Northern District of California
Press releases recorded for this federal judicial district.
Former Tesla Employee Charged in Embezzlement Scheme at TeslaRead the Press Release
SAN JOSE – A federal grand jury issued an indictment against Salil Parulekar today, charging him with engaging in an embezzlement scheme, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.
According to the indictment, during 2016 and 2017, Parulekar, 32, formerly of San Jose, orchestrated an embezzlement scheme at Tesla Inc. (“Tesla”). At the time, Parulekar was an employee in the Global Supply Management group at Tesla. He was responsible for overseeing Tesla’s relationship with certain suppliers for various parts and services related to Tesla automobiles. Parulekar allegedly used his role to initiate a scheme wherein he diverted money owed to one Tesla supplier and caused it to be paid to another supplier. In sum, Parulekar allegedly embezzled approximately $9.3 million.
According to the indictment, Parulekar learned in January 2017 that Tesla had terminated its supplier relationship with Schwabische Huttenwerke Automotive GmbH (“SHW”). At the time of the termination, SHW had only provided a limited number of sample products, specifically, motor pumps, to Tesla. Parulekar allegedly knew the termination meant that Tesla was withholding future payments to SHW and that Parulekar was not authorized to contravene this decision. Notwithstanding these facts, Parulekar redirected a series of payments intended for another supplier, Hota Industrial Manufacturing Co., Ltd. (“Hota”), and caused them to be paid to SHW.
The indictment alleges Parulekar caused the diversion of payments by falsifying invoices; creating fraudulent accounts payable documents, such as bank account information and wire instructions; and impersonating Hota employees. Specifically, Parulekar allegedly stole the identity of a Hota employee and, by impersonating the employee, deceived Tesla’s Accounts Payable division into switching the bank account information for Hota and SHW.
Parulekar was charged with nine counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A.
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 maximum penalty for each count of wire fraud is twenty years’ imprisonment and a $250,000 fine. The maximum sentence for aggravated identity theft, in violation of 18 U.S.C. § 1028A, is two years in prison—to be served consecutively to the underlying felony—and a $250,000 fine. 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 Patrick R. Delahunty is prosecuting the case with the assistance of Susan Kreider. The prosecution is the result of an investigation by the FBI.
Central Valley Drug Trafficker Sentenced to More Than A Decade in PrisonRead the Press Release
SAN FRANCISCO – Daniel Jimenez was sentenced today to 10 years and 8 months in prison for his involvement in a 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.
Jimenez, 48, of Ballico, Calif., pleaded guilty to the charges on December 5, 2017. As part of his plea agreement, Jimenez acknowledged that he participated in a conspiracy to traffic cocaine and methamphetamine. Jimenez admitted that he facilitated the storage of controlled substances intended for distribution. He also admitted to assisting his co-defendants in receiving cocaine and methamphetamine and exchanging the cash proceeds of drug sales.
Jimenez was arrested on October 13, 2015. As part of his plea agreement, he admitted that on the day before his arrest, October 12, 2015, one of his co-conspirators came to his home to deliver cocaine and methamphetamine. On the day of his arrest, law enforcement authorities executed a search warrant at Jimenez’s residence in Ballico. Authorities found approximately 14.3 kilograms of cocaine inside a hidden compartment in a Nissan Versa sedan parked in Jimenez’s garage, as well as digital scales, a money counter, packaging materials, and two handguns in Jimenez’s garage. Authorities found approximately 1.3 kilograms of methamphetamine and $369,040 in U.S. currency inside of a hidden compartment in a Chevrolet SUV parked on Jimenez’s yard. Authorities located approximately $2,589 in U.S. currency in Jimenez’s bedroom.
On November 19, 2015, a federal grand jury indicted Jimenez, charging him and twelve co-defendants with, among other charges, conspiracy to distribute and possess with intent to distribute controlled substances, in violation of 21 U.S.C. §§ 846 & 841(a)(1). Pursuant to his plea agreement, Jimenez pleaded guilty to that charge. In addition to the 128-month prison term, Judge Donato sentenced Jimenez to a 5-year term of supervised release and 400 hours of community service. The defendant has been in custody since his arrest.
Jimenez’s sentence brings to ten the number of defendants sentenced as part of the conspiracy to distribute and possess with intent to distribute controlled substances in this case. All twelve of Jimenez’s co-defendants have pleaded guilty. The defendants are as follows:
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 March 14, 2018, to 140 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)
To be sentenced December 5, 2018.
Maximum sentence:
Conspiracy-
Life in prison (mandatory minimum 10 years in prison)
Firearm charge-
Life in prison
(mandatory minimum 25 years in prison)
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)
To be sentenced on January 9, 2019.
Maximum sentence: Life in prison (mandatory minimum 10 years in prison)
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.
Assistant U.S. Attorneys Christiaan Highsmith, Sheila Armbrust, Katie Burroughs Medearis, and Gregg Lowder are prosecuting the case with the assistance of Theresa Benitez, Ana Guerra, and Michelle Alter Eck. 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.
San Jose Resident Sentenced to 80 Months in Prison for Being A Felon in Possession of A FirearmRead the Press Release
SAN JOSE – Josue Rocha-Vallejo was sentenced today to 80 months in prison for being a felon in possession of a firearm and ammunition, 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, United States District Judge.
Rocha-Vallejo, 27, of San Jose, Calif., pleaded guilty to the charge on November 30, 2017. In pleading guilty, Rocha-Vallejo admitted that he possessed firearms and that he was a convicted felon not legally permitted to possess the firearms.
In sentencing Rocha-Vallejo, Judge Davila found that the defendant possessed seven firearms, including two semi-automatic rifles, and a high capacity magazine—the magazine allowed the firearm to fire more than 15 bullets before having to be reloaded. In addition, Judge Davila found that defendant was in possession of a gun that had been reported stolen.
On May 18, 2017, a federal grand jury indicted Rocha-Vallejo, charging him with one count of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1). Rocha-Vallejo pleaded guilty to the charge.
In addition to the prison term, Judge Davila sentenced the defendant to a three-year period of supervised release. The defendant will begin serving the sentence immediately.
The prosecution is the result of an investigation by the FBI Safe Streets Task Force with assistance from the San Jose Police Department and the Santa Clara County District Attorney’s Office.
Sonoma County Resident Sentenced to 30 Months in Prison for Passport Fraud and Identity TheftRead the Press Release
SAN FRANCISCO – Ronald Victor Solakian was sentenced to 30 months in prison for making a false statement on a passport application and aggravated identity theft, announced United States Attorney Alex G. Tse and Special Agent in Charge Matthew Perlman of the U.S. State Department’s Diplomatic Security Service (DSS) San Francisco Field Office. The sentence was handed down by the Honorable Susan Illston, United States District Judge.
Solakian, 70, pleaded guilty to the charges on August 17, 2018. According to the plea agreement, Solakian admitted that on March 23, 1995, and in August of 2004, and on September 25, 2017, he applied for a United States passport using the name and date of birth of another person. Solakian admitted he used this method of applying for a passport because he did not want his true identity to be known. According to court filings, on September 23, 1994, Solakian was charged in the Central District of California with conspiracy to import marijuana and possession with intent to distribute marijuana. He failed to appear for a jury trial in that case and, according to his filings, “has lived in the Sonoma County area for the past 20 years prior to being arrested.”
On February 15, 2018, a federal grand jury indicted defendant (as John Doe), charging him with two counts of making a false statement in a passport application, in violation of 18 U.S.C. § 1542, and two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A. On February 16, 2018, DSS agents arrested Solakian and his true identity as a federal fugitive from the Central District of California (CDCA) was discovered. Pursuant to his plea agreement, Solakian pleaded guilty to one count each of making a false statement and identity theft. The charges against him in the CDCA were dismissed on August 2, 2018.
In addition to the prison term, on Friday, November 2, 2018, Judge Illston ordered the defendant to serve a year of supervised release and to pay a fine of $5,000. Defendant has been in custody since his arrest and will begin serving the sentence immediately.
Assistant United States Attorney Neal C. Hong is prosecuting the case with the assistance of Kimberly Richardson. The prosecution is the result of an investigation by the DSS.
South Bay Resident Charged with Visa Fraud and Mail FraudRead the Press Release
SAN JOSE – A federal grand jury indicted Kishore Kumar Kavuru, charging him with visa fraud and mail fraud, announced United States Attorney Alex G. Tse and Department of Labor Office of the Inspector General Special Agent in Charge Abel Salinas. The indictment, handed down October 18, 2018, and unsealed today, charges the defendant with ten counts of visa fraud and ten counts of mail fraud in connection with a scheme to maintain a pool of foreign workers for the clients of Kavuru’s consulting companies.
According to the indictment, Kavuru, 46, a resident of Sunnyvale, Calif., held himself out as a staffing specialist for technology firms based in Santa Clara County and elsewhere seeking to fill temporary positions with foreign workers. Since at least as early as 2007, Kavuru was the owner and chief executive officer of four consulting companies: Scopus Consulting Group, Inc.; ITECH Analyst Corp; Infinity Methods Corp; and Orian Engineers Incorporated. The indictment describes how Kavuru used the consulting companies to process and submit fraudulent applications for foreign workers to obtain permission to work in the United States under the H-1B visa program. The H-1B Program allows an employer to hire a foreign worker for a specialty occupation in the United States on a temporary basis. Kuvuru allegedly submitted the fraudulent applications through his consulting companies to gain a competitive advantage over other staffing companies that did not have foreign workers immediately available to work.
Under the H-1B visa program, a specialty occupation requires highly specialized knowledge in a certain field and a bachelor’s degree or its equivalent. An employer seeking permission to hire foreign workers under the H-1B program generally must undergo a two-step process. First, the employer must submit to the Department of Labor documentation describing certain aspects of the job to be filled; such documentation generally relates to the existence and duration of the temporary job posting, and the wages, working conditions, and benefits to be provided to the nonimmigrant. Second, the employer must submit additional documentation to the Department of Homeland Security regarding the specific individual hired for the job and details about the specific work project for which they are being petitioned.
In this case, Kavuru allegedly submitted fraudulent documents to both the Department of Labor and the Department of Homeland Security containing details of bogus work projects awaiting the foreign workers. Because many of the applications were ultimately approved, Kavuru had a pool of unemployed H-1B beneficiaries that were immediately available for legitimate work projects, giving him a competitive advantage over other law-abiding staffing companies that followed the sometimes lengthy visa application process for petitioning foreign workers. As part of the scheme, Kavuru required some prospective workers to pay thousands of dollars in cash before he would prepare and submit the visa applications, a violation of Department of Labor regulations. Kavuru also required some workers to wait unpaid, sometimes for months, to be placed at an end-client’s workplace. This process of “benching” workers without pay is also a violation of the Department of Labor’s regulations.
Also described in the indictment is an example of how Kavuru submitted fraudulent documents to the United States to suggest he had a contract to place software engineers to work on a specific project at an employee benefits and health insurance brokerage company. Through his consulting companies, Kavuru submitted and mailed approximately 43 petitions for H-1B software engineers to be placed at the benefits company. In fact, there were no software engineer positions available at the benefits company.
In sum, Kavuru is charged with ten counts of visa fraud, in violation of 18 U.S.C. § 1546(a), and ten counts of mail fraud, in violation of 18 U.S.C. § 1341.
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 the following statutory maximum sentence of ten years in prison and a maximum fine of $250,000 (or twice the gross gain or loss, whichever is greater) for each count of visa fraud. The defendant also faces a statutory maximum sentence of 20 years in prison and a fine maximum fine of $250,000 (or twice the gross gain or loss, whichever is greater) for each count of mail fraud. The court also may order as part of a sentence additional fines, terms of supervised release, and restitution, if appropriate. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Kavuru was arrested this morning and made his initial federal court appearance before U.S. Magistrate Judge Susan van Keulen. The defendant was released on bond; Magistrate Judge van Keulen scheduled the defendant’s arraignment and identification of counsel for November 9, 2018.
Assistant United States Attorney Maia Perez is prosecuting the case. The prosecution is the result of an investigation by the U.S. Department of Labor, Office of Inspector General and Homeland Security Investigations.
East Bay Man Pleads Guilty to Income and Employment Tax FraudRead the Press Release
OAKLAND – Robert Lacome, Jr., pleaded guilty in federal court today to tax evasion and willful failure to account for and pay federal employment taxes, announced United States Attorney Alex G. Tse and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Tara Sullivan. The plea was accepted by the Honorable Jon S. Tigar, U.S. District Judge.
In pleading guilty, Lacome, 50, of Castro Valley, Calif., admitted he willfully failed to report all his income and willfully failed to account for, and pay over, employment taxes. Specifically, from 2009 through 2014, Lacome owned and operated RMS Moving Company (RMS), a moving and relocation services business. During that period, he received more than $5 million in gross receipts from the operation of RMS but evaded assessment of income tax on the income he received from the company. To conceal his tax fraud, Lacome willfully failed to file income tax returns reporting his income from RMS. Further, Lacome structured currency transactions at his bank in amounts less than $10,000 in order to evade the bank currency transaction reporting requirement to the Internal Revenue Service. Lacome further admitted that from 2010 through 2014, he willfully failed to account for and pay over more than $600,000 in employment taxes to the IRS that he was required to withhold from the wages he paid to RMS employees. Combined, Lacome’s tax fraud resulted in losses to the United States of more than $1.1 million.
On September 18, 2018, Lacome, was charged by Information with three counts of tax evasion, in violation of 26 U.S.C § 7201, and 12 counts of willful failure to account for and pay over taxes to the Internal Revenue Service, in violation of 26 U.S.C. § 7202. Pursuant to today’s plea agreement, Lacome pleaded guilty to one count of tax evasion and one count of willful failure to account for and pay over tax to the Internal Revenue Service. If Lacome complies with the plea agreement, the remaining charges will be dismissed at sentencing.
Judge Tigar scheduled Lacome’s sentencing hearing for March 1, 2019. The maximum statutory penalties for the tax evasion count and willful failure to account for and pay over employment taxes count are the same: five years in prison and a fine of $250,000. In addition, the court may order restitution and an additional period of supervised release. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney José A. Olivera is prosecuting this case with the assistance of Kathy Tat and Larry Garland. The prosecution is the result of an investigation by IRS, Criminal Investigation.
California Realtor Sentenced to Prison for Filing a False Tax ReturnRead the Press Release
A Santa Rosa, California, real estate salesperson was sentenced to 24 months in prison yesterday for filing a false income tax return that did not report income earned from the sale of marijuana, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and United States Attorney Alex G. Tse of the Northern District of California.
According to court documents, Charles T. Woods, from 2012 to 2014, deposited more than $1 million dollars in cash earned from his marijuana distribution business into over 25 bank accounts he controlled. Woods hid this income from his tax return preparers by providing them with incomplete financial information, which in turn caused the filing of false tax returns for tax years 2012, 2013, and 2014. The total tax loss caused by Woods’ conduct was over $450,000.
In addition to the term of imprisonment imposed, Woods was ordered to serve one year of supervised release and pay $466,707 in restitution to the Internal Revenue Service.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Tse commended special agents of IRS-Criminal Investigation, who investigated the case, as well as Tax Division Trial Attorney Christopher Magnani and Assistant U.S. Attorney José A. Olivera, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Pleasanton Man Convicted of Online Enticement and International Sexual Abuse of A ChildRead the Press Release
OAKLAND – A federal jury convicted David John Telles, Jr. of online enticement of a minor, travel with intent to engage in illicit sexual conduct, and engaging in illicit sexual conduct with a minor in a foreign place, announced United States Attorney Alex G. Tse and Homeland Security Investigations Special Agent in Charge Ryan Spradlin. The guilty verdict was handed down October 29, 2018, following a jury trial before the Honorable Jeffrey S. White, U.S. District Judge.
Evidence at trial showed that Telles, then 38 years old, lived in Pleasanton, California, and used the internet to entice and induce a child to engage in sexual activity. Specifically, Telles used an online messaging application to groom the 14-year-old victim for weeks before he traveled to England with the intent to sexually abuse her in June of 2014. After arriving in England, Telles took the victim to two different hotels where he sexually abused her over the course of two days. Police officers from the Devon and Cornwall Constabulary in England ultimately apprehended Telles and rescued the child.
On October 13, 2016, a federal grand jury returned an indictment charging defendant with: online enticement of a minor, in violation of 18 U.S.C. § 2422(b); traveling with intent to engage in illicit sexual conduct in foreign places, in violation of 18 U.S.C. § 2423(b); and engaging in illicit sexual conduct in foreign places, in violation of 18 U.S.C. § 2423(c).
The investigation began when HSI received a request for assistance from the Devon and Cornwall Constabulary in the United Kingdom in locating a missing 14-year-old child. HSI arrested Telles on October 20, 2016, at San Francisco International Airport, following his deportation from the United Kingdom.
Telles is currently being held in the custody of the United States Marshal. Judge White scheduled Telles’s sentencing hearing for February 26, 2019. The maximum statutory penalty for the violation of 18 U.S.C. § 2422(b) is life imprisonment and a fine of $250,000, plus restitution. There is also a mandatory minimum 10-year term of imprisonment for the offense. The maximum statutory penalties for the violations of 18 U.S.C. §§ 2423(b) and (c) are 30 years imprisonment and a fine of $250,000, plus restitution. However, any sentence will be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Christina McCall and Vanessa Baehr-Jones are prosecuting the case with the assistance of Vanessa Quant, Michelle Alter Eck, Katie Turner, and Noble Hughes. This prosecution is the result of investigations carried out by HSI and the Devon and Cornwall Constabulary.
PRC State-Owned Company, Taiwan Company, and Three Individuals Charged with Economic EspionageRead the Press Release
A federal grand jury indicted a state-owned enterprise of the People’s Republic of China (PRC), a Taiwan company, and three individuals, charging them with crimes related to a conspiracy to steal, convey, and possess stolen trade secrets of an American semiconductor company for the benefit of a company controlled by the PRC government. All of the defendants are charged with a conspiracy to commit economic espionage, among other crimes. Attorney General Jeff Sessions, FBI Director Christopher Wray, Assistant Attorney General for National Security John Demers, Assistant Attorney General for the Criminal Division Brian A. Benczkowski, United States Attorney Alex G. Tse of the Northern District of California, and FBI Special Agent in Charge for the San Francisco Field Office John F. Bennett made the announcement.
In addition, the United States filed a civil lawsuit seeking to enjoin the further transfer of the stolen trade secrets and to enjoin certain defendants from exporting to the United States any products manufactured by UMC or Jinhua that were created using the trade secrets at issue. The indictment was filed on September 27, 2018, and unsealed today. The civil lawsuit was filed today.
“I am announcing that a grand jury in San Francisco has returned a multi-defendant indictment alleging economic espionage on the part of a state-owned Chinese company, a Taiwanese company, and three Taiwan individuals for an alleged scheme to steal trade secrets from Micron, an Idaho-based semi-conductor company,” said Attorney General Sessions. “The worldwide supply for DRAM is worth nearly $50 billion; Micron controls about 20 to 25 percent of the dynamic random access memory industry—a technology not possessed by the Chinese until very recently. As this and other recent cases have shown, Chinese economic espionage against the United States has been increasing—and it has been increasing rapidly. I am here to say that enough is enough. With integrity and professionalism, the Department of Justice will aggressively prosecute such illegal activity.”
“The theft of intellectual property is not only unfair, but stifles technological innovation by disincentivizing investment in long-term research and development,” said U.S. Attorney Alex Tse. “The theft of intellectual property on a continuing basis by nation-state actors is an even more damaging affront to the rule of law. We in the Northern District of California, one of the world’s great centers of intellectual property development, will continue to lead the fight to protect U.S. innovation from criminal misappropriation, whether motivated by personal greed or national economic ambition.”
"No country presents a broader, more severe threat to our ideas, our innovation, and our economic security than China," said FBI Director Christopher Wray. "The Chinese government is determined to acquire American technology, and they’re willing use a variety of means to do that – from foreign investments, corporate acquisitions, and cyber intrusions to obtaining the services of current or former company employees to get inside information. If China acquires an American company's most important technology – the very technology that makes it the leader in a field – that company will suffer severe losses, and our national security could even be impacted. We are committed to continuing to work closely with our federal, state, local, and private sector partners to counter this threat from China."
According to the indictment, the defendants were engaged in a conspiracy to steal the trade secrets of Micron Technology, Inc. (Micron), a leader in the global semiconductor industry specializing in the advanced research, development, and manufacturing of memory products, including dynamic random-access memory (DRAM). DRAM is a leading-edge memory storage device used in computer electronics. Micron is the only United States-based company that manufactures DRAM. According to the indictment, Micron maintains a significant competitive advantage in this field due in large part from its intellectual property, including its trade secrets that include detailed, confidential information pertaining to the design, development, and manufacturing of advanced DRAM products.
Prior to the events described in the indictment, the PRC did not possess DRAM technology, and the Central Government and State Council of the PRC publicly identified the development of DRAM and other microelectronics technology as a national economic priority. The criminal defendants are United Microelectronics Corporation (“UMC”), a Taiwan semiconductor foundry; Fujian Jinhua Integrated Circuit, Co., Ltd. (“Jinhua'”), a state-owned enterprise of the PRC; and three Taiwan nationals: Chen Zhengkun, a.k.a. Stephen Chen, age 55; He Jianting, a.k.a. J.T. Ho, age 42; and Wang Yungming, a.k.a. Kenny Wang, age 44. UMC is a publicly listed semiconductor foundry company traded on the New York Stock Exchange; is headquartered in Taiwan; and has offices worldwide, including in Sunnyvale, California. UMC mass produces integrated-circuit logic products based on designs and technology developed and provided by its customers. Jinhua is a state-owned enterprise of the PRC, funded entirely by the Chinese government, and established in February 2016 for the sole purpose of designing, developing, and manufacturing DRAM.
According to the indictment, Chen was a General Manager and Chairman of an electronics corporation that Micron acquired in 2013. Chen then became the president of a Micron subsidiary in Taiwan, Micron Memory Taiwan (“MMT”), responsible for manufacturing at least one of Micron’s DRAM chips. Chen resigned from MMT in July 2015 and began working at UMC almost immediately. While at UMC, Chen arranged a cooperation agreement between UMC and Fujian Jinhua whereby, with funding from Fujian Jinhua, UMC would transfer DRAM technology to Fujian Jinhua to mass-produce. The technology would be jointly shared by both UMC and Fujian Jinhua. Chen later became the President of Jinhua and was put in charge of its DRAM production facility.
While at UMC, Chen recruited numerous MMT employees, including Ho and Wang, to join him at UMC. Prior to leaving MMT, Ho and Wang both stole and brought to UMC several Micron trade secrets related to the design and manufacture of DRAM. Wang downloaded over 900 Micron confidential and proprietary files before he left MMT and stored them on USB external hard drives or in personal cloud storage, from where he could access the technology while working at UMC.
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 individual defendants face a maximum sentence of 15 years imprisonment and a $5,000,000 fine for economic espionage charges, and 10 years imprisonment for theft of trade secrets charges. If convicted, each company faces forfeiture and a maximum fine of more than $20 billion. 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.
PRC State-Owned Company, Taiwan Company, and Three Individuals Charged with Economic EspionageRead the Press Release
SAN FRANCISCO – The Department of Justice announced that a federal grand jury indicted a state-owned enterprise of the People’s Republic of China (PRC), a Taiwan company, and three individuals, charging them with crimes related to a conspiracy to steal, convey, and possess stolen trade secrets of an American semiconductor company for the benefit of a state-owned enterprise of the PRC. In addition, the United States filed a civil lawsuit seeking to enjoin the further transfer of the stolen trade secrets and to enjoin certain defendants from exporting to the United States any products manufactured by UMC or Jinhua that were created using the trade secrets at issue. The indictment was filed on September 27, 2018, and unsealed today. The civil lawsuit was filed this morning.
“I am announcing that a grand jury in San Francisco has returned a multi-defendant indictment alleging economic espionage on the part of a state-owned Chinese company, a Taiwanese company, and three Taiwan individuals for an alleged scheme to steal trade secrets from Micron, an Idaho-based semi-conductor company,” said Attorney General Sessions. “Micron is worth an estimated $100 billion and has a 20 to 25 percent share of the dynamic random access memory industry—a technology not possessed by the Chinese until very recently. As this and other recent cases have shown, Chinese economic espionage against the United States has been increasing—and it has been increasing rapidly. I am here to say that enough is enough. With integrity and professionalism, the Department of Justice will aggressively prosecute such illegal activity.”
“The theft of intellectual property is not only unfair, but stifles technological innovation by disincentivizing investment in long-term research and development. The theft of intellectual property on a continuing basis by nation-state actors is an even more damaging affront to the rule of law,” said U.S. Attorney Alex Tse. “We in the Northern District of California, one of the world’s great centers of intellectual property development, will continue to lead the fight to protect U.S. innovation from criminal misappropriation, whether motivated by personal greed or national economic ambition.”
"The attempts by foreign governments to illegally obtain U.S. intellectual property and trade secrets pose a substantial threat to our national security and economy," said Special Agent in Charge John F. Bennett. "The San Francisco Bay Area, with its unique blend of human talent and innovative technologies, is often a target of economic espionage and theft of trade secrets by foreign individuals and governments. This indictment demonstrates the FBI's commitment to protecting American innovation, research, and development."
According to the indictment, the defendants were engaged in a conspiracy to steal the trade secrets of Boise, Idaho-based Micron Technology, Inc. (Micron), a leader in the global semiconductor industry specializing in the advanced research, development and manufacturing of memory products, including dynamic random-access memory (DRAM). DRAM is a leading-edge memory storage device used in computer electronics. In the worldwide DRAM supply, Micron holds approximately a 20-25% of the market share. Micron is the only United States-based company that manufactures DRAM. According to the indictment, Micron maintains a significant competitive advantage in this field due in large part from its intellectual property, including its trade secrets that include detailed, confidential information pertaining to the design, development, and manufacturing of advanced DRAM products.
Prior to the events described in the indictment, the PRC did not possess DRAM technology, and the Central Government and State Council of the PRC publicly identified the development of DRAM and other microelectronics technology as a national economic priority. The indictment describes the manner and means by which the defendants conspired to steal Micron’s intellectual property related to DRAM and convey it to a company controlled by the PRC government.
The criminal defendants are United Microelectronics Corporation (“UMC”), a Taiwan semiconductor foundry; Fujian Jinhua Integrated Circuit, Co., Ltd. (“Jinhua'”), a state-owned enterprise of the PRC; and three Taiwan nationals: Chen Zhengkun, a.k.a. Stephen Chen, age 55; He Jianting, a.k.a. J.T. Ho, age 42; and Wang Yungming, a.k.a. Kenny Wang, age 44. UMC is a publicly listed semiconductor foundry company traded on the New York Stock Exchange; is headquartered in Taiwan; and has offices worldwide, including in Sunnyvale, Calif. UMC mass produces integrated-circuit logic products based on designs and technology developed and provided by its customers. UMC did not possess advanced DRAM technology prior to misappropriating it from Micron.
Jinhua is a state-owned enterprise of the PRC, funded entirely by the Chinese government, and established in February 2016 for the sole purpose of designing, developing, and manufacturing DRAM. The indictment describes how UMC, Jinhua, and employees of both, conspired to bypass many years of research and development by illegally obtaining Micron’s proprietary technology. The DRAM technology at issue is based on research and development and other proprietary information worth at least hundreds of millions and up to billions of dollars.
According to the indictment, Chen was a General Manager and Chairman of an electronics corporation that Micron acquired in 2013. Chen then became the president of a Micron subsidiary in Taiwan, Micron Memory Taiwan (“MMT”), responsible for manufacturing at least one of Micron’s DRAM chips. Chen resigned from MMT in July 2015 and began working at UMC thereafter. While at UMC, Chen helped negotiate a cooperation agreement between UMC and Jinhua whereby, with funding from Jinhua, UMC would transfer DRAM technology to Jinhua to mass-produce. The technology would be jointly shared by both UMC and Jinhua. Chen became the head of UMC’s division tasked with fulfilling the terms of the cooperation agreement, namely developing DRAM technology to transfer to Jinhua. Chen later became the President of Jinhua and was put in charge of its DRAM production facility.
While at UMC, Chen recruited numerous MMT employees, including Ho and Wang, to join him at UMC. Prior to leaving MMT, Ho and Wang both stole and brought to UMC Micron trade secrets related to the design and manufacture of DRAM. For example, Ho and Wang stole confidential and proprietary materials pertaining to the past, current, and future generations of DRAM technology, some still in the research and development phase. Wang downloaded over 900 Micron confidential and proprietary files before he left MMT and stored them on USB external hard drives or in personal cloud storage, from where he could access the technology while working at UMC.
In sum, all defendants are charged with one count of conspiracy to commit economic espionage, in violation of 18 U.S.C. § 1831(a)(5); one count of conspiracy to commit theft of trade secrets, in violation of 18 U.S.C. § 1832(a)(5); and one count of economic espionage (receiving and possessing stolen trade secrets), in violation of 18 U.S.C. § 1831(a)(3). Additionally, Wang is charged with two counts of substantive economic espionage and Ho is charged with one count each of economic espionage and theft of trade secrets.
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 individual defendants face a maximum sentence of 15 years imprisonment and a $5,000,000 fine for economic espionage charges, and 10 years imprisonment for theft of trade secrets charges. If convicted, each company faces forfeiture and a maximum fine of more than $20 billion. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The defendants have been summoned to appear on November 19, 2018 before U.S. Magistrate Judge Susan van Keulen.
In the civil complaint, the United States sues UMC, Jinhua, and Chen to enjoin them from exporting to the United States any products containing DRAM manufactured by Jinhua or UMC. The lawsuit also seeks an order preventing the civil defendants from transferring the trade secrets to anyone else. As authority for the lawsuit, the complaint cites 18 U.S.C. § 1836(a), a statute that permits the Attorney General to “obtain appropriate injunctive relief” against violations of 18 U.S.C. §§ 1831 and 1832.
This prosecution is a result of an investigation by the FBI. Substantial assistance was provided by Taiwan’s Ministry of Justice and the Ministry of Justice Investigation’s Bureau, MJIB.
Marijuana Distributor Sentenced to Two Years in Prison for Tax FraudRead the Press Release
SAN FRANCISCO – Charles T. Woods was sentenced today to 24 months in prison, and ordered to pay a fine of $10,000 and restitution of $466,707 for willfully filing a false individual income tax return with the Internal Revenue Service, announced United States Attorney Alex G. Tse, Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, and Internal Revenue Service (IRS), Criminal Investigation, Acting Special Agent in Charge Tara Sullivan. The sentence was handed down by the Honorable Susan Illston, U.S. District Judge.
Woods, 44, of Santa Rosa, Calif., pleaded guilty to the charge on May 25, 2018. In pleading guilty, Woods admitted he engaged in marijuana distribution in 2012, 2013, and 2014, and that he knowingly and willfully filed federal tax returns for those years that underreported income from his marijuana distribution. For all three years, Woods consistently reported business gross receipts on his tax returns of under $85,000 per year despite earning hundreds of thousands of dollars more. To evade bank currency transaction reporting requirements and to conceal his income, Woods deposited more than $1 million into numerous bank accounts under his control in amounts less than $10,000. In total, Woods failed to report more than $1.1 million in gross receipts from his marijuana distribution business, which resulted in a tax loss of $466,707 to the United States.
Woods was charged by information on April 25, 2018, with two counts of willfully making and subscribing a false tax return to the Internal Revenue Service, in violation of 26 U.S.C § 7206(1). He pleaded guilty to one count.
In addition to the prison term, Judge Illston also ordered the defendant to serve a year of supervised release following his prison term. Judge Illston ordered the defendant to surrender on or before January 11, 2019, to begin serving his sentence.
Assistant U.S. Attorney José A. Olivera and U.S. Department of Justice, Tax Division, trial attorney Christopher Magnani are prosecuting this case with the assistance of Kathy Tat and Larry Garland. The prosecution is the result of an investigation by IRS Criminal Investigation.
Kentucky Resident Sentenced to More Than Three Years in Prison for Wire Fraud Conspiracy and Money Laundering SchemeRead the Press Release
SAN FRANCISCO – Bradley Howell was sentenced to 46 months in prison for conspiracy to commit wire fraud and money laundering, 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 Susan Illston, United States District Judge.
Howell, 34, of Louisville, Ky., pleaded guilty to the charges on July 18, 2018. According to his plea agreement, from about April 2013 through March 2014, Howell and a co-conspirator devised a scheme in which they convinced potential investors the co-conspirators could help them receive millions of dollars’ worth of financial instruments (bank guarantees and standby letters of credit) in exchange for a much smaller down payment. Howell’s co-conspirator was an attorney licensed to practice in California. Howell and his co-conspirator told the investors that the co-conspirator would serve as an escrow agent in the transactions and that after the investors wired money to an attorney-client trust account, the co-conspirator would notify them when the bank had issued a bank guarantee or standby letter of credit. Howell admitted he was aware the investors’ money was not being held in escrow and that the co-conspirator did not obtain any of the financial instruments they promised the investors they would help them obtain. Howell further admitted that he and his co- conspirator used the investors’ money for their own personal expenses.
In his plea agreement, Howell described several instances in which he and his co- conspirator obtained hundreds of thousands of dollars from would-be investors in California. For example, in July of 2013, the co-conspirator convinced an investor to wire $100,000 to the attorney trust account, supposedly to secure a $2,000,000 bond; by August of 2013, the co-conspirator convinced another three victims to provide $250,000, ostensibly to obtain a $4,000,000 financial instrument; and in February of 2014, the co-conspirator tricked three more victims into wiring $300,000, supposedly to finance a $20,000,000 project. In sum, between May 2013 and February 2014, Howell admitted receiving over a $1 million from his co-conspirator pursuant to the scheme.
In addition, Howell admitted in his plea agreement that he was engaged in a money laundering scheme in Kentucky. Specifically, Howell admitted that in 2012, he defrauded a steel company of $500,000, and in 2015, he defrauded a married couple of $100,000.On September 17, 2015, federal grand jury in the Northern District of California indicted Howell, charging him with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and nine counts of wire fraud, in violation of 18 U.S.C. § 1343. In addition, on March 8, 2017, a federal grand jury in the Western District of Kentucky indicted Howell, charging him with two counts of wire fraud and two counts of money laundering, in violation of 18 U.S.C. § 1957. Based on the consent of both districts, the Kentucky proceedings were transferred to the Northern District of California. Pursuant to his plea agreement, Howell pleaded guilty to the conspiracy charge and one of the Kentucky money laundering counts.
In addition to the prison term, Judge Illston sentenced the defendant to a three-year period of supervised release and ordered him to pay $1,591,895 in restitution. Judge also ordered forfeiture of four parcels of real property, a Lamborghini automobile and a Campagna T Rex motorcycle. Howell has been in custody since May of 2018, and will begin serving his sentence immediately.
Assistant U.S. Attorneys Robin Harris and Chinhayi Cadet are prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the FBI and the Internal Revenue Service, Criminal Investigation.
Former Union Treasurer Pleads Guilty to Embezzlement of Money from A Labor OrganizationRead the Press Release
OAKLAND – Susan Elizabeth Kyle pleaded guilty in federal court in Oakland to embezzlement of money from a labor organization by an officer, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation (“FBI”) Special Agent in Charge John Bennett. The plea was accepted yesterday by the Honorable Haywood S. Gilliam, Jr., U.S. District Court Judge.
In pleading guilty, Kyle, 61, admitted to embezzling approximately $490,338 in funds that belonged to the union representing East Bay Regional Parks employees, the American Federation of State, County and Municipal Employees (“AFSCME”) Local 2428. Kyle served as the Treasurer of AFSCME Local 2428 between 1999 and 2014, with fiduciary responsibility for managing its funds. Kyle admitted she stole the money from AFSCME Local 2428 by instructing a payroll processing company to issue unauthorized payments to herself to which she was not entitled. Kyle admitted that she concealed her embezzlement from AFSCME Local 2428 by preparing reports that did not reflect the true expenditures.
On October 5, 2018, Kyle was charged 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). Under the plea agreement, Kyle pleaded guilty to the count and agreed to pay full restitution to AFSCME Local 2428.
Kyle is currently released on bond pending sentencing. Judge Gilliam scheduled Kyle’s sentencing hearing for February 4, 2019. The maximum statutory penalty for a violation of 29 U.S.C. § 501(c) is five years and a fine of $10,000, 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.
Assistant U.S. Attorney Christina McCall is prosecuting the case with the assistance of Vanessa Quant and Katie Turner. The prosecution is the result of an investigation by the FBI.
Former Genentech Employees Charged with Theft of Trade SecretsRead the Press Release
SAN FRANCISCO – A federal grand jury indicted Xanthe Lam, Allen Lam, John Chan, and James Quach for stealing trade secrets from Genentech and related charges, announced United States Attorney Alex G. Tse and FBI Special Agent in Charge John F. Bennett. The indictment, handed down on October 25, 2018, and unsealed today, alleges that the defendants stole confidential Genentech information to help a company in Taiwan create and sell drugs similar to those that were created by Genentech.
According to the indictment, Xanthe Lam worked for Genentech as a Principal Scientist from 1986 until 2017. Her husband, Allen Lam, and James Quach, both were former Genentech employees who, along with John Chan, became consultants for JHL Biotech, Inc. JHL is a company based in Zhubei, Taiwan, that develops “biosimilars.” Biosimilars are roughly the equivalent of a “generic” chemical drug, i.e., designed to have properties similar to a biopharmaceutical that previously was approved by a regulatory agency, such as the Food and Drug Administration. The indictment alleges Xanthe Lam conspired with Allen Lam and John Chan to steal the company’s trade secrets related to biopharmaceuticals Pulmozyme, Rituxan, Herceptin, and Avastin. Xanthe Lam allegedly downloaded, collected, and transferred to Allen Lam and others at JHL certain confidential Genentech documents relating to the processes by which the company formulated drugs and managed raw materials. Xanthe Lam also allegedly secretly consulted for JHL while still employed at Genentech.
The indictment also alleges that Xanthe Lam conspired with former Genentech employee James Quach to illegally use her computer credentials. Specifically, she allowed Quach to gain access to Genentech’s secure document repository and, once he had access to the repository, Quach stole the company’s proprietary manufacturing protocols.
In sum, the Indictment charges the defendants with the following crimes and, if found guilty, they are subject to the following maximum statutory penalties:
Defendant
Age/Residence
Charges
Maximum Penalties
Xanthe Lam
66/ South San Francisco, Calif.
18 U.S.C. §§ 1832(a)(5) – Conspiracy to Commit Theft of Trade Secrets
18 U.S.C. §§ 1832(a) and 2 – Theft of Trade Secrets, Aid and Abet
18 U.S.C. § 1030(b) – Conspiracy to Commit Computer Fraud and Abuse
18 U.S.C. § 1030(a)(2)(C) and 2 – Computer Fraud and Abuse, Aid & Abet
Ten years of imprisonment, $250,000 fine, three years of supervised release, $100 special assessment, forfeiture
Ten years of imprisonment, $250,000 fine, three years of supervised release, $100 special assessment, forfeiture
Five years of imprisonment; $250,000 fine, three years of supervised release, $100 special assessment, forfeiture
Five years of imprisonment; $250,000 fine, three years of supervised release, $100 special assessment, forfeiture
Allen Lam
68/ South San Francisco, Calif.
18 U.S.C. §§ 1832(a)(5) – Conspiracy to Commit Theft of Trade Secrets
18 U.S.C. §§ 1832(a) and 2 – Theft of Trade Secrets, Aid and Abet
Ten years of imprisonment, $250,000 fine, three years of supervised release, $100 special assessment, forfeiture
Ten years of imprisonment, $250,000 fine, three years of supervised release, $100 special assessment, forfeiture
John Chan
29/ San Francisco, Calif.
18 U.S.C. §§ 1832(a)(5) – Conspiracy to Commit Theft of Trade Secrets
18 U.S.C. §§ 1832(a) and 2 – Theft of Trade Secrets, Aid and Abet
Ten years of imprisonment, $250,000 fine, three years of supervised release, $100 special assessment, forfeiture
Ten years of imprisonment, $250,000 fine, three years of supervised release, $100 special assessment, forfeiture
James Quach
58/ Daly City, Calif.
18 U.S.C. § 1030(b) – Conspiracy to Commit Computer Fraud and Abuse
18 U.S.C. § 1030(a)(2)(C) and 2 – Computer Fraud and Abuse, Aid & Abet
Five years of imprisonment; $250,000 fine, three years of supervised release, $100 special assessment, forfeiture
Five years of imprisonment; $250,000 fine, three years of supervised release, $100 special assessment, forfeiture
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. In addition, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The defendants were all arraigned this morning before U.S. Magistrate Judge Joseph C. Spero. All defendants pleaded not guilty and were released on bond. Magistrate Judge Spero scheduled the defendants’ next district court appearance for November 13, 2018, before U.S. District Judge William Alsup. Quach also will appear on November 2, 2018, before Magistrate Judge Spero for identification of counsel.
Assistant U.S. Attorneys Matthew A. Parrella and Michelle J. Kane are prosecuting the case with the assistance of Elise Etter and Rebecca Shelton. The prosecution is the result of an investigation by the FBI.
United States Joins Lawsuits Against Tetra Tech EC Inc. Alleging False Claims in Connection with Shipyard CleanupRead the Press Release
SAN FRANCISCO – The United States has intervened in three whistleblower cases pending in the Northern District of California against Tetra Tech EC Inc. (Tetra Tech) alleging that Tetra Tech submitted false claims to the United States Navy for radiological remediation and support services provided at Hunters Point Naval Shipyard in San Francisco, the Justice Department announced today.
Tetra Tech is a government contractor headquartered in Morris Plains, New Jersey. The Navy awarded contracts to Tetra Tech to test parcels of land at the Hunters Point Naval Shipyard for radiation and to remediate any areas where the radiation was excessive. The lawsuits allege that Tetra Tech misrepresented the source of soil samples it submitted for radiological testing. The lawsuits also allege that Tetra Tech falsified data collected from radiological surveys of existing buildings at Hunters Point Naval Shipyard.
Earlier this year, two Tetra Tech supervisors, Stephen C. Rolfe and Justin E. Hubbard, pleaded guilty to falsifying records and were sentenced to eight months in prison. Rolfe and Hubbard both admitted as part of their guilty pleas that, rather than take soil samples from the survey units undergoing analysis, they participated in the substitution of “clean” (non-radioactive) dirt fraudulently taken from other areas within the former naval base.
“It is of paramount concern to this community and the United States that the radiological remediation at Hunter’s Point Naval Shipyard be completed properly and lawfully,” said United States Attorney Tse for the Northern District of California. “Today’s intervention will ensure that the Navy’s contractors retained to work in the Northern District of California are held accountable for any failures to comply with the contract that was intended to make certain critical testing was completed. We will ensure compliance with all contractual obligations for which the government has paid.”
“It was of critical importance to the United States Navy, and the public, that Tetra Tech perform accurately and fully the radiological testing and remediation at the Hunters Point site for which it was hired,” said Assistant Attorney General Joseph H. Hunt of the Department of Justice’s Civil Division. “The Department of Justice will vigorously pursue action against those who obtain federal funds based on promises they knowingly fail to keep.”
"The Department of the Navy will cooperate with the Department of Justice regarding this litigation,” said Secretary of the Navy Richard V. Spencer. “As a steward of taxpayer dollars, the Navy is responsible and accountable to the public for our investments in manning, training, and equipping a ready and lethal Navy the Nation Needs. In doing so, we demand and expect the same from our private industry partners."
The whistleblower actions were filed under the qui tam provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and to share in any recovery. The act also permits the United States to intervene in such an action, as it has done in part in these three whistleblower actions.
The whistleblower lawsuits are captioned United States ex rel. Jahr, et al. v. Tetra Tech, EC, Inc., et al., Civil Action No. 13-3835 JD (N.D. Cal.), United States ex rel. Smith v. Tetra Tech EC, Inc., et al., Civil Action No. 16-1106 JD (N.D. Cal.), and United States ex rel. Wadsworth v. Tetra Tech EC, Inc., Civil Action No. 16-1107 (N.D.Cal.).
The cases are assigned to the Hon. James Donato, U.S. District Judge who has scheduled a case management conference for February 28, 2019. The United States plans to file its complaint against Tetra Tech in the matter on or before January 14, 2019.
The claims asserted in the three currently-filed complaints are allegations only and there has been no determination of liability.
United States Joins Lawsuits Against Tetra Tech EC Inc. Alleging False Claims in Connection with Shipyard CleanupRead the Press Release
The United States has intervened in three whistleblower cases pending in the Northern District of California against Tetra Tech EC Inc. (Tetra Tech) alleging that Tetra Tech submitted false claims to the United States Navy for radiological remediation and support services provided at Hunters Point Naval Shipyard in San Francisco, the Justice Department announced today.
Tetra Tech is a government contractor headquartered in Morris Plains, New Jersey. The Navy awarded contracts to Tetra Tech to test parcels of land at the Hunters Point Naval Shipyard for radiation and to remediate any areas where the radiation was excessive. The lawsuits allege that Tetra Tech misrepresented the source of soil samples it submitted for radiological testing. The lawsuits also allege that Tetra Tech falsified data collected from radiological surveys of existing buildings at Hunters Point Naval Shipyard.
Earlier this year, two Tetra Tech supervisors, Stephen C. Rolfe and Justin E. Hubbard, pleaded guilty to falsifying records and were sentenced to eight months in prison. Rolfe and Hubbard both admitted as part of their guilty pleas that, rather than take soil samples from the survey units undergoing analysis, they participated in the substitution of “clean” (non-radioactive) dirt fraudulently taken from other areas within the former naval base.
“It was of critical importance to the United States Navy, and the public, that Tetra Tech perform accurately and fully the radiological testing and remediation at the Hunters Point site for which it was hired,” said Assistant Attorney General Joseph H. Hunt of the Department of Justice’s Civil Division. “The Department of Justice will vigorously pursue action against those who obtain federal funds based on promises they knowingly fail to keep.”
“It is of paramount concern to this community and the United States that the radiological remediation at Hunter’s Point Naval Shipyard be completed properly and lawfully,” said United States Attorney Tse for the Northern District of California. “Today’s intervention will ensure that the Navy’s contractors retained to work in the Northern District of California are held accountable for any failures to comply with the contract that was intended to make certain critical testing was completed. We will ensure compliance with all contractual obligations for which the government has paid.”
"The Department of the Navy will cooperate with the Department of Justice regarding this litigation,” said Secretary of the Navy Richard V. Spencer. “As a steward of taxpayer dollars, the Navy is responsible and accountable to the public for our investments in manning, training, and equipping a ready and lethal Navy the Nation Needs. In doing so, we demand and expect the same from our private industry partners."
The whistleblower actions were filed under the qui tam provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and to share in any recovery. The act also permits the United States to intervene in such an action, as it has done in part in these three whistleblower actions.
The whistleblower lawsuits are captioned United States ex rel. Jahr, et al. v. Tetra Tech, EC, Inc., et al., Civil Action No. 13-3835 JD (N.D. Cal.), United States ex rel. Smith v. Tetra Tech EC, Inc., et al., Civil Action No. 16-1106 JD (N.D. Cal.), and United States ex rel. Wadsworth v. Tetra Tech EC, Inc., Civil Action No. 16-1107 (N.D.Cal.).
The claims asserted in the three complaints are allegations only and there has been no determination of liability.
East Bay Resident Pleads Guilty to Making False Statements to the FBIRead the Press Release
SAN FRANCISCO – Moses Orozco pleaded guilty today to making false statements to federal investigators, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. The plea was accepted by the Honorable Susan Illston, U.S. District Judge.
According to the plea agreement, Orozco, 23, of Pittsburg, Calif., admitted he knowingly made false statements to the FBI earlier this year when he claimed two people were planning a high school shooting in the East Bay.
On March 27, 2018, Orozco called the FBI Public Access Line and falsely told FBI personnel that his ex-girlfriend and her brother were planning a mass shooting. Orozco stated in the call that the brother recently had been acting “weird,” that he said he wanted to commit a shooting “anywhere there was a massive amount of people,” and that he asked, “Have you ever wanted to do a mass shooting?” Orozco also claimed he had photographs of the brother with guns and text messages that were exchanged between his ex-girlfriend and her brother in which the two planned a mass shooting.
Further, on March 28, 2018, Orozco repeated much of the same story to an FBI Task Force Officer during an interview. Orozco stated that his former girlfriend and her brother were planning a mass school shooting at an undisclosed location; that the brother recently told Orozco he (the brother) wanted to conduct a school shooting; that the brother showed Orozco digital photos of himself with guns and a text message thread with his sister in which they were making plans for the shooting; that the brother said, “something big was about to happen,” and that Orozco should watch the evening news; and that Orozco believed a mass school shooting was in the execution phase.
Then, on March 29 and 31, 2018, Orozco provided to law enforcement authorities additional details about the alleged mass shooting threat. For example, Orozco told the FBI that his ex-girlfriend’s brother stated, “I’m not going to tell you when I’m going to do it because you’ll call the cops.” Orozco also showed an officer from the Antioch Police Department a text thread that Orozco claimed was from his ex-girlfriend.
The ruse came to an end on April 3, 2018. On that day, Orozco met with FBI agents and, during the interview, admitted he lied about the school shooting threats. Orozco also admitted he lied when he called the Public Access Line to report the school shooting threat and that he fabricated the text messages. Orozco told the agents that he was upset about his breakup with his ex-girlfriend and that he reported the threat to “get back at her.”
On September 6, 2018, a grand jury indicted Orozco, charging him with three counts of making false statements to an agency of the United States, in violation of 18 U.S.C. § 1001(a)(2). Today, Orozco pleaded guilty to all three charges.
Judge Illston scheduled Orozco’s sentencing for February 8, 2019. The maximum statutory penalty for a violation of 18 U.S.C. § 1001(a)(2) is five years in prison, a $250,000 fine, and 3 years of supervised release. 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.
Assistant U.S. Attorney Jonathan Lee is prosecuting the case with assistance from Sarah Lamparelli and Kim Richardson. The prosecution is the result of an investigation by the FBI.
Norteño Gang Associate Sentenced to 12 Years in Prison for Participating in RICO Conspiracy and Being an Accessory After the Fact to an Attempted MurderRead the Press Release
SAN JOSE – Robert Loera was sentenced today to 144 months in prison for his role in a racketeering conspiracy and for being an accessory after the fact to an attempted murder, 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 earlier today by the Honorable Lucy H. Koh, U.S. District Judge.
On October 24, 2018, Loera, 38, of Salinas, pleaded guilty to the charges. According to his plea agreement, Loera admitted that from 2009 to 2011, he associated with gang members from Norteño street gang cliques, including “East Las Casitas” or “ELC,” “Salinas East Market” or “SEM,” and “Santa Rita.” Loera also admitted that from at least 2009 and continuing through at least 2011, he was a member of an Enterprise made up of Norteño street gang members and associates.
“The senseless violence of the Norteño gangs in Salinas demands that we respond with a constant and vigilant law enforcement approach,” said United States Attorney Tse. “We applaud the Court’s strong sentence for this gang associate, and hope that it will provide much needed solace to the defendant’s victims and send a clear message to the Salinas community that this office is dedicated to prosecuting those individuals engaged in gang violence, and even those who assist others to commit gang violence, to the fullest extent of the law.”
Loera acknowledged in his plea agreement that Enterprise members committed acts of violence to benefit the Norteño gang, specific Norteño street cliques, or the Enterprise, itself. Such acts of violence included murder, attempted murder, and robbery. For example, members of ELC sought to attack and kill members of rival Sureño gangs and members of other rival gangs. In addition, sometimes Norteño gang members from different cliques combined to engage in illegal activities, including narcotics trafficking and robberies. Further, Norteño cliques engaged in violence simply to assert their gang identities, to claim or protect their territory, to challenge or respond to a challenge, to retaliate against a rival gang or member, to gain notoriety and show their superiority over others, and to send others a message that they are strong, powerful, and not to be provoked.
Loera admitted that while an Enterprise member, members of the gang would kill, and try to kill, actual and suspected Sureños, persons who defied the will of the gang, and persons suspected of cooperating with law enforcement. Loera also admitted that on November 5, 2010, he picked up two gang members after one of them shot at suspected Sureños. While driving, Loera learned of the shooting and drove the gang members out of the area to help them evade police. Loera later was informed that one of the shooter’s victims was grazed in the head by a bullet and one was struck in the hand, causing serious bodily injury.
Loera’s plea agreement also contains a list of crimes in which he participated directly, including the following:
- On September 13, 2010, Loera assisted three gang members in the robbery of a CVS pharmacy in Salinas. Loera remained outside in a vehicle, while gang members went inside and conducted the robbery using at least one firearm, which was brandished during the robbery. Approximately $8,000 was stolen during the robbery.
- On November 18, 2010, Loera assisted in the robbery of the Jewelry Outlet jewelry store in Salinas. Loera waited in a getaway car while gang members entered the jewelry store armed with two handguns which they brandished while robbing the store. After the robbery, Loera drove the robbers away in the car. The jewelry store lost approximately $45,000 from the robbery.
- On February 1, 2010, Loera assisted in the robbery of another jewelry store in Watsonville, Calif. Loera remained outside in a car monitoring a scanner for police activity in the area while gang members entered the jewelry store and brandished firearms during the robbery. The jewelry store lost approximately $80,000 from the robbery.
On October 28, 2015, a grand jury charged Loera with one count each of racketeering conspiracy, in violation of 18 U.S.C. § 1962(d); conspiracy to commit murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(5); conspiracy to commit assault with a dangerous weapon in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(6); conspiracy to commit robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a); conspiracy to rob banks and credit unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371; and accessory after the fact, in violation of 18 U.S.C. §§ 1959(a)(5) and 3. Loera also was charged with two counts of using a firearm in furtherance of a crime of violence, in violation of 18 U.S.C. § 924(c)(1)(A) and 2. Pursuant to his plea agreement, Loera pleaded guilty to the racketeering conspiracy charge and the accessory charge.
In addition to the prison term, Judge Koh also sentenced Loera to a five-year period of supervised release, to commence after Loera completes his prison sentence. Loera has been in federal custody since his arrest on this case in November 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 Williams, Adria Trgovich, and Lance Libatique. The investigation leading to the indictment was initially led by the Salinas Police Department and later adopted as part of the FBI’s crackdown on Norteño gangs in Monterey County. The prosecution is the result of an investigation by the FBI and the Salinas Police Department, which has played, and continues to play, a critical role in support of the case.
Justice Department, EPA, State of Mississippi Reach Nationwide Settlement with Chevron U.S.A. Inc. to Address Chemical Accident Prevention ViolationsRead the Press Release
The U.S. Department of Justice, the U.S. Environmental Protection Agency (EPA), and the Mississippi Department of Environmental Quality (MDEQ) announced a national settlement with Chevron U.S.A. Inc. (Chevron) that requires safety improvements at all of its petroleum refineries across the United States, resolving claims that the company violated provisions of the Clean Air Act aimed at preventing accidental releases of hazardous chemicals that can have serious consequences for public health and the environment.
As part of the proposed settlement, Chevron will spend approximately $150 million to replace vulnerable pipes, institute operating parameters and alarms for safer operation, improve corrosion inspections and training, centralize safety authority within the corporation, conduct a pilot study of safety controls for fired heaters, and make other safety improvements at all its domestic refineries. Chevron also will pay a $2.95 million civil penalty and will implement supplemental environmental projects worth at least $10 million in the communities surrounding the refineries in California, Mississippi, Utah, and Hawaii. The overall value of this settlement exceeds $160 million, which makes it the largest settlement in the history of the EPA’s enforcement of the Risk Management Plan Rule under Clean Air Act Section 112(r).
EPA’s initial investigation was spurred by an August 6, 2012 fire involving high-temperature hydrocarbons released in the Crude Unit at Chevron’s Richmond, California refinery. That fire prompted a shelter-in-place order by Contra Costa County officials, endangered 19 employees, and caused 15,000 local residents to seek medical attention. During EPA’s investigation, Chevron experienced accidental releases of regulated chemicals at two of its other refineries, including a 2013 explosion and fire in Pascagoula, Mississippi that caused the death of employee Tonya Graddy, and a 2013 rupture in El Segundo, California that caused a loss of power and flaring at the refinery.
“The Clean Air Act’s hazardous chemical risk management program is intended to protect local communities and American workers ,” said Acting Assistant Attorney General Jeffrey H. Wood for the Justice Department’s Environment and Natural Resources Division. “Today’s action, taken jointly with our enforcement partners at EPA and the State of Mississippi, strengthens emergency prevention and response systems at Chevron’s U.S. refineries, which will help to protect their workers and the communities in which they live from dangerous chemical accidents.”
“The 2012 fire at Chevron’s refinery in Richmond, California, heavily affected the surrounding area,” said United States Attorney Alex G. Tse of the Northern District of California. “Thousands of residents were ordered to shelter in place and over 15,000 nearby residents sought medical assistance. Under the agreement announced today, among other relief, Chevron will make safety improvements at its refineries, and will also implement supplemental environmental projects in the affected communities, including Richmond. This office will continue to ensure compliance by corporate citizens with laws that are intended to protect the environment and the residents’ right to know.”
“This case demonstrates the importance of performing equipment inspections and maintenance in accordance with environmental regulations,” said EPA Office of Enforcement and Compliance Assurance Assistant Administrator Susan Bodine. “Under this settlement Chevron, U.S.A Inc. will improve their safety systems and monitoring equipment, protecting their employees and the surrounding communities.”
The United States’ and Mississippi’s Complaint, filed concurrently with the proposed settlement today in the United States District Court for the Northern District of California, alleges violations of Section 112(r) of the Clean Air Act. Section 112(r) requires covered facilities to implement a systematic Risk Management Program to prevent accidental releases of dangerous substances, and to meet a general duty of care in designing and maintaining safe facilities. The Mississippi Department of Environmental Quality participated as co-plaintiff, exercising its concurrent authority to enforce the Risk Management Program regulations over Chevron’s Pascagoula refinery. This is the first case in which the United States and a state have jointly brought suit to enforce these provisions.
The proposed settlement also resolves claims under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Emergency Planning and Community Right-to-Know Act (EPCRA) regarding delayed reporting of an August 2, 2012, hydrogen sulfide release from Chevron’s Richmond facility.
The Supplemental Environmental Projects that Chevron has agreed to perform, valued at $10 million, will supply emergency response equipment to local jurisdictions surrounding the five subject refineries.
Chevron U.S.A. Inc. is the subsidiary of Chevron Corporation that owns and operates the corporation’s U.S. petroleum refineries. Chevron Corporation is the second-largest integrated energy company in the United States, and Chevron U.S.A. Inc. is the sixth-largest U.S. refiner as measured by crude oil distillation capacity. The proposed settlement covers all four Chevron U.S.A. Inc. refineries, which are located in Richmond and El Segundo, California; Pascagoula, Mississippi; and Salt Lake City, Utah; as well as a fifth refinery formerly owned and operated by Chevron, located in Kapolei, Hawaii. The Richmond component of the settlement builds on the relief achieved by previous state enforcement actions, including a 2013 criminal settlement with the California Attorney General’s Office and the District Attorney for Contra Costa County, and a 2017 settlement with the California Department of Industrial Relations, Occupational Safety and Health Division.
The proposed consent decree was lodged today in the U.S. District Court for the Northern District of California and is subject to a 30-day public comment period and final court approval. Information about submitting a public comment is available at: https://www.justice.gov/enrd/consent-decrees. More information about the settlement may be found at: https://www.epa.gov/enforcement/chevron-settlement-information-sheet.
Members of the public can help protect our environment by identifying and reporting environmental violations. Learn more here: https://www.epa.gov/enforcement/report-environmental-violation-general-information
Former IRS-CI Special Agent Sentenced to Prison for Filing False Tax Returns, Theft of Government Money and Obstruction of JusticeRead the Press Release
A former special agent for the Internal Revenue Service-Criminal Investigation was sentenced to serve 51 months in prison for filing false tax returns, obstruction of justice, and stealing government money, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Alex G. Tse for the Northern District of California.
According to the evidence introduced at trial, Alena Aleykina, 45, who is also a Certified Public Accountant and holds a master’s degree in business administration, filed six false tax returns – three personal tax returns for years 2009, 2010, and 2011, and three in the names of trusts she created for years 2010 and 2011. On her personal tax returns, Aleykina fraudulently claimed the head of household filing status, listed false dependents, and claimed deductions for education expenses to which she was not entitled. Aleykina also obtained a fraudulent legal separation decree from the California Superior Court for Yolo County so that she and her husband could claim rental real estate loss deductions to which they were not entitled. Further, on a trust tax return, she falsely claimed to be paying wages to her mother and her sister to care for her son and father.
Additionally, Aleykina stole government funds and obstructed justice during the investigation. She stole from the IRS’s Tuition Assistance Program, a program created to allow IRS employees to take job-related classes from local colleges and educational institutions. Aleykina falsely claimed to be taking English classes from a trust registered to her sister. As a result of these fake classes, Aleykina recieved $4,000 in tuition reimbursement from the Tuition Assistance Program. When criminal investigators approached Aleykina to retrieve her government laptop, Aleykina lied to the agents about the location of the laptop and deleted dozens of files from the computer after the agents left. The total loss to the government from Aleykina’s conduct is more than $50,000.
Aleykina was previously convicted in June after a two-week federal jury trial in the Eastern District of California of filing false tax returns, destroying records in a federal investigation, and theft of government money.
In addition to the term of prison imposed, Aleykina was also ordered to serve one year of supervised release and to pay $4,000 in restitution to the Internal Revenue Service (IRS).
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Tse commended special agents of the Treasury Inspector General for Tax Administration and IRS-Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney William Frentzen and Tax Division Trial Attorneys Arthur J. Ewenczyk and Charles O’Reilly, who prosecuted the case.
Former IRS-CI Special Agent Sentenced to over Four Years in Prison for Filing False Tax Returns, Theft of Government Money, and Obstruction of JusticeRead the Press Release
SAN FRANCISCO— Alena Aleykina, a former special agent for the Internal Revenue Service-Criminal Investigation, was sentenced to serve 51 months in prison for filing false tax returns, obstruction of justice, and stealing government money, announced U.S. Attorney Alex G. Tse and Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. The sentence was handed down by the Honorable John A. Mendez, U.S. District Judge, following a two-week jury trial after which the defendant was found guilty of the charges.
On June 15, 2018, a federal jury in the Eastern District of California convicted Aleykina, 45, of Sacramento, Calif., for filing false tax returns, destroying records in a federal investigation, and theft of government money. According to the evidence introduced at trial, Aleykina, who is also a Certified Public Accountant and holds a master’s degree in business administration, filed six false tax returns: three personal tax returns for years 2009, 2010, and 2011 and three in the names of trusts she created for years 2010 and 2011. On her personal tax returns, Aleykina fraudulently claimed the head of household filing status, listed false dependents, and claimed deductions for education expenses to which she was not entitled. Aleykina also obtained a fraudulent legal separation decree from the California Superior Court for Yolo County so that she and her husband could claim rental real estate loss deductions to which they were not entitled. Further, on a trust tax return, she falsely claimed to be paying wages to her mother and her sister to care for her son and father.
Additionally, Aleykina stole government funds and obstructed justice during the investigation. She stole from the IRS’s Tuition Assistance Program, a program created to allow IRS employees to take job-related classes from local colleges and educational institutions. Aleykina falsely claimed to be taking English classes from a trust registered to her sister. As a result of these fake classes, Aleykina recieved $4,000 in tuition reimbursement from the Tuition Assistance Program. When criminal investigators approached Aleykina to retrieve her government laptop, Aleykina lied to the agents about the location of the laptop and deleted dozens of files from the computer after the agents left.In sentencing Aleykina, Judge Mendez stated his concern that defendant was a federal law enforcement officer and emphasized the importance of that fact when considering the defendant’s betrayal of the public’s trust. Judge Mendez stated that such fraud and misconduct from a federal agent cannot be tolerated and that the defendant’s behavior shocked the conscience. In addition to the term of prison imposed, Judge Mendez ordered Aleykina to serve three years of supervised release and to pay $4,000 in restitution to the Internal Revenue Service.
Assistant U.S. Attorney William Frentzen and Tax Division Trial Attorneys Arthur J. Ewenczyk and Charles O’Reilly are prosecuting the case. The case was investigated by special agents of the Treasury Inspector General for Tax Administration and IRS-Criminal InvestigationThe United States Attorney’s Office in San Francisco, California, is prosecuting this case with the Tax Division; the United States Attorney’s Office for the Eastern District of California is recused from this matter.
California Resident Pleads Guilty in Scheme to Defraud the United States of over $9 MillionRead the Press Release
Jacqueline Ramos, aka Jackie Acosta, of Salinas, California, pleaded guilty yesterday to one count of conspiring to submit false claims for income tax refunds and two counts of bank fraud, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and United States Attorney Alex G. Tse of the Northern District of California.
According to documents and information provided to the court, Ramos conspired with others to defraud the Internal Revenue Service (IRS) by filing false tax returns to obtain fraudulent refund checks, and then depositing the checks into bank accounts under their control. The false returns included fake income, bogus dependents, and sham education expenses. By filing these fraudulent returns, Ramos and her co-conspirators are alleged to have stolen more than $9 million in tax refunds. Two of those co-conspirators, Ana Bajo, aka Ana Covarrubias, and Norma Morfin, aka Norma Mandujano, pleaded guilty earlier this year to related tax charges.
U.S. District Court Judge Lucy H. Koh scheduled sentencing for March 20, 2019. Ramos faces a maximum sentence of ten years in prison for the conspiracy count and thirty years for each of the bank fraud counts, in addition to a period of supervised release, restitution, and monetary penalties.
Principal Deputy Assistant Attorney General Zuckerman and United States Attorney Tse commended the IRS special agents who investigated this case, as well as the Department of Justice attorneys who are handling it, Assistant United States Attorney Michael G. Pitman and Trial Attorney Christopher Magnani.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Political Consultant Pleads Guilty to Conspiring to Defraud the United States and Making False Statements to Federal InvestigatorsRead the Press Release
SAN FRANCISCO – Derf Butler, owner and president of San Francisco-based Butler Enterprises, pleaded guilty today to conspiracy to defraud the United States in connection with a federal construction contract, and making false statements to federal investigators, announced United States Attorney Alex G. Tse, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and the Department of Energy (DOE) Office of Inspector General Special Agent in Charge James Breckenridge. The plea was accepted by the Honorable Charles R. Breyer, U.S. District Judge.
A federal grand jury indicted Butler, 54, of Vallejo, with the charges on April 6, 2017. In pleading guilty to the charges without a plea agreement, Butler has admitted that he conspired with others to knowingly and intentionally defraud the DOE. Specifically, Butler admitted that beginning no later than July 17, 2013, he was involved with others in an illegal scheme to obtain a contract with the DOE to renovate a building on the campus of the Lawrence Berkeley National Laboratory (LBNL).
Contractors seeking construction work with the DOE are legally required to obtain work through a competitive bidding process. In this case, Butler and others agreed to submit, or participate in the submission of, fraudulent and non-competitive bids to perform the renovation of LBNL Building 84. Specifically, Butler agreed to take steps to ensure that a particular “developer” won the contract by ensuring the developer’s bid on the renovation project was the lowest bid. Butler also helped to orchestrate the submission of bids by other contractors in amounts dictated by the developer. Butler also admitted he understood the bids he arranged for submission by other contractors were not genuine bids and were intended to be higher than the bid submitted to the DOE by the developer.
In addition, Butler admitted meeting with the developer in July of 2013, at which time Butler agreed to locate contractors to submit bids for the DOE contract in amounts higher than the contractor’s bid. During the meeting, the developer gave Butler $2,000 in cash. At the same meeting, Butler proposed that, instead of paying the contractors for submitting the bids, the developer could give the bidders sub-contracting work once the developer won the contract. Later that same month, Butler met with the developer other contractors. All agreed that the contractors would submit separate bids and none of the bids would be lower than the $5.7 million bid to be submitted by the developer. Within the next three months, the contractors’ additional, higher bids were submitted to the DOE and Butler received two additional cash payments of $4,000 and $9,000.
Butler also admitted facts related to making fraudulent statements to investigators. On March 26, 2014, agents from the Federal Bureau of Investigation interviewed Butler about his dealings with the developer. Butler told the agents he had never received money from and that he had no financial relationship with the developer. In truth, Butler already had received $15,000, he had requested an additional $15,000, and he had multiple conversations with the developer about the financial benefits he expected to receive once the DOE contract for the renovation project was awarded.
The grand jury charged Butler with one count of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371, and one count of making a false statement, in violation of 18 U.S.C. § 1001(a)(2). Pursuant to today’s plea agreement, he pleaded guilty to both counts. Judge Breyer scheduled Butler’s sentencing for January 23, 2019.
Butler faces a maximum penalty of five years imprisonment, a three-year term of supervised release and a $250,000 fine for the conspiracy charge. In addition, Butler faces a maximum penalty of ten years imprisonment, a three-year term of supervised release, and a $250,000 fine for the false statement 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.
On March 9, 2018, Anton Kalafati, 34, of San Francisco, President of B Side Inc. in San Francisco, pleaded guilty to his role in the scheme. Kalafati admitted to being one of the contractors who submitted a sham bid for the LBNL Building 84 renovation contract. There is currently no date scheduled for Kalafati’s sentencing hearing.
The investigation that led to the charges in the indictment arose out of the FBI’s 2012-2014 public corruption investigation of San Francisco political consultant Keith Jackson and then-State Senator Leland Yee, and the related organized crime investigation of Raymond “Shrimp Boy” Chow. The FBI source who was posing as the developer and acting undercover in connection with the CalVet and DOE contracts described above was also involved in the investigation of Jackson and Yee. Jackson and Yee were convicted of corruption charges in 2015.
Assistant United States Attorneys Cynthia Frey, William Frentzen, and David Countryman are prosecuting the case with the assistance of Rosario Calderon and Bridget Kilkenny. The prosecution is the result of an investigation by the Federal Bureau of Investigation and United States Department of Energy, Office of Inspector General. Additional assistance was provided by the California Department of Veteran’s Affairs.
South Bay Doctor Indicted for Unlawfully Distributing Hydrocodone and Health Care FraudRead the Press Release
SAN JOSE– A federal grand jury has indicted South Bay doctor Venkat Aachi, charging him with distributing hydrocodone outside the scope of his professional practice and without a legitimate medical need, and with health care fraud related to the submission of false and fraudulent claims regarding the health care benefits, announced United States Attorney Alex G. Tse, Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) Special Agent in Charge Steven J. Ryan.
According to the indictment filed October 9, 2018, and unsealed Friday, October 12, 2018, on six occasions from November 27, 2017, through March 5, 2018, Aachi, 52, of Saratoga, Calif., was a licensed physician in the state of California when he knowingly distributed hydrocodone to two individuals knowing that the distribution was outside the scope of his professional practice and not for a legitimate medical purpose. Further, on July 2, 2018, Aachi allegedly submitted to an insurance company a false and fraudulent claim for payment for healthcare benefits, items, and services.
In sum, Aachi is charged with six counts of distributing drugs outside the scope of professional practice, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C), and one count of health care fraud, in violation of 18 U.S.C. § 1347.
An indictment merely alleges that crimes have been committed, and Aachi, like all defendants, is 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 $1,000,000, for each count of illegal distribution of hydrocodone. In addition, if convicted, the defendant faces 10 years in prison and $250,000 for the violation of 18 U.S.C. § 371. Additional fines, restitution, and additional periods of supervised release also could be ordered at sentencing. 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.
Aachi made an initial appearance on October 12, 2018, before U.S. Magistrate Judge Virginia K DeMarchi. At that time, he was arraigned on the indictment, entered a plea of not guilty, and was released on bond. Aachi is scheduled to appear next before Magistrate Judge DeMarchi on October 22, 2018, for a further bond hearing.
Assistant U.S. Attorney Shailika Kotiya is prosecuting the case with the assistance of Rawaty Yim. This prosecution is the result of investigations by the DEA, FBI, HHS-OIG, and the California Department of Justice Bureau of Medi Cal Fraud and Elder Abuse (BMFEA). Through the BMFEA, the California Department of Justice regularly works with other law enforcement agencies to investigate and prosecute fraud perpetrated on the Medi Cal program against a wide variety of healthcare providers, including doctors and pharmaceutical companies. 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.
Salinas Resident Charged with Attempted Murder and Related Crimes in Salinas Gang CaseRead the Press Release
SAN JOSE - A federal grand jury indicted Kristopher Purcell, aka “K-Dawg,” charging him with two counts of attempted murder in aid of racketeering; two counts of assault with a dangerous weapon in aid of racketeering; and one count of use of a firearm during and in relation to, or possession in furtherance of, a crime of violence, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
The indictment was filed October 11, 2018, and was unsealed earlier today. According to the indictment, Purcell, age 20, of Salinas, is accused of attempting to murder two victims on Orchard Avenue in Salinas, on February 12, 2017, in an attempt to enhance his status with the Nuestra Familia prison gang and its subservient Norteno street gangs. The indictment describes how Norteno gang members earn promotion and prestige by proving themselves through the commission of criminal activities, including acts of violence such as murder and attempted murder. In fact, according to the indictment, a Norteno gang member is expected to “hunt” – that is, seek out and beat, stab, or shoot – any rivals.
Further, Purcell is charged with two counts of assault with a dangerous weapon as a result of the same February 12, 2017 shooting. The fifth charge in the indictment relates to Purcell’s alleged use of a firearm during the attack. In sum, Purcell is charged with two counts of attempted murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(5); two counts of assault with a dangerous weapon in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(3); and one count 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 either count of attempted murder, Purcell faces a maximum prison term of 10 years and a maximum fine of $250,000. If convicted of either count of assault with a dangerous weapon, Purcell faces a maximum prison term of 20 years and a maximum fine of $250,000. If convicted of the firearm offense, Purcell faces a mandatory minimum sentence of 10 years in prison and a maximum prison term of life in prison, to run consecutive to any other sentence imposed in this case. The firearms offense also carries a maximum fine of $250,000. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Purcell made an initial appearance this afternoon before U.S. Magistrate Judge Susan van Keulen. He remains in custody and is next scheduled to appear before U.S. Magistrate Judge Virginia K. DeMarchi for a hearing to determine whether he will be detained pending disposition of this case.
The prosecution is the result of an investigation by the FBI, with assistance from the California Highway Patrol and the Salinas Police Department.
Members of the public who have information regarding gang-related activities are encouraged to contact FBI San Francisco Division at 415-553-7400.
Over A Dozen Alleged Gang Members Charged with Federal Racketeering Conspiracy, Attempted Murder and Assault in Aid of Racketeering, and Other CrimesRead the Press Release
SAN JOSE- A federal grand jury indicted multiple Salinas-based 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, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The indictment handed down on October 3, 2013, and unsealed today alleges that the defendants are all gang members who committed crimes in and out of Monterey County Jail for the benefit of enhancing the wealth and reputation of the gang and themselves.
“As alleged, the Nuestra Familia prison gang and the Norteño street gangs have terrorized Monterey County residents for much too long,” said U.S. Attorney Tse. “The gangs have targeted anyone, even in jail, who does not obey their violent rules. We are thankful for the efforts of our federal and local partners to bring to justice individuals responsible for these alleged horrific criminal acts within our prison system.”
“In collaboration with our partners at the Monterey County Sheriff’s Office and the Monterey County Jail, we will continue to take action against groups who use violence, fear, and criminal behavior for their own power and gain,” said FBI Special Agent in Charge, John F. Bennett. “It is important for Monterey County and Salinas area residents to know that the FBI will not tolerate the presence of organized criminal enterprises in our neighborhoods. We will not allow fear or intimidation have a place in our communities.”
“This was an exhaustive and thorough 6-year effort by the FBI,” said Monterey Sheriff Steve Bernal, “We are proud to have partnered with our federal partners on this important investigation that will improve the safety of our entire community.”
According to the indictment, the defendants engaged in racketeering for the purpose of preserving the power, territory, reputation, and profits of the Nuestra Familia/Salinas Norteños Enterprise. The indictment describes how members, when not incarcerated, compete for control of lucrative illegal activities, such as drug dealing and robbery. Such competition leads to violence both on the streets and within custodial facilities. The indictment also describes how the gang developed a structure, philosophy, rules, rituals, and obligations for its members within custodial facilities in Monterey County. One rule includes the general principle that once an individual reaches a certain status within the gang, death, under most circumstances, is the only way to withdraw.
Nuestra Familia sees Monterey County as a stronghold for the gang. The indictment describes how the gang has targeted Monterey County for crimes, most specifically in and near Salinas. For example, Norteño cliques in the county fight with rival street gangs, and to a lesser extent other Norteño cliques, for control of territory in which to conduct narcotics trafficking and other crimes, as well as to recruit and influence non-gang members.
Inside the Monterey County Jail, Norteños work together to maintain the structure and follow the rules of Nuestra Familia without regard to what specific clique they are from. Nuestra Familia has come to regard inmates at Monterey County Jail as potential new members for the criminal organization. Norteños in Monterey County Jail are separated from other inmates—in part due to the Norteños predatory nature, and in part because Nuestra Familia rules prohibit them from preying upon each other—and Nuestra Familia now regards the jail as one of the better “training” facilities for new members. The gang considers inmates in the jail well-regimented, disciplined, and aligned with Nuestra Familia values.
In this case, the defendants have been charged with either directing or participating in assaults, attempted murders, and drug trafficking within Monterey County Jail as follows:
Johnny Magdaleno, a/k/a “Soldier Boy,”
Vincent Gerald Garcia, a/k/a “Chente,”
Rodney Luis Romero, a/k/a “Speedy,”
Michael James Rice, a/k/a “Redwood,”
Alberto Cervantes, a/k/a “Littles”
Alejo Alex Alegre, IV, a/k/a “Chino,”
Carlos Cervantes, a/k/a “Lil Huero,” a/k/a “Doug,”
Alberto Moreno, a/k/a “Doughboy,”
Steven Anthony Dorado, a/k/a “Castro,” a/k/a “Chinaman,”
Michael Abraham Cazares, a/k/a “Lil Rhino,”
Jeffrey Lopez, a/k/a “T-Bone,”
Juan Alvarez, a/k/a “Chucky,”
Erik Lopez, a/k/a “Bimbo,” and
Jorge Jasso
The indictment describes the crimes in which each defendant has participated, leadership positions within the gang, and a description of the defendants’ gang-related tattoos. The indictment centers largely on seven “removals,” by which inmates inflict violence on other inmates, often for violations of gang rules. The purpose of a removal is often to literally remove an inmate from a prison housing unit by killing that inmate or inflicting as much bodily harm as possible. Removals typically require authorization from gang leadership and members are instructed how to perpetrate the violent crime—members are instructed how and where a “hitter” should stab a victim in order to inflict as much injury as possible, and how “bombers” should follow up by assaulting the victim with hands and feet to inflict additional injuries and to distract prison guards long enough to allow a bomber to discard weapons and change out of blood-stained clothes.
In this case, the following removals are alleged:
(1) Removal of Victim 1 on December 2, 2012 (Victim 1 was stabbed at least 21 times in the chest and back with a jail-made shank for violating gang rules):
- Johnny “Soldier Boy” Magdaleno
- Erik “Bimbo” Lopez
- Jorge Jasso
- Alberto “Littles” Cervantes
(2) Removal of Victim 2 on February 25, 2013 (Victim 2 was stabbed in the head and face):
- Rodney “Speedy” Romero
- Alberto “Littles” Cervantes
- Johnny “Soldier Boy” Magdaleno
- Erik “Bimbo” Lopez
- Jorge Jasso
- Michael “Redwood” Rice
(3) Removal of Victim 3 on April 29, 2013 (Victim 3 was stabbed in the head, hands, arms, and wrists):
- Johnny “Soldier Boy” Magdaleno
- Vincent “Chente” Garcia
- Rodney “Speedy” Romero
- Michael “Redwood” Rice
- Carlos “Doug/Huero” Cervantes
- Alberto “Doughboy” Moreno
- Steven “Castro/Chinaman” Dorado
- Jorge Jasso
(4) Removal of Victim 4 on July 10, 2013 (Victim 4 was stabbed in the face, head, and neck):
- Michael “Little Rhino” Cazares
- Jeffrey “T-Bone” Lopez
(5) Removal of Victim 5 on October 23, 2013 (Victim 5 was stabbed in the neck):
- Vincent “Chente” Garcia
- Rodney “Speedy” Romero
- Juan “Chucky” Alvarez
(6) Removal of Victim 6 on November 13, 2013 (Victim 6 was stabbed in the head, torso, and arms approximately 10 times):
- Alejo “Chino” Alegre
(7) Removal of Victim 7 on April 14, 2014:
- Vincent “Chente” Garcia
In sum, the charges pending against each defendant are as follows:
Defendant
Age
Charges
Maximum Statutory Penalty
All Defendants
Racketeering Conspiracy
18 U.S.C. § 1962(d)
Life in prison
5 years of supervised release
$250,000 fine
JOHNNY MAGDALENO
31
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
VINCENT GERALD GARCIA
51
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
Attempted Murder (of Victim 5) in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Assault (of Victim 5) With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
20 years in prison
3 years supervised release
$250,000 fine
Attempted Murder (of Victim 7) in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Assault (of Victim 7) With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(3)
20 years in prison
3 years supervised release
$250,000 fine
RODNEY LUIS ROMERO
33
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
Attempted Murder (of Victim 5) in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Assault (of Victim 5) With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
20 years in prison
3 years supervised release
$250,000 fine
MICHAEL JAMES RICE
34
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
ALBERTO CERVANTES
34
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
ALEJO ALEX ALEGRE, IV
26
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
Attempted Murder (of Victim 6) in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Assault (of Victim 6) With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(3)
20 years in prison
3 years supervised release
$250,000 fine
CARLOS CERVANTES
30
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
ALBERTO MORENO
25
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
STEVEN ANTHONY DORADO
27
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
MICHAEL ABRAHAM CAZARES
26
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
JEFFREY LOPEZ
26
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
JUAN ALVAREZ
37
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
Attempted Murder (of Victim 5) in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Assault (of Victim 5) With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(3)
20 years in prison
3 years supervised release
$250,000 fine
ERIK LOPEZ
24
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
Felon in Possession of a Firearm and Ammunition
18 U.S.C. § 922(g)
10 years in prison
3 years supervised release
$250,000 fine
JORGE JASSO
26
Conspiracy to Commit Murder in Aid of Racketeering
18 U.S.C. § 1959(a)(5)
10 years in prison
3 years supervised release
$250,000 fine
Conspiracy to Commit Assault With a Dangerous Weapon in Aid of Racketeering
18 U.S.C. § 1959(a)(6)
3 years in prison
1 year supervised release
$250,000 fine
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
In addition, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The prosecution is the result of an investigation by the FBI with assistance from the Monterey County Sheriff’s Office, the California Highway Patrol, the California Department of Corrections and Rehabilitation, and the Salinas Police Department.
Federal Bribery Charges Added to List of Crimes Pending Against Oakland Resident Wing Wo MaRead the Press Release
SAN FRANCISCO - A federal grand jury in San Francisco filed a Third Superseding indictment today adding bribery to the list of charges pending against Wing Wo Ma, a/k/a Mark Ma, a/k/a Fat Mark, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The new indictment amends drug distribution charges originally brought October 21, 2015, and conspiracy and murder charges filed April 6, 2017.
The third superseding indictment realleges charges brought in the April 6, 2017, superseding indictment that Ma, 52, of Oakland, was involved in a conspiracy to distribute marijuana between January and October of 2013. During the same period, Ma allegedly possessed a firearm in furtherance of the drug conspiracy and used a firearm to cause the death of two people: Jim Tat Kong and Cindy Bao Feng Che. Ma has been charged with one count each of conspiracy to cultivate and distribute and to possess with intent to distribute marijuana, in violation of 21 U.S.C. §§ 846 and 841(a)(1) and (b)(1)(B); use of a firearm causing murder, in violation of 18 U.S.C. § 924(j); and use of a firearm during and relation to a drug trafficking crime, in violation of 18 U.S.C. § 924(c)(1)(A).
Today’s third superseding indictment adds conspiracy to commit bribery allegations to the charges previously pending against Ma. Specifically, Ma bribed an Alameda County District Attorney’s Office Investigator to protect Ma from prosecution and investigation by law enforcement agencies. As alleged, Ma gave things of value to the now former investigator, including airfare for multiple trips to Las Vegas, free accommodation at high-end suites and hotel rooms at Las Vegas casinos, music concert tickets, and use of a new Mercedes Benz. In addition, Ma told criminal associates that the investigator would be able to protect them from investigations conducted by law enforcement agencies, given Ma’s relationship with the investigator. Ma also collected money from criminal associates for the purpose of bribing the investigator and represented to criminal associates that the investigator was an investor in Ma’s fraudulent investment projects. Furthermore, Ma used the investigator’s name and reputation to attract investors to his own fraudulent schemes.
The indictment charges Ma with one count of conspiracy to commit honest services fraud and bribery, in violation of 18 U.S.C. §§ 371, 666, 1343, and 1346.
All indictments merely allege that crimes have been committed, and all defendants, including Ma, are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Ma faces a maximum statutory sentences as follows:
- Conspiracy to cultivate and distribute and to possess with intent to distribute marijuana: Maximum term of forty years imprisonment; maximum fine of $5,00,000; at least four years, but up to lifetime, supervised release. (Mandatory minimum prison term of 5 years.)
- Use of Firearm Causing Murder: maximum lifetime imprisonment, maximum fine of $250,000, maximum three years of supervised release.
- Use of a firearm during and in relation to a drug trafficking crime: maximum life imprisonment, maximum fine of $250,000, maximum five years of supervised release. (Minimum consecutive penalties include the following: 5 years consecutive mandatory minimum, 7 years if the firearm is brandished, and 10 years if the firearm is discharged.)
- Conspiracy to Commit Bribery: maximum penalty of five years imprisonment, maximum $250,000 fine, maximum three years of supervised release.
However, any sentence following a conviction of Ma 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 United States Attorneys Joseph Alioto and William Frentzen are prosecuting these cases with the assistance of Adria Trigovcich and Bridget Kilkenny. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Eleven Bay Area Residents Charged in Federal Drug Trafficking, Firearms CrackdownRead the Press Release
SAN JOSE- Federal law enforcement authorities arrested eight Bay Area residents for a broad range of charges involving methamphetamine trafficking and the unlawful possession and sale of firearms, announced United States Attorney Alex G. Tse; Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Rayfield Roundtree; Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen; and U.S. Marshal Don O’Keefe. The arrests were made pursuant to five separate federal indictments handed down between March 8, 2018, and August 23, 2018. In total, the indictments charge eleven defendants, three of whom already were in custody.
The five indictments were unsealed yesterday as the defendants made initial appearances before U.S. Magistrate Judge Virginia DeMarchi. According to the indictments, each defendant engaged in at least one crime related to the distribution of methamphetamine or the illegal possession or sale of firearms.
The eleven defendants and the corresponding charges are as follows:
Defendant
Age
Charges
Maximum Statutory Penalty
ELISEO MARTINEZ
a/k/a Snowman
24
Conspiracy to Distribute Methamphetamine,
21 U.S.C. §§ 846, 841(a)(1) and 841(b)(1)(B)
August 2016 through October 7, 2016
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
Distribution of Methamphetamine,
21 U.S.C. §§ 841(a)(1) and (b)(1)(B) October 7, 2016
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
DANIEL NOGUEIRA
26
Conspiracy to Distribute Methamphetamine,
21 U.S.C. §§ 846, 841(a)(1) and 841 (b)(1)(B)
August 2016 through October 7, 2016
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
Distribution of Methamphetamine,
21 U.S.C. §§ 841(a)(1) and (b)(1)(A)
October 17, 2016
Lifetime imprisonment (minimum 10 years), $10 million fine, lifetime of supervised release (minimum 5 years)
Felon in Possession of a Firearm / Ammunition (two counts),
18 U.S.C. § 922(g)
November 18, 2016
December 13, 2017
(For each count)
10 years’ imprisonment, $250,000 fine,
3 years supervised release,
Distribution of Methamphetamine,
21 U.S.C. §§ 841(a)(1) and (b)(1)(B)
December 13, 2016
40 years’ imprisonment (minimum 5 years),
$5 million fine,
Lifetime of supervised release (minimum 4 years)
SHAWN MOORE, a/k/a S Mo
51
Conspiracy to Distribute Methamphetamine,
21 U.S.C. §§ 846, 841(a)(1) and 841 (b)(1)(B)
January 17, 2017 through
January 23, 2017
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
Distribution of Methamphetamine (three counts),
21 U.S.C. 841(a)(1) and 841(b)(1)(B)
January 19, 2017
January 23, 2017
February 8, 2017
(For each count)
40 years’ imprisonment (minimum 5 years),
$5 million fine,
Lifetime of supervised release (minimum 4 years)
Felon in Possession of Ammunition,
18 U.S.C. § 922(g)
February 13, 2017
10 years’ imprisonment, $250,000 fine,
3 years supervised release,
ANTHONY LOPEZ, a/k/a Evil
34
Conspiracy to Distribute Methamphetamine,
21 U.S.C. §§ 846, 841(a)(1) and 841 (b)(1)(B)
January 17, 2017 through
January 23, 2017
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
Distribution of Methamphetamine (two counts),
21 U.S.C. 841(a)(1) and 841(b)(1)(B)
January 19, 2017
January 23, 2017
(For each count)
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
DEREKE HOLDEN a/k/a Dee
22
Sale of Firearm / Ammunition to Felon (four counts),
18 U.S.C. § 922(d)(1)
January 30, 2017
May 30, 2017
June 23, 2017
(For each count)
10 years’ imprisonment,
$250,000 fine,
3 years supervised release
Distribution of Methamphetamine (two counts),
21 U.S.C. 841(a)(1) and 841(b)(1)(B)
September 12, 2017
September 20, 2017
(For each count)
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
SALVADOR MORFIN
a/k/a Panda
34
Distribution of Methamphetamine (two counts),
21 U.S.C. §§ 841(a)(1) and 841 (b)(1)(B)
September 20, 2017
October 5, 2017
(For each count)
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
COLLIN BLAUDEANDERSON
22
Sale of Firearm / Ammunition to Felon,
18 U.S.C. § 922(d)(1)
May 30, 2017
10 years’ imprisonment,
$250,000 fine,
3 years supervised release
Felon in Possession of Firearm / Ammunition (two counts),
18 U.S.C. § 922(g)(1)
May 30, 2017 and
June 23, 2017
(For each count)
10 years’ imprisonment, $250,000 fine,
3 years supervised release
ZION KORCZYNSKI
a/k/a Cream
25
Conspiracy to Distribute Methamphetamine,
21 U.S.C. §§ 846, 841(a)(1) and
841(b)(1)(B)
February 13, 2017 through
September 12, 2017
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
Distribution of Methamphetamine (two counts),
21 U.S.C. §§ 841(a)(1) and 841(b)(1)(B)
February 13, 2017
September 12, 2017
(For each count)
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
OSCAR MADRIGAL, JR.
a/k/a Oso
22
Sale of Firearm /Ammunition to Felon (two counts),
18 U.S.C. 922(d)(1)
June 23, 2017
October 5, 2017
(For each count)
10 years’ imprisonment,
$250,000 fine,
3 years supervised release
LARRY A. LUNDY
51
Conspiracy to Distribute Methamphetamine,
21 U.S.C. §§ 846, 841(a)(1) and
841(b)(1)(B)
February 13, 2017 through
September 12, 2017
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
Distribution of Methamphetamine,
21 U.S.C. §§ 841(a)(1) and 841(b)(1)(B)
September 12, 2017
40 years’ imprisonment (minimum 5 years),
$5 million fine,
Lifetime of supervised release (minimum 4 years)
Distribution of Methamphetamine,
21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A)
September 18, 2017
October 11, 2017
Lifetime imprisonment (minimum 10 years), $10 million fine, lifetime of supervised release (minimum 5 years)
BREANN MANUEL ALONSO
a/k/a Manny
22
Unlicensed Dealing in Firearms,
18 U.S.C. §922(a)(1)(A)
July 5, 2017 through
September 6, 2017
5 years’ imprisonment,
$250,000 fine,
3 years supervised release
Felon in Possession of a Firearm / Ammunition (four counts),
18 U.S.C. § 922(g)
July 31, 2017
August 22, 2017
August 29, 2017
September 6, 2017
(For each count)
10 years’ imprisonment, $250,000 fine,
3 years supervised release,
Distribution of Methamphetamine,
21 U.S.C. §§ 841(a)(1) and (b)(1)(B)
August 29, 2017
40 years’ imprisonment (minimum 5 years),
$5 million fine,
lifetime of supervised release (minimum 4 years)
Nogueira, Moore, Holden, Blaudeanderson, Madrigal, Alonso, Korczynski, and Lundy were arrested yesterday. Each made his initial appearance before Magistrate Judge DeMarchi and pleaded not guilty to the charged offenses. All the defendants except two are residents of San Jose. Moore is a resident of San Francisco and Blaudeanderson is a resident of Morgan Hill.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.
In addition, 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 John Bostic is prosecuting the case with the assistance of Tong Zhang. The prosecution is the result of an investigation by the ATF. Assisting in the arrest operation were the United States Marshals Service, Drug Enforcement Administration, and Santa Clara County Specialized Enforcement Team.
Oakland Gang Members Sentenced to Prison for Racketeering Conspiracy and Use of Firearm to Commit MurderRead the Press Release
OAKLAND – Two members of the West Oakland gang, Acorn, were sentenced for their respective roles in a criminal racketeering conspiracy, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The Honorable Phyllis J. Hamilton, Chief United States District Judge, today sentenced Jermaine Earnest, a/k/a “Acorn Maine,” to 37 years in prison, following a guilty plea entered by the defendant on May 2, 2018. The Honorable Phyllis J. Hamilton previously sentenced John Devalier Daniels, a/k/a “Lil Jon,” to 14 years in prison on September 5, 2018, following a guilty plea entered by the defendant on May 7, 2018. Both defendants admitted being involved with murder, robbery, and distribution of controlled substances.
According to his plea agreement, Earnest, 28, of Oakland, admitted that he became involved with the Acorn gang in or about 2006. He acknowledged that he agreed to participate in the Acorn gang’s activities to help achieve its objectives, including shooting members of rival gangs. Among the crimes Earnest committed for Acorn was a shooting that occurred on April 16, 2014. Earnest admitted that on the morning of April 16, he carried a gun and rode in a car with other Acorn members to a rival gang’s neighborhood. When Earnest saw a man he believed was a rival gang member, he fired several shots at the victim who died as a result of his injuries.
A federal grand jury indicted Earnest on October 16, 2014, for illegal gun possession in September 2014, a superseding indictment was subsequently filed on June 18, 2015, adding additional charges related to the April 16, 2014 shooting, and a second superseding indictment was filed on January 25, 2018. On May 2, 2018, Earnest pleaded guilty to the following charges from the second superseding indictment: racketeering conspiracy, in violation of 18 U.S.C. § 1962(d); using a firearm during and in relation to a crime of violence causing death, in violation of 18 U.S.C. § 924(j)(1); and using a firearm during and in relation to a crime of violence, in violation of 18 U.S.C. § 924(c).
Daniels, 31, of Oakland, also admitted he was a member of the Acorn gang. Daniels admitted he was a member of the Acorn gang and was the driver of the rental vehicle used in the April 16, 2014 drive-by shooting to which Earnest admitted. Daniels also admitted he was engaged in narcotics trafficking and robbery as part of his support for the Acorn gang.
Daniels was named as a defendant in the June 18, 2015 superseding indictment, and the January 25, 2018, second superseding indictment. On May 7, 2018, Daniels pleaded guilty to racketeering conspiracy, in violation of 18 U.S.C. § 1962(d), in the second superseding indictment.
In addition to the prison terms, Chief District Judge Hamilton also ordered each of the defendants to serve five years of supervised release.
The case is the result of an investigation by the FBI and the Oakland Police Department (OPD).
Bay-Area Babysitter and Camp Counselor Pleads Guilty to Child Pornography ConspiracyRead the Press Release
SAN FRANCISCO – Ryan Michael Spencer pleaded guilty in federal court in San Francisco to two counts of production of child pornography, conspiracy to distribute and receive child pornography, distribution of child pornography, receipt of child pornography, possession of child pornography, and felony contempt of court, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
In pleading guilty, Spencer admitted that he produced pornographic images of more than a dozen children with whom he came into contact through his jobs as a babysitter and camp counselor in the Santa Cruz area. One set of such images depicted Spencer molesting a child that he was babysitting. Spencer created other image by surreptitiously photographing the children’s genitalia and pubic areas while the children were naked and in his care.
Spencer admitted that, beginning no later than March 2015 and continuing until his arrest in April 2017, he conspired with his co-defendant, Tiburon-area babysitter Bryan Petersen, to trade the child pornography he produced for other images of child pornography that Petersen took of children in Petersen’s care.
The two men also conspired to distribute and receive child pornography from other sources. Spencer admitted that he and Petersen shared child pornography using Kik Messenger and that, in the spring of 2016, he filled a hard drive with more than 30,000 images and videos of child pornography and gave it to Petersen.
Spencer also pleaded guilty to felony contempt of court based on his willful and knowing refusal to comply with U.S. District Judge Charles R. Breyer’s order compelling him to decrypt three electronic devices seized from his residence under a valid search warrant. Twenty-one days after being held in civil contempt of court, Spencer decrypted the devices, which were found to contain child pornography, including images and a video of Spencer molesting a child who he was babysitting.
The investigation began when the FBI executed a search warrant at the home of Spencer’s co-defendant, Bryan Petersen, and found evidence on Petersen’s devices that Spencer was creating child pornography. Petersen pleaded guilty in 2017 and is awaiting sentencing.
Spencer, 21, and Petersen, 27, were indicted by a federal Grand Jury on May 11, 2017. The Grand Jury returned a superseding indictment on May 31, 2018, charging Spencer with Conspiracy to Distribute and Receive Child Pornography in violation of 18 U.S.C. § 2252(a)(2) and (b)(1), Production of Child Pornography in violation of 18 U.S.C. § 2251(a) (two counts), Distribution of Child Pornography in violation of 18 U.S.C. § 2252(a)(2) (two counts), Receipt of Child Pornography in violation of 18 U.S.C. § 2252(a)(2), Possession of Child Pornography in violation of 18 U.S.C. § 2252(a)(4)(B), and Contempt of Court in violation of 18 U.S.C. § 401(3). Under the plea agreement, Spencer pled guilty to all counts and agreed to a sentence of 30 years’ imprisonment, subject to approval by Judge Breyer.
Spencer has been in custody since his arrest in April 2017. His sentencing hearing is scheduled for February 20, 2019, at 10:00 am before Judge Breyer in San Francisco. The maximum statutory penalty is 30 years for each count of production of child pornography and 20 years for the other child pornography counts, a fine of up to $250,000, plus restitution to the victims. 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.
Julie D. Garcia is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Tong Zhang and Alycee Lane. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Convicted Fraudster Sentenced to Five Years in Prison for $7 Million Ponzi SchemeRead the Press Release
SAN FRANCISCO – Kevin Kyes was sentenced today to five years in prison for wire fraud and money laundering convictions arising from a $7 million Ponzi scheme, announced United States Attorney Alex G. Tse, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and the Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Tara Sullivan. The sentence was handed down by the Honorable Susan Illston, U.S. District Judge.
After a week-long trial before Judge Illston, a jury convicted Kyes, 70, formerly of Campbell, Calif. and currently of Roseville, Calif., of one count of conspiracy to commit wire fraud, seventeen counts of wire fraud, one count of conspiracy to commit money laundering, and two counts of money laundering. The evidence at trial established that Kyes conspired to commit wire fraud and committed wire fraud as part of a nearly $7 million Ponzi scheme in which the victims were a group of more than 60 Japanese investors. The jury found that Kyes conspired to and did launder the proceeds of this fraud.
From December 2012 through July 2015, Kyes worked with John Holdaway, 74 of Sandy, Utah, to defraud the Japanese investors through a business that they referred to as “Money Management Strategies,” or MMS. Kyes and Holdaway told the investors their money would be invested in high-speed trading programs with historical returns of well over 100% annually. Kyes and Holdaway also told investors that their investments would be safe, in part because their principal investment would never leave the bank accounts into which the funds were sent, and that instead, MMS would draw a credit line secured by their funds and use that to fund trading. Kyes and Holdaway further explained that any trading losses would be borne by MMS. Based on the representations of Holdaway and Kyes, these investors wired money to bank accounts in Northern California controlled by Holdaway and Kyes. The Japanese investors sent approximately $6.8 million to Holdaway and Kyes during the scheme.
The evidence at trial demonstrated that, in reality, Holdaway and Kyes did not invest the money as promised. Instead, they spent the money themselves, used it to fund Ponzi-type payments back to investors, spent the money to pay back prior creditors to whom they owed funds, and spent it on gold-related businesses. In addition, Holdaway and Kyes told investors that they were receiving distributions or returns on their investment. To back up their claims, Holdaway and Kyes created and sent to investors fake documents, including phony account statements and forged letters from an accountant. Holdaway, with Kyes’s knowledge and participation, also sent emails to investors under fake names, to give the appearance that multiple people worked for Holdaway and Kyes, and lied about traveling to Europe or elsewhere to work on their investments.
A federal grand jury indicted Kyes and Holdaway on June 14, 2016, charging them with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; eighteen counts of wire fraud, in violation of 18 U.S.C. § 1343; one count of conspiracy to engage in monetary transactions in property derived from specified unlawful activity, in violation of 18 U.S.C. § 1956(h); and five counts of engaging in monetary transactions in property derived from specified unlawful activity, in violation of 18 U.S.C. § 1957.
In addition to the prison term, Judge Illston also ordered Kyes to serve three years of supervised release and to pay over $3.6 million in restitution. On October 6, 2017, Holdaway pleaded guilty to one count of conspiracy to commit wire fraud and one count of filing false tax returns, and is scheduled to be sentenced on November 16, 2018, also before Judge Illston.
Assistant U.S. Attorneys Benjamin Kingsley and Helen Gilbert are prosecuting the case with assistance from Bridget Kilkenny and Patricia Mahoney. The prosecution is the result of an investigation by the FBI and the IRS, Criminal Investigation.
Santa Rosa Doctor Indicted for Unlawfully Prescribing Fentanyl and OxycodoneRead the Press Release
SAN FRANCISCO –A federal grand jury indicted Santa Rosa doctor Thomas Keller, charging him with distributing Schedule II and IV controlled substances outside the scope of his professional practice and without a legitimate medical need, announced United States Attorney Alex G. Tse, Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) Special Agent in Charge Steven J. Ryan. Keller was also charged with two counts of health care fraud related to billing.
According to the indictment filed September 27, 2018, and unsealed yesterday, in June of 2017, Keller, 72, of Santa Rosa, was a licensed physician when he knowingly distributed Oxycodone to a person knowing that the distribution was outside the scope of his professional practice and not for a legitimate medical purpose. Further, in March of 2018, Keller allegedly distributed Tramadol to another person, again knowing the distribution was outside the scope of professional practice and not for a legitimate medical purpose. Then, in July of 2018, the indictment alleges, Keller distributed fentanyl to a different person knowing the distribution was outside the scope of professional practice and not for a legitimate medical purpose. In addition, Keller is accused of submitting two fraudulent health care claims for payment as follows: one to Anthem Blue Cross of California in March of 2018, and the other to Medi-Cal in July of 2015.
In sum, Keller is charged with three counts of distributing drugs outside the scope of professional practice, in violation of 21 U.S.C. §§ 841(a)(1), and two counts of health care fraud, in violation of 18 U.S.C. § 1347.
This prosecution is the result of investigations by the DEA, FBI, HHS-OIG, and the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse.
An indictment merely alleges that crimes have been committed, and Keller, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Keller faces a maximum sentence of 20 years imprisonment and a fine of $1,000,000, for the distribution of fentanyl and Oxycodone. If convicted, Keller faces a maximum statutory sentence of five years in prison and $250,000 for the distribution of Tramadol. In addition, if convicted, Keller faces 10 years in prison and $250,000 (or twice the gain or loss) for each violation of 18 U.S.C. § 371. Additional fines, restitution, and additional periods of supervised release also could be ordered at sentencing. 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.
Keller made an initial appearance before Chief U.S. Magistrate Judge Joseph C. Spero yesterday. Keller is scheduled to appear next before the Honorable Judge Vince Chhabria on Tuesday October 16, 2018.
Assistant U.S. Attorney Shailika Kotiya is prosecuting the case with the assistance of Rawaty Yim. 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.
San Francisco Resident Indicted for Bank RobberiesRead the Press Release
SAN FRANCISCO – A federal grand jury indicted Timothy Wayne Phillips today for allegedly committing three bank robberies and attempting a fourth robbery in the San Francisco Bay Area, announced United States Attorney Alex. G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to the indictment, between August 29, 2018, and September 7, 2018, Phillips, 51, of San Francisco, used force, violence, and intimidation, to commit three bank robberies. The robberies occurred on the following dates and locations:
- August 29, 2018 – U.S. Bank in San Bruno, Calif.
- September 6, 2018 – Wells Fargo Bank in San Francisco, Calif.
- September 7, 2018 – Wells Fargo Bank in Berkeley, Calif.
Phillips allegedly stole a total of $7,335.90 from the banks. In addition, Phillips allegedly attempted to rob City National Bank in Walnut Creek on September 7, 2018. In sum, Phillips was charged with three counts of bank robbery and one count of attempted bank robbery. Each count is a violation of 18 U.S.C. § 2113(a).
An indictment 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 each 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 Westmore on October 4, 2018 for arraignment.
Assistant U.S. Attorney Joseph Springsteen is prosecuting the case with the assistance of Marina Ponomarchuk. The prosecution is the result of investigations by the FBI with significant assistance from the police departments of Daly City, Berkeley, Walnut Creek, San Francisco, and San Bruno.
Honduran National Sentenced to Seven Years in Prison for Illegally Reentering the United States and Selling Drugs Near A SchoolRead the Press Release
SAN FRANCISCO – Olvin Didier Centeno-Gamez was sentenced to 84 months in prison for illegally re-entering the United States after deportation and possessing with intent to distribute drugs within 1000 feet of a school, announced U.S. Attorney Alex G. Tse and Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin. The sentence was handed down today by the Honorable Susan Illston, U.S. District Judge.
Centeno-Gamez, 36, a citizen of Honduras, pleaded guilty to the crimes on June 22, 2016. In pleading guilty, Centeno-Gamez admitted that on April 18, 2018, he was in San Francisco’s Tenderloin District and in possession of heroin, methamphetamine, and cocaine that he intended to distribute. At the time of his arrest, Centeno-Gamez was within 1000 feet of a local elementary school. Centeno-Gamez further admitted he illegally re-entered the United States after having been deported on five previous occasions between 2009 and 2017.
A federal grand jury indicted Centeno-Gamez on May 17, 2018, charging him with three counts of possession with intent to distribute a controlled substance within 1000 feet of a school, in violation of 21 U.S.C. §§ 841 and 860(a), and one count of illegal re-entry into the United States after deportation, in violation of 18 U.S.C. §§ 1326(a) and (b)(2). Centeno-Gamez pleaded guilty to all counts in the indictment.
In addition to the prison term, Judge Illston ordered Centeno-Gamez to serve a six-year period of supervised release. Centeno-Gamez 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 Marina Ponomarchuck. The prosecution is the result of an investigation led by HSI with assistance from the Drug Enforcement Administration.
Bay Area Man Sentenced to over 17 Years in Prison for Production of Child PornographyRead the Press Release
SAN FRANCISCO –Douglas Pippert was sentenced to 210 months in prison for production of child pornography, 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 today by U.S. District Judge Vince G. Chhabria
Pippert, 49, formerly of Montana, pleaded guilty to the charge on June 19, 2018. According to his plea agreement, Pippert admitted he produced pornographic images of at least two minor victims while they were unconscious. Pippert engaged in sexual acts with one of the minors, while he was conscious and unconscious, and recorded the molestation. Both of the minors would sometimes stay at Pippert’s home. Pippert also developed the persona of a minor female on Facebook in order to trick teenage boys into sending him images of their genitals.
According to documents filed by the federal government, law enforcement agents discovered approximately 400,000 images and 50 hours of videos involving child pornography on Pippert’s electronic devices.
In addition to the prison term, Judge Chhabria sentenced Pippert to a ten-year term of supervised release. Pippert currently is in federal custody and will begin serving his sentence immediately.
Assistant United States Attorneys Neal C. Hong and Meredith B. Osborn are prosecuting the case with the assistance of Kimberly Richardson. The prosecution is the result of an investigation by the FBI and the Fort Bragg Police Department.
Justice Department Is Awarding Almost $320 Million to Combat Opioid CrisisRead the Press Release
WASHINGTON – On the first day of National Substance Abuse Prevention Month, the Department of Justice announced it is awarding almost $320 million to combat the opioid crisis in America. The unprecedented funding will directly help those most impacted by the deadliest drug crisis in American history, including crime victims, children, families, and first responders.
"President Trump has made ending the opioid crisis a priority for this administration, and under his leadership, the Department of Justice has taken historic action," said Attorney General Jeff Sessions. "Today we are announcing our next steps: investing $320 million into all three parts of the President’s comprehensive plan to end the epidemic: prevention, treatment, and enforcement. We are attacking this crisis from every angle—and we will not let up until we bring it to an end."
In 2017, more than 72,000 Americans lost their lives to drug overdoses, an increase from the 64,000 overdose deaths in 2016, according to the Centers for Disease Control and Prevention. The majority of these deaths can be attributed to opioids, including illicit fentanyl and its analogues. October marks two important anti-drug events: Red Ribbon Week and National Prescription Drug Takeback Day. Red Ribbon Week takes place every year between October 23-31 and encourages students, parents, schools, and communities to promote drug-free lifestyles. The Drug Enforcement Administration’s (DEA) National Prescription Drug Take Back Day on October 27 aims to provide an opportunity for Americans to prevent overdose deaths and drug addictions before they start. DOJ expanded on DEA's Drug Takeback Days and collected more than 2.7 million pounds of expired or unused prescription drugs since April 2017.
The Attorney General has been resolute in the fight against the drug crisis in America. The Department assigned more than 300 federal prosecutors to U.S. Attorneys’ offices and hired more than 400 DEA task force officers, announced the formation of Operation Synthetic Opioid Surge, a new program to reduce the supply of deadly synthetic opioids in high impact areas, and created a new data analytics program called the Opioid Fraud and Abuse Detection Unit to assist 12 prosecutors sent to drug “hot spot districts.” In addition, the Department charged more than 3,000 defendants with trafficking in heroin, fentanyl, or prescription drugs in FY 2017, announced the first-ever indictments of Chinese nationals for fentanyl trafficking, and scheduled variants of fentanyl to prevent illicit drug labs from circumventing the law. In addition, DOJ executed the largest ever health care fraud enforcement action charging more than 600 defendants and proposed rules consistent with President Trump's "Safe Prescribing Plan," requiring a reduction of ten percent in 2019 in manufacturing quotas. The Department dismantled AlphaBay, the largest criminal marketplace on the Internet and has already generated prosecutions in the fight against online drug trafficking through the Joint Criminal Opioid Darknet Enforcement Team (J-CODE).
The approximately $320 million awarded by the Department’s Office of Justice Programs (OJP) will be distributed in order to maximize effectiveness over the country. A breakdown of the grant funding can be found here.
- Innovative Prosecution Solutions for Combating Violent Crime and Opioid Abuse ($2.8 Million)
- Help prosecutors develop strategies to address violent crime caused by illegal opioid distribution and abuse
- Comprehensive Opioid Abuse Site-based Program ($162 Million)
- Help jurisdictions plan and implement programs aimed at reducing opioid abuse and mitigating its impact on crime victims, including training and technical assistance
- Justice and Mental Health Collaboration Program ($5.9 Million)
- Address the treatment needs of people using opioids under the Justice and Mental Health Collaboration Program
- Helping Children and Youth Impacted by Opioids ($46.6 Million)
- Help children and youth impacted by the opioid crisis, including training and technical assistance
- Drug Courts ($81.2 Million)
- Assist adult, juvenile, and family drug courts and veterans treatment courts, including training and technical assistance
- Paul Coverdell Forensic Science Improvement Grant Program ($17 Million)
- Address the dramatic increase in deaths and the backlogs of seized drugs as a result of the opioid crisis
- Opioid-Related Research for Criminal Justice Purposes ($4.1 Million)
- Development of new tools to enforce the law, ensure public safety, prevent and control crime, and ensure fair and impartial administration of justice
OJP provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice, and assist victims. OJP has six bureaus and offices: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking. More information about OJP and its components can be found at: www.ojp.gov.
- Innovative Prosecution Solutions for Combating Violent Crime and Opioid Abuse ($2.8 Million)
Lending Club Agrees to Pay $2 Million Penalty to Resolve Investigation into Its Lending PracticesRead the Press Release
lendingclub_settlement_agreement.pdf SAN FRANCISCO – Peer-to-peer lending company LendingClub Corporation of San Francisco, Calif., has agreed to pay a civil penalty of $2 million to resolve allegations that it violated the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), announced United States Attorney Alex G. Tse, Special Agent in Charge John F. Bennett of the Federal Bureau of Investigation San Francisco Field Office, and Federal Deposit Insurance Corporation (FDIC), Office of Inspector General Special Agent in Charge Wade V. Walters.FIRREA authorizes the federal government to seek civil penalties against companies and individuals that violate various predicate criminal offenses affecting federally insured financial institutions, including false statements to financial institutions, bank fraud, and wire fraud. In this case, the United States alleged that from January 2009 to September 2010, LendingClub made misrepresentations to its FDIC-insured loan originator, WebBank. Further, the United States alleged that due to Lending Club’s misrepresentations, WebBank originated over 200 loans to borrowers who did not satisfy WebBank’s credit requirements. The government alleged that LendingClub made these misrepresentations fraudulently to increase the volume of loans available for investment on its platform and to meet its monthly loan origination goals.
“As technology continues to provide more creative means for financial transactions, so, too, must financial technology companies be careful to abide by the rules that ensure stability and fairness in these emerging markets.” said U.S. Attorney Tse. “We will vigorously investigate wrongful conduct in this industry.”
“The FBI is committed to protecting the American people by investigating violations of law by all entities, including financial institutions,” said Special Agent in Charge John F. Bennett of the FBI San Francisco Division, “The FBI prioritizes combatting white-collar crime and will not tolerate any business or institution that engages in false representation for their own benefit and does not abide by the law."
“This settlement shows that allegations of misconduct to advance personal or corporate goals will be vigorously investigated and pursued,” said FDIC OIG Special Agent in Charge Wade Walters. “Law enforcement agencies worked together to address these allegations and obtain a settlement in the pursuit of justice.”
The settlement was the result of a coordinated effort between the U.S. Attorney’s Office for the Northern District of California and the Securities and Exchange Commission, with investigative support from the FBI and FDIC-OIG. Assistant U.S. Attorney Kimberly Friday is handling the matter on behalf of the U.S. Attorney’s Office for the Northern District of California, with substantial assistance provided by Assistant U.S. Attorney Lila Bateman from the U.S. Attorney’s Office for the District of Colorado and Assistant U.S. Attorney Michael Sew Hoy from the U.S. Attorney’s Office for the Central District of California.
The claims resolved by this settlement are allegations only, and there has been no admission of liability.
Former Morgan Hill Real Estate Broker Convicted of Bankruptcy FraudRead the Press Release
SAN JOSE- Goyko Gustav Kuburovich, also known as “Batzi” Kuburovich and “Gus” Kuburovich, and his daughter, Kristel Kuburovich were convicted of bankruptcy fraud-related crimes by a federal jury announced United States Attorney Alex G. Tse and Special Agent in FBI Special Agent in Charge John F. Bennett. The verdicts were handed down yesterday following a jury trial before the Honorable Edward J. Davila, U.S. District Judge.
The jury found Goyko Kuburovich, 58, formerly of Morgan Hill and currently a resident of Auburn, guilty of one count of bankruptcy fraud, one count of concealment of assets during a bankruptcy proceeding, and one count of making false statements during a bankruptcy proceeding. Kristel Kuburovich, 29, also of Auburn, was found guilty of one count of concealment of assets during a bankruptcy proceeding. Ms. Kuburovich was acquitted of one count of bankruptcy fraud.
Evidence at trial showed that Goyko Kuburovich enlisted his daughter, Kristel Kuburovich, in a scheme to defraud the bankruptcy court for the purpose of concealing Goyko Kuburovich’s real property and cash assets. To implement this scheme, Goyko Kuburovich executed multiple financial transactions, including by and through Kristel Kuburovich. The trial evidence proved that when Goyko Kuburovich filed a bankruptcy petition in 2010, he fraudulently omitted his interest in certain real and personal property, the same assets that were the subject of his financial transactions with his daughter. In reaching its verdict, the jury found that through this scheme to defraud, Goyko Kuburovich knowingly and intentionally concealed approximately $870,000 of his assets from the bankruptcy court, while having over $2.5 million of debt discharged by the bankruptcy court.
On August 25, 2016, a federal grand jury indicted the defendants, charging them with one count of bankruptcy fraud, in violation of 18 U.S.C. § 157(1), and one count of concealment of assets during a bankruptcy proceeding, in violation of 18 U.S.C. § 152(1). Goyko Kuburovich also was charged with one additional count of making false statements during a bankruptcy proceeding, in violation of 18 U.S.C. § 152(3).
The defendants are currently released from custody on separate bonds. The next court appearance is set before Judge Davila on October 9, 2018, at 1:30 p.m. for a hearing on the defendants’ motion for a judgment of acquittal. No date has been set yet for a sentencing hearing.
The maximum statutory penalty for each count is five years imprisonment and a $250,000 fine plus restitution, if appropriate. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Scott Simeon and Jeff Schenk are prosecuting the case with the assistance of Laurie Worthen and Lakisha Holliman. The prosecution is the result of a five-year investigation by the Federal Bureau of Investigation.
Daly City Man Sentenced to 20 Months in Prison for Smuggling Firearms to PhilippinesRead the Press Release
SAN FRANCISCO – Elmer Ratunil Cuares was sentenced to 20 months in prison for smuggling goods, including firearms, out of the United States, announced United States Attorney Alex G. Tse; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Special Agent in Charge in Northern California and Northern Nevada Ryan L. Spradlin; and the U.S. Department of Commerce’s Office of Export Enforcement, San Jose Office, Special Agent in Charge Joseph P. Whitehead. The sentence was handed down today by the Honorable Lucy H. Koh, U.S. District Judge.
Cuares, 51, of Daly City, pleaded guilty to the charge on June 20, 2018. According to his plea agreement, Cuares admitted that he attempted to export several firearms to the Philippines without the proper license authorizing him to do so.
Cuares admitted that in the Spring of 2015 he entered into an agreement to purchase two trucks from a San Jose-based company. Pursuant to the agreement, the company would arrange for the trucks to be transported to the Philippines in a shipping container from the United States. After the company ordered and received the shipping container, Cuares received permission from the company to add personal items to the container so that those items could be shipped to the Philippines along with the trucks he had purchased. Cuares added several items to the container, including a motorcycle, a television set, a washing machine or clothes dryer, a tool chest, and several boxes. However, unbeknownst to the company or to authorities, Cuares also added to the shipping container several firearms including one Glock Model 42 .380 caliber handgun, one Ruger LC .380 caliber handgun, one STI .40 caliber handgun, and one Spikes Tactical M-4 assault rifle. The shipping container arrived in the Philippines in early June of 2015.
Cuares also took steps to conceal the presence of the firearms in the container. For example, he disassembled the firearms and hid the pieces inside of innocuous items. Further, Cuares admitted export of the firearms is illegal under the Arms Export Control Act (22 U.S.C. § 2778) and the International Traffic in Arms Regulations (22 C.P.R. §§ 120-130), he knowingly exported the firearms from the United States to the Philippines, and he had neither applied for nor received a license authorizing him to export firearms.
A federal grand jury indicted Cuares on September 14, 2017, charging him with three counts: one count each of smuggling goods from the United States and concealing goods prior to exportation from the United States, both in violation of 18 U.S.C. § 554, and one count of delivery of firearms to common carrier without written notice, in violation of 18 U.S.C. § 922(e). Cuares pleaded guilty to the first charge. The additional charges were dismissed following sentencing.
In addition to the prison term, Judge Koh ordered Cuares to serve a one-year term of supervised release to begin after he has served his prison term. Judge Koh ordered defendant to begin serving his sentence on November 28, 2018.
Assistant U.S. Attorney John Bostic is prosecuting the case. The prosecution is a result of a joint investigation by HSI and the U. S. Department of Commerce.
San Francisco Resident Sentenced to Nearly 10 Years in Prison for Illegal Possession of A FirearmRead the Press Release
SAN FRANCISCO – Valentino Johnson was sentenced to 114 months in prison for illegally possessing a firearm in the Bayview neighborhood of San Francisco, announced United States Attorney Alex G. Tse and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Rayfield Roundtree. The sentence was handed down today by the Honorable Vince Chhabria, U.S. District Judge.
Johnson was convicted of the charge on August 28, 2015, following a jury trial. On April 4, 2016, the defendant was sentenced to eight years in prison. After a government appeal, the Ninth Circuit Court of Appeals reversed the sentence and remanded to the District Court for resentencing.
The evidence at trial and sentencing showed that Johnson possessed a firearm after sustaining six felony convictions. Evidence in this case also showed that the defendant used the firearm to break into a San Francisco residence. The Court also found that the defendant obstructed justice in connection with this case by attempting to persuade another person to accept responsibility for the firearm.
The San Francisco Police Department was able to make the connection between the firearm and the defendant by testing the firearm through ATF’s National Integrated Ballistic Information Network (NIBIN). In this case, the firearm possessed by Johnson was used by Johnson’s brother to kill another person in the Mission neighborhood of San Francisco in 2011. His brother pleaded guilty to using a firearm in connection with the homicide, but the firearm itself was never recovered by the San Francisco Police Department. In 2014, SFPD discovered the firearm during a parole search of Johnson’s Bayview residence. The NIBIN test results provided key evidence establishing Johnson’s possession of the firearm.
NIBIN is the only national network that allows for the capture and comparison of ballistic evidence to aid in solving and preventing violent crimes involving firearms. Since the program’s inception in 1999, NIBIN partners have processed approximately 99,000 NIBIN leads and 110,000 NIBIN hits. Approximately 16 million images in the network includes 3.3 million pieces of evidence.
In addition to the prison term, Judge Chhabria sentenced the defendant to a three-year period of supervised release. The defendant has been in custody since his arrest in this matter.
Assistant U.S. Attorneys Daniel Kaleba and Merry Jean Chan are prosecuting the case. The prosecution is the result of an investigation by San Francisco Police Department and ATF.
Alameda Resident Sentenced to over Five Years in Prison for Selling Prescription Drugs Without A License and Related ChargesRead the Press Release
SAN FRANCISCO – Kenzo Mateo Tokuda was sentenced to 69 months in prison for possessing with intent to distribute alprazolam (commonly known as “Xanax”) and carrying a firearm during and in relation to a drug trafficking crime, announced United States Attorney Alex G. Tse and Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen. The sentence was handed down today by the Honorable Haywood S. Gilliam, Jr., United States District Judge.
Tokuda, 24, of Alameda, pleaded guilty to the charges on May 21, 2018. According to his plea agreement, on August 10, 2017, the defendant posted a photograph of alprazolam pills on his social media account as a means of adverting that they were for sale. Tokuda acknowledged that at the time, he had roughly 540 “followers” to his social media account. Tokuda further admitted that on August 11, 2017, he possessed both the pills and a 9 mm pistol. He admitted he possessed the pills with the intent to distribute them and he possessed the firearm for the purpose of protecting himself while he distributed the drugs.
On September 28, 2017, a federal grand jury indicted Tokuda charging him with one count each of possessing with intent to distribute alprazolam, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(E)(2); carrying a firearm during and in relation to a drug trafficking crime, in violation of 18 U.S.C. § 924(c); being a felon in possession of ammunition, in violation of 18 U.S.C. § 922(g)(1); and advertisement of a controlled substance on the Internet, in violation of 21 U.S.C. § 843(c)(2)(A). Tokuda pleaded guilty to the first two counts and the remaining counts were dismissed. According to the government’s sentencing memorandum, Tokuda came to law enforcement’s attention in the Spring of 2017 after he “flagrantly post[ed] photographs and videos of prescription drugs, marijuana, guns, and cash” to his social media account.
In addition to the prison term, Judge Gilliam sentenced the defendant to a three-year period of supervised release. The defendant currently is in state custody on unrelated charges and will begin serving the sentence when he is released from state custody.
Assistant U.S. Attorney Katherine Wawrzyniak is prosecuting the case with the assistance of Theresa Benitez and Linda Love. The prosecution is the result of an investigation by the DEA Tactical Diversion Squad.
Justice Department Will Award up to $246 Million in Grants to Improve Public Safety in American Indian and Alaska Native CommunitiesRead the Press Release
SAN FRANCISCO- U.S. Attorney Alex G. Tse joined the Department of Justice today in announcing more than $113 million in grant awards to improve public safety, serve victims of crime, combat violence against women, and support youth programs in American Indian and Alaska Native communities. Tribes receiving awards in the Northern District of California include the following:
Blue Lake Rancheria Tribe $256,150 Cher-Ae Heights Indian Community of the Trinidad Rancheria $450,000 Hoopa Valley Tribe Total $731,362 Hopland Band of Pomo Indians $265,539 Yurok Tribe Total $1,628,658In addition, the Karuk Tribe, spanning both the Northern and Eastern Districts of California, will be receiving a $1,682,084 grant.
“The programs funded by these awards can be extremely effective in improving public safety and preventing violence against vulnerable populations in Native American communities,” said United States Attorney Tse. “The funds granted to the tribes in this district reflect the Department of Justice’s continued commitment to support violence reduction and promote public safety.”
Nationwide, grants were awarded to 133 American Indian tribes, Alaska Native villages, and other tribal designees through the Coordinated Tribal Assistance Solicitation, a streamlined application for tribal-specific grant programs. Of the $113 million, just over $53 million comes from the Office of Justice Programs, more than $35 million from the Office on Violence Against Women, and more than $24.7 million from the Office of Community Oriented Policing Services.
In addition, the Department is in the process of allocating up to $133 million in a first-ever set aside program to serve victims of crime in American Indian and Alaska Native communities. The awards are intended to help tribes develop, expand and improve services to victims of crime by providing funding, programming and technical assistance. Recipients will be announced in the near future.
“With these awards, we are doubling the amount of grant funding devoted to public safety programs and serving victims of crime in Native American communities,” said Principal Deputy Associate Attorney General Jesse Panuccio, who made the announcement during his remarks at the 26th Annual Four Corners Indian Country Conference in Santa Fe, New Mexico. “There is an unacceptable level of violent crime and domestic abuse in American Indian and Alaska Native communities. This increase in resources, together with our aggressive investigation and prosecution of crimes, shows how seriously Attorney General Sessions and the entire Department of Justice take these issues. We are committed to reducing violent crime and improving public safety.”
The Four Corners Conference is facilitated annually by U.S. Attorneys from Arizona, Colorado, New Mexico and Utah to provide a forum for discussion of justice-related topics with a large number of populous and diverse tribal nations located in the region.
CTAS awards cover nine purpose areas: public safety and community policing; justice systems planning; alcohol and substance abuse; corrections and correctional alternatives; children’s justice act partnerships; services for victims of crime; violence against women; juvenile justice; and tribal youth programs. CTAS funding helps tribes develop and strengthen their justice systems’ response to crime, while expanding services to meet their communities’ public safety needs.
Today’s announcement is part of the Justice Department’s ongoing initiative to increase engagement, coordination and action on public safety in American Indian and Alaska Native communities.
A listing of today’s announced CTAS awards is available at: www.justice.gov/tribal/page/file/1095161/download.
Former Medical Doctor Sentenced to over Three Years in Prison for Unlawfully Prescribing OxycodoneRead the Press Release
SAN FRANCISCO – Christopher Owens was sentenced to 41 months in prison for unlawfully prescribing oxycodone hydrochloride without a medical purpose, announced United States Attorney Alex G. Tse and U.S. Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen. The sentence was handed down today by the Honorable William Alsup, U.S. District Judge.
Owens pleaded guilty on March 20, 2018. According to his open plea application filed with the court, Owens, 50, of Indianapolis, Ind., was a medical doctor when he prescribed oxycodone hydrochloride, a Schedule II controlled substance, to an individual. Owens acknowledged he prescribed the drugs without a legitimate medical need and outside of the course of medical practice. On July 11, 2017, a federal grand jury indicted Owens charging him with distributing oxycodone without a medical need, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C). . Owens has since lost his license to practice medicine.
In sentencing Owens, Judge Alsup stated, “[Owens] was not running a pill mill, . . . but he was doing something just as bad . . .. He used that prescription pad to feed a habit.”
In addition to the prison term, Judge Alsup ordered Owens to serve three years of supervised release to begin after his prison term is completed and a $7,500 fine. Judge Alsup ordered Owens to surrender and begin serving his sentence on December 3, 2018.
Assistant U.S. Attorney Sheila A.G. Armbrust is prosecuting the case with the assistance of Linda Love. The prosecution is the result of an investigation by the DEA with assistance from the University of California San Francisco Police Department.
Florida Resident Sentenced to Ten Years in Prison for Leading A Conspiracy to Defraud Factoring CompaniesRead the Press Release
OAKLAND – Karl James Stehlin, aka Carl Davis, was sentenced to ten years in prison and ordered to pay $2,158,250.04 in restitution for leading a scheme to defraud multiple companies out of more than $9,500,000, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down yesterday by the Honorable Yvonne Gonzalez Rogers, U.S. District Judge.
Stehlin, 63, of Seminole, Fla., pleaded guilty to the charges on January 25, 2018. In pleading guilty, Stehlin admitted that along with co-defendant Gregory Scott Winters, aka Rob Sacci, 46, formerly of Ocala Fla., and others, he conspired to sell millions of dollars’ worth of fake invoices to a Walnut Creek company. The Walnut Creek company provides services related to accounts receivable collateralized lending, also called “factoring.” Factoring is a financial transaction in which a business sells its accounts receivable (invoices) to a third party (the factor) at a discount. The factor advances a percentage of the face amount of the invoices to the business and then collects the full amount from the customers of the business in due course. Following collection from the customers, the factor deducts its commission and other fees and then pays the balance to the business. As part of the scheme, Stehlin and his co-conspirators created fake invoices and sold them to the Walnut Creek company.
To commit this fraud scheme, Stehlin and his co-conspirators created multiple shell entities. For example, the co-conspirators created Nature’s Own Pharmacy, a company they claimed sold equine supplements. They also created other shell companies the co-conspirators represented to be Nature’s Own Pharmacy’s customers. In reality, Nature’s Own Pharmacy is a phony shell corporation that sold no goods. Further, all of Nature’s Own Pharmacy’s purported customers were phony companies that purchased no goods and owed no legitimate debt. Stehlin admitted that he and his co-conspirators then created fake invoices that gave the appearance of the sale of goods from Nature’s Own Pharmacy to the shell company’s fake customers, and then sold the phony invoices to victims.
Stehlin admitted he perpetrated this scheme over a six-year period on multiple factoring companies throughout the United States. Stehlin used false names, virtual office addresses, and other false information to execute the scheme.
A federal grand jury indicted Stehlin on January 12, 2017, charging him and Winters with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 and wire fraud, in violation of 18 U.S.C. § 1343. Stehlin pleaded guilty to both counts.
During the proceedings at which Stehlin pleaded guilty and was sentenced, Judge Gonzalez Rogers made findings that the defendant organized the scheme and that he defrauded multiple factoring companies out of more than $9,500,000. Further, Judge Gonzalez Rogers found that Stehlin and his co-conspirators duped their victims into believing they would collect the face value of the invoices from the purported customers when, in reality, the invoices sold by Stehlin to the factoring companies were worthless. Stehlin admitted that the factoring companies involved in this case suffered losses in excess of $9,500,000. Judge Gonzalez Rogers concluded the defendant’s conduct resulted in significant financial hardship to one or more of his victims, including one factoring company that had to close a branch and lay off employees, many of whom worked for that company for years.
In addition to the prison term, Judge Gonzalez Rogers sentenced the defendant to a three-year period of supervised release. The defendant has been in federal custody since his initial appearance and will begin serving his sentence immediately.
Winters pleaded guilty to conspiracy and wire fraud charges on October 12, 2017. On April 19, 2018, Judge Gonzalez Rogers sentenced Winters to two years in prison to be followed by three years of supervised release for his role in the scheme.
Assistant U.S. Attorney William J. Gullotta is prosecuting the case with the assistance of Katie Turner and Michelle Alter Eck. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Fugitive Methamphetamine Distributor Sentenced to Eight Years in PrisonRead the Press Release
SAN FRANCISCO – Hermilo Virelas Maciel was sentenced to 96 months in prison for conspiracy and possessing with the intent to distribute methamphetamine announced United States Attorney Alex G. Tse, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Rayfield Roundtree, and United States Marshal Donald M. O’Keefe. The sentence was handed down yesterday afternoon by the Honorable William H. Alsup, U.S. District Judge.
Maciel, 64, of Santa Rosa, Calif., pleaded guilty to the charges on May 22, 2018. Twenty three years earlier, on May 22, 1995, Maciel was arrested as he attempted to sell approximately 2.5 pounds of methamphetamine to a confidential informant.
On June 15, 1995, a federal grand jury indicted Maciel, charging him with one count of conspiracy to possess with the intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 846, and one count of possession with the intent to distribute methamphetamine, in violation of 21 U.S.C. § 841(a)(1). The next day, June 16, 1995, Maciel was arraigned on the charges and then was released on an unsecured personal recognizance bond. Weeks later, the defendant absconded from pre-trial supervision and on August 28, 1995, a bench warrant was issued for his arrest. On March 28, 2018, Michigan State Police located the defendant in Michigan and arrested him on the then-almost 23-year outstanding bench warrant. Upon his return in custody to San Francisco, Maciel pleaded guilty to the original charges in the indictment.
Maciel has been in custody since his arrest in March of 2018; he will begin serving his sentence immediately.
In addition to the prison term, Judge Alsup ordered Maciel to serve a three-year period of supervised release.
Assistant U.S. Attorney Shailika Kotiya is prosecuting the case with the assistance of Rawaty Yim. The prosecution is the result of an investigation by the Mendocino County-Wide Narcotics Task Force, the ATF, and the United States Marshals Service.
Four Chinese State-Owned Industrial Companies Arraigned in Economic Espionage ConspiracyRead the Press Release
OAKLAND – Four state-owned Chinese companies were arraigned on a Third Superseding Indictment charging each of the companies and two of their officers with conspiring to commit economic espionage and related crimes, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The companies were arraigned yesterday before U.S. Magistrate Judge Donna M. Ryu on charges that the defendants conspired and attempted to engage in economic espionage by seeking to acquire misappropriated trade secrets for the production technology for chloride-route titanium dioxide (TiO2) from E.I. du Pont de Nemours & Company (DuPont).
According to the indictment that was filed January 5, 2016, between 1998 and 2011, Pangang Group Company, Ltd. (also known as Panzhihua Iron and Steel (Group) Co., Ltd.) allegedly conspired with Chinese nationals Hou Shengdong and Dong Yingjie as well as three of the company’s subsidiaries and others to acquire stolen or misappropriated trade secrets. The defendant subsidiaries companies are:
- Pangang Group Steel Vanadium & Titanium Company, Ltd.;
- Pangang Group Titanium Industry Company Ltd.; and
- Pangang Group International Economic & Trading Company.
The trade secrets relate to TiO2 technology from DuPont. DuPont had developed the technology and controlled a significant amount of the world’s TiO2 sales. The defendants are alleged to have obtained confidential trade secret information including photographs related to TiO2 plant technologies and facilities. Further, the defendants are alleged to have paid an Oakland company at least $27,000,000 between 2006 and 2011 for assistance with TiO2 technology, including obtaining DuPont trade secrets. The defendants also allegedly attempted, between 2008 and 2011, to commit economic espionage related to DuPont’s TiO2 processes.
In sum, the indictment charges the four companies and two officers with one count of conspiracy to commit economic espionage, in violation of 18 U.S.C. § 1831(a)(5), and one count of attempted economic espionage, in violation of 18 U.S.C. §§ 1831(a)(1), (2), (3), and (4). The indictment also seeks forfeiture of any property used in the offenses or derived from the commission of the offenses.
The four companies appeared before Magistrate Judge Ryu through an attorney and pleaded not guilty to all charges.
Initial appearances are scheduled for October 2, 2018, in Oakland, before the Honorable Jeffrey S. White, U.S. District Judge.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, each defendant company faces a maximum sentence five years of probation and a fine of $10,000,000 for each count of conviction. Hou and Dong face 15 years of imprisonment, a $500,000 fine, and a maximum of 3 years of supervised release for each count in the indictment. Restitution, if appropriate, may also be ordered. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
This case is being prosecuted by the Special Prosecutions and National Security Unit of the United States Attorney’s Office. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
South San Francisco Resident Sentenced to Prison for Money Transmission and Tax SchemeRead the Press Release
SAN FRANCISCO – Subhash Jay was sentenced today to 30 months in prison and ordered to pay restitution of $409,871 for operating an unlicensed money transmitting business and filing a false tax return announced United States Attorney Alex G. Tse, Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Tara Sullivan, Bureau of Industry and Security, Special Agent in Charge Joseph Whitehead, and Homeland Security Investigations Special Agent in Charge Ryan L. Spradlin. The sentence was handed down by the Honorable Charles R. Breyer, Senior United States District Judge.
Jay, 59, of South San Francisco, pleaded guilty to the charges on March 23, 2018. According to the plea agreement, Jay admitted to operating a money transmitting business known as Force Services, Inc., without obtaining required state or federal licenses. Jay admitted that, during 2010 through 2014, he caused two domestic bank accounts held in the name of Force Services to receive international wire transfers on behalf of a client with an aggregate value of at least $4,515,236. Jay then forwarded most of those funds to the client, but retained $817,734 as a commission. In addition, Jay willfully filed corporate tax returns for Force Services for the years 2010 through 2014, which failed to report the commissions as gross receipts, and also willfully filed individual income tax returns for the years 2010 through 2014, which failed to report the commissions as income.
A federal grand jury indicted Jay on April 6, 2017, changing him with one count of operating an unlicensed money transmitting business in violation of 18 U.S.C. § 1960, ten counts of filing false tax returns in violation of 26 U.S.C. § 7206(1), one count of making false statements to a government agency in violation of 18 U.S.C. § 1001(a)(2), and one count of structuring financial transactions to evade reporting requirements in violation of 31 U.S.C. § 5324(a)(3). Pursuant to his plea agreement, Jay pleaded guilty to one count of operating an unlicensed money transmitting business, and one count of filing false tax returns on March 23, 2018. The remaining counts were dismissed.
In addition to the prison term and restitution, Judge Breyer also ordered Jay to serve a three-year period of supervised release. Further, on July 11, 2018, Judge Breyer issue a forfeiture order in the amount of $4,515,236. Judge Breyer ordered the defendant to begin serving the sentence on December 12, 2018.
Assistant United States Attorney Michael G. Pitman is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation, Homeland Security Investigations and the Bureau of Industry and Security.
Mountain View Man Pleads Guilty to Production and Distribution of Child PornographyRead the Press Release
SAN JOSE – Grant Ridder pleaded guilty today to production, distribution, and possession of child pornography, announced United States Attorney Alex G. Tse and United States Secret Service Acting Special Agent in Charge John Roberts. The guilty plea was accepted by the Honorable Lucy H. Koh, U.S. District Judge.
According to his plea agreement, on July 27, 2013, Ridder, 27, of Mountain View, engaged in sexually explicit conduct with a minor and produced photographs and video of the sexual encounter. In October 2013, he accessed the minor’s Facebook account without her permission and uploaded sexually explicit images of her to her Facebook page. Ridder acknowledged that he uploaded the images with the intent to cause substantial emotional distress to the minor. Ridder also possessed additional photographs of the minor engaged in sexually explicit conduct.
Further, according to the plea agreement, on July 14, 2013, Ridder persuaded a second minor, aged between 12 and 15 years, to engage in sexually explicit conduct for the purpose of producing photographs which the minor sent to Ridder on his phone. On July 26, 2013, Ridder coerced this minor to produce additional sexually explicit images of herself by threatening to post her prior sexually explicit photographs on a Russian website. In January 2014, Ridder uploaded the sexually explicit photographs of the minor to a Russian-based website.
Further according to the plea agreement, on December 7, 2013, Ridder coerced a third minor into producing sexually explicit images of herself by threatening to send her prior sexually explicit photographs to others. In January 2014, Ridder uploaded the sexually explicit photographs of the minor to a Russian-based website.
Lastly, according to the plea agreement, from approximately November 19, 2013, through June 18, 2014, Ridder used phone text messaging to entice a fourth minor to engage in sexual activity with him, knowing that she was a minor.
A federal grand jury indicted Ridder on May 18, 2017, charging him with two counts of production of child pornography, in violation of 18 U.S.C. § 2251(a); three counts of distribution of child pornography, in violation of 18 U.S.C. § 2252(a)(2); one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B); three counts of cyberstalking, in violation of 18 U.S.C. § 2261A; and one count of coercion and enticement of a minor, in violation of 18 U.S.C. § 2422(b). Ridder pleaded guilty to one count of production, one count of distribution, and one count of possession of child pornography.
Judge Koh scheduled a sentencing hearing for December 5, 2018, at 9:15 a.m., in San Jose. The minimum statutory sentence for violating 18 U.S.C. § 2251(a) (production) is a 15-year prison term; the maximum statutory sentence is a 30-year prison term. The minimum statutory sentence for a violation of 18 U.S.C. § 2252(a)(2) (distribution) is five years in prison and the maximum prison term is 20 years. The maximum statutory sentence for violating 18 U.S.C. § 2252(a)(4)(B) (possession) is 10 years in prison. Additional fines, victim restitution, and a term of supervised release also may be imposed; however, any sentence following conviction 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 Maia Perez and Marissa Harris are prosecuting the case with the assistance of Nina Williams. The prosecution is the result of an investigation by the United States Secret Service, the Contra Costa District Attorney’s Office, the Stockton Police Department, and the Martinez Police Department.
If members of the public have any information relevant to this investigation or to suspected child predators or suspicious activity, they should contact Homeland Security Investigations through the toll-free Tip Line at 1-866-DHS-2-ICE or complete the 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.
Fraudster Sentenced to More Than Four Years in PrisonRead the Press Release
SAN FRANCISCO – John Bryan Murphy was sentenced today to 51 months in prison, and ordered to pay $897,464.50 in restitution for wire fraud and money laundering, 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 Charles R. Breyer, U.S. District Judge.
Murphy, 44, of Hyannis, Massachusetts, pleaded guilty on April 27, 2018, to wire fraud and money laundering charges. According to the plea agreement, Murphy admitted that between at least 2012 and continuing up until his arrest in 2017, he executed a scheme to defraud victims in order to obtain money and property from them by making false representations and promises. Specifically, Murphy admitted he solicited investments from over a dozen victims on the false and fraudulent premise that he would professionally invest their money through an entity he controlled known as Capital Park, LLC. Instead of investing their money, he used his victims’ money to support his lifestyle, to speculate on the stock market, and to partially repay other victims. With respect to his partial payments to victims, he admitted that he made them to lull his victims into a false sense of security, to lead them to believe that the promises he made were true when in fact they were not, to postpone or prevent them from complaining to law enforcement, and to induce new victims to “invest” their money with him. Murphy also admitted that he acted with the intent to defraud his victims during the entire scheme. Finally, Murphy admitted that his scheme caused at least $890,000 in losses to his victims.
A federal grand jury indicted Murphy on November 30, 2017, charging him with ten counts of wire fraud, in violation of 18 U.S.C. § 1343, and two counts of money laundering, in violation of 18 U.S.C. § 1957. Murphy pleaded guilty to three counts of wire fraud and one count of money laundering. The remaining counts were dismissed.
“Today’s just and significant sentence is a reminder that fraud will not be tolerated and instead punished to the fullest extent of the law,” said US Attorney Tse. “The defendant hid behind his lies and fraud to friends who trusted him with their hard earned investments. Today’s sentence will hopefully bring some closure and relief to these victims of fraud.”
In addition to the prison term and restitution, Judge Breyer also ordered the defendant to serve a three-year period of supervised release to follow his prison term. The defendant has remained in custody since his arrest and will begin serving his sentence immediately.
Assistant U.S. Attorney Robert David Rees is prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Civic Center Heroin Dealer Sentenced to Four Years in PrisonRead the Press Release
SAN FRANCISCO – Richard Sollid was sentenced today to 48 months in prison for possessing with the intent to distribute heroin announced United States Attorney Alex G. Tse and Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen. The sentence was handed down by the Honorable Charles R. Breyer, Senior U.S. District Judge.
Sollid, 56, of San Francisco, pleaded guilty to the charges on June 14, 2018. According to his plea agreement, Sollid admitted that San Francisco Police Department officers arrested him on October 27, 2017. The arrest occurred in San Francisco’s Civic Center neighborhood. Sollid was found with approximately 95 grams of heroin and $7,840 in cash. Solid admitted he intended to distribute the drugs.
On April 19, 2018, a federal grand jury indicted Sollid, charging him with one count of possession with intent to distribute heroin, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(C). Sollid pleaded guilty to the charged offense.
In addition to the prison term, Judge Breyer ordered Sollid to serve a three-year period of supervised release. Sollid is currently in custody and will begin serving his sentence immediately.
Special Assistant U.S. Attorney Christopher Vieira is prosecuting the case with the assistance of Kimberly Richardson. The prosecution is the result of collaboration between the DEA and the San Francisco Police Department.