Northern District of California
Press releases recorded for this federal judicial district.
Bay Point Man Charged and Detained on Charges of Distributing Child PornographyRead the Press Release
OAKLAND - Sergio Luiz Cruz Esparza was charged with distribution of child pornography in a criminal complaint, announced United States Attorney David L. Anderson and Homeland Security Investigations Special Agent in Charge Tatum King. Cruz Esparza appeared in federal court today in San Francisco for a detention hearing in the matter before the Honorable U.S. Magistrate Judge Sallie Kim, who detained Cruz Esparza pending trial.
According to an affidavit filed in connection with the complaint, Cruz Esparza, 22, of Bay Point, is alleged to have distributed images of child pornography using social media mobile applications. The affidavit alleges that at least one of the images depicted a minor female committing a sexual act on Cruz Esparza. The affidavit also describes that Cruz Esparza transmitted links to an online cloud storage site to other individuals, one of whom was a law enforcement agent acting in an undercover capacity. Those links led to videos depicting sexually explicit conduct by adult males inflicted on minor females as young as 4 years old.
Cruz Esparza is currently detained, and his next scheduled appearance is at 10:30 a.m on July 29, 2020, for a status conference and preliminary hearing before Magistrate Judge Kim.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Cruz Esparza faces maximum penalties of 20 years imprisonment with a minimum imprisonment term of 5 years, a life term of supervised release with a minimum supervised release term of 5 years, and a maximum fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Jonathan U. Lee is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Jessica Gonzalez Rodriguez and Kathleen Turner. The prosecution is the result of an investigation by the Department of Homeland Security, Homeland Security Investigations, and the Silicon Valley Internet Crimes Against Children Task Force.
Visiting Stanford University Researcher Charged with VISA FraudRead the Press Release
SAN FRANCISCO – Song Chen has been charged in a criminal complaint with visa fraud in connection with a scheme to lie about her status as an active member of the People’s Republic of China’s military forces while in the United States conducting research at Stanford University, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John L. Bennett. Song made her initial federal court appearance before U.S. Magistrate Judge Sallie Kim this morning to face the charge.
The allegations describing the crime appear in an affidavit supporting the complaint filed on July 17, 2020. According to the affidavit, Song, 38, a Chinese national, entered the United States on December 23, 2018, using a J-1 non-immigrant visa. Song obtained the J-1 visa, a document “for individuals approved to participate in work-and study-based exchange visitor programs,” with an application she submitted in November 2018. In that application, Song stated that she had served in the Chinese military only from September 1, 2000, through June 30, 2011. She further stated that her employer was “Xi Diaoyutai Hospital” located at “No. 30 Fucheng Road, Beijing, 100142.” Song described herself in her visa application as a neurologist who was coming to the U.S. to conduct research at Stanford University related to brain disease.
The affidavit alleges that these were lies, and that Song was a member of the People’s Liberation Army (PLA), the Chinese military, when she entered and while she was in the United States, and that the hospital she listed on her visa as her employer was a cover for her true employer, the PLA. Specifically, the affidavit identifies four research articles that she co-authored. These articles were identified on a resume that Song submitted to Stanford. The versions of the articles available via open sources on the Internet show her as affiliated with institutions subordinate to the PLA Air Force. Specifically, the articles list Song as affiliated with the Air Force General Hospital in Beijing and the Fourth Military Medical University (FMMU), a PLA Air Force university in Xi’an. In addition, as of July 13, 2020, a Chinese health care website listed Song as an attending physician of the Department of Neurology of the PLA Air Force General Hospital, a hospital that shared an address with the “Xi Diaoyutai Hospital” listed on her visa application. The listing allegedly included a photograph of Song wearing what appears to be a military uniform. Further, an article published in 2015 identifies Song as the doctor at the PLA Air Force hospital who performed the autopsy on the former chief physician of the MRI Department at the hospital.
Finally, according to the affidavit, a search of Song’s external hard drive, recovered pursuant to a court-authorized search warrant, found that, on June 21, 2020, Song had deleted a folder titled, in Chinese, “2018 Visiting School Important Information.” The search recovered deleted documents from this folder. The affidavit alleges that one of the recovered documents was a letter from Song to the Chinese Consulate in New York, which explained that she was extending her time in the United States for another year, and wrote that her stated employer, Beijing Xi Diaoyutai Hospital, is a false front, and that, as a result, she had obtained approval for her extension from the PLA Air Force and FMMU. The letter further allegedly explained that, as these Chinese military approval documents were classified, she could not transmit them online.
Song was charged with obtaining a visa by material false statements, in violation of 18 U.S.C. § 1546(a).
The complaint merely alleges that a crime has been committed, and Song, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt.
If convicted, she faces a maximum statutory penalty of up to 10 years in prison and a fine of $250,000. In addition, the court may order additional terms of supervised release. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Song’s next appearance is scheduled for Tuesday, July 21, 2020, before Magistrate Judge Kim for further proceedings regarding detention.
The prosecution is being handled by the Office of the U.S. Attorney, Northern District of California’s Special Prosecutions Section and is the result of an investigation by the FBI.
Santa Clara Man Charged with Running Bogus Artificial Intelligence Investment Fraud SchemeRead the Press Release
SAN FRANCISCO – A criminal complaint was unsealed today in federal court alleging that Shaukat Shamim fraudulently obtained millions of dollars in venture capital funding for an artificial intelligence company by making false and misleading statements about the company’s technology and its revenue, announced United States Attorney David L. Anderson and Federal Bureau Investigation Special Agent in Charge John L. Bennett. Shamim is charged in the complaint with one count of securities fraud and one count of wire fraud.
“Silicon Valley is a global leader when it comes to ingenuity and entrepreneurship. Fraud is neither ingenuity nor entrepreneurship. We are committed to protecting the Valley’s innovation leaders from fraudulent investment schemes,” said U.S. Attorney David L. Anderson.
“The FBI will not allow deceit, corporate greed, and federal criminal activity to run rampant in Silicon Valley," said FBI Special Agent in Charge John F. Bennett. "This scheme allegedly falsified revenue and faked clients to swindle investors of over $17 million."
According to the complaint, beginning in 2013, Shamim, 49, of Santa Clara, is alleged to have raised over $17 million in funds for his startup company, Youplus. To woo investors, Shamim lied about the number of clients who had purchased Youplus’ software, and about Youplus’ revenue. In particular, Shamim is alleged to have provided investors with a fake bank statement in August of 2019 showing that Youplus had over $600,000 in revenue from 35 different client companies, including Coca-Cola, Kraft, and Netflix, when the true bank statement showed only one client, providing $65,000 in revenue. The complaint also alleges that Shamim used investor funds on personal expenses, including purchases at luxury clothing, eyewear, and duty-free stores.
Shamim also allegedly claimed that Youplus had developed proprietary artificial intelligence software that could interpret video reviews posted by customers of particular products, enabling the companies behind those products to analyze how their brands were trending online. Shamim allegedly pitched Youplus’s software as the “world’s first Video Opinion Search engine,” telling investors that “similar to how Google is indexing the textual web by looking inside and indexing keywords, Youplus is using computer vision, audio, and text analysis to look inside videos” to understand market trends. According to the complaint, though, Youplus had not developed AI that could perform these functions. Instead, a review of the software and the company suggested that Youplus was paying workers through its corporate offices in India to watch videos and record their impressions. In other words, the market analysis Youplus was producing was the result of human intelligence, rather than AI software.
Shamim was served with a summons today in Santa Clara, ordering him to appear in federal court on Tuesday, July 21, 2020, in San Francisco.
A complaint merely alleges that crimes have been committed, and Shamim is presumed innocent until proven guilty beyond a reasonable doubt. If convicted of wire fraud under 18 U.S.C. § 1343 (wire fraud), Shamim faces a maximum sentence of 20 years’ imprisonment, a fine of $250,000, and restitution if appropriate. If convicted of securities fraud under 15 U.S.C. § 78j(b) and 78ff, and 17 C.F.R. § 240.10b-5, Shamim faces a maximum sentence of 20 years’ imprisonment, a fine of $5,000,000, and restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
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.
New York Man Charged with Wire Fraud in Alleged Multi-Million Dollar Cryptocurrency Investment SchemeRead the Press Release
SAN FRANCISCO – Douglas Jae Woo Kim has been charged in a criminal complaint with wire fraud in connection with a multi-million dollar scheme to raise money for bogus cryptocurrency investments announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John L. Bennett.
Kim, 27, of New York, NY, made his initial federal court appearance before U.S. Magistrate Judge Sallie Kim this morning to face the charge. The allegations describing the crime appear in an affidavit filed together with the complaint on July 9, 2020. According to the complaint and affidavit, Kim represented to friends and acquaintances that he was a cryptocurrency trader and requested loans for business purposes or to trade cryptocurrency. The complaint describes how Kim used cryptocurrencies, including Bitcoin (BTC) and Ether (ETH) to finance transactions as part of the scheme and how, on multiple occasions, he transferred some or all of the assets he received from his victims to online gambling sites operating outside the United States.
According to the affidavit, in October 2017, Kim contacted a victim by text message and said he was looking for investors interested in making what he called a short-term loan for a “fairly modest operation.” According to Kim, he was investing in a cryptocurrency operation in which he would make profit from fees charged to a peer-to-peer network and from exchange transactions. Kim represented to the victim that he already had $300,000 to $400,000 in financial holdings and that the operation “isn’t very risky to me.” Kim later emailed the victim details of the investment. Shortly after receiving cryptocurrency from the victim to finance the investment, Kim transferred about half of it to a bitcoin sportsbook and casino located outside the United States.
In an agreement dated January 1, 2018, Kim set out the terms of similar investment with a second victim. The agreement called for the victim to provide ETH valued at approximately $200,000. The same day, Kim converted more than half of the funds to BTC and, in the following days, transferred substantially all the converted cryptocurrency to his account with an offshore casino.
In the ensuing weeks and months, Kim convinced his victims to provide funds, all or part of which were transferred to cryptocurrency gambling sites. In sum, Kim convinced his victims to provide to him over $4.5 million. According to the affidavit, Kim’s victims all stated they would not have loaned money to Kim if they had known he was using the proceeds for gambling purposes.
Kim 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 Kim, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt.
If convicted, he 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.
Kim’s next appearance is scheduled for August 19, 2020 before Judge Kim for status.
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.
Washington State Felon Arrested in the Bay Area for Possessing an Assault RifleRead the Press Release
OAKLAND – James David Allen II made an initial appearance today in federal court on a criminal complaint for being a felon in possession of a firearm and ammunition, after police arrested him on July 8, 2020, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. Allen made his initial appearance in federal court today before Magistrate Judge Sallie Kim.
According to the complaint, Allen, a resident of Washington State, was found sleeping in a stolen car in Pinole on the morning of July 8, 2020. After confirming that the vehicle was stolen, officers arrested Allen and conducted an inventory search of the vehicle.
The complaint alleges that on the front passenger floorboard of the vehicle, officers found a loaded AR-15 style rifle with handwritten numbers and words all over it. The rifle was pointed barrel down with the rear stock leaning against the front edge of the passenger seat, making it immediately accessible to the driver’s hand. It was equipped with a loaded, high-capacity 30-round magazine. Upon taking possession of the rifle, the arresting officers found a live round chambered and the fire control switch set to “fire.” A second loaded, high-capacity 30-round magazine was taped to this magazine. The second magazine was positioned opposite so that the shooter could drop the first magazine from the rifle and easily flip it over to insert the other loaded magazine. A third loaded, high capacity magazine was found in the trunk of the vehicle.
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.
Michael A. Rodriguez 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 Pinole Police Department.
Russian Man Found Guilty of Hacking into Three Bay Area Tech CompaniesRead the Press Release
SAN FRANCISCO – Yevgeniy Nikulin was convicted today by a federal jury for hacking into LinkedIn, DropBox, and the social networking company formerly known as Formspring, announced United States Attorney David L. Anderson and FBI Special Agent in Charge John L. Bennett.
The jury found that Nikulin hacked into computers belonging to LinkedIn, DropBox and Formspring, damaged computers belonging to LinkedIn and Formspring by installing malware on them, stole the usernames and passwords for employees at LinkedIn and Formspring, and sold and conspired with others to sell the data he stole as a result of his hacks.
Evidence at trial showed that Nikulin, 32, of Russia, 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 Nikulin to control the computer remotely. Nikulin then used that remote computer as a base to steal LinkedIn users’ login information. Evidence at trial showed that Nikulin was behind similar intrusions at DropBox and at Formspring. According to trial testimony, one of the ways that investigators were able to tie Nikulin to all three incidents was by tracing an IP address from one of the hacks back to his location in Moscow. Nikulin was arrested while traveling in the Czech Republic on October 5, 2016, and extradited to the United States to face trial.
The guilty verdict followed 6 days of trial testimony before the Honorable William H. Alsup, U.S. District Court Judge. The trial initially 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. When trial resumed on July 7, 2020, the defendant, the attorneys, and Judge Alsup wore masks, and witnesses testified from behind a glass panel to allow for social distancing requirements.
“Today’s guilty verdicts are the result of our first federal jury trial in San Francisco since the beginning of shelter in place. I am immensely grateful to Judge Alsup for getting this case to trial. Trial by jury is one of the defining features of the American justice system. We need jury trials to administer justice,” said U.S. Attorney Anderson. “Nikulin’s conviction is a warning to would-be hackers, wherever they may be. Computer hacking is not just a crime, it is a direct threat to the security and privacy of Americans. American law enforcement will respond to that threat regardless of where it originates.”
Nikulin, 32, of Moscow, Russia, was indicted by a federal grand jury on October 20, 2016. He was charged with multiple counts of computer hacking, fraud, and identity theft.
Nikulin has been in custody since his extradition from the Czech Republic.
Nikulin’s sentencing hearing is scheduled for September 29, 2020, before Judge Alsup in San Francisco. The maximum statutory penalty for each count of selling stolen usernames and passwords in violation of 18 U.S.C. § 1029(a)(2) and for each count of installing malware on protected computers in violation of 18 U.S.C. § 1030(a)(5) is 10 years, along with a fine of up to $250,000, plus restitution if appropriate. The maximum statutory penalty for each count of conspiracy in violation of 18 U.S.C. § 371 and computer hacking in violation of 18 U.S.C. § 1030(a)(2)(C) is five years, along with a fine of up to $250,000, plus restitution if appropriate. There is also a mandatory two year sentence for any conviction of aggravated identity theft, in violation of 18 U.S.C. § 1028A(1). However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Michelle Kane and Katherine Wawrzyniak are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Helen Yee, Jessica Rodriguez Gonzalez, and Kim Richardson. The prosecution is the result of a four-year investigation by the Federal Bureau of Investigation, with the assistance of authorities in the Czech Republic and the U.S. Secret Service and the U.S. Department of Justice’s Criminal Division, Office of International Affairs.
Bay Area Physician Agrees to Pay $400,000 to Settle Allegations of False Medicare ChargesRead the Press Release
A settlement agreement was finalized today in federal court in which a Bay Area physician, Dr. Parvez Fatteh, agreed to pay $400,000 to resolve allegations that he violated the False Claims Act by charging the Medicare Program for physical and occupational therapy services rendered by unlicensed persons, announced United States Attorney David L. Anderson, Steven J. Ryan, Special Agent in Charge, Office of Inspector General for the U.S. Department of Health and Human Services, and John L. Bennett, Special Agent In Charge of the Federal Bureau of Investigation.
Medicare pays for physical and occupational therapy rendered by individuals who are licensed to practice therapy under State law. According to the settlement agreement, Dr. Fatteh owned and operated San Francisco Pain Management and Physical Therapy (dba Total Health Plus), a clinic located in San Francisco, California, that provided physical and occupational therapy and chiropractor services. The agreement indicates that from 2012 to 2015, Dr. Fatteh billed Medicare for physical and occupational therapy rendered by individuals who allegedly were not licensed therapists under California law.
“Patients are entitled to receive care from licensed providers. When Medicare pays for patient services, it expects that the treating providers are properly licensed as required by the State. Billing Medicare to pay for services rendered by unlicensed providers is fraud upon Medicare and upon the American taxpayers,” said U.S. Attorney David L. Anderson.
“Patients expect their providers be properly credentialed, having proven to the State they have the skills needed to provide high quality care,” said Steven J. Ryan, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Along with our law enforcement partners we will continue working to protect government health plan beneficiaries and taxpayers supporting their care.”
“Healthcare fraud is not a victimless crime. Medical professionals who fraudulently bill our government’s healthcare programs are stealing from taxpayers and robbing vulnerable patients of necessary medical care,” said FBI Special Agent in Charge Bennett. "The FBI and our law enforcement partners will continue to thoroughly investigate white collar crimes such as fraud in our healthcare system.”
The settlement resolves claims against Dr. Fatteh in a lawsuit brought by Hercules Malabanan, a former employee of San Francisco Pain and Physical Therapy, under the qui tam or whistleblower provisions of the False Claims Act, 31 U.S.C. §§ 3729-33. (United States of America, State of California, ex rel. Malabanan v. San Francisco Pain Management and Physical Therapy (D.B.A. Total Care Plus), et al., 14-CV-05165 LB) The False Claims Act permits private individuals known as relators to bring lawsuits on behalf of the United States, and to share in any recovery. The relator will receive fifteen percent of the settlement announced today. The amount of the settlement was determined based on analysis of Dr. Fatteh’s ability to pay after review of his financial condition.
The claims resolved by this settlement are allegations only and there has been no determination of liability.
Gioconda Molinari is the Assistant U.S. Attorney who handled the matter with assistance from Paralegal Tiffani Chiu. The settlement is the result of an investigation by the U.S. Attorney’s Office for the Northern District of California, and the U.S. Department of Health and Human Services Office of Inspector General, along with the Federal Bureau of Investigation.
Bay Area Resident Sentenced to Two Years in Prison for Conspiring to Commit Mail Fraud in Connection with Disability Fraud SchemeRead the Press Release
SAN FRANCISCO - Linda Nguyen was sentenced to two years in prison for her role in a multi-million dollar mail fraud conspiracy, announced United States Attorney David L. Anderson and Federal Bureau of Investigation, Special Agent in Charge John F. Bennett. The sentence was handed down by the Hon. Phyllis J. Hamilton, Chief U.S. District Judge.
Nguyen pleaded guilty to the charge on July 17, 2019. According to the plea agreement, Nguyen, 68, of Union City, engaged in a scheme to defraud California’s State Disability Insurance (SDI) program. The SDI program is designed to provide partial wage replacement benefits to eligible California workers who are unable to work due to a non-work-related illness, injury, or pregnancy. To receive SDI benefits, a claimant must file a claim for benefits supported by a Physician/Practitioner Certification attesting to the claimant’s disability. According to the plea agreement, Nguyen admitted that from January 2013 until January 2019, she agreed with a licensed physician and others to commit mail fraud by defrauding California’s SDI program. Specifically, Nguyen admitted she helped non-disabled persons prepare and submit fraudulent applications and certifications for SDI benefits. In exchange for her services, Nguyen charged the non-disabled SDI applicants a fee equal to 10% of the SDI benefits that they received. In addition, she paid the physician for each certification he completed for the fraudulent application.
Nguyen’s plea agreement contains four examples of individuals for whom she completed fraudulent applications. The agreement further describes how Nguyen paid a physician to complete and sign the practitioner disability certifications even though the applicants were never treated by the physician. Nguyen acknowledged in the agreement that the total loss attributable to the fraudulent scheme in which she participated is estimated to be between $3,500,000 and $9,500,000.
A federal grand jury indicted Nguyen on January 29, 2019, charging her with one count of conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349, and one count of substantive mail fraud, in violation of 18 U.S.C. § 1341. Nguyen pleaded guilty to the conspiracy count and the substantive mail fraud count was dismissed at sentencing.
In addition to the prison term, Chief Judge Hamilton ordered Nguyen to serve a three year term of supervised release, to begin at the end of the prison term, and to pay restitution.
Special Assistant U.S. Attorney Christopher Vieira is prosecuting the case with the assistance of Alice Pai. The prosecution is the result of an investigation by the FBI with assistance from the Social Security Administration, Office of Inspector General and the California Employment Development Department.
Pleasant Hill Man Sentenced to 25 Years in Prison for Producing Child PornographyRead the Press Release
OAKLAND – Daniel Joseph Feliciano was sentenced today to 25 years in prison for producing 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 Jeffrey S. White, U.S. District Judge.
Feliciano, 30, of Pleasant Hill, pleaded guilty to the charge on March 3, 2020. According to his plea agreement, Feliciano admitted that he recorded a video of a 9-year-old minor in a sexually explicit act and produced an image of a 5-year-old seated on a bed with the minor’s genitalia visible. Feliciano knew the two victims were minors and he created the images using his cellular phone.
In addition, Feliciano admitted that he possessed approximately 205 images or videos of minors engaged in sexually explicit conduct. The government filed additional papers arguing that Feliciano possessed more than 21,000 images of child pornography, including images of sexual abuse of a toddler-aged child and other children younger than 7 years old.
A federal grand jury indicted Feliciano on December 19, 2019, charging him with two counts of producing and possessing child pornography, in violation of 18 U.S.C. § 2251(a) and 18 U.S.C. § 2252(a)(4)(B). Feliciano pleaded guilty to both counts.
In addition to the prison term, Judge White also sentenced the defendant to a 10-year period of supervised release and scheduled a hearing for September 22, 2020, at 1:00 p.m. to resolve issues concerning restitution. The defendant will begin serving the sentence immediately.
This prosecution arose from a Cybertip on October 4, 2019, to the National Center for Missing and Exploited Children (NCMEC) related to the discovery of potential exploitation material being stored in a cloud storage account later traced to Feliciano.
Assistant U.S. Attorney Jonathan U. Lee is prosecuting the case with the assistance of Jessica Rodriguez Gonzalez, Kay Konopaske, and Kathleen Turner. The prosecution is the result of an investigation by HSI, the Silicon Valley Internet Crimes Against Children Task Force, and the Pleasant Hill Police Department.
Two Local Leaders of MS-13 Gang Sentenced to over 25 Years in Prison for Racketeering, Extortion, and MurderRead the Press Release
SAN JOSE – Tomas Rivera, a/k/a Jonas Portillo Escobar, a/k/a Profugo, a/k/a Caballo, and Alexander Martinez-Flores, a/k/a Pocar, were sentenced to prison for their respective roles in Santa Cruz-based MS-13 gang-related crimes, announced United States Attorney David L. Anderson and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King. Rivera was sentenced today to 27 years in prison for conspiring to engage in racketeering, extortion by force, and murder in aid of racketeering. Flores was sentenced on June 18, 2020, to 30 years in prison for using a firearm to cause murder, conspiracy to commit murder and extortion, and racketeering conspiracy. The sentences were handed down by the Hon. Edward J. Davila, U.S. District Judge.
On January 23, 2020, Rivera, 27, of El Salvador, pleaded guilty to all the charges pending against him and on March 16, 2020, Martinez-Flores, 29, of Santa Cruz, Calif., pleaded guilty to three of the six counts then pending against him. Both defendants admitted being a member of the transnational street gang La Mara Salvatrucha, also known as MS-13. MS-13 has local chapters, or “cliques,” throughout the world, including El Salvador, Honduras, Mexico, and the United States. Members and associates of the gang engage in crimes such as murder, narcotics trafficking, extortion, and obstruction of justice. MS-13 members enforce gang rules and protect gang territory with violence, including murder. The Santa Cruz Salvatrucha Locos (SCSL) is an MS-13 clique that operates in and around Santa Cruz, Calif.
In his plea agreement, Rivera admitted he arrived in Santa Cruz in April of 2016, where he quickly stepped in as second-in-command of the SCSL clique of the MS-13 gang. Rivera admitted he played a key role in a murder committed by SCSL gang members. Specifically, Rivera admitted that in April 2016, he discussed seeking approval from gang members in El Salvador to kill a suspected rival gang member. Then, after the murder was committed by Martinez-Flores and other SCSL members on September 22, 2016, Rivera collected the murder weapons. Rivera, Martinez-Flores and other SCSL members then celebrated the murder. Rivera’s plea agreement also provides details of addition crimes he has committed as part of the gang including the following:
-
At a meeting on October 2016, Rivera took charge of organizing the day-to-day efforts of SCSL members to kill additional rivals.
-
Rivera destroyed evidence of another murder by MS-13 members. Specifically, the agreement described Rivera’s involvement in burning clothing and a car that played a role in the murder.
-
From April 2016 through January 2017, Rivera engaged in drug trafficking and extortion with other SCSL members.
-
Rivera coordinated with MS-13 members in El Salvador and other places to carry out the directives of the gang’s leadership in and around Santa Cruz. Rivera acknowledged that he pushed for strict adherence to MS-13 rules, including the rule that required all people who wanted to join the gang to commit a murder to qualify for membership.
-
Rivera was involved in patrolling the area over which SCSL gang members asserted their control. Rivera admitted in the plea agreement that on one occasion he and other SCSL members beat up a suspected rival gang member they found in their territory. On another occasion, Rivera and other MS-13 members were in a car when they spotted people they suspected of being rival gang members. One of the MS-13 members shot at and attempted to kill a member of the group.
As for Martinez-Flores, he admitted that he was one of the shooters in the September 22, 2016, murder committed by SCSL gang members. Martinez-Flores admitted that in April 2016, the gang discussed seeking approval from El Salvador to kill a suspected rival gang member and after the murder was approved, Martinez-Flores was one of the gang members tasked with killing the victim. Martinez-Flores was one of the gang members who celebrated the murder after it was completed. Martinez-Flores’s plea agreement also describes how Martinez-Flores collected an extortion payment—the “monthly fee due to SCSL”—from a local drug dealer.
A federal grand jury returned a second superseding indictment against Rivera, Martinez-Flores and others on August 16, 2018. The indictment charged Rivera with one count of racketeering conspiracy, in violation of 18 U.S.C. § 1962(d); one count of conspiracy to commit extortion by force, in violation of 18 U.S.C. § 1951(a); and one count of conspiracy to commit murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(5). Rivera pleaded guilty to all three counts against him. Martinez-Flores was charged in multiple counts in the same second superseding indictment, and pleaded guilty to the racketeering conspiracy, conspiracies to commit extortion and murder, and use of a firearm causing murder counts. The remaining counts against him were dismissed at sentencing.
In addition to the prison terms, Judge Davila sentenced both defendants to a 5-year period of supervised release. The defendants have been in continuous federal custody since their arrests, and they will be transferred to the custody of the Bureau of Prisons to serve the remainder of their sentences.
In addition to Rivera and Martinez-Flores, eight additional defendants in this case have pleaded guilty for their respective roles in the SCSL and MS-13 criminal enterprise. Seven such defendants have been sentenced as reflected in the following chart:
Name
Charges
Sentence
Ismael Alvarenga-Rivera, a/k/a Casper
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Commit Extortion by Force, 18 U.S.C. § 1951(a)
Sentenced on September 23, 2019, to 90 months in prison
Willfredo Ayala-Garcia, a/k/a Chino
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Commit Extortion by Force, 18 U.S.C. § 1951(a)
Sentenced on September 17, 2019, to 80 months in prison
Jose David Abrego-Galdamez, a/k/a Largo
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Commit Extortion by Force, 18 U.S.C. § 1951(a)
Sentenced on September 16, 2019, to 36 months in prison, consecutive to his sentence in CR 17-567 BLF
Gerber Morales, a/k/a Choco
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Possess with Intent to Distribute 50 Grams or More of Methamphetamine, 21 U.S.C. §§ 846, 841(a)(1), and 841(b)(1)(A)(viii)
Sentenced on September 17, 2019, to 72 months in prison
Emilio Escobar-Albarnga, a/k/a Diablo
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Possess with Intent to Distribute 50 Grams or More of Methamphetamine, 21 U.S.C. §§ 846, 841(a)(1), and 841(b)(1)(A)(viii)
Sentenced on January 20, 2020, to 60 months in prison
Josue Alcedis Escobar Cerritos, a/k/a Penguino
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Possess with Intent to Distribute 50 Grams or More of Methamphetamine, 21 U.S.C. §§ 846, 841(a)(1), and 841(b)(1)(A)(viii)
Sentenced on July 30, 2019, to 72 months in prison
Melvin Lopez, a/k/a Sharky
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Commit Extortion by Force, 18 U.S.C. § 1951(a); Conspiracy to Commit Murder, 18 U.S.C. § 1959(a)(5)
Sentenced on January 27, 2020, to 120 months in prison
Velarmino Escobar-Ayala, a/k/a Meduza
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Commit Extortion by Force, 18 U.S.C. § 1951(a); Conspiracy to Commit Murder, 18 U.S.C. § 1959(a)(5)
Scheduled to be sentenced on July 6, 2020
The United States Attorney’s Office’s Organized Crime Strike Force is prosecuting the case. This prosecution is the result of an investigation conducted by HSI with the assistance of the Santa Cruz Police Department.
-
Alameda Resident Pleads Guilty to Illegally Importing NarcoticsRead the Press Release
OAKLAND –James Heyward Silcox III pleaded guilty to all three counts in an indictment charging him with illegally importing controlled substances, announced United States Attorney David L. Anderson, Homeland Security Investigations Special Agent in Charge Tatum King, Coast Guard Investigative Service Special Agent in Charge Kelly Hoyle, and Customs and Border Protection Director of Field Operations Brian J. Humphrey. Silcox entered the guilty plea without a plea agreement. The plea was accepted by the Hon. Jon S. Tigar, United States District Judge.
Silcox, 42, of Alameda, Calif., was originally charged by complaint on September 18, 2019. The complaint alleged that he illegally imported Tramadol from Singapore and Germany to post office boxes he held. Tramadol is a Schedule IV controlled substance and narcotic.
Silcox, a U.S. Coast Guard Commander, was arrested on the complaint on September 17, 2019, at Coast Guard Island, in Alameda.
During the change of plea hearing, the government advised the court of evidence that Silcox began purchasing tramadol in 2017 online from an unknown person he believed was in Singapore. The government offered further evidence that Silcox had received shipments of tramadol from three separate overseas suppliers from 2017 to 2019, and sent shipments to downstream buyers of 500-1000 pills per month, which Silcox received from his overseas suppliers at his P.O. boxes. According to the government, Silcox used end-to-end encrypted communication applications and email services to communicate with his overseas suppliers and his downstream domestic customers, and used crytpocurrency to make payments.
On September 26, 2019, a federal grand jury indicted Silcox charging him with three counts of importation of a Schedule IV narcotic drug, in violation of 21 U.S.C. §§ 952(a) and 960(b)(6). Pursuant to the guilty plea, Silcox pleaded guilty to all three counts.
Silcox faces a maximum sentence of 5 years in prison, and a fine of $250,000, for each count in the indictment. However, any sentence would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. His next court appearance has been set for September 25, 2020, which is a status hearing concerning the sentencing.
Assistant U.S. Attorney Sarah E. Griswold is prosecuting the case with the assistance of Mimi Lam. The prosecution is the result of an investigation by the Homeland Security Investigations; the High Intensity Drug Trafficking Area-Transnational Narcotics Team (HIDTA-TNT); the U.S. Postal Inspection Service; the Department of Homeland Security Office of Inspector General; and the Coast Guard Investigation Service. The prosecution is part of the Organized Crime Drug Enforcement Task Force National Heroin Initiative to combat the opioid crisis.
Texas Man Charged with Defrauding Alameda-Based Union of $4.5 MillionRead the Press Release
OAKLAND – Scott A. Wilson was arrested today in connection with a complaint unsealed in Oakland alleging that he defrauded the Operating Engineers Local Union No. 3, based in Alameda, California, of approximately $4.5 million, announced United States Attorney David L. Anderson, Federal Bureau of Investigation Special Agent in Charge John L. Bennett, and U.S. Department of Labor Office of Inspector General Special Agent in Charge Quentin Heiden.
According to the complaint, Wilson, 52, of Corsicana, Texas, was the director of the union’s information technology department, where he had authority to purchase goods and services. While working for the union, Wilson allegedly set up a front company called OST. Using the alias, “John Lasson,” Wilson allegedly used OST to receive funds from the union, at first directly and then through two other front companies set up by a friend and a relative under Wilson’s direction. Between 2011 and 2017, Wilson allegedly used these front companies to fraudulently invoice the union for IT-related goods and services that were never to be delivered, taking some funds directly through OST, and others through kickbacks paid by his friend and relative. Wilson also allegedly used the front companies to conceal payments made with union funds to his own family members, primarily for work that was never done. At one point, according to the complaint, Wilson arranged for the union funds to be withdrawn from the front companies’ accounts and delivered to him at various restaurants around the Bay Area in the form of cash, wrapped in the shape of bricks and placed in silver bags.
The complaint alleges that over the course of six years, in total Wilson fraudulently directed approximately $4.5 million to the front companies, of which $2.5 million was kicked directly back to Wilson in various ways. The complaint further alleges that Wilson used the allegedly embezzled funds to, among other things, purchase land in Corsicana, Texas, and build himself a house there.
According to the complaint, the scheme was discovered when the union’s finance department learned that Wilson had concealed that he was the principal behind one of the front companies with which his IT department was conducting business.
Wilson was arrested on June 26, 2020, in Corsicana, Texas, and made an appearance in federal court in Dallas this afternoon. He was ordered to appear in federal court in Oakland on July 13, 2020.
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 in prison, and a fine of up to $250,000, along with potential restitution 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 Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District of California. The prosecution is the result of an investigation by the Federal Bureau of Investigation, and the Department of Labor’s Office of Inspector General and Office of Labor Management Standards.
San Francisco Venture Capitalist Charged in Wide-Ranging Schemes to DefraudRead the Press Release
SAN FRANCISCO – Michael Brent Rothenberg was charged in a criminal complaint with wire fraud in connection with a scheme to invest in a privately-traded software company in 2016, and in an information in connection with multiple schemes to defraud spanning from 2013 to 2016, announced United States Attorney David L. Anderson, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Kareem Carter, Special Agent in Charge of Criminal Investigation at the Internal Revenue Service. Rothenberg made his initial appearance in federal court today before Magistrate Judge Westmore.
According to the complaint and information, Rothenberg, 36, of San Francisco, California, is alleged to have orchestrated multiple schemes to defraud his victims. Rothenberg founded a venture capital company, Rothenberg Ventures Management Company, LLC (“RVMC”), that he used between 2013 and 2016 to raise and manage four annual funds whose purpose was to invest in Silicon Valley start-up companies, and particularly companies in the field of virtual reality technologies.
The information filed today alleges that Rothenberg partially funded his capital commitment to the second of those funds by committing bank fraud. Specifically, in 2014, Rothenberg made false statements about his wealth to his bank while refinancing his home mortgage and while obtaining a $300,000 personal loan, and poured some of the ill-gotten money he obtained from the bank into the second of his funds.
In 2015, the information alleges that Rothenberg took excess money in venture capital fees from one of the funds he was raising and managing at RVMC, and therefore faced a shortfall at the end of the year that he did not wish to report to his investors. At the end of 2015, the information alleges that Rothenberg engaged in a scheme to defraud a bank by making false statements and misrepresentations to the bank in order to obtain a $4 million line of credit to pay back the fund from which he had taken excess fees. In so doing, Rothenberg attempted to deceive his investors into believing the fund was well-managed and that RVMC was following the operating agreements the investors understood controlled the management of the fund.
In February 2016, according to the allegations laid out in the information, Rothenberg engaged in a scheme to defraud an investor with respect to a $2 million investment that it believed it was making directly into a virtual reality content production company operating as River Studios that Rothenberg contended he wholly-owned. It is alleged that, rather than using that investment at River Studios as he had represented, Rothenberg used most of it for non-River Studios purposes.
The complaint then alleges that, in July 2016, Rothenberg engaged in a scheme to defraud as many as five separate investors when he induced them to wire a total of $1.35 million under the premise of investing in the untraded stock of a privately-held software company. The complaint charges Rothenberg with knowingly engaging in a scheme to defraud one investor by representing to that organization that its money would be used to purchase the software company’s shares. According to the complaint, on the same day the money was wired, Rothenberg took the money from the bank account designed to make the investment and sent it to RVMC’s main operating bank account, from which it was used for many purposes. The complaint alleges that no stock in the software company was ever purchased.
Finally, the information sets out allegations about a series of investors as to whom Rothenberg engaged in a scheme to defraud in 2015 and 2016 by inducing their investments in his RVMC-managed funds under the premise he would use the money for investments in “frontier edge” technologies and take only certain limited fees for the management of the funds. Instead, Rothenberg took more fees than to which he was entitled and invested far less of the money he raised than the operating agreements disclosed to the investors contemplated.
Today’s allegations in the criminal complaint and information state that the evidence has established that since 2013 Rothenberg fraudulently obtained at least $18.8 million through his illegal conduct.
The criminal complaint unsealed today charges Rothenberg with wire fraud, in violation of 18 U.S.C. §§ 1343 and 2.
The information filed today charges Rothenberg with 23 crimes, including the one set out in the criminal complaint. For his two schemes to defraud a bank, Rothenberg is charged with two counts of bank fraud, in violation of 18 U.S.C. §§ 1344 and 2, and two counts of making a false statement in a loan application to an FDIC-insured lender, in violation of 18 U.S.C. §§ 1014 and 2. With respect to his scheme to defraud an investor in River Studios, Rothenberg is charged with three counts of wire fraud, in violation of 18 U.S.C. §§ 1343 and 2, and four counts of engaging in monetary transactions in property derived from specified unlawful activity, commonly known as money laundering, in violation of 18 U.S.C. §§ 1957 and 2. For his scheme to defraud investors in the untraded stock in a privately held software company in July 2016, Rothenberg is charged with four counts of wire fraud, in violation of 18 U.S.C. §§ 1343 and 2. Finally, for his scheme to defraud investors in his funds in 2015 and 2016, Rothenberg is charged with eight counts of wire fraud, in violation of 18 U.S.C. §§ 1343 and 2.
Each of the wire fraud charges carries maximum statutory penalties of up to 20 years in prison, not more than three years supervised release, and a $250,000 fine. The two bank fraud charges and the two false statement to a bank charges each carry a maximum of 30 years in prison, not more than five years supervised release, and a $1,000,000 fine. Finally, the money laundering charges carry a penalty of imprisonment of not more than ten years, not more than three years of supervised release, and a fine of not more than twice the amount of the criminally derived property involved in the transaction at issue. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
The charges contained in the criminal complaint and information are mere allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Magistrate Judge Westmore ordered Rothenberg released on $250,000 bond pending the outcome of the case. Rothenberg’s next appearance is scheduled for August 27, 2020, at 10:30 a.m.
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 and IRS Criminal Investigations.
Chinese Citizen Convicted of Economic Espionage, Theft of Trade Secrets, and ConspiracyRead the Press Release
Hao Zhang, 41, of China, was found guilty of economic espionage, theft of trade secrets, and conspiring to commit both offenses today, announced the Department of Justice. The ruling was handed down by the Honorable Edward J. Davila, U.S. District Judge, following a four-day bench trial.
Evidence submitted during the course of the trial demonstrated that from 2010 to 2015, Zhang conspired to and did steal 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. Judge Davila found that Zhang intended to steal the trade secrets for the benefit of the People’s Republic of China
“The defendant plotted with Tianjin University to take trade secrets from two U.S. companies, including his own employer, to China for the benefit of the Chinese Government,” said Assistant Attorney General for National Security John C. Demers. “Today’s guilty verdict on all counts is an important step in holding accountable an individual who robbed his U.S. employer of trade secrets and sought to replicate the company’s technology and replace its market share. The Department of Justice’s commitment to prosecuting these cases should serve as a cautionary tale to anyone considering doing the same.”
“A free nation is naturally innovative. No nation is more innovative than the United States. Countries without freedom cannot match our innovation, and inevitably must resort to theft. Theft is not innovation. By combatting theft, we protect innovation and freedom,” said U.S. Attorney David L. Anderson for the Northern District of California.
“Economic Espionage is a pervasive threat throughout the United States, particularly to the San Francisco Bay Area and Silicon Valley which is the center of innovation and technology,” said FBI Special Agent in Charge John F. Bennett. “While this case exemplifies how easily a few motivated employees can conspire to misappropriate intellectual property for the benefit of the People’s Republic of China, Zhang’s conviction should serve as a warning to our adversaries that the FBI and our partners remain committed to aggressively investigating and prosecuting these crimes.”
According evidence presented during the bench trial, Zhang stole trade secrets relating the performance of wireless devices. Specifically, Surface Acoustic Wave (SAW) and Bulk Acoustic Wave (BAW) filters are used in wireless devices to eliminate interference and improve other aspects of device performance. Film Bulk Acoustic Resonators (FBAR) are one type of BAW filter. The most common and most profitable application of FBAR technology is as a radio frequency (RF) filter for mobile phones and other wireless devices. Technological advances in FBARs have played a substantial role in creating smaller, more efficient wireless devices for both consumer and military applications. Avago, one of the victims of Zhang’s theft, was the leading company in the United States manufacturing and selling FBARs. Zhang’s other victim, Skyworks, was developing its own BAW technology.
Evidence at trial further showed that in October 2006, Zhang and his co-conspirators started a business in China to compete with Avago and Skyworks. One of Zhang’s co-conspirators, Wei Pang, started working at Avago at the same time. Zhang and Pang illicitly shared trade secrets with each other and with co-conspirators in China while they worked for the U.S. companies. Zhang and Pang then connected their venture to Tianjin University (TJU) in China, an instrumentality of the Chinese government. By 2009, they left their work in the United States to relocate to China, following a plan laid out by TJU officials to form another company, Novana, in the Cayman Islands. Along the way, Zhang obtained patents in his own name using trade secret information he knew was stolen from Avago. Zhang also worked with stolen trade secrets in a lab he founded at TJU while developing his new FBAR business. The FBAR processes that Zhang and his co-conspirators stole took Avago over twenty years of research and development to build. Additional evidence during the bench trial demonstrated that Zhang engaged in economic espionage to help TJU and Zhang’s Chinese company unfairly compete in the multi-billion dollar global market for cell phone RF filters.
Zhang was charged in a superseding indictment returned by a federal grand jury on April 1, 2015.
Zhang is currently released on a $500,000 secured bond.
Zhang’s sentencing hearing is scheduled for Aug. 31, 2020, before Judge Davila in San San Jose. The maximum statutory penalty for each count in violation of 18 U.S.C. § 1831 is 15 years in custody and a fine of $250,000, plus restitution if appropriate. The maximum statutory penalty for each count in violation of 18 U.S.C. § 1832 is 10 years in custody and a fine of $250,000, plus restitution if appropriate. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Michelle J. Kane and Susan Knight are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Rebecca Shelton, Susan Kreider, and Laurie Worthen. The prosecution is the result of an investigation by the FBI.
Chinese Citizen Convicted of Economic Espionage, Theft of Trade Secrets, and ConspiracyRead the Press Release
SAN JOSE – Hao Zhang, 41, of China, was found guilty of economic espionage, theft of trade secrets, and conspiring to commit both offenses today, announced the Department of Justice. The ruling was handed down by the Honorable Edward J. Davila, U.S. District Judge, following a four-day bench trial.
Evidence submitted during the course of the trial demonstrated that from 2010 to 2015, Zhang conspired to and did steal 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. Judge Davila found that Zhang intended to steal the trade secrets for the benefit of the People’s Republic of China
“A free nation is naturally innovative. No nation is more innovative than the United States. Countries without freedom cannot match our innovation, and inevitably must resort to theft. Theft is not innovation. By combatting theft, we protect innovation and freedom,” said U.S. Attorney David L. Anderson for the Northern District of California.
“The defendant plotted with Tianjin University to take trade secrets from two U.S. companies, including his own employer, to China for the benefit of the Chinese Government,” said Assistant Attorney General for National Security John C. Demers. “Today’s guilty verdict on all counts is an important step in holding accountable an individual who robbed his U.S. employer of trade secrets and sought to replicate the company’s technology and replace its market share. The Department of Justice’s commitment to prosecuting these cases should serve as a cautionary tale to anyone considering doing the same.”
“Economic Espionage is a pervasive threat throughout the United States, particularly to the San Francisco Bay Area and Silicon Valley which is the center of innovation and technology,” said FBI Special Agent in Charge John F. Bennett. “While this case exemplifies how easily a few motivated employees can conspire to misappropriate intellectual property for the benefit of the People’s Republic of China, Zhang’s conviction should serve as a warning to our adversaries that the FBI and our partners remain committed to aggressively investigating and prosecuting these crimes.”
According evidence presented during the bench trial, Zhang stole trade secrets relating the performance of wireless devices. Specifically, Surface Acoustic Wave (SAW) and Bulk Acoustic Wave (BAW) filters are used in wireless devices to eliminate interference and improve other aspects of device performance. Film Bulk Acoustic Resonators (FBAR) are one type of BAW filter. The most common and most profitable application of FBAR technology is as a radio frequency (RF) filter for mobile phones and other wireless devices. Technological advances in FBARs have played a substantial role in creating smaller, more efficient wireless devices for both consumer and military applications. Avago, one of the victims of Zhang’s theft, was the leading company in the United States manufacturing and selling FBARs. Zhang’s other victim, Skyworks, was developing its own BAW technology.
Evidence at trial further showed that in October 2006, Zhang and his co-conspirators started a business in China to compete with Avago and Skyworks. One of Zhang’s co-conspirators, Wei Pang, started working at Avago at the same time. Zhang and Pang illicitly shared trade secrets with each other and with co-conspirators in China while they worked for the U.S. companies. Zhang and Pang then connected their venture to Tianjin University (TJU) in China, an instrumentality of the Chinese government. By 2009, they left their work in the United States to relocate to China, following a plan laid out by TJU officials to form another company, Novana, in the Cayman Islands. Along the way, Zhang obtained patents in his own name using trade secret information he knew was stolen from Avago. Zhang also worked with stolen trade secrets in a lab he founded at TJU while developing his new FBAR business.
The FBAR processes that Zhang and his co-conspirators stole took Avago over twenty years of research and development to build. Additional evidence during the bench trial demonstrated that Zhang engaged in economic espionage to help TJU and Zhang’s Chinese company unfairly compete in the multi-billion dollar global market for cell phone RF filters.
Zhang was charged in a superseding indictment returned by a federal grand jury on April 1, 2015.
Zhang is currently released on a $500,000 secured bond.
Zhang’s sentencing hearing is scheduled for Aug. 31, 2020, before Judge Davila in San San Jose. The maximum statutory penalty for each count in violation of 18 U.S.C. § 1831 is 15 years in custody and a fine of $250,000, plus restitution if appropriate. The maximum statutory penalty for each count in violation of 18 U.S.C. § 1832 is 10 years in custody and a fine of $250,000, plus restitution if appropriate. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Michelle J. Kane and Susan Knight are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Rebecca Shelton, Susan Kreider, and Laurie Worthen. The prosecution is the result of an investigation by the FBI.
Lobbyist Jack Abramoff and CEO Rowland Marcus Andrade Charged with Fraud in Connection with $5 Million Initial Coin Offering of Cryptocurrency AML BitcoinRead the Press Release
SAN FRANCISCO –Jack Abramoff has been charged in a criminal information with conspiracy to commit wire fraud and violating the Lobbying Disclosure Act. In a connected case, a federal grand jury in San Francisco has indicted Rowland Marcus Andrade for wire fraud and money laundering. The announcements were made by United States Attorney David L. Anderson, Special Agent in Charge of the Federal Bureau of Investigation John F. Bennett, and Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, Kareem Carter.
The allegations underlying the charges against Abramoff, 62, of Silver Spring, Md., and Andrade, 42, of Missouri City, Texas, are contained in two separate documents: the information filed June 25, 2020, charging Abramoff, and the indictment filed June 22, 2020, charging Andrade. According to the allegations in the charging documents, Andrade and Abramoff conspired to make false and misleading statements to potential purchasers of a proposed new cryptocurrency called AML Bitcoin. According to the indictment, Andrade was the founder and chief executive officer of NAC Foundation, also referred to as the “National AtenCoin Foundation,” an organization that was intended to develop and manage the new cryptocurrency AML Bitcoin. Andrade claimed to be the creator of AML Bitcoin and inventor of its technology that purportedly would prevent money laundering and anonymous use through “biometric technologies.” The charging documents allege Andrade claimed this technology would allow the AML Bitcoin cryptocurrency to comply with anti-money laundering and know-your-customer laws and regulations. According to the charging documents, the defendants misled purchasers through various means when raising money to fund the venture. In addition, the charging documents allege Andrade defrauded investors by misusing funds that were raised and laundered funds that were illegally obtained.
The indictment and information allege that beginning in July 2017 Andrade and his company NAC Foundation began raising money for the development of AML Bitcoin by selling AML Bitcoin to purchasers in the United States and elsewhere, and that sales continued through at least December 2018. According to the charging documents, NAC Foundation raised more than $5 million through the sale of AML Bitcoin. The charging documents allege the defendants engaged in the following criminal condu
-
In January and February 2018, Andrade and Abramoff allegedly engaged in a false “rejection campaign” regarding a television commercial that they falsely stated was going to be aired during the 2018 Super Bowl television broadcast. The television commercial portrayed AML Bitcoin as impervious to hacking efforts by the North Korean government and its leader in a manner demeaning to the North Korean government and its leader. Andrade and Abramoff falsely claimed that the advertisement would have aired during the Super Bowl if the television network airing the Super Bowl and the National Football League had not rejected the advertisement as being too politically controversial. In fact, as Abramoff and Andrade knew, the NAC Foundation did not have the funds to purchase the advertising time, did not intend to air the television commercial, and the advertisement was not reviewed or rejected by the television network or the NFL. Abramoff and Andrade used paid op-ed articles, social media, and AML Bitcoin press releases to make statements that the commercial had been rejected in order to promote AML Bitcoin to prospective purchasers.
-
Andrade, Abramoff, and Andrade’s NAC Foundation allegedly made false statements to the public and potential purchasers of AML Bitcoin that misrepresented the state of the development of the technology and the viability and timeline for the release of AML Bitcoin cryptocurrency.
-
Andrade, with assistance of Abramoff, allegedly made statements that falsely stated and implied NAC Foundation had reached or was about to finalize agreements with various government agencies for the use of AML Bitcoin or AML Bitcoin technology. The statements were intended to convince prospective purchasers that the cryptocurrency was progressing toward widespread adoption. In addition, Abramoff allegedly retained writers to disseminate these statements as op-eds published on various news and financial websites. Included among the false claims were claims that the NAC Foundation was near a partnership with the Panama Canal Authority to permit AML Bitcoin to be used for ships passing through the Panama Canal when no such agreement or negotiations existed.
-
Andrade allegedly diverted more than $1 million obtained through the sale of AML Bitcoin and spent it on personal expenses, including the purchase of two properties in Texas.
-
Andrade allegedly laundered funds from the venture by steering investor assets through various bank accounts before moving them into an account for Andrade’s personal expenses and the purchase of the two properties.
The information filed against Abramoff also alleges that he knowingly and corruptly failed to register as a lobbyist, as required by the Lobbying Disclosure Act, after being retained for lobbying efforts that would involve one or more lobbying communications with a federal official. This is the first ever known prosecution of a lobbyist for a criminal violation of the Lobbying Disclosure Act. The information alleges that during part of 2017, Abramoff was retained by a client in the marijuana industry, and that the engagement in part involved efforts to advocate for changes in federal law and policy. The information also alleges that in June 2017, an FBI undercover agent, posing as a business person seeking to fund lobbying efforts, agreed to retain Abramoff for lobbying activities including lobbying contacts. After being retained, and after having a later lobbying contact with a federal elected official, Abramoff failed to register as a lobbyist with the Secretary of the Senate and the Clerk of the House of Representatives within 45 days of the retention or the contact, as required by the Act.
In sum, Andrade is charged in the indictment 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)(1). Abramoff is charged in the information with one count of conspiracy, in violation of 18 U.S.C. § 371, and one count of violating the provisions of the Lobbying Disclosure Act, in violation of 2 U.S.C. § 1606(b).
Andrade was arrested on June 23, 2020, in Missouri City, Texas, and appeared before a U.S. Magistrate Judge in Houston, Texas. He was released on bond pending his initial San Francisco federal court appearance, which is set before the duty U.S. Magistrate Judge on July 1, 2020.
Abramoff has filed a stipulated notice of an intent to change plea pursuant to a plea agreement. The hearing for intended change of plea has not yet been scheduled.
An information and an indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Andrade faces a maximum sentence of 20 years, and a fine of $250,000, plus restitution if appropriate, for violation of 18 U.S.C. § 1343, and a maximum sentence of 20 years and a fine of $500,000 for violation of 18 U.S.C. § 1956(a)(1). Abramoff faces a maximum sentence of 5 years, and a fine of $250,000 for violation of 18 U.S.C. § 371, and a maximum sentence of 5 years and a fine of $250,000, for violation of 2 U.S.C. § 1606(b). However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
In separate civil actions filed on June 25, 2020, the United States Securities and Exchange Commission filed civil charges against Andrade and Abramoff, alleging securities fraud and acting as unregistered brokers of securities, among other charges.
Assistant U.S. Attorneys Lloyd Farnham and Andrew Dawson are prosecuting the case with the assistance of Kimberly Richardson. The prosecution is being conducted by the United States Attorney’s Office new Corporate Fraud Strike Force. The prosecution is the result of an investigation by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigations with the assistance of the San Francisco Regional Office of the Securities and Exchange Commission.
-
Contractor and Permit Expediter Charged with Corrupting San Francisco City OfficialsRead the Press Release
SAN FRANCISCO – Charges were unsealed today alleging that Walter Wing Lok Wong conspired for over 15 years to defraud the public of their right to the honest services of San Francisco city officials, including Mohammed Nuru, the former head of the San Francisco Department of Public Works, announced United States Attorney David L. Anderson, John F. Bennett, Special Agent in Charge of the Federal Bureau of Investigation, and Kareem Carter, IRS Criminal Investigation Special Agent in Charge.
According to the information, Wong, 70, of San Francisco, is alleged to have conspired with NURU and other unnamed City officials since as early as 2004 to defraud the public through a scheme involving bribery, kickbacks, and the concealment of material information. A second count in the information alleges that Wong also conspired with Nuru and others to engage in money laundering, to disguise and conceal the proceeds of fraud.
A document filed in court along with the information indicates that Wong intends to change his plea to guilty on both counts as early as July 6. As part of that guilty plea, according to the terms of a plea agreement filed on the docket, Wong will provide information, documents, and testimony to the ongoing federal investigation into corruption in San Francisco city government, in exchange for the possibility of reducing his sentence. The conduct underlying the crimes to which Wong was charged were submitted to the court in a separate “Exhibit A” to the plea agreement that was filed under seal and thus is not available to the public. However, government officials have confirmed that Wong is the person previously described as “Contractor 2” in the 75-page complaint affidavit filed earlier this year against Nuru.
Wong is the sixth defendant to be charged as part of the graft probe, and the second to plead guilty. Charges were previously filed against Nuru and local restaurateur Nick Bovis on January 28, 2020. Earlier this month, additional charges were filed against Sandra Zuniga, the Mayor’s Fix-It Director, and contractors Balmore Hernandez and Florence Kong. Bovis has since pleaded guilty and agreed to cooperate with the government.
“The charged conspiracy that we announce today is breathtaking in its duration and scope, alleging more than a decade of fraud and money laundering involving one of San Francisco’s highest ranking public employees, one of its most well-known permit expediters, and other city officials,” said U.S. Attorney Anderson. He added, “As this investigation continues, the breadth and depth of the identified misconduct is widening. To everyone with a piece of public corruption in San Francisco, please understand that here in federal court we will distinguish sharply between those who cooperate and those who do not. If you love San Francisco, and regret your misconduct, you still have an opportunity to do the right thing. Run, don’t walk, to the FBI, before it is too late for you to cooperate.”
“Today’s announcement is part of a complex, ongoing FBI investigation into public corruption in San Francisco city government,” said FBI’s Special Agent in Charge John F. Bennett. “This type of unscrupulous behavior erodes trust in our municipal departments and will not be tolerated. The FBI is committed to investigating any individual or company involved and hold them accountable.”
“Pay-to-play schemes destroy the public’s confidence in government,” said Kareem Carter, Special Agent in Charge IRS Criminal Investigation. “And as we follow the money we are discovering all the players in this scheme, and how this game was played. IRS CI will continue to work with our law enforcement partners to ensure that any individual or company involved in this scheme shall be held accountable for their actions and not go unpunished.”
Wong faces a maximum statutory penalty of up to 20 years in prison on each count, as well as fines that could go as high as $500,000 or twice the amount of funds involved in the money laundering conspiracy. 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.
Monterey County Man Accused of Dealing Fentanyl-Laced Pills That Killed One, Injured AnotherRead the Press Release
SAN FRANCISCO – Xavier Jimenez-Robledo appeared today in court on charges that he dealt counterfeit pills containing fentanyl that led to the overdose death of one individual in Monterey County, and the hospitalization of another individual, a minor, announced United States Attorney David L. Anderson and Special Agent in Charge Daniel C. Comeaux, Drug Enforcement Administration (DEA).
According to the complaint, Jimenez Robledo, age 19, of Seaside, California, is alleged to have sold counterfeit Percocet “M30” pills laced with fentanyl on two occasions between April 13 and May 5, 2020. The complaint alleges that one of the buyers, a Carmel Valley man, overdosed and died after being hospitalized. The complaint further alleges that the other buyer, a Pacific Grove minor, also overdosed but ultimately survived.
“The drug overdose death alleged in this complaint is both a tragedy and a warning,” said U.S. Attorney David L. Anderson. “With every drug overdose death, our community is delivered another tragic reminder that drug trafficking is a serious crime with real victims. I especially urge the young people of Monterey County to stay away from street drugs made to look like medicine. Taking even one counterfeit pill one time can be incredibly dangerous.”
“Counterfeit pills are often sold on the street with unknown amounts of fentanyl but disguised as the real deal,” stated DEA Special Agent in Charge Daniel C. Comeaux. “As this case demonstrates we will continue to collaborate with our law enforcement partners to federally prosecute cases that involve distribution of a drug that causes serious bodily injury or death.”
The complaint affidavit against Jimenez-Robledo describes how the investigation began on April 16, 2020, when officers from the Pacific Grove Police Department (PGPD) responded to reports of an unresponsive juvenile. Paramedics arrived and administered Naloxone, at which point the juvenile became responsive and was transported to a local Monterey hospital. Meanwhile, in the minor’s bedroom officers found what appeared to be counterfeit Percocet M30 tablets. According to the complaint, the tablets contained fentanyl. The complaint also alleges that the minor had fentanyl in his blood at the time of his overdose. M30 tablets are round tablets that are light blue in color with an “M” imprinted on one side and “30” imprinted on the other.
As further described in the complaint, the DEA received a separate report on May 5, 2020, of another individual who had been hospitalized after becoming unresponsive. That individual, aged 20, died a few days later, on May 9, 2020. The complaint alleges that this individual also had fentanyl in his blood. As further described in the complaint, DEA agents recovered what appeared to be counterfeit M30 tablets containing fentanyl pills from this victim’s possessions.
According to the complaint, the defendant was identified after agents pursued a number of leads they obtained from, among other things, the victims’ Snapchat communications arranging to purchase M30 tablets. Investigators pursued these leads to a house in Seaside, California, where on May 21, 2020, agents observed Jimenez-Robledo give a small plastic baggie to an unidentified subject who then gave Jimenez-Robledo an unknown amount of US currency. Between May 21, 2020 and May 24, 2020, the agents were also able to observe numerous vehicles stopping at the premises for short periods of time and meeting with individuals who had access to the premises.
Jimenez Robledo was arrested in Marina, CA, on June 16, 2020, and made his initial appearance in federal court in San Francisco on June 17, 2020. Jimenez Robledo is currently being held in custody pending further proceedings. He is due to appear today for a detention hearing before the Honorable Laurel Beeler, 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 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 Treasurer of Moraga Community Foundation Charged with FraudRead the Press Release
OAKLAND – Francis Robert Fritzky, the former treasurer of the Moraga Community Foundation was charged yesterday with wire fraud and filing a false tax return, announced United States Attorney David L. Anderson and IRS Criminal Investigation Special Agent in Charge Kareem Carter.
According to an information filed with the court, from at least June 2016 through July 2019, Fritzky was the treasurer of the Moraga Community Foundation (the Foundation) and also on the Foundation’s board of directors. According to the Foundation’s bylaws, the board members and officers were not entitled to compensation or a salary for their services as board members and/or officers. As treasurer, Fritzky was responsible for maintaining and keeping records of the Foundation’s bank accounts, funds, assets, and liabilities. He also had signatory authority on the Foundation’s bank accounts and had access to the money contained within those bank accounts. According to the information, from June 23, 2016, and continuing through July 24, 2019, Fritzky allegedly made unauthorized withdrawals of more than $250,000 from the Foundation’s bank accounts to himself, to a company in which he held majority ownership interest, and to a foundation he founded and controlled. He also allegedly provided false financial reports to the Foundation’s board of directors. For example, Fritzky represented that the ending balance for one of the Foundation’s funds in December 2018 was more than $108,000 and that the ending balance of the other fund was more than $37,000 when the combined balances for both funds was allegedly less than $2,000. Court documents further allege that Fritzky filed IRS Form 990-EZ, Return of Organization Exempt From Income Tax, for the Foundation, falsely reporting that the Foundation’s “Cash, savings and investments” at the end of the year was $111,275, when in fact it was less than that amount.
Fritzky was charged with wire fraud and aiding and abetting, in violation of 18 U.S.C. §§ 1343, 2 and making and subscribing a false tax return, in violation of 26 U.S.C. § 7206(1)(a). The maximum statutory penalty for wire fraud is twenty years in prison and a fine of $250,000. The maximum statutory penalty for making and subscribing a false tax return is three years in prison 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.
The charges contained in the information are mere allegations. As in any criminal case, the defendant is presumed innocent unless and until proven guilty in a court of law.
Frtizky’s first court appearance in this matter has yet to be scheduled.
The case is being prosecuted by the Special Prosecutions Section of the U.S. Attorney’s Office. The prosecution is the result of an investigation by the Moraga Police Department and IRS Criminal Investigation.
Two Defendants Charged with Murder and Aiding and Abetting in Slaying of Federal Protective Service Officer at Oakland Courthouse BuildingRead the Press Release
At a press conference held this morning at the Ronald V. Dellums Federal Building and U.S. Courthouse in Oakland, the Department of Justice announced that murder and attempted murder charges have been filed against Steven Carrillo, the alleged gunman in the May 29, 2020, drive-by shooting that resulted in the death of Protective Security Officer David Patrick Underwood and injuries to a second security officer. The Department of Justice also announced aiding and abetting charges against Robert Alvin Justus Jr., the driver of the vehicle from which Carrillo is alleged to have attacked the guards.
“Liberty flourishes in the rule of law,” said Assistant Attorney General for National Security John C. Demers. “Indiscriminate targeting of law enforcement officers by those motivated by violent extremism of any stripe is contrary to our nation’s values and undermines the powerful message of peaceful protestors. The Department of Justice stands in support of all Americans exercising their First Amendment rights to peaceable assembly and speech but we stand firmly against anyone who seeks to hijack the protests with acts of violence and destruction.”
“I applaud the agents and officers who investigated and captured those responsible for the attack on Federal Protective Service officers resulting in the death of Officer Underwood and serious injury of Officer Mifkovic,” said Department of Homeland Security Acting Secretary Chad Wolf. “As the nation's largest law enforcement organization, the Department's top priority is protecting the American people and our workforce, and we are not going to rest until these criminals are brought to justice. The assassination and injury of federal officers who swore an oath to protect the American public will not be tolerated. The Department of Homeland Security will continue its mission to end violent extremism in any form.”
“Pat Underwood was murdered because he wore a uniform,” said U.S. Attorney Anderson, “but he was much more than just the uniform he wore. Pat Underwood was a brother, a father, and a son. Many, many people will miss hearing the sound of his voice and laughter. Pat Underwood wore his uniform because it signified his authority to protect the courthouse where we are gathered here today. This courthouse exists to administer justice, to uphold the rule of law, and to protect the freedoms that we all cherish. In announcing today’s charges, we are reaffirming our determination to protect those who protect us.”
"These arrests are an important step for our community, the families of those who were killed in the line of duty, and our law enforcement partners, so that we may begin the healing process," said FBI San Francisco Special Agent in Charge John F. Bennett. "While we cannot bring Officer Pat Underwood and Sergeant Damon Gutzwiller back, we can hold those responsible for taking them from us accountable.”
“ATF immediately responded to these shooting incidents to make available our personnel to support our partners with the investigations into these crimes,” said Special Agent in Charge Patrick Gorman, San Francisco Field Division, ATF. “ATF provided investigative and forensic support throughout the investigation into these crimes. This included local special agents, as well as, laboratory and firearms enforcement officer resources from the greater Washington, DC area. ATF personnel examined firearm evidence and utilized our National Integrated Ballistic Information Network or NIBIN. The complaints describe the work ATF personnel performed to uncover the purported similarities between the recovered fired cartridge cases found at the Oakland and Ben Lomond homicides. These senseless crimes, which resulted in the tragic loss of Patrick and Damon and caused serious injuries to others, should not have occurred. ATF will continue to make available our resources and support to our partners throughout this investigation.”
The charges against Carrillo and Justus were brought in two criminal complaints, one filed against each defendant. According to the complaints, at approximately 9:27 p.m., on May 29, 2020, a white Ford Econoline-style van parked directly across the street from the federal building in Oakland on Jefferson Street. The van was parked facing the guard post where Officer Underwood and his partner that evening stood guard to protect the building. The van was on the southeast corner in the spot closest to the intersection with an unobstructed view of the guard post. Shortly after the van parked, a man emerged from the driver’s seat and walked around the area conducting reconnaissance for approximately ten minutes. Then, at approximately 9:43 p.m., the exterior lights of the van turned on and the van moved north on Jefferson Street toward the guard post. The passenger-side sliding door opened, and Carrillo allegedly fired multiple rounds from a firearm toward the guard post, killing Officer Underwood and injuring his partner.
The incident set off an eight-day manhunt that came to a crescendo after a witness reported an abandoned white Ford van in Ben Lomond, Calif. The van reportedly contained what appeared to be ammunition, firearms, and bomb-making equipment and an effort apparently was made to alter the van’s appearance with spray paint and a wheel covering to disguise a missing hubcap. Nevertheless, evidence from the van, led deputies from the Santa Cruz County Sheriff’s Office to Carrillo’s residence in Ben Lomond. There, Carrillo allegedly opened fire on the deputies when they arrived at his property, killing one deputy and injuring a second. During the attack there was also an explosion on the property.
The complaints describe a subsequent odyssey during which Carrillo was shot and fled the scene initially on foot, and then by carjacking a vehicle on a nearby highway. The chase came to an end when, still bleeding from his hip, Carrillo was taken into custody.
Additional evidence was recovered at Carrillo’s Ben Lomond residence included an AR-15-style short-barreled rifle fitted with a binary trigger that fired one round of 9mm ammunition at the pull of the trigger and another round at the release of the trigger. The rifle was fitted with a silencer that suppressed the sound of gunfire from the rifle. In addition, Carrillo appears to have used his own blood to write various phrases on the hood of the car that he carjacked. The phrases relate to an extremist ideology that promotes inciting a violent uprising through use of militias.
Cell phone records from Carrillo’s phone identified Justus as a person with whom Carrillo may have been communicating in the days leading up to the drive-by shooting attack in Oakland. On June 11, while the FBI had Justus under surveillance, travelled to the Federal Building in San Francisco, met with the FBI, and was thereafter arrested for his involvement in the shooting, including his role as the driver of the vehicle.
The charges contained in the criminal complaints are allegations only. Carrillo and Justus are presumed innocent until proven guilty beyond a reasonable doubt.
Carrillo is charged with one count of murder of a person assisting an officer or employee of the United States Government, in violation of 18 U.S.C. §§ 1114(1) and 1114(3) and one count of attempted murder under the same statutes. If convicted of the murder charge, the maximum statutory penalty for this charge is death. If convicted of the attempted murder charge, Carrillo faces a maximum statutory penalty of 20 years in prison, three years of supervised release, a $250,000 fine, and restitution. Justus is charged with aiding and abetting the murder and attempted murder and faces the same maximum statutory penalties. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
Justus made his initial appearance Monday, June 15, 2020, before U.S. Magistrate Judge Laurel Beeler, and was detained for further proceedings. His next appearance is scheduled for Friday, 10:30 am, before Magistrate Judge Kandis A. Westmore for identification of counsel and additional proceedings. An initial federal court appearance has not yet been scheduled for Carrillo.
The case is being prosecuted by United States Attorney for the Northern District of California David Anderson and the Oakland Branch of the Office of the United States Attorney with assistance from George Kraehe of the National Security Division’s Counterterrorism Section. The case is being investigated by the FBI, the ATF, the FPS, and the U.S. Marshal Service with assistance from the Oakland Police Department and the Santa Clara County Sheriff’s Office.
Two Defendants Charged with Murder and Aiding and Abetting in Slaying of Federal Protective Service Officer at Oakland Courthouse BuildingRead the Press Release
OAKLAND – At a press conference held this morning at the Ronald V. Dellums Federal Building and United States Courthouse in Oakland, the Department of Justice announced that murder and attempted murder charges have been filed against Steven Carrillo, the alleged gunman in the May 29, 2020, drive-by shooting that resulted in the death of Protective Security Officer David Patrick Underwood and injuries to a second security officer. The Department of Justice also announced aiding and abetting charges against Robert Alvin Justus, Jr., the driver of the vehicle from which Carrillo is alleged to have attacked the guards.
“Pat Underwood was murdered because he wore a uniform,” said U.S. Attorney Anderson, “but he was much more than just the uniform he wore. Pat Underwood was a brother, a father, and a son. Many, many people will miss hearing the sound of his voice and laughter. Pat Underwood wore his uniform because it signified his authority to protect the courthouse where we are gathered here today. This courthouse exists to administer justice, to uphold the rule of law, and to protect the freedoms that we all cherish. In announcing today’s charges, we are reaffirming our determination to protect those who protect us.”
“Liberty flourishes in the rule of law,” said Assistant Attorney General for National Security John C. Demers. “Indiscriminate targeting of law enforcement officers by those motivated by violent extremism of any stripe is contrary to our nation’s values and undermines the powerful message of peaceful protestors. The Department of Justice stands in support of all Americans exercising their First Amendment rights to peaceable assembly and speech but we stand firmly against anyone who seeks to hijack the protests with acts of violence and destruction.”
“I applaud the agents and officers who investigated and captured those responsible for the attack on Federal Protective Service officers resulting in the death of Officer Underwood and serious injury of his partner,” said Department of Homeland Security Acting Secretary Chad Wolf. “As the nation's largest law enforcement organization, the Department's top priority is protecting the American people and our workforce, and we are not going to rest until these criminals are brought to justice. The assassination and injury of federal officers who swore an oath to protect the American public will not be tolerated. The Department of Homeland Security will continue its mission to end violent extremism in any form.”
“These arrests are an important step for our community, the families of those who were killed in the line of duty, and our law enforcement partners, so that we may begin the healing process,” said FBI San Francisco Special Agent in Charge John F. Bennett. "While we cannot bring Officer Pat Underwood and Sergeant Damon Gutzwiller back, we can hold those responsible for taking them from us accountable.”
“ATF immediately responded to these shooting incidents to make available our personnel to support our partners with the investigations into these crimes,” said Special Agent in Charge Patrick Gorman, San Francisco Field Division, ATF. “ATF provided investigative and forensic support throughout the investigation into these crimes. This included local special agents, as well as, laboratory and firearms enforcement officer resources from the greater Washington, DC area. ATF personnel examined firearm evidence and utilized our National Integrated Ballistic Information Network or NIBIN. The complaints describe the work ATF personnel performed to uncover the purported similarities between the recovered fired cartridge cases found at the Oakland and Ben Lomond homicides. These senseless crimes, which resulted in the tragic loss of Patrick and Damon and caused serious injuries to others, should not have occurred. ATF will continue to make available our resources and support to our partners throughout this investigation.”
The charges against Carrillo and Justus were brought in two criminal complaints, one filed against each defendant. According to the complaints, at approximately 9:27 p.m., on May 29, 2020, a white Ford Econoline-style van parked directly across the street from the federal building in Oakland on Jefferson Street. The van was parked facing the guard post where Officer Underwood and his partner that evening stood guard to protect the building. The van was on the southeast corner in the spot closest to the intersection with an unobstructed view of the guard post. Shortly after the van parked, a man emerged from the driver’s seat and walked around the area conducting reconnaissance for approximately ten minutes. Then, at approximately 9:43 p.m., the exterior lights of the van turned on and the van moved north on Jefferson Street toward the guard post. The passenger-side sliding door opened, and Carrillo allegedly fired multiple rounds from a firearm toward the guard post, killing Officer Underwood and injuring his partner.
The incident set off an eight-day manhunt that came to a crescendo after a witness reported an abandoned white Ford van in Ben Lomond, Calif. The van reportedly contained what appeared to be ammunition, firearms, and bomb-making equipment and an effort apparently was made to alter the van’s appearance with spray paint and a wheel covering to disguise a missing hubcap. Nevertheless, evidence from the van led deputies from the Santa Cruz County Sheriff’s Office to Carrillo’s residence in Ben Lomond. There, Carrillo allegedly opened fire on the deputies when they arrived at his property, killing one deputy and injuring a second. During the attack there was also an explosion on the property.
The complaints describe a subsequent odyssey during which Carrillo was shot and fled the scene initially on foot, and then by carjacking a vehicle on a nearby highway. The chase came to an end when, bleeding from his hip, Carrillo was taken into custody.
Additional items were recovered at Carrillo’s Ben Lomond residence included an AR-15-style short-barreled rifle fitted with a binary trigger that fired one round of 9mm ammunition at the pull of the trigger and another round at the release of the trigger. The rifle was fitted with a silencer that suppressed the sound of gunfire from the rifle. In addition, Carrillo appears to have used his own blood to write various phrases on the hood of the car that he carjacked. The phrases relate to an extremist ideology that promotes inciting a violent uprising through use of militias.
Cell phone records from Carrillo’s phone identified Justus as a person with whom Carrillo may have been communicating in the days leading up to the drive-by shooting attack in Oakland. On June 11, while the FBI had Justus under surveillance, travelled to the Federal Building in San Francisco, met with the FBI, and was thereafter arrested for his involvement in the shooting, including his role as the driver of the vehicle.
The charges contained in the criminal complaints are allegations only. Carrillo and Justus are presumed innocent until proven guilty beyond a reasonable doubt.
Carrillo is charged with one count of murder of a person assisting an officer or employee of the United States Government, in violation of 18 U.S.C. §§ 1114(1) and 1114(3) and one count of attempted murder under the same statutes. If convicted of the murder charge, the maximum statutory penalty for this charge is death. If convicted of the attempted murder charge, Carrillo faces a maximum statutory penalty of 20 years in prison, three years of supervised release, a $250,000 fine, and restitution. Justus is charged with aiding and abetting the murder and attempted murder and faces the same maximum statutory penalties. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
Justus made his initial appearance Monday, June 15, 2020, before U.S. Magistrate Judge Laurel Beeler, and was detained for further proceedings. His next appearance is scheduled for Friday, 10:30 am, before Magistrate Judge Kandis A. Westmore for identification of counsel and additional proceedings. An initial federal court appearance has not yet been scheduled for Carrillo.
The case is being prosecuted by United States Attorney for the Northern District of California David Anderson and the Oakland Branch of the Office of the United States Attorney with assistance from George Kraehe of the National Security Division’s Counterterrorism Section. The case is being investigated by the FBI, the ATF, the FPS, and the U.S. Marshal Service with assistance from the Oakland Police Department and the Santa Clara County Sheriff’s Office.
Monterey-Based Attorney Charged with Wire FraudRead the Press Release
SAN FRANCISCO – John Arthur Hudson, an attorney also known as Art Hudson and J.A. Hudson, was charged in a criminal complaint unsealed yesterday with wire fraud in connection with a scheme to fraudulently obtain loans involving a trust that he administered and the trust’s San Francisco property, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to the complaint filed June 9, 2020, Hudson, 70, was an attorney based in Monterey County who was appointed to be trustee of a trust in 2011. The trust owned a commercial property on Fillmore Street in San Francisco and received rental income from its tenant, The Elite Cafe, a New Orleans-inspired restaurant.
As evidence of wire fraud, the complaint alleges that between April 2011 and June 2018, Hudson took out at least $680,000 in loans as trustee of the trust, pledging the property on Fillmore Street as security and falsely representing that the loan proceeds would be used to improve the property. Hudson instead personally profited from the loan proceeds and did not use any of the money to improve the property, as alleged in the complaint. For example, the complaint describes how loan proceeds were traced to Hudson’s unrelated legal settlement payments, personal mortgage and credit card payments, checks payable to Hudson, and other personal expenses.
The complaint alleges that Hudson obtained the loans without the authorization or knowledge of the trust’s beneficiaries, and without disclosing the loans to them, all while misrepresenting the trust’s finances. According to the complaint, when the trust sold the property in early 2019, more than $600,000 of the proceeds went to pay off the loans obtained by Hudson rather than the beneficiaries of the trust.
Hudson is charged with wire fraud, in violation of 18 U.S.C. § 1343. If convicted, Hudson faces a statutory maximum of 20 years in prison, three years of supervised release, and a $250,000 fine or twice the gross gain or gross loss. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing 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.
Hudson made his initial appearance before U.S. Magistrate Judge Laurel Beeler yesterday, and he is currently released on a $500,000 bond. Hudson’s next court appearance is scheduled for June 22, 2020 before Judge Beeler for a bail review hearing.
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.
Officer of China’s People’s Liberation Army Arrested at Los Angeles International AirportRead the Press Release
SAN FRANCISCO – Xin Wang, a scientific researcher and officer with the People’s Republic of China’s (PRC) People’s Liberation Army (PLA), was arrested at Los Angeles International Airport (LAX) while attempting to depart the United States for Tianjin, China, and was charged with visa fraud, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to court documents filed today and a complaint which was unsealed on Monday, Wang entered the United States on March 26, 2019, after receiving a multiple entry J1 non-immigrant visa in December of 2018. Wang’s visa application stated that the purpose of his visit was to conduct scientific research at the University of California, San Francisco (UCSF). Wang is alleged to have made fraudulent statements on this visa application. Specifically, in his visa application, Wang stated that he had served as an Associate Professor in Medicine in the PLA, from September 1, 2002 through September 1, 2016.
In reality, when interviewed by officers of Customs and Border Protection (CBP) at LAX on June 7, 2020, Wang provided information that he was, in fact, still currently a “Level 9” technician in the PLA, employed by a military university lab. CBP officers also obtained information that this roughly corresponded with the level of Major, and that Wang had received compensation from the PLA and the China Scholarship Council—in addition to compensation from UCSF—while in the United States. According to court documents, Wang was still employed by the PLA while he was studying in the United States and he made false statements about his military service in his visa application in order to increase the likelihood that he would receive his J1 visa.
Also according to court documents, Wang provided information to CBP that he had been instructed by his supervisor, the director of his military university lab in the PRC, to observe the layout of the UCSF lab and bring back information on how to replicate it in China. CBP received information that Wang had studies from UCSF with him which he was taking to share with his PLA colleagues, and he had sent research to his lab in China via email. Wang similarly told his supervising UCSF professor that he had duplicated some of the work of that professor at the lab in China. Some of the work of the UCSF lab was funded by grants from the United States Department of Health and Human Services, National Institutes of Health (NIH). Wang also wiped his personal phone of WeChat messaging content earlier the morning he arrived at LAX.
Wang is charged with visa fraud, in violation of 18 U.S.C. § 1546(a). If convicted, he faces a maximum statutory penalty of ten years in prison and a fine of $250,000.
Wang made his initial appearance on Monday, June 8, 2020, in the Central District of California before Magistrate Judge Jacqueline Chooljian, and was detained for further proceedings. His next appearance is scheduled for Friday, June 12, 2020, at 10 a.m., before Judge Chooljian, for a detention hearing.
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.
Medical Technology Company President Charged in Scheme to Defraud Investors and Health Care Benefit Programs in Connection with COVID-19 TestingRead the Press Release
The president of a California-based medical technology company was charged in a complaint unsealed today in the Northern District of California, in connection with his alleged participation in schemes to mislead investors, to manipulate the company’s stock price and to conspire to commit health care fraud in connection with the submission of over $69 million in false and fraudulent claims for allergy and COVID-19 testing.
The complaint against Mark Schena, 57, of Los Altos, California, the president of Arrayit Corporation, is the first criminal securities fraud prosecution related to the COVID-19 pandemic that has been brought by the Department of Justice and charges one count of securities fraud and one count of conspiracy to commit health care fraud.
“This defendant allegedly defrauded Medicare through illegal kickbacks and bribes, and then turned to exploiting the pandemic by fraudulently promoting an unproven COVID-19 test to the market,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Working together with our law enforcement partners, the Criminal Division is committed to safeguarding the integrity of the Medicare system and protecting the investing public from securities scams.”
“The allure of cheap reliable alternatives to today’s standard blood tests panels has captured the imagination of the health care industry, making such alternatives a prime subject for fraudsters,” said U.S. Attorney David L. Anderson of the Northern District of California. “The scheme described in the complaint, in which the defendant allegedly leveraged this allure by appending the fear of the COVID-19 pandemic, amounts to a cynical multi-million dollar hoax.”
“Investigating COVID-19 fraud scams billed to federal health programs – such as those charged here – are a top priority for our agency,” said Special Agent in Charge Steven J. Ryan for the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG). “The ongoing public health crisis has spawned a rash of fraudulent schemes; therefore, we will continue working with law enforcement partners to protect beneficiaries, programs and taxpayers.”
“Those seeking to maximize profits while misleading investors should expect to pay a heavy price, especially now,” said Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service (USPIS) – Criminal Investigations Group. “The U.S. Postal Inspection Service is proud to work alongside the Department of Justice and our other law enforcement partners to identify and investigate anyone who capitalizes on this pandemic to commit fraud. By working together, we can keep our communities and our vulnerable populations safe from financial exploitation.”
“Scams that trade on the VA’s name to portray an air of credibility will not be tolerated,” said Special Agent in Charge Kim R. Lampkins of the Veterans Affairs Office of Inspector General (VA OIG). “These charges reflect the VA OIG’s commitment to working with our law enforcement partners to investigate any fraudulent schemes that affect VA’s COVID-19 testing or other responses to the pandemic.”
“Today’s unsealing of the criminal complaint and the subsequent arrest of Mr. Schena are significant steps forward in this case to root out fraud and corruption being committed against the U.S. healthcare system, including the Department of Defense’s TRICARE program,” said Special Agent in Charge Bryan D. Denny, Defense Criminal Investigative Service, Western Field Office. “Any attempts to subvert the integrity of the TRICARE program, especially as we all are struggling to cope with the COVID-19 pandemic, will be aggressively investigated and prosecuted, if appropriate, to preserve and recover precious taxpayer dollars.”
According to the affidavit in support of the complaint, Schena touted that Arrayit is the “only laboratory in the world that offers” revolutionary “microarray technology” that allows Arrayit to test for allergy and COVID-19 based on a drop of blood that is 250,000 times smaller than the technology touted by Theranos.
Beginning in or around 2018 and continuing to in or around February 2020, Schena and others paid kickbacks and bribes to recruiters and doctors to run an allergy screening test for 120 allergens (including things ranging from stinging insects to food allergens) on every patient regardless of medical necessity, and then made numerous misrepresentations to potential investors about Arrayit’s allergy test sales, financial condition, and its future prospects. Schena and others issued press releases and tweeted about partnerships with Fortune 500 companies, government agencies and public institutions, without disclosing that such partnerships either did not exist or were of de minimis value.
As the COVID-19 crisis began to escalate in March 2020, Schena and others made false claims concerning Arrayit’s ability to provide accurate, fast, reliable and cheap COVID-19 tests in compliance with state and federal regulations, and made numerous misrepresentations to potential investors about the COVID-19 tests and Arrayit’s future prospects for COVID-19 testing.
Schena stated that it was simple to develop a test for COVID-19 because the switch from testing for allergies to testing for COVID-19 was “like a pastry chef” who switches from selling “strawberry pies” to selling “rhubarb and strawberry pies.” Arrayit’s stock price doubled in mid-March, but Schena and others never disclosed that there were questions about the validity of its data and the accuracy of its COVID-19 test.
A complaint is merely an allegation and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The Fraud Section uses the Victim Notification System (VNS) to provide victims with case information and updates related to this case. Victims with questions may contact the Fraud Section’s Victim Assistance Unit by calling the Victim Assistance phone line at 1-888-549-3945 or by emailing [email protected]. To learn more about victims’ rights, please visit: https://www.justice.gov/criminal-vns/victim-rights-derechos-de-las-v-ctimas. If you believe you are a victim who has invested in Arrayit, or you have taken a COVID-19 test prepared or marketed by Arrayit, please visit https://www.justice.gov/criminal-vns/case/Arrayit.
HHS-OIG’s San Francisco Regional Office and Detroit Regional Office, USPIS, the FBI, VA-OIG and DCIS investigated the case. Assistant Chiefs Jacob Foster and Justin Weitz of the Criminal Division’s Fraud Section and Assistant U.S. Attorney William Frentzen of the Northern District of California are prosecuting the case. The department appreciates the assistance of the Securities and Exchange Commission.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn mode about the history of our agency at www.Justice.gov/Celebrating150Years.
Medical Technology Company President Charged in Scheme to Defraud Investors and Health Care Benefit Programs in Connection with COVID-19 TestingRead the Press Release
SAN FRANCISCO – The president of a California-based medical technology company was charged in a complaint unsealed today in the Northern District of California, in connection with his alleged participation in schemes to mislead investors, to manipulate the company’s stock price and to conspire to commit health care fraud in connection with the submission of over $69 million in false and fraudulent claims for allergy and COVID-19 testing.
The complaint against Mark Schena, 57, of Los Gatos, California, the president of Arrayit Corporation, is the first criminal securities fraud prosecution related to the COVID-19 pandemic that has been brought by the Department of Justice and charges one count of securities fraud and one count of conspiracy to commit health care fraud.
“The allure of cheap reliable alternatives to today’s standard blood tests panels has captured the imagination of the health care industry, making such alternatives a prime subject for fraudsters,” said U.S. Attorney David L. Anderson of the Northern District of California. “The scheme described in the complaint, in which the defendant allegedly leveraged this allure by appending the fear of the Covid 19 pandemic, amounts to a cynical multi-million dollar hoax.”
“This defendant allegedly defrauded Medicare through illegal kickbacks and bribes, and then turned to exploiting the pandemic by fraudulently promoting an unproven COVID-19 test to the market,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Working together with our law enforcement partners, the Criminal Division is committed to safeguarding the integrity of the Medicare system and protecting the investing public from securities scams.”
“Investigating COVID-19 fraud scams billed to federal health programs – such as those charged here – are a top priority for our agency,” said Special Agent in Charge Steven J. Ryan for the Office of Inspector General of the U.S. Department of Health and Human Services. “The ongoing public health crisis has spawned a rash of fraudulent schemes; therefore, we will continue working with law enforcement partners to protect beneficiaries, programs and taxpayers.”
“Those seeking to maximize profits while misleading investors should expect to pay a heavy price, especially now,” said Inspector in Charge Delany De Leon-Colon of the U.S. Postal Inspection Service (USPIS) – Criminal Investigations Group. “The U.S. Postal Inspection Service is proud to work alongside the Department of Justice and our other law enforcement partners to identify and investigate anyone who capitalizes on this pandemic to commit fraud. By working together, we can keep our communities and our vulnerable populations safe from financial exploitation.”
“Scams that trade on VA’s name to portray an air of credibility will not be tolerated,” said Special Agent in Charge Kim R. Lampkins of the Veterans Affairs Office of Inspector General (VA OIG). “These charges reflect the VA OIG’s commitment to working with our law enforcement partners to investigate any fraudulent schemes that affect VA’s COVID-19 testing or other responses to the pandemic.”
“Today’s unsealing of the criminal complaint and the subsequent arrest of Mr. Schena are significant steps forward in this case to root out fraud and corruption being committed against the U.S. healthcare system, including the Department of Defense’s TRICARE program,” said Special Agent in Charge Bryan D. Denny, Defense Criminal Investigative Service, Western Field Office. “Any attempts to subvert the integrity of the TRICARE program, especially as we all are struggling to cope with the COVID-19 pandemic, will be aggressively investigated and prosecuted, if appropriate, to preserve and recover precious taxpayer dollars.”
According to the affidavit in support of the complaint, Schena touted that Arrayit is the “only laboratory in the world that offers” revolutionary “microarray technology” that allows Arrayit to test for allergy and COVID-19 based on a drop of blood that is 250,000 times smaller than the technology touted by Theranos. Beginning in or around 2018 and continuing to in or around February 2020, Schena and others paid kickbacks and bribes to recruiters and doctors to run an allergy screening test for 120 allergens (including things ranging from stinging insects to food allergens) on every patient regardless of medical necessity, and then made numerous misrepresentations to potential investors about Arrayit’s allergy test sales, financial condition, and its future prospects. Schena and others issued press releases and tweeted about partnerships with Fortune 500 companies, government agencies and public institutions, without disclosing that such partnerships either did not exist or were of de minimis value.
As the COVID-19 crisis began to escalate in March 2020, Schena and others made false claims concerning Arrayit’s ability to provide accurate, fast, reliable and cheap COVID-19 tests in compliance with state and federal regulations, and made numerous misrepresentations to potential investors about the COVID-19 tests and Arrayit’s future prospects for COVID-19 testing.
Schena stated that it was simple to develop a test for COVID-19 because the switch from testing for allergies to testing for COVID-19 was “like a pastry chef” who switches from selling “strawberry pies” to selling “rhubarb and strawberry pies.” Arrayit’s stock price doubled in mid-March, but Schena and others never disclosed that there were questions about the validity of its data and the accuracy of its COVID-19 test.
A complaint is merely an allegation and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The Fraud Section uses the Victim Notification System (VNS) to provide victims with case information and updates related to this case. Victims with questions may contact the Fraud Section’s Victim Assistance Unit by calling the Victim Assistance phone line at 1-888-549-3945 or by emailing [email protected]. To learn more about victims’ rights, please visit: https://www.justice.gov/criminal-vns/victim-rights-derechos-de-las-v-ctimas.
HHS-OIG’s San Francisco Regional Office and Detroit Regional Office, USPIS, the FBI, VA-OIG and DCIS investigated the case. Assistant Chiefs Jacob Foster and Justin Weitz of the Criminal Division’s Fraud Section and Assistant U.S. Attorney William Frentzen of the Northern District of California are prosecuting the case. The department appreciates the assistance of the Securities and Exchange Commission.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn mode about the history of our agency at www.Justice.gov/Celebrating150Years.
San Francisco Public Official and Contractors Charged with Crimes Related to Public Corruption and Money Laundering SchemeRead the Press Release
SAN FRANCISCO – Three more people have been charged with crimes related to an investigation into corruption in San Francisco’s City Hall, announced United States Attorney David L. Anderson; Federal Bureau of Investigation Special Agent in Charge John F. Bennett of the San Francisco Division; and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Kareem Carter. The three are San Francisco’s Fix-It Director and Director of the Mayor’s Office of Neighborhood Services, Sandra Zuniga; longtime employee of San Francisco’s Department of Public Works and now Chief Executive Officer and Vice President of San Francisco-based construction engineering firm AzulWorks, Inc., Balmore Hernandez; and San Francisco-based construction company owner Florence Kong.
The criminal charges all relate to the arrest and charging in January of San Francisco’s former Director of the Department of Public Works (DPW), Mohammed Nuru, on public corruption charges. Nuru was charged by criminal complaint for an alleged scheme to bribe a San Francisco Airport Commissioner. The complaint against Nuru also alleged he engaged in several additional schemes, including obtaining free and discounted labor and construction equipment from contractors to help him build a personal vacation home in Stonyford, Calif., while those contractors were also engaging in business with the City. The three complaints unsealed today provide numerous details of the charges leveled in the complaint against Nuru as well as a description of additional crimes that allegedly were committed.
“The federal investigation into City Hall corruption has not been sidetracked by Covid-19 or other recent traumatic events,” said U.S. Attorney Anderson. “Today’s criminal complaints will not be the last. To everyone with a piece of this corruption, again I urge you to help make things right for San Francisco. Run, don’t walk to the FBI, before it is too late for you to cooperate.”
The complaint against Zuniga, 44, of South San Francisco, alleges that she both knew about and benefitted from Nuru’s schemes. In addition, the complaint alleges Zuniga conspired for years with Nuru to launder the proceeds of his honest services wire fraud.
According to the complaint against Zuniga, she was Nuru’s longtime romantic partner and he described to her some of the illegal actions he took in his official position. For example, Nuru allegedly described to Zuniga the actions he took to benefit a billionaire in China who was developing a large multi-million dollar mixed-use project in San Francisco, in exchange for travel and lodging, high-end liquor, and other gifts and benefits.
Further, the complaint against Zuniga charges that she laundered proceeds from Nuru’s schemes in a variety of transactions over a period of several years. The complaint points out that from March 2014 to January 2020, Zuniga made over $135,000 in cash deposits, on top of her City of San Francisco paycheck. She also deposited over $8,000 in checks from associates of Nuru. During the same period, she then engaged in a variety of transactions that benefitted Nuru. For example, for more than three years, Zuniga paid the monthly mortgage on a portion of Nuru’s Colusa County vacation home. She allegedly did so by depositing approximately $1,000 in cash into her checking account almost every month, and then immediately writing a check for $1,000 to Nuru’s lender.
In another example of alleged money laundering, the complaint describes how Zuniga received a $5,000 check in September 2018 from a contractor who had extensive business with DPW and the City of San Francisco, and then used the funds to benefit Nuru. According to the complaint, Zuniga deposited the contractor’s check into her personal checking account and then executed a series of transactions through multiple banks, which the complaint alleges was for the purpose of concealing the source and nature of the payment. In one set of transactions, Zuniga allegedly paid a $2,400 construction bill on Nuru’s vacation home by writing a $2,500 check to herself, depositing it into another bank account, and then sending a check from that account to the contractor as soon as Nuru sent her the bill. Ultimately, according to the complaint, Zuniga sent an email to Nuru reporting to him how she had used the contractor’s $5,000 payment.
Further, the complaint against Zuniga describes how she benefitted from some of Nuru’s schemes. For example, Zuniga traveled with Nuru on a lavish two-week trip to South America in fall 2018, complete with business class flights and a stay at the Ritz-Carlton in Santiago, Chile, all paid for, or heavily subsidized by, a contractor doing business with the City.
The criminal complaint filed against Hernandez, 55, of Burlingame, describes how Hernandez used his relationship with Nuru to obtain advantages with the City for his construction engineering firm. Specifically, the complaint alleges that Hernandez established a continuing course of conduct in which tens of thousands of dollars in labor and materials were provided to Nuru in exchange for his assistance with public contracts and City approvals. In addition, the complaint alleges Hernandez sought Nuru’s assistance to obtain a long term supply contract and lease agreement with the City to operate an asphalt plant on land owned by the Port of San Francisco.
According to the complaint against Hernandez, Nuru owned two adjacent 10-acre parcels of land in Stonyford, Calif., on which Hernandez built a home and made other improvements. Hernandez and Nuru referred to the property as “the ranch.” Between late 2016 and the end of 2018, Hernandez allegedly supplied in excess of $250,000 in labor and materials to help Nuru build the home and make related improvements on the ranch. For example, the complaint describes how Hernandez supplied Nuru with more than $50,000 worth of tile and stone for the vacation home and then asked Nuru for help saving AzulWorks’ bid for a multi-million dollar project for which it had submitted an unqualified proposal. AzulWorks ultimately won that contract and, based on publicly available data, received more than $1.9 million from the City in connection with the project. The complaint also describes how Hernandez sought help from Nuru so that he could appeal an adverse DPW order preventing Hernandez’s company from removing trees at a job site on Van Ness Avenue.
With respect to Kong, 62, of Hillsborough, the complaint filed against her charges that she lied to FBI investigators during the probe of Nuru’s schemes. Kong owns two companies that do business with San Francisco: a construction company called Kwan Wo Ironworks and a construction debris recycling company called SFR Recovery Inc. The complaint describes recorded calls in which Kong sought to obtain business for her companies from DPW. In addition, the complaint alleges that Kong provided Nuru with cash, a Rolex watch worth more than $40,000, expensive meals, and the installation of a gate for his vacation home. Nevertheless, according to the complaint, Kong denied ever discussing business with Nuru. Kong also claimed that Nuru never helped her to obtain contracts with the City; this despite the fact that intercepted calls demonstrate that Nuru helped her with construction contracts for city facilities.
The charges contained in the criminal complaints against Zuniga, Hernandez, and Kong are mere allegations. As in any criminal case, each defendant is presumed innocent unless and until proven guilty in a court of law.
Zuniga is charged with one count of conspiracy to launder money, in violation of 18 U.S.C. § 1956(h). If convicted, she faces a maximum statutory penalty of 20 years in prison, a fine of $500,000 or twice the value of the property involved in the transactions, or both. Hernandez is charged with bribery, in violation of 18 U.S.C. § 666(a)(2). If convicted, the maximum statutory penalty is 10 years in prison and a fine of $250,000. Kong is charged with making false statements in violation of 18 U.S.C. § 1001(a)(2). If convicted, the maximum statutory penalty is five years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
Kong and Hernandez made their initial appearances in federal court today before U.S. Magistrate Judge Laurel Beeler, and are expected to make another appearance before the magistrate judge on June 15th for further proceedings to finalize the size and type of bond the magistrate judge will require to secure their release. Zuniga is scheduled to make her initial appearance before Magistrate Judge Beeler on June 10, 2020.
The case is being prosecuted by the Corporate Fraud Strike Force of the U.S. Attorney’s Office. The case is being investigated by the FBI and IRS Criminal Investigation.
Bay Area Hospitality and Automotive Executive Charged with FraudRead the Press Release
SAN FRANCISCO – Geoffrey M. Palermo was charged in a criminal complaint with wire fraud and making false statements in a loan application in connection with multiple schemes to defraud spanning from 2013 to 2020, announced United States Attorney David L. Anderson, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and U.S. Small Business Administration (SBA) Office of the Inspector General (OIG) Western Region Special Agent in Charge Weston King.
“What is particularly galling about the conduct alleged in the complaint is that while Geoffrey Palermo was wrongfully receiving PPP funds, he was not paying required payroll taxes for his employees, making it difficult or impossible for his employees to obtain the benefits to which they were rightfully entitled,” said U.S. Attorney Anderson. “PPP funds are intended to protect the many, not to enrich the few. The fraud alleged in the indictment reversed Congressional intent by depriving employees and enriching Palermo.”
"The FBI, along with our federal partners, will actively pursue this type of criminal behavior—especially of those seeking to fraudulently profit from the current health crisis,” said FBI Special Agent in Charge Bennett. “This case exemplifies how collaboration with our federal partners is vital to these investigations.”
“Our office will aggressively investigate any false statements made to gain access to SBA’s programs,” said SBA OIG Special Agent in Charge King. “OIG and its law enforcement partners are poised to root out fraud in SBA’s programs and bring wrongdoers to justice.”
According to the complaint, Palermo, 56, of Novato, Calif., is alleged to have orchestrated multiple schemes to defraud his victims. While working as the manager of the San Francisco Hilton hotel between 2013 and 2016, Palermo allegedly embezzled large sums of money, including through capital improvement kickback schemes. One contractor frequently hired by Palermo for projects at the hotel is suspected of paying Palermo approximately $1.5 million in kickbacks between March 2013 and June 2016. Palermo allegedly ensured that the contractor’s inflated or fraudulent invoices were paid by Justice Investors, LP, the owner of the hotel. After depositing Justice Investor checks to his business banking account, the contractor transferred funds into an illegitimate living trust bank account and then wrote checks back to Palermo or entities associated with Palermo.
After leaving the Hilton in 2016, Palermo worked for GMP Cars, a set of collision and auto repair centers in the Bay Area that he owned and operated. The complaint alleges that Palermo used GMP Cars funds to pay for lavish expenditures, including a Ferrari racing car and personal travel. The complaint explains that Palermo’s reliance on the company’s funds to finance his personal expenditures left the company in financial distress.
Then, in 2019, Palermo applied to an SBA Preferred Lender for two loans to GMP Cars for a total of approximately $5 million. The SBA guaranteed 75% of the loans. According to the complaint, Palermo made several material omissions and false statements during the 2019 loan application process. For example, Palermo failed to disclose that in September 2019—during the loan application process—he had overdrawn his business bank accounts by more than $700,000. Palermo also misrepresented amounts he owed German Motors Corporation in connection with GMP Cars’ acquisition of a collision center in San Francisco, going so far as to submit an altered promissory note to the Preferred Lender.
Most recently, in April 2020, Palermo made false and misleading statements when he applied for and received approximately $1.7 million through the SBA’s Paycheck Protection Program (PPP). The PPP is a relief program offered through participating lenders to aid small businesses during the COVID-19 pandemic. In the PPP application, Palermo falsely certified that GMP Cars had employees for whom it paid salaries and payroll taxes. The criminal complaint includes an internal GMP Cars spreadsheet showing that Palermo had decided not to pay required payroll taxes since at least mid-2019. According to the complaint, laid-off GMP Cars employees have had difficulty in recent months collecting their full unemployment benefits due to GMP Cars’ failure to pay payroll taxes and accurately report employee wages to California’s Employment Development Department (EDD).
In sum, the complaint alleges that the investigation is ongoing and that, to date, the evidence has established that since 2013 Palermo fraudulently obtained at least $8 million through his illegal conduct.
Palermo is charged with honest services wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346; wire fraud, in violation of 18 U.S.C. § 1343; and making a false statement in a loan application to an FDIC-insured lender, in violation of 18 U.S.C. § 1014. The wire fraud charges each carry maximum statutory penalties of up to 20 years in prison and a $250,000 fine, while the false statement charge carries a maximum of 30 years in prison and a $1,000,000 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 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.
Palermo is scheduled to make his initial appearance in federal court on June 10, 2020 before U.S. Magistrate Judge Laurel Beeler.
The case is being prosecuted by the Corporate Fraud Strike Force of the U.S. Attorney’s Office. The case is being investigated by the FBI and SBA OIG.
East Bay Resident Ordered to Pay over $17,000 for Making False Statements to Gain Admittance for Military ServiceRead the Press Release
SAN FRANCISCO – Ross Anthony Farca was ordered to pay $17,832 in restitution for making false statements to a government agency, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Jon S. Tigar, U.S. District Judge.
Farca, 24, of Concord, pleaded guilty to the charge, without a plea agreement, on April 9, 2020. As part of the proceedings for pleading guilty, Farca acknowledged he falsely certified on an electronic questionnaire that he had not consulted with a health care professional about an emotional or mental health condition when in fact he had.
Additional facts about the case appear in other court filings, including a complaint filed November 19, 2019. According to the complaint, on June 22, 2017, Farca traveled to a U.S. Army Recruitment Center in Mountain View, Calif., where he completed and submitted an online background check application in his bid to join the U.S. Army. The background check application, also known as an SF-86, contains language specifically warning that falsifying or concealing a material fact on the application is a felony which may result in fines or imprisonment. In this case, the criminal complaint alleges that Farca nevertheless knowingly made false statements about his mental health when completing the form. Specifically, he affirmatively stated that he had not received mental health treatment when, in fact, Farca had been in regular contact with a psychiatrist since 2011. In addition, the complaint alleges Farca had received prescriptions for various medications and had received treatments to manage his mental disorders.
According to the complaint, Farca understood that because of his diagnosis, he needed a letter of clearance from a mental health professional before he would be qualified to enlist in the army. The complaint alleges that Farca requested a letter of clearance from both his psychiatrist and a caseworker familiar with his condition; both mental health professionals, however, denied Farca’s request for a clearance letter. The complaint further alleges that when Farca completed the SF-86, rather than admit he had been seeing a psychiatrist and that he was unable to obtain a letter clearing him for duty, Farca instead denied he had ever had counseling for his psychological or emotional health. According to the complaint, Farca reported to basic training on August 28, 2017, and was discharged October 3, 2017. The discharge paperwork cited "failed medical / physical / procurement standards" and noted, "erroneous enlistment; medical condition disqualifying for military service, with no medical waiver approved."
A federal grand jury indicted Farca on December 3, 2019, charging him with making a false statement, in violation of 18 U.S.C. § 1001(a). Farca pleaded guilty to the count.
In addition to the restitution order, Judge Tigar also sentenced the defendant to time served in jail—a period of more than six months as defendant has been in custody since his arrest on November 21, 2019—and a 3-year period of supervised release, to include special conditions restricting his computer usage. Defendant will be released from federal custody and transferred to the custody of Contra Costa County, to face additional pending charges.
The Office of the U.S. Attorney’s Special Prosecutions Section is prosecuting the case. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Concord Police Department.
Four Defendants Plead Guilty to Racketeering Conspiracy in Nationwide Prescription Drug Diversion CaseRead the Press Release
SAN FRANCISCO – Mihran Stepanyan, Artur Stepanyan, Yan German, and Khachig Geuydjian pleaded guilty today to crimes stemming from their respective roles in a wide-ranging racketeering conspiracy involving diversion of prescription drugs, money laundering, bank fraud, identity theft, and additional crimes, announced United States Attorney David L. Anderson; Federal Bureau of Investigation Special Agent in Charge John F. Bennett; and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Kareem Carter. The pleas were accepted by the Hon. Charles R. Breyer, United States District Judge, and leaves one remaining defendant to stand trial for allegations made in a Second Superseding Indictment filed in February of 2016 against 38 defendants.
“Patients needing prescription drugs shouldn’t have to worry that their medications came out of a back alley,” said U.S. Attorney Anderson. “The defendants and their co-conspirators were able to make massive profits by diverting street drugs back into mainstream channels while creating false paperwork to conceal their true source. Thanks to the FBI, IRS, and federal prosecutors in San Francisco, the defendants now face the prospect of lengthy prison sentences for their criminal conduct.”
“The American public was victimized twice by this scheme,” said FBI San Francisco Special Agent in Charge John F. Bennett. “The majority of the profits were subsidized both by American taxpayers and by those paying private insurance premiums.” “Additionally, patients were put at risk by the movement of these black market drugs, as the defendants disregarded general safety protocols and guidelines, to include expiration dates and pharmaceutical lot numbers.”
“Today’s guilty pleas bring us one step closer to closing the chapter on this criminal enterprise,” said Kareem Carter, Special Agent in Charge IRS Criminal Investigation. “The crimes committed by these defendants ranged from picking up drugs at a pizza shop to a half-million-dollar tax check fraud scheme. In total, more than $199 million in diverted prescription drug proceeds were laundered through bank accounts established with false identities and shell companies. IRS-CI is committed to following the money so we can financially disrupt and dismantle criminal organizations like these.”
All four defendants pleading guilty today—Mihran Stepanyan (M. Stepanyan), his cousin Artur Stepanyan (A. Stepanyan), German, and Geuydjian—have acknowledged that they were members of a nationwide conspiracy referred to in court documents as the Karapedyan-Stepanyan Enterprise (Enterprise). One key aspect of the criminal activity was a multi-million dollar prescription drug diversion scheme. According to the plea agreements filed today, members and associates of the Enterprise procured prescription drugs from unlicensed sources, usually street dealers, and resold the drugs to unknowing customers. The Stepanyans also admitted that they are not licensed to sell drugs, that they procured millions of dollars of drugs through street suppliers and other unlicensed sources, and that the drugs they procured eventually were resold as legitimate products.
The Stepanyans’ plea agreements include an overview of the complexity and sophistication of the Enterprise’s operations. Members of the Enterprise conducted the affairs of the organization through a pattern of racketeering and committed crimes throughout California as well as in Minnesota, Ohio, and Puerto Rico. Further, the Stepanyans’ plea agreements describe how members and associates of the Enterprise procured and distributed a wide variety of drugs from unlicensed sources for distribution throughout the country. The drugs included medications used to treat HIV infection, Type-2 diabetes, dementia, and high blood pressure, among other conditions. Members and associates of the Enterprise also created false and fraudulent paperwork, referred to as pedigrees, to make it appear that those drugs had been purchased from legitimate sources. In addition, they created sham companies and used multiple bank accounts to receive and distribute the proceeds from their fraudulent transactions. The plea agreements also describe how the Stepanyans, along with other members and associates of the Enterprise, intentionally used the identities of real people to carry out their unlawful objectives. The plea agreements of Geuydjian and German provide further details of the Enterprise’s operations. Specifically, Geuydjian’s plea agreement describes how he negotiated fraudulent personal and tax checks for the benefit of the Enterprise, and German’s plea agreement describes how he supplied drugs for distribution by the Enterprise and managed aspects of the Enterprise’s money laundering operations.
According to M. Stepanyan’s plea agreement, he became a member of the Enterprise as early as January 2010. He admitted that he agreed with his co-conspirators to commit multiple criminal acts involving money laundering, mail fraud, wire fraud, bank fraud, identity theft, and multiple acts involving the distribution of drugs from unlicensed sources to conduct the affairs of the Enterprise. In his plea agreement, M. Stepanyan admitted that he controlled several entities, including Red Rock Capital Group, Inc.; Trans Atlantic Capital Group, Inc.; GC National Wholesale, Inc.; and Sky Atlantic Group, Inc., in addition to numerous bank accounts through which approximately $199 million of pharmaceutical money flowed between 2010 and 2014. M. Stepanyan also admitted purchasing approximately $56 million in gold using the illicit proceeds from the unlawful sale of prescription drugs. As a further example of his participation in the Enterprise, M. Stepanyan used an entity called Niva Pharmaceuticals to facilitate transactions related to the criminal conspiracy. Specifically, M. Stepanyan admitted that in January of 2014, he purchased Niva from a co-conspirator who had set up the company. Although Niva was licensed to engage in drug wholesaling in California, it was not and did not engage in wholesale drug distribution. Instead, M. Stepanyan acknowledged, Niva was nothing more than a shell company with offices that generally were empty except for a desk, a computer, and tables for drugs that the Enterprise procured. The plea agreement describes how Enterprise members stored boxes of drugs in Niva’s offices and shipped them throughout the country using fraudulent labels that suggested the drugs were being shipped by or to authentic companies, including a legitimate drug company operating in Puerto Rico.
A. Stepanyan also admitted in his plea agreement that he was a member of the Enterprise beginning in at least January of 2010. Between 2010 and 2015, he directed and participated in a prescription drug diversion scheme whereby he procured drugs from various unlicensed sources and sold them to a co-defendant who, in turn, sold the drugs to pharmacies throughout the United States. Further, A. Stepanyan admitted that the gross receipts for the sale of those diverted prescription drugs was at least $199 million. According to the plea agreement, A. Stepanyan and his cousin, M. Stepanyan, laundered those proceeds through various bank accounts established in false identities, which M. Stepanyan controlled.
German admitted in his plea agreement that he was a member of the Enterprise between 2013 and 2015. He acknowledged that he was responsible for establishing a network of unlicensed street suppliers to provide drugs for the distribution scheme. As described in his plea agreement, German had multiple sources of drugs. Between 2013 and 2014, he obtained boxes full of prescription drugs from one of his co-conspirators in Los Angeles, California. For example, he would pick up drugs from one of his sources at a pizza shop with the help of one of his associates, load the boxes into the trunk of a car, and drive them to a nearby mall or another pre-arranged location where he would deliver them to the Stepanyans. German also admitted that in his role managing money-laundering operations for the Enterprise, he assisted with wire fraud, bank fraud, identity theft, and illegal check cashing schemes. In the plea agreement, German admits that he used his birth name, Henrik Hartyunyan, during some of the underlying illegal conduct he performed on behalf of the Enterprise.
Geuydjian admitted that he was a member of the Enterprise from at least 2012 through approximately 2014. In his plea agreement, he describes himself as a “money launderer for the Enterprise.” Geuydjian acknowledged that he and others in the Enterprise created sham companies and used multiple bank accounts to receive and distribute the proceeds from the fraudulent transactions. Geuydjian liquidated tax fraud and drug diversion proceeds by making deposits to a number of sham corporate entities that he created and allowed other members and associates of the Enterprise to use his businesses to send illicit funds and other merchandise. Furthermore, Geuydjian used the identities of real people to carry out many of the Enterprise’s unlawful objectives. For example, the plea agreement describes how Geuydjian’s co-conspirators acquired and possessed stolen identifying information for dozens of individuals in order to file fraudulent tax returns online. The Enterprise obtained checks issued by the federal government and mailed from the United States Treasury based on fraudulent tax returns. From approximately August 2012 through August 2013, Geuydjian fraudulently liquidated approximately 51 checks totaling more than $538,295 though accounts he held in the names of three companies he controlled. Geuydjian also used photocopies of driver’s licenses, social security cards, or other personal identifying with the identities of real people to open bank accounts or gain access to the victims’ bank accounts, to negotiate checks made out in the victims’ names. Furthermore, Geudjian and his co-conspirators perpetrated a tax check fraud scheme. For example, in March 2014, Geudjian deposited two tax refund checks into fraudulent Wells Fargo bank accounts—one in the amount of $117,887 and another in the amount of $131,205. These checks, which were from legitimate tax return filings, were stolen out of the mail by “runners” employed by members of the conspiracy. Geudjian also liquidated approximately $71,806 that his co-conspirators stole from a victim’s Fidelity 401K retirement account.
On February 11, 2016, a federal grand jury handed down the Second Superseding Indictment charging the four defendants—as well as 34 additional individuals—with various crimes in connection with the activities of the Enterprise. All four defendants pleading guilty today are released on bond pending sentencing. A majority of the defendants in this case have pleaded guilty to various charges, including the following:
Defendant
Charges To Which Defendant Pleaded Guilty
Status of Sentencing
MIHRAN STEPANYAN, 34, Glendale, Calif.
Pleaded guilty today to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentencing scheduled for September 21, 2020
(statutory maximum of 20 years in prison and $250,000 fine)
ARTUR STEPANYAN, 43, Glendale, Calif.
Pleaded guilty today to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentencing scheduled for September 21, 2020
(statutory maximum of 20 years in prison and $250,000 fine)
KHACHIG GEUYDJIAN, 79, Chatsworth, Calif.
Pleaded guilty today to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentencing scheduled for September 21, 2020
(statutory maximum of 20 years in prison and $250,000 fine)
YAN GERMAN
a/k/a Henrik Hartyunyan, 40, Encino, Calif.
Pleaded guilty today to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentencing scheduled for September 21, 2020
(statutory maximum of 20 years in prison and $250,000 fine)
GEVORK TER-MKRTCHYAN, 58, Encino, Calif.
Pleaded guilty on August 23, 2017, racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentenced on January 30, 2018, to 21 months in prison
ARMAN PETROSYAN, 37, Northridge, Calif.
Pleaded guilty on August 28, 2019, this defendant pled guilty pursuant to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentencing is scheduled for September 21, 2020
(statutory maximum of 20 years in prison and $250,000 fine)
LANNA KARAPEDYAN, 30, Los Angeles, Calif.
Pleaded guilty on October 22, 2019, to a Superseding Information charging her with aiding and abetting receiving, retaining, and concealing stolen or forged Treasury checks, in violation of 18 U.S.C. §§ 510(b) and 2.
Sentencing is scheduled for September 21, 2020 (statutory maximum of 10 years in prison and $250,000 fine)
MAXWELL STARSKY, 41, Studio City, Calif.
Pleaded guilty on August 29, 2017, racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentenced on March 9, 2018, to 18 months in prison.
SEVAK GHARGHANI, 48, Burbank, Calif.
Pleaded guilty on August 28, 2019, to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentencing is scheduled for September 21, 2020 (statutory maximum of 20 years in prison and $250,000 fine)
JEAN DUKMAJIAN, 66, Los Angeles, Calif.
Pleaded guilty on October 22, 2019, to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentencing is scheduled for September 21, 2020 (statutory maximum of 20 years in prison and $250,000 fine)
KARINE DUKMAJIAN, 38, Reseda, Calif.
Pleaded guilty on October 22, 2019, to one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. §§ 1343 and 1349.
Sentencing is scheduled for September 21, 2020 (maximum of 20 years in prison and $1,000,000, per count)
ANGELA DUKMAJIAN, 30, Los Angeles, Calif.
Pleaded guilty on October 22, 2019, to one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. §§ 1343 and 1349.
Sentencing is scheduled for September 21, 2020 (maximum of 20 years in prison and $1,000,000)
ARMAN DANIELIAN, 44, Burbank, Calif.
Pleaded guilty on October 22, 2019, to one count of conspiracy to engage in unlicensed wholesale distribution of prescription drugs, in violation of 21 U.S.C. §§ 331(t), 333(b)(1)(D), and 353(e)(2)(A).
Sentencing is scheduled for September 21, 2020 (maximum of 10 years in prison and $250,000, per count)
ASATOUR MAGZANYAN, 58, Los Angeles, Calif.
Pleaded guilty on March 15, 2019, to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentencing is scheduled for September 21, 2020 (statutory maximum of 20 years in prison and $250,000 fine)
TIGRAN SARKISYAN, 45, Toluca Lake, Calif.
Pleaded guilty on May 10, 2017, to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentenced on August 1, 2018, to 15 months in prison.
HRIPSIME KHACHTRYAN, 45, Toluca Lake, Calif.
Pleaded guilty on May 10, 2017, to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentenced on August 1, 2018, to 12 months and one day in prison.
LOUI ARTIN, 58, North Hollywood, Calif.
Pleaded guilty on November 15, 2017, to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentencing is scheduled for September 21, 2020 (statutory maximum of 20 years in prison and $250,000 fine)
ARMAN ZARGARYAN, 37, Granada Hills, Calif.
Pleaded guilty on November 20, 2019, to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentencing is scheduled for September 21, 2020 (statutory maximum of 20 years in prison and $250,000 fine)
DMITRIY KUSTOV, 50, Los Angeles, Calif.
Pleaded guilty on May 10, 2017, to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d).
Sentenced on August 29, 2018 to a term of probation.
MICHAEL INMAN, 58, Los Angeles, Calif.
Pleaded guilty on February 8, 2017, to one count of conspiracy to commit bank fraud, in violation of 18 U.S.C. § 1349.
Sentenced on June 7, 2017, to 34 months in prison.
ARAXIA NAZARYIAN, 29, Van Nuys, Calif.
Pleaded guilty on December 18, 2019, to a Superseding Information charging her with misdemeanor introduction or delivery for introduction of adulterated or misbranded drugs, in violation of 21 U.S.C. §§ 331(a) and 333(a)(1)).
Sentencing is scheduled for September 21, 2020 (maximum statutory sentence is one year in prison and a $1,000 fine)
CHERYL BARNDT, 46, Spicewood, Texas
Pleaded guilty on August 21, 2019, to a Superseding Information charging her with misdemeanor introduction or delivery for introduction of adulterated or misbranded drugs, in violation of 21 U.S.C. §§ 331(a) and 333(a)(1)).
Sentencing is scheduled for September 21, 2020 (maximum statutory sentence is one year in prison and a $1,000 fine)
ERIC FIGUEROA, 35, Los Angeles, Calif.
Pleaded guilty on June 13, 2018, to one count of conspiracy to engage in the unlicensed wholesale distribution of drugs, in violation of 21 U.S.C. §§ 331(t), 333(b)(1)(D), 353(e)(2)(A), and 18 U.S.C. § 371.
Sentenced on February 22, 2019, to three years’ probation, six months of home detention, and 200 hours of community service.
MARC ASHEGHIAN, 59, Sherman Oaks, Calif.
Pleaded guilty on December 11, 2019 to a Superseding Information charging him with aiding and abetting the unlicensed wholesale distribution of drugs, in violation of 21 U.S.C. §§ 331(t), 333(b)(1)(D), 353(e)(2)(A), and 18 U.S.C. § 2.
Sentencing is scheduled for September 21, 2020 (maximum statutory sentence is 10 years in prison and a $250,000 fine)
MICHAEL ASHEGHIAN, 71, Vernon, Calif.
Pleaded guilty on December 11, 2019 to a Superseding Information charging him with aiding and abetting the unlicensed wholesale distribution of drugs, in violation of 21 U.S.C. §§ 331(t), 333(b)(1)(D), 353(e)(2)(A), and 18 U.S.C. § 2.
Sentencing is scheduled for September 21, 2020 (maximum statutory sentence is 10 years in prison and a $250,000 fine)
ARARAT YESAYAN, 39, Glendale, Calif.
Pleaded guilty on February 6, 2017, to one count of conspiracy to commit identity theft, in violation of 18 U.S.C. § 1028(f).
Sentenced on June 9, 2017 to a term of five years of probation.
ILIA NALBANS, 57, Montbello, Calif.
Pleaded guilty on March 15, 2019 to two counts of forging endorsements on Treasury checks and aiding and abetting the same, in violation of 18 U.S.C. §§ 510 and 2.
Sentenced on June 19, 2019, to restitution of $17,215 and a term of two years of supervised release.
For those defendants who have not yet been sentenced, in addition to a term of imprisonment and fine, the court also may order additional periods of supervised release, restitution, and special assessments. 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.
A separate investigation resulted in another indictment filed on May 6, 2015 in the Southern District of Ohio charging M. Stepanyan, A. Stepanyan, and others with various crimes arising from their sale of millions of dollars of illicitly-procured drugs. That matter was transferred to the Northern District of California and consolidated with the instant case.
Assistant United States Attorneys Claudia A. Quiroz, Andrew Dawson, and Chris Kaltsas are prosecuting the case with the assistance of Adrienne DelaPena and Kevin Costello. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the IRS.
Search of Concord Warehouse Leads to Re-Arrest of Dark Web VendorRead the Press Release
OAKLAND – Jeremy Donagal was charged in a criminal complaint filed this morning with possession of equipment for producing counterfeit drugs as well as the manufacture and sale of counterfeit drugs in a scheme to distribute counterfeit generic alprazolam (the active ingredient in the brand-name anti-anxiety medication Xanax), announced United States Attorney David L. Anderson, Drug Enforcement Administration (DEA) Special Agent in Charge Daniel C. Comeaux; Homeland Security Investigations (HSI) Special Agent in Charge Tatum King; and IRS Criminal Investigation Special Agent in Charge Kareem Carter. In a separate filing, Donagal also is alleged to have violated the conditions of his supervised release from his 2015 conviction, where he was originally charged in the 2014 indictment as “Jeremy Donagal, a/k/a/ “Xanax King”, a/k/a “XK”.
According to the criminal complaint, Donagal, 41, of Martinez, Calif., signed a lease in December of 2018, for a warehouse in Concord, Calif. Donagal allegedly visited the warehouse on May 14, 2020, let himself into the building, and was detained shortly after stepping outside. As explained in the motion to revoke his supervised release, inside the building, were multiple pill presses, plastic trays with punches and dies in them, thousands of pressed tablets, packaging and shipping materials, and other equipment consistent with a mail-order business. The tablets had the same markings as are used by Sandoz Inc., a company that the U.S. Food and Drug Administration has authorized to manufacture and distribute generic alprazolam. Donagal is charged with possession of equipment to produce counterfeit drugs, in violation of 21 U.S.C. § 843(a)(5), and the manufactured and sale of counterfeit drugs, in violation of 21 U.S.C. § 331(i)(3).
Donagal already was on supervised release from a previous conviction. Donagal’s previous sentence included a three-year term of supervised release. Donagal was released on June 27, 2018, subject to the terms of a supervised release order that required Donagal to refrain from committing additional federal crimes and work regularly at a lawful occupation. In papers filed this morning, the government seeks to revoke Donagal’s release for violating these terms of his supervised release. The motion to revoke supervised release states as follows:
[A]lmost immediately after being released from prison to supervised release, DONAGAL began work setting up a new counterfeit drug operation. He set up a laboratory and pill press operation to manufacture the counterfeit pills, and he established a dark web vendor site to sell the pills nationwide. He also established vendor pages on dark web criminal marketplaces like Samsara and Empire. On May 14, 2020, agents executed search warrants at DONAGAL’s residence and warehouse and seized pill presses, punch-dies designed to produce counterfeit drugs, and that packaging materials in the same brand name he used on the dark web marketplaces. That same day, agents arrested him.
Donagal was made his initial federal court appearance on May 15, 2020, before U.S. Magistrate Judge Donna M. Ryu. Donagal is next scheduled to appear before Magistrate Judge Alex G. Tse on May 18, 2020, at 10:30 AM for an attorney appointment hearing.
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 possessing equipment to produce counterfeit drugs, Donagal faces a maximum statutory penalty of four years in prison and one year of supervised release. If convicted of the counterfeit drug manufacturing and sale charge, Donagal faces a maximum statutory penalty of three years in prison and one year of supervised release. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The prosecution is the result of an investigation by the DEA, HSI, and IRS. The U.S. Department of the Treasury and U.S. Customs and Border Patrol is assisting with the investigation.
California Woman Arrested for Theft of Mail from U.S. Postal Service VehicleRead the Press Release
SAN JOSE – Paula Orozco was arrested and charged with mail theft, announced United States Attorney David L. Anderson and Postal Inspector in Charge Rafael E. Nuñez, United States Postal Inspection Service.
According to an amended criminal complaint filed today, Orozco, 38, of San Jose, Calif., is alleged to have stolen mail from a U.S. Postal Service (“USPS”) mail delivery vehicle in San Jose. As detailed in the complaint, the burglary from the delivery vehicle took place on April 18, 2020, and was reported four days later, when a victim reported fraudulent charges on a debit card that was in the mail on April 18. Postal inspectors reviewed surveillance footage from a location where a fraudulent charge occurred and identified Orozco in the footage. On May 13, 2020, a witness reported another break in to a USPS mail delivery vehicle in San Jose. Postal inspectors responded to the report and identified and detained Orozco in the immediate area of the burglary.
The complaint charges Orozco with mail theft, in violation of 18 U.S.C. § 1708.
Orozco’s initial appearance took place on May 14, 2020, before the Honorable Susan van Keulen, U.S. Magistrate Judge. Her next appearance is scheduled for May 19, 2020, at 1:30 p.m.
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 possession of mail theft, the defendant faces a maximum sentence of five years in prison and a $250,000 fine. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Richard Ewenstein is prosecuting the case with the assistance of Morgan Byrne. The prosecution is the result of an investigation by the U.S. Postal Inspection Service.
Former Chief of Cardiology at Palo Alto VA Hospital Indicted for Sexual Battery of Subordinate DoctorRead the Press Release
SAN JOSE - A federal grand jury in San Jose indicted Dr. John Giacomini for Abusive Sexual Contact, announced United States Attorney David L. Anderson, Special Agent in Charge James K. Wahleithner of the U.S. Department of Veterans Affairs’ Office of Inspector General, Criminal Investigations Division (“VA OIG”), and Chief of Police Martin Sizemore of the Veterans Affairs Police Service, Palo Alto Health Care Division.
According to the indictment, Giacomini, 71, of Atherton, is alleged to have subjected the victim, a subordinate doctor under Giacomini’s supervision, to unwanted and nonconsensual sexual contact in December of 2017 while both were on duty at the Veterans Affairs Hospital in Palo Alto, Calif. At the time, Giacomini was the Chief of the Palo Alto VA’s Cardiology Department. He had served in this position for over 30 years and also served on the medical faculty at Stanford University. Since the alleged sexual battery happened on federal property, the VA OIG referred the matter to the U.S. Attorney’s Office for federal prosecution. Giacomini no longer works at the Palo Alto VA Hospital or Stanford University.
Giacomini made his initial appearance by telephone on May 14, 2020. Giacomini is currently released on a $200,000 bond under the supervision of the United States Pretrial Services Office in San Jose. Giacomini’s next court appearance is scheduled for July 7, 2020, for a status conference before the Hon. Beth L. Freeman, United States District Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Giacomini faces a maximum sentence of two years of imprisonment, a fine of $250,000, restitution, supervised release, and a special assessment. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Jeffrey Nedrow and Marissa Harris are prosecuting the case with the assistance of Jessica Leung and Susan Kreider. The prosecution is the result of an investigation by the VA OIG and the Veterans Affairs Police Service.
San Francisco-Based Restauranteur Agrees to Cooperate with Government Investigation and Agrees to Plead Guilty to Honest Services Wire Fraud ChargesRead the Press Release
SAN FRANCISCO – San Francisco restauranteur Nick James Bovis has agreed to cooperate with a federal investigation and to plead guilty to honest services wire fraud and wire fraud charges alleged in a newly-filed criminal information, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett of the San Francisco Division. The parties have requested that a hearing be scheduled on Thursday, May 21, 2020, before the Hon. William H. Orrick, United States District Judge, to allow the defendant to plead guilty to the charges by videoconference.
Originally, Bovis, 56, of San Mateo, was charged in a criminal complaint filed January 15, 2020. The original complaint alleged that Bovis and San Francisco Director of Public Works Mohammed Colin Nuru, 57, of San Francisco, attempted to bribe an unnamed San Francisco Airport Commissioner. Specifically, the complaint charged that beginning in January of 2018, and until April of 2018, Nuru and Bovis attempted to use cash and free travel to bribe the airport commissioner. Nuru and Bovis allegedly were involved in a scheme to offer bribes in exchange for assistance from the commissioner to win a bid for the right to run a restaurant in the San Francisco International Airport.
The new information filed by the government today charges Bovis with two separate crimes: honest services wire fraud and wire fraud. Bovis has signed a plea agreement indicating that he wishes to plead guilty to both crimes.
The terms of the plea agreement would require Bovis to cooperate with an ongoing investigation and to surrender assets acquired as a result of his illegal conduct.
The conduct underlying the crimes to which Bovis has admitted were submitted to the court in a separate “Exhibit A” that was filed under seal and thus is not available to the public. Although the factual basis of the plea agreement is not public, the information filed today provides details about the crimes to which Bovis has pleaded guilty. For example, the alleged honest services wire fraud began years prior to the fraud alleged in the original complaint. Specifically, the information alleges that Bovis began participating in the honest services wire fraud scheme “at an unknown date, but at least as early as in or about 2015, and continuing through on or about January 28, 2020.” Further, the information alleges Bovis “participated in . . . a scheme to defraud the public of its right to the honest services of public officials, through bribery and kickbacks . . .” and that Bovis transmitted a wire communication on March 22, 2018, in connection with the scheme.
With respect to the wire fraud count, the information alleges that Bovis participated in the scheme beginning April of 2018 and that the he used wire communications in furtherance of the scheme.
Bovis faces a maximum statutory penalty of 20 years in prison and a $250,000 fine for each count to which he has agreed to plead guilty. 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.
San Francisco-Based Building Contractor and Former Building Commission Member Charged with Bank FraudRead the Press Release
SAN FRANCISCO – Rodrigo Santos was charged in a criminal complaint with bank fraud in connection with a scheme to divert into his personal bank account funds that his clients intended to be paid to the San Francisco Department of Building Inspection (“DBI”) and other city departments, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to the complaint filed May 11, 2020, Santos, 61, of San Francisco, is the principal and co-founder of Santos and Urrutia Structural Engineers, Inc., a structural engineering company based in San Francisco. Santos has been involved with inspection work in the city both through his firm and through political appointments. For example, Santos was appointed to the San Francisco Building Inspection Commission in 2000 and as the Commission’s President in 2004 by then-Mayors Willie Brown and Gavin Newsom, respectively.
As evidence of bank fraud, the complaint alleges that between January 13, 2016, and March 18, 2019, Santos deposited a number of checks into his personal bank account that had been written to third-party departments, companies, and an individual. The complaint alleges that Santos fraudulently deposited into his personal account 261 checks totaling $478,377.83. Specifically, the complaint describes several examples of Santos’ alleged diversion of the funds of individual clients. In one example, Santos instructed joint owners of a residential project to write a blank check to DBI for the uncertain cost of obtaining a purported permit from the agency. After the owners wrote a check to DBI for an amount “not to exceed $3,000,” the check ultimately was deposited into Santos’s personal account with the hand-written endorsement “DBI” on the reverse of the check. In another example, the owners of a different residential project wrote several checks they believed would be submitted to DBI or San Francisco’s Department of Public Works for various permits. Santos caused four of the checks to be deposited into his personal bank account with “DPW” or “DBI” hand-written in the endorsement field on the reverse of the check. In yet another example, the homeowners wrote a check in the amount of $1,314.50 as pay to the order “DBI,” and Santos added letters changing “DBI” to “RoDBIgo SANTOS.” The check was deposited into Santos’s personal bank account.
Finally, the complaint alleges that, when confronted with this evidence, Santos submitted forged invoices to the FBI.
Santos is charged with bank fraud, in violation of 18 U.S.C. § 1344. If convicted, Santos faces a statutory maximum of 30 years in prison and a $1,000,000 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.
Santos was arrested this morning and appeared before U.S Magistrate Judge Alex Tse. Magistrate Judge Tse ordered Santos released on a $100,000 bond. Santos’s next court appearance is scheduled for Friday, May 15, 2020, before U.S. Magistrate Judge Donna M. Ryu for identification of counsel.
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 2020 that Santos engaged in check fraud.
San Francisco Resident Arrested for Possession of Child PornographyRead the Press Release
SAN FRANCISCO – Chad Andrew Carter was arrested for possessing child pornography, announced United States Attorney David L. Anderson and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King.
According to a criminal complaint filed on April 30, 2020, Carter, 44, of San Francisco, Calif., is alleged to have knowingly possessed child pornography. As detailed in the complaint, an individual using the handle “TopRod” was observed in a Zoom chat room displaying and streaming child pornography videos. Zoom is a video-conferencing and photo and video-sharing platform. The user “TopRod” was traced to an IP address and email account in defendant’s name. On January 4, 2018, HSI agents executed a search warrant on defendant’s residence and seized various electronic devices. In a review of those devices, agents identified approximately 3,077 image files and 469 video files containing child pornography, including images and videos of victims as young as three-to-five years old.
The complaint charges Carter with possession of child pornography, in violation of 18 U.S.C. § 2251(a)(4)(B).
Carter’s detention hearing occurred on May 7, 2020, before the Honorable Susan van Keulen, U.S. Magistrate Judge. Carter was released with conditions, including monitoring of his computer and electronics use and prohibiting contact with minors. Carter’s next appearance is scheduled for May 27, 2020, at 10:30 a.m.
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 possession of child pornography charge, the defendant faces a maximum sentence of 20 years imprisonment, five years to a life term supervised release, 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.
Assistant U.S. Attorney David Ward is prosecuting the case with the assistance of Margoth Turcios and Llessica Chan Fierro. The prosecution is the result of an investigation by HSI.
Northern District of California Counties and Cities Receive More Than $7 Million in Justice Grants to Address COVID-19 PandemicRead the Press Release
SAN FRANCISCO – U.S. Attorney David L. Anderson today announced that counties and cities throughout the Northern District of California have been allocated a total or more than $7 million in grants from the U.S. Department of Justice to respond to the public safety challenges posed by the COVID-19 pandemic. The Department of Justice awarded the grants through the Coronavirus Emergency Supplemental Funding program, which was authorized by recent federal stimulus legislation.
“First responders continue to work hard to keep the public safe at this time,” said U.S. Attorney Anderson. “They deserve not just our admiration and appreciation, but also our support. We are pleased to announce this funding to assist law enforcement and public safety efforts throughout our district.”
“The outbreak of COVID-19 and the public health emergency it created are sobering reminders that even the most routine duties performed by our nation’s public safety officials carry potentially grave risks,” said Katharine T. Sullivan, Principal Deputy Assistant Attorney General for the Office of Justice Programs. “These funds will provide hard-hit communities with critical resources to help mitigate the impact of this crisis and give added protection to the brave professionals charged with keeping citizens safe.”
The law gives jurisdictions considerable latitude in the use of these funds for dealing with COVID-19. Potential uses include hiring personnel, paying overtime, purchasing protective equipment, distributing resources to hard-hit areas and addressing inmates’ medical needs.
Agencies that were eligible for the fiscal year 2019 State and Local Edward Byrne Memorial Justice Assistance Grant Program are candidates for the emergency funding. Local units of government and tribes will receive direct awards separately according to their jurisdictions’ allocations. Information on how to apply for grants is available at https://bja.ojp.gov/funding/opportunities/bja-2020-18553.
California counties and municipalities throughout the Northern District received grants through the program:
Jurisdiction Name
Grant Allocation
ALAMEDA CITY
$41,660
ALAMEDA COUNTY
$133,882
ANTIOCH CITY
$161,353
BERKELEY CITY
$135,693
CONCORD CITY
$105,655
CONTRA COSTA COUNTY
$82,337
DALY CITY
$56,072
EAST PALO ALTO CITY
$32,226
EMERYVILLE CITY
$32,903
EUREKA CITY
$50,185
FREMONT CITY
$89,657
GILROY CITY
$43,922
HAYWARD CITY
$132,068
HUMBOLDT COUNTY
$60,602
LAKE COUNTY
$45,281
LIVERMORE CITY
$43,242
MARIN COUNTY
$58,008
MENDOCINO COUNTY
$69,733
MONTEREY COUNTY
$58,337
MOUNTAIN VIEW CITY
$33,660
NAPA CITY
$65,354
NAPA COUNTY
$58,008
OAKLAND CITY
$1,330,582
PETALUMA CITY
$51,091
PITTSBURG CITY
$63,695
REDWOOD CITY
$42,488
RICHMOND CITY
$221,800
ROHNERT PARK CITY
$47,469
SALINAS CITY
$235,764
SAN FRANCISCO CITY AND COUNTY
$1,449,067
SAN JOSE CITY
$865,998
SAN LEANDRO CITY
$107,391
SAN MATEO CITY
$58,562
SAN MATEO COUNTY
$70,864
SAN PABLO CITY
$46,867
SAN RAFAEL CITY
$51,242
SANTA CLARA CITY
$39,923
SANTA CLARA COUNTY
$70,261
SANTA CRUZ CITY
$107,845
SANTA CRUZ COUNTY
$65,506
SANTA ROSA CITY
$149,879
SONOMA COUNTY
$140,146
SOUTH SAN FRANCISCO CITY
$40,751
SUNNYVALE CITY
$37,584
UNION CITY
$60,450
WATSONVILLE CITY
$63,318
The Office of Justice Programs (OJP), directed by Principal Deputy Assistant Attorney General Katharine T. Sullivan, provides federal leadership, grants, training, technical assistance and other resources to improve the nation’s capacity to prevent and reduce crime, assist victims and enhance the rule of law by strengthening the criminal and juvenile justice systems. More information about OJP and its components can be found at www.ojp.gov.
California Man Sentenced to Six Months in Prison for Making False Statements in Passport ApplicationRead the Press Release
SAN FRANCISCO – Mustapha Traore, aka Olivier Adella, was sentenced to six months in prison and six additional months of home confinement for knowingly making false statements in an application for a passport with the intent to induce and secure the issuance of a passport, 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) San Francisco Special Agent in Charge Tatum King. The sentence was handed down by the Honorable Vince Chhabria, U.S. District Judge.
“The Diplomatic Security Service (DSS) is committed to ensuring that those that perpetrate U.S. passport fraud face consequences for their nefarious actions,” said Matthew Perlman, Special Agent in Charge of the DSS San Francisco Field Office. “The successful prosecution of this complex international, multi-jurisdictional case is a direct result of DSS’ global reach and strong partnership with both U.S. and foreign law enforcement agencies.”
“Homeland Security Investigations agents and professional staff will continue to closely collaborate with the Diplomatic Security Service and the U.S. Attorney’s Office in order to proactively disrupt fraud schemes that attempt to exploit our lawful immigration system,” said HSI Special Agent in Charge King.
Traore, formerly of Burlingame, Calif., pleaded guilty to the charge on March 9, 2020. Today’s sentence follows Traore’s arrest by DSS special agents on a criminal complaint on January 10, 2020.
According to the complaint, Traore entered the United States in February 2002 using a fake French passport with the name Olivier Adella. The criminal complaint further alleged that after Traore used the fake passport to enter the United States, he used the passport to obtain immigration status and eventually a naturalization certificate under the assumed name Olivier Adella. After becoming a naturalized U.S. citizen, Traore made false statements about his true name and birthplace in a December 2011 application for a U.S. passport; and based on those lies he was issued a U.S. passport under the assumed name.
According to information presented to the court at sentencing, on the night of April 28-29, 2016, Traore took part in the murder of San Mateo resident Keith Green. The court was informed that Traore pled guilty to accessory in the murder; and that Traore admitted that he helped load Mr. Green’s body into the trunk of his Chrysler 300, drove the body from San Mateo County across the Golden Gate Bridge, and then dumped the body down an embankment off of Highway 101 in Sonoma County. Around May 10, 2016—shortly after Green was killed but before Traore was arrested in connection with the murder—Traore submitted an expedited passport renewal application and again provided false information.
On January 23, 2020, a federal grand jury indicted Traore, charging him with knowingly making false statements in an application for a passport with the intent to induce and secure the issuance of a passport, in violation of 18 U.S.C. § 1542. Traore pleaded guilty to the charge.
In addition to the prison term, Judge Chhabria sentenced the defendant to a three-year period of supervised release, including the six months of home confinement.
Assistant United States Attorney Daniel Pastor is prosecuting the case with assistance from Marina Ponomarchuk. The prosecution is the result of an investigation by the DSS and HSI.
U.S. Attorney Announces Efforts to Combat Sexual Harassment in Housing During COVID-19 CrisisRead the Press Release
SAN FRANCISCO – Today U.S. Attorney David L. Anderson announced that the Department of Justice has devoted law enforcement resources to address housing-related sexual harassment resulting from the current COVID-19 crisis. The Department of Justice remains vigilant in investigating and prosecuting wrongdoing related to the pandemic, including sexual harassment by landlords, property managers, maintenance workers, loan officers or other people who have control over housing.
U.S. Attorney Anderson made the announcement to remind the public that sexual harassment in housing will not be tolerated and that the Department of Justice is focused on addressing this problem.
“Sexual misconduct in housing and rental situations can be just as pernicious as harassment in the workplace,” U.S. Attorney Anderson said. “Landlords and superintendents who try to capitalize on the current crisis by sexually harassing people in need of housing should know that reports of misconduct will be investigated and pursued.”
As the country adopts drastic measures to slow the spread of COVID-19, many Americans have lost their jobs and many more have seen their wages curtailed. These losses have forced many to seek abatements or suspensions of their rent. Many landlords have responded to these circumstances with understanding and care, trying to work with their tenants to weather the current crisis. There have been reports, however, of other landlords who have responded to requests to defer rent payments with demands for sexual favors and other acts of unwelcome sexual conduct. Such behavior is illegal.
The Department of Justice remains remaining vigilant in investigating and prosecuting wrongdoing related to the pandemic. To address predatory practices by unscrupulous landlords, Attorney General Barr directed Assistant Attorney General for Civil Rights, Eric Dreiband, and Christina Nolan, the U.S. Attorney for the District of Vermont to oversee and coordinate U.S. Attorneys’ Offices efforts to devote all necessary resources to investigate reports of housing-related sexual harassment resulting from the current crisis.
If you think you are a victim of sexual harassment by a landlord or any other person who has control over housing, resulting from the COVID-19 crisis, you can report that harassment to:
- Sexual Harassment in Housing Initiative at 1-844-380-6178
- Email: [email protected]
- Local authorities
For more information about the Department of Justice’s efforts to combat housing-related sexual harassment visit www.justice.gov/crt/sexual-harassment-housing-initiative or the Spanish language webpage: www.justice.gov/crt-espanol/iniciativa-en-contra-del-acoso-sexual-en-la-vivienda.
For more information regarding sexual harassment in housing and how to report it, please visit www.justice.gov/crt/page/file/1048341/download.
Michigan Man Charged with COVID-19-Related Wire Fraud SchemeRead the Press Release
SAN FRANCISCO – The United States Attorney’s Office for the Northern District of California unsealed charges today in a criminal complaint charging Rodney L. Stevenson II with wire fraud for his operation of an e-commerce website that allegedly scammed customers into paying for N95 masks that they never received. The announcement was made by United States Attorney for the Northern District of California David L. Anderson, United States Attorney for the Western District of Michigan Andrew Byerly Birge, U.S. Postal Inspection Service San Francisco Division Postal Inspector in Charge Rafael E. Nuñez, U.S. Postal Inspection Service Detroit Division Acting Inspector in Charge Felicia George, FBI Special Agent in Charge John F. Bennett, and FBI Special Agent in Charge Detroit Field Division Steve D’Antuono.
“Hospitals, healthcare providers and everyday people are understandably anxious to obtain N95 masks, N99 filters and other PPE,” said U.S. Attorney Anderson. “The criminal element is always ready to prey on fear and uncertainty, and it is all too easy to lie over the internet. While sheltering in place, Americans are shopping on the internet like never before. The complaint alleges a consumer’s nightmare of fake webpages and false promises.”
“The reach of federal law enforcement is long. If someone uses the internet to commit alleged fraud, their victims can be from anywhere and they could find themselves facing those victims and subject to serious federal charges far from home,” said U.S. Attorney Birge. “After some preliminary hearings here in West Michigan, all future proceedings related to these very serious allegations will be in Northern California.”
“The United States Postal Inspection Service has a long history of successfully investigating complex fraud cases,” stated San Francisco Division Inspector in Charge Nuñez. “Anyone or any organization engaging in deceptive practices, especially if they are attempting to exploit the COVID-19 pandemic emergency, should know they will not go undetected and will be held accountable. The collaborative investigative work on this case conducted by Postal Inspectors, our law enforcement partners, and the United States Attorney’s Office illustrates our efforts to protect consumers.”
“The FBI will pursue criminals who attempt to deceive and defraud consumers at the expense of public safety during this pandemic,” said FBI Special Agent in Charge Bennett. “During this crisis, the FBI remains vigilant in deterring, detecting, and investigating wrongdoing and will rigorously pursue those individuals and groups attempting to victimize the American public.”
According to the complaint, Stevenson, 24, of Muskegon, Michigan, controlled EM General, a Michigan limited liability company created in September 2019. EM General operated a website that purported to sell an available inventory of “Anti-Viral N95” respirator masks. An N95 respirator mask is a particulate-filtering facepiece respirator that meets the U.S. National Institute for Occupational Safety and Health N95 standard of air filtration. N95 masks, which cover the user’s nose and mouth, are required to filter at least 95% of airborne particles.
The complaint alleges that EM General, through its website, falsely claimed to have N95 respirator masks “in stock” and available for sale and shipment during the shortage caused by the COVID-19 pandemic. Based on these and other representations, customers bought masks from the website, sometimes paying EM General more than $40 or more per mask. Stevenson is alleged to have taken several steps to fraudulently make EM General appear to be a legitimate company. For example, Stevenson invented a fictional Chief Executive Officer, “Mike Thomas,” from whom fraudulent emails were sent, as well as several other fake officers or employees of the company. Stevenson also used stock photographs from the internet to create a page depicting this team of fake professional management staff. After customers made their first purchase, the defendant offered additional masks to those customers at discounted prices.
The complaint describes how four victims paid for, but did not receive, N95-compliant masks. Three of the four victims reside in the San Francisco Bay Area, including one hospital employee. Also described in the complaint are follow-up emails from EM General to customers in which false excuses about supply and shipping issues were made. Three of the four customers in the complaint never received the promised products at all despite multiple representations that the masks had been shipped. The fourth customer paid over $400 on March 2, 2020, for N95 masks represented to be “in stock,” and, after raising several complaints, on March 27, 2020, received cheaply made fabric masks. The masks, delivered in a white envelope with no return address, did not comply with the N95 standard that EM General purportedly sold.
Stevenson is charged with wire fraud, in violation of 18 U.S.C. § 1343. A complaint merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Stevenson was arrested at his home in Muskegon, Michigan, made his initial appearance before the United States District Court for the Western District of Michigan in Grand Rapids, and was released on supervised bond. Stevenson’s next scheduled appearance is set for May 18, 2020, in the Western District of Michigan for a preliminary hearing.
If convicted, the defendant faces a maximum sentence of 30 years in prison, 5 years of probation, and a fine of $1,000,000. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by the Special Prosecutions Section of the United States Attorney’s Office for the Northern District of California. This case is being investigated jointly by the San Francisco and Detroit Divisions of the United States Postal Inspection Service and the San Francisco and Detroit field offices of the Federal Bureau of Investigation.
Two San Francisco Women Charged with Robbery Affecting Interstate Commerce in Alleged Scheme to Steal Merchandise While Threatening to Spread COVID-19Read the Press Release
SAN FRANCISCO – The United States Attorney’s Office for the Northern District of California unsealed charges today in a criminal complaint charging Carmelita Barela and Rosetta Shabazz with committing robbery affecting interstate commerce in connection with a scheme to steal merchandise from a Walgreens while claiming to have COVID-19, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
“It is an unfortunate reality that there will be those in our community who try to take advantage of the current pandemic to prey on people’s fear of contracting COVID-19,” said U.S. Attorney Anderson. “While many in our community can remain safe by sheltering in place, store managers and clerks are putting themselves out into the world for our benefit. They don’t deserve to be threatened and robbed. Everyone suffers from a crime like this.”
“In a time when our communities have come together to be responsible and stay safe, the FBI will simply not tolerate the criminal actions of the few individuals who use fear and intimidation to endanger others,” said Special Agent in Charge Bennett. “We must protect the front-line service workers who are providing the public with the critical supplies we all need.”
According to the complaint, on April 6, 2020, Barela, 36, and Shabazz, 32, both of San Francisco, entered a Walgreens near San Francisco’s Civic Center with empty bags and without wearing masks. After the store manager offered assistance, Shabazz allegedly began to cough without covering her mouth. The store manager asked Shabazz to leave the store if she was sick. Instead, Shabazz walked over to Barela and both defendants began to cough audibly while taking merchandise off the shelves and placing it into their bags. The manager told the defendants to leave the store, to which they responded by saying, “We have COVID.” The defendants continued to cough audibly and eventually left the store without paying for the merchandise they placed into their bags.
The defendants are charged with robbery affecting interstate commerce (Hobbs Act Robbery), in violation of 18 U.S.C. § 1951. A complaint merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants each face a maximum sentence of 20 years of prison and a $250,000 fine. In addition, the court may order restitution and an additional term of supervised release. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Barela and Shabazz were arrested on April 23, 2020. Shabazz made her initial appearance this morning before Magistrate Judge Kandis Westmore and was released to home confinement. Her next appearance is scheduled for April 28, 2020, before Judge Westmore, for a bond hearing. Barela’s next appearance is scheduled for April 27, 2020, before Magistrate Judge Thomas Hixson for an initial appearance.
Assistant United States Attorney Abraham Fine is prosecuting the case with assistance from Margoth Turcios. The prosecution is a result of an investigation by the FBI.
Department of Justice Commemorates National Crime Victims’ Rights WeekRead the Press Release
SAN FRANCISCO – U.S. Attorney David L. Anderson joins the Department of Justice and communities nationwide in observing National Crime Victims’ Rights Week and celebrating victims’ rights, protections and services. This year’s observance takes place April 19-25 and features the theme, “Seek Justice | Ensure Victims’ Rights | Inspire Hope.”
“Every year, millions of Americans suffer the shock and trauma of criminal victimization, affecting their well-being and sense of security and dignity,” said Attorney General William P. Barr. “To these victims, we affirm our unwavering commitment to supporting them in their hour of need. We also commend the thousands of victim advocates and public safety professionals who labor tirelessly to secure victims’ rights and support survivors.”
Some 3.3 million Americans age 12 and older were victims of violent crime in 2018, according to the National Crime Victimization Survey. The Office for Victims of Crime (OVC), part of the Justice Department’s Office of Justice Programs, supports more than 7,000 local victim assistance programs and victim compensation programs in every state and U.S. territory. Funds for these programs come from the Crime Victims Fund, which is made up of federal criminal fines, penalties and bond forfeitures.
The Victim-Witness Assistance Program for the U.S. Attorney’s Office is responsible for providing victim notification and coordinating a variety of assistance services for victims and witnesses during the prosecution of criminal and civil cases in the Northern District of California. In 2019, the U.S. Attorney’s Office sent out over 127,000 notifications of court events to victims. The Office’s Victim-Witness Unit is dedicated to ensuring victim rights, seeking justice and inspiring hope among the communities that make up the Northern District of California.
During National Crime Victims’ Rights Week, victim advocacy organizations, community groups and state, local and tribal agencies traditionally host rallies, candlelight vigils, and other events to raise awareness of victims’ rights and services. This year, many communities are organizing virtual gatherings and online public awareness campaigns. The community events scheduled by the U.S. Attorney’s Office have been postponed until in-person events can be held safely.
“Crime victims deserve to know that they have the encouragement and support of the American people,” said OVC Director Jessica E. Hart. “I hope that citizens throughout the nation will take the opportunity this week to remember all victims of crime and their heroic stories of survival. I encourage everyone to also find meaningful ways to express their appreciation to the many committed and compassionate service providers across the country who work tirelessly supporting these survivors.”
For more information on how to create your own public campaigns to raise awareness about crime victims’ rights online and at events throughout the year, please visit: https://ovc.ncjrs.gov/ncvrw2020/overview.html.
For more information about the Victim-Witness Assistance Program for the Northern District of California, please visit https://www.justice.gov/usao-ndca/victim-witness-assistance.
Federal Prosecutors and FBI to Participate in Telephonic Town Hall to Provide Information About COVID-19 ScamsRead the Press Release
SAN FRANCISCO – Prosecutors from the four United States Attorney’s Offices in California, along with representatives from the FBI, will participate in a telephonic town hall to help California residents identify and avoid fraudulent schemes related to Coronavirus and COVID-19. The event is being coordinated by the American Association of Retired Persons (“AARP”).
The telephonic town hall will happen on Monday, April 20 from 10 to 11 a.m. PDT. During the event, a special agent from the FBI and a federal prosecutor will make presentations, and participants from across California will be allowed to ask questions to a panel of Assistant United States Attorneys from the four offices that serve California.
AARP’s Fraud Watch Network is providing the infrastructure for the event. Approximately 100,000 AARP members will receive a phone call Monday morning inviting them to participate in the town hall. Those who wish to receive an invitation may sign up here (https://vekeo.com/aarpcalifornia/).
During the current health crisis, federal investigators and prosecutors continue to fulfill their critical mission of protecting public safety. Federal officials have prioritized the disruption, investigation and prosecution of crimes related to Coronavirus and COVID-19, including fraudulent schemes, unapproved treatments, and scams related to stimulus money. During the town hall, federal officials will discuss the types of schemes currently being seen, along with tips on how to avoid becoming a victim.
Soon after the town hall event, a recording will be available at https://vekeo.com/aarpcalifornia/.
***
REPORT COVID-19 CRIME. Contact the National Center for Disaster Fraud Hotline: 866-720-5721 or [email protected].
U.S. Attorney and IRS Special Agent in Charge Urge Public to Watch Out for Scams and Fraud Involving COVID-19 Economic Impact PaymentsRead the Press Release
SAN FRANCISCO – U.S. Attorney David L. Anderson and Kareem Carter, Special Agent in Charge of the IRS Criminal Investigation today warned the public that scammers may try to target the anticipated COVID-19 economic impact payments and urged everyone to be on the lookout for possible scams.
U.S. Attorney Anderson and Special Agent in Charge Carter made the announcement today in an effort to arm taxpayers with the information necessary to avoid being victimized by criminals who may view the forthcoming payments as an opportunity for fraud.
COVID-19 economic impact payments will be issued over the coming days and weeks. For most Americans, the payment will come in the form of a direct deposit into their bank account. However, for those taxpayers that traditionally receive tax refunds via paper check, including many elderly citizens and those who do not use banking services, the payments will be issued as a paper check. All taxpayers—whether they expect to receive a direct deposit or a paper check—may be the target of fraud.
“We must all remain alert,” said U.S. Attorney Anderson. “Scammers will always try to think of creative ways to take your money from you. With the help of an alert public, we can bring them to justice before they can profit from their illegal schemes.”
“As this deadly virus continues to impact every part of our lives, scammers are looking to take advantage of all the chaos,” said Special Agent in Charge Carter. “They will prey on our hopes and fears to steal your money, your personal information, or both.”
U.S. Attorney Anderson and Special Agent in Charge Carter offered the following information about how the COVID-19 related economic impact payments will be issued and tips on how to spot and avoid scams:
- The IRS will deposit your check into the direct deposit account you previously provided on your tax return (or, in the alternative, send you a paper check).
- The IRS will not call and ask you to verify your payment details. Do not give out your bank account, debit account, or PayPal account information - even if someone claims it's necessary to get your check. It's a scam.
- If you receive a call, don't engage with scammers or thieves, even if you want to tell them that you know it's a scam, or you think that you can beat them. Just hang up.
- If you receive texts or emails claiming that you can get your money faster by sending personal information or clicking on links, delete them. Don't click on any links in those emails.
- Reports are also swirling about bogus checks. If you receive a “check” in the mail now, it’s a fraud - it will take the Treasury a few weeks to mail those out. If you receive a “check” for an odd amount (especially one with cents), or a check that requires that you verify the check online or by calling a number, it’s a fraud.
Additional information about the pandemic and the Department’s role in combatting related illegal activities can be found here: www.justice.gov/coronavirus.
If you think you are a victim of a scam or attempted fraud involving COVID-19, you can report it without leaving your home through a number of platforms. Go to:
The National Center for Disaster Fraud Hotline at 866-720-5721 or via email at [email protected], or
Report the incident to IRS Criminal Investigation at [email protected]
Singaporean Shipping Company Fined $1.65m for Concealing Illegal Discharges of Oily WaterRead the Press Release
Unix Line PTE Ltd., a Singapore-based shipping company, was sentenced Friday in federal court before U.S. District Court Judge Jon S. Tigar in Oakland, California, after previously pleading guilty to a violation of the Act to Prevent Pollution from Ships. Unix Line PTE Ltd. was sentenced to pay a fine of $1,650,000.00, placed on probation for a period of four years, and ordered to implement a comprehensive Environmental Compliance Plan as a special condition of probation.
In pleading guilty, Unix Line admitted that its crew members onboard the Zao Galaxy, a 16,408 gross-ton, ocean-going motor tanker, knowingly failed to record in the vessel’s oil record book the overboard discharge of oily bilge water without the use of required pollution-prevention equipment, during the vessel’s voyage from the Philippines to Richmond, California.
“Deliberately concealing illegal discharges of oil waste into our oceans is a federal crime we will not tolerate,” said Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Environment and Natural Resources Division. “This sentencing shows that polluting our oceans and misleading the Coast Guard will cost you.”
“The defendant’s crew members intentionally discharged oily bilge waste into the ocean on their voyage to California,” said U.S. Attorney David L. Anderson of the Northern District of California. “Our district includes hundreds of miles of the beautiful Pacific coast, stretching from Monterey to Del Norte County. We will do our part to protect those natural resources and hold companies responsible when they fail to follow federal and international laws designed to protect our oceans from pollution.”
“The Coast Guard Investigative Service will continue to make criminal investigations that deter maritime organizations from breaking international and U.S. law designed to protect our finite natural marine resources a priority,” said Kelly Hoyle, Special Agent in Charge Pacific Region of the Coast Guard Investigative Service.
On Oct. 24, 2019, Unix Line was indicted by a federal Grand Jury of obstruction of justice and a violation of the Act to Prevent Pollution from Ships. Under the plea agreement, Unix Line pled guilty to one count of a violation of the Act to Prevent Pollution from Ships.
According to the plea agreement, Unix Line is the operator of the Zao Galaxy, which set sail from the Philippines on Jan. 21, 2019, heading toward Richmond, California, carrying a cargo of palm oil. On Feb. 11, 2019, the Zao Galaxy arrived in Richmond, where it underwent a U.S. Coast Guard inspection and examination. Examiners discovered that during the voyage, a Unix Line-affiliated ship officer directed crew members to discharge oily bilge water overboard, using a configuration of drums, flexible pipes, and flanges to bypass the vessel’s oil water separator. The discharges were knowingly not recorded in the Zao Galaxy’s oil record book when it was presented to the U.S. Coast Guard during the vessel’s inspection.
Senior Trial Attorney Kenneth Nelson of the Environmental Crimes Section, with the assistance of Assistant U.S. Attorney Katherine Lloyd-Lovett, Special Assistant U.S. Attorney Andrew Briggs, Kay Konopaske and Katie Turner, of the Northern District of California, are prosecuting the case. The prosecution is the result of a year-long investigation by the Coast Guard Investigative Service and the Investigations Division of Coast Guard Sector San Francisco.
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.
U.S. Attorney Urges the Public to Report Suspected COVID-19 FraudRead the Press Release
SAN FRANCISCO – U.S. Attorney David L. Anderson of the Northern District of California today urged the public to report suspected fraud schemes related to COVID-19 (the Coronavirus) by calling the National Center for Disaster Fraud (NCDF) hotline (1-866-720-5721) or to the NCDF e-mail address [email protected].
In coordination with the Department of Justice, Attorney General William Barr has directed U.S. Attorneys to prioritize the investigation and prosecution of Coronavirus fraud schemes. The NCDF Hotline can receive and enter complaints into a centralized system that can be accessed by all U.S. Attorneys, as well as Justice Department litigating and law enforcement components to identify, investigate and prosecute fraud schemes.
“Unfortunately there are fraudsters out there who will try to use this public health emergency to scam the public and profit on the pandemic,” said U.S. Attorney Anderson. “As communities throughout Northern California take steps to limit the spread of COVID-19, we are working closely with our law enforcement partners to guard against fraud and bring swift justice to those who try to ply their scams in our district.”
Some examples of these schemes include:
- Individuals and businesses selling fake cures for COVID-19 online and engaging in other forms of fraud.
- Phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and Prevention.
- Malicious websites and apps that appear to share Coronavirus-related information to gain and lock access to your devices until payment is received.
- Seeking donations fraudulently for illegitimate or non-existent charitable organizations.
- Medical providers obtaining patient information for COVID-19 testing and then using that information to fraudulently bill for other tests and procedures.
In a memorandum to U.S. Attorneys issued March 19, Deputy Attorney General Jeffrey Rosen also directed each U.S. Attorney to appoint a Coronavirus Fraud Coordinator to serve as the legal counsel for the federal judicial district on matters relating to the Coronavirus, direct the prosecution of Coronavirus-related crimes, and to conduct outreach and awareness activities. The Northern District of California has appointed an Assistant U.S. Attorney to be a Coronavirus Fraud Coordinator who can be reached at 415-436-7200.
The NCDF can receive and enter complaints into a centralized system that can be accessed by all U.S. Attorneys, as well as Justice Department litigating and law enforcement components to identify, investigate, and prosecute fraud schemes. The NCDF coordinates complaints with 16 additional federal law enforcement agencies, as well as state Attorneys General and local authorities.
To find more about Department of Justice resources and information, please visit www.justice.gov/coronavirus.
Singaporean Shipping Company Fined $1.65M for Concealing Illegal Discharges of Oily WaterRead the Press Release
OAKLAND – Unix Line PTE Ltd., a Singapore-based shipping company, was sentenced today in federal court before U.S. District Court Judge Jon S. Tigar in Oakland, California, after previously pleading guilty to a violation of the Act to Prevent Pollution from Ships. Unix Line PTE Ltd. was sentenced to pay a fine of $1,650,000.00, placed on probation for a period of four years, and ordered to implement a comprehensive Environmental Compliance Plan as a special condition of probation.
U.S. Attorney David L. Anderson of the Northern District of California, Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Environment and Natural Resources Division and U.S. Coast Guard Investigative Service Special Agent in Charge Kelly S. Hoyle made the announcement.
In pleading guilty, Unix Line admitted that its crew members onboard the Zao Galaxy, a 16,408 gross-ton, ocean-going motor tanker, knowingly failed to record in the vessel’s oil record book the overboard discharge of oily bilge water without the use of required pollution-prevention equipment, during the vessel’s voyage from the Philippines to Richmond, California.
“The defendant’s crew members intentionally discharged oily bilge waste into the ocean on their voyage to California,” said U.S. Attorney Anderson. “Our district includes hundreds of miles of the beautiful Pacific coast, stretching from Monterey to Del Norte County. We will do our part to protect those natural resources and hold companies responsible when they fail to follow federal and international laws designed to protect our oceans from pollution.”
“The Coast Guard Investigative Service will continue to make criminal investigations that deter maritime organizations from breaking international and U. S. law designed to protect our finite natural marine resources a priority” said Kelly Hoyle, Special Agent in Charge Pacific Region of the Coast Guard Investigative Service.
On Oct. 24, 2019, Unix Line was indicted by a federal grand jury for obstruction of justice and a violation of the Act to Prevent Pollution from Ships. Under the plea agreement, Unix Line pled guilty to one count of a violation of the Act to Prevent Pollution from Ships.
According to the plea agreement, Unix Line is the operator of the Zao Galaxy, which set sail from the Philippines on Jan. 21, 2019, heading toward Richmond, Calif., carrying a cargo of palm oil. On Feb. 11, 2019, the Zao Galaxy arrived in Richmond, where it underwent a U.S. Coast Guard inspection and examination. Examiners discovered that during the voyage, a Unix Line-affiliated ship officer directed crew members to discharge oily bilge water overboard, using a configuration of drums, flexible pipes, and flanges to bypass the vessel’s oil water separator. The discharges were knowingly not recorded in the Zao Galaxy’s oil record book when it was presented to the U.S. Coast Guard during the vessel’s inspection.
Assistant United States Attorney Katherine Lloyd-Lovett and Special Assistant United States Attorney Andrew Briggs of the Northern District of California and Senior Trial Attorney Kenneth Nelson of the Environmental Crimes Section are prosecuting the case, with the assistance of Kay Konopaske and Katie Turner. The prosecution is the result of a year-long investigation by the Coast Guard Investigative Service and the Investigations Division of Coast Guard Sector San Francisco.
Oakland Man Sentenced to 36 Months for Being A Felon in Possession of A FirearmRead the Press Release
OAKLAND – Jamaal Myers was sentenced to 36 months in prison for being a felon in possession of a firearm, announced United States Attorney David L. Anderson and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) San Francisco Acting Special Agent in Charge Frederic Winston. The Honorable Jon S. Tigar, U.S. District Judge, handed down the sentence.
Myers, 42, of Oakland, Calif., pleaded guilty to the charge on November 8, 2019. According to his plea agreement, Myers admitted that, on June 15, 2019, in Oakland, he had a .45 caliber pistol, loaded with eleven rounds, in his possession. The pistol was tucked into the waistband of Myers’s pants while he was at a liquor store in Oakland, where the Oakland Police Department encountered him. Myers admitted that he knew at the time that previously he had been convicted of a number of felonies, including an August 30, 2017, conviction for carrying a loaded firearm in violation of California law, for which he had received a two-year prison sentence.
On July 25, 2019, a federal grand jury indicted Myers, charging him with being a felon in possession of a firearm and ammunition, in violation of 18 U.S.C. § 922(g)(1). Myers pleaded guilty to the charge.
The defendant is currently in federal custody. In addition to the prison term, Judge Tigar sentenced Myers to a three-year period of supervised release.
Assistant U.S. Attorney Ajay Krishnamurthy is prosecuting the case with the assistance of Lenora Hamilton. The prosecution is the result of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Oakland Police Department.
Former Uber Self-Driving Car Executive Signs Agreement to Plead Guilty to Theft of Trade Secrets from GoogleRead the Press Release
SAN JOSE - Anthony Scott Levandowski submitted documents today requesting that the court accept his plea of guilty to theft of trade secrets charges, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The documents include a request to William H. Alsup, United States District Judge, to accept a proposed plea agreement and a request to schedule a date for a sentencing hearing.
Levandowski, 40, of Marin County, worked in Google’s self-driving car program for approximately seven years. According to the proposed plea agreement, Levandowski acknowledged that during this time, he was aware his employment agreement required that he keep Google’s valuable non-public information confidential. He also knew that the non-public information related to Project Chauffeur was sensitive and subject to the confidentiality requirement. Nevertheless, while Levandowski was considering leaving Google, and prior to his departure in 2016, he obtained and stored thousands of files. Specifically, on December 11, 2015, Levandowski downloaded approximately 14,000 files from an internal, password-protected Google server known as “SVN,” which was hosted on Google’s network. Then, on or about December 14, 2015, he transferred those SVN files from his Google-issued laptop to his personal laptop. In addition, prior to his departure from Google, he downloaded a variety of files from a corporate Google Drive repository to his personal laptop. Levandowski has admitted that he intended to use the Google Drive files for his personal benefit.
Within months after Levandowski’s departure from Google, he created a new company that was then purchased by Uber. Levandowski admitted that while he was working for Google, he downloaded at least 20 files from Google Drive. Among the files downloaded between October 2015 and January 2016, was an internal tracking document entitled “Chauffeur TL weekly updates – Q4 2015.” The update contained a variety of details regarding the status of Google’s self-driving car program. Levandowski admitted he downloaded the file with the intent to use it for the benefit of himself and Uber and that he accessed the document after his resignation from Google. Levandowski acknowledged that the document qualified as a trade secret. In sum, Levandowski admitted a reasonable estimate of the loss attributed to his conduct is up to $1,500,000.
A federal grand jury indicted Lewandowski on August 15, 2019, charging him with 33 counts of theft and attempted theft of trade secrets, in violation of 18 U.S.C. § 1832. If the court accepts the plea agreement, Levandowski will plead guilty to one count and the Court will dismiss the remaining counts at sentencing.
Should the court accept his plea, Levandowski will face a maximum sentence of 10 years in prison and a fine of $250,000, plus 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 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.
MS-13 Gang Member Pleads Guilty to Murder and Extortion ChargesRead the Press Release
SAN FRANCISCO – Alexander Martinez-Flores, a/k/a Pocar, pleaded guilty to using a firearm to cause murder, conspiracy to commit murder and extortion, and racketeering conspiracy in connection with his role as a member and former leader of a local MS-13 gang clique, announced United States Attorney David L. Anderson and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King. The guilty plea was received by the Honorable Edward J. Davila, United States District Judge.
The transnational street gang La Mara Salvatrucha, also known as MS-13, has local chapters, or “cliques,” throughout the world, including El Salvador, Honduras, Mexico, and the United States. MS-13 members and associates engage in crimes such as murder, narcotics trafficking, extortion, and obstruction of justice. MS-13 members enforce gang rules and protect gang territory with violence, including murder. The Santa Cruz Salvatrucha Locos (SCSL) is an MS-13 clique that operates in and around Santa Cruz, California.
According to his plea agreement, Martinez-Flores, 29, of Santa Cruz, Calif., was a member of the SCSL clique of the MS-13 gang from at least January 2013 to February 2017, and the first-in-command from about February to August 2014. Martinez-Flores and SCSL members engaged in violence, drug trafficking and extortion. Martinez-Flores coordinated with MS-13 members in El Salvador and other places to carry out the directives of the gang’s leadership in and around Santa Cruz. Martinez-Flores directed how SCSL money was maintained and spent.
The plea agreement describes Martinez-Flores’ role in patrolling SCSL’s claimed gang territory in Santa Cruz. Martinez-Flores admitted in the plea agreement that he and other gang members patrolled their territory with firearms and knives and beat up, stabbed, threatened or shot rival gang members in order to maintain control over this turf. Martinez-Flores admitted that he hunted for rivals to kill on many occasions.
In the plea agreement, Martinez-Flores admitted that he was one of the shooters in a murder committed by SCSL gang members. Martinez-Flores admitted that in April 2016 the gang discussed seeking approval from El Salvador to kill a suspected rival gang member. The murder was approved and Martinez-Flores was one of the gang members tasked with killing the victim. On September 22, 2016, the victim was shot and killed, and Martinez-Flores was one of the shooters. Martinez-Flores celebrated the murder with other MS-13 members.
The plea agreement also describes Martinez-Flores’ role in supporting SCSL’s extortion and drug trafficking activities. The plea agreement describes how on one occasion in July 2016, Martinez-Flores collected an extortion payment—the “monthly fee due to SCSL”—from a local drug dealer.
A federal grand jury returned a second superseding indictment against Martinez-Flores and others on August 16, 2018. The indictment charged Martinez-Flores with one count of racketeering conspiracy, in violation of 18 U.S.C. § 1962(d); one count of conspiracy to commit extortion by force, in violation of 18 U.S.C. § 1951(a); one count of conspiracy to commit murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(5); one count of murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(1); one count of use of a firearm in furtherance of a crime of violence, in violation of 18 U.S.C. § 924(c)(1)(A); and one count of use of a firearm causing murder, in violation of 18 U.S.C. § 924(j)(1)(A). Martinez-Flores pleaded guilty to the racketeering conspiracy, conspiracies to commit extortion and murder, and use of a firearm causing murder counts. If Martinez-Flores complies with and the court accepts the plea agreement, the remaining counts will be dismissed at sentencing.
Judge Davila scheduled Martinez-Flores’ sentencing hearing for June 8, 2020, at 1:30 p.m. Pursuant to the terms of his plea agreement, Martinez-Flores has agreed that a reasonable and appropriate disposition of his case would include a term of 30 years in prison and a five-year term of supervised release. The court also may order payment of a fine and restitution, 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.
Nine of the other charged defendants have already pleaded guilty for their roles in the SCSL and MS-13 criminal enterprise and seven have been sentenced as reflected in the following chart:
Name
Charges
Sentence
Ismael Alvarenga-Rivera, a/k/a Casper
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Commit Extortion by Force, 18 U.S.C. § 1951(a)
Sentenced on September 23, 2019, to 90 months in prison
Willfredo Ayala-Garcia, a/k/a Chino
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Commit Extortion by Force, 18 U.S.C. § 1951(a)
Sentenced on September 17, 2019, to 80 months in prison
Jose David Abrego-Galdamez, a/k/a Largo
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Commit Extortion by Force, 18 U.S.C. § 1951(a)
Sentenced on September 16, 2019, to 36 months in prison, consecutive to his sentence in CR 17-567 BLF
Gerber Morales, a/k/a Choco
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Possess with Intent to Distribute 50 Grams or More of Methamphetamine, 21 U.S.C. §§ 846, 841(a)(1), and 841(b)(1)(A)(viii)
Sentenced on September 17, 2019, to 72 months in prison
Emilio Escobar-Albarnga, a/k/a Diablo
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Possess with Intent to Distribute 50 Grams or More of Methamphetamine, 21 U.S.C. §§ 846, 841(a)(1), and 841(b)(1)(A)(viii)
Sentenced on January 20, 2020, to 60 months in prison
Josue Alcedis Escobar Cerritos, a/k/a Penguino
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Possess with Intent to Distribute 50 Grams or More of Methamphetamine, 21 U.S.C. §§ 846, 841(a)(1), and 841(b)(1)(A)(viii)
Sentenced on July 30, 2019, to 72 months in prison
Melvin Lopez, a/k/a Sharky
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Commit Extortion by Force, 18 U.S.C. § 1951(a); Conspiracy to Commit Murder, 18 U.S.C. § 1959(a)(5)
Sentenced on January 27, 2020, to 120 months in prison
Tomas Rivera, a/k/a Profugo, a/k/a Caballo, a/k/a Jonas Portillo Escobar
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Commit Extortion by Force, 18 U.S.C. § 1951(a); Conspiracy to Commit Murder, 18 U.S.C. § 1959(a)(5).
Scheduled to be sentenced on April 13, 2020
Velarmino Escobar-Ayala, a/k/a Meduza
Racketeering Conspiracy, 18 U.S.C. § 1962(d); Conspiracy to Commit Extortion by Force, 18 U.S.C. § 1951(a); Conspiracy to Commit Murder, 18 U.S.C. § 1959(a)(5)
Scheduled to be sentenced on May 4, 2020
The United States Attorney’s Office’s Organized Crime Strike Force is prosecuting the case. This prosecution is the result of an investigation conducted by HSI with the assistance of the Santa Cruz Police Department.
Hayward Resident Sentenced to Four Years for Acting as an Agent of the People’s Republic of ChinaRead the Press Release
Xuehua (Edward) Peng aka Edward Peng was sentenced yesterday to 48 months in prison, and ordered to pay a $30,000 fine for acting as an agent of the People’s Republic of China’s Ministry of State Security (MSS) in connection with a scheme to conduct pickups known as “dead drops” and transport Secure Digital (SD) cards from a source in the United States to the MSS operatives in China, announced the Department of Justice.
“This case exposed one of the ways that Chinese intelligence officers work to collect classified information from the United States without having to step foot in this country. Peng acted as an agent of the Chinese Ministry of State Security in the United States, conducting numerous dead drops here on their behalf and delivering classified information to them in China. He pled guilty and is now being held accountable for his criminal actions and his betrayal of his oath of citizenship,” said Assistant Attorney General for National Security John C. Demers. “This case is but one example of the Chinese government’s multi-faceted espionage efforts and it both illustrates our determination to thwart those efforts and serves as a warning to other potential co-optees that we will find you and ensure you are punished.”
“Today Xuehua Peng suffers the consequences of acting in the United States at the direction of a foreign government,” said U.S. Attorney David L. Anderson for the Northern District of California. “This day of reckoning comes from Peng’s decision to execute dead drops, deliver payments, and personally carry to Beijing, China, secure digital cards containing classified information related to the national security of the United States. Peng will now spend years in prison for compromising the security of the United States.”
"This sentence serves as a powerful deterrent to both Communist China, who will continue to attempt to recruit others to act on its behalf, and those who attempt to carry out such tasks at the direction of its intelligence services” said FBI San Francisco Special Agent in Charge John F. Bennett. “These actions are illegal and inexcusable. By working jointly with our partners, we will never stop our fight against hostile intelligence services and our determination to protect the national security of the United States should never be in doubt.”
According to his Nov. 25, 2019, guilty plea, Peng, a 56 year-old U.S. citizen living in Hayward, Calif., acted at the direction and under the control of MSS officials in China in retrieving classified information passed to him and leaving money behind for the source. Peng admitted that in March 2015, an official from the People’s Republic of China (PRC) introduced himself to Peng while Peng was on a business trip to China. The official asked Peng to use his citizenship in the United States to assist the official with matters of interest to the PRC. Peng eventually came to understand that the official was employed as an intelligence or security services officer of the PRC, specifically of the Ministry of State Security (MSS), and nevertheless agreed to perform activities in the United States on behalf of the PRC. Peng’s plea acknowledged that he knew he was acting on behalf of the government of the PRC.
Specifically, Peng admitted that in March of 2015, he received instructions regarding how to use dead drops to exchange money for items to deliver to the PRC. Peng admitted that the official directed him to locate and reserve hotel rooms where he was to leave money and then depart for several hours. The official instructed Peng to return later and retrieve small electronic storage devices that the source would leave for him. Thereafter, Peng was to fly to the PRC and deliver the retrieved devices to the PRC official. Peng never met nor interacted with the individual who left the devices for him and was instructed not to access the information stored on the SD cards.
According to the Plea, Peng participated in five dead drops involving drop-offs of cash and/or pick-ups of SD cards, after a practice run in June 2015. After he participated in two dead drops in the San Francisco Bay Area between October 2015 and April 2016, Peng began making dead drops in Columbus, Georgia. After three dead drops in Georgia, Peng informed the PRC official that he wanted to resume dead drops in the San Francisco Bay Area. Peng did not complete a seventh dead drop before his arrest by federal authorities in September 2019.
Federal law requires people acting within the United States on behalf of a foreign government to file with the Attorney General a notice and documentation of their activities. Peng acknowledged that he never filed with the Attorney General of the United States any notice or documentation of his actions as an agent of the People’s Republic of China or the Ministry of State Security. Peng also admitted that the PRC official paid him at least $30,000 for the acts he performed as a courier for the MSS.
The 48 month sentence was handed down by The Honorable Haywood S. Gilliam, U.S. District Court Judge, following Peng’s November 25, 2019 plea of guilty to an Information charging one count of acting as an agent of a foreign government without notice to the Attorney General, in violation of 18 U.S.C. § 951. Peng has been in custody since his arrest on Sept. 27, 2019.
This case is being prosecuted by the Special Prosecutions Section of the United States Attorney’s Office for the Northern District of California and the Counterintelligence and Export Control Section of the Department of Justice, National Security Division. The prosecution is the result of an investigation by the FBI and Internal Revenue Service-Criminal Investigation.