Northern District of California
Press releases recorded for this federal judicial district.
Bay Area Business Owner Pleads Guilty to Defrauding United States of More Than $500,000 of Employment TaxesRead the Press Release
SAN FRANCISCO – Herminigilda Manuel pleaded guilty today in federal court to willfully failing to account for and pay over federal employment taxes, announced United States Attorney David L. Anderson and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Kareem Carter. The plea was accepted by the Honorable Richard Seeborg, U.S. District Judge.
Manuel, 62, of San Leandro, Calif., is the former owner of three assisted living facilities in the San Francisco Bay Area. In pleading guilty, Manuel admitted that from 2010 through 2013, she willfully failed to account for and pay more than $500,000 of employment taxes (i.e., federal income, Social Security, and Medicare taxes) that were owed by the assisted living facilities. Further, Manuel admitted that to conceal her fraud, she caused her assisted living facilities to keep two sets of payroll accounting records. One set of records consisted of wages paid to employees and taxes withheld from those wages that were reported to the IRS. The second set of accounting records consisted of additional wages paid to employees that were not reported to the IRS. The employment taxes due on the additional wages totaled $512,000.
Manuel was charged by information on February 8, 2019, with twelve counts of willful failure to account for and pay over employment taxes, in violation of 26 U.S.C. § 7202. Under the plea agreement, Manuel pleaded guilty to one count; if Manuel complies with the plea agreement, the remaining counts will be dismissed at sentencing.
Judge Seeborg scheduled Manuel’s sentencing hearing for June 11, 2019 at 2:30 p.m. The maximum statutory penalty for a violation of 26 U.S.C. § 7202 is five years in prison and a fine of $250,000. Additional periods of supervised release, fines, and restitution also may be imposed, however, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Jose A. Olivera is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
San Francisco Man to Face Federal Firearm ChargesRead the Press Release
SAN FRANCISCO – A federal grand jury indicted Michael Sandy Abadilla for possessing illegal and unregistered firearms and equipment, announced United States Attorney David L. Anderson and United States Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) Special Agent in Charge Rayfield Roundtree. The indictment was filed February 12, 2019, and unsealed today.
According to the indictment, on January 16, 2019, Abadilla, 52, of San Francisco, possessed five full automatic conversion switches. Full automatic conversion switches are mechanical parts designed to convert a firearm from semi-automatic to fully-automatic, and as such constitute “machineguns” as defined by federal law. The indictment also charges that the full automatic conversion switches were not registered to the defendant in the National Firearms Registration and Transfer Record (“NFRTR”). In addition, Abadilla was in possession of two firearm silencers that also were not registered to him in the NFRTR. Abadilla is charged with one count of possession of illegal machineguns, in violation of 18 U.S.C. § 922(o), and two counts of possession of unregistered firearms, in violation of 26 U.S.C. § 5861(d).
An indictment merely alleges that a crime has been committed and Abadilla, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt. If convicted of the Section 922(o) violation, Abadilla faces a maximum statutory penalty of 10 years in prison and a fine of $250,000. If convicted of either of the Section 5861(d) violations, Abadilla faces a maximum statutory penalty of 10 years in prison and a fine of $10,000, per count.
Abadilla was arrested yesterday and made an initial appearance before U.S. Magistrate Judge Laurel Beeler today. Magistrate Judge Beeler scheduled Abadilla’s next appearance for February 20, 2019, for a detention hearing.
Assistant United States Attorney Nicholas Walsh is prosecuting this case with assistance from Margoth Turcios. This case is the result of an investigation by the ATF.
Northern District of California Collects over $113 Million in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2018Read the Press Release
SAN FRANCISCO –U.S. Attorney David L. Anderson announced today that the Northern District of California collected $113,842,340.66 in criminal and civil actions in Fiscal Year 2018. Of this amount, $103,764,722.65 was collected in criminal actions and $2,354,162.58 was collected in civil actions.
Additionally, the Northern District of California worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $2,102,220,943.25 in cases pursued jointly. Of this amount, $2,354,162.58 was collected in criminal actions and $2,099,866,780.67 was collected in civil actions.
Overall, the Justice Department collected nearly $15 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2018. The $14,839,821,650 in collections in FY 2018 represents nearly seven times the appropriated $2.13 billion ($2,136,750,000) budget for the 94 U.S. Attorneys’ offices.
“The extraordinary work of the people employed in this office can never be quantified in dollars alone,” said U.S. Attorney Anderson. “Still, it is gratifying to know that during this past fiscal year, the employees of this office had a direct hand in retrieving funds in excess of the budget of the 94 United States Attorneys’ Offices combined. I am proud of the work of this office and we will continue to pursue vigorously all financial claims that arise from crime and other violations of federal law.”
“The men and women of the U.S. Attorneys’ offices across the country work diligently, day in and day out, to see that the citizens of our nation receive justice. The money that we are able to recover for victims and this country as a whole is a direct result of their hard work,” Director James A. Crowell, IV, Executive Office for U.S. Attorneys.
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims Fund, which distributes the funds collected to federal and state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, the Department of Health and Human Services, the Internal Revenue Service, the Small Business Administration and the Department of Education.
San Francisco Man Sentenced to Twelve and A Half Years in Prison for Scheme to Use Internet to Entice A Minor to Engage in Sexual ActivityRead the Press Release
SAN FRANCISCO – Roger Dale Boshers was sentenced today to 150 months in prison for coercing and enticing a minor to engage in sexual activity, announced United States Attorney David L. Anderson and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin. The sentence was handed down by the Honorable William H. Orrick, United States District Judge.
Boshers, 64, of Bethel Island, Calif., pleaded guilty to the charge on November 29, 2018. According to the plea agreement, Boshers admitted that between April 6, 2018, and April 11, 2018, he exchanged messages online with a person he believed was a 14-year-old girl. Boshers sent this person sexually explicit messages and a photograph of his genitals. Ultimately, Boshers arranged to meet the purported 14-year-old girl on April 11, 2018, to engage in sexual activity. When Boshers arrived at the prearranged meeting location, he was stopped by law enforcement officers and placed under arrest. Boshers later discovered that the person he had exchanged messages with was in fact an undercover police officer.
In addition, Boshers acknowledged that on October 19, 2017, he possessed multiple electronic devices, including three laptops and several hard drives, on which he stored images of females he believed to be under the age of eighteen engaged in sexually explicit conduct. Boshers also admitted that as early as August 31, 2017, he used an internet-based messaging application to distribute at least three pictures of children engaged in sexually explicit activity.
On May 31, 2018, a federal grand jury returned a three-count indictment charging Boshers with one count of distribution of child pornography, in violation of 18 U.S.C. § 2252(a)(2) and (b)(1); one count of possession of child pornography, in violation of 18 U.S.C. §§ 2252(a)(4)(B) and (b)(2); and one count of coercion and enticement of a minor to engage in sexual activity, in violation of 18 U.S.C. § 2422(b). Boshers pleaded guilty to the coercion and enticement charge and the other two charges were dismissed. As a condition of his plea agreement, Boshers was ordered to pay restitution to the victims identified in the child pornography counts.
In addition to the prison term, Judge Orrick ordered that Boshers serve a life term of supervised release and to register as a sex offender. Boshers has been in custody since his April 11, 2018, arrest and will begin serving his sentence immediately.
Assistant United States Attorney Sloan Heffron is prosecuting the case with the assistance of Kimberly Richardson. This prosecution is the result of an investigation by Homeland Security Investigations, the San Francisco Police Department, the Contra Costa County District Attorney’s Office, the Contra Costa County Sheriff’s Office, and the Silicon Valley Internet Crimes Against Children Task Force.
Members of the public who have information regarding suspected child predators or suspicious activity should contact HSI through the toll-free Tip Line at 1-866-DHS-2-ICE or by completing its online tip form at https://www.ice.gov/webform/hsi-tip-form. Both are staffed around the clock by investigators. Suspected child sexual exploitation or missing children may also be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.
Bay Area Couple Indicted for Allegedly Stealing Mail Containing Credit Cards and Drivers LicensesRead the Press Release
SAN FRANCISCO – Tyler Goforth and Jesslyn Felix were indicted on charges they engaged in a scheme to steal the mail from a San Francisco condominium, announced United States Attorney David L. Anderson and U.S. Postal Inspection Service Inspector in Charge Rafael Nuñez. The indictment was filed January 15, 2019, and unsealed today.
According to the indictment, from August of 2017 to February of 2018, Goforth and Felix, both 35 and residing in Walnut Creek, entered a 600-condominium apartment complex in San Francisco to steal the residents’ mail. The defendants allegedly used an electronic key fob to enter the complex and then used a tool to unlock and open the door to the residents’ mailboxes. The defendants then activated credit cards, debit cards, and gift cards that they stole from the mailboxes to make purchases for their own benefit.
The indictment describes a number of purchases made with the stolen credit, debit, and gift cards. For example, the indictment alleges that between December 12, 2017 and January 9, 2018, over $800 was used to make purchases at the Sheraton Sonoma County Hotel and another $700 was used to make purchases at CVS pharmacies and Target stores. Further, the indictment alleges on February 15, 2018, the defendants were in possession of more than five authentic drivers licenses that were not issued for their use.
In sum, each defendant is charged with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; five counts of wire fraud, in violation of 1343; six counts of theft of mail, in violation of 18 U.S.C. § 1708; one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A; and one count of possession with intent to use or transfer five or more documents or authentication features, in violation of 18 U.S.C. § 1028(a)(3).
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of 20 years in prison and $250,000 on each fraud and conspiracy count, 5 years in prison and $250,000 on each mail theft count; 5 years in prison on the false document count, and a mandatory 2 years in prison if convicted of the aggravated identity theft count. In addition, the court also may order an additional term of supervised release, fines or other assessments, and restitution, if appropriate. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Goforth made his initial appearance this morning before U.S. Magistrate Judge Beeler. His next scheduled appearance is scheduled for February 28, 2019, before Magistrate Judge Beeler for a detention hearing. Felix currently is in state custody on unrelated charges; her initial appearance has not yet been scheduled.
Assistant U.S. Attorney Ross Weingarten is prosecuting this case with the assistance of Marina Ponomarchuk. This prosecution is the result of an investigation by the U.S. Postal Inspection Service.
Serial Armed Robber Sentenced to Five and A Half Years in PrisonRead the Press Release
SAN FRANCISCO – Harwood Francis McCovey was sentenced today to 66 months in prison for committing multiple armed robberies, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John Bennett. The sentence was handed down by the Honorable Vince Chhabria, United States District Judge.
McCovey, 34, of Hoopa, Calif., pleaded guilty to the robberies on October 16, 2018. According to his plea agreement, in the summer of 2016, McCovey robbed the following three banks and gas station, all while using a dangerous weapon:
- On July 20, 2016, McCovey robbed a bank in Eureka.
- On July 27, 2016, McCovey robbed a credit union in Eureka.
- On July 31, 2016, McCovey robbed a gas station in McKinleyville and absconded with money, cigarettes, and lighters.
- On August 4, 2016, McCovey returned to the credit union in Eureka that he had robbed on July 27, 2016, and robbed it again.
- On August 12, 2016, McCovey robbed a bank in Fortuna.
A federal grand jury indicted McCovey on March 27, 2018, charging him with four counts of armed bank robbery, in violation of 18 U.S.C. § 2113(a) and (d), and one count of robbery affecting interstate commerce (Hobbs Act robbery), in violation of 18 U.S.C. § 1951(a). McCovey pleaded guilty to all five counts.
In addition to the prison term, Judge Chhabria ordered McCovey to serve 5 years of supervised release and to pay $38,486.75 in restitution. McCovey has been in custody since his arrest and will begin serving his sentence immediately.
Assistant U.S. Attorney Sailaja Paidipaty is prosecuting the case with the assistance of Marina Ponomarchuk. The prosecution is the result of investigations by the Eureka Police Department, the Fortuna Police Department, and the Humboldt County Sheriff’s Office with support from the Federal Bureau of Investigation’s Eureka Resident Agency.
Petaluma Drug Trafficker Sentenced to Five Years in PrisonRead the Press Release
SAN FRANCISCO – Steven Roberson was sentenced today to 60 months in prison for possessing heroin with intent to distribute the drug, announced United States Attorney David L. Anderson and Drug Enforcement Administration Special Agent in Charge Chris Nielsen. On January 30, 2019, Roberson’s codefendant, Kelly Olson, was sentenced to 64 months in prison for her role in the scheme. The sentences were handed down by the Honorable Maxine M. Chesney, U.S. District Judge.
Roberson, 32, of Petaluma, Calif., pleaded guilty to the charge on October 10, 2018. Olson, 29, also of Petaluma, pleaded guilty about a week later, on October 18, 2018. According to the plea agreements, in January of 2018, law enforcement officers observed Roberson conducting hand-to-hand drug transactions with drug customers in the parking lot of a Safeway store in Petaluma. On February 19, 2018, Roberson and Olson drove together to Sacramento to obtain heroin from a supplier. While the two were driving back to Petaluma, law enforcement officers stopped and eventually searched the car where, in the trunk, officers found heroin, digital scales, and plastic baggies. Both defendants admitted they knew there was heroin in the car and that they possessed it with intent to distribute it. In sum, 156.8 grams of heroin was found in the car.
On May 15, 2018, a federal grand jury handed down a two-count indictment charging each defendant with one count of conspiracy to distribute and possess with intent to distribute heroin, in violation of 21 U.S.C. §§ 846, and 841, and one count of possession with intent to distribute heroin, in violation of 21 U.S.C. § 841. The defendants each pleaded guilty to the possession with intent to distribute count and the conspiracy charges were dismissed.
In addition to the prison terms, Judge Chesney sentenced each defendant to serve a 5-year term of supervised release. Defendants currently are in custody and are beginning to serve their prison terms immediately upon sentencing.
Assistant U.S. Attorney Ravi Narayan is prosecuting the case with the assistance of Kimberly Richardson. The prosecution is the result of an investigation by the DEA, together with Petaluma Police Department
Two Men Indicted in “SIM Swapping” Scheme to Steal CryptocurrencyRead the Press Release
SAN FRANCISCO - A federal grand jury indicted Ahmad Wagaafe Hared and Matthew Gene Ditman with conspiracy to commit computer fraud and abuse, conspiracy to commit access device fraud, extortion, and aggravated identity theft, announced United States Attorney David L. Anderson and Federal Bureau of Investigation, Special Agent in Charge John Bennett.
According to the indictment unsealed today, Hared, 21, of Tucson, Ariz., and Ditman, 23, of Las Vegas, Nev., engaged in a scheme to obtain by fraud and extortion cryptocurrencies and other money and property owned and controlled by executives of cryptocurrency-related companies and cryptocurrency investors. The indictment alleges Hared, Ditman, and their co-conspirators used fraud, deception, and social engineering techniques to induce representatives of cellphone service providers to provide information about the SIM cards of the conspirators’ victims. A SIM card—short for Subscriber Identity Module or Subscriber Identification Module—is a technology used to identify and authenticate subscribers on mobile phone devices. The conspirators allegedly convinced the representatives of cellphone service providers to transfer or port cellphone numbers from SIM cards in the devices possessed by victims to SIM cards in devices possessed by the conspirators, a practice known as SIM swapping. The indictment further alleges that after Hared, Ditman, and others gained control of victims’ cellphone numbers, they used additional deceptive techniques to gain access to email, electronic storage, and other accounts of victims and ultimately to cryptocurrency accounts of victims. Hared, Ditman, and their co-conspirators also extorted victims of the SIM swapping scheme.
Hared was arrested in Tucson and made his initial appearance in the District of Arizona on January 31, 2019. He was released on a $100,000 bond. His next scheduled appearance is at 9:30 a.m. on February 13, 2019, before the Honorable Laurel Beeler, U.S. Magistrate Court Judge.
Ditman was arrested in Las Vegas and made his initial appearance in the District of Nevada on January 31, 2019. He was released on bond. His next scheduled appearance is at 9:30 a.m. on February 6, 2019, before Judge Beeler.
The indictment charges the defendants with the following crimes and, if found guilty, they are subject to the following maximum statutory penalties:
Count
Charge
Maximum Penalties
One
18 U.S.C. § 1030(b) – Conspiracy to Commit Computer Fraud and Abuse
Five years of imprisonment; $250,000 fine or not more than twice the gross gain or twice the gross loss; three years of supervised release; $100 special assessment; forfeiture; and restitution
Two
18 U.S.C. § 1030(a)(7) – Threatening to Damage a Protected Computer
Five years of imprisonment; $250,000 fine or not more than twice the gross gain or twice the gross loss; three years of supervised release; $100 special assessment; forfeiture; and restitution
Three
18 U.S.C. § 875(d) – Interstate Communications with Intent to Extort
Two years of imprisonment; $250,000 fine or not more than twice the gross gain or twice the gross loss; one year of supervised release; $100 special assessment; forfeiture; and restitution
Four
18 U.S.C. § 1029(b)(2) – Conspiracy to Commit Access Device Fraud
Five years of imprisonment; $250,000 fine or not more than twice the gross gain or twice the gross loss; three years of supervised release; $100 special assessment; forfeiture; and restitution
Five
18 U.S.C. § 1028A(a)(1) – Aggravated Identity Theft
Two-year mandatory minimum consecutive sentence
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Robert S. Leach is prosecuting the case with the assistance of Mimi Lam and Rebecca Shelton. The prosecution is the result of an investigation by the FBI.
South Bay Resident Pleads Guilty to Money Laundering and Witness Tampering in Connection with Scheme to Sell Stolen Computer PartsRead the Press Release
SAN JOSE – Kenneth Tam pleaded guilty today to money laundering and witness tampering in connection with a scheme to sell stolen computer parts announced United States Attorney David L. Anderson and Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI), Kareem Carter. The plea was accepted by the Honorable Edward J. Davila, U.S. District Judge.
According to the plea agreement, Tam, 59, formerly of San Jose, admitted that from January 2006 through July 2010, he was an employee of a San Francisco Bay Area manufacturer of computer parts. During that period, and until at least the end of 2010, Tam knowingly obtained stolen merchandise from his employer and sold it to his co-conspirator, Cuong Cao Dang. Dang owned a company whose business was overwhelmingly that of buying and selling merchandise stolen from Tam’s employer. Tam admitted that in most instances, he would take cash from Dang as payment for delivery of stolen computer parts. Tam further admitted that he would deposit the proceeds from the stolen equipment into accounts owned by a foreign national who had given Tam power-of-attorney over the accounts.
Tam’s plea agreement describes various aspects of the money-laundering scheme. For example, on February 3, 2010, Dang provided Tam with a check for $500,000 made out to the foreign national whose name Tam was using as the nominal owner of the accounts. The check was provided to Tam for payment of previously provided stolen parts, as well as in pre-payment for additional stolen parts that Tam planned to provide. Nevertheless, Tam instructed Dang to write “loan” on the memo line of the check; this was an effort to disguise the true purpose of the payment. Then, after Tam learned there was an investigation into Dang’s company, Tam gave Dang a backdated check for $500,000 to make it appear as though a loan was made and re-paid.
Tam also admitted various aspects of his scheme to tamper with witnesses. For example, Tam told Dang that he would lie to his employer and to any investigators about his knowledge and involvement with Dang and Dang’s company. Tam also contacted the foreign national who owned the accounts in which Tam deposited the funds from the stolen equipment; Tam provided the foreign national with a false cover story to use if she was contacted by law enforcement agents investigating the accounts.
On October 26, 2017, a federal grand jury handed down a superseding indictment charging Tam with two counts of witness tampering, in violation of 18 U.S.C. § 1512(b)(1), as well as one count each of conspiracy to commit mail fraud, in violation of 18 U.S.C. 1349; money laundering, in violation of 18 U.S.C. § 1956; structuring financial transactions, in violation of 31 U.S.C. § 5324(a)(1) and (a)(3); making a false statement to government agents, in violation of 18 U.S.C. § 1001; and contempt, in violation of 18 U.S.C.§ 401(3). Tam pleaded guilty to one count of money laundering and one count of witness tampering. The remaining counts will be dismissed at sentencing if Tam complies with the terms of the plea agreement.
Judge Davila scheduled Tam’s sentencing for May 6, 2019. Tam faces a maximum sentence of 20 years of imprisonment, and a fine of $500,000 for the money laundering count and a maximum sentence of up to $250,000 for the witness tampering count. However, the court will consider the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553, prior to imposing a sentence.
On December 11, 2015, Dang pleaded guilty for his role in the scheme and on October 31, 2017, Judge Davila sentenced Dang to 90 months in prison to be followed by three years of supervised release.
Assistant United States Attorneys Amie Rooney and Robert Leach are prosecuting the case with the assistance of Lakisha Holliman and Elise Etter. The prosecution is the result of an investigation by the IRS-CI and the Santa Clara REACT Task Force.
Former East Bay Resident Sentenced to over 7 Years in Prison for Being A Felon in Possession of A FirearmRead the Press Release
OAKLAND – Ray Lee Howard was sentenced today to 92 months in prison for being a felon in possession of a firearm and ammunition, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The Honorable Haywood S. Gilliam, Jr., U.S. District Judge, handed down the sentence.
Howard, 47, previously of Oakland, pleaded guilty to the charge on October 23, 2018. According to his plea agreement, Howard admitted that on July 20, 2018, he brought a loaded semi-automatic assault rifle into the residence of a woman with whom, pursuant to a protective order, he was prohibited from having contact. Howard also was not permitted to possess firearms and ammunition because he previously had been convicted of felonies. The assault rifle included a magazine loaded with nine rounds of .223 caliber bullets. Howard acknowledged that he concealed the rifle and magazine in a black fabric guitar case that he brought into the woman’s home.
On August 23, 2018, a federal grand jury indicted Howard charging him with one count of being a felon in possession of a firearm and ammunition, in violation of 18 U.S.C. § 922(g)(1). Howard pleaded guilty to the charge.
Judge Gilliam also sentenced the defendant to a three-year period of supervised release to follow the prison term. The defendant currently is in custody and will begin serving the sentence immediately.
Assistant U.S. Attorney Thomas Green is prosecuting the case with the assistance of Noble Hughes and Elyza Delgado. The prosecution is the result of an investigation by the FBI.
Citrus Heights Resident Sentenced to Two Years in Prison for EmbezzlementRead the Press Release
OAKLAND – Susan Elizabeth Kyle was sentenced this morning to 24 months in prison for embezzlement of money from a labor organization by an officer, announced United States Attorney David L. Anderson and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge.
Kyle, 61, now living in Citrus Heights, Calif., pleaded guilty to the charge on October 29, 2018. According to her plea agreement, Kyle admitted that while employed as the Treasurer of American Federation of State, County and Municipal Employees Local 2428, the union for East Bay Regional Park District employees, she used her Treasurer position to redirect union funds to accounts that she controlled. As Treasurer, Kyle was the signatory of Local 2428’s bank account. Kyle would verbally authorize the Local 2428’s payroll processing company to issue payments to cover the union’s payroll expenses. Kyle admitted that from 2008 to 2014, while she managed the Local 2428’s accounts, she told the Local 2428’s payroll processing company to issue unauthorized payments to herself on a weekly basis. Then, to conceal her fraud, she prepared reports that did not reflect the true expenditures. Kyle admitted that she stole at least $490,338 from the Union as a result of this scheme.
In addition, as part of the plea agreement, Kyle admitted that she abused her position of trust as Treasurer of the Local 2428 Union.
On October 5, 2018, the United States Attorney’s Office charged Kyle by Information with one count of embezzlement of money from a labor organization by an officer, in violation of 29 U.S.C. § 501(c). Kyle pleaded guilty to the charge.
In addition to the prison term, Judge Gilliam ordered Kyle to pay $490,338 in restitution to the Local 2428 Union. At the sentencing hearing, Judge Gilliam recognized the “devastating effect [Kyle’s crime had] on the Union” and noted that Kyle caused a “massive amount of harm.” Judge Gilliam ordered Kyle to serve 36 months of supervised release following her prison term. Judge Gilliam ordered Kyle to self-surrender on or before March 18, 2019, to begin serving her prison term.
Assistant United States Attorney Christina McCall is prosecuting this case with the assistance of Vanessa Quant and Elyza Delgado. This prosecution is the result of an investigation by the FBI.
Bay Area Doctor Charged with Conspiracy to Commit Mail Fraud in Connection with Disability Fraud SchemeRead the Press Release
SAN FRANCISCO - A federal grand jury indicted George David and Linda Nguyen with conspiracy to commit mail fraud and substantive mail fraud, announced United States Attorney David L. Anderson and Federal Bureau of Investigation, Special Agent in Charge John Bennett.
According to the indictment filed January 29, 2019, and unsealed today, David, 78, a San Francisco physician, and Nguyen, 66, 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 indictment, David provided fraudulent Physician/Practitioner Certifications to support fraudulent SDI applications for non-disabled claimants. In addition, the indictment alleges that Nguyen facilitated the fraud by assisting non-disabled persons with the execution and submission of fraudulent documents. The indictment further alleges that Nguyen charged the non-disabled persons for processing their fraudulent applications. In sum, the defendants each were charged 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.
The defendants were arrested this morning and made their initial appearances before U.S. Magistrate Judge Donna M. Ryu. Both defendants were released on bond. Magistrate Judge Ryu scheduled David’s and Nguyen’s next appearances for February 8 and February 15, 2019, respectively, for arraignment and identification of counsel.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If found guilty, the defendants face a maximum statutory sentence of 20 years in prison for each count in the indictment. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Special Assistant U.S. Attorney Christopher Vieira is prosecuting the case with the assistance of Kimberly Richardson. The prosecution is the result of an investigation by the FBI and Social Security Administration Office of the Inspector General.
Former San Pablo Resident Pleads Guilty to Filing False Tax ReturnsRead the Press Release
SAN FRANCISCO – Marcus Wilson pleaded guilty in federal court in San Francisco today to filing a false claim with the Internal Revenue Service, announced United States Attorney David L. Anderson and Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI), Kareem Carter. The plea agreement was accepted by the Honorable Jon S. Tigar, U.S. District Judge.
In pleading guilty, Wilson, 32, formerly of San Pablo, admitted that during 2011 and 2012 he filed numerous false tax returns on behalf of others. Wilson admitted he told people that they may qualify for “Obama Stimulus” or “Renter’s Rebates” if they had not filed any tax return in a given year. In reliance on his representations, the individuals provided Wilson with information sufficient for him to file a tax return on their behalf. Nevertheless, the individuals generally did not provide any financial or other tax-related information; instead, Wilson falsified information regarding the individuals’ wage and business income so he could obtain refunds from the IRS. Wilson admitted he caused the IRS to fund over $1 million worth of refunds to numerous individuals for tax year 2011 by presenting tax returns he knew contained false information.
A federal grand jury indicted Wilson on January 17, 2017. He was charged with one count of conspiracy to file false claims, in violation of 18 U.S.C. § 286; five counts of filing false claims, in violation of 18 U.S.C. § 287; five counts of wire fraud, in violation of 18 U.S.C. § 1343; and five counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A. Wilson pleaded guilty to one count of filing a false claim and, if he complies with the terms of the agreement, the remaining counts will be dismissed at sentencing.
Wilson currently is released on bond. His next court appearance is scheduled for May 31, 2019, for a sentencing hearing before Judge Tigar. The maximum statutory penalty for a violation of 18 U.S.C. § 287 is 5 years’ imprisonment and a fine of $250,000 plus restitution. 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. In this case, Wilson has agreed to pay restitution in an amount to be set by the Court, but in no event less than $1,026,340.
Assistant U.S. Attorneys Robert Rees and Meredith Osborn are prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the IRS-CI.
Dublin Man Pleads Guilty to Insider Trading Charges in Relation to Securities of Ross Stores, Inc.Read the Press Release
OAKLAND – Saleem Khan pleaded guilty in federal court in Oakland today to conspiracy and securities fraud charges arising from an insider trading scheme in which he obtained and traded on material, non-public information, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The plea was accepted by the Honorable Haywood S. Gilliam, Jr., United Stated District Judge.
In pleading guilty, Khan, 54, of Dublin, admitted that during the period July 2009 to October 2012, he obtained material, non-public information relating the sales and financial performance of Ross Stores, Inc. (“Ross”), a discount-clothing retailer then headquartered in Pleasanton, Calif., from a friend who worked in Ross’s finance department. Based on this material, non-public information, Khan entered into options contracts regarding Ross securities in advance of Ross’s monthly sales announcements in brokerage accounts held both in his name and in nominee names. These transactions included at least nine “call” option transactions that occurred between October 2011 and August 2012. In his plea agreement, Khan admitted he provided pecuniary benefits to the Ross “tipper,” including by providing $130,000 to the tipper through third parties and by purchasing items on the tipper’s behalf. Khan admitted he made profits in excess of $3,500,000 as a result of the scheme.
On November 2, 2017, federal grand jury returned a superseding indictment against Khan charging him with one count of conspiracy to commit securities fraud, in violation of 18 U.S.C. § 1349; nine counts of securities fraud, in violation of 18 U.S.C. § 1348; and one count of obstruction of justice, in violation of 18 U.S.C. § 1505. Khan pleaded guilty to the conspiracy and securities fraud counts. If Khan complies with the terms of the plea agreement, the remaining count will be dismissed at his sentencing.
Khan was previously sued in a civil case by the Securities and Exchange Commission (SEC), Securities and Exchange Commission v. Saleem Khan et al., Civil Action No. 3:14-cv-02743 HSG (N.D. Cal., filed June 13, 2014), pertaining to the same insider-trading scheme. In September 2016, the court entered a final judgment against Khan ordering him to pay more than $15 million in disgorgement, penalties, and prejudgment interest. In that case, Khan agreed to settle the charges against him without admitting or denying the allegations in the civil complaint, and he consented to the entry of final judgment.
Khan’s sentencing hearing is scheduled for June 24, 2019, before Judge Gilliam in Oakland. The maximum statutory penalty for each count in violation of 18 U.S.C. §§ 1348 and 1349 is 25 years’ imprisonment and a fine of $250,000, plus restitution and forfeiture, if appropriate. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Kyle F. Waldinger and Matthew L. McCarthy are prosecuting the case with the assistance of Hector Lopez and Bridget Kilkenny. The criminal prosecution is the result of an investigation by the Federal Bureau of Investigation. In addition, substantial cooperation and assistance was provided by the San Francisco Regional Office and the Market Abuse Unit of the SEC. The government also appreciates the cooperation and assistance of the Financial Industry Regulatory Authority, Inc., Criminal Prosecution Assistance Group.
David L. Anderson Sworn in as United States Attorney for the Northern District of CaliforniaRead the Press Release
SAN FRANCISCO – David L. Anderson took the oath of office today to become the United States Attorney for the Northern District of California. President Donald Trump announced the nomination of Mr. Anderson on August 16, 2018, and the United States Senate confirmed Mr. Anderson on January 2, 2019. United States District Judge Richard Seeborg swore in Mr. Anderson in a private ceremony.
Twice previously Mr. Anderson served in the office that he now leads. From 1998 to 2002, he was an Assistant United States Attorney, and from 2008 to 2010, he was First Assistant United States Attorney.
For 20 years, while not in government service, Mr. Anderson practiced at a large law firm. While in private practice, Mr. Anderson worked on criminal and civil cases around the country for individual and corporate clients. He chaired the Magistrate Judge Merit Selection Panel in the Northern District of California. He served as a Criminal Justice Act panel attorney. He taught securities regulation at Hastings College of the Law and testified before Congress successfully in support of securities litigation reform legislation.
Mr. Anderson clerked for Justice Anthony M. Kennedy of the United States Supreme Court in 1991-1992. He clerked for Chief Judge J. Clifford Wallace of the Ninth Circuit Court of Appeals in 1990-1991 and Judge George H. Aldrich of the Iran-United States Claims Tribunal in the Hague, Netherlands in 1992-1993.
Mr. Anderson graduated with distinction from Stanford Law School in 1990 and San Jose State University in 1985.
Puerto Rico Resident Charged in Alleged Multimillion-Dollar Scheme to Defraud Owners of CryptocurrencyRead the Press Release
SAN FRANCISCO- A federal grand jury has indicted Jerry Ji Guo, charging him with eight counts of wire fraud in a scheme to defraud customers of cryptocurrencies, announced U.S. Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to the indictment filed November 15, 2018, Guo, 31, whose last residence was San Juan, Puerto Rico, devised a scheme to obtain cash and cryptocurrency from victims by convincing them he would provide marketing and publicity services as a consultant. Guo convinced potential customers to forward up-front fees and retainers by making false statements about his experience and credentials as consultant. Guo allegedly provided no consulting services and instead orchestrated the unauthorized transfer of cash and cryptocurrency out of supposed “escrow” accounts into accounts he controlled.
In addition to the indictment, on November 9, 2018, the government filed a complaint that describes some of the alleged conduct. According to the affidavit, Guo claimed to prospective clients that he would use his company, pressICO LLC, to provide client services as an initial coin offering (ICO) marketing and publicity agency. ICOs are like initial public offerings and are a relatively new way to use cryptocurrencies such as Bitcoin and ether to fund start-ups and projects. The marketing campaign generally plays and important role in a successful ICO. The affidavit alleges that Guo convinced clients to forward to him funds by claiming the services he could provide had value because he had an extensive network of contacts within the cryptocurrency industry, he oversaw the documentation necessary for a $100 million ICO, and his company pressICO raised $165 million in connection with nine ICOs. According to the affidavit, none of these claims was true.
Further, the affidavit describes how Guo allegedly transferred funds from supposed escrow-like accounts to accounts that Guo controlled. Guo convinced clients to deposit funds into the special cryptocurrency accounts in part by assuring the clients that their authority would be required in two ways before funds could be transferred. Specifically, Guo misrepresented to his clients that he would be unable to remove funds from the accounts both without the private passcodes that were given to the clients and without the clients’ approval regarding the account to which the funds would be transferred. In reality, neither was true. Guo maintained a separate set of backup private codes that enabled him to gain access to, and authority to remove funds from, the accounts. Also, Guo set up special pre-approved accounts that were able to receive fund transfers without client knowledge or approval. Further, the affidavit states that on August 19, 2018, Guo executed unauthorized orders transferring funds valued at more than $3.4 million into accounts he controlled.
In sum, Guo is charged with eight counts of wire fraud, in violation of 18 U.S.C. § 1343. The complaint and indictment merely allege crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If found guilty, Guo faces a maximum statutory penalty of 20 years in prison and a fine of $250,000, plus restitution for each count alleged in the indictment. Additional terms of supervised release also may be imposed. However, any sentence after 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.
Guo was arrested in Puerto Rico and made his initial appearance this morning before U.S. Magistrate Judge Sallie Kim. His next scheduled appearance is scheduled for January 22, 2019, at 9:00 am, before the Honorable Beth Labson Freeman, U.S. District Judge in San Jose, California, for a status conference.
Assistant U.S. Attorney Matt Parrella is prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the FBI.
Silicon Valley CEO Sentenced to Three Years in Prison for Wire Fraud SchemeRead the Press Release
SAN FRANCISCO– Renato Libric, the former Chief Executive Officer of Bouxtie, Inc., was sentenced to 36 months in prison for wire fraud, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down today by the Honorable Maxine M. Chesney, United States District Judge.
Libric, 39, of Redwood City, Calif., and Zagreb, Croatia, pleaded guilty to the wire fraud charge on September 5, 2018. According to his plea agreement, Libric admitted that from August 2017 through February 2018, he devised and carried out a scheme to defraud potential investors in Bouxtie, Inc., a Delaware corporation based in the San Francisco Bay Area. Libric admitted that an essential purpose of the scheme was to overstate the financial condition and prospects of Bouxtie, and to induce potential investors to believe Libric had authority to sell shares in Bouxtie to investors.
Libric took multiple steps to convince members of a Las Vegas-based company to invest over a million dollars in Bouxtie. As part of the scheme, Libric fraudulently suggested to representatives of the potential investors that a large publicly traded corporation was interested in purchasing Bouxtie at a price of $150 million. To bolster this claim, Libric fraudulently placed the signature of an executive with the alleged purchasing corporation on a forged Term Sheet. The Term Sheet purported to indicate the large corporation was interested in the purchase of Bouxtie. In addition, Libric caused the falsified Term Sheet and a falsified bank statement to be transmitted to potential investors. The false bank statement suggested Bouxtie had a balance of over $2,000,000 in an account when, in fact, there was only $7,642.82 in the account. Furthermore, Libric placed the signatures of members of Bouxtie’s Board of Directors on a document that purported to authorize Libric to enter into agreements pursuant to which the investors would lend $1.5 million to Bouxtie and that the loan eventually would be converted into shares of Bouxtie.
As a result of his scheme, Libric convinced investors to transfer $1.5 million into accounts belonging to Bouxtie. Further, after the $1.5 million was deposited, Libric withdrew more than $130,000 of the invested funds from an account and put the funds into his own checking account.
On May 10, 2018, a federal grand jury indicted Libric, charging him with one count of wire fraud, in violation of 18 U.S.C. § 1343 and 2. In September, Libric pleaded guilty to the charge and agreed to make restitution to the victims for their losses.
In addition to the prison term, Judge Chesney also sentenced the defendant to a three-year period of supervised release and ordered him to pay over $1,500,000 in restitution. Libric has been in custody since his arrest on May 10, 2018, and will begin serving his sentence immediately.
Assistant U.S. Attorney Matthew McCarthy is prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the FBI.
San Francisco Resident Sentenced to Five Years in Prison for Unauthorized Possession of Credit Card and Related InformationRead the Press Release
SAN FRANCISCO – Janelyn Mangisel Dasig was sentenced today to 60 months in prison for unauthorized possession of more than 15 access devices announced United States Attorney Alex G. Tse and United States Secret Service Special Agent in Charge Dave Thomas. The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge.
Dasig, 34, of San Francisco, pleaded guilty to the charge on August 29, 2018. According to the plea agreement, on May 8, 2018, Dasig was a front desk clerk at San Francisco motor lodge. She admitted she knowingly possessed printouts of at least three hundred guest names with credit card information, expiration, CVV code, and other identifying information that she unlawfully took from her place of employment. Dasig admitted that when she took the information, she had an intent to defraud and she knew she was not authorized to take the access devices.
On July 17, 2018, a federal grand jury indicted Dasig charging her with one count of possession of 15 or more counterfeit and unauthorized access devices, in violation of 18 U.S.C. § 1029(a)(3) and (c)(1)(A)(i). Dasig pleaded guilty to the charge. Dasig also was serving a term of supervised release on an unrelated charge at the time she was found with the access devices. Judge Breyer sentenced Dasig to 42 months in prison for the access device violation and an additional 18 months in prison for the violation of the conditions of her supervised release.
In addition to the prison term, Judge Breyer also sentenced the defendant to a three-year period of supervised release. The defendant has been in federal custody since May 16, 2018, and will begin serving her sentence immediately.
Special Assistant U.S. Attorney Ann C. Lucas and Assistant U.S. Attorney Philip J. Kearney are prosecuting the case with the assistance of Kimberly Richards and Margoth Turcios. The prosecution is the result of an investigation by the United States Secret Service.
San Francisco Police Officer Arrested and Charged with Robbing BankRead the Press Release
SAN FRANCISCO – San Francisco police officer Rain Olson Daugherty was arrested yesterday and charged this morning with robbing a San Francisco bank, announced United States Attorney Alex. G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to an affidavit filed in connection with the case, on November 29, 2018, Daugherty, 44, of San Francisco, is the person who allegedly robbed entered the East West Bank in the Sunset District of San Francisco and handed a teller a note that demanded money in $50 and $100 denominations. The robber then said something to the effect of “calm down, just do it.” The teller gave a stack of cash and gave it to the robber. A second teller, who had observed the robber pass the note, pressed the alarm and left the area to notify a bank manager of the robbery. The robber took approximately $9,000 from the bank.
According to documents filed with the court, Daugherty is currently under suspension without pay. Daugherty was charged with bank robbery, in a violation of 18 U.S.C. § 2113(a).
A complaint merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. The defendant faces a maximum statutory penalty of 20 years in prison for the charge. Additional fines, forfeitures, restitution, and special assessments also may be imposed. 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 defendant currently is in federal custody and is scheduled to appear before U.S. Magistrate Judge Sallie Kim on December 19, 2018, for arraignment.
Assistant U.S. Attorney Ajay Krishnamurthy with the assistance of Kimberly Richardson. The prosecution is the result of an investigation by the FBI with assistance from the San Francisco Police Department.
Physician Assistant Sentenced to 10 Years in PrisonRead the Press Release
OAKLAND – David Lague was sentenced to 10 years in prison, and ordered to pay a $5,000 fine and for unlawfully distributing prescription drugs, announced United States Attorney Alex G. Tse, Drug Enforcement Administration Special Agent in Charge Chris Nielsen, and Health & Human Services, Office of Inspector General, Office of Investigations Special Agent in Charge Steven J. Ryan. The sentence was handed down by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge.
On July 24, 2018, a jury found Lague guilty of 39 counts of unlawful distribution of controlled substances, in violation of 21 U.S.C. § 841(a)(1), after a two-week trial. During the trial, evidence showed that Lague intentionally prescribed drugs to five different patients, knowing that the prescriptions were outside the usual course of professional practice and without a legitimate medical purpose. The evidence showed that, on two occasions, a patient asked Lague to double his prescriptions for powerful opioids so that the patient could sell the drugs. Lague not only doubled the prescriptions, he also discussed with the patient how to do it in a way to avoid scrutiny by pharmacies or law enforcement. Lague admitted at trial that he wrote false medical records of those visits in order to cover up what he was doing. The evidence at trial also showed that Lague falsified records as to other patients as well, detailing exams that never took place and indicating that he had reviewed lab work that he never reviewed. An expert who reviewed four of Lague’s patient files found that his handling of those patients was an extreme departure from the standard of care. Further, the evidence at trial showed that, among physicians who prescribed opioids to 50 or more MediCare patients, Lague was the highest prescriber of opioids in California in 2015 and 2016.
“This case represents an important victory for the community in its fight against the diversion of prescription drugs,” U.S. Attorney Tse said. “The medical profession has made great strides in reforming prescribing practices, and the DEA has worked to decrease the total quantities of pills that pharmaceutical companies produce every year, all with the end of decreasing the numbers of powerful opioid pills getting into the hands of vulnerable members of our community,” he continued. “We appreciate and support their combined efforts. At the same time, we will not hesitate to charge and seek the conviction of those few medical professionals who have abandoned all pretense of providing patient care and instead use their power to prescribe for their own personal benefit. David Lague abused his power in this way. He showed no hesitation when asked to provide pills to someone who said he was going to sell them. There can be no greater abuse of the trust the community placed in him when it gave him the ability to prescribe. Lague’s conduct put a stain on the reputations of the thousands of doctors and physician assistants who try their hardest daily to provide compassionate, quality medical care to the patients they see.”
“Most physician assistants generally hold as their primary responsibility the health, safety, welfare and dignity of all human beings. Instead, Mr. Lague placed his own personal interests above protecting public health and safety, when he provided powerful narcotics outside the usual course of practice and without a medical purpose. This criminal behavior jeopardizes lives,” stated DEA Special Agent in Charge Nielsen. “DEA will continue to hold accountable those who engage in this type of illegal conduct.”
“Medical professionals who overprescribe deadly opioids threaten the health and safety of vulnerable individuals across the country,” said Steven J. Ryan, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “OIG along with our law enforcement partners will ensure that corrupt people, like David Lague, pay a heavy price for the criminal prescribing of opioids.”
In addition to the prison term, Judge Gilliam sentenced the defendant to a 3-year period of supervised release following incarceration, a $5,000 fine, and a $3,800 special assessment. Lague was immediately remanded into custody to begin serving his sentence.
The prosecution is the product of an extensive investigation by 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.
U.S. Army Veteran and Former Government Employee Indicted for Wire FraudRead the Press Release
SAN FRANCISCO - A federal grand jury indicted Malik Swinton for wire fraud and identity theft, announced United States Attorney Alex G. Tse; U.S. Department of Veterans Affairs Office of Inspector General, Criminal Investigations Division, Special Agent in Charge James Wahleithner; U.S. Department of Justice Office of the Inspector General, Los Angeles Field Division, Special Agent in Charge James K. Cheng; Social Security Administration Office of Inspector General Special Agent in Charge Robb Stickley; Office of Personnel Management Acting Inspector General Norbert Vint; and U.S. Department of Labor Office of Inspector General Special Agent in Charge Abel Salinas.
The indictment describes various claims that Swinton, 40, of Las Vegas, Nevada, made to the Department of Veterans Affairs, the Social Security Administration, and the Department of Labor. According to the indictment, Swinton was discharged from the U.S. Army in February 2001. That month, Swinton submitted a disability claim with the U.S. Department of Veterans Affairs. In the application, Swinton listed, among other physical ailments, degenerative joint disease of the left knee and right knee, and pain in both feet and both ankles. He continued to receive benefits even after he enrolled as an undergraduate at the University of Oklahoma in August 2002 and competed in the Big 12 Indoor Track and Field Championships.
According to the indictment, in July 2012 Swinton applied to the Department of Veterans Affairs for additional disability benefits, claiming that he was unable to work due service-connected post-traumatic stress disorder. Swinton claimed that he suffered from PTSD after his “squad leader pulled his weapon and shot [his] platoon sergeant” in front of him and then later threatened to “kill or hurt Swinton or [his] family if [he] told anyone.” According to the indictment, no such incident occurred.
Further, the indictment alleges that from April through October 2012, Swinton devised a plan to submit false information to the Social Security Administration when he applied for disability benefits from that agency. In April, Swinton submitted a letter in connection with a request for benefits that Swinton claimed was from a doctor. The letter stated Swinton suffered from a number of medical conditions including PTSD and depression. Later, in October 2012, Swinton submitted a second letter to bolster his claim. The second letter was supposedly written by a separate doctor. In reality, neither letter was written or authorized by the persons who supposedly wrote them and both letters contained false information.
Finally, in April 2012, Swinton submitted an application to the U.S. Department of Labor for workers’ compensation for injuries that he supposedly sustained while working for the U.S. Department of Justice’s Bureau of Prisons. Swinton claimed that he suffered from PTSD as a result of a “stressful, hostile, and harassing” work environment. According to the indictment, Swinton repeatedly submitted fraudulent forms and letters, purportedly written by various doctors, to support his workers’ compensation claim. Swinton also never disclosed to the Department of Labor that he was receiving disability benefits from the VA and the Social Security Administration.
In sum, Swinton was charged with seven counts of wire fraud, in violation of 18 U.S.C. § 1343 and one count of identity theft, in violation of 18 U.S.C. § 1028A(a)(1).
Defendant was arrested on December 14, 2018, and he made his initial appearance in federal court in Las Vegas before the Honorable George Foley, Jr. on December 17, 2018. Swinton was released on bond and ordered to appear for further proceedings in San Francisco on December 21, 2018 before the Honorable Sallie Kim.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment and a fine of $250,000, plus restitution. In addition, if convicted of the identity theft count, Swinton faces a mandatory two years in prison consecutive to any other sentence. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Special Assistant U.S. Attorney Christopher Vieira is prosecuting the case with the assistance of Kimberly Richardson. The prosecution is a result of an investigation by the Offices of Inspectors General of the Department of Veterans Affairs, the Department of Justice, the Social Security Administration, the Office of Personnel Management, and the Department of Labor.
Three Defendants Indicted for Conspiracy to Commit Murder, Drug Trafficking, and Related CrimesRead the Press Release
SAN FRANCISCO – A federal grand jury in San Francisco returned a superseding indictment charging Marcus Etienne, a.k.a. Hitler, Mario Robinson, and Burte Gucci Rhodes, a.k.a. Moeshawn, with murder-for-hire, a number of firearms and drug distribution offenses, and related crimes, announced United States Attorney Alex G. Tse, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett and Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI), Tara Sullivan. Etienne and Robinson also are charged with racketeering conspiracy. The superseding indictment, filed today, amends racketeering, murder, and conspiracy charges originally filed February 16, 2017, and updated August 3, 2017, against Etienne, Robinson, and other defendants.
The charges stem from a multi-state marijuana trafficking organization and the murder of Trince Thibodeaux on March 22, 2016, at 90th Ave. and International Boulevard in Oakland, Calif. The superseding indictment alleges that Etienne, 37, of Opelousas, La., ran an enterprise consisting of more than five members who conducted a continuing and extensive narcotics conspiracy and criminal organization. The criminal organization and conspiracy distributed marijuana from California to Louisiana and Texas.
The superseding indictment filed today makes clear that Etienne conspired with, Robinson, 35, of Oakland, and Rhodes, 37, of Oakland, to murder Thibodeaux on March 22, 2016, in Oakland. According to the indictment, Rhodes shot and killed Thibodeaux and $5000 was promised in exchange for the murder.
Etienne and Robinson also are charged with racketeering conspiracy and being part of an enterprise referred to in the indictment as the “Etienne Enterprise,” based in St. Martin Parish La. The Etienne Enterprise engaged in narcotics distribution, assault, robbery, extortion, extortionate collection of extensions of credit, murder for hire, murder, money laundering, illegal firearms possession, and obstruction of justice. Among the activities of the racketeering conspiracy was a gambling operation through a large-scale dogfighting ring. The racketeering conspiracy existed since January 7, 2013, and its members operated in Louisiana, in the Northern District of California, in Texas, and elsewhere.
The defendants are charged in the superseding indictment as follows:
DEFENDANT
CHARGES
STATUTE
MAXIMUM STATUTORY PENALTY
Marcus Etienne a/k/a Hitler
Conspiracy to Distribute and possess with intent to distribute 1,000 kilograms or more of marijuana
21 U.S.C. § 846, 841, and (b)(1)(A)
Not less than 10 years or more than life in prison
$10,000,000 fine
After filing of prior conviction, if applicable, not less than 20 years or more than life in prison and
$20,000,000 fine
Murder during a narcotics offense
21 U.S.C. § 848(e)(1)(A)
Not less than 20 years and not more than live in prison
$250,000 fine
Use or possession of a firearm in murder
18 U.S.C. § 924(j)
Not less than 10 years or more than life in prison.
$250,000 fine
Conspiracy to conduct the affairs of an enterprise through a pattern of racketeering activity
18 U.S.C. § 1962(d)
Life in prison
$250,000 fine
Murder in aid of racketeering
18 U.S.C. § 1959(a)(1)
Mandatory life in prison
$250,000 fine
Conspiracy to commit murder in aid or racketeering
18 U.S.C. § 1959(a)(5)
Ten years in prison
$250,000 fine
Murder for hire
18 U.S.C. § 1958
Mandatory life in prison
$250,000
Conspiracy
18 U.S.C. § 371
Five years in prison
$250,000 fine
Assault with a deadly weapon in aid of racketeering
18 U.S.C. § 1959(a)(3)
20 years in prison
$250,000 fine
Conspiracy to commit money laundering
18 U.S.C. § 1956(h)
20 years in prison
$250,000 fine
Money laundering
(2 counts)
18 U.S.C. § 1956(a)(1)(A)(i) and (a)(1)(B)(i)
(each count)
20 years in prison
$250,000 fine
Mario Robinson
Conspiracy to distribute and possess with intent to distribute 1,000 kilograms or more of marijuana
21 U.S.C. § 846, 841, and (b)(1)(A)
Not less than 10 years or more than life in prison
$10,000,000 fine
After filing of prior conviction, if applicable, not less than 20 years or more than life in prison and
$20,000,000 fine
Murder during a narcotics offense
21 U.S.C. § 848(e)(1)(A)
Not less than 20 years and not more than live in prison
$250,000 fine
Use or possession of firearm in murder
18 U.S.C. § 924(j)
Not less than 10 years or more than life in prison.
$250,000 fine
Conspiracy to conduct the affairs of an enterprise through a pattern of racketeering activity
18 U.S.C. § 1962(d)
Life in prison
$250,000 fine
Murder in aid of racketeering
18 U.S.C. § 1959(a)(1)
Mandatory life in prison
$250,000 fine
Murder for hire
18 U.S.C. § 1958
Mandatory life in prison
$250,000
Conspiracy
18 U.S.C. § 371
Five years in prison
$250,000 fine
Conspiracy to commit money laundering
18 U.S.C. § 1956(h)
20 years in prison
$250,000 fine
Money laundering
(3 counts)
18 U.S.C. § 1956(a)(1)(A)(i) and (a)(1)(B)(i)
(each count)
20 years in prison
$250,000 fine
Burte Gucci Rhodes
a/k/a Moeshawn
Murder for hire
18 U.S.C. § 1958
Mandatory life in prison
$250,000
Use or possession of a firearm to commit murder
18 U.S.C. § 924(j)
Not less than 10 years or more than life in prison.
$250,000 fine
Conspiracy
18 U.S.C. § 371
Five years in prison
$250,000 fine
Possession with intent to distribute heroin
21 U.S.C. § 841(a)(1) and (b)(1)(B)(i)
Not less than 5 years or more than 40 years in prison
$5,000,000 fine
Possession of firearms in connection with drug trafficking offenses
18 U.S.C. § 924(c)(1)(A) & (B)
Not less than 5 and 10 years consecutive in prison
$250,000 fine
Additional fines, forfeitures, restitution, and special assessments also may be imposed. However, any sentence after conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
An indictment merely alleges that crimes have been committed, and the defendants is presumed innocent until proven guilty beyond a reasonable doubt.
Etienne remains in custody based on the February 16, 2017, indictment. Robinson was arrested in Louisiana on August 4, 2017, and appeared on August 7, in federal court in the Western District of Louisiana. Rhodes was arrested December 5, 2018, on a federal arrest warrant. The case is assigned to the Honorable William Alsup, United States District Judge, for the Northern District of California.
The case is being prosecuted by Assistant United States Attorneys Meredith Osborn and William Frentzen with the assistance of Jessica Meegan and Bridget Kilkenny. This case is being investigated by the Federal Bureau of Investigation’s San Francisco, New Orleans, Houston Divisions; IRS-CI; Oakland Police Department; with the assistance from the St. Landry Parish, Louisiana, Sheriff’s Office, Opelousas, Louisiana Police Department.
San Jose Man Sentenced to 18 Months in Prison for Mailing Letters Attacking Victims’ Sexual Orientation, Race, and ReligionRead the Press Release
SAN JOSE - Robert Gary Toltzis was sentenced to 18 months in prison for mailing hateful threats to victims because of their sexual orientation, race, and religion, announced U.S. Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge.
Toltzis, 56, of San Jose, pleaded guilty to one count of mailing threatening communications. At the time of his plea, Toltzis admitted to executing a scheme to issue a series threats of death, bodily injury, injury to reputation, and other forms of harassment to at least sixteen different victims. Toltzis sent the threats using anonymous remailers, his own e-mail address, and the U.S. mail and chose his victims based on his belief of their sexual orientation, national origin, and ethnic background. Toltzis acknowledged that he further harmed his victims by mailing copies of the threats to the victims’ friends and family.
Toltzis admitted he knew that some of the victims he targeted had severe mental health conditions whom he knew to be vulnerable to his hateful threats. In addition, Toltzis admitted that on one occasion, he mailed a letter to a victim at his home urging the victim to kill himself and claiming that the victim was a drug addict, bad husband, and a homosexual. Toltzis also admitted he delivered threats to victims who were particularly vulnerable because they had not publicly communicated their sexual orientation to their family, friends, or community.
On November 12, 2014, a federal grand jury indicted Toltzis, charging him with four counts of mailing threatening communications, in violation of 18 U.S.C. § 876(c). He pleaded guilty to one count and the remaining three were dismissed.
In addition to the prison term, Judge Davila ordered Toltzis to pay a $10,000 fine and serve a three-year term of supervised release. Judge Davila scheduled an additional hearing for March 11, 2019, to determine the amount of compensation Toltzis will be ordered to pay his victims.
Assistant U.S. Attorney Patrick R. Delahunty is prosecuting the case with the assistance of Susan Kreider. The prosecution is the result of an investigation by the FBI.
Bay Area CPA Sentenced to 8 Months in PrisonRead the Press Release
Marc Howard Berger was sentenced today to 8 months in prison for aiding and assisting in the filing of false tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, United States Attorney Alex G. Tse, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation (IRS-CI) Special Agent in Charge Tara Sullivan.
On July 18, after a three-week jury trial, Berger was found guilty of willfully assisting in the preparation of three false Forms 1040 for codefendant G. Steven Burrill for the 2011, 2012, and 2013 tax years. Evidence at trial showed that Berger, 68, of Walnut Creek, California, was a Certified Public Accountant and partner with a regional tax preparation firm, Burr Pilger Mayer. Berger’s client, Burrill, was the owner and CEO of Burrill & Company, Burrill Capital, and a number of related entities. Through those entities, Burrill managed venture capital funds, including Burrill Life Sciences Capital Fund III L.P. (the Fund), a $283 million investment fund focused on the life sciences industry. Between Dec. 2007 and Sept. 2013, Burrill transferred more than $18 million from the Fund to his management companies, a sum in excess of the management fees that were due and allowable under the agreements that governed the Fund. Berger intentionally prepared and filed false income tax returns for Burrill that failed to report more than $18 million in income, resulting in unpaid taxes of more than $4.7 million. With Berger’s assistance, Burrill did not pay individual income taxes for the years 2009 through 2013.
Berger was indicted by a federal grand jury on Sept. 14, 2017. Berger was charged with three counts of willfully aiding and assisting in the preparation of three false Forms 1040 for Burrill for 2011, 2012, and 2013.
The sentence was handed down by The Honorable Richard Seeborg, U.S. District Court Judge. Judge Seeborg also sentenced the defendant to one year of supervised release and a $20,000 fine. The defendant will begin serving the sentence on July 8, 2019.
Burrill pleaded guilty on Dec. 7, 2017, to one count of investment-adviser fraud, in violation of 15 U.S.C. §§ 80b-6 & 80b-17, 18 U.S.C. § 2, and 17 C.F.R. § 275.206(4)-8, and one count of filing a false income tax return, in violation of 26 U.S.C. § 7206(1). He was sentenced to 30 months in prison on December 4, 2018.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Tse thanked special agents of IRS-Criminal Investigation and the Federal Bureau of Investigation, who conducted the investigation, and Assistant U.S. Attorney Robert S. Leach and Trial Attorney Lori A. Hendrickson of the Tax Division, who prosecuted the case.
Bay Area CPA Sentenced to Eight Months in PrisonRead the Press Release
SAN FRANCISCO – Marc Howard Berger was sentenced today to eight months in prison for aiding and assisting in the filing of false tax returns, announced United States Attorney Alex G. Tse, Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation (IRS-CI) Special Agent in Charge Tara Sullivan. The sentence was handed down by the Honorable Richard Seeborg, U.S. District Judge.
On July 18, 2018, Berger, 68, of Walnut Creek, Calif., was found guilty, after a three-week jury trial, of willfully assisting in the preparation of three false Form 1040s for codefendant G. Steven Burrill. The Form 1040s were filed for tax years 2011, 2012, and 2013. Evidence at trial showed that Berger was a Certified Public Accountant and partner with a regional tax preparation firm, Burr Pilger Mayer. Berger’s client, Burrill, was the owner and CEO of Burrill & Company, Burrill Capital, and a number of related entities. Through the entities, Burrill managed venture capital funds, including Burrill Life Sciences Capital Fund III, L.P. (the Fund), a $283 million investment fund focused on the life sciences industry. Between December 2007 and September 2013, Burrill transferred more than $18 million from the Fund to his management companies in excess of the management fees that were due and allowable under the agreements that governed the Fund. Berger intentionally prepared and filed false income tax returns for Burrill that failed to report more than $18 million in income, resulting in unpaid taxes of more than $4.7 million. With Berger’s assistance, Burrill paid no individual income taxes for the years 2009 through 2013.
Berger was indicted by a federal grand jury on September 14, 2017. Berger was charged with three counts of willfully aiding and assisting in the preparation of three false Form 1040s for Burrill for 2011, 2012, and 2013.
In addition to the prison term, Judge Seeborg sentenced the defendant to one year of supervised release and a $20,000 fine. The defendant will begin serving the sentence on July 8, 2019.
Burrill pleaded guilty on December 7, 2017, to one count of investment-adviser fraud, in violation of 15 U.S.C. §§ 80b-6 & 80b-17, 18 U.S.C. § 2, and 17 C.F.R. § 275.206(4)-8, and one count of filing a false tax return, in violation of 26 U.S.C. § 7206(1). He was sentenced to 30 months in prison on December 4, 2018.
Assistant U.S. Attorney Robert S. Leach and Trial Attorney Lori Hendrickson of the U.S. Department of Justice Tax Division are prosecuting the case with the assistance of Maryam Beros, Larry Garland, and Bridget Kilkenny. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation.
Alleged Fraudster Indicted in Ticket Investment SchemeRead the Press Release
SAN FRANCISCO – Patrick Ayson was indicted on charges related to an alleged $3.3 million investment fraud scheme, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. In an indictment filed yesterday and unsealed this morning, a federal grand jury charged Ayson with inducing investors to hand over money based on false promises that the funds would be used to purchase tickets for special events that would then be resold for a profit.
According to the indictment, between June of 2015 and November of 2017, Ayson, 32, formerly of San Francisco, induced at least 15 potential investors from California, New York, and Washington State, to provide millions of dollars in funds on the promise that their investment would result in profits ranging from 10% to 35%. Ayson misrepresented that he would purchase tickets to sporting events, plays, and concerts at discounted prices and that he would then resell the tickets for a profit to investors. In reality, Ayson spent most of the funds on personal purchases, such as rent, and on extravagant expenditures such as gambling, travel, and shopping at Louis Vuitton. In total, Ayson is alleged to have defrauded investors of at least $3.3 million.
The indictment charges Ayson with six counts of wire fraud, in violation of 18 U.S.C. § 1343. He was arrested this morning in San Francisco and made his initial appearance before Sallie Kim, United States Magistrate Judge. Ayson’s next appearance is scheduled for December 20, 2018, before Magistrate Judge Kim for issues related to pretrial detention or release.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of 20 years in prison on each count in the indictment. In addition, the court also may order an additional term of supervised release, fines or other assessments, and restitution, if appropriate. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Neal C. Hong is prosecuting this case with the assistance of Margoth Turcios. This prosecution is the result of an investigation by the Federal Bureau of Investigation.
Alameda County Resident Sentenced to 15 Months of Confinement for Scheme to Defraud Networking Equipment ManufacturerRead the Press Release
SAN JOSE - Ferdinand Pasion Arafiles, a/k/a Dennis Arafiles, was sentenced today to 10 months in prison, 5 months of home confinement, and ordered to pay $100,000 in restitution for his role in scheme to defraud a Bay Area manufacturer and seller of networking equipment, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge.
Arafiles, 50, of Alameda County, pleaded guilty on December 11, 2017, to wire fraud. Arafiles was an employee of a Bay Area public school district. According to his plea agreement, Arafiles admitted that beginning October of 2009 until February 2016, he devised a plan to take advantage of the relationship between the school district and a leading networking equipment and services corporation (the “Corporation”). Specifically, Arafiles maintained access to the Corporation’s warranty contract and service program for the school district and used that access to order, receive, and then sell, replacement computer parts to which he was not entitled.
In the plea agreement, Arafiles acknowledged he created multiple email accounts, including variations on the name of the school district that employed him, and used those email accounts to create user accounts with the Corporation. He then made service requests on the Corporation’s customer support website. Using those email accounts and fraudulent identities, Arafiles instructed the Corporation to send “replacement” parts to designated addresses, including Arafiles’s personal residence in Alameda County. Arafiles understood that the Corporation required the return of failed or defective parts, so he returned bogus parts that contained forged or altered serial number labels. Arafiles also posted for sale and sold on internet market places some of the parts he fraudulently obtained from the Corporation.
A federal grand jury indicted Arafiles on June 23, 2016. In sum, Arafiles was charged with five counts each of wire fraud, in violation of 18 U.S.C. § 1343; interstate transportation of stolen property, in violation of 18 U.S.C. § 2314; and mail fraud, in violation of 18 U.S.C. § 1341.
In addition to the prison term, Judge Davila sentenced the defendant to a three-year period of supervised release and $100,000 in restitution. The defendant will begin serving his prison term on March 13, 2019.
Assistant U.S. Attorney Jeff Schenk is prosecuting the case with the assistance of Laurie Worthen and Tong Zhang. The prosecution was the result of an investigation by the FBI.
Central Valley Drug Trafficker Sentenced to 26 Years in PrisonRead the Press Release
SAN FRANCISCO – Manuel Gonzalez Chavez, aka Manuel Gonzalez Cobain, was sentenced today to 26 years in prison for his involvement in a heroin, cocaine, and methamphetamine trafficking conspiracy, announced United States Attorney Alex G. Tse and Drug Enforcement Administration Special Agent in Charge Chris Nielsen. The sentence was handed down by the Honorable James Donato, U.S. District Judge.
Gonzalez Chavez, 40, a citizen of Mexico, formerly of Stockton, Calif., pleaded guilty to the charges on November 9, 2017. As part of his plea agreement, Gonzalez Chavez acknowledged that he participated in a conspiracy to traffic heroin, cocaine, and methamphetamine. Gonzalez Chavez admitted that he bought and sold heroin, cocaine, and methamphetamine and that he distributed these controlled substances to his customers. Gonzalez Chavez also admitted that he directed at least one other person to act as his courier and to pick up or drop off controlled substances or the proceeds of drug sales on his behalf.
In sentencing Gonzalez Chavez, U.S. District Judge James Donato characterized the drug conspiracy in this case as a “massive and very destructive conspiracy” that trafficked drugs “in mercenary fashion” and “effectively poisoned” the community. Judge Donato declared that he was “particularly troubled” by the fact that Gonzalez Chavez had previously been convicted of possessing a firearm in furtherance of a drug trafficking offense and acted in this case “as if that [prior] conviction meant nothing.” Judge Donato also declared that the “intersection of drugs and firearms [is] particularly pernicious.”
Gonzalez Chavez was arrested on October 13, 2015. As part of his plea agreement, he admitted that on the day before his arrest, October 12, 2015, law enforcement authorities executed a search warrant at his residence in Stockton, Calif. At the time authorities entered Gonzalez Chavez’s home, he was actively packaging cocaine for distribution. Authorities’ search of Gonzalez Chavez’s residence resulted in the total seizure of approximately 5.2 kilograms of heroin, approximately 1.6 kilograms of methamphetamine, and approximately 4.2 kilograms of cocaine.
Law enforcement found heroin, methamphetamine, and cocaine throughout Gonzalez Chavez’s house. For example, the heroin, some of the methamphetamine, and some of the cocaine was found under the bathroom sink. In Gonzalez Chavez’s living room, authorities found additional cocaine and, in the living room closet, a .40 caliber Taurus PT100 pistol loaded with ammunition. In the kitchen, authorities found three digital scales, packaging materials, additional methamphetamine, more than one kilogram of cocaine, and bullets. In the backyard, authorities found approximately 1.8 kilograms of cocaine. In one of the bedrooms, authorities found a .38 caliber revolver and an Air Soft pistol. Authorities also seized approximately $43,500 in cash. Gonzalez Chavez admitted as part of his plea agreement that he knew the $43,500 represented the proceeds from drug sales.
On November 19, 2015, a federal grand jury indicted Gonzalez Chavez and twelve co-defendants for various crimes related to the scheme. The grand jury charged Gonzalez Chavez with conspiracy to distribute and possess with intent to distribute controlled substances, in violation of 21 U.S.C. §§ 846 and 841(a)(1), and with possession of a firearm in furtherance of drug trafficking, in violation of 18 U.S.C. § 924(c). Pursuant to his plea agreement, Gonzalez Chavez pleaded guilty to both charges. In addition to the 26-year prison term, Judge Donato sentenced Gonzalez Chavez to a 3-year term of supervised release. The defendant has been in custody since his arrest on October 13, 2015.
Gonzalez Chavez’s sentence brings to 12 the number of defendants sentenced as part of the conspiracy to distribute and possess with intent to distribute controlled substances in this case. All of Gonzalez Chavez’s co-defendants have pleaded guilty. During the course of this investigation, law enforcement seized more than 40 pounds of methamphetamine, more than 65 pounds of cocaine, more than 11 pounds of heroin, more than $1,200,000 in cash drug proceeds, and approximately twelve firearms.
Defendant
Age/
Residence
Charges
Status
Jesus Guadalupe Rojas
32/
Turlock
Distribution of methamphetamine, 21 U.S.C. §§ 841(a)(1)
Sentenced on June 14, 2017, to 24 months in prison and 3 years supervised release.
Jose Armando Mendoza Linares
42/
Turlock
Conspiracy to distribute and possess with intent to distribute methamphetamine, 21 U.S.C. §§ 846 & 841(a)(1)
Sentenced on October 25, 2017, to 60 months in prison and 5 years supervised release.
Gabriel Estrada
41/
Compton
Conspiracy to distribute and possess with intent to distribute cocaine, 21 U.S.C. §§ 846 & 841(a)(1)
Sentenced on December 13, 2017, to 70 months in prison and 3 years supervised release
Vanessa Valdez
31/
Chula Vista
Conspiracy to distribute and possess with intent to distribute methamphetamine and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)
Sentenced on December 13, 2017, to 22 months in prison and 3 years supervised release.
Elias Dominguez
46/
Patterson
Conspiracy to distribute and possess with intent to distribute methamphetamine, 21 U.S.C. §§ 846 & 841(a)(1)
Sentenced on January 24, 2018, to 55 months in prison and 5 years supervised release.
Carlos Martinez
26/
Hayward
Conspiracy to distribute and possess with intent to distribute cocaine, 21 U.S.C. §§ 846 & 841(a)(1)
Sentenced on February 21, 2018, to 30 months in prison and 3 years supervised release.
Ismael Mendoza Rodriguez
37/
Turlock
Conspiracy to distribute and possess with intent to distribute methamphetamine and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)
Possession of a firearm in furtherance of drug trafficking, 18 U.S.C. § 924(c)
Sentenced on February 21, 2018, to 200 months in prison and 5 years supervised release.
Michael Sherman
48/
Lathrop
Conspiracy to distribute and possess with intent to distribute cocaine, 21 U.S.C. §§ 846 & 841(a)(1)
Sentenced on February 28, 2018, to 32 months in prison and 3 years supervised release.
Ruben Franco Lopez
48/
Turlock
Conspiracy to distribute and possess with intent to distribute cocaine, 21 U.S.C. §§ 846 & 841(a)(1)
Sentenced on March 7, 2018, to 37 months in prison and 3 years supervised release.
Manuel Lara Andrade
64/
Delhi
Conspiracy to distribute and possess with intent to distribute methamphetamine and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)
Sentenced on March 14, 2018, to 140 months in prison and 5 years supervised release.
Daniel Jimenez
48/
Ballico
Conspiracy to distribute and possess with intent to distribute methamphetamine and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)
Sentenced on November 7, 2018, to 128 months in prison and 5 years supervised release.
Manuel Gonzalez Chavez
42/
Stockton
Conspiracy to distribute and possess with intent to distribute methamphetamine, heroin, and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)
Possession of a firearm in furtherance of drug trafficking, 18 U.S.C. § 924(c)
Sentenced on December 12, 2018, to 312 months in prison and 3 years of supervised release.
Carlos Olivares Hernandez
52/
Turlock
Conspiracy to distribute and possess with intent to distribute methamphetamine and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)
Scheduled to be sentenced on January 9, 2019.
Assistant U.S. Attorneys Christiaan Highsmith, Sheila Armbrust, Katie Burroughs Medearis, and Gregg Lowder are prosecuting the case. The prosecution is the result of an investigation by the DEA, the Concord Police Department, and the IRS Criminal Investigations. The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force, a multi-agency task force that coordinates long-term narcotics trafficking investigations.
Salinas Residents Charged with Murders and Other Racketeering Crimes in Salinas Gang CaseRead the Press Release
SAN JOSE - A federal grand jury returned murder charges against Anthony Valdez aka “Hitter,” aka “Tony Boronda,” and Kristopher Purcell, aka “K-Dawg,” announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The superseding indictment supplements charges brought October 11, 2018, against Purcell.
According to the indictment, Valdez, 21, and Purcell, 20, both of Salinas, Calif., are Norteño gang members and members of the Boronda Boys street gang. Valdez and Purcell, along with other Boronda Boys street gang members and associates, are accused of forming a “murder squad” that hunted and killed rival gang members, gang dropouts, and others who violated gang rules. The murder squad also targeted those perceived to be rival gang members and other persons when it suited the purposes of the gang.
In this case, Valdez and others are alleged to have murdered a victim on North Hebbron Avenue in Salinas on November 3, 2018. Valdez is charged with racketeering conspiracy, in violation of 18 U.S.C. § 1962(d); conspiracy to murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(5); murder in aid of racketeering, in violation of 18 U.S.C. §§ 1959(a)(1) and 2; use of a firearm during and in relation to, or possession in furtherance of, a crime of violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2; and use of a firearm causing murder, in violation of 18 U.S.C. §§ 924(j)(1) and 2.
Purcell is alleged to have murdered a victim on Fremont Street in Salinas on February 11, 2017. Purcell remains charged with attempting to murder two victims on Orchard Avenue in Salinas the next day, February 12, 2017. In sum, Purcell is now charged with racketeering conspiracy, in violation of 18 U.S.C. § 1962(d); conspiracy to murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(5); murder in aid of racketeering, in violation of 18 U.S.C. §§ 1959(a)(1) and 2; use of a firearm causing murder, in violation of 18 U.S.C. §§ 924(j)(1) and 2; two counts of attempted murder in aid of racketeering, in violation of 18 U.S.C. §§ 1959(a)(5) and 2; two counts of assault with a dangerous weapon in aid of racketeering, in violation of 18 U.S.C. §§ 1959(a)(3) and 2; and two counts of use of a firearm during and in relation to, or possession in furtherance of, a crime of violence, in violation of 18 U.S.C. § 924(c).
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
If convicted of murder in aid of racketeering, the defendants would face a mandatory sentence of life in prison or death. The remaining charges carry separate 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 the imposition of a sentence, 18 U.S.C. § 3553.
Valdez was arrested and made an initial appearance in federal court today. He is scheduled to make his next appearance on December 27, 2018, for identification of counsel.
The prosecution is the result of an investigation conducted by the Salinas Police Department in partnership with the FBI.
Members of the public who have information regarding gang-related activities are encouraged to contact FBI San Francisco Division at 415-553-7400.
Government Intervenes in False Claims Act Lawsuit Against Sutter Health and Palo Alto Medical Foundation for Mischarging the Medicare Advantage ProgramRead the Press Release
The United States has intervened in a complaint against Sutter Health LLC, a California-based healthcare services provider, and an affiliated entity, Palo Alto Medical Foundation, (collectively “Sutter”) that alleges that Sutter violated the False Claims Act by submitting inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans, the Justice Department announced today. Sutter Health is headquartered in Sacramento, California.
“Federal healthcare programs rely on the accuracy of information submitted by healthcare providers to ensure that patients are afforded the appropriate level of care and that managed care plans receive appropriate compensation,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “Today’s action sends a clear message that we will seek to hold healthcare providers responsible if they fail to ensure that the information they submit is truthful.”
Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed healthcare insurance plans called Medicare Advantage Plans (MA Plans) that are owned and operated by private Medicare Advantage Organizations (MAOs). MA Plans are paid a capitated, or per-person, amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans. The Centers for Medicare and Medicaid Services (CMS), which oversees the Medicare program, adjusts the payments to MA Plans based on demographic information and the health status of each plan beneficiary. The adjustments are commonly referred to as “risk scores.” In general, a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary.
Sutter Health, a non-profit public benefit corporation that provides healthcare services through affiliated entities, including hospitals and medical foundations, contracted with certain MAOs to provide healthcare services to California beneficiaries enrolled in the MAOs’ MA Plans. In exchange, Sutter received a share of the payments that the MAOs received from CMS for the beneficiaries under Sutter’s care.
Sutter submitted diagnoses to the MAOs for the MA Plan enrollees that they treated. The MAOs, in turn, submitted the diagnosis codes to CMS from the beneficiaries’ medical encounters, such as office visits and hospital stays, and these diagnosis codes were used by CMS to calculate a risk score for each beneficiary.
The lawsuit alleges that Sutter Health and Palo Alto Medical Foundation knowingly submitted unsupported diagnosis codes for certain patient encounters for beneficiaries under their care. These unsupported diagnosis scores allegedly inflated the risk scores of these beneficiaries, resulting in inflated payments to Sutter. The lawsuit further alleges that once the Sutter entities became aware of these unsupported diagnosis codes, they failed to take sufficient corrective action to identify and delete additional potentially unsupported diagnosis codes.
“This intervention illustrates our commitment to protecting the integrity of the Medicare Advantage program,” said U.S. Attorney Alex G. Tse for the Northern District of California. “The share of Medicare beneficiaries enrolled in Medicare Advantage has steadily grown over the past decade, with 19 million beneficiaries enrolled in 2017. It is critically important that the data submitted to the Medicare Advantage program is truthful, because the government relies on this information to set payment levels. We will continue to guard government health programs from companies that improperly maximize their bottom line at taxpayer expense.”
The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The False Claims Act also permits the government to intervene in such lawsuits, as it has done in this case. The whistleblower, Kathleen Ormsby, was a former employee of Palo Alto Medical Foundation.
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Northern District of California, and HHS-OIG.
The case is captioned United States ex rel. Ormsby v. Sutter Health, et al., Case No. 15-CV-01062-JD (N.D. Cal.). The claims in which the United States has intervened are allegations only, and there has been no determination of liability.
Government Intervenes in False Claims Act Lawsuit Against Sutter Health and Palo Alto Medical Foundation for Mischarging the Medicare Advantage ProgramRead the Press Release
SAN FRANCISCO – The United States has intervened in a complaint against Sutter Health LLC, a California-based healthcare services provider, and an affiliated entity, Palo Alto Medical Foundation, (collectively “Sutter”) that alleges that Sutter violated the False Claims Act by submitting inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans, the Justice Department announced today. Sutter Health is headquartered in Sacramento, California.
“This intervention illustrates our commitment to protecting the integrity of the Medicare Advantage program,” said U.S. Attorney Alex G. Tse. “The share of Medicare beneficiaries enrolled in Medicare Advantage has steadily grown over the past decade, with 19 million beneficiaries enrolled in 2017. It is critically important that the data submitted to the Medicare Advantage program is truthful, because the government relies on this information to set payment levels. We will continue to guard government health programs from companies that improperly maximize their bottom line at taxpayer expense.”
“Federal healthcare programs rely on the accuracy of information submitted by healthcare providers to ensure that patients are afforded the appropriate level of care and that managed care plans receive appropriate compensation,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “Today’s action sends a clear message that we will seek to hold healthcare providers responsible if they fail to ensure that the information they submit is truthful.”
Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed healthcare insurance plans called Medicare Advantage Plans (MA Plans) that are owned and operated by private Medicare Advantage Organizations (MAOs). MA Plans are paid a capitated, or per-person, amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans. The Centers for Medicare and Medicaid Services (CMS), which oversees the Medicare program, adjusts the payments to MA Plans based on demographic information and the health status of each plan beneficiary. The adjustments are commonly referred to as “risk scores.” In general, a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary.
Sutter Health, a non-profit public benefit corporation that provides healthcare services through affiliated entities, including hospitals and medical foundations, contracted with certain MAOs to provide healthcare services to California beneficiaries enrolled in the MAOs’ MA Plans. In exchange, Sutter received a share of the payments that the MAOs received from CMS for the beneficiaries under Sutter’s care.
Sutter submitted diagnoses to the MAOs for the MA Plan enrollees that they treated. The MAOs, in turn, submitted the diagnosis codes to CMS from the beneficiaries’ medical encounters, such as office visits and hospital stays, and these diagnosis codes were used by CMS to calculate a risk score for each beneficiary.
The lawsuit alleges that Sutter Health and Palo Alto Medical Foundation knowingly submitted unsupported diagnosis codes for certain patient encounters for beneficiaries under their care. These unsupported diagnosis scores allegedly inflated the risk scores of these beneficiaries, resulting in inflated payments to Sutter. The lawsuit further alleges that once the Sutter entities became aware of these unsupported diagnosis codes, they failed to take sufficient corrective action to identify and delete additional potentially unsupported diagnosis codes.
The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery. The False Claims Act also permits the government to intervene in such lawsuits, as it has done in this case. The whistleblower, Kathleen Ormsby, was a former employee of Palo Alto Medical Foundation.
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Northern District of California, and HHS-OIG.
The claims in which the United States has intervened are allegations only, and there has been no determination of liability.
Sacramento County Resident Sentenced to Seven Years in Prison for Drug Dealing and Illegally Selling FirearmsRead the Press Release
SAN FRANCISCO – Donnie Yingling was sentenced today in federal court to 84 months in prison for distributing crystal methamphetamine, conspiring to deal in firearms without a license, and related crimes, announced U.S. Attorney Alex G. Tse and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Ray Roundtree. The sentence was handed down by the Honorable Susan Illston, Senior U.S. District Judge.
Yingling, 48, of Walnut Grove, Calif., pleaded guilty to the charges on August 23, 2018. According to his plea agreement, Yingling admitted that in March 2017, he knowingly conspired with codefendant Ronald Ahart to sell firearms without a license. Specifically, Yingling admitted that on March 21, 2017, he and Ahart talked by telephone with an undercover officer to arrange the sale of firearms. On March 22, 2017, the codefendants sold five firearms for $4,340 to undercover officers. Further, the defendants sold another six firearms to the undercover officers for $7,000 on March 23, 2017. Yingling admitted that he was not a licensed firearms dealer.
Yingling also admitted that on April 20, 2017 he sold 54.4 grams of actual methamphetamine to undercover officers for $600.
On July 21, 2017, a federal grand jury indicted Yingling charging him with two counts of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1), as well as one count each of conspiracy to deal in firearms without a license, in violation of 18 U.S.C. § 371; dealing with firearms without a license, in violation of 18 U.S.C. § 922(a)(1)(A); and distribution and possession with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(B)(viii). Yingling pleaded guilty to the conspiracy charge, the firearm dealing charge, and the drug distribution charge. Judge Illston dismissed the remaining charges at his sentencing.
In addition to the prison term, Judge Illston ordered Yingling to serve a five year period of supervised release to begin when the prison term has been completed. Yingling has been in custody since November 28, 2017.
On August 3, 2018, the co-conspirator Ahart pleaded guilty to his part in the gun distribution conspiracy and to being a felon in possession of firearms. On November 30, 2018, Judge Illston sentenced Ahart to 46 months in prison and three years of supervised release for his offenses.
Special Assistant U.S. Attorney Christopher Vieira is prosecuting the case with the assistance of Kimberly Richardson. These prosecutions are the result of an investigation by the ATF and are brought as part of “Operation Cold Day,” an effort spearheaded by the ATF to bring federal resources to bear in support of ongoing state and local efforts to combat gun and drug related crime.
Former Fund Manager Sentenced to Prison for Fraud and Filing a False Tax ReturnRead the Press Release
An Eagle River, Wisconsin man, who resided in San Francisco, California, was sentenced to 30 months in prison on Tuesday December 4, 2018, by U.S. District Judge Robert Seeborg in the U.S. District Court for the Northern District of California, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and United States Attorney Alex G. Tse.
According to court documents, in December 2017, Burrill, 74, pleaded guilty to investment adviser fraud and filing a false 2010 individual income tax return that failed to report millions of dollars. Burrill was the owner and CEO of Burrill Capital, LLC and a number of related entities. Through these entities, he managed investment funds, including Burrill Life Sciences Capital Fund III, L.P. (the Fund), an investment fund focused on the life sciences industry. The Fund was comprised of total committed capital of approximately $283 million. To accomplish his scheme, Burrill caused the Fund to transfer millions of dollars in advance management fees to companies he controlled, although Burrill knew that he was not permitted to draw such advance fees. Burrill then filed a false federal income tax return that did not report millions in fees that he had illegally diverted.
Marc Berger, Burrill’s accountant, was convicted at trial of assisting Burrill with filing a false income tax return. He is scheduled to be sentenced next week.
Principal Deputy Assistant Attorney General Zuckerman and United States Attorney Alex G. Tse commended special agents of IRS–Criminal Investigation and FBI, who conducted the investigation, and Assistant United States Attorney Robert S. Leach and Trial Attorney Lori A. Hendrickson, Tax Division, who prosecuted the case. Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Tse also thanked the San Francisco Regional Office of the Securities and Exchange Commission, which provided assistance in this matter.
Eureka Resident Sentenced to 10 Years in Prison Dealing Drugs with FirearmsRead the Press Release
SAN FRANCISCO, CA – Judson Allen Stiglich was sentenced in federal court today to 120 months in prison for possessing methamphetamine with intent to distribute the drug and possession of a firearm in furtherance of the drug trafficking, announced U.S. Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Susan Illston, U.S. District Judge.
Stiglich, 36, of Eureka, pleaded guilty to the charges on June 22, 2018. According to his plea agreement, Stiglich admitted that on December 7, 2017, he possessed nearly a half-pound of methamphetamine and a loaded gun. On that day, law enforcement officers executed a search warrant at his home and found over 200 grams of 100% pure ice methamphetamine; Stiglich acknowledged that he intended to sell the drugs. During the search of his residence, law enforcement officers also found $2409 in cash and drug distribution paraphernalia, including a digital scale with methamphetamine residue. Stiglich acknowledged he knowingly possessed all the items and further admitted that in the weeks leading up to December 7, 2017, he sent text messages from his phone both to set up drug transactions and to discuss his debt to a drug supplier.
Further, according to his plea agreement, Stiglich admitted he possessed a .357 revolver loaded with four rounds of ammunition to further his drug dealing. Stiglich admitted that among the reasons he possessed the weapon were to protect himself, his drugs, and his money.
On March 1, 2018, a federal grand jury indicted Stiglich charging him with one count each of possessing with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(B); possessing a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c); and being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g). Stiglich pleaded guilty to the first two charges.
In addition to the prison term, Judge Illston ordered Stiglich to serve a 4-year term of supervised release. Stiglich has been in custody since his arrest on December 7, 2017, and will begin serving his sentence immediately.
Assistant U.S. Attorney Ravi T. Narayan is prosecuting the case with the assistance of Kimberly Richardson. The prosecution is the result of an investigation conducted by the FBI and the Humboldt County Drug Task Force.
CEO Charged with Wire Fraud Arrested at SFORead the Press Release
SAN FRANCISCO – Brandon Frere was charged with wire fraud on December 5, 2018, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation, Special Agent in Charge John F. Bennett.
According to the criminal complaint, Frere, 41, of Sonoma County, is alleged to have used various companies that he controlled to operate a fraudulent student loan debt relief scheme to unjustly enrich himself and his family members from 2014 to November 2018. An affidavit filed by an FBI special agent in connection with a criminal complaint alleges that Frere targeted recipients of federal student loans who were often struggling to make payments and devised a scheme to steal millions of dollars from these victims. Frere is the President, Chief Executive Officer, Secretary, and primary shareholder of American Financial Benefits Center, Ameritech Financial, and Financial Education Benefits Center (collectively “the Companies”). The Companies allegedly collected advance fees of approximately $600 to $800 per victim, purportedly to prepare and submit documents to enroll consumers in the Public Service Loan Forgiveness program, income-driven repayment program, and other alternative repayment plans with the U.S. Department of Education. Frere and the Companies also allegedly collected enrollment fees ranging from $100 to $1,200, as well as monthly fees ranging from $49 to $99 for a so-called financial education membership program.
The affidavit describes a complex, multi-faceted scheme to defraud. As part of the alleged scheme, Frere’s Companies made misrepresentations to the victims concerning their ability to obtain lower fixed payments and loan forgiveness. Employees of defendant’s companies were trained to encourage victims to misrepresent their family size so that they could be enrolled in programs for which they were not eligible. Frere’s companies are also alleged to have misrepresented the nature and purpose of the fees that consumers would be paying. Victims often were charged recurring monthly fees for the “financial education” membership program. These fees were encompassed within the program costs quoted to consumers during sales calls, but agents represented that the fee was tied to consumers’ enrollment in an alternative repayment plan and that some or all of the monthly payments under “the program” would applied to consumers’ outstanding loan balance. This was false because the monthly fees were not being applied to the victims’ loan balances. Monthly payments, however, would continue to be pulled out of the victim’s bank account for the term of consumer’s student loans, falsely making it appear that the fees were related to their loan repayment.
Frere and the Companies are believed to have collected over $28 million from 2014 to early 2018. The affidavit also alleges that bank records show the dissipation of over $128,000 to airlines, hotels, resorts, casinos, cruise lines, and similar companies; over $202,000 to automotive and motorsports companies; and over $253,000 to companies that provide building, landscaping, and related supplies and services. Frere allegedly directed payments of over $864,000 to members of his family and family-owned businesses. Frere himself allegedly transferred millions of dollars to his personal accounts, including millions of dollars transferred overseas to accounts that he controlled in Andorra and Luxembourg. As recently as last Thursday, Frere is alleged to have looted the business accounts of hundreds of thousands of dollars.
Frere was arrested last night, December 5, 2018, at SFO as he attempted to board a flight to Cancun, Mexico. He made his initial appearance in federal court in San Francisco this morning. Frere is currently being held in the custody of the United States Marshals Service. His next scheduled appearance is at 9:30 AM on December 10, 2018, for a detention hearing before the Honorable Sallie Kim, U.S. Magistrate Judge.
The criminal investigation began after the Federal Trade Commission filed a civil complaint in February 2018 against Frere and the Companies in federal court in Oakland. (Federal Trade Commission v. American Financial Benefits, et al., Case No. CV 18-00806-SBA).
A criminal complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of wire fraud under 18 U.S.C. § 1343, Frere faces a maximum sentence of 20 years in prison, and a fine of $250,000, or not more than the greater of twice the gross gain or twice the gross loss from the fraud. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Scott Joiner is prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the Internal Revenue Service and Federal Bureau of Investigation.
Soledad Gang Member Who Faked His Own Kidnapping Arrested in FresnoRead the Press Release
San Francisco - Jorge Jasso, 26, a Norteño street gang member, was arrested in Fresno, California on November 29, 2018 following his disappearance on October 22, 2018, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. A federal grand jury indicted Jasso on September 27, 2018 along with fourteen other gang members for a broad range of racketeering crimes, including racketeering conspiracy, conspiracy to commit murder and assault in aid of racketeering, attempted murder in aid of racketeering, and assault with a dangerous weapon in aid of racketeering. Jasso was scheduled to appear in magistrate court in San Jose for a bail review hearing on October 22, 2018, the day he disappeared. His girlfriend, Kimberly Herrera Villacorte, called 911 that morning to report that unknown individuals had burst into Jasso’s residence, dragged her into a closet by the hair, and kidnapped him. The ankle monitor that had been placed on Jasso was found on the ground next to the residence. U.S. Magistrate Judge Virginia K. DeMarchi issued a bench warrant against Jasso for failing to appear before the Court on that date, as required.
Suspecting that this might be a hoax given a number of inconsistencies in Herrera’s account of the events, the FBI and local law enforcement agencies surveilled Herrera for almost six weeks, which eventually led them to Jasso. On November 29, 2018, Jasso and Herrera were in a Motel 6 in Fresno, California, and were seen entering a white GMC truck. When police tried to pull it over, the truck tried to escape and crashed into another vehicle. After the collision, Jasso jumped out of the truck and attempted to run from the police. After a short chase, Jasso was taken into custody and was found to be in possession of a concealed firearm. Jasso was arrested along with the other occupants of the vehicle, including Villacorte.
This morning, the United States Attorney’s Office filed a criminal complaint against Herrera, 22, charging her with making false statements to government agents, in violation of Title 18, United States Code 1001(a) and aiding and abetting failure to appear, in violation of Title 18, United States Code, Section 3146(a)(1) and 2. If convicted, Herrera faces up to five years in prison for lying to the FBI and up to ten years in prison for assisting Jasso in jumping bail, however, the Complaint filed today merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. In addition, any sentence following a 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.
Last week’s arrest and efforts to locate Jasso are the product of a coordinated effort by the FBI, the California Highway Patrol, the Soledad Police Department, the Salinas Police Department, the California Department of Corrections and Rehabilitation, Multi-Agency Gang Enforcement Consortium, and the Fresno Police Department.
Norteño Gang Member Sentenced to 15 Years in Prison for RICO Conspiracy and Use of FirearmsRead the Press Release
SAN JOSE – Anthony Lek was sentenced yesterday to 15 years in prison for his role in a racketeering conspiracy and for using or possessing firearms in furtherance of a crime of violence, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge.
On January 4, 2018, Lek, 31, of Salinas, pleaded guilty to one count of Racketeering Conspiracy, in violation of 18 U.S.C. § 1962(d); Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. § 1951(a); and Using a Firearm in Furtherance of a Crime of Violence, in violation of 18 U.S.C. §§ 924(c) and 2. According to the plea agreement, Lek has been an active member of the “Santa Rita” street gang, which is a subset of the larger Norteño gang affiliation in Salinas, since at least 2007. An essential element of being a Norteño gang member in Salinas was a commitment to violently attack and even kill rival Sureño gang members. Since at least 2009, Lek began associating with a particularly violent subgroup of Norteño gang members in Salinas and participated with them in conducting three take-over style armed robberies of commercial establishments.
Specifically, on June 2, 2010, Lek and three fellow Norteño gang members conducted an armed robbery of the Zale’s jewelry store at the Gilroy Outlets. Lek was armed with a semi-automatic firearm and pointed his gun at the workers and forced them to open the jewelry cases. Lek and a co-robber used zip ties to bind the workers after they opened the jewelry cases. The robbers took over $800,000 worth of jewelry during this robbery.
A few months later, in October 2010, Lek and another Norteño gang member committed an armed robbery of a check-cashing business in Turlock, California. The robbers took several thousand dollars.
On March 17, 2011, Lek and three fellow Norteño gang members committed an armed robbery of the Chase bank in Santa Maria, California. Lek scoped out the bank the day before the robbery. On the day of the robbery, Lek remained outside as the getaway driver of a second vehicle staged a short distance from the bank. The robbers stole a total of $174,000.
On October 28, 2015, Lek was charged in a 71 count superseding indictment along with his co-conspirators. The investigation leading to the indictment was part of the Salinas Police Department and FBI’s crackdown on Norteño gangs in Monterey County.
In addition to the prison term, Judge Koh also sentenced Lek to a five-year period of supervised release, to commence after Lek completes his prison sentence. Lek has been in federal custody since June 1, 2015, and will begin serving his sentence immediately.
Assistant U.S. Attorneys Kimberly Hopkins, Christiaan Highsmith, and Stephen Meyer are prosecuting the case with the assistance of Nina Burney Williams, Adria Trgovich, and Lance Libatique. The prosecution is the result of an investigation by the FBI and Salinas Police Department.
Former Autonomy CEO Charged with Wire FraudRead the Press Release
SAN FRANCISCO – Today, a federal grand jury indicted Michael Richard Lynch, the former Chief Executive Officer (“CEO”) of Autonomy Corporation plc (“Autonomy”), with conspiracy to commit wire fraud and multiple counts of wire fraud, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. Stephen Keith Chamberlain, Autonomy’s former Vice President for Finance, was also indicted today in the same indictment for the same offenses.
According to the indictment, Lynch, 53, and Chamberlain, 46, both citizens and residents of the United Kingdom, allegedly engaged in a scheme to defraud purchasers and sellers of Autonomy securities, including the Hewlett-Packard Company, about the true performance of Autonomy’s business, its financial condition, and its prospects for growth.
Prior to October 2011, Autonomy was a company incorporated in the United Kingdom that maintained dual headquarters in San Francisco and Cambridge. In 2010, about 68% of Autonomy’s reported revenues came from the United States and other countries in the Americas. The case involves the acquisition by Palo Alto-based Hewlett-Packard Company and Hewlett-Packard Vision B.V., a wholly-owned subsidiary of HP (collectively “HP”), of Autonomy. On August 18, 2011, HP entered into an Offer Agreement with Autonomy and publicly announced its offer to acquire Autonomy for approximately $11 billion. On October 3, 2011, HP’s acquisition of Autonomy closed and HP acquired control of Autonomy.
According to the Indictment, between 2009 and 2011, Lynch and Chamberlain, and other co-conspirators, (1) artificially inflating Autonomy’s revenues by backdating written agreements to record revenue in prior periods; recording revenue on contracts that were subject to side letters or other contingencies that impacted revenue recognition; and improperly recorded revenue for reciprocal or roundtrip transactions; (2) made false and misleading statements to Autonomy’s independent auditor about transactions allegedly supporting the recognition of revenue and other items in Autonomy’s financial statements; (3) made false and misleading statements to market analysts covering Autonomy about Autonomy’s true performance and the nature and composition of its products, revenues and expenses; (4) made false and misleading statements to Autonomy’s regulators in response to inquiries about its financial statements; (5) made false and misleading statements that Autonomy was a so-called “pure software” company while concealing the fact that Autonomy engaged in hidden, loss-making resales of hardware separate from its sale of appliances; (6) made false and misleading statements about Autonomy’s alleged sales of original manufactured equipment or “OEM” licenses; and (7) intimidated, pressured and paid off persons who raised complaints about or openly criticized Autonomy’s financial practices and performance.
As part of the alleged scheme to defraud, Autonomy issued materially false and misleading quarterly and annual financial statements which the defendants allegedly provided to HP during the time that HP was considering whether to purchase Autonomy. The indictment alleges that Lynch and Chamberlain caused Autonomy to make materially false and misleading statements directly to HP regarding Autonomy’s financial condition, performance, and business during the negotiations between HP and Autonomy leading up to the August 18, 2011 acquisition announcement. Allegedly, the defendants, and their co-conspirators, made false and misleading statements about the nature of Autonomy’s products, concealed Autonomy’s non-appliance hardware sales, and made other false and misleading statements during HP’s “due diligence” of Autonomy.
In sum, the indictment charges Lynch and Chamberlain with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and thirteen (13) counts of wire fraud, in violation of 18 U.S.C. § 1343. The indictment also includes asset forfeiture allegations.
No federal court appearance has yet been scheduled for the defendants.
The indictment filed today merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of twenty (20) years in prison, and a fine of $250,000, plus restitution, for each count of wire fraud and for the conspiracy count. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Robert S. Leach, Adam A. Reeves, and William Frentzen are prosecuting the case with the assistance of Beth Margen, Phillip Villanueva, and Bridget Kilkenny. The prosecution is the result of a multi-year investigation involving the FBI and the United States Securities and Exchange Commission.
Dublin Man Sentenced to More Than 14 Years in Prison for Series of Armed Robberies Targeting San Francisco PharmaciesRead the Press Release
SAN FRANCISCO – Adam Herrick was sentenced Thursday, November 29, 2018, to 171 months in prison for six robberies targeting San Francisco pharmacies, announced U.S. Attorney Alex G. Tse and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Ray Roundtree. The sentence was handed down by the Honorable William H. Orrick, U.S. District Judge.
Herrick, 36, a Dublin resident, pleaded guilty on August 23, 2018, to six counts of interference with commerce by robbery (“Hobbs Act robbery”) and one count of brandishing a firearm during a robbery. At the time of his plea, Herrick admitted to committing all six robberies between March 15, 2015, and April 17, 2017, at various San Francisco businesses, including multiple Walgreens and CVS locations, and one independent pharmacy. In several of the robberies, Herrick jumped over the pharmacy counter and brandished a black semi-automatic pistol as he demanded that the pharmacist and pharmacy employees hand over prescription drugs, including Fentanyl and OxyContin. The total value of the drugs that Herrick stole during the two-year robbery spree amounted to $32,360.
A federal grand jury indicted Herrick on March 1, 2018, charging him with six counts of Hobbs Act robbery, in violation of 18 U.S.C. § 1951(a) and one count of brandishing a firearm in furtherance of a crime of violence, in violation of 18 U.S.C. § 924(c)(1)(A). Herrick pleaded guilty and was sentenced as to all counts in the indictment.
In addition to the prison term, Judge Orrick ordered Herrick to serve a five-year period of supervised release, and further ordered Herrick to compensate each victim pharmacy for its monetary losses resulting from the robberies. Herrick is currently in custody and will begin serving his sentence immediately.
Assistant U.S. Attorney Casey Boome is prosecuting the case with the assistance of Patricia Mahoney and Marina Ponomarchuck. The prosecution is the result of an investigation led by the San Francisco Police Department and the ATF.
U.S. District Judge Issues Warrant for Arrest of Fugitive in Wire Fraud CaseRead the Press Release
SAN JOSE – U.S. District Judge Edward J. Davila signed a warrant for the arrest of Christian Reimer Stukenbrock (also spelled as Stuckenbrock), the defendant in a 9-count wire fraud case who failed to appear yesterday at what was supposed to be the first day of a jury trial, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.
On January 14, 2015, a federal grand jury indicted Stukenbrock, 62, a citizen of Germany, with nine counts of wire fraud. According to court documents, the government intended to prove that Stukenbrock misappropriated several million dollars that was supposed to be invested on behalf of a successful Silicon Valley entrepreneur. According to the government, Stukenbrock created a company called Silicon Valley Technology Group (“SVTG”) in 2000 to raise investment capital, but Stukenbrock never operated SVTG as a bona fide corporate entity. Between 2005 and 2011, the defendant allegedly received nearly $23 million from the entrepreneur to invest in several companies. The government intended to demonstrate at trial that only some of the investor’s money was invested as promised and that Stukenbrock diverted millions of dollars to himself. In furtherance of that scheme to defraud, Stukenbrock allegedly made numerous misrepresentations in bank records, business records, and filings made with public entities. Stukenbrock was charged with nine counts of wire fraud, in violation of 18 U.S.C. § 1343. An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The trial in the case was scheduled to begin yesterday morning. On Monday, however, defendant’s counsel forwarded to the government and the court a message from Stukenbrock in which he stated “Please contact the court and tell them that I will not be there tomorrow and cancel the proceedings. I already left the jurisdiction . . . .” Judge Davila read the email into the court record and issued a bench warrant for the defendant’s arrest.
Anyone with information regarding the defendant’s whereabouts should contact the FBI at 415-553-7400.
San Francisco Resident Sentenced to 10 Years in Prison for Manufacturing Counterfeit Adderall Pills Containing MethamphetamineRead the Press Release
SAN FRANCISCO – Gino Carl von Eckstein was sentenced to 10 years in prison today for possessing with intent to distribute methamphetamine announced United States Attorney Alex G. Tse; Drug Enforcement Administration Special Agent in Charge Chris Nielsen; U.S. Customs and Border Protection Director of Field Operations Brian J. Humphrey; Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett; and Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI), Tara Sullivan. The sentence was handed down by the Honorable Charles R. Breyer, U.S. Senior District Judge.
Eckstein, 25, of Brisbane, Calif., pleaded guilty to the charge on September 5, 2018, after federal agents executed search warrants on his car and three residences he was using. Eckstein admitted that he possessed counterfeit “Adderall” pills, or pills that appeared to be Adderall, but in fact contained methamphetamine. Eckstein admitted he stored the pills in his car, at three locations in San Francisco’s Richmond District, in Brisbane, and in San Leandro. Eckstein further admitted he possessed the equipment and ingredients necessary to manufacture counterfeit Adderall pills. In total, agents allegedly found over 1,000 grams of suspected methamphetamine.
“Counterfeit pharmaceuticals are a danger to the community,” said U.S. Attorney Tse. “As this case illustrates, we are responding to the emerging threat of counterfeit pharmaceuticals in our district, particularly when the substances are laced with potentially life endangering drugs. Those individuals who put these dangerous products in our community will be prosecuted to the fullest extent of the law.”
“Producing unregulated concoctions and marketing them as a legitimate substance is criminal and dangerous. These drugs are unsafe and their use can have devastating consequences,” stated DEA Special Agent in Charge Chris Nielsen. “We will continue working with our partners to hold people accountable who threaten public health and safety by distributing counterfeit pharmaceuticals.”
“This a textbook example of how multiple law-enforcement agencies work together to keep dangerous drugs off the street and bring criminals to justice,” said Brian J. Humphrey, CBP Director of Field Operations.
“This investigation and subsequent sentence is the result of the FBI and our partners’ unwavering commitment to keep our citizens safe,” said FBI San Francisco Special Agent in Charge John F. Bennett. “Counterfeit pharmaceuticals laced with dangerous substances on our streets threaten the safety of our citizens and will not be tolerated.”
A federal grand jury filed an indictment on June 26, 2018, charging Eckstein with one count of intentionally possessing with intent to distribute 500 grams and more of a mixture and substance containing methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A)(viii). He pleaded guilty to the charge.
In addition to the prison term, Judge Breyer also sentenced the defendant to a 5-year period of supervised release. Eckstein has been in continuous custody since June 15, 2018, and will begin serving his sentence immediately.
Assistant United States Attorney Sheila Armbrust in prosecuting this case. This case is the result of an investigation by the DEA, CBP, FBI, and IRS-CI, with assistance from the San Francisco Police Department. 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.
Oakland Resident Sentenced to 14 Years in Prison for Role in Interstate Gun Trafficking Scheme and Related CrimeRead the Press Release
OAKLAND – Andre Martel Winn was sentenced today to 14 years in prison for his role in orchestrating an elaborate illegal interstate firearm trafficking scheme, as well as robbery and firearms charges, announced United States Attorney Alex G. Tse and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Ray Roundtree. The sentence was imposed by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge.
Winn was convicted of the crimes on July 18, 2018, following a bench trial based on stipulated facts. According to court documents, Winn was one of nine defendants participating in the illegal interstate firearm trafficking scheme. The other defendants are Oakland resident Edgar De La Cruz, 21; Reno, Nev. residents Richard Straight, 28, Jenna Jeanne Allec, 26, Jonathan Salevao, 29, Kaleka Mile Kam, 25, and Quinton Kalifa Endemann, 30; Elko, Nev. resident Kenneth Lee Kemp, 34; and Sparks, Nev. resident Daniel Taylor Taufi, 26. Winn worked with codefendants to purchase dozens of firearms in Nevada and have them transported to and sold in California. Winn had Nevada-based co-conspirators purchase specific types of firearms at his request and then he wired money from Oakland to Nevada to pay for the gun purchases. Court documents demonstrate that Allec, Kemp, Kam, Taufi, and Endemann purchased the firearms from licensed Nevada firearm dealers and then negotiated with Salevao and Straight to sell the arms to Winn and De La Cruz. Further, Winn and De La Cruz traveled from Oakland to Reno to retrieve the firearms. Winn and De La Cruz then transported the firearms to the San Francisco Bay Area where they were sold.
From March of 2015 through October of 2016, well over 60 firearms were purchased, transported, and sold in violation of federal firearms laws via this scheme. A number of the firearms trafficked during the conspiracy have been recovered in Oakland and elsewhere in the Bay Area by local police officers in the course of law enforcement operations.
“Today’s sentence should serve as a reminder to all those who may consider getting involved is the sale of illegal firearms,” said U.S. Attorney Tse. “This office will prosecute to the fullest extent of the law anyone caught unlawfully disseminating these weapons into our communities.”
“In the pursuit of our commitment to the public and our communities, ATF special agents followed evidence of significant purchases of firearms being trafficked and resold without these individuals holding federal firearms licenses, which is a violation of federal law,” said Special Agent in Charge Roundtree. “This investigation involved routine, multiple sales and trace reports. ATF utilized its Crime Gun Intelligence Centers to glean information on firearms that showed up at crime scenes which were recently purchased. ATF personnel is dedicated to making sure firearms are not going into the hands of criminals and used in violent crimes in our neighborhoods.”
In addition to charges resulting from his role in the firearms trafficking scheme, Winn also was sentenced today for his role in a robbery, being a felon in possession of a firearm, and brandishing firearms in furtherance of a crime of violence. Court documents reflect that before participating in the firearms trafficking scheme, he had a felony conviction. Winn therefore was prohibited from possessing or receiving firearms. In addition, court documents and evidence demonstrate that Winn and De La Cruz each brandished a firearm when they robbed a gas station on High Street in Oakland in 2015. On that occasion, the defendants absconded with approximately $2,000 in cash.
In sum, the defendants have been convicted of the following crimes and sentenced as set forth below:
Defendant
Convictions
Statute
Sentence
Andre Martel Winn
Robbery (Interference with Commerce by Robbery)
18 U.S.C. § 195l(a)
14 years in prison
4 years of supervised release
Possessing/Brandishing a Firearm in Furtherance of a Crime of Violence
18 U.S.C. § 924(c)(l)(A)
Felon in Possession of a Firearm
18 U.S.C. § 922(g)(l)
Conspiracy to Deal in Firearms Without a License
18 U.S.C. § 371
Dealing in Firearms Without a License
18 U.S.C. § 922(a)(l)(A)
Traveling Interstate to Promote Illegal Firearms Trafficking
18 U.S.C. § 924(n)
Edgar De La Cruz
Robbery (Interference with Commerce by Robbery)
18 U.S.C. § 195l(a)
120 months in prison
5 years of supervised release
Possessing/
Brandishing a Firearm in Furtherance of a Crime of Violence
18 U.S.C. § 924(c)(l)(A)
Conspiracy to Deal in Firearms Without a License
18 U.S.C. § 371
Traveling Interstate to Promote Illegal Firearms Trafficking
18 U.S.C.
§ 924(n)
Richard Straight
Dealing in Firearms Without a License
18 U.S.C.
§ 922(a)(l)(A)
42 months in prison
3 years of supervised release
Aiding and Abetting Traveling Interstate to Promote Illegal Firearms Trafficking
18 U.S.C.
§§ 924(n) and 2
Jenna Leanne Allec
Dealing in Firearms Without a License
18 U.S.C.
§ 922(a)(l)(A)
4 years of probation
Kenneth Lee Kemp
Conspiracy to Deal in Firearms Without a License
18 U.S.C. § 371
14 months in prison
3 years of supervised release
Jonathan Salevao
Dealing in Firearms Without a License
18 U.S.C.
§ 922(a)(l)(A)
24 months in prison
3 years of supervised release
Aiding and Abetting Traveling Interstate to Promote Illegal Firearms Trafficking
18 U.S.C.
§§ 924(n) and 2
Kaleka Mile Kam
Dealing in Firearms Without a License
18 U.S.C.
§ 922(a)(l)(A)
3 years of probation
Daniel Taylor Taufi
Dealing in Firearms Without a License
18 U.S.C.
§ 922(a)(l)(A)
3 years of probation
Quinton Kalifa Endemann
Dealing in Firearms Without a License
18 U.S.C.
§ 922(a)(l)(A)
Sentencing set for
January 7, 2019.
Maximum penalties:
5 years in prison
$250,000 fine
3 years supervised release
All of the defendants were convicted of federal felony crimes making it a federal felony for any of them to possess a firearm or ammunition in the future.
The prosecution is the result of an investigation by the ATF Crime Gun Intelligence Center, San Francisco Field Division.
Former California State Assemblyman Indicted for Fraud Scheme Involving BART Coffee ShopsRead the Press Release
OAKLAND – A federal grand jury returned a superseding indictment against defendant Terrence Patrick Goggin with four counts of wire fraud and nine counts of money-laundering, announced United States Attorney Alex G. Tse, Internal Revenue Service Special Agent in Charge Tara Sullivan, and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
Goggin, 76, is a former California State Assemblyman and current California-licensed attorney. According to the superseding indictment unsealed today, Goggin also was the CEO of Metropolitan Coffee & Concessions (MC2) and perpetrated an investment fraud scheme through the company. MC2 owned and operated four Peet’s Coffee & Tea retail centers in Bay Area Rapid Transit (BART) stations and held permits to expand their business to other stations. In 2013, Goggin solicited and obtained money from private equity investors to fund the build-out of two additional retail centers at the Civic Center and Balboa Park BART stations. The indictment alleges that after receiving investor funds, Goggin diverted the money to non-approved business projects in New York City, including a now-closed restaurant called “Preserve 24.” Goggin also used his authority as CEO to direct MC2 employees to transfer the investor money inappropriately. Further, Goggin used investor funds to support his personal spending and transferred thousands of dollars to a girlfriend in Thailand.
Goggin made his initial appearance in federal court in Oakland on November 26, 2018. Goggin is presently out of custody. A bail hearing and appointment of counsel will occur at 9:30 a.m. on December 5, 2018, before the Honorable Kandis Westmore, U.S. Magistrate 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, Goggin faces a maximum sentence of 20 years imprisonment, and a fine of $250,000 or twice the gross gain or loss, plus restitution for each violation of 18 U.S.C. § 1343 (wire fraud) and a maximum sentence of 10 years imprisonment, and fine of $250,000 or twice the value of the criminal property involved in the transactions for each violation of 18 U.S.C. § 1957 (money laundering). However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Katie Burroughs Medearis is prosecuting the case with the assistance of Jessica Rodriguez Gonzalez. The prosecution is the result of an investigation by the Federal Bureau of Investigation and Internal Revenue Service–Criminal Investigation.
United States Attorney Alex G. Tse Congratulates Judges Ioana Petrou and Tracie L. Brown on Their Appointments to the California Courts of AppealRead the Press Release
SAN FRANCISCO – United States Attorney Alex G. Tse congratulated Superior Court Judges Ioana Petrou and Tracie L. Brown on their respective selections by Governor Edmund G. Brown Jr. for appointments to First District Court of Appeal. Both selectees worked for the Office of the United States Attorney for the Northern District of California.
Judge Petrou, who has been appointed associate justice for Division Three of the First District Court of Appeal, served as an Assistant U.S. Attorney in the Northern District of California from 2004 to 2010. Judge Petrou also served as an Assistant U.S. Attorney in the Eastern District of New York from 2000 to 2002. Judge Brown, who has been appointed associate justice for Division Four of the First District Court of Appeal, served as an Assistant U.S. Attorney from 2002 to 2013. Both appointments require confirmation by the California Commission on Judicial Appointments.
“We are proud to see the elevation of these former assistant U.S. attorneys to the California Courts of Appeal,” said U.S. Attorney Tse. “I am certain that both Judge Petrou and Judge Brown will continue to serve with distinction as justices of the California Courts of Appeal.”
Oakland Man Sentenced to More Than 10 Years in Prison for Sex Trafficking of A MinorRead the Press Release
OAKLAND – Kaybaun Rodgers was sentenced today to 121 months in prison for sex trafficking of a minor, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John Bennett. The sentence was handed down by the Honorable Phyllis J. Hamilton, Chief United States District Judge.
Rodgers, 26, whose last known address was in Oakland, Calif., pleaded guilty to the charge on September 5, 2018. According to the plea agreement, between August 28, 2016, and February 19, 2017, he used the website Backpage.com to advertise the availability of a minor for commercial sex acts. Rodgers posted at least 46 advertisements depicting and describing the minor victim. Rodgers also admitted that from August 28, 2016, to April 20, 2018, he collected proceeds from the minor which were derived from the commercial sex acts in which the minor participated. For example, on April 20, 2018, Rodgers instructed the minor to send him $50 via Western Union after she had received $200 in exchange for a commercial sex act.
Rodgers further admitted that on October 24, 2017, he went to a hotel room where he made a video recording of the minor and a male who had solicited a commercial sex act through one of the Rodgers’s Backpage.com advertisements. In the recording, Rodgers confirmed with the minor that she had received $120 for performing the sex act. Rodgers then attempted to extort additional money from the man by threatening to post the video on Facebook unless the man paid more money.
Rodgers also used the minor to produce visual depictions of sexually explicit conduct and used his cellular telephone to record videos depicting the minor performing sex acts on himself.
On August 2, 2018, Rodgers was charged in a federal information with one count of sex trafficking of a minor, in violation of 18 U.S.C. §§ 1951(a)(1), (a)(2) and (b)(2). Pursuant to his plea agreement, Rodgers pleaded guilty to the charge.
In addition to the prison term, Chief Judge Hamilton sentenced the defendant to a 20-year period of supervised release. Rodgers also was ordered to register as a sex offender. The defendant has been in custody since his arrest in April of 2018 and will begin serving his sentence immediately.
Assistant U.S. Attorney Vanessa Ann Baehr-Jones is prosecuting the case with the assistance of Michelle Alter. The prosecution is the result of an investigation by the Federal Bureau of Investigation with assistance from the Union City Police Department.
Eureka Man Sentenced to 12½ Years in Prison for Possessing Child PornographyRead the Press Release
SAN FRANCISCO – Richard Rood was sentenced today to 150 months in prison for possession of child pornography, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John Bennett. The sentence was handed down by the Honorable William H. Alsup, United States District Judge.
Rood, 74, of Eureka, pleaded guilty to the charge on September 4, 2018. According to the plea agreement, Rood admitted he used publicly available computers at the Humboldt County Library to locate, view, and save images and videos depicting minors engaged in sexually explicit conduct. Rood saved the images and videos to his personal email accounts and he also emailed the images and videos to his cellular phone. Using email, Rood also traded images and videos of minors engaged in sexually explicit conduct with others. He admitted that he possessed 230 images and 10 videos of minors engaged in sexually explicit conduct. Some of the images and videos, Rood admitted, depicted sadistic or masochistic portrayals of minors as young as 5 years of age. Further, Rood admitted he obtained and sent images to minors by email.
A federal grand jury indicted Rood on May 31, 2018, charging him with one count each of distribution, receipt and possession of child pornography, in violation of 18 U.S.C §§ 2252(a)(2) and 2252(a)(4)(B). Pursuant to his plea agreement, Rood pleaded guilty to the possession charge and the remaining charges were dismissed. The possession charge, in light of Rood’s history, carried a mandatory minimum sentence of 120 months in prison.
In addition to the prison term, Judge Alsup sentenced the defendant to a 10-year period of supervised release. Rood already is a registered sex offender. The defendant has been in custody since his arrest in July of 2018 and will begin serving his sentence immediately.
Assistant U.S. Attorney Jonathan U. Lee is prosecuting the case with the assistance of Kimberly Richardson. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Humboldt County Sheriff’s Office.
Salinas Resident Sentenced to Prison for Tax SchemeRead the Press Release
SAN JOSE – Norma Morfin Mandujano, aka Norma Morfin, was sentenced today to 30 months in prison, and ordered to pay $7,505,519 in restitution, for her role in a conspiracy to submit false claims to the government, announced United States Attorney Alex G. Tse, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Tara Sullivan. The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge.
Morfin, 47, of Salinas, pleaded guilty to the charge on July 18, 2018. According to the plea agreement, Morfin admitted that, during 2012, she conspired with her codefendants to obtain the personal identifying information of others, and to use that information to file more than 2,300 fraudulent income tax returns with the Internal Revenue Service. These returns reported fake wages and fraudulently claimed dependents, education expenses, and tax credits. In total, the returns sought approximately $9.7 million in refunds, of which more than $7.5 million were paid. Morfin and her co-conspirators directed the fraudulently obtained refunds into bank accounts they controlled.
A federal grand jury indicted Morfin on July 13, 2017, charging her with one count of conspiracy to submit false claims, in violation of 18 U.S.C. § 286.
In addition to the prison term and restitution, Judge Koh ordered Morfin to serve a 3-year period of supervised release. The defendant will begin serving the sentence on January 15, 2019.
Other co-defendants indicted in connection with the conspiracy include the following:
Name
Charge
Status
Jacqueline Acosta, aka Jaqueline Ramos, aka Jackie Acosta
Pleaded guilty on
October 17, 2018 to conspiracy,
in violation of 18 U.S.C. § 286, and two counts of bank fraud,
in violation of 18 U.S.C. § 1344(2)
Sentencing scheduled for
March 20, 2019
Ana Bajo, aka
Ana Covarrubias
Pleaded guilty on
April 18, 2018, to conspiracy,
in violation of 18 U.S.C. § 286
Sentencing scheduled for
April 10, 2019
Jorge Vissani
Charged with one count of conspiracy, in violation of 18 U.S.C. § 286
Fugitive of justice
The charge pending against Jorge Vissani merely alleges that a crime has been committed; all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the Vissani faces a maximum statutory sentence of ten years in prison, a fine of $250,000, three years of supervised release, and restitution, if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
In addition, on October 30, 2018, Antonio Ahumada Rivas pleaded guilty to two counts of bank fraud in connection with the scheme. Judge Koh scheduled Rivas’s sentencing for February 6, 2019.
Assistant United States Attorney Michael G. Pitman and Trial Attorney Christopher Magnani are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
California Resident Sentenced to Prison for Stealing over $7.5 Million of Taxpayer MoneyRead the Press Release
Norma Morfin, aka Norma Morfin Mandujano of Salinas, California, was sentenced today to 30 months in prison, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and United States Attorney Alex G. Tse.
On July 18, 2018, Morfin pleaded guilty to conspiring to file fraudulent claims for income tax refunds. According to the plea agreement and documents filed with the court, Morfin admitted that, during 2012, she conspired with her co-defendants to obtain the personal identifying information of others, and to use that information to file more than 2,300 fraudulent income tax returns with the Internal Revenue Service. These returns reported false wages, dependents, education expenses, and tax credits, and claimed fraudulent tax refunds of more than $9 million, of which more than $7.5 million were paid.
The sentence was handed down by the Honorable Lucy H. Koh, United States District Court Judge, in San Jose. In addition to the 30 month sentence and the $7,505,519 in restitution, Morfin was also sentenced to a three year period of supervised release. Co-defendants Jackie Ramos, Antonio Ahumada, and Ana Bajo have also pleaded guilty and are awaiting sentencing.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Tse commended special agents of IRS-Criminal Investigation, who conducted the investigation and Assistant United States Attorney Michael Pitman and Trial Attorney Christopher Magnani are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Hillsborough Resident Sentenced to Nine Years in Prison for Role in Scheme to Illegally Export Components for Production of Night Vision and Thermal Devices and Money LaunderingRead the Press Release
SAN FRANCISCO – Naum Morgovsky was sentenced to 108 months in prison for his role in a conspiracy to illegally export components for the production of night-vision and thermal devices to Russia in violation of the Arms Export Control Act and related crimes. The announcement was made by United States Attorney Alex G. Tse, Assistant Attorney General for National Security John Demers, and Special Agent in Charge John F. Bennett of the Federal Bureau of Investigation (FBI) San Francisco Field Office. The sentence was handed down this morning by the Honorable Vince Chhabria, United States District Judge.
“Export controls keep us safe and prevent dangerous technologies from falling into the wrong hands,” said U.S. Attorney Tse. “The defendant pleaded guilty to knowingly violating the Arms Export Control Act when he tried to make money by shipping night vision and thermal components to Russia. Today’s nine-year sentence should send a clear message to deter others who are tempted by profits to violate the export laws of this country.”
“The FBI will continue to tirelessly investigate those who violate export controls that protect our country's sensitive technologies from American adversaries,” said Special Agent in Charge Bennett. “I would like to thank the dedicated work and collaborative efforts of our Federal partners in this case.”
Morgovsky, 69, of Hillsborough, Calif., pleaded guilty to the charges on June 12, 2018, which was to be the second day of jury selection for the proceedings at which Morgovsky would be tried on the charges. In pleading guilty, Morgovsky, 69, admitted that from at least April 2012 until August 25, 2016, he conspired with his wife, Irina Morgovsky, 67, to export without the necessary license, numerous night and thermal vision components, including image intensifier tubes and lenses. The couple conspired to export the components to a company called Infratech in Moscow, Russia, and used their U.S. business, Hitek International, to purchase the components. They misrepresented to the sellers that the products would not be exported and then shipped the products to Russia using a variety of front companies and shipment methods. Further, Mr. Morgovsky admitted he conspired with another employee of Infratech to export the components. He also admitted he knew the night and thermal vision components they exported were on the U.S. Munitions List and that they therefore were not permitted to export the items without a license from the Department of State, Directorate of Defense Trade Controls, which he never sought.
Judge Chhabria found that, in addition to exporting the components, Mr. Morgovsky had taken steps to conceal his crimes so that the couple could continue to operate the illegal export business undetected, and that Mr. Morgovsky laundered the proceeds of the export crimes. In addition, Mr. Morgovksy used numerous front companies and the identity of at least one deceased person in furtherance of the scheme. In handing down the sentence, Judge Chhabria stated that Mr. Morgovsky committed a “very serious crime” and that “people who export night vision . . . need to know that there is a penalty.”
On April 27, 2017, a federal grand jury issued a superseding indictment charging the Morgovskys for their respective roles in the illegal export scheme. As to Naum Morgovsky, the grand jury charged him for the illegal export scheme with conspiracy to violate the Armed Export Control Act, in violation of 22 U.S.C. § 2778, and with two counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i) and (2)(A). He pleaded guilty to all these export-related charges without a written plea agreement.
In addition to the prison term, Judge Chhabria assessed a fine against Mr. Morgovsky of $1 million and ordered forfeiture of $222,929.61 and three Infratech night vision devices seized in connection with the investigation.
For her part in the scheme, the grand jury charged Irina Morgovsky with conspiracy to violate the Armed Export Control Act and with misuse of a passport, in violation of 18 U.S.C. 1544. She pleaded guilty to the conspiracy charge and on October 31, 2018, Judge Chhabria sentenced her to 18 months in prison for her role in the scheme. The passport charge was dismissed pursuant to the plea agreement.
The Court has ordered Naum and Irina Morgovsky to self-surrender on January 4, 2019, to begin serving their respective sentences.
Assistant U.S. Attorneys Colin Sampson and Erin Cornell of the Northern District of California and Trial Attorney Jason McCullough of the National Security Division’s Counterintelligence and Export Control Section of the Department of Justice prosecuted this case. The prosecution is the result of an investigation by the counterintelligence squad of the FBI’s San Francisco Field Office, with assistance from IRS-Criminal Investigation and the Department of Commerce, Bureau of Industry and Security.
California Resident Sentenced to 9 Years in Prison and $1 Million Fine for His Scheme to Illegally Export Components for Production of Night Vision and Thermal Devices and Money LaunderingRead the Press Release
Naum Morgovsky, 69, of Hillsborough, California, was sentenced to 108 months in prison and three years of supervised release for conspiring to illegally export components for the production of night-vision and thermal devices to Russia in violation of the Arms Export Control Act, and for laundering the proceeds of the scheme.
The announcement was made by Assistant Attorney General for National Security John Demers, U.S. Attorney Alex G. Tse for the Northern District of California, and Special Agent in Charge John F. Bennet of the FBI’s San Francisco Field Office. The sentence was handed down by U.S. District Judge Vince Chhabria, who also assessed a fine of $1 million and assessed forfeiture of $222,929.61 and three Infratech night vision devices seized in connection with the investigation. On Oct. 31, Naum Morgovsky’s spouse and codefendant, Irina Morgovsky, 67, was sentenced to 18 months in prison for her role in the export conspiracy.
According to their guilty pleas, which occurred during the second day of jury selection on June 12, Naum Morgovsky and Irina Morgovsky admitted that from at least April 2012 until Aug. 25, 2016, they conspired to export without the necessary license to a company called Infratech in Moscow, Russia, numerous night and thermal vision components, including image intensifier tubes and lenses. The couple used their U.S. business, Hitek International, to purchase these components and misrepresented to the sellers that the products would not be exported. The couple then shipped the products to Russia using a variety of front companies and shipment methods. Further, defendants knew the night and thermal vision components they exported were on the U.S. Munitions List and that they therefore were not permitted to export the items without a license from the Department of State, Directorate of Defense Trade Controls, which they never sought.
In addition to exporting the components, Judge Chhabria found that Naum Morgovsky, a naturalized U.S. citizen originally of Ukraine, had taken steps to conceal his crimes so that the couple could continue to operate the illegal export business undetected, and that Naum Morgovsky laundered the proceeds of the export crimes. As the government alleged, Naum Morgovksy used numerous front companies and the identity of at least one deceased person in furtherance of the scheme. In handing down the sentence, Judge Chhabria noted that this was a “very serious crime” and that “people who export night vision . . . need to know that there is a penalty.”
On April 27, 2017, a federal grand jury issued a superseding indictment charging the Morgovskys for their respective roles in the illegal export scheme. As to Naum Morgovsky, the grand jury charged him for the illegal export scheme with conspiracy to violate the Armed Export Control Act, and with two counts of money laundering. He pleaded guilty to all these export-related charges without a written plea agreement.
For her part in the scheme, the grand jury charged Irina Morgovsky with conspiracy to violate the Armed Export Control Act and with misuse of a passport. She pleaded guilty to the charges and on Oct. 31, Judge Chhabria sentenced her to 18 months in prison for her role in the scheme.
The Court has ordered Naum and Irina Morgovsky to self-surrender on Jan. 4, 2019, to begin serving their respective sentences.
This prosecution is the result of an investigation by the counterintelligence squad of the FBI’s San Francisco field office, with assistance from IRS-Criminal Investigation and the Department of Commerce, Bureau of Industry and Security.
The case was prosecuted by Assistant U.S. Attorneys Colin Sampson and Erin Cornell of the Northern District of California, and Trial Attorney Jason McCullough of the National Security Division’s Counterintelligence and Export Control Section of the Department of Justice.