat violence and bring criminals to justice.”
Ten tribes in the Northern District of California were awarded eighteen grants totaling $10,592,453 in funding, representing more than twice the funding awarded in ten grants to six tribes in 2019. The grants are as follows:
Tribe
Grant and Source
Amount
Big Valley Rancheria Band of Pomo Indians
Violence Against Women Tribal Governments Program (OVW)
$748,399
Cahto Tribe of Laytonville Rancheria
Violence Against Women Tribal Governments Program (OVW)
$488,136
Coyote Valley Band of Pomo Indians
Justice Systems and Alcohol and Substance Abuse (BJA)
$900,000
Tribal Victim Services Set-Aside Formula Program Award (OVC)
$417,336
Hoopa Valley Tribe
Public Safety and Community Policing (COPS)
$477,995
Tribal Youth Program (OJJDP)
$416,030
Tribal Victim Services Set-Aside Formula Program Award (OVC)
$694,698
Yurok Tribe
Public Safety and Community Policing (COPS)
$653,751
Violence Against Women Tribal Governments Program (OVW)
$900,000
Juvenile Healing to Wellness Courts (OJJDP)
$400,000
Tribal Victim Services Set-Aside Formula Program Award (OVC)
$694,698
Tolowa Dee-ni’ Nation
Justice Systems and Alcohol and Substance Abuse (BJA)
$362,554
Violence Against Women Tribal Governments Program (OVW)
$900,000
Tribal Victim Services Set-Aside Formula Program Award (OVC)
$503,691
Wiyot Tribe
Tribal Victim Services Set-Aside Formula Program Award (OVC)
$505,795
Scotts Valley Band of Pomo Indians
Tribal Victim Services Set-Aside Formula Program Award (OVC)
$417,336
Karuk Tribe
Tribal Victim Services Set-Aside Formula Program Award (OVC)
$694,698
Bear River Band of the Rohnerville Rancheria
Tribal Victim Services Set-Aside Formula Program Award (OVC)
$417,336
Total:
$10,592,453
Nationwide, these grants were awarded to American Indian tribes, Alaska Native villages, and other tribal designees through the Coordinated Tribal Assistance Solicitation (CTAS). The CTAS is a streamlined application for tribal-specific grant programs. Of the $103 million awarded via CTAS, $41.5 million comes from the Office of Justice Programs, $39.1 million from the Office on Violence Against Women, and $22.5 million from the Office of Community Oriented Policing Services. More than $3.4 million in additional funds from OJP’s Bureau of Justice Assistance to provide training and technical assistance to CTAS awardees, and almost $1.9 million was awarded to 17 tribal communities to address the public safety challenges posed by the outbreak of COVID-19.
The Department also announced awards and other programming totaling $113 million in a set-aside program to serve victims of crime. The awards are intended to help tribes develop, expand, and improve services to victims by supporting programming and technical assistance.
CTAS funding helps tribes develop and strengthen their justice systems’ response to crime, while expanding services to meet their communities’ public safety needs. The awards cover 10 purpose areas: public safety and community policing, justice systems planning, alcohol and substance abuse, corrections and correctional alternatives, children’s justice act partnerships, services for victims of crime, violence against women, juvenile justice, violent crime reduction, and tribal youth programs.
The Department also provided more than $31 million to support a wide range of efforts to address crimes of domestic violence, dating violence, sexual assault, stalking and human trafficking, $7 million to help tribes to comply with federal law on sex offender registration and notification, $16.1 million in separate funding to assist tribal youth, and more than $2.2 million to develop a workforce of direct victim service providers in hard-to-staff positions and locations.
Today’s announcement is part of the Justice Department’s ongoing initiative to increase engagement, coordination, and action on public safety in American Indian and Alaska Native communities.
East Bay Man Charged with Alleged Multi-Million Dollar Payroll Protection Program FraudRead the Press Release
SAN FRANCISCO – Attila Colar a/k/a Dahood Sharieff Bey, a/k/a Sharieff Dahood Bey, a/k/a Dawud Sharieff Bey Ahed, a/k/a Dawud Azadene, a/k/a Attilla Collan, has been charged in a federal criminal complaint with bank fraud in connection with an alleged scheme to obtain illegally more than $22 million dollars in loans through the U.S. government’s Payroll Protection Program (PPP), announced U.S. Attorney David L. Anderson; FBI Special Agent in Charge John L. Bennett; Federal Reserve System Office of Inspector General for the Board of Governors and the Bureau of Consumer Financial Protection (FRB/CFPB-OIG) Western Region Special Agent in Charge Scott Redington; and Small Business Administration Office of the Inspector General (SBA-OIG) Western Region Special Agent in Charge Weston King. Colar made his initial federal court appearance earlier today before U.S. Magistrate Judge Kandis A. Westmore.
According to the criminal complaint, Colar, 48, of Richmond, submitted three applications between April and June of 2020, on behalf of Hercules-based non-profit All Hands on Deck, Inc. All Hand on Deck is a non-profit that purports to provide housing “to men getting out of prison, food bank services, life and work skills, trainings, resiliency treatment services, prenatal life skills, and a variety of necessary know hows to survive in today’s society.” Colar received over $1.1 million from one of those loans. The complaint separately alleges that six more applications were submitted in that same time period on behalf of two other entities linked to Colar—The Family Investment Group, Inc. and Oversight Security, Inc. The criminal complaint describes how the loan applications are rife with false information, misleading statements, and glaring omissions.
“The Payroll Protection Program is supposed to support everyday Americans suffering economic distress,” said U.S. Attorney Anderson. “The complaint describes the methodical preparation of fraudulent loan applications to deprive the program of $22 million that is sorely needed by the public to endure this national crisis.”
“The COVID-19 pandemic has caused economic suffering for so many families and small businesses. It’s particularly abhorrent when criminals take advantage of this situation for their own greed," said FBI Special Agent in Charge John F. Bennett. "Based on the FBI’s investigation, Mr. Colar appears to have illegally used the Paycheck Protection Program to attempt to fraudulently line his own pockets. The FBI is quickly and carefully investigating all claims of PPP fraud to ensure that American businesses aren’t further victimized during this challenging time.”
“We are fully committed to bringing to justice wrongdoers who exploit and defraud financial institutions and the government’s response to the COVID-19 pandemic,” said Special Agent in Charge Redington.
“Fraudsters are tireless and brazen in their fraudulent efforts to steal from taxpayers for their selfish ends,” said Special Agent in Charge King. “OIG and its law enforcement partners will relentlessly pursue fraudsters and bring them to justice. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”
The PPP is administered by the U.S. Small Business Administration as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act is a federal law enacted in March of 2020 to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. PPP loan proceeds must be used by the business on certain permissible expenses—payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal on the PPP loan to be entirely forgiven if the business spends the loan proceeds on these 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.
The complaint alleges Colar prepared numerous loans for submission through the PPP. One such application, submitted in June 2020, requested $2 million from a bank in Salt Lake City, Utah. That loan was ultimately funded in the amount of $1,113,112. The complaint alleges the application contained false information including bogus employee names, false payroll records, and fraudulent tax documents. For example, the application was supported by IRS Forms 941 that purported to establish All Hands on Deck employed 45 people in the third quarter of 2019 and 81 people in both the fourth quarter of 2019 and the first quarter of 2020. Nevertheless, the names of the purported employees not only included one of Colar’s aliases, it also included two contractors and several current and former residents of All Hands on Deck, none of whom could support the information in the IRS forms. In addition, the application contained direct questions pertaining to the background of the principal sponsor; in response Colar allegedly failed to admit he had a criminal record.
Including the successful $2 million loan application submitted on behalf of All Hands on Deck in June, the complaint alleges Colar prepared several other loan applications, the following of which, were actually submitted to banks:
Date Submitted
Applying Entity
Amount requested
April 2020
All Hands on Deck
$2,422,615
May 2020
All Hands on Deck
$1,618,200
June 2020
All Hands on Deck
$2,000,000
June 2020
The Family Investment Group
$3,310,241.05
June 2020
The Family Investment Group
$3,310,000,00
June 2020
Oversight Security, Inc.
$2,893,149.79
June 2020
Oversight Security, Inc.
$2,893,149.79
June 2020
Oversight Security, Inc.
$1,896,063
June 2020
Oversight Security, Inc.
$2,893,147
In sum, Colar is charged with bank fraud, in violation of 18 U.S.C. § 1344. The charge in the complaint is merely an allegation and the defendant is presumed innocent unless proven guilty in a court of law. Colar faces a maximum penalty of 30 years in prison and a million dollar fine, if convicted.
Magistrate Judge Westmore ordered Colar released on a $100,000 bond. Colar’s next federal court appearance is scheduled for October 27, 2020, for further proceedings.
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 FBI, FRB/CFPB-OIG, and SBA-OIG.
Tenderloin Drug Dealer Accused of Trafficking Fentanyl That Killed One, Injured AnotherRead the Press Release
SAN FRANCISCO – Charges were unsealed today accusing a Tenderloin drug dealer of selling fentanyl that led to the overdose death of one individual and the hospitalization of another individual, announced United States Attorney David L. Anderson and Assistant Special Agent in Charge Toby Schwartz of the Drug Enforcement Administration. Additional facts regarding the investigation and charges can be found here: https://youtu.be/6Xy3vG9bwq4
According to the complaint, on May 18, 2020, the defendant, Celin David Doblado-Canaca, age 38, sold fentanyl that was packaged as cocaine near the corner of Golden Gate Avenue and Hyde Streets in San Francisco’s Tenderloin District. The drugs were taken to San Bruno, California, where the substance was ingested later that night by two individuals who believed they were using cocaine. The fentanyl killed one user and nearly killed another. The victims were discovered by a family member in the early hours of May 19, 2020.
“Fentanyl is pouring into our community from China and Mexico. Because it is incredibly powerful in even the smallest doses, fentanyl is being mixed with other drugs and marketed as other drugs. Many drug users who die of fentanyl overdoses never even know that they have been given fentanyl. The epicenter of this fentanyl disaster is the Tenderloin neighborhood in San Francisco,” said U.S. Attorney Anderson. “I feel strongly that the Tenderloin is a wonderful neighborhood, a diverse neighborhood, a relatively affordable neighborhood, a neighborhood of children and the elderly. However, the Tenderloin neighborhood is also home to an open-air drug market that is spreading death throughout the Bay Area. The drug dealing that is openly oppressing the Tenderloin is quietly undermining neighborhoods across San Francisco, Oakland, San Mateo, Sonoma, Marin County and elsewhere. What happens in the Tenderloin does not stay in the Tenderloin.”
“We know fentanyl is potent and fatal in the smallest amounts. We are increasingly seeing it mixed with other drugs or sold as something else. Unfortunately, the user often doesn’t know this until it is too late. It is truly a game of Russian roulette,” said DEA Assistant Special in Charge Schwartz. “Working with our local counterparts in these drug overdose cases is a priority for us. We want to send the message to all those who are distributing this poison in our community, we will find you and bring you to justice. I would like to acknowledge the outstanding efforts by officers from the San Bruno, South San Francisco, and San Francisco Police Departments for their partnership in this investigation.”
The complaint affidavit describes how investigators traced backwards from the scene of the overdose death in San Bruno to the Tenderloin, and ultimately identified Doblado-Canaca as the alleged source of the fentanyl. As part of their investigation, officers stopped and searched Doblado-Canaca when he entered a liquor store at the corner of Hyde and Turk Streets in San Francisco, where he was found to have more than a dozen small baggies of substances alleged to be fentanyl and heroin. The drugs and their packaging appeared to be organized for sale.
Doblado-Canaca was arrested in San Francisco on August 21, 2020, and made his initial appearance in federal court in San Francisco on August 25, 2020. Doblado-Canaca is currently being held in custody pending further proceedings. The case was unsealed today, on September 30, 2020, when Doblado-Canaca made an appearance before the Honorable Alex G. Tse, U.S. Magistrate Judge.
A 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 20 years, and a fine of $1,000,000, for each violation of Title 21, United States Code, Section 841(a)(1) and (b)(1)(C). However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
This case was prosecuted by member agencies of the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state, and local law enforcement agencies. The case was investigated by the Drug Enforcement Administration, the San Bruno Police Department, the South San Francisco Police Department, and the San Francisco Police Department.
Russian Hacker Sentenced to over 7 Years in Prison for Hacking into Three Bay Area Tech CompaniesRead the Press Release
SAN FRANCISCO – Yevgeniy Alexandrovich Nikulin was sentenced to 88 months in prison for hacking into LinkedIn, Dropbox, and the now-defunct social networking company formerly known as Formspring, announced United States Attorney David L. Anderson and FBI Special Agent in Charge John L. Bennett. The sentence was handed down by the Honorable William H. Alsup, U.S. District Judge.
The sentence follows a guilty verdict after a 6-day jury trial. A jury found that Nikulin, 32, of Russia, hacked into computers belonging to LinkedIn, Dropbox, and Formspring, damaged computers belonging to LinkedIn and Formspring by installing malware on them, stole and used the login credentials for employees at LinkedIn and Formspring, and sold and conspired with others to sell customer data he stole as a result of his hacks. Evidence at trial showed that Nikulin was located in Moscow when he hacked into a computer belonging to a Bay Area-based LinkedIn employee and installed malicious software on it, allowing him to control the computer remotely and to use the employee’s credentials to access LinkedIn’s corporate VPN. Once he had access to corporate systems, Nikulin stole a database containing LinkedIn users’ login information, including encrypted passwords. In addition, the evidence demonstrated that Nikulin was behind similar intrusions and thefts of data at Dropbox and at Formspring. The Court also found that Automattic, parent company of Wordpress.com, was the victim of an intrusion by defendant, although there was no evidence that defendant stole any customer credentials. Nikulin was arrested while traveling in the Czech Republic on October 5, 2016, and extradited to the United States to face trial on March 30, 2018.
When discussing the reasons for imposing the 88-month prison term, Judge Alsup made clear that he hoped the sentence would send a message to deter anyone, including persons living overseas, from engaging in similar conduct.
Nikulin’s trial began in March, but proceedings were suspended after just two days in light of the COVID-19 pandemic and ensuing closure of the federal courthouse. The trial resumed on July 7, 2020, with the defendant, the attorneys, and Judge Alsup wearing masks, and the courtroom configured to allow social distancing by all participants. Witnesses testified from behind a glass panel to allow testimony to be given while maintaining social distancing. The trial was broadcast via Zoom to allow the public to view the proceedings without entering the courthouse. Nikulin was convicted of selling stolen usernames and passwords, in violation of 18 U.S.C. § 1029(a)(2); installing malware on protected computers, in violation of 18 U.S.C. § 1030(a)(5); conspiracy, in violation of 18 U.S.C. § 371; computer intrusion, in violation of 18 U.S.C. § 1030(a)(2)(C); and aggravated identity theft, in violation of 18 U.S.C. § 1028A(1).
Nikulin has been in U.S. custody since his extradition from the Czech Republic and will begin serving his sentence immediately.
Assistant U.S. Attorneys Michelle J. Kane and Katherine Wawrzyniak are prosecuting the case with the assistance of Helen Yee, Jessica Rodriguez Gonzalez, and Kim Richardson. The prosecution is the result of an investigation by the Federal Bureau of Investigation, with the assistance of authorities in the Czech Republic, the U.S. Secret Service and the U.S. Department of Justice’s Criminal Division, Office of International Affairs.
Santa Cruz Man Charged with Federal Hate Crime for Attempting to Stab Black ManRead the Press Release
SAN FRANCISCO – Ole Hougen has been charged with a federal hate crime for attacking a black man with a knife on a street in Santa Cruz, announced U.S. Attorney David L. Anderson, Assistant Attorney General Eric Dreiband for the Department of Justice’s Civil Rights Division, and FBI Special Agent in Charge John L. Bennett.
Hougen, 44, of Santa Cruz, Calif., was charged by criminal complaint with willfully attempting to cause bodily injury by using a dangerous weapon because of a person’s actual or perceived race and color. According to the affidavit in support of the criminal complaint, Hougen confronted a 29-year-old black man who was crossing a street in Santa Cruz. Hougen took out a nine-inch knife and slashed at the man’s head, chest, and stomach multiple times while yelling racial slurs at him. At the time of the attack, Hougen was on probation for state convictions involving a racially-motivated assault on a different black man in 2018. The complaint also describes two additional racially-motivated assaults against black men committed by Hougen in 2014 and 2018.
Hougen is charged with violating Title 18, United States Code, Section 249. The charge in the complaint is merely an allegation and the defendant is presumed innocent unless proven guilty in a court of law. Hougen faces a maximum penalty of 10 years in prison if convicted.
Assistant United States Attorney Marissa Harris and Trial Attorney Michael J. Songer of the Civil Rights Division are prosecuting the case on behalf of the government. The FBI conducted the investigation with the assistance of the Santa Cruz Police Department.
Los Angeles Man Charged with Running $350 Million Ponzi SchemeRead the Press Release
SAN FRANCISCO – A criminal information was filed today in federal court alleging that Lewis Wallach, the former CEO of a Marin-based company known as Professional Financial Investors, or PFI, ran the company for years as a Ponzi scheme, announced United States Attorney David L. Anderson and Federal Bureau Investigation Assistant Special Agent in Charge Sid Patel. Wallach is charged in the information with one count of wire fraud and one count of conspiracy to commit wire fraud. Additional facts regarding the investigation and charges can be found here: https://youtu.be/M30PEgy0txo
“We allege that PFI became a classic Ponzi scheme,” said U.S. Attorney Anderson. “Money taken from new investors was allegedly used to pay existing investors while losses mounted behind the scenes. This alleged Ponzi scheme came crashing down just four months ago after the death of PFI’s founder in May 2020. We allege that for years Wallach conspired with PFI’s founder to fool investors.”
“The FBI has been working to identify victims in this Ponzi scheme,” said FBI ASAC Patel. “We may not be able to make the victims whole, but we are determined to do everything we can under the federal legal process to right these wrongs. We know this is a particularly difficult time of financial insecurity for so many Americans, and that fraudulent investments can be devastating to families and businesses.”
According to the information, PFI was a real-estate firm that owned approximately 70 properties throughout Marin and Sonoma Counties. Wallach managed PFI along with the founder of the firm, who has since deceased, the information alleges, and PFI raised more than $350 million from investors since 2015. The information alleges that from at least 2015, Wallach and the founder knew that the revenues generated by PFI properties could not meet PFI’s obligations to pay interest and distributions, but that they hid the truth from investors. To the contrary, according to the information, Wallach and the founder continued to falsely reassure investors, even during the COVID-19 pandemic, that PFI had the financial reserves to survive.
The information also alleges that from 2015 to May 2020, Wallach diverted more than $26 million from PFI for his personal benefit, including personal investments in a land development project in Texas, an office space development project in California, and oil and gas exploration and development projects, as well as payment of his personal credit cards.
An information merely alleges that crimes have been committed, and Wallach is presumed innocent until proven guilty beyond a reasonable doubt. If convicted of wire fraud or conspiracy to commit wire fraud under 18 U.S.C. §§ 1343 or 1349, Wallach faces a maximum sentence of 20 years’ imprisonment on each count, a fine of $250,000, 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.
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.
California Man Charged with Federal Hate Crime for Attempting to Stab Black ManRead the Press Release
Assistant Attorney General Eric Dreiband for the Civil Rights Division, and U.S. Attorney David L. Anderson for the Northern District of California, and Special Agent in Charge Jack Bennett for the FBI San Francisco Division announced today that a California man has been charged with a federal hate crime for attacking a black man with a knife on a street in Santa Cruz, California.
Ole Hougen, 44, of Santa Cruz, California, was charged by criminal complaint with willfully attempting to cause bodily injury by using a dangerous weapon because of a person’s actual or perceived race and color, in violation of Title 18, U.S. Code, Section 249.
According to the affidavit in support of the criminal complaint, Hougen confronted a 29-year-old black man who was crossing a street in Santa Cruz. Hougen took out a nine-inch knife and slashed at the man’s head, chest, and stomach multiple times while yelling racial slurs at him. At the time of the attack, Hougen was on probation for state convictions involving a racially-motivated assault on a different black man in 2018. The complaint also describes two additional racially-motivated assaults against black men committed by Hougen in 2014 and 2018.
The charge in the complaint is merely an allegation and the defendant is presumed innocent unless proven guilty in a court of law. Hougen faces a maximum penalty of 10 years in prison if convicted.
Assistant U.S. Attorney Marissa Harris and Trial Attorney Michael J. Songer of the Civil Rights Division are prosecuting the case on behalf of the government. The FBI conducted the investigation with the assistance of the Santa Cruz Police Department.
California U.S. Attorneys Announce $33 Million in Domestic Violence Funding from DOJ’s Office on Violence Against WomenRead the Press Release
The Justice Department’s Office on Violence Against Women (OVW) will direct more than $33 million in grant funding to California to support efforts to curb domestic violence throughout the state, announced U.S. Attorney for the Northern District of California David L. Anderson, U.S. Attorney for the Eastern District of California McGregor W. Scott, U.S. Attorney for the Central District of California Nicola T. Hanna, and U.S. Attorney for the Southern District of California Robert S. Brewer Jr.
As the state grapples with the COVID-19 pandemic, reports indicate that many cities are experiencing surges in domestic violence. The OVW grants will provide resources to local prosecutors, victim service providers, healthcare professionals, training organizations, and academic researchers, including several with national scope. Even with limited prosecutorial authority in domestic violence cases, the federal government remains committed to working with all of its partners to end the scourge of domestic violence.
Disturbing research shows that intimate partner homicides are common. According to the CDC, roughly 1 in 6 homicide victims are killed by an intimate partner. In 2019, California law enforcement received 161,123 domestic violence-related calls for assistance, and 47% of those calls involved a weapon. Research shows that abusers with a gun in the home are five times more likely to kill their partners than abusers who don’t have access to a firearm.
Given these troubling statistics, in June 2019, Attorney General William P. Barr formed a Domestic Violence Working Group to encourage prosecution of armed domestic violence offenders. Federal law bars domestic violence offenders – those subject to certain protective orders or convicted of domestic violence misdemeanors or felonies – from possessing firearms. Districts across the nation, including all four districts in California, have prioritized their own initiatives designed to keep guns out of the hands of abusers.
“We are proud to stand with the Office on Violence Against Women in announcing these grants to deter domestic violence throughout the state,” said U.S. Attorney Anderson. “These tens of millions of dollars in grants will result in a better trained and more effective law enforcement community and will strengthen the coordination between the federal government and our state and local partners when confronted with domestic violence issues.”
“Putting an end to domestic violence requires effort from everyone in a community and OVW is proud to support the work being done in California,” said OVW Principal Deputy Director Laura L. Rogers. “Our funding supports law enforcement, prosecutors and brings people together to work for a common cause. These strong partnerships lead to creative solutions to prevent violence.”
“We remain committed to reducing domestic violence through enforcement and prevention, working together with our local law enforcement partners and service providers,” said U.S. Attorney Scott. “We must do everything we can to combat the rise in domestic violence during COVID, and these grants will be of great assistance.”
“Domestic violence crimes, especially those involving firearms, are a horrific victimization of some of the most vulnerable among us,” said U.S. Attorney Hanna. “These grants will provide substantial assistance to an array of entities, including those that provide immediate assistance to victims and others that are seeking long-term solutions. We value our ongoing partnerships with these community organizations and look forward to assisting, where we can, by filing federal domestic violence cases.”
Among the $33 million in awards that will be issued to organizations and government agencies in California are:
• $400,000 to promote enhanced training and services to end violence and abuse of elderly women in Contra Costa County;
• $14.77 million to the state to support law enforcement, prosecutors, victim services providers, and courts to respond to domestic and sexual violence, including 0ver $1 million to improve criminal justice responses in Marin and Alameda counties;
• $4.2 million to domestic violence organizations to provide legal service to victims, including $600,000 to the Los Angeles-based Peace Over Violence to provide no-cost legal assistance to victims of domestic violence, including those with disabilities;
• $4.13 million for improving criminal justice responses grant program also known as the Arrest Program, including $999,700 to Sacramento County and $1 million to Tulare County;
• $1.5 million to advocacy groups to help culturally and linguistically specific services programs, including $300,000 to the Sacramento-based My Sister’s House;
• $2.1 million to domestic violence shelters to provide transitional housing and therapy services, including $450,000 to Crisis Intervention Services dba Tahoe SAFE Alliance; and
• $91,000 to the California Partnership to End Domestic Violence and $552,000 to the California Coalition Against Sexual Assault, two statewide organizations working to address violence against women.New projects to provide training and technical assistance throughout the country include:
• The $5 million National Violence Against Women Law Enforcement Training and Technical Assistance Consortium, a project with the Institute for Intergovernmental Research, in Florida, that will deliver training on investigating and responding to domestic violence, sexual assault, and stalking;
• $675,000 to continue the work of the San Diego-based Alliance for HOPE’s Training Institute for Strangulation Prevention, which provides education on investigating and prosecuting nonfatal strangulation in domestic violence cases; and
• $400,000 to the International Association of Forensic Nurses, headquartered in Maryland, to develop a national protocol to guide medical-forensic care for domestic violence victims who seek treatment for their injuries.
Justice Department Calls on San Francisco Mayor to End “One Congregant” Rule for Places of Worship to Comply with the ConstitutionRead the Press Release
The Justice Department today sent a letter to San Francisco mayor explaining that the city’s policy of only allowing a single worshiper in places of worship regardless of their size, while allowing multiple patrons in other indoor settings including gyms, tattoo parlors, hair salons, massage studios, and daycares, is contrary to the Constitution and the nation’s best tradition of religious freedom.
The letter, sent by Assistant Attorney General for the Civil Rights Division Eric Dreiband and U.S. Attorney for the Northern District of California, David Anderson, explains that San Francisco’s policy of treating secular businesses more favorably than houses of worship is “wholly at odds with this nation’s traditional understanding of religious liberty, and may violate the First Amendment,” and calls on the mayor to take action to treat places of worship equally with other venues where people share enclosed spaces.
“No government in this free country can attack religion by transforming a house of worship arbitrarily into a place for solitary confinement. People of faith go to churches, synagogues, mosques, and other places to worship with their fellow believers, and they can do so lawfully because the First Amendment to the United States Constitution makes illegal any effort by government to prohibit the free exercise of religion,” said Assistant Attorney General Eric Dreiband. “That we are dealing with a very serious public health crisis does not permit government to discriminate against religious worshipers by imposing a one-person-per-house-of-worship rule while permitting larger numbers of people to gather in tattoo parlors, hair salons, massage studios, and other places. There is no pandemic exception to the United States Constitution and its Bill of Rights.”
While continuing to enforce the one-congregant rule, San Francisco allows patrons at gyms, hair and nail salons, tattoo parlors, and massage studios so long as 6-foot distancing is followed. Gyms are allowed to open at 10 percent of capacity, daycares to operate with 10 to 12 children per class, and retail establishments generally can operate at 50 percent of capacity.
The letter calls on the city to immediately equalize its treatment of places of worship to comply with the First Amendment.
On April 27, 2020, Attorney General William P. Barr directed Assistant Attorney General for Civil Rights, Eric Dreiband, and the U.S. Attorney for the Eastern District of Michigan, Matthew Schneider, to review state and local policies to ensure that civil liberties are protected during the COVID-19 pandemic.
Oregon Resident Charged with Unlawful Possession of AmmunitionRead the Press Release
SAN FRANCISCO – Timothy Daniel Raybould made an initial appearance today in federal court on a criminal complaint charging him with unlawful possession of ammunition, announced United States Attorney for the Northern District of California David L. Anderson and United States Postal Inspection Service Postal Inspector in Charge Rafael E. Nuñez. Raybould made his initial appearance in federal court today before U.S. Magistrate Judge Virginia K. DeMarchi.
According to the complaint, on July 31, 2020, Raybould, 27, a convicted felon from Oregon, was in the employees’ only parking lot of the Ukiah Post Office in Mendocino County. When three USPS employees asked Raybould to leave, Raybould became agitated and punched one of the USPS employees. While attempting to restrain Raybould, the three USPS employees and Raybould fell to the ground and landed on top of the employee who Raybould had punched. That employee suffered two fractured hips as a result of the altercation.
The postal workers were able to restrain Raybould until Mendocino County Sheriff’s Deputies arrived at the scene. The complaint further describes how a search of Raybould’s person revealed he had a Glock .40 caliber magazine loaded with 5 rounds of ammunition in the back pocket of his pants. A search of Raybould’s car, which was parked in the employees’ only parking lot, revealed a Glock 22 .40 caliber pistol.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Assistant U.S. Attorney Maya Karwande is prosecuting the case with the assistance of Ralph Banchstubbs. The prosecution is the result of an investigation by the United States Postal Inspection Service and the Ukiah Police Department.
Napa Valley Gang Member Charged with Unlawful Possession of a FirearmRead the Press Release
SAN FRANCISCO – A criminal complaint was unsealed today in federal court charging Eduardo Bermudez Gomez with unlawful possession of a firearm, announced United States Attorney David L. Anderson and Homeland Security Investigations Special Agent in Charge Tatum King.
According to the criminal complaint, on or about February 1, 2020, Gomez, 28, of Napa, California and a twice-convicted felon, is alleged to have been driving under the influence and brandishing a firearm at innocent individuals. After receiving reports of a possible DUI, Napa Valley Police officers identified Gomez’s vehicle and attempted to conduct a traffic stop. Gomez fled the traffic stop, subsequently crashed his vehicle into and severely damaged a number of parked cars, and overturned his own vehicle. Officers arrested Gomez and found a .25 caliber Beretta handgun on his person and a 9mm Ruger handgun at the scene. Two rounds of 9mm ammunition along with 0.3 grams of cocaine were also recovered. Earlier that evening, Gomez is reported have to nearly crashed with a separate driver by driving directly at her, and to have brandished his firearm at another vehicle which contained two innocent victims. Gomez is associated with the Sureños.
Gomez was arrested September 17, 2020, and made his initial appearance in federal court in Oakland this morning. Defendant is currently in federal custody. Defendant’s next scheduled appearance is for September 21, 2020, at 10:30 a.m., before U.S. Magistrate Judge Alex G. Tse, for the continuation of the initial appearance.
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.
Assistant U.S. Attorney Ankur Shingal is prosecuting the case with the assistance of Alexa Leisure and Angelica Jao. The prosecution is the result of an investigation by Homeland Security Investigations, the Napa District Attorney’s Office, and the Napa Special Investigations Bureau.
New Charges, Plea Deals in San Francisco City Hall Corruption InvestigationRead the Press Release
SAN FRANCISCO – Charges were filed today in a criminal complaint alleging that Alan Varela and Bill Gilmartin, the president and vice president, respectively, of a Bay Area civil engineering and construction firm, bribed Mohammed Nuru, formerly San Francisco’s Director of Public Works, announced United States Attorney David L. Anderson, and Siddhartha Patel, Assistant Special Agent in Charge of the Federal Bureau of Investigation. Additional facts regarding the investigation and charges can be found here: https://youtu.be/J1EJRrM0k3g
According to an affidavit filed in connection with the complaint, Varela and Gilmartin provided gifts and benefits to Nuru since at least as early as 2013, including, among other things, $20,000 in meals and a tractor worth $40,000 for Nuru to use at his personal vacation home. In exchange for these benefits, Nuru allegedly provided Varela and Gilmartin with a steady stream of illegal inside information about a lucrative San Francisco public contract to build and operate an asphalt recycling plant that Varela and Gilmartin sought.
Additional documents filed today in court indicate that two other contractors previously charged in the ongoing public corruption probe intend to plead guilty. In one case, a filed plea agreement indicates that Balmore Hernandez, the CEO of a local construction company, will plead guilty and has agreed to cooperate in the government’s investigation. In the other case, local contractor Florence Kong will also plead guilty, and will admit that she bribed Nuru with, among other things, a Rolex watch worth more than $35,000, in return for which Nuru corruptly helped Kong obtain San Francisco public contracts, including work at her recycling facility. Kong will also admit lying to the FBI about her interactions with Nuru. Kong’s guilty plea is not a cooperation plea.
Varela and Gilmartin are the seventh and eighth defendants to be charged as part of the graft probe. Hernandez and Kong are the third and fourth defendants to plead guilty. Charges were previously filed against Nuru and local restaurateur Nick Bovis on January 28, 2020. In June of this year, charges were filed against Hernandez and Kong, as well as against Sandra Zuniga, the Mayor’s Fix-It Director. Charges were also filed in June against Walter Wong, a local contractor and permit expediter. Hernandez joins Wong and Bovis in agreeing to cooperate with the government’s investigation.
“Public works contracts in San Francisco are supposed to be awarded on a merit system in San Francisco for the benefit of the residents and taxpayers of San Francisco,” said U.S. Attorney Anderson. “The complaint filed today alleges that this merit system was undermined with insider information and favorable treatment. Instead of awarding public works contracts on the basis of merit, the defendants allegedly sought to secure significant profits on the basis of bribes and backroom deals.”
“While our investigation is ongoing, I hope the resolutions in the Hernandez and Kong cases will help restore confidence in our city governments for Bay Area residents,” said assistant SAC Patel. “San Francisco City Hall can and will function without the influence of the corruption we have seen unravel in this case.”
Varela and Gilmartin face a maximum statutory penalty of up to 10 years in prison, as well as fines that could go as high as $250,000 or twice the gross gain or loss from the alleged bribery scheme. In addition, the court may order additional terms of supervised release and restitution. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553
The prosecution is being handled by the Office of the U.S. Attorney, Northern District of California’s new Corporate Fraud Strike Force and is the result of an investigation by the FBI.
Former General Counsel and Chief Business Officer for Financial Technology Company Charged with Wire FraudRead the Press Release
SAN FRANCISCO – Brooke Campbell Solis appeared today in U.S. Magistrate Court for arraignment and an initial federal court appearance on a criminal complaint charging her with wire fraud in connection with a scheme to embezzle funds from her former employer announced United States Attorney David L. Anderson and FBI Special Agent in Charge John F. Bennett. She appeared before U.S. Magistrate Judge Virginia K. DeMarchi.
According to the complaint, Solis, 49, of Austin, Texas, is a licensed attorney. From January 2018 until July 2019, Solis was the General Counsel and then Chief Business Officer of a financial technology company registered to do business in the State of California. While employed with the technology company, Solis telecommuted from her home in Austin to her employer’s principal place of business in San Francisco.
The complaint describes how Solis allegedly diverted funds from her employer and paid the diverted funds to shell companies and entities controlled by Solis and her husband. For example, Solis controlled a shell company named The Paralegal Group LLC. The company was incorporated in Delaware and Solis was listed as the sole member. Bank records and additional vendor records identify Solis as the person controlling The Paralegal Group. The complaint alleges Solis submitted fraudulent invoices in the name of The Paralegal Group and then arranged for her employer to pay the invoices to the shell company. According to the complaint, there is no evidence The Paralegal Group ever provided any services to Solis’s employer and certain records typically associated with running a true business do not exist for The Paralegal Group.
In another aspect of the embezzlement scheme, Solis used “super administrative privileges” to receive an illegitimate reimbursement payment from her employer. The super administrative privileges had been granted by her employer to assist Solis to exercise her legitimate job responsibilities. Nevertheless, Solis used the privileges to improperly submit and approve payment for expenses without review from other employees or executives working for the employer. For example, in July of 2019, two days after Solis’s employment was terminated, she submitted a personal expense of $4,575 for “Jackson and Oliver boarding.” In this example, Solis self-approved expenses for 61 days of dog boarding. The criminal complaint explains that Solis used her access to her employer’s expense approval software even after her employment was terminated and, as of the signing of the complaint, no records for the boarding company could be found.
In sum, Solis is charged with two counts of wire fraud, in violation of 18 U.S.C. § 1343.
Solis pleaded not guilty. Magistrate Judge DeMarchi ordered Solis released on a $150,000 bond and scheduled her next court appearance for October 22, 2020, at 10:30, for a preliminary examination.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Solis faces a maximum statutory penalty of twenty years in prison for each count of wire fraud. The court also may order an additional term of supervised release, fines 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.
The case is being prosecuted by the Corporate Fraud Strike Force. The prosecution is the result of an investigation by the FBI.
Russian Nationals Indicted for Conspiracy to Defraud Multiple Cryptocurrency Exchanges and Their CustomersRead the Press Release
SAN FRANCISCO – A federal grand jury indicted Russian nationals Danil Potekhin a/k/a cronuswar and Dmitrii Karasavidi a/k/a Dmitriy Karasvidi, charging them with a wide range of crimes in connection with an alleged conspiracy to defraud three cryptocurrency exchanges and their customers of cryptocurrency valued at the time of the theft and manipulation at a minimum of $16.8 million in cryptocurrency, announced United States Attorney David L. Anderson and U.S. Secret Service Criminal Investigative Division Special Agent in Charge David Smith. In addition, the United States Attorney filed documents seeking the civil and criminal forfeiture of assets traceable to the alleged crimes. Further information about the announcement can be found here: https://youtu.be/RGAIsqmixdg.
The Superseding Indictment, filed February 18, 2020, was unsealed earlier today. According to the Superseding Indictment, Potekhin, of Voronezh, Russia, created numerous web domains that mimicked those of legitimate virtual currency exchanges. This tactic used a combination of “phishing” and “spoofing” to exploit Internet users’ trust in known companies and organizations to fraudulently obtain their login credentials, including email addresses, password information, and other personal information. When unwitting customers accessed the fraudulent websites and entered their login information, Potekhin and his co-conspirators stole the victims’ credentials and gained access to their cryptocurrency accounts, from which they stole funds or which they used to manipulate cryptocurrency markets for their own gain.
“My warning to internet fraudsters is that we will prosecute internet frauds against U.S. citizens regardless of where those frauds originate,” said U.S. Attorney Anderson. “My warning to the public is that digital currency exchanges are not like banks. The security of digital currency exchanges is only as good as your own vigilance. While law enforcement will do everything within our power to protect you, you must also protect yourself.”
“Since its inception in 1865 to combat U.S. currency counterfeiting, the Secret Service has remained committed to safeguarding the Nation’s financial infrastructure,” said Special Agent in Charge Smith. “The Secret Service mission has evolved to combat cyber fraud by tracing and seizing fraudulently obtained virtual currencies. These recent actions highlight the efforts of law enforcement to provide attribution to cybercriminals wherever they may reside.”
The Superseding Indictment describes similar attacks perpetrated against the customers of three cryptocurrency platforms, two of which are based in the United States, and one based abroad. Victims of the attacks are alleged to have included people residing in the Northern District of California.
The Superseding Indictment describes a number of complex fraud schemes used by the defendants and their co-conspirators to maximize the value of the cryptocurrency that they stole from the customers of these digital currency exchanges. The first fraud scheme, referred to as a theft attack in the Superseding Indictment, was a scheme to steal digital currency from as many users of a U.S.-based digital currency exchange as possible in a short amount of time. Beginning in July 2017, Potekhin created and controlled at least 13 separate fake domains for this digital currency exchange. Using the fake domains, the defendants induced more than 150 victim customers of the exchange to input their user identification and passwords. Potekhin and Karasavidi, of Moscow, also created multiple fictitious accounts with the same digital currency exchange, and used stolen information from at least three individuals from the United Kingdom to create three of those accounts. The defendants then used the stolen credentials from the victim customers to access the victims’ accounts in August 2017 and withdraw digital currency without authorization. By linking the fictitious accounts to the accounts of victim customers, the defendants were able to withdraw larger sums of digital currency from victim accounts without authorization.
The Superseding Indictment further describes a sophisticated market manipulation scheme that began in July 2017 using the stolen customer credentials of the same U.S.-based digital currency exchange and culminated in a manipulation attack that targeted three victim customers. The defendants first created a number of fictitious accounts on the same platform and each account purchased an inexpensive digital currency known as GAS prior to the manipulation. Then, on October 29, 2017, the defendants took control of the three victim customer accounts and used the digital currency contained in those accounts, with a value of over $5 million at that time, to purchased GAS at the same time, which increased demand and price. The defendants and their co-conspirators then quickly converted the digital currency in their fictitious accounts from GAS to Bitcoin and other digital currencies, causing the value of GAS to plummet and leaving the value of GAS that remained in the victim customer accounts worthless, causing a loss to these three victims of approximately $5 million.
The Superseding Indictment also alleges similar fraud schemes that took place between October 2017 and March 2018, and which resulted in theft attacks targeting victim customers of another U.S.-based digital currency exchange and one based abroad. The value of the stolen digital currency at the time of the thefts was over $11 million.
The Superseding Indictment alleges the defendants laundered the proceeds of the attacks and attempted to conceal the nature and source of the digital currency by transferring them in a layered and sophisticated manner through multiple accounts. Ultimately, a significant amount of the stolen digital currency was deposited into Karasavidi’s account.
In sum, Potekhin and Karasavidi have been charged with conspiracy to commit computer fraud and abuse, in violation of 18 U.S.C. § 1030(b); computer fraud, in violation of 18 U.S.C. § 1030(a)(4); conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; money laundering conspiracy, in violation of 18 U.S.C. § 1956(h); and two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1).
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The defendants remain at large. If convicted, the defendants face the following maximum statutory penalties:
Charge
Statute
Maximum Penalties
Conspiracy to Commit Computer Fraud and Abuse
18 U.S.C. § 1030(b)
(1) 10 years’ imprisonment; (2) Maximum of 3 years of
supervised release;
(3) $250,000 fine or twice the gross gain or twice the gross
Loss
Unauthorized Access to a Protected
Computer To Obtain Value
18 U.S.C. §§ 1030(a)(4) and (c)(3)(A)
(1) 5 years’ imprisonment;
(2) Maximum of 3 years of
supervised release;
(3) $250,000 fine or twice the gross gain or twice the gross
Loss
Conspiracy to Commit Wire Fraud
18 U.S.C. § 1349
(1) 20 years’ imprisonment; (2) Maximum of 3 years of
supervised release;
(3) $250,000 fine or twice the gross gain or twice the gross
loss
Conspiracy to Commit Money Laundering
18 U.S.C. § 1956(h)
(1) 20 years’ imprisonment; (2) Maximum of 3 years of
supervised release;
(3) $250,000 fine or twice the gross gain or twice the gross
Loss
Aggravated Identity Theft
(2 counts)
18 U.S.C. § 1028A(a)(1)
Each count:
(1) 2 years’ imprisonment (to run consecutive to any other
term imposed);
(2) Maximum of 3 years of supervised release;
(3) $250,000 fine
or twice the gross gain or twice the gross loss
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 U.S. Attorney also filed an action for forfeiture of millions of dollars of virtual currency that allegedly are traceable to the defendants’ crimes. According to the forfeiture complaint, law enforcement has seized, and the U.S. Secret Service currently is in custody of, over $6 million in U.S. dollars, and several million in digital currency, the value of which changes based on the market.
In addition to the criminal charges, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) announced it has issued sanctions against the two Russian nationals. The Treasury Department’s announcement can be viewed here: https://home.treasury.gov/news/press-releases/sm1123.
The prosecution and civil forfeiture actions are being handled by the Special Prosecutions Section and the Asset Forfeiture Unit of the Office of the U.S. Attorney for the Northern District of California. The prosecution is the result of an investigation by the U.S. Secret Service San Francisco Field Office. The Justice Department’s Office of International Affairs and the Dutch National High Tech Crime Unit provided investigative assistance.
Fremont Felon Pleads Guilty to Possession of Loaded FirearmRead the Press Release
OAKLAND – Kristopher Allan Sylvester pleaded guilty in federal court in Oakland today to being a felon in possession of a loaded handgun in a criminal complaint and affidavit unsealed today, announced United States Attorney David L. Anderson.
In pleading guilty, Sylvester admitted that at the time of his arrest in Fremont on April 2, 2020, in connection with an investigation of a commercial burglary committed on March 26, 2020, at a rental car location also in Fremont, he knowingly possessed a Ruger .380 caliber handgun and eight rounds of .380 caliber ammunition and magazine. Sylvester further admitted that at the time of his arrest on April 16, 2020, in Santa Clara County, he was in possession of a Ford Mustang reported stolen from a rental car location in San Jose, and he knowingly possessed a Smith & Wesson SD9VE 9mm silver handgun and eleven rounds of 9mm Winchester ammunition. Sylvester further admitted that at the time of his arrest in San Leandro on May 15, 2020, on the federal arrest warrant stemming from his April 2, 2020, arrest, he knowingly possessed a Bishop Defense 9mm black handgun and fourteen rounds of 9mm Luger ammunition and a magazine. Sylvester also admitted that the Ruger and Smith & Wesson handguns and ammunition seized in the three arrests were manufactured outside California. Finally, Sylvester admitted that at the time of his arrest on April 2, 2020, he knew that he had previously been convicted of multiple prior felonies.
Sylvester, 35, of Fremont, was charged by Information on June 22, 2020. He was charged with one count of Felon in Possession of Firearm and Ammunition, in violation of 18 U.S.C. § 922(g)(1). He pled guilty to the sole count of the Information.
Sylvester is currently being held at Santa Rita Jail.
Sylvester’s sentencing hearing is scheduled for December 8, 2020, at 9:00 a.m. before the Honorable Jeffrey S. White, U.S. District Court Judge, in Oakland. The maximum statutory penalties applicable to Sylvester’s guilty plea are ten years’ imprisonment, followed by a term of three years of supervised release, a fine of $250,000, a mandatory special assessment of $100, and forfeiture. 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.
Jonathan U. Lee is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Jessica Rodriguez Gonzalez and Kathleen Turner. The prosecution is the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Fremont Police Department, the San Jose Police Department, and the Santa Clara Police Department.
15 Charged on Drugs and Guns Charges as Part of Anti-Gang Sweep in Concord and Surrounding AreasRead the Press Release
SAN FRANCISCO – Complaints were unsealed in federal court today charging 15 individuals with trafficking drugs and firearms in connection with the Sureños street gang, announced United States Attorney David L. Anderson, ATF Special Agent in Charge Patrick Gorman, FBI Deputy Special Agent in Charge Craig D. Fair, DEA Special Agent in Charge Danny Comeaux, and Concord Police Chief Mark Bustillos.
According to affidavits filed in connection with the complaints, multiple individuals affiliated with the Sureños street gang are alleged to have conspired to sell methamphetamine, cocaine, heroin, and firearms. According to the complaint, the alleged sales occurred across Contra Costa County, but primarily in Concord, with numerous transactions occurring in a shopping center parking lot at 1500 Monument Boulevard. According to the complaint, Sureño gang members claimed control over this shopping center, referring to it as “The Block” or “The Box,” and described it to undercover officers as a kind of “one-stop shop” for guns and drugs.
“Today’s charges explode the myth of the non-violent drug dealer,” said U.S. Attorney David L. Anderson. “Drugs are expensive. Drugs are dangerous. Where we find drugs, we almost always find guns. What is particularly appalling about today’s charges is that the defendants did not even bother to hide the guns or drugs. Rather, the defendants allegedly peddled their products in broad daylight in public spaces.”
“Throughout this investigation, ATF has worked side by side with our partners to fulfill ATF’s mission of protecting the public by investigating the criminal misuse and trafficking of firearms in the Contra Costa county area,” said Special Agent in Charge Patrick Gorman, San Francisco Field Division, ATF. “In April 2019, ATF began working with the Concord Police Department and then with other agencies to address problematic gang activity that was occurring within Contra Costa county. Law enforcement partnerships create an unwavering unified front against violent crime and this collaborative effort between local and federal agencies is evidence of our shared focus. ATF remains committed to working hard and doing our part to make this region a safer place as our pledge to protect the public is one ATF takes very seriously.”
“This operation exemplifies the dedication of the FBI and our task force partners to disrupt dangerous gang activity and remove the threat of criminals who endanger our neighborhoods,” said FBI Deputy Special Agent in Charge Craig Fair. “We are committed to improving the quality of life in our Bay Area communities and ensuring the safety of our citizens.”
“Nobody wins in a community where street gang activity exists. It threatens public safety and the security of our neighborhoods,” stated DEA Special Agent in Charge Daniel C. Comeaux. “These indictments send the message that law enforcement at all levels will work as one to pursue and prosecute criminal gangs and their associates.”
“We are thankful for our close working relationship with our federal partners,” said Concord Police Chief Mark Bustillos. “Violent crime does not stop at a city’s border, and our relationship with our federal partners allows us to bring those who use violence and intimidation in Concord to justice.”
Of the fifteen defendants charged federally, eight were taken into custody on September 10, 2020. Three additional defendants are due to be transferred from state to federal custody, while two more will stay in state custody as of today. The whereabouts of the remaining two federal defendants are unknown. The following chart summarizes the charges, custodial status, and next court dates for of each of the 15 federal defendants:
Name
Age
Custodial status
Case number
Charges
Next court date
Luis CRUZ
24
State custody
20-71278
21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B(viii) and (b)(1)(C) (drug conspiracy)
TBD
Luis RAMIREZ-CARRANZA
31
Federal custody
20-71278
21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B(viii) and (b)(1)(C) (drug conspiracy)
9/15/20
Phabel GUTIERREZ
38
State custody
20-71278
21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B(viii) and (b)(1)(C) (drug conspiracy)
TBD
Angel MAGAÑA
26
State custody
20-71278
21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B(viii) and (b)(1)(C) (drug conspiracy)
TBD
Ernesto MISSIEGO
18
State custody
20-71278
21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B(viii) and (b)(1)(C) (drug conspiracy)
TBD
Christian CERVANTES
23
State custody
20-71278
21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B(viii) and (b)(1)(C) (drug conspiracy)
TBD
Francisco CANO
34
Federal custody
20-71278
21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B(viii) and (b)(1)(C) (drug conspiracy)
9/17/20
Armando NAVARRO
42
Federal custody
20-71278
21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B(viii) and (b)(1)(C) (drug conspiracy)
9/29/20
Sheena MIDDLETON
35
Federal custody
20-71278
21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B(viii) and (b)(1)(C) (drug conspiracy)
9/16/20
Luis CABRERA
28
Wanted
20-71278
21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B(viii) and (b)(1)(C) (drug conspiracy)
TBD
Alexis PEREZ
23
Federal custody
20-71278
21 U.S.C. §§ 841(a)(1) and (b)(1)(C) (drug distribution)
9/18/20
Brian ALVARENGA
30
Wanted
20-71278
21 U.S.C. §§ 841(a)(1) and (b)(1)(C) (drug distribution)
TBD
Eric CARRILLO
23
Federal custody
20-71283
18 U.S.C. 371 (firearms trafficking conspiracy)
9/15/20
Juan CONCHAS-CARRILLO
25
Federal custody
20-71283
18 U.S.C. 371 (firearms trafficking conspiracy)
9/16/20
Kevin VIDAL
23
Federal custody
20-71284
26 U.S.C. § 5861 (unlawful possession of unregistered firearm)
9/21/20
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of a drug conspiracy in violation of 21 U.S.C. §§ 841(a)(1), 841(b)(1)(B)(viii) and 846, the defendants face a sentence of at least 5 and up to 40 years in prison, along with at least 4 years and up to life on supervised release, up to a $5 million fine, forfeiture, and denial of federal benefits. If convicted of a drug conspiracy in violation of 21 U.S.C. §§ 841(a)(1), 841(b)(1)(C) and 846, the defendants face a maximum penalty of up to 20 years in prison, along with at least 4 years and up to life on supervised release, up to a $5 million fine, forfeiture, and denial of federal benefits. If convicted of possession of an unregistered firearm, the defendants face a maximum penalty of up to 10 years in prison, along with up to 3 years of supervised release, a $10,000 fine, and forfeiture. If convicted of conspiring to deal firearms without a license, the defendants fae up to 5 years in prison, along with up to 3 years of supervised release, a $250,000 fine, and forfeiture. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by the Oakland branch of the U.S. Attorney’s Office. The prosecution is the result of a 2-year investigation led by the ATF and the Concord Police Department, along with the DEA and the FBI, as part of the FBI’s Safe Streets Task Force.
Former Driscoll’s Executive Sentenced to over Two Years in Prison for EmbezzlementRead the Press Release
SAN JOSE– Marc Marier was sentenced to 29 months in prison and ordered to pay over $1.49 million in restitution for wire fraud and money laundering, announced United States Attorney David L. Anderson and FBI Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Lucy Koh, U.S. District Judge.
Marier, 42, of Naperville, Illinois, pleaded guilty to the charges on June 10, 2020. Driscoll’s, a company headquartered in Watsonville, Calif., that sells berries, hired Marier as its Director of Real Estate and Workplace Services in October 2017. Driscoll’s paid Marier to relocate from Illinois to California to accept the position.
According to the plea agreement and the government’s sentencing memorandum, about a month into his employment, Marier sought to clarify the scope of his invoice approval authority. Marier was informed that he had the authority to approve invoices of up to $250,000 by virtue of his director-level status at Driscoll’s. Within weeks, Marier started abusing that authority by submitting and approving false invoices from a fake business called TNC US Inc. and routing the payments to a shell J.P. Morgan Chase bank account that he created and maintained for TNC. TNC had no bona fide assets, no employees, and no business. Marier used TNC solely to further his scheme to embezzle funds from Driscoll’s. In total, Marier submitted at least fifteen false invoices to Driscoll’s between November 2017 and May 2018 and received approximately $1.49 million in payment for services that TNC never rendered.
Marier used the embezzled funds to make personal expenditures, including for a five-bedroom home in Naperville, Illinois; a GMC Yukon XL; and a $75,000 cashier’s check for his girlfriend. Marier resigned the day after he became aware of Driscoll’s internal investigation into the fraudulent invoices that he had submitted and approved. Driscoll’s then referred the case to the FBI.
A grand jury indicted Marier on February 14, 2019, charging him with two counts of wire fraud, in violation of 18 U.S.C. § 1343, and two counts of money laundering, in violation of 18 U.S.C. § 1957. Marier pleaded guilty to one count of each charge.
In February 2019, the government seized the Naperville home, the GMC truck, and over $700,000 in cash from bank accounts associated with Marier and TNC. Marier agreed to forfeit all of these assets and to pay full restitution for all losses suffered by Driscoll’s.
In addition to the prison term, Judge Koh ordered Marier to serve a three-year period of supervised release and signed a preliminary order of forfeiture that included, among other things, a personal forfeiture money judgment in the sum of $1,489,216.25. The defendant will begin serving the prison term in January 2021.
Assistant U.S. Attorneys Marissa Harris, Karen Beausey, and Jeffrey Schenk are prosecuting the case with the assistance of Jessica Leung. The prosecution is the result of an investigation by the FBI.
Armed Tenderloin Drug Trafficker Sentenced to More Than Three Years in PrisonRead the Press Release
SAN FRANCISCO – Brazil Harris was sentenced today to three years and four months in prison for being a felon in possession of a firearm and possessing pills containing methamphetamine with the intent to distribute them, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett
Harris pleaded guilty on February 11, 2020, to being a felon in possession of a firearm and to possessing methamphetamine with the intent to distribute it. According to the plea agreement, Harris admitted that on October 19, 2019, he was driving his vehicle near the intersection of Golden Gate Avenue and Larkin Street in the Tenderloin neighborhood of San Francisco, when San Francisco Police Department Officers stopped him for committing a traffic violation. At that time, Harris had in the glove compartment of his vehicle a Springfield XDS .45 caliber semiautomatic pistol, which was loaded with three rounds of ammunition. Harris also possessed in his pants a bottle containing approximately 275 pills, some of which contained methamphetamine. Harris admitted that he possessed the pills with the intent to distribute them. Officers also found approximately $260 on Harris. Harris previously had been convicted of a felony punishable by imprisonment for more than one year and therefore he was prohibited from possessing a firearm.
Harris, 30, of San Francisco, California, was indicted by a federal grand jury on January 23, 2020. He was charged with being a felon in possession of a firearm and with possessing a mixture and substance containing methamphetamine with the intent to distribute it.
San Francisco’s Tenderloin neighborhood has been especially severely impacted by illegal drug dealing. “San Francisco’s Tenderloin neighborhood is known to users and dealers throughout the Bay Area as a place to buy illegal drugs,” according to local law enforcement. Indeed, more than half of all the drug sales incidents booked or cited by the San Francisco Police Department took place in the Tenderloin district—specifically, “56 percent … by far the highest of any police district in the City” in fiscal year 2017–2018.
Assistant U.S. Attorney Kristina Green is prosecuting the case with the assistance of Morgan Byrne. The prosecution is the result of an investigation by the Drug Enforcement Administration and the San Francisco Police Department. This case 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.
The sentence was handed down by The Honorable William H. Alsup, U.S. District Court Judge, following a guilty plea on two counts: felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1); and possession with intent to distribute a mixture and substance containing methamphetamine, in violation of 21 U.S.C. § 841(a)(1). Judge Alsup also sentenced the defendant to a three-year period of supervised release. Harris has been in custody since February 3, 2020.
Kristina Green is the Assistant U.S. Attorney who is prosecuting the case. The prosecution is the result of an investigation by the San Francisco Police Department and Federal Bureau of Investigation.
Tenderloin Drug Dealer Sentenced to More Than Two Years in Prison for Trafficking Heroin in A School ZoneRead the Press Release
SAN FRANCISCO – Darwin Villatoro pleaded guilty and was sentenced today to two years and four months in prison for possessing with intent to distribute heroin, possessing with intent to distribute heroin in a school zone, and possessing with intent to distribute cocaine base, announced United States Attorney David L. Anderson and Drug Enforcement Administration Special Agent in Charge Daniel C. Comeaux.
According to the United States’ sentencing memorandum, Villatoro, 29, of Honduras, was arrested three times between January 2019 and January 2020. The first arrest occurred on January 28, 2019, when San Francisco Police Department officers observed Villatoro in the 300 block of Golden Gate Avenue in violation of a previous order. The order required Villatoro to stay at least 150 yards away from the intersection of Golden Gate Avenue and Larkin Street. When officers attempted to approach Villatoro, he fled on foot and discarded his backpack. After a brief chase, the officers arrested Villatoro and searched his backpack, which contained 22 bindles of heroin, five bindles of methamphetamine, and 10 bindles of cocaine base.
The second arrest occurred on October 26, 2019. On that date, officers observed Villatoro at the intersection of Golden Gate Avenue and Larkin Street, which is within 1,000 feet of both the Tenderloin Community Elementary School and the N. Helen Diller Civic Center Playground. According to papers filed by the government, officers knew Villatoro was the subject of multiple outstanding felony warrants. When officers approached Villatoro, he fled and threw a plastic baggie to the ground. Officers arrested Villatoro and recovered 26 bindles of heroin and eight bindles of cocaine base from the plastic baggie.
The third arrest, on January 27, 2020, occurred after officers observed Villatoro walking on the 300 block of Golden Gate Avenue, in violation of an active stay away order from that location. Officers arrested Villatoro, who, on that occasion, possessed 75 bindles of cocaine base, 13 packages of fentanyl, 22 bindles of heroin, and 11 individually wrapped packages of methamphetamine.
On February 13, 2020, a federal grand jury indicted Villatoro, charging him with possession with intent to distribute heroin, possession with intent to distribute heroin within 1,000 feet of a school or playground, and possession with intent to distribute cocaine base, all in violation of 21 U.S.C. § § 841(a)(1) and (b)(1)(C). Villatoro pleaded guilty to all three counts. The defendant has been in custody since March 16, 2020 and will begin serving his sentence immediately.
San Francisco’s Tenderloin neighborhood has been especially severely impacted by illegal drug dealing. “San Francisco’s Tenderloin neighborhood is known to users and dealers throughout the Bay Area as a place to buy illegal drugs,” according to local law enforcement. Indeed, more than half of all the drug sales incidents booked or cited by the San Francisco Police Department took place in the Tenderloin district—specifically, “56 percent … by far the highest of any police district in the City” in fiscal year 2017–2018.
Assistant U.S. Attorney Yoosun Koh is prosecuting the case. The prosecution is the result of an investigation by the Drug Enforcement Administration and the San Francisco Police Department. This case 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.
Chinese Citizen Sentenced for Economic Espionage, Theft of Trade Secrets, and ConspiracyRead the Press Release
SAN JOSE – Hao Zhang was sentenced yesterday to eighteen months in prison and ordered to pay $476,835 in restitution following his conviction at trial on charges of economic espionage, theft of trade secrets, and conspiring to commit both offenses, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett
“I am gratified by a sentence that recognizes the seriousness of the offense,” said U.S. Attorney David L. Anderson for the Northern District of California. “Command-and-control countries cannot match the innovation of a free nation, and inevitably resort to theft. We will protect Silicon Valley. We will protect our intellectual property.”
“Hao Zhang committed these acts to benefit himself, his co-conspirators, and the government of China. This is not competition – this is economic espionage, theft, and conspiracy,” said FBI Special Agent in Charge Bennett. “The FBI will not allow American research and development to be stolen. We encourage companies to come to us both proactively and when suspicious activity is observed so that we can work together to protect American businesses and ensure our national economic security.”
Evidence admitted during the bench trial demonstrated that, from 2010 to 2015, Zhang conspired to and did steal trade secrets relating to Surface Acoustic Wave (“SAW”) and Bulk Acoustic Wave (“BAW”) filters, including Film Bulk Acoustic Resonators (“FBAR”), one type of BAW filter. These filters are commonly used as radio frequency (“RF”) filters for mobile phones and other devices for consumer and military applications. Zhang and his co-conspirator Wei Pang stole the trade secrets from two companies: Avago, a designer, developer, and global supplier of a broad range of analog, digital, mixed signal and optoelectronics components and subsystems with a focus in semiconductor design and processing, headquartered in San Jose, California, and Singapore; and Skyworks, an innovator of high performance analog semiconductors headquartered in Woburn, Massachusetts. U.S. District Judge Edward J. Davila found that Zhang committed economic espionage because he intended to start a new business in China using the stolen information and knew that the business would benefit instrumentalities of the People’s Republic of China, including Tianjin University (“TJU”).
Evidence introduced at trial further showed that, by October 2006, Zhang and his co-conspirators were formulating the plan to start a business in China to compete with Avago and Skyworks. In 2006, Zhang had graduated with a Ph.D. from the University of Southern California and taken a job at Skyworks while co-conspirator Wei Pang started working at Avago. Zhang and Pang illicitly shared trade secrets with each other and with co-conspirators in China while they worked for the U.S. companies. In 2009, Zhang and Pang obtained professorships at TJU based on their academic and professional experience and their commitment to start a Micro-Electro-Mechanical Systems (“MEMS”) lab at the university. TJU was aware of the trade secrets the defendants brought. With guidance from TJU, the defendants filed Chinese patent requests and created a shell company in the Cayman Islands they called Novana. Novana and a TJU subsidiary called MNMT created the new company, ROFS, as a joint venture to manufacture product realized from use of the trade secrets. Along the way, Zhang also obtained U.S. patents in his own name using trade secret information he knew was stolen from Avago.
Zhang, 41, of China, was charged in a superseding indictment by a federal grand jury on April 1, 2015.
The sentence was handed down by The Honorable Edward J. Davila, U.S. District Court Judge, following a four-day bench trial on one count of conspiracy to commit economic espionage, in violation of 18 U.S.C. § 1831(a)(5), one count of conspiracy to commit theft of trade secrets, in violation of 18 U.S.C. § 1832(a)(5), twelve counts of economic espionage and aid and abetting, in violation of 18 U.S.C. §§ 1831(a)(1)-(3) and 2, and twelve counts of theft of trade secrets and aiding and abetting, in violation of 18 U.S.C. §§ 1832(a)(1)-(3) and 2. Judge Davila also sentenced the defendant to a three year period of supervised release and ordered him to pay restitution to Avago and Skyworks. Zhang consented to the court-ordered forfeiture of the U.S. patents obtained with stolen Avago technology. The defendant will begin serving the sentence on October 22, 2020.
Michelle J. Kane and Susan Knight are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Jessica Rodriguez Gonzalez, Susan Kreider, and Laurie Worthen. The prosecution is the result of an investigation by the FBI.
San Jose Man Sentenced to Ten Years in Prison for Possession of Child PornographyRead the Press Release
SAN JOSE – James Gould, Jr. was sentenced today to 10 years in prison, and ordered to pay $12,000 in restitution for possession of child pornography, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
Gould pleaded guilty on February 3, 2020, to Possession of Child Pornography. According to the plea agreement, Gould admitted that on June 15, 2019, while on supervised release from a prior child pornography conviction, a probation officer conducted a random inspection of Gould’s cell phone, revealing that it had child pornography images on it. As a result, a search was conducted of Gould’s residence, located in San Jose, California. In his bedroom were 26 electronic devices capable of accessing the internet or processing or storing data, which Gould was prohibited from possessing as part of his supervised release conditions. As part of his plea agreement, Gould further admitted that on one of his devices he possessed 556 child pornography images and 169 child pornography videos. The images and videos that Gould possessed depicted infants and toddlers engaged in sexually explicit conduct, including sadistic or masochistic conduct and sexual abuse or exploitation of an infant or toddler.
Gould, 32, of San Jose, was charged by an Information filed on January 30, 2020. He was charged with Possession of Child Pornography.
The sentence was handed down by The Honorable Edward J. Davila, U.S. District Court Judge, following a guilty plea on one count of Possession of Child Pornography in violation of 18 U.S.C. § 2252(a)(4)(B). Judge Davila also sentenced the defendant to an 8 year period of supervised release. The defendant has been in continuous custody since his initial appearance on the related supervised release violation (CR 12-00464 EJD) on June 27, 2019.
Chinhayi Cadet is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Jessica Leung. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
San Jose Man Pleads Guilty to Damaging Cisco’s NetworkRead the Press Release
SAN JOSE – Sudhish Kasaba Ramesh pleaded guilty in federal court in San Jose today to 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 John L. Bennett.
According to the plea agreement, Ramesh admitted to intentionally accessing Cisco Systems’ cloud infrastructure that was hosted by Amazon Web Services without Cisco’s permission on September 24, 2018. Ramesh worked for Cisco and resigned in approximately April 2018. During his unauthorized access, Ramesh admitted that 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 provided video meetings, video messaging, file sharing, and other collaboration tools. He further admitted that he acted recklessly in deploying the code, and consciously disregarded the substantial risk that his conduct could harm to 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, 30, of San Jose, California, was charged by Information on July 13, 2020. He was charged 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).
Under the plea agreement, Ramesh pled guilty to the sole count of the Information.
Ramesh is currently released on bond. Bail was set at $50,000.
Ramesh’s sentencing hearing is scheduled for December 9, 2020, before The Honorable Lucy H. Koh, U.S. District Court Judge, in San Jose. The maximum statutory penalty for the offense 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), is 5 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.
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.
Oakland Residents Charged with Illegally Exporting Night Vision Rifle Scopes to the Sultanate of OmanRead the Press Release
SAN FRANCISCO – Fares Abdo Al Eyani and Saba Mohsen Dhaifallah have been charged in a criminal complaint with attempting to ship export-controlled night vision rifle scopes from the United States to the Sultanate of Oman.
The announcement was made by United States Attorney for the Northern District of California David L. Anderson; Assistant Attorney General for National Security John C. Demers; Federal Bureau of Investigation, San Francisco Division, Special Agent in Charge John F. Bennett; and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King.
The criminal complaint was filed August 5 and unsealed earlier today. According to the complaint, Al Eyani, 37, and Dhaifallah, 38, of Oakland, worked together to purchase numerous devices with night vision capabilities over the last half of 2019. The defendants then allegedly attempted to send those items and firearms to the Sultanate of Oman in shipping containers departing from the Port of Oakland.
The commercial export of arms, ammunitions, implements of war, and defense articles and services from the United States is governed by the Arms Export Control Act (AECA), 22 U.S.C. § 2778. Under the AECA, the President is authorized, among other things, to identify items deemed critical to the national security and foreign policy interests of the United States and to designate such items as “defense articles.” Further, the AECA authorizes the President to promulgate regulations for, and to require a license for the export of, items deemed defense articles. By executive order, the President has delegated this authority to the United States Department of State, Bureau of Political-Military Affairs, Directorate of Defense Trade Controls (DDTC). The DDTC promulgated regulations, codified at 22 C.F.R. §§ 120-130, known as the International Trafficking in Arms Regulations, or ITAR. Under the ITAR, a defense article includes any item on the United States Munitions List (USML). In addition, under the ITAR, a person who desires to export from the United States an item appearing on the USML must first register with the DDTC and obtain a license for the shipment prior to the export.
According to the complaint, Al Eyani and Dhaifallah were engaged in a scheme to export a set of night vision rifle scopes without a license. The AECA and the ITAR prohibit export of the scopes without a license and registration with the DDTC. The complaint describes how Al Eyani and Dhaifallah allegedly worked together to purchase the rifle scopes from a Bay Area gun store in August and September 2019 and then, in December 2019, attempted to export the rifle scopes by hiding them inside a shipping container at the Port of Oakland. In addition, the complaint alleges the unlawful scheme was thwarted when law enforcement officers searched the container and seized the rifle scopes.
Al Eyani and Dhaifallah were arrested yesterday at their residence in Oakland and made their initial appearance this morning in federal court before U.S. Magistrate Judge Thomas S. Hixson. Magistrate Judge Hixson released Al Eyani and Dhaifallah on a $100,000 bond and with travel restrictions. Al Eyani and Dhaifallah’s next hearing has been scheduled for Friday, August 28, 2020, at 10:30 a.m. before U.S. Magistrate Judge Robert M. Illman, for identification of counsel.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Al Eyani and Dhaifallah both face a maximum sentence of twenty years’ imprisonment and a fine of $1,000,000. In addition, the court may order the defendant to serve an additional period of supervised release 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.
The Special Prosecutions Section of the United States Attorney’s office is prosecuting the case in consultation with the Counterintelligence and Export Control Section of the National Security Division at the Department of Justice. The prosecution is the result of an investigation by the Federal Bureau of Investigation, Homeland Security Investigations, and United States Customs and Border Protection.
Fairfax Man Charged with Possession of Child PornographyRead the Press Release
SAN FRANCISCO – Ryan Michael Kannett appeared in federal court today on a criminal complaint alleging that he possessed child pornography, announced United States Attorney David L. Anderson and Homeland Security Investigations Special Agent in Charge Tatum King.
An affidavit filed by an HSI agent in connection with the criminal complaint alleged that Kannett, 36, of Fairfax, used the handle “Sir Sicko,” among others, to engage online with an individual whom he believed to be interested in child pornography, but who in fact was an undercover agent. Kannett allegedly provided the agent with several videos and images depicting sexual acts with minors. Agents then traced the IP addresses from which those files were sent and found the IP addresses were linked to Kannett’s residence in Fairfax. Agents executed a search warrant at that residence and recovered a tablet device that allegedly contained approximately 454 videos depicting child pornography, including videos depicting minors forced to engage in bestiality and bondage. One video in particular was approximately 8 minutes long, and showed an adult female sexually and physically abusing a girl who appeared to be approximately 2 to 5 years old.
Kannett was arrested on December 17, 2019 in Fairfax, Calif., and made his initial appearance in federal court in San Francisco this morning before the Honorable U.S. Magistrate Judge Thomas S. Hixson. Kannett is currently detained pending further proceedings. His next scheduled appearance is at 10:30 a.m. on October 12, 2020, for status before U.S. Magistrate Judge Thomas S. Hixson.
A 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 20 years, and a fine of $250,000, plus restitution for each violation of Title 18 United States Code § 2252. 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 Molly A. Smolen is prosecuting the case with the assistance of Senna Milstead. The prosecution is the result of an investigation by the Department of Homeland Security, Homeland Security Investigations.
Bay Area Man Sentenced to Six Years in Prison for Attempted Receipt of Child PornographyRead the Press Release
OAKLAND – John Vicencio Vinoya was sentenced today to six years in prison, to be followed by twenty years of supervised release, for attempted receipt of child pornography, announced United States Attorney David L. Anderson and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King. The sentence was handed down by the Honorable Haywood S. Gilliam, Jr.
Vinoya, 48, of Richmond, California, pled guilty to the charge on September 30, 2019. According to the plea agreement, Vinoya admitted that, in July 2018, when he was 46 years old, he texted a girl that he knew to be fourteen years old. When he learned that the minor was about to take a shower, he requested that she send him a “half body pic.” Vinoya admitted that he hoped and intended that the minor would send him a naked photograph that would have constituted child pornography.
Vinoya further admitted that, two weeks later, he sent sexually explicit text messages to the minor’s cell phone. He attempted to persuade and entice the minor to have sexual intercourse with him. On August 2, 2018, Vinoya drove to the minor’s home at a time when he believed that her parents were out of town. He brought condoms and lubricating oil with him to the meeting. He was stopped by law enforcement when he reached the minor’s home.
Vinoya was indicted by a federal grand jury on December 13, 2018. He was initially charged with online enticement of a minor, in violation of 18 U.S.C. § 2422(b). He ultimately pled guilty to a violation of 18 U.S.C §§ 2252(a)(2) and (b), attempted receipt of child pornography. Vinoya has been in custody since his arrest by officers of the El Cerrito Police Department on August 2, 2018.
Katherine Lloyd-Lovett is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kay Konopaske. The prosecution is the result of the collaborative investigative efforts of the El Cerrito Police Department, the Silicon Valley Internet Crimes Against Children Task Force, and Homeland Security Investigations HSI.
Five Charged in Multi-Million Dollar International Customs Fraud SchemeRead the Press Release
SAN FRANCISCO - A federal grand jury in San Francisco indicted Dale Behm; Yong Heng Liang, also known as Colin Liang; Joshua Stanka; Joshua Clark; and Michael Choy with conspiracy, wire fraud, and related charges related to an alleged scheme to submit fraudulent claims for refunds on import duties, announced United States Attorney David L. Anderson, Homeland Security Investigations (HSI) Special Agent in Charge Tatum King, and Internal Revenue Service Criminal Investigations (IRS-CI) Special Agent in Charge Kareem Carter.
The indictment, filed August 12, 2020, and unsealed today, alleges Liang, 34, of Daly City, Calif.; Behm, 75, of Shell Knob, Missouri.; Stanka, 41, of Katy, Texas; Clark, 38, of Fair Oaks Ranch, Texas; and Choy, 47, of Etibicoke, Ontario, Canada, conspired to defraud the United States of as much as $40 million by submitting multiple claims for refunds to recover tariffs that were properly owed on imports. Pursuant to the refund scheme, defendants allegedly used a tire recycling company in Hayward and a shell company, both controlled by Liang. The recycling company had no recycling equipment and shipped containers of thousands of used tires to countries in Asia, often using the name of the shell company. In addition, the defendants forged the shipping documents to support false claims to the government that the exported tires were actually high-quality plastics, allowing defendants to seek refunds paid for other imports.
“We allege that the defendants, using Bay Area Tire Recycling, engaged in a massive environmental fraud. Used tires don’t belong in landfills, either here in California or overseas. Used tires can be recycled, retreaded and reused. By dumping used tires in Korea, India, and Vietnam, and using those exports to support false claims, the defendants cheated consumers, American taxpayers, the shipping companies, and everyone who cares about the environment.“
“Working in partnership with IRS Criminal Investigations and U.S. Customs and Border Protection, HSI will vigorously pursue U.S. based violators who seek to trash our planet and ruin the ecosystem for future generations,” said Special Agent in Charge King.
“This was an extremely well organized network,” said Special Agent in Charge Carter. “They manipulated the system to their advantage, submitted millions in false claims and laundered their ill-gotten gains. IRS CI will continue to work with our law enforcement partners to ensure that anyone involved in these types of schemes will be held accountable for their crimes.”
According to the indictment, at the heart of the scheme were bonded companies such as San Francisco-based raw plastics importer The Pacific Rim Traders, LLC. The indictment alleges that beginning as early as 2014 and continuing through September 2019, the defendants filed fraudulent claims for refunds of customs duties that Pacific Rim and other companies had paid to CBP. In the case of Pacific Rim, the company imported large amounts of plastic resin from its parent company in China and used the resin to manufacture food-grade bottles and other materials. Pacific Rim paid tariffs, or “customs duties,” on the imported plastics. The company also maintained a customs bond with CBP and therefore was entitled to accelerated refund checks, or “drawbacks,” from the U.S. Treasury when it exported qualifying goods.
The indictment describes how the defendants submitted documents allowing Pacific Rim to receive drawbacks by submitting documents that made it appear shipping containers filled with used tires and scrap plastic were loaded with drawback-eligible virgin plastic material. Specifically, Liang, who controlled a company that purported to recycle tires, allegedly arranged for shipping containers loaded with used tires to be shipped to ports in countries in Asia, including the Republic of Korea, India, and Vietnam. Liang then allegedly provided documents, including export bills of lading, to Choy who, at the direction of Stanka, Clark, and others, modified Liang’s and other exporters’ documents to provide to Behm with false invoices. The invoices made it appear that Pacific Rim was selling large amounts of virgin plastic material to companies in Asia, when, in reality, Liang was exporting tires and other material. Behm and others then allegedly directed a San Francisco-based customs broker to use the false documents to prepare customs drawback claims with CBP. The claims sought drawbacks for as much as $655,000 at a time.
Liang is also charged with defrauding a shipping company that had to pay for destruction of containers of tires shipped to Busan, South Korea. According to the indictment, Liang listed a then-dissolved company as the recipient, or consignee, of the tires. The indictment alleges that in 2017, 128 containers shipped by Liang were found abandoned in Busan, a discovery that lead to the initiation of an investigation by federal authorities. A comparison of the export documents to the refund claims suggests the coconspirators altered the paperwork so that “scrap rubber” appeared as “PFTE Resin” and “EFTE Resin.” The indictment alleges that if the actual contents of the containers – scrap rubber tires – had been reported to CBP, Pacific Rim’s drawback claims would not have been granted.
In total, the indictment alleges Pacific Rim received at least $6,400,000 in fraudulent drawbacks, while other clients of Stanka, Clark, Choy, and Liang obtained as much as an additional $34,000,000 in total refunds.
In addition, the indictment alleges the parties laundered the proceeds of the fraud scheme. Pacific Rim allegedly received a percentage of the fraudulent refund claims and paid the remainder to a company owned by Stanka and Clark. Further, Stanka and Choy allegedly transferred hundreds of thousands of dollars to themselves and made frequent payments to Choy for altered documents. Choy, in turn, allegedly paid Liang for copies of bills of lading for his exports of waste tires to South Korea, Hong Kong, Vietnam, and elsewhere.
In sum, the defendants are charged with the following crimes:
Count
Violation
Description
Defendant(s) Charged
1
18 U.S.C. § 286
Conspiracy To Defraud the Government With Respect To Claims
All Defendants
2-16
18 U.S.C. § 287
False, Fictitious, Or Fraudulent Claims
All Defendants
17-28
18 U.S.C. § 1343
Wire Fraud
All Defendants
29-30
18 U.S.C. § 1341
Mail Fraud
Yong Heng Liang
31
18 U.S.C. § 1957
Engaging In Monetary Transactions In Property Derived From Specified Unlawful Activity
Joshua Stanka
32
Joshua Clark
33
Joshua Stanka
34
Joshua Stanka
35
Joshua Clark
36
Joshua Stanka; Joshua Clark
37
Joshua Clark; Michael Choy
38
Joshua Clark
39
18 U.S.C. § 1956(a)(2)(A)
Laundering Of Monetary Instruments
Yong Heng Liang; Michael Choy
40
Yong Heng Liang; Michael Choy
41
Joshua Clark; Michael Choy
42
Yong Heng Liang; Michael Choy
43
18 U.S.C. § 1519
Destruction, Alteration, Or Falsification Of Records In Federal Investigations And Bankruptcy
Yong Heng Liang
Defendant Liang was arrested in Daly City, Calif., and is scheduled to make his initial appearance tomorrow morning, August 26, 2020, in San Francisco. Defendants Stanka and Clark were also arrested in Texas this morning and are scheduled made their initial appearances in federal court in Houston, Texas, and San Antonio, Texas, respectively. Defendant Dale Behm was arrested in Missouri and will make his initial appearance in federal court in Springfield, Missouri.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face maximum sentences as follows:
Violation
Description
Maximum Penalties
18 U.S.C. § 286
Conspiracy To Defraud The Government With Respect To Claims
10 Years;
$250,000 fine;
3 Years Supervised Release
18 U.S.C. § 287
False, Fictitious, or Fraudulent Claims
10 Years;
$250,000 fine;
3 Years Supervised Release
18 U.S.C. § 1343
Wire Fraud
20 Years;
$250,000 fine;
3 Years Supervised Release
18 U.S.C. § 1341
Mail Fraud
20 Years;
$250,000 fine;
3 Years Supervised Release
18 U.S.C. § 1957
Engaging In Monetary Transactions In Property Derived From Specified Unlawful Activity
10 Years;
$250,000 fine;
3 Years Supervised Release
18 U.S.C. § 1956(a)(1)(A)
Laundering Of Monetary Instruments
20 Years;
$500,000 fine, or twice the value of property involved in the transaction;
3 Years Supervised Release
18 U.S.C. § 1519
Destruction, Alteration, Or Falsification Of Records In Federal Investigations And Bankruptcy
20 Years;
$250,000 fine;
3 Years Supervised Release
However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.The case is being prosecuted by the Special Prosecutions section of the United States Attorney’s Office with the assistance of Beth Margen and Lance Libatique. The prosecution is the result of an investigation by HSI and IRS-CI.
Owners of South Bay Businesses Sentenced to Prison for Investment Fraud Conspiracy and Related CrimesRead the Press Release
SAN JOSE –Jennifer Yang was sentenced to 46 months in prison for her role—and Daniel Wu, her business partner, was sentenced to 24 months in prison for his role—in a conspiracy to commit mail fraud and visa fraud along with a number of related crimes, announced United States Attorney David L. Anderson; U.S. State Department, Diplomatic Security Service (DSS), San Francisco Field Office Special Agent in Charge Matthew Perlman; and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King. The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge, following a trial in which the defendants were found guilty of crimes related to a scheme to defraud foreign investors in connection with the United States’ “EB-5” immigrant visa program. The EB-5 program allows individuals to apply for permanent residence in the United States if they invest a substantial sum of money in a new commercial enterprise, enabling that business to create at least ten jobs in this country.
After the four-week trial in this case, the jury found that Yang, 52, of Palo Alto, and Wu, 56, of Las Vegas, submitted to the government fraudulent visa applications that claimed they had used investor money to create the required number of jobs when, in fact, the defendants had misused investor money and failed to create the jobs that they claimed.
“The EB-5 program is intended to create jobs and spur investment. The investors in this program should not suffer fraud,” U.S. Attorney Anderson stated. “Yang and Wu broke their promises to investors and lied to the government. They will now spend time in prison to pay for their crimes.”
“The Diplomatic Security Service (DSS) is pleased with this successful prosecution. These hard-fought convictions send a clear message that criminals who attempt to exploit the U.S. visa process for illegal profit will be punished,” said Special Agent in Charge Perlman. “DSS, alongside our federal partners, is committed to rooting-out and prosecuting criminal enterprises involving U.S. travel documents.”
“Fraudulent schemes like these threaten our National Security and public safety,” said Special Agent in Charge King. “They also have substantial impacts on the victims of these callous crimes. HSI special agents work diligently to not only protect National Security interests, but also the victims of fraud.”
Evidence at trial showed that Yang, a lawyer and licensed member of Bar of the District of Columbia, held herself out as a legal specialist for persons interested in applying for EB-5 visa benefits. Yang and Wu solicited six- and seven-figure investments from foreign individuals interested in lawful permanent residency in the United States, promising those individuals that their investments would be used to create jobs and qualify them for EB-5 visas. Nevertheless, instead of using the investors’ money to create jobs as promised, the evidence at trial showed that the defendants diverted the money for other purposes including personal expenditures such as the purchase of cars, stays in luxury hotels, college tuition for a family member, and the cash purchase of a $2.5 million house for Yang and her family. When it came time to submit visa applications on behalf of the investor victims, Yang and Wu falsely represented that the money had been used properly and the jobs had been created. In some cases, the false information about bogus job positions was created using the personal identifying information of third parties without those individuals’ knowledge or consent. Between 2007 and 2016, the defendants filed fraudulent EB-5 visa petitions for at least seven foreign investors who supplied Yang and Wu with approximately six million dollars intended for use as EB-5 investments.
A federal grand jury indicted Yang and Wu on October 19, 2017, charging both with one count of conspiracy to defraud the United States and to commit visa fraud, mail fraud, and aggravated identity theft, all in violation of 18 U.S.C. § 371; three counts of visa fraud, in violation of 18 U.S.C. § 1546(a); two counts of mail fraud, in violation of 18 U.S.C. § 1341; and two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A. In addition, Yang was charged with two counts of money laundering, in violation of 18 U.S.C. § 1957. The jury convicted Yang and Wu of mail fraud, visa fraud, and conspiracy to commit these and other offenses.
In addition to the prison terms, Judge Koh ordered the defendants to pay $5,951,813.00 in restitution and to serve three years of supervised release following their prison terms.
Assistant U.S. Attorneys Patrick Delahunty and John Bostic are prosecuting the case with the assistance of Lakisha Holliman, Mimi Lam, Susan Kreider, and Tong Zhang. The prosecution is the result of an investigation by the United States Department of State, Diplomatic Security Service, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, and U.S. Citizenship and Immigration Services Fraud Detection and National Security Office.
Subcontractor at NASA Ames Field Center to Pay $1.2 Million to Resolve Claims of Inflated Workers’ Compensation PaymentsRead the Press Release
New Mexico-based Fiore Industries Inc. agreed to pay the United States $1,200,000 to resolve allegations that it caused false claims to be submitted to the government for payment. The announcement was made today by United States Attorney David L. Anderson and NASA Office of Inspector General Special Agent in Charge Jennifer Bryan.
Fiore is a subcontractor that provide fire protection services at NASA’s Ames field center in Mountain View, Calif. According to the settlement agreement made public today, the settlement resolves the government’s claims that in 2016 Fiore overcharged the government by seeking hundreds of thousands of dollars in additional payments from NASA based on inflated workers’ compensation rates. The government claimed that the rates Fiore submitted to justify the additional payments did not account for discounts Fiore knew it would receive but did not disclose to NASA.
“Federal contractors and subcontractors must deal squarely and honestly with the government at all times,” said U.S. Attorney Anderson. “By signing this agreement, Fiore agrees to account for various deductions to which the government is entitled and also agrees to cooperate with any further investigation into other parties that may be responsible for overcharging. This agreement protects taxpayers by holding government contractors accountable for their claims practices.”
The claims resolved by this settlement are allegations only, and there has been no determination of liability.
Assistant U.S. Attorney Sharanya Mohan handled the matter for the government, with assistance from Kurt Kosek. The settlement is the result of an investigation by the U.S. Attorney’s Office for the Northern District of California and the NASA Office of Inspector General, with significant assistance from other components of NASA.
Former Chief Security Officer for Uber Charged with Obstruction of JusticeRead the Press Release
SAN FRANCISCO – A criminal complaint was filed today in federal court charging Joseph Sullivan with obstruction of justice and misprision of a felony in connection with the attempted cover-up of the 2016 hack of Uber Technologies Incorporated, announced United States Attorney David L. Anderson and FBI Deputy Special Agent in Charge Craig D. Fair. Additional facts regarding the investigation and charges can be found here: https://youtu.be/QEPRm2E_PUw
According to the complaint, between April 2015 and November 2017, Sullivan, 52, of Palo Alto, Calif., served as Uber’s Chief Security Officer. During this time, two hackers contacted Sullivan by email and demanded a six-figure payment in exchange for silence. The hackers ultimately revealed that they had accessed and downloaded an Uber database containing personally identifying information, or PII, associated with approximately 57 million Uber users and drivers. The database included the drivers’ license numbers for approximately 600,000 people who drove for Uber. The criminal complaint alleges that Sullivan took deliberate steps to conceal, deflect, and mislead the Federal Trade Commission about the breach.
“Silicon Valley is not the Wild West,” said U.S. Attorney Anderson. “We expect good corporate citizenship. We expect prompt reporting of criminal conduct. We expect cooperation with our investigations. We will not tolerate corporate cover-ups. We will not tolerate illegal hush money payments.”
“Concealing information about a felony from law enforcement is a crime,” said Deputy Special Agent in Charge Fair. “While this case is an extreme example of a prolonged attempt to subvert law enforcement, we hope companies stand up and take notice. Do not help criminal hackers cover their tracks. Do not make the problem worse for your customers, and do not cover up criminal attempts to steal people’s personal data.”
The complaint describes how Sullivan played a pivotal role in responding to FTC inquiries about Uber’s cyber security. Uber had been hacked in September of 2014 and the FTC was gathering information about that 2014 breach. The FTC demanded responses to written questions and required Uber to designate an officer to provide testimony under oath on a variety of topics. Sullivan assisted in the preparation of Uber’s responses to the written questions and was designated to provide sworn testimony on a variety of issues. On November 14, 2016, approximately 10 days after providing his testimony to the FTC, Sullivan received an email from a hacker informing him that Uber had been breached again. Sullivan’s team was able to confirm the breach within 24 hours of his receipt of the email.
Rather than report the 2016 breach, Sullivan allegedly took deliberate steps to prevent knowledge of the breach from reaching the FTC. For example, Sullivan sought to pay the hackers off by funneling the payoff through a bug bounty program—a program in which a third party intermediary arranges payment to so-called “white hat” hackers who point out security issues but have not actually compromised data. Uber paid the hackers $100,000 in BitCoin in December 2016, despite the fact that the hackers refused to provide their true names. In addition, Sullivan sought to have the hackers sign non-disclosure agreements. The agreements contained a false representation that the hackers did not take or store any data. When an Uber employee asked Sullivan about this false promise, Sullivan insisted that the language stay in the non-disclosure agreements. Moreover, after Uber personnel were able to identify two of the individuals responsible for the breach, Sullivan arranged for the hackers to sign fresh copies of the non-disclosure agreements in their true names. The new agreements retained the false condition that no data had been obtained. Uber’s new management ultimately discovered the truth and disclosed the breach publicly, and to the FTC, in November 2017. Since that time, Uber has responded to additional government inquiries.
The criminal complaint also alleges Sullivan deceived Uber’s new management team about the 2016 breach. Specifically, Sullivan failed to provide the new management team with critical details about the breach. In August of 2017, Uber named a new Chief Executive Officer. In September 2017, Sullivan briefed Uber’s new CEO about the 2016 incident by email. Sullivan asked his team to prepare a summary of the incident, but after he received their draft summary, he edited it. His edits removed details about the data that the hackers had taken and falsely stated that payment had been made only after the hackers had been identified.
The two hackers identified by Uber were prosecuted in the Northern District of California. Both pleaded guilty on October 30, 2019, to computer fraud conspiracy charges and now await sentencing. The criminal complaint makes clear that “both [hackers] chose to target and successfully hack other technology companies and their users’ data” after Sullivan failed to bring the Uber data breach to the attention of law enforcement.
In sum, Sullivan is charged with obstruction of justice, in violation of 18 U.S.C. § 1505; and misprision of a felony, in violation of 18 U.S.C. § 4.
Sullivan’s initial federal court appearance has not yet been scheduled.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Sullivan faces a maximum statutory penalty of five years in prison for the obstruction charge and a maximum three years on prison for the misprision charge. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
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 FBI.
Bay Area Man Sentenced to Nine Years in Prison for Distributing and Possessing Child PornographyRead the Press Release
SAN JOSE – Oscar Sepulveda was sentenced to 108 months in prison and ordered to pay $9,000 in restitution for distributing and possessing child pornography, announced United States Attorney David L. Anderson and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King. The sentence was handed down by the Honorable Beth L. Freeman, U.S. District Judge.
Sepulveda, 34, of San Jose, pleaded guilty to the charges on October 8, 2019. According to the plea agreement Sepulveda admitted to using a website which allowed him to share sexually explicit images with other users and communicate with other users about the images. One such image was shared with 40 other users at one time. The defendant also possessed over 750 sexually explicit images of children on his personal devices. Sepulveda also admitted that the website gave him access to videos some of which portrayed sexual abuse of an infant or toddler. On November 29, 2018, a federal grand jury indicted Sepulveda charging him with one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B), and one count of distribution of child pornography, in violation of 18 U.S.C. § 2252(a)(2).
In addition to the prison term, Judge Freeman also sentenced the defendant to a five-year period of supervised release and ordered him to pay restitution to the victims in an amount to be determined at a later hearing. The defendant was immediately remanded into custody.
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 HSI.
Norteño Gang Member Charged with Murdering 15-Year-Old in Mission DistrictRead the Press Release
SAN FRANCISCO – A complaint was unsealed today charging Fernando Madrigal with the murder of a 15 year-old, announced United States Attorney David L. Anderson, FBI Deputy Special Agent in Charge Craig D. Fair, and San Francisco Police Chief William Scott. Additional facts regarding the investigation and charges can be found here: https://youtu.be/TJtN7F0vs6o
According to the complaint, Madrigal, 22, of San Francisco, is alleged to have been a member of a street gang known as the San Francisco Mission District Norteños, which claimed to control the area around 24th Street and Mission in San Francisco. The complaint alleges that in the early hours of July 8, 2019, Madrigal and his fellow gang members shot and killed an individual on the sidewalk of 24th Street in San Francisco, about a block away from the 24th and Mission BART Station. The victim was a 15-year old who was identified from his school ID card. According to the complaint, the victim had been erroneously identified as a rival gang member. Shortly after the murder, Madrigal and his fellow gang members drove to a housing complex a few blocks away in an area claimed by their rival gang, and fired a gunshot. There, they encountered SFPD officers, whom they then led on a high-speed car chase through the Mission District and onto Highways 101 and 280, before escaping.
“This killing was senseless,” said U.S. Attorney David L. Anderson. “The Mission District is a wonderful neighborhood, a diverse neighborhood, a neighborhood of children and young families and the elderly. The Mission District deserves to be just as free from gang warfare as every other neighborhood in San Francisco. We will continue to work with our local law enforcement partners to eradicate gang violence. We are all safer when we work together.”
“This murder was senseless and horrific,” said FBI Deputy Special Agent in Charge Craig Fair. “The FBI’s Safe Streets Task Force will continue to investigate street violence that’s targeting the children of our city, and, disproportionally, communities of color and people who are struggling to get by. No one should be afraid to walk in their own neighborhood, and no one deserves to lose their son or daughter to gang violence.”
Madrigal was arrested in San Francisco earlier today. His initial appearance in court before a U.S. Magistrate Judge has yet to be scheduled.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The crime charged against Madrigal in the complaint is eligible for the death penalty. Otherwise, he faces a maximum sentence of life in prison, 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 case is being prosecuted by the Organized Crime Strike Force of the U.S. Attorney’s Office. The prosecution is the result of a yearlong investigation by the Federal Bureau of Investigation, together with SFPD Gang Task Force and SFPD Homicide.
Two Defendants Charged in Connection with Methamphetamine Conversion Lab Uncovered in San JoseRead the Press Release
SAN FRANCISCO – A complaint was unsealed today in San Jose alleging that Mario Orozco and Teodoro Ayon-Ramos distributed methamphetamine, announced United States Attorney David L. Anderson and Drug Enforcement Administration Special Agent in Charge Daniel C. Comeaux. Both defendants were arrested at their residences, one in San Jose and the other in Los Banos, on August 11, 2020.
According to the complaint, the defendants sold approximately four ounces of methamphetamine to a cooperating source working with law enforcement. The transaction occurred in San Jose. The day before, Orozco agreed to sell the cooperating source approximately four ounces of methamphetamine for $3,500. In addition, Ayon-Ramos met a cooperating source in San Jose on June 18, 2020, and delivered the methamphetamine. The complaint alleges that Mario Orozco and Teodoro Ayon-Ramos violated statutes prohibiting drug distribution at 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(B)(viii).
The defendants made their initial appearances in federal court in San Francisco on August 12, 2020. They are currently being held in custody pending further proceedings. Orozco’s next appearance is scheduled for 10:30 a.m., on August 14, 2020, before U.S. Magistrate Judge Kandis A. Westmore. Ayon-Ramos’ next appearance is scheduled for 10:30 a.m., August 17, 2020, before U.S. Magistrate Judge Thomas S. Hixson. Both court appearances are scheduled to address issues regarding detention.
In documents filed in connection with the detention hearings, the government argued that defendants were engaged in a scheme to smuggle methamphetamine dissolved in buckets of paint to avoid discovery and to extract the methamphetamine at a warehouse and convert the drugs into its crystal form. According to the government, the defendants used a warehouse-type structure located on Stockton Avenue, San Jose, Calif., to process the drugs.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of the offense charged in the complaint, the defendants each face a maximum sentence of 40 years and a minimum sentence of five years, and a fine of $5,000,000, for each violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(B)(viii). However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
This case was investigated and prosecuted by member agencies of the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state, and local law enforcement agencies.
Former Uber Executive Sentenced to 18 Months in Jail for Trade Secret Theft from GoogleRead the Press Release
SAN FRANCISCO – Anthony Scott Levandowski pleaded guilty and was sentenced today to 18 months in prison for trade secret theft related to Google’s self-driving car program, announced United States Attorney David L. Anderson and John F. Bennett, Special Agent in Charge of the Federal Bureau of Investigation. Levandowski was also ordered to pay a $95,000 fine and $756,499.22 in restitution.
As part of a plea agreement, Levandowski, 40, of Marin County, pleaded guilty to one of the 33 counts of trade secrets theft originally filed against him in 2019. In pleading guilty, Levandowski admitted that from 2009 to 2016 he worked in Google’s self-driving car program, known then as Project Chauffer. Levandowski admitted that during this time, he was aware his employment agreement required him to keep Google’s valuable non-public information confidential. He also admitted knowing that the non-public information related to Project Chauffeur was sensitive and subject to the confidentiality requirement. Nevertheless, Levandowski admitted that in 2016, as he was preparing to leave Google, he downloaded thousands of Project Chauffer files onto his personal laptop. He also admitted downloading a variety of files from a corporate Google Drive repository. Among these files was an internal tracking document entitled “Chauffeur TL weekly updates – Q4 2015.” The update contained a variety of confidential details regarding the status of Project Chauffer. Levandowski admitted he downloaded this file with the intent to use it to benefit himself and Uber Technologies, Inc. As part of his plea agreement, Levandowski admitted that the stolen document was Google’s trade secret, and that a reasonable estimate of the loss attributable to his theft was up to $1,500,000.
As part of the plea agreement, prosecutors agreed to dismiss the remaining 32 charges against Levandowski. However, prosecutors presented evidence to the court of Levandowski’s broader course of conduct, including downloading thousands of files from an internal, password-protected Google server, describing Levandowski’s overall conduct as “brazen and shocking.” In papers, they argued Levandowski “did the exact thing that Congress criminalized: he took a trade secret on his way out the door.”
The sentence was handed down by the Honorable William H. Alsup, U.S. District Judge. In sentencing Levandowski, Judge Alsup observed “this is the biggest trade secret crime I have ever seen. This was not small. This was massive in scale.” Judge Alsup also sentenced Levandowski to a fine of $95,000 and ordered him to pay $756,499.22 in restitution to Waymo LLC, as Google’s self-driving program is now known. Levandowski was also sentenced to a 3-year period of supervised release. The defendant will begin serving the sentence on a date to be assigned in the future, when risks from the COVID-19 have subsided.
The prosecution is being handled by the Office of the U.S. Attorney, Northern District of California’s Corporate Fraud Strike Force and is the result of an investigation by the FBI.
East Bay Residents Charged with Stealing 27 Firearms from Hayward Gun StoreRead the Press Release
OAKLAND – In an indictment partially unsealed today, a federal grand jury charged Dashawn Talifario Taylor, Anthony Lamar Craft, Jr., and Tyronza Hampton, Jr., for stealing 27 firearms from a Hayward gun shop on the night of May 31, 2020, announced United States Attorney David L. Anderson and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Patrick Gorman. The grand jury also charged Taylor with possession of a stolen firearm and Craft with being a felon in a possession of a firearm.
According to the indictment and an affidavit by an ATF agent in connection with a criminal complaint filed in the same matter, on the night of May 31, 2020, Taylor, 23, Craft, 26, and Hampton, 25, all of Oakland, and several others congregated outside of Richardson Tactical, a firearms retail store in Hayward, California, after business hours when the store was closed. The co-conspirators allegedly broke the store window and entered the store, where they smashed display cabinets and ripped firearms from the walls. In total, the defendants and their co-conspirators allegedly stole no fewer than 27 firearms from the store. The co-conspirators then left the store together and fled the location.
Court filings indicate that surveillance footage and fingerprint evidence were used to identify the defendants, who were arrested between July 15, 2020, and July 31, 2020. Furthermore, according to court filings, on June 6, 2020, in Oakland, California, defendant Taylor attempted to flee by car with several other individuals from the scene of a shooting. The car crashed, at which point Taylor was apprehended; one of the stolen firearms was allegedly recovered from the front passenger area of the car, where Taylor had been sitting. In addition, according to court filings, on June 18, 2020, Craft posted a photo to Instagram, depicting him holding two of the stolen firearms.
“This burglary occurred on a night when Hayward and many other cities in the Bay Area and across the country were experiencing civil unrest and protests,” U.S. Attorney David L. Anderson commented. “My office stands in support of all Americans exercising their First Amendment rights to peaceable assembly and speech. But we will also investigate and seek justice for those who use the cover of lawful protests to break the law.”
Taylor and Hampton were previously arrested and have made their initial appearances before the magistrate court. Both were ordered released on bond, and are currently scheduled to appear before the Honorable Jon S. Tigar, U.S. District Court Judge, on September 25, 2020, at 9:30 a.m. Craft was arrested on July 31, 2020, and made his initial appearance before the magistrate court today. Craft’s next scheduled appearance is before U.S. Magistrate Judge Thomas S. Hixon tomorrow, August 4, 2020, for a detention hearing.
One defendant charged in the indictment has not been arrested and remains a fugitive.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The defendants face a maximum sentence of ten years’ imprisonment, a three-year term of supervised release, a fine of $250,000, and restitution if convicted of theft from a federal firearms licensee in violation of 18 U.S.C. § 922(u), felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1), or possession of a stolen firearm, in violation of 18 U.S.C. § 922(j). If convicted of conspiracy, in violation of 18 U.S.C. § 371, the defendants face a maximum sentence of five years’ imprisonment, a three-year term of supervised release, 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.
This case is being prosecuted by the Oakland Branch of the U.S. Attorney’s Office. The prosecution is the result of an investigation by the ATF with the assistance of the Hayward and Oakland Police Departments, and the Alameda County Sheriff’s Office.
East Bay Felon Charged with Unlawful Possession of AmmunitionRead the Press Release
OAKLAND – Dustin Vaughn Dean Laster made an initial appearance today in federal court on a criminal complaint for being a felon in possession of ammunition, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. Laster made his initial appearance in federal court today before Magistrate Judge Thomas S. Hixson.
According to the complaint, Contra Costa Sheriff’s Office deputies saw Laster, 30, of El Sobrante, California, sitting in the driver’s seat of a car near Hilltop Park in Richmond, California on May 15, 2020, along with another individual in the passenger seat. As the deputies drove past, Laster, whom they knew to be on parole for having previous felony convictions, got out of the car and started walking away from them into Hilltop Park. Deputies stopped Laster in the park, and then searched his vehicle pursuant to terms of his parole. During the search, deputies found a .40 caliber semi-automatic pistol on the floorboard of the front driver’s seat near where Laster had been sitting. The pistol was loaded with a 22-round extended magazine that contained twenty live rounds of ammunition.
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.
Laster is currently being held at Santa Rita Jail. Laster’s next scheduled appearance is tomorrow, August 4, 2020, at 10:30 for a status conference hearing before the Honorable Thomas S. Hixson, U.S. Magistrate Judge.
Noah Stern is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kay E. Konopaske. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Contra Costa County Sheriff’s Office.
Three Individuals Charged for Alleged Roles in Twitter HackRead the Press Release
Three individuals have been charged today for their alleged roles in the Twitter hack that occurred on July 15, 2020.
Mason Sheppard, aka “Chaewon,” 19, of Bognor Regis, in the United Kingdom, was charged in a criminal complaint in the Northern District of California with conspiracy to commit wire fraud, conspiracy to commit money laundering, and the intentional access of a protected computer.
Nima Fazeli, aka “Rolex,” 22, of Orlando, Florida, was charged in a criminal complaint in the Northern District of California with aiding and abetting the intentional access of a protected computer.
The third defendant is a juvenile. With exceptions that do not apply to this case, juvenile proceedings in federal court are sealed to protect the identity of the juvenile. Pursuant to the Federal Juvenile Delinquency Act, the Justice Department has referred the individual to the State Attorney for the 13th Judicial District in Tampa, Florida.
“The hackers allegedly compromised over 100 social media accounts and scammed both the account users and others who sent money based on their fraudulent solicitations,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “The rapid investigation of this conduct is a testament to the expertise of our investigators, our commitment to responding quickly to cyber attacks, and the close relationships we have built with law enforcement partners throughout the world.”
“There is a false belief within the criminal hacker community that attacks like the Twitter hack can be perpetrated anonymously and without consequence,” said U.S. Attorney David L. Anderson for the Northern District of California. “Today’s charging announcement demonstrates that the elation of nefarious hacking into a secure environment for fun or profit will be short-lived. Criminal conduct over the Internet may feel stealthy to the people who perpetrate it, but there is nothing stealthy about it. In particular, I want to say to would-be offenders, break the law, and we will find you.”
“Upon opening an investigation into this attack, our investigators worked quickly to determine who was responsible and to locate those individuals,” said San Francisco FBI Special Agent in Charge John F. Bennett. “While investigations into cyber breaches can sometimes take years, our investigators were able to bring these hackers into custody in a matter of weeks. Regardless of how long it takes us to identify hackers, we will follow the evidence to where it leads us and ultimately hold those responsible for cyber intrusions accountable for their actions. Cyber criminals will not find sanctuary behind their keyboards.”
“Weeks ago, one of the world’s most prolific social media platforms came under attack. Various political leaders, celebrities, and influencers were virtually held hostage as their accounts were hacked,” said Kelly R. Jackson, IRS-Criminal Investigation (IRS-CI) Special Agent in Charge of the Washington D.C. Field Office. “The public was confused, and everyone wanted answers. We can now start answering those questions thanks to the work of IRS-CI cyber-crime experts and our law enforcement partners. Washington DC Field Office Cyber Crimes Unit analyzed the blockchain and de-anonymized bitcoin transactions allowing for the identification of two different hackers. This case serves as a great example of how following the money, international collaboration, and public-private partnerships can work to successfully take down a perceived anonymous criminal enterprise. Regardless of the illicit scheme, and whether the proceeds are virtual or tangible, IRS-CI will continue to follow the money and unravel complex financial transactions.”
“Today’s announcement proves that cybercriminals can no longer hide behind perceived global anonymity,” said Thomas Edwards, Special Agent in Charge, U.S. Secret Service, San Francisco Field Office. “The Secret Service remains committed to pursuing those responsible for cyber-enabled fraud and will continue to hold cyber criminals accountable for their actions. This investigation is a testament to the strong partnerships between the Secret Service, the U.S. Attorney’s Office, the FBI, the IRS, as well as our state, local and international law enforcement partners.”
“Our identities and reputations are sacred. We will continue to aggressively defend and protect individuals, companies, and other entities from new-age cyber-fraud, especially those who scheme to hack, defraud and wreak havoc on U.S. citizens across the country,” said Caroline O’Brien Buster, Special Agent in Charge, U.S. Secret Service, Orlando Field Office. “The Secret Service believes that building trusted partnerships between the private sector and all levels of law enforcement is the proven model for success. I commend the exceptional work conducted by our law enforcement partners and the U.S. Attorney’s Office who worked diligently to hold these defendants accountable.”
As alleged in the complaints, the Twitter attack consisted of a combination of technical breaches and social engineering. The result of the Twitter hack was the compromise of approximately 130 Twitter accounts pertaining to politicians, celebrities, and musicians.
The hackers are alleged to have created a scam bitcoin account, to have hacked into Twitter VIP accounts, to have sent solicitations from the Twitter VIP accounts with a false promise to double any bitcoin deposits made to the scam account, and then to have stolen the bitcoin that victims deposited into the scam account. As alleged in the complaints, the scam bitcoin account received more than 400 transfers worth more than $100,000.
This case is being investigated by the FBI’s San Francisco Division, with assistance from the IRS-Criminal Investigation Cyber Unit; the U.S. Secret Service, San Francisco and Headquarters; the Santa Clara County Sheriff’s Office and their REACT task force and the Florida Department of Law Enforcement.
The case is being prosecuted by Senior Counsel Adrienne Rose of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys William Frentzen and Andrew Dawson of the Northern District of California.
Additional assistance has been provided by the U.S. Attorney’s Office for the Middle District of Florida; the State Attorney for the 13th Judicial District in Tampa, Florida; the Criminal Division’s Office of International Affairs and Organized Crime and Gang Section; the United Kingdom’s Central Authority and National Crime Agency; Chainalysis and Excygent.
The allegations of a criminal complaint are merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
U.S. Attorney Anderson’s video statement can be viewed here.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Three Individuals Charged for Alleged Roles in Twitter HackRead the Press Release
SAN FRANCISCO– Three individuals have been charged today for their alleged roles in the Twitter hack that occurred on July 15, 2020.
The announcement was made by United States Attorney David L. Anderson; Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division; FBI Special Agent in Charge John L. Bennett; Kelly R. Jackson, IRS Criminal Investigation, Special Agent in Charge of the Washington D.C. Field Office; U.S. Secret Service Special Agent in Charge of the San Francisco Field Office Thomas Edwards and U.S. Secret Service Special Agent in Charge of the Orlando Field Office Caroline O’Brien Buster. Additional facts regarding the investigation and charges can be found here: https://youtu.be/z80K3-q3Kqg.
Mason Sheppard, aka “Chaewon,” 19, of Bognor Regis, in the United Kingdom, was charged in a criminal complaint in the Northern District of California with conspiracy to commit wire fraud, conspiracy to commit money laundering, and the intentional access of a protected computer.
Nima Fazeli, aka “Rolex,” 22, of Orlando, Florida, was charged in a criminal complaint in the Northern District of California with aiding and abetting the intentional access of a protected computer.
The third defendant is a juvenile. With exceptions that do not apply to this case, juvenile proceedings in federal court are sealed to protect the identity of the juvenile. Pursuant to the Federal Juvenile Delinquency Act, the Justice Department has referred the individual to the State Attorney for the 13th Judicial District in Tampa, Florida.
“There is a false belief within the criminal hacker community that attacks like the Twitter hack can be perpetrated anonymously and without consequence,” said U.S. Attorney David L. Anderson for the Northern District of California. “Today’s charging announcement demonstrates that the elation of nefarious hacking into a secure environment for fun or profit will be short-lived. Criminal conduct over the Internet may feel stealthy to the people who perpetrate it, but there is nothing stealthy about it. In particular, I want to say to would-be offenders, break the law, and we will find you.”
“The hackers allegedly compromised over 100 social media accounts and scammed both the account users and others who sent money based on their fraudulent solicitations,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “The rapid investigation of this conduct is a testament to the expertise of our investigators, our commitment to responding quickly to cyber attacks, and the close relationships we have built with law enforcement partners throughout the world.”
“Upon opening an investigation into this attack, our investigators worked quickly to determine who was responsible and to locate those individuals,” said San Francisco FBI Special Agent in Charge John F. Bennett. “While investigations into cyber breaches can sometimes take years, our investigators were able to bring these hackers into custody in a matter of weeks. Regardless of how long it takes us to identify hackers, we will follow the evidence to where it leads us and ultimately hold those responsible for cyber intrusions accountable for their actions. Cyber criminals will not find sanctuary behind their keyboards.”
“Weeks ago, one of the world’s most prolific social media platforms came under attack. Various political leaders, celebrities, and influencers were virtually held hostage as their accounts were hacked,” said Kelly R. Jackson, IRS-Criminal Investigation (IRS-CI) Special Agent in Charge of the Washington D.C. Field Office. “The public was confused, and everyone wanted answers. We can now start answering those questions thanks to the work of IRS-CI cyber-crime experts and our law enforcement partners. Washington DC Field Office Cyber Crimes Unit analyzed the blockchain and de-anonymized bitcoin transactions allowing for the identification of two different hackers. This case serves as a great example of how following the money, international collaboration, and public-private partnerships can work to successfully take down a perceived anonymous criminal enterprise. Regardless of the illicit scheme, and whether the proceeds are virtual or tangible, IRS-CI will continue to follow the money and unravel complex financial transactions.”
“Today’s announcement proves that cybercriminals can no longer hide behind perceived global anonymity,” said Thomas Edwards, Special Agent in Charge, U.S. Secret Service, San Francisco Field Office. “The Secret Service remains committed to pursuing those responsible for cyber-enabled fraud and will continue to hold cyber criminals accountable for their actions. This investigation is a testament to the strong partnerships between the Secret Service, the U.S. Attorney’s Office, the FBI, the IRS, as well as our state, local and international law enforcement partners.”
“Our identities and reputations are sacred. We will continue to aggressively defend and protect individuals, companies, and other entities from new-age cyber-fraud, especially those who scheme to hack, defraud and wreak havoc on U.S. citizens across the country,” said Caroline O’Brien Buster, Special Agent in Charge, U.S. Secret Service, Orlando Field Office. “The Secret Service believes that building trusted partnerships between the private sector and all levels of law enforcement is the proven model for success. I commend the exceptional work conducted by our law enforcement partners and the U.S. Attorney’s Office who worked diligently to hold these defendants accountable.”As alleged in the complaints, the Twitter attack consisted of a combination of technical breaches and social engineering. The result of the Twitter hack was the compromise of approximately 130 Twitter accounts pertaining to politicians, celebrities, and musicians.
The hackers are alleged to have created a scam bitcoin account, to have hacked into Twitter VIP accounts, to have sent solicitations from the Twitter VIP accounts with a false promise to double any bitcoin deposits made to the scam account, and then to have stolen the bitcoin that victims deposited into the scam account. As alleged in the complaints, the scam bitcoin account received more than 400 transfers worth more than $100,000.
This case is being investigated by the FBI’s San Francisco Division, with assistance from the IRS-Criminal Investigation Cyber Unit; the U.S. Secret Service, San Francisco and Headquarters; the Santa Clara County Sheriff’s Office and their REACT task force and the Florida Department of Law Enforcement.
The case is being prosecuted by Assistant U.S. Attorneys William Frentzen and Andrew Dawson of the Northern District of California and Senior Counsel Adrienne Rose of the Criminal Division’s Computer Crime and Intellectual Property Section.
Additional assistance has been provided by the U.S. Attorney’s Office for the Middle District of Florida; the State Attorney for the 13th Judicial District in Tampa, Florida; the Criminal Division’s Office of International Affairs and Organized Crime and Gang Section; the United Kingdom’s Central Authority and National Crime Agency; Chainalysis and Excygent.
The allegations of a criminal complaint are merely allegations, and the defendants are presumed innocent unless or until the allegations against them are proved beyond any reasonable doubt.
Sonoma County CEO Sentenced to Three and A Half Years in Prison on Charges Stemming from Multi-Million-Dollar Student Loan Repayment Services ScamRead the Press Release
SAN FRANCISCO – Brandon Frere was sentenced to 42 months in prison following his guilty plea to wire fraud and money laundering charges, announced United States Attorney David L. Anderson and Federal Bureau of Investigation, Special Agent in Charge John F. Bennett. The charges stem from a multi-million-dollar scheme to use deceptive sales tactics to convince people to enroll in his companies’ student loan repayment services programs. The sentence was handed down by the Hon. Susan Illston, United States District Judge.
Frere, 43, of Sonoma County, owned and operated three companies—American Financial Benefits Center (AFBC), the Financial Education Benefits Center (FEBC), and Ameritech Financial (Ameritech)—all based in Rohnert Park, Calif. According to his plea agreement, between January of 2014 and November of 2018, Frere used the companies to market student loan document preparation services for borrowers who wished to apply for programs through the Department of Education. Frere targeted potential customers who were seeking federal loan forgiveness, loan consolidation, and reduced-payment programs. When Frere’s companies sold consumers “document preparation” services, they also sold them a purportedly optional membership in a “financial education benefits program.” The so-called benefits program provided the opportunity to customers to sign up for services such as LifeLock identity theft protection and roadside assistance.
Frere admitted he instructed his employees to follow misleading sales scripts and to employ deceptive sales tactics so that people would enroll for services without fully understanding what they were paying for. For example, when initially enrolling consumers in the document preparation service and signing them up for the financial education benefits program, Frere hid the fees for the financial education benefits program and described the benefits program in a way that made it seem like the cost of the program was included in the document preparation services. Further, Frere admitted he instructed enrollment associates not to present the benefits program as an optional or additional service to the document preparation service; this way, consumers would purchase the benefits packages without knowing they were doing so.
In sum, Frere instructed his employees (1) to make false statements concerning the companies’ ability to deliver fixed payments for the life of student loans and loan forgiveness under alternative repayment plans; (2) to engage in enrollment practices that improperly inflated a consumers’ family size to reduce their prospective payments under federal alternative repayment plans (and therefore make it appear to the consumer that their monthly payments would be lower than what they would have been if the family size were not inflated); and (3) to hide the monthly fees that consumers would pay for a purportedly optional financial education benefits program while leading victims to believe that the benefits program was already included in the document preparation service. Frere admitted for the purposes of sentencing that the amount of losses attributable to his scheme was no less than $25,000,000 and up to $65,000,000.
Moreover, Frere admitted that in order to conceal the proceeds of his wire fraud scheme, in 2015, he began transferring to overseas bank accounts that he controlled large sums of the funds that he had received through the scheme. He continued this process in August 2017, after he became involved in litigation with the Federal Trade Commission (“FTC”) and became concerned the FTC or a court might be able to seize the proceeds of his fraud. The FTC filed a civil complaint in February 2018 against Frere and his companies in federal court in Oakland. (Federal Trade Commission v. American Financial Benefits, et al., Case No. CV 18-00806-SBA).
Frere was arrested December 5, 2018, at SFO as he attempted to board a flight to Cancun, Mexico.
Frere was charged by information on October 1, 2019 with one count of wire fraud, in violation of 18 U.S.C. § 1343, and one count of money laundering, in violation of 18 U.S.C. § 1956(a)(2)(B). Frere pleaded guilty to both counts.
In addition to the prison term, Judge Illston also ordered Frere to serve an additional term of 36 months of supervised release. Judge Illston also scheduled a hearing for October 16, 2020, to determine restitution issues.
Assistant U.S. Attorney Scott Joiner is prosecuting the case with the assistance of Claudia Hyslop and Kimberly Richardson. The prosecution is the result of an investigation by the Federal Trade Commission, Federal Bureau of Investigation, and Internal Revenue Service Criminal Investigation, with assistance from the U.S. Department of Education Office of Inspector General.
Bay Area Woman Charged with Wire Fraud for Soliciting Donations in Bogus Cancer Treatment SchemeRead the Press Release
SAN JOSE- A criminal complaint was filed today charging Amanda C. Riley with wire fraud in connection with a scheme to solicit donations from individuals to help pay for cancer treatments she never needed nor received, announced United States Attorney David L. Anderson and Internal Revenue Service (IRS) Criminal Investigation, Special Agent in Charge Kareem Carter.
According to the complaint, between October 2012 and February 2016, Riley, a resident of Gilroy, Calif., claimed to have Hodgkin’s lymphoma, a type of cancer. The complaint alleges Riley falsely claimed at various times and to various individuals that she was receiving cancer treatment at hospitals, including Kaiser Permanente, City of Hope National Medical Center, Johns Hopkins Hospital, Columbia University Hospital, and UCSF Medical Center. Riley chronicled her purported illness on social media, including on Facebook, Instagram, Twitter, and her blog, and used her purported illness as a basis to solicit donations she claimed would help pay for her medical expenses. The complaint alleges that, in reality, Riley did not have Hodgkin’s lymphoma and had not been diagnosed with or treated for Hodgkin’s lymphoma or any other type of cancer.
The complaint describes numerous ways in which Riley convinced her victims to send her money. For example, Riley’s blog included numerous bogus photos depicting such things as Riley supposedly receiving cancer treatment at hospitals, her supposed cancer medications, her friends and family wearing “Team Amanda” bracelets, and gifts she received from supporters. The blog also contained numerous references to fundraisers that were held for her benefit. In addition, Riley claimed she traveled to New York City to receive cancer treatments and asked for donations to help defray her travel costs. In September 2013, her blog added a link to a support page, http://www.supportamanda.com. The support page enabled people to donate money online. To further conceal her scheme to defraud, on or about April 6, 2016, Riley altered a doctor’s note to read that she was “in treatment for cancer.”
Other people who became aware of Riley’s campaign also organized fundraisers on her behalf. Such fundraisers included a Facebook challenge; a CrossFit fundraiser; a Christmas ornament sale fundraiser; a quilt raffle; a Chili’s Grill & Bar fundraiser; and the auction on eBay of various items, including an electric guitar autographed by American country music artists such as John Michael Montgomery and LeAnn Rimes.
Riley received donations through her online support page and in the form of checks from friends, family, and members of her church donors. Between September 13, 2013, and March 15, 2016, Riley received 447 online donations totaling $60,272.43 though her support page alone— after paying fees, Riley pocketed $58,256.86 from her online support page during this period. The criminal complaint alleges that, rather than use the donated money to pay for medical expenses, Riley deposited the funds into her personal bank account and used the money to pay for her personal expenses.
Riley is charged with one count of wire fraud, in violation of 18 U.S.C. § 1343.
The complaint merely alleges that a crime has been committed, and Riley, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt.
If convicted, Riley faces a maximum statutory penalty of up to 20 years in prison and a fine of $250,000 or twice the gross gain or loss resulting from the scheme. In addition, the court may order additional terms of supervised release and restitution. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Riley is scheduled to appear before Judge Susan van Keulen on August 27, 2020.
Assistant U.S. Attorney Scott Simeon is prosecuting the case with the assistance of Tong Zhang. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation, and the San Jose Police Department.
South San Francisco Resident Pleads Guilty to Tax FraudRead the Press Release
SAN FRANCISCO –Robert Stein, also known as Mikhail Solovey and Michael Swarovski, pleaded guilty to filing a false tax return announced United States Attorney David L. Anderson and Internal Revenue Service – Criminal Investigation Special Agent in Charge Kareem Carter. The plea was accepted by the Hon. Susan Illston, United States District Judge
According to the plea agreement, Stein, 55, of South San Francisco, admitted that while he was in prison serving a prior sentence for fraud, he met S.Z., who was also in prison serving a sentence for investment and securities fraud. After Stein and S.Z. were released from prison, S.Z. offered Stein a marketing job, to be paid by commission, selling securities and recruiting investors. Stein worked for S.Z. beginning in late 2012, and continuing through 2017. S.Z. provided Stein with a database of potential investors for him to make cold calls for securities sales. S.Z. also provided Stein with a misleading script for these cold calls. Stein admitted in his plea agreement that he lied to investors in at least two ways. First, Stein concealed his prior fraud convictions by misrepresenting his name and his background. Second, he misled the investors as he eventually figured out that the investments S.Z had him sell had overstated financial results. During that time, Stein convinced investors to send at least $2,336,681 to S.Z. who paid Stein approximately $416,564 in commissions as part of the scheme. Stein failed to report the commissions on his U.S. Individual Income Tax Returns. To conceal the commission income from the IRS, Stein deposited the commissions into two nominee corporations’ bank accounts, Massachusetts Diagnostic Service, Inc. (MDS) and R&M Marketing (R&M) accounts in 2014, 2015, 2016, and 2017. To further conceal commission income from the IRS, Stein also caused a tax return preparer to prepare and file false corporate income tax returns for MDS and R&M. The unreported income resulted in a tax due in the amount of $98,197.
Stein’s sentencing hearing is scheduled for October 30, 2020, before Judge Illston. Stein was charged by information on July 6, 2020 with one count of filing a false tax return for the year 2013. He pleaded guilty to the one count. The maximum statutory penalty for filing a false tax return, in violation of Title 26, U.S.C. § 7206(1) is three years in prison, a fine of $250,000 and one year of supervised release. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by the Special Prosecutions Unit of the United States Attorney’s Office for the Northern District of California. The prosecution is the result of an investigation by the Internal Revenue Service – Criminal Investigation.
Former Bay Area Engineer Charged with Mail Fraud and Aggravated Identity Theft in Connection with Fraudulent Building Inspection ReportsRead the Press Release
SAN FRANCISCO – A complaint was unsealed today charging Peter Schurman with mail fraud and aggravated identity theft in connection with a scheme to defraud individuals and municipalities in Sausalito and San Francisco by issuing and charging clients for fraudulent Special Inspection reports, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to the complaint filed July 14, 2020, and unsealed today, Schurman, 70, of Tiburon, was an engineering technician and field inspector at several engineering firms throughout the Bay Area. Schurman focused on Special Inspection reports, which are a proactive method of enhancing public safety by ensuring buildings are constructed according to design documents, specifications and approved drawings.
As evidence of mail fraud and aggravated identity theft, the complaint alleges that between July 2015 and October 2019, Schurman knowingly used the name and engineer stamp of other persons who were licensed engineers, without their knowledge or permission, in order to make fraudulent Special Inspection reports appear legitimate. On one project described in the complaint, Schurman sent six invoices containing nine Special Inspection reports for a homeowner in Sausalito, California. Those reports certified that specified work on the project had been performed pursuant to the city-approved plans. According to the complaint, however, the engineer whose signature and stamp appeared on the reports never worked on the project, never signed the documents, never provided her/his stamps, and had no idea that her/his credentials had been used or that her/his signature had been forged.
The complaint further alleges that Schurman’s scheme involved fraudulent Special Inspection reports relating to at least seven other properties in San Francisco, California. Similar to the above-described instance in Sausalito, the fraudulent Special Inspection reports involved in the San Francisco projects were submitted with forged signatures and stamps from five different engineers.
Schurman is charged with mail fraud, in violation of 18 U.S.C. § 1341 and aggravated identity theft, in violation of 18 U.S.C. § 1028A. The maximum penalty for mail fraud is 20 years in prison and a $250,000 fine. The maximum sentence for aggravated identity theft is two years in prison—to be served consecutively to the underlying felony—and a $250,000 fine. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
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.
Schurman had his initial appearance today before U.S. Magistrate Judge Sallie Kim and is set for a status conference on August 21, 2020. Schurman was released on a $50,000 bond.
The case is being prosecuted by the Special Prosecutions Section of the U.S. Attorney’s Office. The case is being investigated by the FBI. San Francisco City Attorney Dennis Herrera also alleged in a lawsuit unsealed in March of 2020 that Schurman engaged in fraud.