Northern District of California
Press releases recorded for this federal judicial district.
Oxnard Man Sentenced to Five Years in Prison for Brokering Sale of Fentanyl PillsRead the Press Release
SAN FRANCISCO – King Edward Harris II was sentenced today to five years in prison for distributing fentanyl pills, announced United States Attorney Brian J. Stretch and Drug Enforcement Administration (DEA) Special Agent in Charge John J. Martin.
Harris, 35, of Oxnard, pleaded guilty on April 7, 2017, to six counts of distributing and possessing with intent to distribute fentanyl. According to the plea agreement, Harris admitted that, over the course of six transactions, he brokered the sale of over 2,300 counterfeit oxycodone pills created by a supplier operating a pill press in San Francisco. Although the pills were marked as genuine oxycodone pills, they were instead laced with fentanyl. Harris admitted that, in total, the pills contained over 160 grams of fentanyl.
On November 29, 2016, federal grand jury returned a superseding indictment charging Harris with conspiracy to distribute fentanyl, as well as six counts of distribution and possession with intent to distribute fentanyl, in violation of 21 U.S.C. § 841(a)(1).
Fentanyl is a dangerous and highly potent opiate about 100 times more powerful than morphine. Just two milligrams of fentanyl can constitute a lethal dose. Fentanyl is particularly dangerous when it is used to create counterfeit pills. Illegal pill press operations will sometimes use fentanyl, which is cheaper than other opiates, to create fake pills that stamped to look like genuine oxycodone pills. Because fentanyl is such a powerful opiate, a small difference in the amount of fentanyl in a homemade pill can make a huge difference in its potency. Counterfeit pills containing fentanyl have already been linked to numerous unintentional overdoses by users who believed they were ingesting a much less powerful opiate.
“Counterfeit pills made with fentanyl represent a fearsome public safety threat to our communities and intensify the opioid crisis,” said U.S. Attorney Stretch. “The distribution of fentanyl must be stopped and our office will continue to fight against its devastating effects on the men, women and children in northern California.”
The sentence was handed down by the Honorable Susan Illston, U.S. District Judge, following Harris’s guilty plea. Judge Illston also sentenced the defendant to a five-year period of supervised release. The defendant was remanded into federal custody and will begin serving the sentence immediately.
Assistant U.S. Attorney Rita Lin is prosecuting the case with the assistance of Amanda Martinez, Rawaty Yim, Theresa Benitez, and Wincy Wong. The prosecution is the result of an investigation by the DEA, United States Postal Inspector, Immigration and Customs Enforcement’s Homeland Security Investigations, and the Internal Revenue Service.
Santa Clara Luxury Insurance Broker Sentenced to Five Years in Prison for Theft from Widow’s Insurance PolicyRead the Press Release
SAN JOSE – Gary Thornhill was sentenced today to serve 60 months in prison for wire fraud and mail fraud in connection with a scheme to steal more than a million dollars from a client’s trust account, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Lucy M. Koh, U.S. District Court Judge, after Thornhill pleaded guilty to the crimes on June 7, 2017.
Thornhill, 65, of Santa Clara, admitted he used his position in a boutique insurance brokerage to withdraw funds from a widow’s client trust account. As part of his plea, Thornhill admitted he is a licensed insurance broker who owned and operated a boutique insurance brokerage in Santa Clara. In 1998, he sold an insurance policy to a married couple and, after the husband passed away in 2005, the widow became the sole insured of the plan. In or about February 2008, Thornhill became the trustee of the entity that was the legal owner of the policy. Thornhill acknowledged that he owed a fiduciary duty to the widow both as his client and as the trustee for the entity that managed the insurance policy. Thornhill admitted that instead of acting in his client’s best interest, he transmitted written requests for funds to be drawn against the cash value of the widow’s insurance policy—he did so without the widow’s prior knowledge, consent, or authorization. Specifically, Thornhill admitted he faxed a request for disbursement from the existing cash value of the policy in the net amount of $800,000. After receiving the check in the mail, Thornhill deposited it into a bank account of which he was the only authorized signatory. Thornhill admitted he transferred all of the funds into a personal bank account and spent all of the funds he had obtained from the policy on personal expenses that were unrelated to his client. He then doctored the account statements before they were given to the client, in order to conceal his scheme.
As a result of his scheme, Thornhill obtained nearly $1.5 million in unauthorized funds from his client’s policy that he used for his own personal benefit and purposes. Thornhill pleaded guilty to one count of wire fraud, in violation of 18 U.S.C. § 1343, and one count of mail fraud, in violation of 18 U.S.C. § 1341.
During today’s sentencing, Judge Koh remarked that the defendant “really took advantage of this family,” and decided to steal from them despite, “a long-standing financial relationship with this family” that stretched back almost twenty years.
In addition to the prison term, Judge Koh sentenced Thornhill to three years of supervised release and ordered him to pay $1,409,843.90 in restitution. Judge Koh ordered the defendant to self-surrender and begin serving his sentence no later than November 15, 2017.
Assistant United States Attorney Timothy J. Lucey is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation the by the Federal Bureau of Investigation.
Gang Member Sentenced to 33 Years in Prison for Shooting Oakland Police OfficerRead the Press Release
OAKLAND – Damion McDaniel was sentenced today to 33 years in prison for shooting an Oakland police officer on January 21, 2013, just 28 hours after he and three other gang members from the Seminary neighborhood in East Oakland shot a rival gang member in a street-corner ambush. The sentenced was announced by United States Attorney Brian J. Stretch and FBI Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Phyllis J. Hamilton, U.S. District Judge.
McDaniel, 27 of Oakland, pleaded guilty on April 27, 2017 to Racketeering Conspiracy (18 U.S.C. § 1962(d)); Attempted Murder in Aid of Racketeering (18 U.S.C. § 1959(a)(5)); Assault with a Dangerous Weapon in Aid of Racketeering Resulting in Serious Bodily Injury (18 U.S.C. § 1959(a)(3)); and Discharging a Firearm in Furtherance of a Crime of Violence (18 U.S.C. § 924(c)).
“Mr. McDaniel posed a significant threat to the public,” said U.S. Attorney Stretch. “Today’s sentence assures the public that this violent criminal will be off the streets for the next three decades. This office will continue to pursue violent and dangerous criminals to the fullest extent of the law. I want to thank all of our federal and state law enforcement partners whose cooperation and efforts helped bring Mr. McDaniel to justice.”
McDaniel admitted that he and three other gang members from East Oakland’s Seminary neighborhood, known as “Sem City,” conspired to murder a rival gang member found in their neighborhood. The four men converged on the victim who was standing at a bus stop. After a volley of gunfire, one of the gang members ran up to the victim lying on the ground and shot him in the head from close range. The man did not die. The next day, after receiving a tip that the get-away car was located in an apartment complex in East Oakland, an Oakland Police Officer went to investigate and was attacked by McDaniel and two other gang members. The officer resisted their attack, but was restrained and struck in the head as the assailants threatened to kill him. McDaniel shot the officer in the arm when the officer refused to give up his service pistol. The officer sustained injuries to the head and forearm.
A federal grand jury indicted McDaniel on December 19, 2013. He was charged with organized crime violations, including racketeering, attempted murder, assault with a deadly weapon, and use of a firearm to further a crime of violence.
Two other gang members from the “Sem City” neighborhood who were also indicted in the federal case, Deante Kincaid (aka “Tay Tay”) and Joseph Pennymon (aka “Junkie”), pleaded guilty to their roles in the offenses last month.
In addition to the prison term, Judge Hamilton also sentenced the defendant to a 5-year period of supervised release to follow the prison term. The defendant has been in custody since 2013 and will begin serving the sentence immediately.
Assistant U.S. Attorneys Joseph Alioto and Scott Joiner are prosecuting the case, with the assistance of Kevin Costello. The prosecution is the result of an investigation led by the Federal Bureau of Investigation, and, at its earlier stages, the Oakland Police Department.
Former CEO of Sunnyvale-Based Company Charged with Insider Trading in His Company’s SecuritiesRead the Press Release
SAN JOSE – Peter C. Chang was arrested today following the filing of a federal complaint charging him with securities fraud and fraud in connection with a tender offer, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to the complaint unsealed upon his arrest this morning, Chang, 59, of Los Altos, Calif., was the President, Chief Executive Officer (CEO), and Chair of the Board of Directors of Alliance Fiber Optic Products, Inc. (AFOP), a manufacturer of fiber optic components based in Sunnyvale, Calif. and publicly traded on the NASDAQ. According to the complaint, Chang engaged in an insider trading scheme in which he traded AFOP stock based on material nonpublic information he obtained from AFOP through his position at the company. In particular, according to the complaint, Chang acquired confidential information about AFOP’s financial performance and potential strategic transactions before these were publicly announced, including information that AFOP was in negotiations to be acquired by another company.
According to the complaint, corporate policies and agreements limited Chang’s ability to trade AFOP securities and required him to keep certain corporate information confidential. Nevertheless, the complaint alleges, Chang controlled and accessed two brokerage accounts in the names of his wife and his brother, and Chang bought and sold AFOP stock in these nominee accounts. Through this trading, the complaint alleges, Chang avoided losses and made profits using information he gathered in his positions with AFOP.
For example, the complaint alleges Chang learned AFOP’s revenues in the third quarter of 2015 would be lower than expected due to a decline in customer orders. The complaint alleges Chang sold more than 152,000 shares of AFOP stock in the nominee accounts in advance of the earnings announcement on October 28, 2015. In this way, the complaint alleges, Chang avoided more than half a million dollars of losses. Similarly, according to the complaint, Chang avoided another $379,000 in losses by selling 129,000 shares of AFOP stock in February of 2016, prior to the February 19, 2016 announcement of the previous quarter’s earnings.
Finally, the complaint alleges that from March 4, 2016 to March 21, 2016, Chang purchased AFOP stock in the nominee accounts. At the time of these purchases, according to the complaint, Corning was negotiating a tender offer for the shares of AFOP. After the acquisition was publicly announced on April 7, 2016, the complaint alleges that Chang sold the shares held in these nominee accounts for profits of more than $800,000.
In connection with the allegations described in the complaint, Chang is charged with one count of securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff and 17 C.F.R. §§ 240.10b-5 and 240.10b5-2, and one count of fraud in connection with a tender offer, in violation of 15 U.S.C. §§ 78n(e) and 78ff and 17 C.F.R. §§ 240.14e-3(a) and 240.14e-3(d).
A criminal complaint merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Chang faces a maximum statutory penalty for securities fraud and fraud in connection with a tender offer of 20 years in prison and a fine of $5 million, per count. Additional fines, periods of supervised release, and restitution also may 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.
The defendant is scheduled to appear before the Honorable Howard R. Lloyd, U.S. Magistrate Judge, at 1:30 p.m. this afternoon in San Jose for an initial appearance.
In a separate civil action, the United States Securities and Exchange Commission filed civil charges against Chang, alleging he engaged in insider trading and failed to report stock transactions.
Assistant U.S. Attorney Lloyd Farnham is prosecuting the case with the assistance of Patricia Mahoney and Claudia Hyslop. The prosecution is the result of an investigation by the FBI, with the assistance of the San Francisco Regional Office of the Securities and Exchange Commission.
Two Men Charged in Northern California in Alleged Multi-Million Dollar Investment Fraud and Tax Evasion SchemeRead the Press Release
Two men have been indicted by a federal grand jury in San Francisco on charges related to an investment fund scheme, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and the U.S. Attorney’s Office for the Northern District of California.
G. Steven Burrill is charged with wire fraud, investment adviser fraud, and tax evasion in connection with an alleged scheme to siphon money from an investment fund. Marc Howard Berger is charged with aiding and assisting in the preparation of tax returns in which Burrill failed to report income he received from the scheme.
According to the 34-count indictment, Burrill was the owner and CEO of Burrill & Company (B&C) and a number of related entities. Through the entities, Burrill allegedly managed investment funds, including Burrill Life Sciences Capital Fund III, L.P. (the “Fund”), an investment fund focused on the life sciences industry. The Fund was comprised of total committed capital of approximately $283 million, most of which, according to the indictment, was committed by limited partners. The indictment alleges that Burrill induced limited partners to contribute capital to the Fund with false and misleading letters. In addition, the indictment alleges Burrill caused the Fund to transfer millions of dollars in management fees to companies he controlled; the money was in excess of the management fees that were due and allowable under the agreements that governed the Fund. Further, the indictment alleges Burrill filed false and fraudulent U.S. Individual Income Tax Return, Forms 1040, which understated his income by excluding money Burrill transferred out of the Fund and into accounts he controlled.
Berger is alleged to have willfully assisted Burrill in preparing and presenting to the IRS three income tax returns in which Burrill understated his income.
In sum, Burrill is charged with 26 counts of wire fraud, one count of investment-adviser fraud, and one count of tax evasion. Additionally, Berger is charged with three counts of aiding and assisting in the preparation of a false tax return.
Berger was arrested this morning and made his initial appearance in federal court in San Francisco. Federal Magistrate Judge Sallie Kim arraigned Berger, who pleaded not guilty and has been released on bond. Berger’s next scheduled appearance is on Oct. 3 before the Honorable Richard Seeborg. Burrill is scheduled to make his initial appearance on Oct. 2.
If convicted, Burrill faces a statutory maximum sentence of 20 years in prison and a fine of $250,000 or twice the gross gain for each count of wire fraud; five years in prison and a fine of $250,000 for investment-adviser fraud, and five years in prison and a $250,000 fine for tax evasion. Berger faces a statutory maximum penalty of three years in prison, if convicted of aiding and assisting in the preparation of a false tax return. Additional terms of supervised release, fines, and restitution may also be imposed; 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.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Acting Deputy Assistant Attorney General Goldberg thanked special agents of the IRS Criminal Investigation and the FBI, who conducted the investigation, and Assistant U.S. Attorney Robert Leach and Trial Attorney Lori Hendrickson of the Tax Division, who are prosecuting the case. The San Francisco Regional Office of the Securities and Exchange Commission provided assistance in this matter.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
East Bay Resident Pleads Guilty to Wire Fraud, Bank Fraud, and Related Charges in Connection to Scheme to Defraud EmployerRead the Press Release
OAKLAND – Celia Nipper, aka Celia Arrand, pleaded guilty this afternoon to committing wire fraud, bank fraud, and filing false tax returns in connection with a scheme to embezzle funds from a real estate technology company announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and Internal Revenue Service (IRS), Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The plea was accepted by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge.
According to the plea agreement, Nipper, 61, of Dublin, Calif., admitted that while employed as an office manager, she used her position of financial control at a technology company to redirect funds intended for her employer to accounts that she controlled. According to the plea agreement, from 2005 to 2011, while Nipper managed her company’s accounts payable and accounts receivable, invoicing, and bill paying she opened bank accounts in the name of her employer without disclosing the existence of the accounts. She then directed customer payments to those accounts. Nipper also admitted as part of the plea agreement that she misappropriated funds from her employer’s legitimate corporate bank accounts. Nipper also admitted she used money belonging to her employer to pay for her own personal expenses and deposited employer funds into her personal bank accounts. Nipper further acknowledged that her scheme defrauded the company of more than $2 million.
In addition, Nipper admitted in the plea agreement that in June of 2008, on two separate occasions she overstated her income in connection with fraudulent mortgage loan applications. Further, nipper admitted that she filed false U.S. Income Tax Returns for the tax years 2009, 2010, and 2011. In each case, she understated her income, resulting in a failure to report more than $1 million and a tax loss to the United States of at least $290,000.
On April 7, 2016, a federal grand jury indicted Nipper by superseding indictment, charging her with three counts of wire fraud, in violation of 18 U.S.C. § 1343; two counts of bank fraud, in violation of 18 U.S.C. § 1344(2); and three counts of filing a false tax return, in violation of 26 U.S.C. § 7206(1). Pursuant to today’s plea agreement, Nipper pleaded guilty to all seven counts.
Judge Gilliam has scheduled Nipper’s sentencing for February 5, 2018. The maximum statutory penalties for wire fraud and bank fraud is 20 years in prison, a $250,000 fine, and 3 years of supervised release. The maximum statutory penalty for filing a false tax return is 3 years in prison, a $250,000 fine and 1 year of supervised release. Additional fines, forfeitures, 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.
This prosecution is the result of an investigation by the FBI and IRS, Criminal Investigation.
Bay Area Defendants Charged in Alleged Multi-Million Dollar Investment Fraud and Tax Evasion SchemeRead the Press Release
SAN FRANCISCO – G. Steven Burrill and Marc Howard Berger have been indicted by a federal grand jury in San Francisco, announced the office of the United States Attorney for the Northern District of California; Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett; and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
Burrill, 73, of San Francisco, is charged with wire fraud, investment-adviser fraud, and tax evasion in connection with an alleged scheme to siphon money from an investment fund. Berger, 66, of Walnut Creek, is charged with aiding and assisting in the preparation of tax returns in which Burrill failed to report income he received from the scheme.
According to the 34-count indictment, Burrill was the owner and CEO of Burrill & Company (B&C) and a number of related entities. Through the entities, Burrill allegedly managed investment funds, including Burrill Life Sciences Capital Fund III, L.P. (the Fund), an investment fund focused on the life sciences industry. The Fund was comprised of total committed capital of approximately $283 million, most of which, according to the indictment, was committed by limited partners. The indictment alleges that Burrill induced limited partners to contribute capital to the Fund with false and misleading letters. In addition, the indictment alleges Burrill caused the Fund to transfer millions of dollars in management fees to companies he controlled; the money was in excess of the management fees that were due and allowable under the agreements that governed the Fund. Further, the indictment alleges Burrill filed false and fraudulent U.S. Individual Income Tax Return, Forms 1040, which understated his income by excluding money Burrill transferred out of the Fund and into accounts he controlled.
Berger is alleged to have willfully assisted Burrill in preparing and presenting to the IRS three income tax returns in which Burrill understated his income.
In sum, Burrill is charged with 26 counts of wire fraud, in violation of 18 U.S.C. §§ 1343 & 2; one count of investment-adviser fraud, in violation of 15 U.S.C. §§ 80b-6 & 80b-17, 18 U.S.C. § 2 and 17 C.F.R. § 275.206(4)-8; and one count of tax evasion, in violation of 26 U.S.C. § 7201. Berger is charged with three counts of aiding and assisting in the preparation of a false tax return, in violation of 26 U.S.C. § 7206(2).
Berger was arrested this morning and made an initial appearance in federal court in San Francisco. Federal Magistrate Judge Sallie Kim arraigned Berger, who pleaded not guilty and has been released on bond. Berger’s next scheduled appearance is at 2:30 p.m. on October 3, 2017 for status before the Honorable Richard Seeborg. Burrill is scheduled to make his initial appearance on October 2, 2017, at 9:30 a.m.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Burrill faces a maximum sentence of 20 years in prison and a fine of $250,000 or twice the gross gain for each count of wire fraud; five years in prison and a fine of $250,000 for investment-adviser fraud, and five years in prison and a $250,000 fine for tax evasion. Berger faces a maximum statutory penalty of three years if convicted of aiding and assisting in the preparation of a false tax return. Additional terms of supervised release, fines, and restitution may also be imposed, however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Robert Leach and Trial Attorney Lori Hendrickson of the U.S. Department of Justice Tax Division are prosecuting the case with the assistance of Bridget Kilkenny and Daniel Charlier-Smith. The prosecution is the result of an investigation by the FBI and IRS-Criminal Investigation. The San Francisco Regional Office of the Securities and Exchange Commission provided assistance in this matter.
San Jose Resident Sentenced for Using Identities of Homeless Individuals to File Fraudulent Tax ReturnsRead the Press Release
San Jose – Trong Nguyen, also known as John Nguyen, was sentenced to 25 months in prison for conspiring to file false claims against the government and submitting false claims to the government, announced United States Attorney Brian J. Stretch, Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, Postal Inspection Service Inspector in Charge Rafael Nuñez, and Internal Revenue Service (IRS), Criminal Investigations, Special Agent in Charge Michael T. Batdorf.
According to the indictment, plea agreement, and documents introduced in court, Nguyen worked with codefendant Diep Vo, also known as Nancy Vo, to submit fraudulent tax returns to the government using the identities of homeless individuals and people in San Jose’s Vietnamese community. Vo went to homeless shelters and homeless encampments, where Vo falsely represented to homeless individuals that she could get them money from a government program designed to assist people who had not worked in previous years. In doing so, Vo convinced homeless individuals to write down their names, Social Security numbers, and signatures. Thereafter, Vo and Nguyen used the information and signatures to file false tax returns which claimed fraudulent refunds from the IRS. On the fraudulent tax returns, Vo and Nguyen wrote addresses to private mailboxes they rented, causing the IRS to send the fraudulently obtained tax refund checks to mailboxes Vo and Nguyen controlled. According to the plea agreement, Nguyen and Vo claimed more than $1.5 million in fraudulent refunds from the IRS.
Nguyen previously pleaded guilty to conspiring to file false claims against the government, in violation of 18 U.S.C. § 286, and submitting false claims to the government, in violation of 18 U.S.C. § 287. Vo later pleaded guilty to conspiring to file false claims against the government, in violation of 18 U.S.C. § 286; submitting false claims to the government, in violation of 18 U.S.C. § 287; mail fraud, in violation of 18 U.S.C. § 1341; and aggravated identity theft, in violation of 18 U.S.C. § 1028A.
Assistant United States Attorney Thomas Newman and Trial Attorney Gregory Bernstein of the Justice Department Tax Division are prosecuting the case. The prosecution is the result of an investigation by the United States Postal Inspection Service and IRS, Criminal Investigations.
California Resident Sentenced to Prison for Stolen Identity Refund FraudRead the Press Release
A California resident was sentenced to 25 months in prison for filing and conspiring to file fraudulent claims for income tax refunds with the Internal Revenue Service (IRS), announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Brian J. Stretch for the Northern District of California.
According to documents filed with the court, Trong Nguyen aka John Nguyen, 57, and his codefendant Diep Vo aka Nancy Vo, 74, used the identities of homeless and unemployed individuals in the San Jose, California area to file fraudulent claims for refunds with the Internal Revenue Service (IRS). Vo went to homeless shelters and homeless encampments and falsely represented to individuals that she could get them money from a government program designed to assist people who had not worked in previous years. Vo convinced people to write down their names and social security numbers and to sign blank income tax returns. Vo and Nguyen then falsified the signed returns including bogus income and income tax amounts withheld and sought more than $1.5 million in refunds from the IRS. Vo and Nguyen directed the IRS to send the refund checks to private mailboxes they controlled.
In addition to the term of prison imposed, U.S. District Court Judge Beth Freeman also ordered Nguyen to serve three years of supervised release and to pay restitution to the IRS in the amount of $700,816. Nguyen previously pleaded guilty in May. Vo also pleaded guilty and she is scheduled to be sentenced on Nov. 14.
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch thanked special agents of IRS Criminal Investigation and the U.S. Postal Inspection Service, who conducted the investigation. The case was prosecuted by Assistant U.S. Attorney Thomas Newman and Trial Attorney Gregory Bernstein of the Tax Division.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
East Bay Developer Arraigned on Campaign Finance Fraud ChargesRead the Press Release
OAKLAND – James Tong, a prominent East Bay developer, was arraigned today on an indictment alleging that he made illegal campaign finance donations, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation, Special Agent in Charge John F. Bennett.
According to the indictment, Tong, 72, of Pleasanton, Calif., used “conduit contributors,” or straw donors, to make donations from his own funds to a political campaign in excess of the amounts allowed by one individual. The indictment alleges that in both 2012 and 2013, Tong made over $10,000 of these “straw” donations to the authorized political committee supporting the campaign of a candidate for federal elected office. Neither the committee nor the candidate are named in the indictment.
Court filings confirm that Tong is the same individual who was convicted last year of violating the Endangered Species Act, in United States v. James Tong, 15-512-JST.
Tong was arraigned and made his initial appearance in federal court in Oakland before U.S. Magistrate Judge Kandis A. Westmore. He was released on his own recognizance and required to surrender his passport. Tong’s next scheduled appearance is at 9:30 on September 29, 2017, before the Honorable Jon S. Tigar, U.S. District Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence on each of the counts alleged of 2 years, and a fine of $50,000 or 1000% of the amount involved in the violation, whichever is greater. There is also a minimum mandatory fine of at least 300% of the amount involved in the violation. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by the Special Prosecution and National Security Unit of the U.S. Attorney’s Office and is the result of a year-long investigation by the Federal Bureau of Investigation.
Salinas Resident Sentenced to 54 Months in Prison for Identity Theft and Preparing False Tax ReturnsRead the Press Release
SAN JOSE - Elizabeth Calderon was sentenced today to 54 months years in prison for filing false tax returns, aggravated identity theft, and making false statements to federally insured institution, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The sentence was handed down by the Honorable Beth Labson Freeman, U.S. District Judge, following Calderon’s September 12, 2016, guilty plea in which she admitted to committing the crimes.
According to court filings, Calderon, 41, a resident of Salinas, Calif., admitted she assisted in preparing and filing more than 4,000 federal income tax returns in 2010 through 2013, many of which were materially false because they improperly reported false credits, false expenses or deductions; they reported false filing status; or they contained some combination of these false reports. In addition, Calderon concealed the profit she earned through assisting in the filing of fraudulent tax returns. She concealed this profit by omitting hundreds of thousands of dollars from her own income tax returns, and by purchasing a home in the name of a “straw” buyer. Calderon also prepared and filed fraudulent tax returns using stolen identities, and stole the resulting refunds. This conduct resulted in a loss of more than $1,000,000 to the government.
A federal grand jury indicted Calderon on October 1, 2015, charging her with filing false tax returns and aiding or advising in the filing of false tax returns, in violation of 26 U.S.C. §§ 7206(1) and 7206(2); theft of government funds, in violation of 18 U.S.C. § 641; aggravated identity theft, in violation of 18 U.S.C. § 1028A; making false statements to a federally insured institution, in violation of 18 U.S.C. § 1014; and conspiracy, in violation of 18 U.S.C. § 371. Calderon pleaded guilty on September 12, 2016, to one count each of filing a false tax return, aggravated identity theft, and making a false statement to a federally insured institution.
In addition to the prison term, Judge Freeman also ordered Calderon to pay $1,036,547 in restitution, to forfeit $167,381, and to serve three years of supervised release. Judge Freeman also ordered Calderon, among other things, to refrain from preparing or filing tax returns for anyone else during her period of supervised release. The defendant will begin serving the sentence on October 25, 2017.
Assistant U.S. Attorney Michael G. Pitman is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
U.S. District Court Enters Judgment Against Fugitive and Surety in Fentanyl Distribution CaseRead the Press Release
SAN FRANCISCO – The U.S. District Court for the Northern District of California entered judgment against fugitive defendant Candelaria Dagandan Vazquez and her surety Candelaria Antoinette Sapp in the amount of $50,000, announced United States Attorney Brian J. Stretch. The Honorable Susan Illston, U.S. District Judge entered the judgment after the defendant failed to appear for court proceedings.
On June 21, 2016, a federal grand jury indicted Vazquez, 39, of Richmond, Calif., for conspiracy to distribute fentanyl and for distribution and possession with intent to distribute fentanyl, in violation of 21 U.S.C. §§ 841(a)(1) and 846. The complaint authorizing Vazquez’s arrest by federal authorities alleges that Vazquez and her co-defendant Kia Zolfaghari manufactured and sold counterfeit oxycodone pills online that were laced with fentanyl, a powerful opiate. Following her arrest, Vazquez was released on a pretrial bond of $50,000 co-signed by her daughter, Sapp, guaranteeing Vazquez’s appearance.
Vazquez absconded from her residence in Richmond, where she was required to reside, in April 2017, and failed to appear at her scheduled status conference on May 19, 2017. A warrant has been issued for her arrest. She remains a fugitive.
The federal court therefore entered judgment on the bond against both Vazquez and her surety, Sapp, in the amount of $50,000. The entry of judgment essentially means the entire amount is due and payable immediately to the United States government. Further, pursuant to the terms of the bond, if the amount remains unpaid, the government retains the right to place liens on property owned by Sapp and to garnish Sapp’s wages to satisfy the judgment.
At the hearing on the government’s motion to enter judgment on the bond, which was held on August 25, 2017, the federal court observed that it retains the power to set aside some or all of the judgment against Sapp if Vazquez turns herself in or is arrested.
Vazquez’s co-defendant Kia Zolfaghari fled in April 2017 as well, and failed to appear at a hearing scheduled for a change of his plea. A warrant has issued for his arrest, and he remains a fugitive. The government’s motion to enter judgment on Zolfaghari’s bond against both Zolfaghari and his surety Behrooz Zolfaghari is scheduled to be heard on October 27, 2017.
Cuong Cao “Calvin” Dang Sentenced to 7 ½ Years in Prison for Role in $37M Cisco Fraud and Related CrimesRead the Press Release
SAN JOSE – Cuong Cao “Calvin” Dang was sentenced to 90 months in prison for his role in a scheme to sell products stolen from Cisco Systems by its employees, announced United States Attorney Brian J. Stretch, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The sentence was handed down today in San Jose by the Honorable Edward J. Davila, U.S. District Judge, following the entry of two guilty plea agreements. In the first plea agreement, Dang admitted to running a business that bought and sold merchandise stolen from Cisco. In the second plea agreement, Dang admitted to blackmailing a person by threatening to tell the government about the person’s involvement with the fraud scheme.
According to the plea agreement, Dang, 47, of San Jose, Calif., owned and operated Network Genesis, based in San Jose, from approximately January 2006 until January 23, 2013. Dang admitted to having a small network of Cisco employees who delivered stolen Cisco merchandise to Network Genesis for resale to customers both in and outside California. Dang admitted that, to cover his tracks, he changed the serial numbers on the stolen merchandise and created fraudulent “test sheets” to give to customers. (A test sheet shows the diagnostic information, including the serial number, for a particular part.) Dang also admitted using nominees to launder the illicit proceeds, enabling him to obtain large amounts of cash without having the money go through bank accounts associated with him or his businesses.
On October 30, 2013, a federal grand jury returned a superseding indictment in which Dang and seven other defendants were charged with various offenses related to Dang’s scheme. For his part, Dang was charged with conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349; six substantive mail fraud counts, in violation of 18 U.S.C. § 1341; two counts of engaging in financial transactions (money laundering) using criminally derived proceeds, in violation of 18 U.S.C. § 1957; and six counts of money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i) and (a)(1)(B)(i).
On December 11, 2015, Dang entered into the first of two plea agreements. In this plea agreement, Dang pleaded guilty to one count of conspiracy to commit mail fraud, one count of mail fraud, one count of money laundering, and one count of money laundering of criminally derived proceeds. Dang admitted that Network Genesis’s business was “overwhelmingly that of buying and selling merchandise stolen from Cisco” by its employees. Dang also admitted that from January 2006 until Network Genesis was raided by federal law enforcement officers in January 2013, sales revenues totaled approximately $37,000,000. Despite entering into this plea agreement and admitting this criminal conduct, Dang did not cease all of his criminal activity.
As part of his original plea agreement, Dang participated in interviews with agents for the government to provide detailed information about all of his Network Genesis activities. Dang promised to provide details of financial transactions in which he participated and government agents specifically asked Dang about the details of any other instances of potentially unlawful financial transactions in which he may have participated. Instead of providing all such details, Dang and his wife renewed contact with an individual with whom Dang had engaged in financial transactions in the past and blackmailed the individual. Specifically, Dang and his wife demanded that the individual pay $350,000 in exchange for not telling the government about the transactions. With Dang’s agreement, Dang’s wife told the individual that if Dang and his wife were not paid hundreds of thousands of dollars, Dang would “leave [the] name on the list” and tell the government about the individual. Over time, the individual paid approximately $270,000 to Dang and his wife in exchange for Dang’s silence.
On March 9, 2017, a grand jury indicted Dang and charged him with obstruction of justice, in violation of 18 U.S.C. § 1510; contempt, in violation of 18 U.S.C. § 401(3); and blackmail, in violation of 18 U.S.C. § 873. Dang pleaded guilty to all three charges yesterday. His wife, Ly Thi Be Le, was also charged in the same indictment with obstruction of justice and blackmail. She pleaded guilty to the blackmail charge. Le’s sentencing is scheduled for December 11, 2017.
Dang’s co-defendants include Loc Xuan Hoang, Thuy Nguyen, Long Pham, Emily Le, David Huynh, and Edwin Lin. Judge Davila has sentenced Loc Xuan Hoang to 14 months’ imprisonment, Thuy Nguyen to 15 months’ imprisonment, Long Pham to 12 months and 1 day in prison, and Edwin Lin to time served. Sentencings for Emily Le and David Huynh, are scheduled to take place in 2018.
In addition to the prison term, Judge Davila also sentenced Dang to serve a three-year period of supervised release. The amount of restitution to the blackmail victim will be determined at the December 11, 2017, sentencing hearing. Judge Davila ordered Dang to begin serving his sentence immediately.
Assistant United States Attorney Amie Rooney is prosecuting the case with the assistance of Elise Etter and Lakisha Holliman. The prosecution is the result of an investigation by the IRS Criminal Investigation, with the assistance of the Santa Clara Regional Enforcement Allied Computer Team (R.E.A.C.T.) Task Force.
Pittsburg Resident Sentenced to 84 Months in Prison for Tax Fraud SchemeRead the Press Release
SAN FRANCISCO – Ebony Standifer was sentenced today to 84 months in prison and ordered to pay $193,602 in restitution for conspiracy to file false claims, aggravated identity theft, and criminal contempt announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The sentence was handed down by the Honorable Charles Breyer, U.S. District Judge after Standifer pleaded guilty to the charges.
According to court documents, Standifer, 30, of Pittsburg, Calif., admitted she conspired with others to file false federal income tax returns with the Internal Revenue Service from 2010 through 2012. As part of the scheme, individuals with whom Standifer conspired provided her with names of people for whom to file false tax returns. Standifer used those identities and filed returns without showing the documents to the people listed on them. In addition to inserting the person’s name and Social Security number, Standifer made up figures for income and the amount of taxes that were withheld. She then requested a tax refund based on these made-up figures. Standifer filed the false returns electronically from various locations and kept notebooks that recorded information regarding the people whose identity she misappropriated. In total, during 2010-2012, Standifer filed or assisted in filing false tax returns in the aggregate amount of $656,000 for the 2009-2011 tax years. Of that amount, the IRS actually paid fraudulent claims in the amount of $193,602.
A federal grand jury indicted Standifer on October 28, 2014, charging her with one count of conspiracy to file false claims, in violation of 18 U.S.C. § 286; five counts of wire fraud, in violation of 18 U.S.C § 1343; and three counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A. Standifer pleaded guilty on August 19, 2015, to conspiracy to file false claims and one count of aggravated identity theft.
On February 3, 2016, Standifer was charged by information with two additional counts of criminal contempt, in violation of 18 U.S.C. § 401(3). Standifer pleaded guilty to both counts on February 22, 2017, admitting that when she pleaded guilty to the original charges, she already was involved in a pending identity theft case in Nevada. Standifer acknowledged that while awaiting sentencing in this district, she used a misappropriated credit card to travel illegally to Nevada so she could attend hearings on the identity theft charges pending in that jurisdiction.
In addition to the prison term, Judge Breyer also sentenced Standifer to 36 months of supervised release.
Assistant U.S. Attorney Thomas Newman is prosecuting the case. The prosecution is the result of an investigation by the IRS, Criminal Investigation.
Hayward Man Charged with Harboring Illegal Aliens in CaliforniaRead the Press Release
On December 18, 2020, United States Attorney David L. Anderson issued the following statement:
On Friday, December 18, 2020, we moved to vacate the judgment and dismiss the superseding indictment against Job Torres Hernandez. In this case, a jury concluded Mr. Torres Hernandez was guilty of multiple crimes, and the district court entered a criminal judgment against Mr. Torres Hernandez based upon that verdict. During the pendency of Mr. Torres Hernandez’s appeal to the Ninth Circuit Court of Appeals, we learned of circumstances leading us to the firm conclusion that at this point only a dismissal would meet the interests of justice. It is a serious step for the United States to dismiss criminal charges. Likewise, it is the solemn duty of the United States to seek justice in all its cases, and to evaluate the appropriateness of its charges throughout the course of the proceedings.
SAN FRANCISCO - A federal grand jury in San Francisco indicted Job Torres Hernandez on August 23, 2017, for harboring illegal aliens for commercial advantage or private financial gain, announced United States Attorney Brian J. Stretch and Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin.
According to the indictment unsealed today, since at least July 18, 2015, Torres, 37, of Hayward, Calif., harbored at least five people who he knew had come to, entered, and remained in the United States in violation of the law. According to the indictment, Torres concealed, harbored, and shielded from detection people who were not in the United States legally and that he knew, or had reckless disregard for the fact that, they were not in the United States legally. The indictment further alleges that Torres harbored these individuals, who were his employees, for the purpose of obtaining a commercial advantage and for private financial gain. The indictment charges Torres with one count of harboring illegal aliens for commercial advantage or private financial gain, in violation of 8 U.S.C. §§ 1324(a)(1)(A)(iii) and (B)(i).
Torres was arrested this morning in Hayward and made his initial appearance before U.S. Magistrate Judge Donna M. Ryu. At the hearing this morning the government alleged that Torres paid below minimum wage to his workers. In addition, the government alleged that the warehouse where many of the workers lived was locked from the outside at night. The government represented in court that seven people were recovered from that warehouse during the execution of a search warrant.
The defendant currently is in federal custody and is scheduled to appear again before Magistrate Judge Ryu tomorrow, August 30, 2017, for identification of counsel.
The maximum statutory penalty for a violation of 8 U.S.C. §§ 1324(a)(1)(A)(iii) and (B)(i) is 10 years in prison and a fine of $250,000. In addition, the court may order an additional term of supervised release, forfeiture, and restitution. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Assistant U.S. Attorney Shailika Kotiya is prosecuting the case. The prosecution is the result of an investigation by the HSI.
Oakland Resident Pleads Guilty to Role in Interstate Gun Trafficking SchemeRead the Press Release
OAKLAND – Edgar De La Cruz pleaded guilty this afternoon to committing several crimes related to his role in an interstate firearms trafficking conspiracy announced United States Attorney Brian J. Stretch and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder. De La Cruz also pleaded guilty to participating in an armed robbery and acknowledged possessing cocaine and marijuana for sale. The plea was accepted by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge.
According to the plea agreement, De La Cruz, 19, from Oakland, Cal., admitted that from at least March of 2015 until the date of his arrest in January of 2017, he was involved in a conspiracy to engage in the business of dealing in firearms without a license. De La Cruz acknowledged that he agreed with two or more other people to purchase firearms in the Reno, Nevada, area for sale in Oakland. Specifically, the defendant admitted that the Nevada-based coconspirators purchased firearms at his request and that he wired money to pay for the gun purchases. De La Cruz then picked up the guns, brought them to Oakland, and resold them to others for a profit. De La Cruz admitted the conspiracy was responsible for trafficking more than 60 firearms from Reno to Oakland.
De La Cruz also pleaded guilty to armed robbery. De La Cruz admitted that on November 21, 2015, he committed the armed robbery of an Oakland gas station. De La Cruz and an accomplice were both carrying guns when they entered the gas station store and demanded cash from the cash registers at gunpoint. After receiving cash, the defendant then ran out of the store with his accomplice. In addition to the armed robbery, De La Cruz admitted that on October 20, 2016, he possessed three Glock firearms and possessed cocaine and marijuana for distribution. The defendant also admitted to possessing cocaine for sale and, at times, trading guns for drugs. In sum, De La Cruz acknowledged he possessed firearms for multiple purposes: to engage in illegal firearms trafficking, to commit robbery, and to protect himself and his drug stash when he engaged in narcotics dealing.
On April 20, 2017, a federal grand jury indicted De La Cruz and seven alleged coconspirators with numerous crimes related to the conspiracy. For his role, De La Cruz was charged with conspiracy to deal in firearms without a license, in violation of 18 U.S.C. § 371; conspiracy to commit interference with commerce by robbery, in violation of 18 U.S.C. § 1951(a); interference with commerce by robbery, in violation of 18 U.S.C. §§ 195l(a) and 2; carrying or brandishing a firearm in furtherance of a crime of violence, in violation of 8 U.S.C. §§ 924(c)(l)(A); two counts of possession with intent to distribute cocaine, in violation of 21 U.S.C. §§ 84l(a)(l) and (b)(l)(C); 54 counts of dealing in firearms without a license, in violation of 18 U.S.C. §§ 922(a)(l)(A) and 2; two counts of traveling interstate to promote illegal firearms trafficking; and possession with intent to distribute marijuana, in violation of 21 U.S.C. §§ 84l(a)(l) and (b)(l)(D). Pursuant to today’s plea agreement, De La Cruz pleaded guilty to one count each of robbery affecting interstate commerce, carrying and brandishing a firearm during and in relation to a crime of violence, conspiracy to deal in firearms without a license, and traveling interstate to promote illegal firearms trafficking.
Judge Gilliam has scheduled De La Cruz’s sentencing for November 13, 2017, at 2 p.m. The maximum statutory penalty for robbery affecting interstate commerce is 20 years in prison, a $250,000 fine, and 3 years of supervised release. The maximum statutory penalty for carrying and brandishing a firearm during and in relation to a crime of violence is life in prison (with a 7-year mandatory minimum, consecutive to sentence imposed on any other count), a $250,000 fine, and 5 years of supervised release. The maximum statutory penalty for conspiracy to deal in firearms without a license is 5 years in prison, a $250,000 fine and 3 years of supervised release. The maximum statutory penalty for traveling interstate to promote illegal firearms trafficking is 10 years in prison, a $250,000 fine, and 3 years of supervised release. Additional fines, forfeitures, 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.
This prosecution is the result of an investigation by the ATF Crime Gun Intelligence Center.
Petaluma Resident Sentenced to 3.5 Years in Prison for Role in Wire Fraud SchemeRead the Press Release
SAN JOSE – Robert Stephens was sentenced to 42 months in federal prison for conspiracy to commit wire fraud, wire fraud, and money laundering, announced United States Attorney Brian J. Stretch, Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf, and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. The sentence was handed down today by the Honorable Lucy H. Koh, U.S. District Judge, after Stephens pleaded guilty to the charges on June 15, 2016.
Stephens, is a 65 year-old resident of Petaluma, California. According to his guilty plea, since at least 2009 and continuing through December of 2015, he defrauded scores of victims of at least $5.6 million. Stephens admitted that along with his four co-defendants, Laurence Miles, 76, now living in Arizona, Shirley Molina, 70, of Hawthorne, Calif., Munsif Shirazi, 49, of Bell Canyon, Calif., and Rayan Lakshmanan, 48, of Davis, Calif., he told people that an heiress to a billion-dollar estate was very ill and was in need of medical attention. Stephens and his co-defendants convinced their victims that the heiress’s money was tied up in a secret probate case and that, in return for money to help pay for the heiress’s medical costs, Stephens and his accomplices would return to their victims $1,000 for every $1 they invested in the heiress’s estate. Stephens and his accomplices promised their victims that they would see the returns on their investments after the money was released from probate. In truth, there was no dying heiress with a large estate. Instead, Stephens and his codefendants used the victims’ money to support their own lifestyles. On December 3, 2015, a federal grand jury indicted Stephens and charged him with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; 22 counts of wire fraud, in violation of 18 U.S.C. § 1343; and 1 count of money laundering, in violation of 18 U.S.C. § 1957. Pursuant to his plea agreement, Stephens pleaded guilty to one count of each of the charges and the remaining charges were dismissed. Each of Stephens’s co-defendants has pleaded guilty to their respective roles in the conspiracy. Judge Koh sentenced Miles to 108 months in prison and sentenced Lakshmanan to 18 months in prison. Shirazi and Molina will be sentenced later this year.
In sentencing Stephens, Judge Koh found that he had been conducting the scheme since 2007. The Court concluded that Stephens and his co-defendants obtained almost $8 million dollars from the scheme and that Stephens was responsible for recruiting most of the victims.
In addition to the 42-month prison term, Judge Koh ordered Stephens to serve a three-year period of supervised release, to pay restitution in the amount of $7,901,081, and to pay a forfeiture money judgment of $5,628,765. Judge Koh ordered Stephens to begin serving his sentence October 20, 2017.
Assistant U.S. Attorneys Amber Rosen and Patrick Delahunty prosecuted the case with the assistance of Nina Williams and Susan Kreider. The prosecution is the result of an investigation by the FBI and IRS.
Arcadia Residents Pleads Guilty to Filing False Tax ReturnRead the Press Release
SAN FRANCISCO – Anthony Arroyo and Maria Maybelene Arroyo pleaded guilty in federal court in San Francisco today to filing false tax returns, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The plea was accepted by the Honorable William H. Orrick, U.S. District Judge, following the June 16, 2017, filing in federal court charging the Arroyos with filing false tax returns.
According to the plea agreement, the Arroyos, residents of Arcadia, Calif., filed joint federal income tax returns for 2006 through 2010 that underreported their income. Specifically, the Arroyos worked together to hide more than $690,000 of the couple’s income from the Internal Revenue Service. The defendants concealed the income from the individual who prepared their tax returns and then signed and caused to be filed tax returns which omitted the income.
The Arroyos were both charged in an information with a single count of filing false tax returns, in violation of 26 U.S.C. § 7206(1). Pursuant to today’s agreement, the both defendants pleaded guilty to that count. The Arroyos both are scheduled to appear Judge Orrick on November 30, 2017, at 1:30 PM for sentencing.
The maximum penalty for a violation of 26 U.S.C. § 7206(1), is three years’ imprisonment and a fine of $250,000. In addition, a fine and a term of supervised release 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 Gary Fry and Michael G. Pitman are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
300th Bay Area Resident Prosecuted for Federal Passport OffensesRead the Press Release
SAN FRANCISCO – Federal authorities continue to devote resources to investigating and prosecuting federal passport offenses, announced United States Attorney Brian J. Stretch and U.S. Department of State, Diplomatic Security Service Special Agent in Charge Matthew Perlman.
The below listed defendants are part of more than 300 Bay Area residents who have been charged with false passport-related offenses since 2007. Illustrative of the cases being pursued are the following seven cases, each of which involves a defendant accused or convicted of misrepresenting their identity on applications for United States passports or committing related offenses in violation of either 18 U.S.C. § 1542, pertaining to making false statements on an application for a passport, or 18 U.S.C. § 1028, pertaining to fraud in connection with identification documents:
CONVICTED:
Victor Ortiz Soto, of San Jose, Calif., was convicted of applying for a United States passport using a fraudulent California ID card. In December of 2016, Ortiz Soto was sentenced to three years of probation.
Judith Hernandez-Castaneda, of San Jose, Calif., was convicted of applying for a United States passport using an unlawfully issued driver’s license. Hernandez-Castaneda was sentenced in May of 2017 to serve four months of home confinement and three years of probation.
Tendai Mashamba, of Mountain View, Calif., was convicted of possessing an unlawfully issued United States passport. Mashamba was sentenced to three years of probation in August, 2016.
Juan Palaminos Torres, of Sunnyvale, Calif., pleaded guilty in June of 2017 to applying for a United States passport using a previously unlawfully issued passport. He is scheduled to be sentenced by the Honorable Lucy H. Koh, United States District Judge, in San Jose on October 11, 2017.
Sukhvinder Singh, of Livermore, Calif., is alleged to have applied for a United States passport and to have made several false statements, including that he was born in the United States. Singh was arrested in January 2017, and pleaded guilty on June 28, 2017. Singh’s sentencing is set for 10:30 a.m. on October 11, 2017, before the Honorable James Donato, United States District Judge, in San Francisco.
CHARGED (Please note, charges described in this document contain only allegations and, as with all defendants, the defendants in the cases listed below must be presumed innocent unless and until proven guilty beyond a reasonable doubt.):
Efrain Cagal, of Sunnyvale, Calif., is alleged to have applied for a United States passport and to have made several false statements, including that he was born in the United States. Cagal was arrested in April, 2017, and his case remains in progress. Cagal’s next scheduled appearance is set for 9:30 a.m. on July 17, 2017 before the Honorable Kandis Westmore, United States Magistrate Judge, in Oakland.
Laura Selene Rios Flores, formerly of San Jose, Calif., is alleged to have applied for a passport in another person’s name and also is alleged to have used a fraudulently obtained a passport to travel. In addition, Flores has been charged with aggravated identity theft, in violation of 18 U.S.C. § 1028A. Flores was arrested in June, 2017, in Antelope, Calif., and her case remains in progress. Flores’ next appearance is scheduled for September 26, 2017, before the Honorable Beth Labson Freeman, United States District Judge, in San Jose for a status conference.
Anyone with information about false or fraudulently issued passports or entry visas, or the whereabouts of the above fugitives, is encouraged to contact the Diplomatic Security Service at (415) 705-1176.
Former Secret Service Agent Pleads Guilty to Money LaunderingRead the Press Release
A former Special Agent with the U.S. Secret Service pleaded guilty on Tuesday to charges of money laundering, announced Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, U.S. Attorney Brian Stretch of the Northern District of California, Special Agent in Charge Kimberly A. Lappin of the IRS-Criminal Investigation (IRS-CI) Washington, D.C. Field Office Cyber Crimes Unit, Special Agent in Charge John F. Bennett of the FBI’s San Francisco Division, and Special Agent in Charge David Green of the Department of Homeland Security Office of Inspector General, Houston Field Office.
Shaun W. Bridges, 35, of Laurel, Md., pleaded guilty to one count of money laundering before U.S. District Court Judge Richard Seeborg of the Northern District of California. Sentencing has been set for November 7.
Bridges had been a Special Agent with the U.S. Secret Service for approximately six years in the Baltimore Field Office. Between 2012 and 2014, he was assigned to the Baltimore Silk Road Task Force, a multi-agency group investigating illegal activity on the Silk Road, a covert online marketplace for illicit goods, including drugs. Bridges’ responsibilities included, among other things, conducting forensic computer investigations in an effort to locate, identify and prosecute targets of the Silk Road Task Force, including Ross Ulbricht, aka “Dread Pirate Roberts,” who ran the Silk Road from the Northern District of California. In 2015, Bridges pleaded guilty to one count of money laundering and one count of obstruction of justice related to his theft and diversion of over $800,000 in digital currency over which he gained control as part of his role on the Baltimore Silk Road Task Force. In December 2015, Bridges was sentenced to 71 months in prison on those charges.
Prior to reporting to prison to begin serving his sentence for the 2015 conviction, Bridges was arrested and taken into custody on new charges related to another theft of approximately 1,600 bitcoin, valued at the time of the theft at approximately $359,005, from a digital wallet belonging to the U.S. government. According to admissions made in connection with his guilty plea in this case, Bridges admitted to using a private key to access a digital wallet belonging to the U.S. government, and subsequently transferring the bitcoin to other digital wallets at other bitcoin exchanges to which only he had access. As part of his plea, Bridges agreed to turn over the stolen bitcoin to U.S. agents.
The case is being investigated by the FBI’s San Francisco Division, the IRS-CI’s Washington, D.C. Field Office Cyber Crimes Unit and the Department of Homeland Security Office of the Inspector General, Houston Field Office. The case is being prosecuted by Assistant U.S. Attorney William Frentzen of the Northern District of California and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section. Assistant U.S. Attorney David Countryman is handling the Asset Forfeiture aspects of the case.
Former Secret Service Agent Pleads Guilty to Money LaunderingRead the Press Release
SAN FRANCISCO– A former Special Agent with the U.S. Secret Service pleaded guilty today to charges of money laundering, announced U.S. Attorney Brian J. Stretch, Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, IRS-Criminal Investigation (IRS-CI) Washington D.C. Field Office Cyber Crimes Unit Special Agent in Charge Kimberly A. Lappin, Special Agent in Charge John Bennett of the FBI’s San Francisco Division, and Special Agent in Charge of the Department of Homeland Security Office of the Inspector General Houston Field Office David Green.
Shaun W. Bridges, 35, of Laurel, Md., pleaded guilty to one count of money laundering before U.S. District Court Judge Richard Seeborg of the Northern District of California. Sentencing has been set for November 7, 2017.
Bridges had been a Special Agent with the U.S. Secret Service for approximately six years in the Baltimore Field Office. Between 2012 and 2014, he was assigned to the Baltimore Silk Road Task Force, a multi-agency group investigating illegal activity on the Silk Road, a covert online marketplace for illicit goods, including drugs. Bridges’ responsibilities included, among other things, conducting forensic computer investigations in an effort to locate, identify and prosecute targets of the Silk Road Task Force, including Ross Ulbricht, a/k/a “Dread Pirate Roberts,” who ran the Silk Road from the Northern District of California. In 2015, Bridges pleaded guilty to one count of money laundering and one count of obstruction of justice related to his theft and diversion of over $800,000 in digital currency over which he gained control as part of his role on the Baltimore Silk Road Task Force. In December 2015, Bridges was sentenced to 71 months in prison on those charges.
Prior to reporting to prison to begin serving his sentence for the 2015 conviction, Bridges was arrested and taken into custody on new charges related to another theft of approximately 1,600 bitcoin, valued at the time of the theft at approximately $359,005, (approximately $6.6 million today) from a digital wallet belonging to the U.S. government. According to admissions made in connection with his guilty plea in this case, Bridges admitted to using a private key to access a digital wallet belonging to the U.S. government, and subsequently transferring the bitcoin to other digital wallets at other bitcoin exchanges to which only he had access. In the course of the investigation, U.S. agents were able to locate and seize approximately 600 of the stolen bitcoin and, as part of his plea, Bridges agreed to turn over the remaining stolen bitcoin.
The case is being prosecuted by Assistant U.S. Attorney William Frentzen and Trial Attorney Richard B. Evans of the U.S. Department of Justice Criminal Division’s Public Integrity Section with assistance from Bridget Kilkenny. Assistant U.S. Attorney David Countryman is handling asset forfeiture aspects of the case. The case is being investigated by the FBI’s San Francisco Division, the IRS-CI’s Washington D.C. Field Office Cyber Crimes Unit, and the Department of Homeland Security Office of the Inspector General.
Federal-State Law Enforcement Partnership Results in More Than 75 Arrests in San Mateo, San Francisco CountiesRead the Press Release
SAN FRANCISCO – Officials from more than a half dozen law enforcement agencies gathered today to announce that over 75 individuals have been arrested and charged with a variety of state and federal crimes pursuant to “Operation Cold Day,” a joint federal-state effort to combat crime in San Mateo and San Francisco counties.
The announcement was made by U.S. Attorney Brian J. Stretch; Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), San Francisco Field Division, Special Agent in Charge Jill Snyder; San Mateo County District Attorney Steve Wagstaffe; San Francisco District Attorney George Gascón; San Francisco Chief of Police William Scott; Daly City Chief of Police Manuel Martinez; and California Highway Patrol, Golden Gate Division, Assistant Chief James Libby.
According to the officials, Operation Cold Day was spearheaded by the ATF in close coordination with local law enforcement partners in an effort to support ongoing state and local efforts to combat gun and drug-related crime. Multiple investigations and undercover operations have resulted in federal charges against 42 defendants and charges against dozens in state court.
According to the federal charging documents, the defendants are charged in mostly separate indictments. Each defendant is charged with allegedly committing at least one or more of the following crimes: possessing illegal firearms (such as firearms with obliterated serial numbers), in violation of 18 U.S.C. § 922(k); engaging in the unlicensed dealing in firearms, in violation of 18 U.S.C. § 922(a)(1)(A); distributing and possessing with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(B)(viii); being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1); and participating in a conspiracy to distribute methamphetamine and cocaine base, in violation of 21 U.S.C. § 846. Similarly, defendants in the prosecutions brought by the district attorneys of San Francisco and San Mateo Counties face a variety of charges.
“This week we took a key preemptive step in our battle against violent crime,” said U.S. Attorney Stretch. “By pooling the resources of the federal government with those of our state and local law enforcement partners, scores of weapons that we allege were illegally possessed and sold now have been taken off the streets. We commend and thank all of our law enforcement partners who have risked their safety to bring this phase of the operation to a successful conclusion.”
“It is our duty to make this community a safer place for you and your families,” said ATF Special Agent in Charge Snyder. “The safety of the public is at the core of ATF’s mission and we stand at the frontline eradicating violent crime from our streets. One firearm in the hands of a gang member or prohibited person is one firearm too many. It only takes one round from one gun to end a life. Today ATF and our partners stand here united and proud to serve our communities. Through everyone’s hard work and dedication this operation has been a true success. These are also our neighborhoods and today the greater San Francisco area is a safer place.”
“Law enforcement is at its best when we all come together to enhance public safety,” said District Attorney Gascón. “My office’s Crime Strategies Unit is always looking for creative ways to work with our law enforcement partners to make our jurisdictions safer together.”
“Gun violence has negatively impacted the lives of far too many people in San Francisco,” said SFPD Chief Scott. “This type of violence is more likely to happen when guns are in the hands of individuals willing to obtain and/or use them illegally. This interagency collaboration and the resulting arrests goes a long way to towards addressing gun violence by removing from our streets firearms and those willing to obtain them illegally and potentially use them.”
“The effects of this large-scale and collaborative operation will have an impact on the public safety in this region for quite some time,” said Daly City Police Chief Martinez.
“This type of interagency cooperation stands as an example of what can be accomplished when state, federal and local law enforcement agencies work together to ensure that our communities are safe,” said CHP Assistant Chief Libby. “This two-year operation would never have been possible were it not for the cooperation of all of the agencies involved, and for this, the California Highway Patrol is grateful to all of our allied partners.”
The indictments merely allege that crimes have been committed, and each defendant must be presumed innocent until proven guilty beyond a reasonable doubt.
These prosecutions are the result of close coordination between the ATF; the California Highway Patrol; and the police departments of San Francisco, Redwood City, San Bruno, and Daly City; and the San Mateo County Sheriff’s Office.
OPERATION COLD DAY FEDERAL DEFENDANTS
Defendant
Case Number(s)
Charges
MARIO ALVARADO
CR 17-336 WHA
21 U.S.C. § 841
21 U.S.C. § 846
18 U.S.C. § 922(g)(1)
HARRINGTON AMADOR
CR 17-361 WHA
21 U.S.C. § 841
AISHAH BUENAVENTURA
CR 17-395 CRB
CR 17-402 CRB
CR 17-401 RS
21 U.S.C. § 841 (four counts)
21 U.S.C. § 846 (two counts)
18 U.S.C. § 922(a)(1)
PAUL BIDINGER
CR 17-391 EMC
21 U.S.C. § 841
21 U.S.C. § 846
ALLELEA CABILES
CR 17-404 SI
21 U.S.C. § 841 (two counts)
21 U.S.C. § 846
RYAN COSINO
CR 17-402 CRB
21 U.S.C. § 841
21 U.S.C. § 846
VICENTE CRUZ
CR 17-356 EMC
21 U.S.C. § 841 (two counts)
21 U.S.C. § 846
18 U.S.C. § 922(g)(1)
DAVID DAYAN
CR 17-372 MMC
21 U.S.C. § 841
NELSON DECUIRE
CR 17-395 CRB
CR 17-391 EMC
CR 17-393 WHA
21 U.S.C. § 841 (three counts)
21 U.S.C. § 846 (three counts)
JOEL DOMINGUEZ
CR 17-0375 JST
21 U.S.C. § 841
21 U.S.C. § 846
ARMANDO ESPARZA
CR 17-381 VC
21 U.S.C. § 841
21 U.S.C. § 846
JEAN FAALATAINA
CR 17-373 CRB
21 U.S.C. § 841
21 U.S.C. § 846
CENTURY FAATAUI
CR 16-303 CRB
18 U.S.C. § 922(g)(1)
SHANE DYLAN FABRIS
CR 17-386 CRB
21 U.S.C. § 841 (two counts)
21 U.S.C. § 846
KRISTIAN SANTOS FIEL
CR 17-335 VC
21 U.S.C. § 841 (two counts)
CHRISTINE FLORES
CR 17-398 WHO
21 U.S.C. § 841
21 U.S.C. § 846
KRYSTAL FLORES
CR 17-373 CRB
21 U.S.C. § 841
21 U.S.C. § 846
RODRICK FORD
CR 17-377 VC
21 U.S.C. § 841
18 U.S.C. § 922(g)(1) (three counts)
26 U.S.C. § 5861(d)
CARLITA FOWLER
CR 17-412 VC
21 U.S.C. § 841 (three counts)
21 U.S.C. § 846
LORENZO GAINES
CR 17-371 CRB
18 U.S.C. § 922(g)(1) (two counts)
ALBERTO GARCIA
CR 17-353 CRB
18 U.S.C. § 922(k)
MONICA GARCIA
CR 17-411 WHO
21 U.S.C. § 841
LAWRENCE GILBERT
CR 17-265 CRB
18 U.S.C. § 922(g)(1)
ROBERT GUEVARA
CR 17-378 RS
21 U.S.C. § 841
21 U.S.C. § 846
LILLIAN HOVAN
CR 17-378 RS
21 U.S.C. § 841
21 U.S.C. § 846
ETEVATI LEVI
CR 17-356 EMC
21 U.S.C. § 841
21 U.S.C. § 846
ANGELITO MALLARI
CR 17-403 WHO
CR 17-404 SI
21 U.S.C. § 841 (five counts)
21 U.S.C. § 846 (two counts)
JENNIFER MCPIKE
CR 17-389 RS
21 U.S.C. § 841
21 U.S.C. § 846
ALICIA MORALES
CR 17-398 WHO
21 U.S.C. § 841
21 U.S.C. § 846
CARLOS ORELLANA
CR 17-396 SI
21 U.S.C. § 841(a)(1) (two counts)
BRIAN PEREZ
CR 17-383 SI
CR 17-386 CRB
18 U.S.C. § 371
18 U.S.C. § 922(a)(1)
18 U.S.C. § 922(g)(1) (two counts)
21 U.S.C. § 841 (two counts)
21 U.S.C. § 846
CARL PITTS
CR 17-412 VC
21 U.S.C. § 841
21 U.S.C. § 846
JOSE ALEJANDRO VASQUEZ ROBLEDO
CR 17-381 VC
21 U.S.C. § 841
21 U.S.C. § 846
LUIS ROMERO
CR 17-336 WHA
21 U.S.C. § 841
21 U.S.C. § 846
18 U.S.C. § 922(g)(5)
JAVIER ROSALES
CR 17-376 SI
26 U.S.C. § 5861(d)
EFRAIN SANTAMARIA
CR 17-389 RS
18 U.S.C. § 922(g)(1)
DANIELLE SIMRIL
CR 17-382 CRB
21 U.S.C. § 841 (two counts)
KERMIT TANNER
CR 17-383 SI
CR 17-347 VC
18 U.S.C. § 371
18 U.S.C. § 922(a)(1)
18 U.S.C. § 922(g)(1) (three counts)
21 U.S.C. § 841 (two counts)
SANDY TUIMAVAVE
CR 15-593 TEH
18 U.S.C. § 922(g)(1)
BRIAN VANDERCOURT
CR 16-121 WHO
21 U.S.C. § 841 (two counts)
DONNIE YINGLING
CR 17-388 SI
18 U.S.C. § 371
18 U.S.C. § 922(a)(1)(A)
18 U.S.C. § 922(g)(1) (two counts)
21 U.S.C. § 841
IVAN ZARICH
CR 16-358
18 U.S.C. § 922(g)(1)
18 U.S.C. § 111(b)
The statutes referenced above correlate to the following alleged offenses:
18 U.S.C. § 371- Conspiracy to deal in firearms without a license
18 U.S.C. § 111(b)- Assault on a federal officer
18 U.S.C. § 922(a)- Dealing in firearms without a license
18 U.S.C. § 922(g)- Felon in possession of a firearm
18 U.S.C. § 922(k)- Possession of a firearm with an obliterated serial number
21 U.S.C. § 841- Distribution and/or possession with intent to distribute a controlled substance
21 U.S.C. § 846- Conspiracy to distribute and/or possess with intent to distribute a controlled substance
26 U.S.C. § 5861(d)- Possession of an unregistered firearm
Four Defendants Indicted for Murder in Oakland, Conspiracy to Murder, Racketeering, and Trafficking MarijuanaRead the Press Release
SAN FRANCISCO – On August 3, 2017, a federal grand jury in San Francisco returned a superseding indictment charging Marcus Etienne, a.k.a. Hitler, Elizabeth Gobert, Craig Marshall, and Mario Robinson, with racketeering, murder, and conspiracy, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The indictment was unsealed today.
The charges stemmed from the defendants’ running of a multi-state marijuana trafficking organization and the murder of Trince Thibodeaux on March 22, 2016, at 90th Avenue and International Boulevard in Oakland, California.
The superseding indictment alleges that Etienne, of Opelousas, Louisiana, ran an enterprise of more than five members who conducted a continuing and extensive narcotics conspiracy and criminal organization that distributed marijuana from California to Louisiana and Texas. In connection with that enterprise and conspiracy, Etienne, Marshall, of Houston, Texas, and Robinson, of Oakland, California, acted in concert to murder Thibodeaux on March 22, 2016, in Oakland. A grand jury had previously charged Etienne and Gobert, Etienne’s wife, also of Opelousas, with conspiracy to distribute marijuana on February 16, 2017. Etienne was detained by the Court and Gobert was released on bail. The Superseding Indictment unsealed today charges Etienne and Gobert with conspiring to murder defendant Robinson during May of 2017, while Gobert was on release pending further proceedings on the first indictment.
The defendants are charged in the superseding indictment as follows:
Etienne:
- 21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(B) - Conspiracy to Distribute and Possess with Intent to Distribute Marijuana;
- 21 U.S.C. § 848(e) - Murder in Connection with Continuing Criminal Enterprise;
- 18 U.S.C. § 924(j) - Use of Firearm to Commit Murder;
- 18 U.S.C. § 1962(d) - Racketeering Conspiracy;
- 18 U.S.C. § 1959(a)(1) - VICAR Murder; and
- 18 U.S.C. § 1959(a)(5) - VICAR Conspiracy to Murder
Gobert:
- 21 U.S.C. §§ 846, 841(a)(1) and (b)(l)(B) - Conspiracy to Distribute and Possess with Intent to Distribute Marijuana;
- 18 U.S.C. § 1962(d) - Racketeering Conspiracy; and
- 18 U.S.C. § 1959(a)(5) - VICAR Conspiracy to Murder
Marshall:
- 21 U.S.C. §§ 846, 841(a)(1) and (b)(l)(B) - Conspiracy to Distribute and Possess with Intent to Distribute Marijuana;
- 21 U.S.C. § 848(e) - Murder in Connection with Continuing Criminal Enterprise;
- 18 U.S.C. § 924(j) - Use of Firearm to Commit Murder;
- 18 U.S.C. § 1962(d) - Racketeering Conspiracy; and
- 18 U.S.C. § 1959(a)(1) - VICAR Murder
Robinson:
- 21 U.S.C. §§ 846, 841 (a)(1) and (b)(1)(B) - Conspiracy to Distribute and Possess with Intent to Distribute Marijuana;
- 21 U.5.C. § 848(e) - Murder in Connection with Continuing Criminal Enterprise;
- 18 U.S.C. § 924(j) - Use of Firearm to Commit Murder;
- 18 U.S.C. § 1962(d) - Racketeering Conspiracy; and
- 18 U.S.C. § 1959(a)(1) - VICAR Murder
Etienne remains in custody in Northern California based on the February 16, 2017, indictment. Robinson was arrested in Louisiana on August 4, 2017, and appeared on August 7, in federal court in the Western District of Louisiana. Marshall was arrested on August 7, 2017, in Houston, Texas, and appeared in federal court in the Southern District of Texas today. Gobert was re-arrested on Sunday August 6, and made her initial appearance on August 7, in federal court in the Western District of Louisianan. Robinson, Marshall, and Gobert are expected to be required to appear in the Northern District of California upon transfer from their current locations. The case is assigned to the Honorable William Alsup, United States District Judge, for the Northern District of California.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by Assistant United States Attorney William Frentzen, paralegal specialist Jessica Meegan, legal assistant Bridget Kilkenny, all of the U.S. Attorney’s Office for the Northern District of California. The case is being investigated by the Federal Bureau of Investigation’s San Francisco, New Orleans, and Houston Divisions, and the Oakland Police Department, with assistance from the St. Landry Parish, Louisiana, Sheriff’s Office, and the Opelousas, Louisiana Police Department.
Salinas Residents Charged in Tax Fraud SchemeRead the Press Release
SAN JOSE – A federal grand jury in San Jose indicted five Salinas residents, charging them with conspiracy to submit fraudulent tax returns to the IRS, announced United States Attorney Brian J. Stretch, Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
According to the indictment, issued on July 13, 2017, and unsealed yesterday, Jorge Vissani, Jacqueline Ramos, Ana Bajo, Norma Morfin, and Antonio Ahumada stole money from the United States by filing false tax returns which claimed fraudulent income tax refunds. The indictment alleges that the defendants directed the IRS to send the fraudulent tax refunds to addresses or bank accounts the defendants controlled. Once the defendants received fraudulent tax refund checks, they cashed or deposited the checks at financial institution and businesses in Northern California. The scheme resulted in the issuance of fraudulent tax refunds worth approximately $9,000,000 during 2011 and 2012. Each defendant is charged with conspiracy to submit false claims, in violation of 18 U.S.C. § 286. Ramos and Ahumada were also charged with bank fraud, in violation of 18 U.S.C. § 1344.
Ramos, Bajo, Morfin, and Ahumada were arrested yesterday in Salinas. They made their initial appearance in federal court in San Jose before the Honorable Nathanael M. Cousins, U.S. Magistrate Judge. The next hearing in the case is scheduled for August 4, 2017 at 1:30 PM before Judge Cousins.
An indictment merely alleges that crimes have been committed and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The maximum penalty for conspiracy to file false claims, in violation of 18 U.S.C. § 286, is five years in prison and a $250,000 fine. The maximum penalty for bank fraud, in violation of 18 U.S.C. § 1344, is 30 years in prison and a $250,000 fine. Any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant United States Attorney Michael G. Pitman and Department of Justice Trial Attorney Gregory Bernstein are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Five Individuals Indicted in California for Allegedly Stealing More Than $9 Million in Tax RefundsRead the Press Release
A grand jury in the Northern District of California returned an indictment, which was unsealed today, charging five individuals with conspiring to submit fraudulent claims for tax refunds, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Brian J. Stretch for the Northern District of California. Two of the individuals were also indicted for bank fraud.
According to the indictment and information provided to the court, Jorge Vissani, Jacqueline Ramos a/k/a Jackie Acosta, Ana Bajo a/k/a Ana Cobraubias, Norma Morfin and Antonio Ahumada filed fraudulent tax returns with the Internal Revenue Service (IRS) that included fake income, false dependents and bogus education expenses. As a result of filing these fraudulent returns, the defendants are alleged to have stolen more than $9 million in tax refunds. The indictment alleges that the defendants directed the IRS to send the refunds to addresses and bank accounts that they controlled. According to the indictment, they forged endorsements and cashed or deposited the refund checks at financial institutions and businesses in Northern California.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
If convicted, the defendants face a statutory maximum penalty of five years in prison on the conspiracy count. Ramos and Ahumada also face a statutory maximum sentence of 30 years in prison on the bank fraud counts. They also face a period of supervised release, restitution and monetary penalties.
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch thanked special agents of IRS Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Michael G. Pitman and Trial Attorney Gregory Bernstein of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Richmond Man Sentenced to 108 Months in Prison for Possession of Child PornographyRead the Press Release
OAKLAND– Dumaka Hammond was sentenced to 9 years in prison for possession of child pornography, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down today by the Honorable James Donato, U.S. District Judge.
According to papers filed with the court, Hammond, 40, of Richmond, admitted using an internet tool known as Tor to access and download child pornography. Hammond acknowledged that some of the images he downloaded depicted sadistic or masochistic content and some images and videos involved prepubescent children. Additionally, Hammond acknowledged that law enforcement found and removed from his home a laptop computer that contained more than 300 child pornographic images. On March 10, 2016, a federal grand jury indicted Hammond, charging him with possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B). Hammond pled guilty to the charge on March 8, 2017.
In addition to the prison term, Judge Donato ordered Hammond to serve a fifteen year period of supervised release to follow his custodial sentence. Hammond was also ordered to pay $3,000 in restitution to a child victim depicted in his collection. Hammond has been in custody since his arrest in March 2016.
Assistant U.S. Attorney Thomas Green is prosecuting the case with the assistance of Trina Khadoo. The prosecution is the result of an investigation by the FBI.
Members of the public with information regarding suspected child predators or suspicious activity may 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.
California Resident Sentenced to Prison in Fraudulent Refund and Stolen Treasury Check SchemeRead the Press Release
A Los Angeles, California woman was sentenced to 65 months in prison for her role in a conspiracy to cash stolen and fraudulently obtained U.S. Treasury checks, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Brian J. Stretch for the Northern District of California.
Janel McDonald, 38, was convicted in March of conspiring to commit theft of public money, theft of public money and aggravated identity theft. McDonald was charged, along with 10 co-defendants, in November 2015. According to the indictment and evidence presented at trial, from August 2013 through April 2015, McDonald’s co-conspirators stole deceased individuals’ personal identifying information from California death records and used it to file federal tax returns seeking refunds. They also obtained social security and refund checks that were stolen from the U.S. mail system. McDonald provided fake California IDs to her co-conspirators who used them to cash the stolen and fraudulently obtained U.S. Treasury checks. McDonald caused a tax loss of approximately $471,000.
In addition to the term of prison imposed, U.S. District Court Judge Jeffrey White ordered McDonald to serve three years of supervised release and to pay $471,961 in restitution to the Internal Revenue Service (IRS).
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch thanked special agents of the IRS Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Thomas Newman and Assistant U.S. Attorney Jose Olivera and Trial Attorney Gregory Bernstein of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
California Resident Sentenced to Prison in Fraudulent Refund and Stolen Treasury Check SchemeRead the Press Release
SAN FRANCISCO – A Los Angeles woman was sentenced to 65 months in prison for her role in a conspiracy to cash stolen and fraudulently obtained U.S. Treasury checks, announced U.S. Attorney Brian J. Stretch and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. The sentence was handed down by Jeffrey S. White, U.S. District Judge, following McDonald’s conviction after a jury trial.
Janel McDonald, 38, was convicted in March of conspiring to commit theft of public money, theft of public money, and aggravated identity theft. McDonald was charged, along with 10 co-defendants, in November 2015. According to the indictment and evidence presented at trial, from August 2013 through April 2015, McDonald’s co-conspirators stole deceased individuals’ personal identifying information from California death records and used it to file federal tax returns seeking refunds. They also obtained social security and refund checks that were stolen from the U.S. mail system. McDonald provided fake California IDs to her co-conspirators who used them to cash the stolen and fraudulently obtained U.S. Treasury checks. McDonald caused a tax loss of approximately $471,000.
In addition to the term of prison imposed, Judge White ordered McDonald to serve three years of supervised release and to pay $471,961 in restitution to the Internal Revenue Service (IRS).
U.S. Attorney Stretch and Acting Deputy Assistant Attorney General Goldberg thanked the attorneys prosecuting the case, Assistant U.S. Attorneys Thomas Newman and Jose Olivera, and Trial Attorney Gregory Bernstein of the Tax Division, as well as the special agents of the IRS Criminal Investigation who conducted the investigation.
British Expatriate Sentenced to Nine Years in Prison for Role in Wire Fraud SchemeRead the Press Release
SAN JOSE – Laurence Miles was sentenced to 108 months in federal prison for conspiracy to commit wire fraud, wire fraud, and money laundering, announced United States Attorney Brian J. Stretch, Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf, and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. The sentence was handed down yesterday by the Honorable Lucy H. Koh, U.S. District Judge, after Miles pleaded guilty to the charges on April 6, 2017.
Miles, a 76 year-old citizen of Great Britain, had been living in Southern California during the time of the offenses. According to his guilty plea, since at least 2009 and continuing through December of 2015, he defrauded scores of victims of at least $5.6 million. Miles admitted that along with his four co-defendants, Shirley Molina, 70, of Hawthorne, Calif., Munsif Shirazi, 49, of Bell Canyon, Calif., Robert Stephens, 65, of Napa, Calif., and Rayan Lakshmanan, 48, of Davis, Calif., he told people that an heiress to a billion-dollar estate was very ill and was in need of medical attention. Miles and his co-defendants convinced their victims that the heiress’s money was tied up in a secret probate case and that, in return for money to help pay for the heiress’s medical costs, Miles and his accomplices would return to their victims $1,000 for every $1 they invested in the heiress’s estate. Miles and his accomplices promised their victims that they would see the returns on their investments after the money was released from probate. In truth, there was no dying heiress with a large estate. Instead, Miles and his codefendants used the victims’ money to support their own lifestyles. On December 3, 2015, a federal grand jury indicted Miles and charged him with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; 22 counts of wire fraud, in violation of 18 U.S.C. § 1343; and 4 counts of money laundering, in violation of 18 U.S.C. § 1957. Pursuant to his plea agreement, Miles pleaded guilty to one count of each of the charges and the remaining charges were dismissed. Each of Miles’ co-defendants have pleaded guilty to their respective roles in the conspiracy and will be sentenced later this year.
In sentencing Miles, Judge Koh found that Miles had been conducting the scheme for more than a decade. The Court concluded Miles obtained millions of dollars from his victims, had been a leader of the fraud, controlled the money, and exercised authority over some of his accomplices.
In addition to the 9-year prison term, Judge Koh ordered Miles to serve a three-year period of supervised release and to pay a forfeiture money judgement of $5,628,765. Judge Koh ordered Miles to begin serving his sentence October 20, 2017, immediately after a hearing to determine the amount of restitution he owes his victims. Judge Koh further ordered that until the restitution hearing, Miles will remain on electronic monitoring and must remain at his residence with limited exceptions.
Assistant U.S. Attorneys Amber Rosen and Patrick Delahunty prosecuted the case with the assistance of Nina Williams and Susan Kreider. The prosecution is the result of an investigation by the FBI and IRS.
Russian National and Bitcoin Exchange Charged in 21-Count Indictment for Operating Alleged International Money Laundering Scheme and Allegedly Laundering Funds from Hack of Mt. GoxRead the Press Release
SAN FRANCISCO – A grand jury in the Northern District of California has indicted a Russian national and an organization he allegedly operated, BTC-e, for operating an unlicensed money service business, money laundering, and related crimes. The announcement was made by U.S. Attorney Brian J. Stretch for the Northern District of California; Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; Internal Revenue Service (IRS) Criminal Investigation Chief Don Fort; Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Acting Executive Associate Director Derek Benner; Federal Bureau of Investigation (FBI) Special Agent in Charge of the Louisville Division Amy Hess; United States Secret Service (USSS) Special Agent in Charge of the Criminal Investigative Division Michael D’Ambrosio; Federal Deposit Insurance Corporation (FDIC), Office of the Inspector General, Inspector General Jay N. Lerner; and Acting Director of the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), Jamal El-Hindi.
“Cryptocurrencies such as Bitcoin provide people around the world new and innovative ways of engaging in legitimate commerce. As this case demonstrates, however, just as new computer technologies continue to change the way we engage each other and experience the world, so too will criminals subvert these new technologies to serve their own nefarious purposes,” said U.S. Attorney Stretch. “This office will continue to devote the necessary resources to ensure that money launderers and cyber-criminals are detected, apprehended, and brought to justice wherever and however they use the internet to commit their crimes.”
"As this case demonstrates, the Criminal Division employs a multi-faceted approach to dismantling criminal enterprises, by prosecuting the criminal actors themselves, and by shutting down their ability to monetize their crimes through entities that facilitate money laundering," said Acting Assistant Attorney General Blanco. "The Criminal Division will work tirelessly to identify those who use technology to conduct and obscure their criminal activity, as we ensure there are no safe havens from U.S. justice for those who seek to victimize Americans."
“Homeland Security Investigations is strongly committed to tracking down criminals who seek to strike at the foundations of global financial security through complex money laundering schemes,” said HSI Acting Executive Associate Director Derek Benner. “The resulting indictment is a clear representation of why our close law enforcement partnerships are vital to our shared missions. HSI will continue to aggressively target those who deliberately seek to exploit financial systems for personal gain."
“Mr. Vinnik is alleged to have committed and facilitated a wide range of crimes that go far beyond the lack of regulation of the bitcoin exchange he operated. Through his actions, it is alleged that he stole identities, facilitated drug trafficking, and helped to launder criminal proceeds from syndicates around the world,” said Chief Don Fort, IRS Criminal Investigation. “Exchanges like this are not only illegal, but they are a breeding ground for stolen identity refund fraud schemes and other types of tax fraud. When there is no regulation and criminals are left unchecked, this scenario is all too common. The takedown of this large virtual currency exchange should send a strong message to cyber-criminals and other unregulated exchanges across the globe.”
“BTC-e was noted for its role in numerous ransomware and other cyber-criminal activity; its take-down is a significant accomplishment, and should serve as a reminder of our global reach in combating transnational cyber crime,” said Special Agent in Charge of the USSS Criminal Investigative Division Michael D’Ambrosio. “We are grateful for the efforts of our law enforcement partners in achieving this significant result.”
"The arrest of Alexander Vinnik is the result of a multi-national effort and clearly displays the benefits of global cooperation among US and international law enforcement,” said FBI Special Agent in Charge Hess. “This investigation demonstrates the long-term commitment given to identifying and pursuing criminals world-wide with a whole of government approach. This was a highly complex investigation that has only reached this stage due to the persistent and dedicated efforts of all the parties involved. We must continue to impose real costs on criminals, no matter who they are or where they attempt to hide."
“The Federal Deposit Insurance Corporation Office of Inspector General works to ensure the integrity of the financial service sector and is committed to holding accountable those involved in criminal activity that undermine its integrity,” said Inspector General Lerner. “This investigation demonstrates what can be achieved among the cooperative partnerships in the domestic and international law enforcement community.”
The indictment describes Alexander Vinnik, 37, a Russian citizen, as the owner and operator of multiple BTC-e accounts, including administrator accounts, and also a primary beneficial owner of BTC-e’s managing shell company, Canton Business Corporation. According to the indictment, numerous withdrawals from BTC-e administrator accounts went directly to Vinnik’s personal bank accounts. The indictment further alleges that proceeds from well-known hacks and thefts from bitcoin exchanges were funded through a BTC-e administrator account associated with Vinnik. Vinnik was arrested in Greece on July 25.
According to the indictment unsealed today, BTC-e, founded in 2011, was one of the world’s largest and most widely used digital currency exchanges. The indictment alleges that BTC-e allowed its users to trade in the digital currency “Bitcoin” with high levels of anonymity. The indictment alleges that although Bitcoin has known legitimate uses, the virtual currency, like cash, can be used to facilitate illicit transactions and to launder criminal proceeds. According to the indictment, since its inception, Vinnik and others developed a customer base for BTC-e that was heavily reliant on criminals, including by not requiring users to validate their identity, obscuring and anonymizing transactions and source of funds, and by lacking any anti-money laundering processes. The indictment alleges BTC-e was operated to facilitate transactions for cybercriminals worldwide and received the criminal proceeds of numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings. Thus, the indictment alleges, BTC-e was used to facilitate crimes ranging from computer hacking, to fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. The investigation has revealed that BTC-e received more than $4 billion worth of bitcoin over the course of its operation.
As to Vinnik, the indictment alleges that he received funds from the infamous computer intrusion or “hack” of Mt. Gox – an earlier digital currency exchange that eventually failed, in part due to losses attributable to hacking. The indictment alleges that Vinnik obtained funds from the hack of Mt. Gox and laundered those funds through various online exchanges, including his own BTC-e and a now defunct digital currency exchange, Tradehill, based in San Francisco, California. The indictment alleges that by moving funds through BTC-e, Vinnik sought to conceal and disguise his connection with the proceeds from the hacking of Mt. Gox and the resulting investigation.
As for defendant BTC-e, the indictment alleges that, despite doing substantial business in the United States, BTC-e was not registered as a money services business with the U.S. Department of the Treasury, had no anti-money laundering process, no system for appropriate “know your customer” or “KYC” verification, and no anti-money laundering program as required by federal law. According to the company’s website, BTC-e is located in Bulgaria but organized or otherwise subject to the laws of Cyprus. The exchange allegedly maintains a base of operations in the Seychelles Islands and its web domains are registered to shell companies in, among other places, Singapore, the British Virgin Islands, France, and New Zealand.
The indictment charges BTC-e and Vinnik with one count of operation of an unlicensed money service business, in violation of 18 U.S.C. § 1960, and one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). In addition, the indictment charges Vinnik with seventeen counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1), and two counts of engaging in unlawful monetary transactions, in violation of 18 U.S.C. § 1957. An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.
FinCEN today assessed a $110 million civil money penalty against BTC-e for willfully violating U.S. anti-money laundering (AML) laws. Alexander Vinnik was assessed $12 million for his role in the violations.
“We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they willfully violate U.S. AML laws,” said Acting FinCEN Director Jamal El-Hindi. “Today’s action should be a strong deterrent to anyone who thinks that they can facilitate ransomware, dark net drug sales, or conduct other illicit activity using encrypted virtual currency. Treasury’s FinCEN team and our law enforcement partners will work with foreign counterparts across the globe to appropriately oversee virtual currency exchangers and administrators who attempt to subvert U.S. law and avoid complying with U.S. AML safeguards.”
If convicted of these crimes, Vinnik faces the following maximum penalties:
Violation
Statute
Maximum Penalty
operation of an unlicensed money service business
18 U.S.C. § 1960
5 years of imprisonment
conspiracy to commit money laundering
18 U.S.C. § 1956(h)
20 years of imprisonment and a $500,000 fine or twice the value of the property involved in the transaction
money laundering
18 U.S.C. § 1956(a)(1)
20 years of imprisonment and a $500,000 fine or twice the value of the property involved in the transaction (each count)
engaging in unlawful monetary transactions
18 U.S.C. § 1957
10 years of imprisonment and a $500,000 fine or twice the value of the property involved in the transaction (each count)
Additional fines, restitution, and supervised release also may be ordered. 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.
This case is being investigated by the Internal Revenue Service (the Oakland Calif., Field Office and Cyber Crime Unit in Washington, D.C.); Department of Homeland Security, Homeland Security Investigations; FBI; U.S. Secret Service Criminal Investigative Division; and Federal Deposit Insurance Corporation, Office of the Inspector General. The case is being prosecuted by the U.S. Attorney’s Office for the Northern District of California and the Criminal Division’s Computer Crime and Intellectual Property Section. The Criminal Division’s Office of International Affairs provided substantial assistance on the case.
North Bay Methamphetamine Trafficker Sentenced to Ten Years in PrisonRead the Press Release
SAN FRANCISCO – Jose Vasquez Bautista was sentenced today to 120 months in prison for possessing with the intent to distribute methamphetamine announced United States Attorney Brian J. Stretch and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder. The sentence was handed down by the Honorable Thelton E. Henderson, U.S. District Judge, following the entry of Bautista’s guilty plea to the charge on February 27, 2017.
Bautista, 42, of Lodi, Calif., admitted that on June 3, 2015, he attempted to sell approximately four pounds (1.8 kilograms) of methamphetamine to an undercover officer in Napa. Court documents indicate that Bautista attempted to sell the methamphetamine for $5,300 per pound, for a total of $21,200, and wanted to establish a methamphetamine pipeline in Napa County. In addition, Judge Henderson found that Bautista maintained a storage unit in Lodi that contained approximately twenty-five pounds (11.3 kilograms) of methamphetamine and a large amount of liquid used to manufacture more of the drug. Further, Judge Henderson found that Bautista possessed three firearms in connection with his offense.
On January 5, 2016, a federal grand jury indicted Bautista and charged him with one count of possession with intent to distribute methamphetamine, in violation of 21 U.S.C. § 841(a)(1). Bautista pleaded guilty to the charge without a written agreement.
Judge Henderson ordered Bautista remanded to the custody of the U.S. Marshal Service today and Bautista will begin serving his sentence immediately. In addition to the prison term, Judge Henderson ordered Bautista to serve a five-year period of supervised release.
Assistant U.S. Attorneys Katherine Lloyd-Lovett and Helen Gilbert are prosecuting the case with the assistance of Marina Ponomarchuk. The prosecution is the result of an investigation by the ATF and the Napa County Special Investigations Bureau.
Alleged ISIS Supporter Indicted for Attempting to Provide Material Support to Foreign Terrorist OrganizationRead the Press Release
Amer Sinan Alhaggagi, 22, of Oakland, California, was indicted yesterday by a federal grand jury in San Francisco with attempting to provide material support to a designated foreign terrorist organization.
Acting Assistant Attorney General for National Security Dana J. Boente, U.S. Attorney Brian J. Stretch of the Northern District of California and Special Agent in Charge John F. Bennett of the FBI’s San Francisco Field Office.
According to the indictment, Alhaggagi, 22, of Oakland, California, is alleged to have knowingly attempted to provide services and personnel to the Islamic State of Iraq and al-Sham (ISIS), between July and November of 2016, in violation of 18 U.S.C. § 2339B. ISIS is a designated foreign terrorist organization. The indictment alleges that the services Alhaggagi attempted to provide included opening social media accounts for the use, benefit and promotion of ISIS, and that the personnel he provided was himself.
The indictment also alleges three counts of identity theft offenses – two counts of identity theft, in violation of 18 U.S.C. § 1029, and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A. With respect to those charges, an affidavit previously filed by an agent of the FBI in connection with a criminal complaint in the same matter alleged that Alhaggagi had used a stolen credit card to make $4,932 in fraudulent online purchases from a clothing company.
The FBI arrested Alhaggagi, a U.S. citizen, on Nov. 29, 2016, based on a criminal complaint charging identity theft. Magistrate Judge Kandis Westmore ordered Alhaggagi detained following his arrest based on findings that he presented a flight risk and a danger to the community. The complaint and the previous proceedings against Alhaggagi were unsealed yesterday when the indictment was returned.
Alhaggagi’s arraignment has not yet been scheduled.
An indictment is merely an allegation, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. If convicted, the defendant faces a maximum total sentence of 47 years on all four counts in the indictment, and a fine of $250,000 for each count. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.
The prosecution is the result of an investigation by the FBI, the Special Prosecutions and National Security Unit of the U.S. Attorney’s Office for the Northern District of California, the National Security Division’s Counterterrorism Section of the U.S. Department of Justice, and members of the Joint Terrorism Task Force, including the Oakland Police Department and the Berkeley Police Department.
Alleged ISIS Supporter Indicted for Attempting to Provide Material Support to Foreign Terrorist OrganizationRead the Press Release
SAN FRANCISCO - A federal grand jury in San Francisco indicted Amer Sinan Alhaggagi yesterday with attempting to provide material support to a designated foreign terrorist organization, announced United States Attorney Brian J. Stretch, Acting Assistant Attorney General for National Security Dana J. Boente, and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.
According to the indictment, Alhaggagi, 22, of Oakland, California, is alleged to have knowingly attempted to provide services and personnel to the Islamic State of Iraq and Syria, or ISIS, between July and November of 2016, in violation of 18 U.S.C. § 2339B. ISIS was designated a foreign terrorist organization by the United States Secretary of State in 2014. The indictment alleges that the services Alhaggagi attempted to provide included opening social media accounts for the use, benefit, and promotion of ISIS, and that the personnel he provided was himself.
The indictment also alleges three counts of identity theft offenses – two counts of identity theft, in violation of 18 U.S.C. § 1029, and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A. With respect to those charges, an affidavit previously filed by an agent of the Federal Bureau of Investigation in connection with a criminal complaint in the same matter alleged that Alhaggagi had used a stolen credit card to make $4,932 in fraudulent online purchases from a clothing company.
The FBI arrested Alhaggagi on November 29, 2016, based on a criminal complaint charging identity theft. Magistrate Judge Kandis Westmore ordered Alhaggagi detained following his arrest based on findings that he presented a flight risk and a danger to the community. The complaint and the previous proceedings against Alhaggagi were unsealed when the indictment was returned.
Alhaggagi’s arraignment has not yet been scheduled.
An indictment merely alleges that crimes have been committed, and the defendants is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a total of 47 years imprisonment for the four counts charged in the indictment, and a fine of $250,000 for each 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.
The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Special Prosecutions and National Security Unit of the United States Attorney’s Office for the Northern District of California, the United States Department of Justice National Security Division, the Berkeley Police Department, and members of the Joint Terrorism Task Force including, the Oakland Police Department.
San Jose Businesswoman Pleads Guilty to Tech Worker Visa FraudRead the Press Release
SAN JOSE, CA - A San Jose businesswoman pleaded guilty in federal court today to three counts of visa fraud, announced U.S. Attorney Brian J. Stretch Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin. The guilty plea was accepted by the Honorable Lucy H. Koh, U.S. District Judge.
In pleading guilty, Sridevi Aiyaswamy, 50, of San Jose, admitted that between April 2010 and June 2013 she made numerous false statements, and submitted over 25 fraudulent documents, to the United States Citizenship and Immigration Services (USCIS) for the purpose of obtaining H-1B non-immigrant classifications for skilled foreign workers. Acting as a petitioner on behalf of foreign worker beneficiaries, Aiyaswamy falsely represented in I-129 petitions that the foreign worker beneficiaries would be working at Cisco, an information technology and networking company in San Jose, Calif. Aiayswamy further submitted counterfeit statements of work with forged signatures as back-up documentation to the I-129 petitions. In fact, at the time she submitted these documents to USCIS, Aiyaswamy knew that the statements regarding offers of work from Cisco for these beneficiaries were false statements, and that Cisco had not made any offers of employment regarding these individuals.
A federal grand jury indicted Aiyaswamy on December 3, 2015, charging her with 34 counts of visa fraud, in violation of 18 U.S.C. § 1546(a). Pursuant to today’s pea agreement, Aiyaswamy pleaded guilty to three of the counts of visa fraud and the government agreed to request dismissal of the remaining counts.
Aiyaswamy is currently free on bond. Judge Koh scheduled her sentencing for November 15, 2017, at 9:15 a.m. The maximum statutory penalty for visa fraud is 10 years in prison and a $250,000 fine. 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 John Bostic and Jeff Nedrow are prosecuting the case with the assistance of Laurie Worthen and Susan Kreider. The prosecution is the result of an investigation led by HSI. U.S. Citizenship and Immigration Service’s Office of Fraud Detection and National Security also assisted with the investigation.
East Bay Real Estate Agent Pleads Guilty to Wire Fraud and Money Laundering in Connection with Scheme to Defraud Homeowners and Mortgage HoldersRead the Press Release
SAN FRANCISCO – Robert Jacobsen pleaded guilty today to wire fraud and money laundering charges in connection with a scheme to use sham companies and collusive lawsuits to create the appearance that mortgage liens had been invalidated, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The plea was accepted by the Honorable Maxine M. Chesney, U.S. District Judge.
According to the plea agreement, Jacobsen, 69, formerly of Lafayette, Calif., admitted that from October 2012 through October 2013, he executed a scheme to sell homes to buyers who were duped into believing that the homes had clear title. Jacobsen admitted that he identified homes with mortgage deeds of trust that were recorded for the benefit of an entity called “American Brokers Conduit” (ABC). Jacobsen also admitted that he registered a separate entity in New York called “American Brokers Conduit Corporation” (ABC Corp.). Jacobsen then hired an attorney to file lawsuits against his phony ABC Corp., claiming that mortgages that had been originated by the real ABC were invalid. Controlling both sides of the lawsuits, Jacobsen caused the attorneys to enter into stipulated judgments, agreeing that the mortgage deeds of trust were invalid. The courts then entered judgment based on these fraudulent agreements, which Jacobsen recorded with county recorder’s offices. The result created the impression that the deeds of trust had been legitimately invalidated by federal or state courts.
Jacobsen admitted that two homes that were the subjects of such lawsuits were in Danville, Calif., and San Francisco, Calif. Jacobsen admitted that, after obtaining fraudulent judgments, he sold the Danville home for $540,000 and the San Francisco home for $1.2 million. Jacobsen admitted that in both cases, his representations regarding the fraudulent court judgments had a natural tendency to influence the buyers to purchase the homes.
As part of his plea agreement, Jacobsen further admitted that proceeds from the sale of the Danville and San Francisco homes were used to pay for a 54’ Hylas sailboat that the government seized at a marina in Beaufort, North Carolina on November 18, 2015. Jacobsen agreed that his interest in this sailboat was subject to forfeiture.
On December 5, 2015, a federal grand jury indicted Jacobsen charging him with 13 counts of wire fraud, in violation of 18 U.S.C. § 1343 and 9 counts of engaging in monetary transactions in property derived from specified unlawful activity (money laundering), in violation of 18 U.S.C. § 1957. Pursuant to today’s plea agreement, Jacobsen pleaded guilty to one count of each crime.
Jacobsen’s sentencing is scheduled for November 15, 2017. Jacobsen faces a maximum sentence of 20 years of imprisonment, and a fine of $250,000, plus restitution, for the wire fraud count and a maximum sentence of 10 years of imprisonment, and a fine of $250,000, for the money laundering count. However, any sentence following conviction will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant United States Attorneys Benjamin Kingsley, Meredith Osborn, and Gregg Lowder are prosecuting the case with the assistance of Beth Margen and Bridget Kilkenny. The prosecution is the result of an investigation by the FBI and IRS-CI.
Charges Filed Against Northern California Physician for Unlawfully Dispensing OxycodoneRead the Press Release
SAN FRANCISCO — Christopher Owens, a physician licensed to practice in California, was indicted on Tuesday with unlawfully prescribing oxycodone, announced U.S. Attorney Brian J. Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin. The indictment alleges that between September of 2012 and June of 2015, Owens, 50, now of Indianapolis, IN, intended to act outside the course of usual professional practice and without a legitimate medical purpose when he prescribed oxycodone on numerous occasions. In sum, Owens is charged with 36 counts of distributing oxycodone, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C).
Owens was arrested on Tuesday, July 11, 2017, in Indianapolis, Ind., and is currently scheduled to appear in Indiana before a U.S. Magistrate Judge for a detention hearing on Monday, July 17th.
An indictment merely alleges a crime has been committed. Owens, as well as all defendants, must be presumed innocent unless and until proven guilty beyond a reasonable doubt.
Assistant U.S. Attorney Sheila Armbrust is prosecuting the case. The prosecution is the result of an investigation by the Drug Enforcement Administration with assistance from the University of California San Francisco Police Department.
Earlier today, federal officials joined in Washington to announce the scope of the recent enforcement actions. Attorney General Jeff Sessions, Department of Health and Human Services (HHS) Secretary Tom Price, M.D., Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting FBI Director Andrew McCabe, Acting Drug Enforcement Administration (DEA) Administrator Chuck Rosenberg, Inspector General Daniel Levinson of the HHS Office of Inspector General (OIG), IRS-Criminal Investigations Chief Jon Fort, CMS Administrator Seema Verma, and Deputy Director Kelly P. Mayo of the Defense Criminal Investigative Service (DCIS) described the program. The enforcement actions were led and coordinated by the Criminal Division and staffed by the Fraud Section’s Health Care Fraud Unit in conjunction with its Medicare Fraud Strike Force (MFSF) partners, a partnership between the Criminal Division, U.S. Attorney’s Offices, the FBI and HHS-OIG. In addition, the operation includes the participation of the DEA, DCIS, and State Medicaid Fraud Control Units. Of the more than 412 people charged, over 120 defendants, including doctors, were charged for their roles in prescribing and distributing opioids and other dangerous narcotics.
Oakland Woman Sentenced to 8 Years in Prison for Transporting 14-Year-Old Across State Lines to Engage in ProstitutionRead the Press Release
OAKLAND – Carrie Myles was sentenced today to 96 months in prison for transporting a 14-year-old girl from Oakland, Calif., to Las Vegas, Nev., for the purpose of making the girl available to engage in commercial sex acts, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Haywood S. Gilliam, U.S. District Judge.
Myles, 38, of Oakland, pleaded guilty on February 27, 2017, to driving a 14-year-old girl across state lines to engage in commercial sex acts. According to her plea agreement, Myles admitted that for nearly a month she profited from arranging for the minor to engage in commercial sex acts with adults. Myles admitted she photographed the girl while she was partially dressed in provocative clothing and also admitted posting or directing the girl to post those photos in advertisements on an online classified website service. Myles acknowledged she misrepresented the girl’s age in the advertisements and admitted she instructed the girl that, if asked, the girl should tell customers she was an adult. Myles also provided the girl with clothing to use in photographs and while performing sex acts and controlled the phone number she provided the minor. Myles admitted she used the girl’s purported number to communicate with potential customers who may have thought they were communicating with the girl they saw in photographs in the advertisements. Myles also admitted that for a month, on approximately a daily basis, she urged the girl to engage in commercial sex acts. This continued until Myles was arrested in September of 2015 after she drove the girl to an Oakland hotel to meet with someone who had solicited prostitution.
On September 29, 2016, a federal grand jury indicted Myles, charging her with one count of transportation for illegal sexual activity, in violation of 18 U.S.C. § 2421(a) and one count of transportation of a minor for illegal sexual activity, in violation of 18 U.S.C. § 2423(a) and (e). Pursuant to her plea agreement, Myles pleaded guilty to the transportation for illegal sexual activity charge and received sentencing enhancements for her behavior with the minor including the following: committing the federal offense while having the minor in her custody and control, knowingly misrepresenting the girl’s age, and unduly influencing the minor to engage in commercial sex.
In addition to the prison term, Judge Gilliam also sentenced Myles to serve a five-year term of supervised release and ordered Myles to register as a sex offender.
Assistant U.S. Attorney Thomas R. Green is prosecuting the case with the assistance of Noble Hughes and Trina Khadoo. The prosecution is the result of an investigation by the FBI.
If members of the public have any information relevant to this investigation or to suspected child predators or suspicious activity, the FBI encourages them to contact HSI through the toll-free Tip Line at 1-866-DHS-2-ICE or by completing its online tip form at https://www.ice.gov/webform/hsi-tip-form. Both are staffed around the clock by investigators. Suspected child sexual exploitation or missing children may also be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.
Owners of Bay Area Sushi Boat Restaurants Appear in Federal Court to Face Tax Fraud ChargesRead the Press Release
OAKLAND – Man Young Kim and Kyong Ja Kim, husband and wife, appeared in federal court today to face charges that they conspired to defraud the United States and committed related tax crimes, announced United States Attorney Brian J. Stretch and Michael T. Batdorf, Special Agent in Charge, Internal Revenue Service. The couple appeared before U.S. Magistrate Judge Kandis A. Westmore and were arraigned on charges related to three Bay Area sushi restaurants owned by the Kims, Sushi Boat Oakridge, Sushi Boat Valley Fair, and Sushi Boat Westgate.
A federal grand jury indicted the Kims on June 29, 2017. According to the indictment, Man Kim, 63, and Kyong Kim, 57, both of Dublin, Calif., each own 50 percent of the three sushi boat restaurants at issue and are alleged to have conspired to defraud the United States by failing to report income from the restaurants. The indictment describes an alleged scheme by which both defendants denied the existence of records related to daily income; then, after investigators sought computer records, Kyong Ja Kim allegedly hired a computer consultant to delete relevant data from the restaurants’ computer system. Both defendants are charged with conspiracy to defraud the United States, in violation of 18 U.S.C. § 371. In addition, Kyong Ja Kim is charged with preparing and filing false employment tax returns, in violation of 26 U.S.C. § 7206(2), and preparing and filing a false federal income tax return, in violation of 26 U.S.C. § 7206(1). In addition to the conspiracy charge, Man Young Kim is charged with three counts of filing false tax returns, in violation of 26 U.S.C. § 7206(l), and nine counts of willfully failing to collect, account for, and pay over to the IRS the federal income taxes, in violation of 26 U.S.C. § 7202.
Following today’s appearance, the defendants were released on bond. Defendants’ next court appearance is scheduled for August 31, 2017, at 2:00 p.m., before the Honorable Yvonne Gonzalez Rogers, U.S. District Court Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of the conspiracy charge, the defendants face a maximum sentence of five years in prison, a fine of $250,000, and restitution, if appropriate. In addition, Man Kim faces a maximum of three years of prison time, and a fine of $250,000, plus restitution for each violation of 26 U.S.C. § 7206(1) (filing false returns) and a maximum of 5 years of prison time, and a fine of $250,000, plus restitution for each violation of 26 U.S.C. § 7206(2) (willful failure to collect and pay over taxes). Kyong Kim faces a maximum of three years of prison time, and a fine of $250,000, plus restitution for each violation of 26 U.S.C. § 7206(2) (aiding and assisting in preparing false returns). However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Cynthia Stier is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service.
San Francisco International Airport Security Screener Sentenced to A Year in Prison for Her Role in A Conspiracy to Obstruct the Transportation Security AdministrationRead the Press Release
SAN FRANCISCO – Jessica Scott, an employee of Covenant Aviation Security (CAS), a private company that contracts with the Transportation Security Administration (TSA), was sentenced today to one year and a day in prison for her role in a conspiracy to defraud the federal government, announced United States Attorney Brian J. Stretch, Drug Enforcement Administration Special Agent in Charge John J. Martin, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and Transportation Security Administration Office of Inspection Special Agent in Charge Regan O. Fong. The sentence was handed down by the Honorable Charles R. Breyer, following a guilty plea in which Scott admitted permitting carry-on luggage to pass through a checkpoint undetected at the San Francisco International Airport (SFO).
Scott, 29, of San Pablo, Calif., pleaded guilty on March 28, 2017, to conspiring to defraud the government in connection with a drug smuggling operation at SFO. According to her plea agreement, on July 18, 2013, her former husband, Joseph Scott, 35, of Vallejo, told her that a friend would be coming through the terminal and that the friend’s bag was “good.” Jessica Scott understood that she was being asked for her assistance to ensure that the carry-on luggage would not be subject to a secondary check when the passenger passed through security. The defendant admitted that she deliberately avoided learning what was in the bag by failing to take steps to investigate the luggage—even though she knew there was a high probability that the luggage contained drugs. In addition, the defendant admitted that when she saw the x-ray image of the carry-on luggage, she recognized three bright orange bricks and three bright green bricks that, based on her training and experience, she knew might have been explosives. Jessica Scott nevertheless allowed the luggage to pass through security without further investigation.
On November 3, 2015, Jessica Scott was indicted along with Joseph Scott and another former Lead Transportation Security Officer for CAS. All three were charged with one count of conspiring to defraud the TSA by obstructing a lawful government function, in violation of 18 U.S.C. § 371, and one count conspiring to distribute and possess with intent to distribute more than five kilograms of cocaine, in violation of 21 U.S.C. §§ 846 and 841. Pursuant to her plea agreement, Jessica Scott pleaded guilty to the conspiracy to obstruct charge.
In addition to the prison term, Judge Breyer also ordered Jessica Scott to serve a three-year term of supervised release. On June 27, 2017, Joseph Scott pleaded guilty to one count of receiving a bribe as a public official, in violation of 18 U.S.C. § 201(b)(2). Judge Breyer set his sentencing for November 15, 2017.
Assistant U.S. Attorney Laura Vartain Horn is prosecuting the case with the assistance of Wincy Wong. The investigation has involved officers and agents from the Drug Enforcement Administration, Federal Bureau of Investigation, the TSA Office of Inspection, San Francisco Police Department, and the Oakland Police Department. This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state, and local law enforcement agencies.
Prospect Mortgage, LLC Agrees to Pay $4.157 Million to Resolve False Claims Act Allegations Arising from the FHA Mortgage Lending Practices of Two of Its BranchesRead the Press Release
SAN FRANCISCO – Prospect Mortgage Company, LLC (“Prospect”) has agreed to pay the United States $4.157 million to resolve allegations that that the company committed civil mortgage fraud in connection with its participation in the Direct Endorsement Lender Program announced U.S. Attorney for the Northern District of California Brian J. Stretch, and U.S. Attorney for the Northern District of Georgia John A. Horn.
The Direct Endorsement Lender Program, is administered by the Federal Housing Administration (“FHA”) and the U.S. Department of Housing and Urban Development (“HUD”). Prospect participated in the FHA insurance program as a Direct Endorsement Lender (“DE Lender”). As a DE Lender, Prospect had the authority to originate, underwrite, and endorse mortgages for FHA insurance. In this settlement, Prospect has agreed to pay the United States $4.157 million to resolve an investigation conducted by the U.S. Attorneys’ Offices (USAO) for the Northern District of California and the Northern District of Georgia into whether Prospect violated the False Claims Act by falsely certifying compliance with critical underwriting and quality control (“QC”) requirements when originating loans insured by the FHA and HUD.
“Prospect’s knowing failure to comply with material HUD loan origination requirements not only resulted in major losses to the public fisc, but also served to undermine the FHA program,” said U.S. Attorney Stretch. “Today’s settlement demonstrates the Department of Justice’s resolve and commitment to hold lenders, large and small, accountable for this type of fraudulent conduct.”
“To participate in the FHA program, Prospect had to comply with HUD underwriting and quality control requirements and certify that these requirements had been satisfied with respect to each FHA loan it originated,” said U.S. Attorney Horn. “Prospect failed to adhere to these requirements at two Southeastern branches and when many of these loans later defaulted, the United States suffered substantial losses.”
“Ensuring the fiscal integrity of FHA programs is at the core of our mission,” said Acting HUD Inspector General Helen M. Albert. “We will continue to work with our law enforcement partners to identify and root out those that seek to compromise such programs that are directly intended to assist the American public,” he concluded.
Under the DE Program, if a DE Lender approves a mortgage loan for FHA insurance, and the loan later defaults, the holder of the loan may submit an insurance claim to the Government to recover its losses on the loan. The Government does not review a loan before endorsement for FHA insurance; instead, FHA and HUD rely upon DE Lenders like Prospect to follow program rules. The rules require, among other things, that a lender: (1) adhere to HUD underwriting guidelines; (2) maintain a QC program that can identify and correct deficiencies in their underwriting practices; and (3) self-report to HUD materially deficient loans identified by their QC program. As revealed by an Atlanta HUD-Office of Inspector General (“OIG”) audit, two Prospect branches – one in Florida and another in North Carolina – originated many of these loans without adhering to the requisite HUD requirements. As a result, the United States suffered substantial losses when the loans defaulted and ripened into claims by Prospect for insurance payments from the United States.
Between December 2007 and December 2009, Prospect had a 12.29 percent default rate – well in excess of the national average – within HUD’s Atlanta Home Ownership Center (“HOC”). HUD determined that approximately 76% of these defaults were attributable to two particular Prospect branches located in Florida and North Carolina. The Government’s investigation revealed that the majority of the audited loans from these branches were not compliant with HUD underwriting requirements relating to Prospect’s assessment of borrower: (1) assets; (2) income; and (3) credit, which are essential considerations in determining whether a loan will be repaid, as opposed to going into default or serious delinquency.
As part of the settlement, Prospect has acknowledged, among other things, the following conduct that occurred in the two Prospect branches at issue:
- Prospect endorsed for FHA insurance loans that had not been originated in accordance with HUD requirements concerning a DE Lender’s assessment of assets, income, and credit.
- Prospect falsely certified that the non-compliant loans that it originated had been underwritten in accordance with HUD underwriting requirements.
- As evidenced by its 12.29% default rate within the Atlanta HOC, and the fact that 76% percent of such defaults were attributable to one branch office in Florida and another in North Carolina, Prospect failed to adhere to HUD quality control guidelines.
The investigation of this case was a coordinated effort between the USAO for the Northern District of California, the USAO for the Northern District of Georgia, and HUD, including HUD’s Office of Inspector General.
This resolution with Prospect is the latest in a string of civil fraud cases pursued by the United States in recent years alleging fraudulent lending practices by residential mortgage lenders.
Assistant U.S. Attorney Douglas K. Chang handled this matter for the U.S. Attorney’s Office for the Northern District of California, with the assistance of Tina Louie.
Former Packaged Seafood Executive Pleads Guilty to Price FixingRead the Press Release
A former senior vice president of sales for a packaged seafood company pleaded guilty for his role in a conspiracy to fix the price of packaged seafood, such as canned tuna, sold in the United States, the Department of Justice announced today.
According to documents filed in this case, Stephen Hodge and his co-conspirators agreed to fix the prices of packaged seafood from as early as 2011 through 2013. He pleaded guilty to a one-count criminal information filed on May 30, 2017, in U.S. District Court for the Northern District of California in San Francisco. Hodge has agreed to pay a criminal fine and cooperate with the Antitrust Division’s ongoing investigation. He will be sentenced by the court at a later date.
“With today’s plea, the Antitrust Division continues to send a strong signal that senior executives will be held accountable for their actions,” said Acting Assistant Attorney General Andrew Finch of the Justice Department’s Antitrust Division. “The division, along with our law enforcement colleagues, will continue to investigate price fixing among packaged seafood companies and the executives who worked at those companies.”
“The FBI will not tolerate the reprehensible behavior of company executives who abuse the trust of the American public for personal gain,” said FBI San Francisco Division Special Agent in Charge John F. Bennett. “We, along with our Justice Department partners, are dedicated to our ongoing investigations into price fixing and will bring these companies to justice.”
According to court documents, Hodge and his co-conspirators discussed the prices of packaged seafood sold in the United States and agreed to fix the prices of those products. Hodge and his co-conspirators negotiated prices and issued price announcements for packaged seafood in accordance with the agreements they reached. Including Hodge, three executives have pleaded guilty for their participation in this conspiracy. Bumble Bee Foods LLC has also been charged for its role in the price-fixing conspiracy. Bumble Bee Foods has a court appearance scheduled for August 2, 2017.
Today’s plea is the result of an ongoing federal antitrust investigation into the packaged seafood industry, which is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Field Office. Anyone with information on price fixing, bid rigging or other anticompetitive conduct related to the packaged seafood industry should contact the Antitrust Division’s Citizen Complaint Center at (888) 647-3258, visit https://www.justice.gov/atr/report-violations, or call the FBI tip line at (415) 553-7400.
San Jose Resident Pleads Guilty to Stealing Homeless Individuals’ IDs and Using Them to Seek Fraudulent Tax RefundsRead the Press Release
SAN JOSE – Diep Vo, aka Nancy Vo, pleaded guilty to conspiring to file false claims for tax refunds, submitting false claims for tax refunds, mail fraud, and aggravated identity theft, announced U.S. Attorney Brian J. Stretch and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. The plea was accepted late yesterday by the Honorable Beth Labson Freeman, U.S. District Judge.
According to documents and information provided to the court, Vo, 74, of San Jose, conspired with codefendant Trong Nguyen, aka John Nguyen, to use the personal information of people, including homeless people in the San Jose Vietnamese community, to file fraudulent claims for refunds with the Internal Revenue Service (IRS). Vo went to homeless shelters and halfway houses and falsely represented to individuals that she could get them money from a government program designed to assist people who had not worked in previous years. Vo convinced people to write down their names and social security numbers and to sign blank income tax returns. Vo and Nguyen then falsified the signed returns by including bogus income and income tax withheld amounts and sought fraudulent refunds from the IRS. Vo and Nguyen directed the IRS to send the refund checks to private mailboxes they controlled. On May 18, 2017, a federal grand jury indicted Vo charging her with one count of conspiracy to file false claims, in violation of 18 U.S. C. § 286; three counts of aiding and abetting in filing false claims, in violation of 18 U.S.C. §§ 287 & 2; two counts of mail fraud, in violation of 18 U.S.C. § 1341; and two counts of aggravated identity theft, in violation of 18 U.C.S. §§ 1028A & 2. Pursuant to her plea, Vo pleaded guilty to all counts.
Nguyen previously pleaded guilty to submitting and conspiring to submit false claims for refund.
Vo’s sentencing is scheduled for Nov. 14, 2017. Vo faces a statutory maximum sentence of five years in prison on each count of conspiring to file false claims and submitting false claims for refund, 20 years in prison for each count of mail fraud, and a mandatory minimum sentence of two years in prison for aggravated identity theft. Vo also faces a period of supervised release, restitution and monetary penalties. Nguyen is scheduled to be sentenced on July 25, 2017.
U.S. Attorney Stretch and Acting Deputy Assistant Attorney General Goldberg thanked Assistant U.S. Attorney Thomas Newman and Trial Attorney Gregory Bernstein of the Tax Division, who are prosecuting the case as well as the special agents of IRS Criminal Investigation who conducted the investigation.
California Resident Pleads Guilty to Stealing Homeless Individuals’ IDs and Using Them to Seek Fraudulent Tax RefundsRead the Press Release
A California resident pleaded guilty yesterday to conspiring to file false claims for tax refunds, submitting false claims for tax refunds, mail fraud and aggravated identity theft, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Brian J. Stretch for the Northern District of California.
According to documents and information provided to the court, Diep Vo aka Nancy Vo, 74, conspired with codefendant Trong Nguyen aka John Nguyen, to use the IDs of homeless and unemployed individuals in the San Jose, California area to file fraudulent claims for refunds with the Internal Revenue Service (IRS). Vo went to homeless shelters and halfway houses and falsely represented to individuals that she could get them money from a government program designed to assist people who had not worked in previous years. Vo convinced people to write down their names and social security numbers and to sign blank income tax returns. Vo and Nguyen then falsified the signed returns including bogus income and income tax withheld amounts and sought fraudulent refunds from the IRS. Vo and Nguyen directed the refund checks to private mailboxes they controlled. Nguyen previously pleaded guilty to submitting and conspiring to submit false claims for refund.
Sentencing is scheduled for Nov. 14. Vo faces a statutory maximum sentence of five years in prison on each count of conspiring to file false claims and submitting false claims for refund, 20 years in prison for each count of mail fraud and a mandatory minimum sentence of two years in prison for aggravated identity theft. Vo also faces a period of supervised release, restitution and monetary penalties. Nguyen is scheduled to be sentenced on July 25.
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch thanked special agents of IRS Criminal Investigation and the U.S. Postal Inspection Service, who conducted the investigation, and Assistant U.S. Attorney Thomas Newman and Trial Attorney Gregory Bernstein of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Former Labor Organizer Pleads Guilty to Taking Money from Businesses He Was Attempting to OrganizeRead the Press Release
OAKLAND – Daniel J. Rush pleaded guilty in federal court today to three felony counts: receiving an illegal payment as a union employee; honest services fraud; and conspiracy to commit structuring and money laundering, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. The plea was accepted by the Honorable Haywood S. Gilliam Jr., U.S. District Judge.
In pleading guilty, Rush, 56, of Crescent City, Calif. (formerly of Oakland, Calif.), admitted that between 2011 and 2015 he was employed by the United Food and Commercial Workers International (UFCW International) as the Organizing Coordinator for the unofficial medical cannabis and hemp division. Rush had fiduciary duties to the UFCW International, and the UFCW International constitution prohibited him from accepting dual compensation or expenses related to the performance of his duties. Notwithstanding these fiduciary duties, in today’s plea agreement, Rush admitted he violated the Taft-Hartley Act when he accepted compensation from employees in, or potentially in, a labor organization. Rush also admitted he committed honest services wire fraud with the intent to deprive the UFCW of its right to his honest services and he conspired with attorney Marc TerBeek, 50, of Berkeley, Calif., to launder money and to evade reporting requirements in an effort to conceal the source of the money. TerBeek pleaded guilty in February 2017 to making illegal payments to Rush in violation of the Taft-Hartley Act and to violating anti-structuring regulations.
According to Rush’s plea agreement, in January 2010, a marijuana entrepreneur loaned Rush $500,000 in cash, ostensibly to be used to develop pieces of real property under Rush’s control. Rush promised to pay the entrepreneur $3,000 in interest per month for 5 years and then pay the balance in a lump sum in January 2015. Rush knew that the money he borrowed had been earned in connection with illegal marijuana cultivation activities and that therefore the money was the proceeds of unlawful activity. Rush acknowledged that he and TerBeek conspired to structure the loan proceeds into the banking system and they further agreed to falsely characterize the $3,000 per month payments as consulting fees.
In January and February 2010, TerBeek made a series of deposits of less than $10,000 at Wells Fargo and Bank of America branches. Once TerBeek had deposited sufficient funds, he paid off a $420,000 note on a property owned by Rush.
TerBeek also began making the $3,000 monthly payments to the marijuana entrepreneur on Rush’s behalf. In exchange for these payments and other compensation from TerBeek, Rush referred medical marijuana employers to TerBeek. Terbeek provided assist to the employers regarding compliance and licensing. The clients included owners of businesses in the marijuana industry that Rush was purporting to attempt to organize for the UFCW. Rush did not disclose to the clients or the UFCW that he was receiving significant sums of money from TerBeek. This kickback scheme violated Rush’s duty to provide his honest services to the UFCW.
By 2014, the individual who loaned money to Rush in 2010 was an employer in the medical marijuana industry that Rush was trying to unionize. Rush used his position in the UFCW to make official recommendations to government entities for the individual’s marijuana business and accepted at least $250,000 of debt forgiveness from the individual.
The FBI’s investigation began with a tip from a medical marijuana dispensary owner regarding Rush’s activities.
A federal grand jury indicted Rush on September 17, 2015. He was charged with 15 felony counts, including one Taft-Hartley violation under 29 U.S.C. § 186(b)(1); ten counts of honest services fraud, in violation of 18 U.S.C. §§ 1341, 1343, and 1346; attempted extortion under color of law, in violation of 18 U.S.C. § 1951; conspiracy, in violation of 18 U.S.C. § 371; and money laundering by concealment, in violation of 18 U.S.C. § 1956(a)(1)(B)(ii). Under the plea agreement, Rush pleaded guilty to the Taft-Hartley violation, one count of honest services fraud, and one count of conspiracy to commit structuring and money laundering.
For his part in the scheme, on February 15, 2017, TerBeek was charged by information with one count of making a payment to a union employee, in violation of 29 U.S.C. § 186(a), and one count of willful violation of anti-structuring regulations, in violation of 12 U.S.C. § 1956. He pleaded guilty to both counts on February 16, 2017. TerBeek is scheduled to be sentenced by Judge Gilliam on August 21, 2017.
Rush is currently on release on a $100,000 bond. Judge Gilliam scheduled his sentencing hearing for October 2, 2017. The maximum statutory penalty for the Taft-Hartley violation is 5 years’ imprisonment and a $15,000 fine; the maximum statutory penalty for the honest services fraud count is 20 years’ imprisonment and a $250,000 fine; and the maximum statutory penalty for the conspiracy is 5 years’ imprisonment and a $250,000 fine. 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 prosecution is the result of an investigation by the FBI and the Internal Revenue Service-Criminal Investigation Division.
Texas Resident Sentenced to Four Years in Prison for Bribing Public Official at San Francisco International AirportRead the Press Release
SAN FRANCISCO – Bobby Napier was sentenced to 48 months’ imprisonment for bribing a public official, announced Acting United States Attorney Brian J. Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin. The sentence was handed down yesterday by the Honorable Charles R. Breyer, United States District Judge, following a guilty plea in which Napier admitted to committing the crime.
Napier, 47, of Stafford, Tex., pleaded guilty on January 11, 2017, to bribing a public official in order to smuggle drugs through passenger security screening at San Francisco International Airport (SFO). The public official was an employee of a private company under contract to provide baggage and passenger screening services to the Transportation Security Administration (TSA).
The plea agreement describes five separate occasions between May 16, 2013, and April 17, 2014, in which Napier paid the public official for the purpose of smuggling cocaine through the security screening checkpoint at SFO. According to the guilty plea, Napier also admitted that even before the instances described in his plea agreement, he had smuggled marijuana through SFO. Napier acknowledged making payments in the form of cash deposits to the public official’s bank account, money orders or cash mailed to the official, and cash payments in face-to-face meetings. Napier admitted the payments were intended to allow persons carrying drugs in carry-on luggage to pass through the security checkpoint undetected. Napier facilitated the smuggling of a total of 23 kilograms of cocaine through the checkpoint and paid bribes totaling $13,500 to the TSA official.
On January 10, 2017, Napier was charged by superseding information with one count of bribing a public official, in violation of 18 U.S.C. § 201(b)(1). Pursuant to his plea agreement, Napier pleaded guilty to the charge.
In addition to the prison term, Judge Breyer sentenced Napier to three years of supervised release. Judge Breyer ordered Napier to surrender on or before September 8, 2017, to begin serving his sentence.
Assistant United States Attorney Laura Vartain Horn is prosecuting the case with the assistance of Rawaty Yim. This case is the product of an investigation by the Drug Enforcement Administration and the Federal Bureau of Investigation.
Counterfeiters Sentenced for Convictions in Nationwide Conspiracy to Distribute Fake 5-Hour Energy DrinkRead the Press Release
SAN JOSE – Joseph Shayota and Adriana Shayota were sentenced to 86 months and 26 months in prison, respectively, for their roles in a conspiracy to traffic in counterfeit goods and conspiracy to commit criminal copyright infringement and to introduce misbranded food into interstate commerce.
The announcement was made by United States Attorney Brian J. Stretch, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and Food and Drug Administration (FDA) Office of Criminal Investigations’ Los Angeles Field Office Special Agent in Charge Lisa L. Malinowski. The sentences were handed down yesterday by the Honorable Lucy H. Koh, U.S. District Court Judge, bringing an end to all but one of the cases brought against 11 defendants charged in a scheme involving the manufacture and sale of millions of bottles of the liquid dietary supplement 5-Hour ENERGY.
On November 28, 2016, a jury in San Jose found Joseph Shayota, 64, and his wife, Adriana Shayota, 45, (the Shayotas) guilty of conspiracy to traffic in counterfeit goods, as well as conspiracy to commit criminal copyright infringement and to introduce misbranded food into interstate commerce. The criminal conduct began in late 2009 and ran through October 2012. Over 3,700,000 bottles of counterfeit 5-Hour ENERGY were placed in the stream of interstate commerce.
Besides the Shayotas, other defendants charged with various roles in the scheme include: Justin Shayota, 33, of Spring Valley, Calif.; Walid Jamil, 57, of Troy, Mich.; Raid Jamil, 48, of West Bloomfield, Mich.; Kevin Attiq, 52, of El Cajon, Calif.; Fadi Attiq, 59, of El Cajon, Calif.; Leslie Roman, 63, Rancho Cucamonga, Calif.; Mario Ramirez, 56, of San Diego; Camilo Ramirez, 32, of San Diego; and Juan Romero, 70, of Mexico City, Mexico.
“Acting out of pure greed, these defendants gambled with the health and safety of millions of users of this well-known consumer product," said U.S Attorney Brian Stretch. "Consumers can rightly expect that the commercial products they buy are safe to ingest. Those individuals who manufacture and distribute unsafe counterfeit food products will be prosecuted and sent to jail.”
“By trafficking in counterfeit dietary supplements, Joseph Shayota and Walid Jamil led an organized criminal conspiracy that violated intellectual property rights and endangered the health and safety of the public for their own financial gain,” said Special Agent in Charge Bennett. “The FBI is committed to identifying, arresting, and prosecuting those who defraud US businesses and put consumers at risk in an attempt to line their own pockets. I want to thank the FBI special agents and analysts, as well as our partners at the FDA and U.S. Attorney’s Office, for their tireless work on this investigation.”
“Criminals who mislead unsuspecting U.S. consumers by selling them counterfeit and false-labeled products cheat the American consumer and endanger the public’s health,” said Special Agent in Charge Malinowski. “We will continue to protect the U.S. consumer by working to bring to justice those who place profits above public health.”
At trial, the evidence demonstrated that the Shayotas, through their company Tradeway International Inc., (doing business as Baja Exporting, LLC), entered into an agreement with Living Essentials, LLC, to distribute 5-Hour ENERGY in Mexico. Living Essentials owns 5-Hour ENERGY and registered and owns all 5-Hour ENERGY trademarks and related copyrights. The company does not grant licenses to any individual or entity to manufacture 5-Hour ENERGY. As part of the distribution agreement, Living Essentials manufactured and provided the Spanish-labeled 5-Hour ENERGY bottles to the Shayotas, who were unable to sell it in Mexico. The Shayotas and their co-conspirators then removed the Spanish-language labels and replaced them with counterfeit English-language labels. They also removed the true lot numbers and expiration dates placed on the bottles by Living Essentials and replaced them with false lot numbers and expiration dates. The Shayotas and their co-conspirators sold this counterfeit-labelled product throughout the U.S.
The evidence at trial demonstrated that by early 2012, the Shayotas and their co-conspirators began to manufacture and sell an entirely counterfeit 5-Hour ENERGY product. They manufactured the counterfeit 5-Hour ENERGY liquid at an unsanitary facility using untrained day workers, and mixed unregulated ingredients in vats in an attempt to mimic the real 5-Hour ENERGY products. The Shayotas and their co-conspirators engaged a plastics manufacturer in Mexico to copy the 5-Hour ENERGY bottles and caps, and recruited co-conspirators in the San Diego area to create counterfeit display boxes and plastic sleeves (bottle labels), which appeared identical to the true boxes and labels. The Shayotas and their co-conspirators also copied true lot numbers and expiration dates from genuine 5-Hour ENERGY and placed those numbers and dates on the counterfeit bottles that they had manufactured.
From approximately December 2011 through October 2012, the Shayotas and their co-conspirators ordered more than seven million counterfeit label sleeves and hundreds of thousands of counterfeit display boxes, and placed false lot and expiration codes on the bottles and boxes. They often changed the lot and expiration codes on the counterfeit bottles and boxes to parallel the valid codes being used on the authentic product.
The government filed a Superseding Information on June 29, 2016, charging each of the defendants with one count of conspiracy to traffic in counterfeit goods, in violation of 18 U.S.C. §2320(a), and one count of conspiracy to commit criminal copyright infringement and to introduce misbranded food into interstate commerce, in violation of 18 U.S.C. § 371. Following this afternoon’s sentencing, the disposition as against eight of the defendants is as follows:
Defendant
Charges and Disposition
Sentence
Joseph Shayota
Found guilty by a jury on November 28, 2016, of
Conspiracy to Traffic in Counterfeit Goods, in violation of 18 U.S.C. § 2320(a), and Conspiracy to Commit Criminal Copyright Infringement and to Introduce
Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371.
Sentenced June 20, 2017, to 86 months in prison, 3 years of supervised release, a $144,868 fine, and forfeiture of $750,000.
Adriana Shayota
Found guilty by a jury on November 28, 2016, of
Conspiracy to Traffic in Counterfeit Goods, in violation of 18 U.S.C. § 2320(a) (Count One), and Conspiracy to Commit Criminal Copyright Infringement and to Introduce
Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371 (Count Two).
Sentenced June 20, 2017, to 26 months in prison, 3 years of supervised release, and a fine of $144,868.
Walid Jamil
Pleaded guilty on
October 7, 2016, to Conspiracy to Traffic in Counterfeit Goods, in violation of 18 U.S.C. § 2320(a) (Count One), and Conspiracy to Commit Criminal Copyright Infringement and to Introduce
Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371 (Count Two).
Sentenced on April 26, 2017, to 84 months on Count One and 60 months on Count Two, to be served concurrently; three years of supervised release; and $555,801.32 in restitution to Living Essentials.
Leslie Roman
Pleaded guilty on September 23, 2016, to Conspiracy to Commit Criminal Copyright Infringement and to Introduce
Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371.
Sentenced on May 24, 2017, to 32 months’ imprisonment, 3 years supervised release, and restitution of $91,065.91 to Living Essentials.
Raid Jamil
Pleaded guilty on September 13, 2016, Conspiracy to Commit Criminal Copyright Infringement and to Introduce
Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371.
Sentenced on May 17, 2017, to 24 months’ imprisonment, and three years of supervised release, and $268,936 in restitution to Living Essentials. This sentence was ordered to run consecutive to a 6-month sentence imposed in a separate case in the Eastern District of Michigan under Docket No. 16-CR-20623-001-JCO.
Kevin Attiq
Pleaded guilty on November 4, 2016, to Conspiracy to Commit Criminal Copyright Infringement and to Introduce
Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371.
Sentenced on June 14, 2017, to three years of probation (to include eight months of home confinement) and a $20,000 fine.
Justin Shayota
Pleaded guilty on
March 2, 2016, to Conspiracy to Traffic in Counterfeit Good, in violation of 18 U.S.C. § 2320(a), and Conspiracy to Commit Criminal Copyright Infringement and to Introduce
Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371.
Sentenced on June 14, 2017, to six months’ imprisonment, six months’ home confinement, three years of supervised release, and $555,801.32 in restitution to Living Essentials.
Mario Ramirez
Pleaded guilty on November 9, 2016, to Conspiracy to Commit Criminal Copyright Infringement and to Introduce
Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371.
Sentenced on February 15, 2017, to five years of probation (to include six months home confinement) and a $30,000 fine. Agreed to pay restitution of $133,606.09 to Living Essentials.
The government referred defendants Camilo Ramirez and Fadi Attiq to pre-trial diversion and Juan Romero remains a fugitive. The charges against Romero are merely allegations that crimes have been committed. As with all defendants, he must be presumed innocent until proven guilty beyond a reasonable doubt.
Joseph and Adriana Shayota both were ordered to surrender on September 6, 2017, to begin serving their respective sentences.
Assistant United States Attorneys Matt Parrella, Susan Knight, and Joseph Springsteen are prosecuting the case with the assistance of Lakisha Holliman and Elise Etter. Assistant United States Attorney David Countryman assisted with forfeiture matters. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Food and Drug Administration Office of Criminal Investigations.
Daly City Resident Pleads Guilty in Tax Fraud SchemeRead the Press Release
OAKLAND – Everardo Laurian pleaded guilty to theft of government money announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
Laurian, 26, of Daly City, pleaded guilty to theft of government money. The Honorable Jeffery S. White, United States District Judge, accepted the plea today.
According to his plea agreement, between March and April 2015, Laurian participated in a conspiracy to illegally obtain money from the United States. The conspiracy involved filing false federal income tax returns in order to obtain fraudulent federal income tax refunds and cashing stolen U.S. Treasury checks at Walmart stores throughout the United States. Laurian became a member of the conspiracy knowing that the objective was to steal money from the federal government.
In 2015, codefendants Gary Bostick, 39, and Ana Bostick, 37, both of Pittsburg, Calif., asked Laurian to participate in a scheme to cash stolen or fraudulently obtained U.S. Treasury Checks. In March and April 2015, Laurian aided the Bosticks, co-conspirator Hugh Robinson, 46, of San Pablo, Calif., and others to cash fraudulently obtained or stolen U.S. Treasury checks. Laurian’s role was to drive individuals to Walmart stores and cashed the stolen or fraudulently obtained U.S. Treasury checks. In addition, after the checks were cashed, Laurian delivered the proceeds to Gary Bostick and Ana Bostick. In sum, Laurian conspired with others to cash a total of $88,826.41 in stolen U.S. Treasury checks as part of this joint undertaking.
On November 5, 2015, a federal grand jury indicted Laurian and ten co-conspirators for various crimes in connection with the scheme. For his part in the scheme, Laurian was charged with conspiracy to defraud the United States, in violation of 18 U.S.C. § 371; two counts of theft of public money, in violation of 18 U.S.C. § 641; and two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A. He pleaded guilty to two counts of theft of public money.
On October 31, 2017, a jury found Hugh Robinson guilty of conspiracy to commit theft of public money, in violation of 18 U.S.C. § 371; seven counts of theft of public money, in violation of 18 U.S.C. § 641; and seven counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A, in connection with the scheme. Judge White sentenced Robinson to 144 months in prison for his role in a conspiracy. Ana Bostick was charged with conspiracy to commit theft of public money, in violation of 18 U.S.C. § 371; two counts of theft of public money, in violation of 18 U.S.C. § 641; and two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A. On June 15, 2017, she pleaded guilty to all charges. For his part in the scheme, Gary Bostick was charged with conspiracy to commit theft of public money, in violation of 18 U.S.C. § 371; four counts of wire fraud, in violation of 18 U.S.C. § 1343; and four counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A. On June 15, 2017, he pleaded guilty to the conspiracy charge and to the wire fraud charges.
Judge White scheduled Laurian’s sentencing for September 26, 2017. The maximum sentence for theft of public money is ten years in prison and a fine of $250,000. However, any sentence following conviction will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Gary Bostick’s sentencing is scheduled for September 19, 2017, and Ana Bostick’s sentencing is scheduled for November 14, 2017.
Assistant U.S. Attorneys Thomas Newman and Jose A. Olivera and Trial Attorney Gregory Bernstein and Paralegal Jonathan Deville of the Tax Division are prosecuting this case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Cocaine Trafficker Sentenced to More Than 14 Years in PrisonRead the Press Release
SAN JOSE – Raul Guadalupe Monjardin-Iribe was sentenced today to 175 months (14 years, 7 months) in prison for his part in a conspiracy to possess and distribute cocaine, announced United States Attorney Brian J. Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin. The sentence was handed down by the Honorable Edward J. Davila, U.S. District Court Judge, following a guilty plea entered in December of last year.
Raul Monjardin-Iribe, 36, a citizen of Mexico, pleaded guilty on December 20, 2016, to one count of conspiracy to possess with intent to distribute and to distribute cocaine, and one count of distribution and possession with intent to distribute cocaine. The defendant entered a guilty plea without a written agreement. In pleading guilty, he admitted to conspiring with other individuals to distribute 5 kilograms or more of cocaine in the Northern District of California between January 2015 and September 2015. He further admitted that, on or about May 23, 2015, he distributed one kilogram of cocaine to a co-conspirator. Monjardin-Iribe, who was living in the San Jose area at the time of the offense, was indicted by a federal grand jury on October 8, 2015. He was charged with one count of conspiracy to possess with intent to distribute and to distribute cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1), and 841(b)(1)(A)(viii); and one count of distribution and possession with intent to distribute cocaine, in violation of 21 U.S.C §§ 841(a)(1) and 841(b)(1)(B). Monjardin-Iribe pleaded guilty to both counts in the indictment.
In addition to the prison term, Judge Davila sentenced Monjardin-Iribe to a 5-year period of supervised release. The defendant has been in custody since his arrest on September 19, 2015, and will begin serving his sentence immediately.
Assistant U.S. Attorney Chinhayi Cadet is prosecuting the case with the assistance of Patricia Mahoney. This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state, and local law enforcement agencies.
Genesis Healthcare, Inc. Agrees to Pay Federal Government $53.6 Million to Resolve Allegations of Medically Unnecessary Rehabilitation Therapy and Hospice ServicesRead the Press Release
SAN FRANCISCO- The Justice Department announced today that Genesis Healthcare, Inc. (Genesis) will pay the federal government $53,639,288.04, including interest, to settle six federal lawsuits and investigations regarding the submission of false claims for medically unnecessary therapy and hospice services, and grossly substandard nursing home care. Genesis, headquartered in Kennett Square, Pennsylvania, owns and operates through its subsidiaries skilled nursing facilities, assisted/senior living facilities, and a rehabilitation therapy business. According to the allegations in the lawsuits, companies and facilities acquired by Genesis violated the False Claims Act. The settlement announced today resolves the claims and investigations into the allegations.
“We are committed to protecting the federal health care programs and the patients who are enrolled in them,” said U.S. Attorney Brian J. Stretch. “We will continue to vigorously pursue companies and individuals who provide care that is grossly deficient or unnecessary.”
“We will continue to hold health care providers accountable if they bill for unnecessary or substandard services or treatment,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s settlement demonstrates our unwavering commitment to protect federal health care programs against unscrupulous providers.”
This settlement resolves four sets of allegations. First, the settlement resolves allegations involving Skilled Healthcare Group, Inc. (SKG) and its subsidiaries (collectively, the Skilled Companies). Specifically, the settlement resolves allegations that from April 1, 2010 through March 31, 2013, SKG and its subsidiaries Skilled Healthcare, LLC (Skilled LLC) and Creekside Hospice II, LLC knowingly submitted or caused to be submitted false claims to Medicare for services performed at the Creekside Hospice facility in Las Vegas, Nevada by: (1) billing for hospice services for patients who were not terminally ill and so were not eligible for the Medicare hospice benefit and (2) billing inappropriately for certain physician evaluation management services.
Second, this settlement resolves allegations that from January 1, 2005 through December 31, 2013, SKG and its subsidiaries Skilled LLC and/or Hallmark Rehabilitation GP, LLC knowingly submitted or caused to be submitted false claims to Medicare, TRICARE, and Medicaid at certain facilities by providing therapy to certain patients longer than medically necessary, and/or billing for more therapy minutes than the patients actually received. The settlement also resolves allegations that those companies fraudulently assigned patients a higher Resource Utilization Group (RUG) level than necessary. Medicare reimburses skilled nursing facilities based on a patient’s RUG level, which is supposed to be determined by the amount of skilled therapy required by the patient.
Third, this settlement resolves allegations that from January 1, 2008, through September 27, 2013, Sun Healthcare Group, Inc., SunDance Rehabilitation Agency, Inc., and SunDance Rehabilitation Corp. (collectively, the Sun Companies) knowingly submitted or caused the submission of false claims to Medicare Part B by billing for outpatient therapy services provided in the State of Georgia that were (1) not medically necessary or (2) unskilled in nature.
Finally, this settlement resolves allegations that between September 1, 2003, and January 3, 2010, Skilled LLC submitted false claims to the Medicare and Medi-Cal programs at certain of its nursing homes for services that were grossly substandard and/or worthless and therefore ineligible for payment. More specifically, the settlement resolves allegations that Skilled LLC violated certain essential requirements that nursing homes are required to meet to participate in and receive reimbursements from government healthcare programs and failed to provide sufficient nurse staffing to meet residents’ needs.
The Skilled Companies were acquired by Genesis after the conduct at issue in this settlement. The Sun Companies were acquired by Genesis in December 2012.
“Safeguarding federal health care programs and patients is a priority,” said Acting U.S. Attorney for the District of Nevada Steven W. Myhre. “Today’s settlement is an example of the U.S. Attorney’s Office’s commitment to holding medical providers accountable for fraudulent billing of medically unnecessary treatments and services. We are committed to protecting federal health care programs, including Medicare, TRICARE, and Medicaid, which are funded by taxpayer dollars.”
“Health care providers that falsify claims for unauthorized or unnecessary services steal precious taxpayer dollars, and we will aggressively seek to recover those funds for the program that needs them,” said U. S. Attorney for the Northern District of Georgia John Horn.
“It’s disturbing when health care companies bill Medicare and Medicaid to care for vulnerable patients, but provide grossly substandard care and medically unnecessary services just to boost company profits,” said Special Agent in Charge Steven J. Ryan of the Department of Health and Human Services, Office of Inspector General. “We will continue to crack down on medical providers who betray the public’s trust and the needs of vulnerable patients through fraudulent billing and irresponsible practices.”
“At a time when the cost of healthcare weighs heavy on many taxpayers, it is imperative that people who illegally bill our healthcare system are held accountable and forced to pay restitution,” said FBI Atlanta Special Agent in Charge David J. LeValley. “This case is an example of how committed the FBI and its partners are to keeping healthcare providers from abusing the system.”
The settlement, which was based on the company’s ability to pay, resolves allegations originally brought in lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act by Joanne Cretney-Tsosie, Jennifer Deaton, Kimberley Green, Camaren Hampton, Teresa McAree, Terri West, and Brian Wilson, former employees of companies acquired by Genesis. The act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The government may intervene and file its own complaint in such a lawsuit. In this case, the whistleblowers will receive a combined $9.67 million as their share of the recovery.
The claims resolved by the settlement are allegations only; there has been no determination of liability.
The Northern District of California case is docketed as United States, ex rel. West v. Skilled Healthcare Group Inc., et. al., 11-02658-ED (N.D. Cal.). Assistant United States Attorneys Kimberly Friday, Erica Blachman Hitchings, and Gioconda Molinari, with the assistance of Tina Louie, handled the West case and a related investigation. Additional docketed matters include United States, ex rel. Cretney-Tsosie v. Creekside Hospice II, LLC, 2:13-cv-167-HDM (D. Nev.); United States ex rel. McAree v. SunDance Rehabilitation Corp., 1:12-CV-4244 (N.D. Ga.); United States ex rel. Deaton v. Skilled Healthcare Group, Inc. et al., Civ. 4:14-cv-00219 (W.D. Mo.); and United States ex rel. Wilson v. Skilled Healthcare Group, Inc. et al., Civ. 14-cv-860 (W.D. Mo.). This case is the result of an investigation by the U.S. Attorneys’ Offices for the Northern District of California, the Northern District of Georgia, the Western District of Missouri, and the District of Nevada; the Department of Health and Human Services, Office of Inspector General; the U.S. Department of Justice Civil Division’s Commercial Litigation Branch; and the Department of Defense’s Defense Criminal Investigative Service.
If you have concerns about care being provided at a nursing home in California, you can contact the California Long Term Care Ombudsman at 1-800-231-4024, or your Local Long Term Ombudsman. A directory of local services can be found at https://www.aging.ca.gov/programs/ltcop/. You can also contact the United States Attorney’s Office for the Northern District of California at https://www.justice.gov/usao-ndca/elder-justice-task-force or 1-415-436-7102.
Genesis Healthcare Inc. Agrees to Pay Federal Government $53.6 Million to Resolve False Claims Act Allegations Relating to the Provision of Medically Unnecessary Rehabilitation Therapy and Hospice ServicesRead the Press Release
The Justice Department announced today that Genesis Healthcare Inc. (Genesis) will pay the federal government $53,639,288.04, including interest, to settle six federal lawsuits and investigations alleging that companies and facilities acquired by Genesis violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary therapy and hospice services, and grossly substandard nursing care. Genesis, headquartered in Kennett Square, Pennsylvania, owns and operates through its subsidiaries skilled nursing facilities, assisted/senior living facilities, and a rehabilitation therapy business.
“We will continue to hold health care providers accountable if they bill for unnecessary or substandard services or treatment,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Today’s settlement demonstrates our unwavering commitment to protect federal health care programs against unscrupulous providers.”
This settlement resolves four sets of allegations. First, the settlement resolves allegations that from April 1, 2010 through March 31, 2013, Skilled Healthcare Group Inc. (SKG) and its subsidiaries, Skilled Healthcare LLC (Skilled LLC) and Creekside Hospice II LLC, knowingly submitted or caused to be submitted false claims to Medicare for services performed at the Creekside Hospice facility in Las Vegas, Nevada by: (1) billing for hospice services for patients who were not terminally ill and so were not eligible for the Medicare hospice benefit and (2) billing inappropriately for certain physician evaluation management services.
Second, this settlement resolves allegations that from Jan. 1, 2005 through Dec. 31, 2013, SKG and its subsidiaries, Skilled LLC and Hallmark Rehabilitation GP LLC, knowingly submitted or caused to be submitted false claims to Medicare, TRICARE, and Medicaid at certain facilities by providing therapy to certain patients longer than medically necessary, and/or billing for more therapy minutes than the patients actually received. The settlement also resolves allegations that those companies fraudulently assigned patients a higher Resource Utilization Group (RUG) level than necessary. Medicare reimburses skilled nursing facilities based on a patient’s RUG level, which is supposed to be determined by the amount of skilled therapy required by the patient.
Third, this settlement resolves allegations that from Jan. 1, 2008, through Sept. 27, 2013, Sun Healthcare Group Inc., SunDance Rehabilitation Agency Inc., and SunDance Rehabilitation Corp. knowingly submitted or caused the submission of false claims to Medicare Part B by billing for outpatient therapy services provided in the State of Georgia that were (1) not medically necessary or (2) unskilled in nature.
Finally, this settlement resolves allegations that between Sept. 1, 2003 and Jan. 3, 2010, Skilled LLC submitted false claims to the Medicare and Medi-Cal programs at certain of its nursing homes for services that were grossly substandard and/or worthless and therefore ineligible for payment. More specifically, the settlement resolves allegations that Skilled LLC violated certain essential requirements that nursing homes are required to meet to participate in and receive reimbursements from government healthcare programs and failed to provide sufficient nurse staffing to meet residents’ needs.
SKG and its subsidiaries were acquired by Genesis after the conduct at issue in this settlement. Sun Healthcare Group Inc., SunDance Rehabilitation Agency Inc. and SunDance Rehabilitation Corp. were acquired by Genesis in December 2012.
“Safeguarding federal health care programs and patients is a priority,” said Acting U.S. Attorney Steven W. Myhre for the District of Nevada. “Today’s settlement is an example of the U.S. Attorney’s Office’s commitment to holding medical providers accountable for fraudulent billing of medically unnecessary treatments and services. We are committed to protecting federal health care programs, including Medicare, TRICARE, and Medicaid, which are funded by taxpayer dollars.”
“We are committed to protecting the federal health care programs and the patients who are enrolled in them,” said U.S. Attorney Brian J. Stretch for the Northern District of California. “We will continue to vigorously pursue companies and individuals who provide care that is grossly deficient or unnecessary.”
“Health care providers that falsify claims for unauthorized or unnecessary services steal precious taxpayer dollars, and we will aggressively seek to recover those funds for the program that needs them,” said U. S. Attorney John Horn for the Northern District of Georgia.
“It’s disturbing when health care companies bill Medicare and Medicaid to care for vulnerable patients, but provide grossly substandard care and medically unnecessary services just to boost company profits,” said Special Agent in Charge Steven J. Ryan of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “We will continue to crack down on medical providers who betray the public’s trust and the needs of vulnerable patients through fraudulent billing and irresponsible practices.”
“At a time when the cost of healthcare weighs heavy on many taxpayers, it is imperative that people who illegally bill our healthcare system are held accountable and forced to pay restitution,” said FBI Atlanta Special Agent in Charge David J. LeValley. “This case is an example of how committed the FBI and its partners are to keeping healthcare providers from abusing the system.”
The settlement, which was based on the company’s ability to pay, resolves allegations originally brought in lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act by Joanne Cretney-Tsosie, Jennifer Deaton, Kimberley Green, Camaren Hampton, Teresa McAree, Terri West, and Brian Wilson, former employees of companies acquired by Genesis. The act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The government may intervene and file its own complaint in such a lawsuit. The whistleblowers will receive a combined $9.67 million as their share of the recovery in this case.
This matter was handled by the Civil Division’s Commercial Litigation Branch; the U.S. Attorneys’ Offices for the Northern District of California, the Northern District of Georgia, the Western District of Missouri, and the District of Nevada and HHS-OIG.
The claims resolved by the settlement are allegations only; there has been no determination of liability.
The cases are docketed as United States, ex rel. Cretney-Tsosie v. Creekside Hospice II, LLC, Case No. 2:13-cv-167-HDM (D. Nev.); United States ex rel. McAree v. SunDance Rehabilitation Corp., Case No. 1:12-CV-4244 (N.D. Ga.); United States, ex rel. West v. Skilled Healthcare Group Inc., et. al., Case No. 11-02658-ED (N.D. Cal.); United States ex rel. Deaton v. Skilled Healthcare Group, Inc. et al., Case No. 4:14-cv-00219 (W.D. Mo.); and United States ex rel. Wilson v. Skilled Healthcare Group, Inc. et al., Case No. 14-cv-860 (W.D. Mo.).