Northern District of California
Press releases recorded for this federal judicial district.
California Resident Convicted of Supplying Fake IDs to Cash Stolen and Fraudulently Obtained U.S. Treasury ChecksRead the Press Release
A federal jury sitting in Oakland, California convicted Janel McDonald today 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.
McDonald was charged, along with 10 codefendants in November 2015, with conspiracy to commit theft of public money, theft of public money and aggravated identity theft. 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.
Sentencing is scheduled for Aug. 1. McDonald faces a statutory maximum sentence of five years in prison for conspiracy to commit theft of public money, 10 years in prison for theft of public money and a mandatory minimum sentence of two years in prison for aggravated identity theft. She also faces a period of supervised release, restitution and monetary penalties.
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch thanked special agents of the Internal Revenue Service–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 and its enforcement efforts may be found on the division’s website.
California Resident Convicted of Supplying Fake IDs to Cash Stolen and Fraudulently Obtained U.S. Treasury ChecksRead the Press Release
OAKLAND– A federal jury convicted Janel McDonald today 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.
McDonald, 38, of Los Angeles, was charged, along with 10 codefendants in November 2015, with conspiracy to commit theft of public money, theft of public money, and aggravated identity theft. 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. On November 5, 2015, McDonald was charged in a superseding indictment 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 & 2; and two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A. Pursuant to today’s verdict, McDonald was found guilty of all the charges.
Sentencing is scheduled for Aug. 1. McDonald faces a statutory maximum sentence of five years in prison for conspiracy to commit theft of public money, 10 years in prison for theft of public money and a mandatory minimum sentence of two years in prison for aggravated identity theft. She also faces a period of supervised release, restitution and monetary penalties. 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.
U.S. Attorney Stretch and Acting Deputy Assistant Attorney General Goldberg thanked special agents of the Internal Revenue Service–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.
San Francisco Resident Sentenced to over Three Years in Prison for Aggravated Identity TheftRead the Press Release
SAN FRANCISCO – Yee Man Lui was sentenced to serve 40 months in prison for aggravated identity theft and access device fraud announced U.S. Attorney Brian J. Stretch and United States Postal Inspection Service Inspector in Charge Rafael Nuñez. The sentence was handed down by the Honorable Maxine M. Chesney, U.S. District Judge, following Lui’s September 14, 2016, guilty plea.
According to the guilty plea, from February through July of 2014, Lui, 36, of San Francisco, engaged in a scheme to defraud several financial institutions by opening new credit accounts in the names of unsuspecting individuals. Lui admitted that as part of the scheme, she took over existing credit card and debit card accounts and then, using the personal identifying information of the account holders without their knowledge or consent, created and used new credit accounts. She acknowledged applying for 42 credit cards via the Internet using the personal identifying information of her victims. In addition, Lui admitted she used credit and bank cards in the names of at least two individuals to make purchases. In sum, Lui admitted causing over $30,000 in actual and over $120,000 in intended losses to her victims.
On August 6, 2015, Lui was charged in a five-count indictment with two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1), two counts of access device fraud, in violation 18 U.S.C. § 1029(a)(2) and (b)(1), and one count of conspiracy to commit access device fraud, in violation of 18 U.S.C. § 1029(b)(2). On September 14, 2016, Lui pleaded guilty to one count each of aggravated identity theft and access device fraud. The remaining charges were dismissed.
In addition to the prison term, Judge Chesney also ordered Lui to serve 36 months of supervised release and to pay restitution. Judge Chesney has not yet set a hearing date to determine the amount of restitution that Lui will be ordered to pay.
Assistant United States Attorney Sarah Hawkins is prosecuting the case with the assistance of Patricia Mahoney. This prosecution is the result of an investigation by the United States Postal Inspection Service.
North Bay Area Credit Union Employee Sentenced to 33 Months in Prison for Embezzlement SchemeRead the Press Release
SAN FRANCISCO- Allison Bushart was sentenced today to 33 months in prison for misapplication and embezzlement of credit union funds and making and subscribing a false tax return announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The sentence was handed down by the Honorable Richard Seeborg, U.S. District Judge, following Bushart’s December 20, 2016, guilty plea.
According to her plea agreement, Bushart, 54, of Rohnert Park, Calif., was employed at the Rohnert Park branch of Patelco Credit Union (Patelco) from approximately May 2003 to early 2015, where her duties included processing member transactions, including cash withdrawals. Bushart acknowledged that, beginning no later than 2010, she began taking cash withdrawals from numerous account holders’ accounts without their knowledge. Among the methods she used to complete the unauthorized withdrawals was to fill out withdrawal slips for specific amounts related to individuals’ accounts and then to forge the account holders’ signatures on the slips. She then took the corresponding amounts of cash home at the end of the day or deposited the cash into her own, or a relative’s, account. Bushart acknowledged that she made unauthorized withdrawals from the accounts of at least ten different individuals, some of whom were legally “vulnerable” because of their age and mental condition. Bushart also admitted that total amount of unauthorized withdrawals that she made pursuant to her embezzlement scheme exceeded $150,000. In imposing his sentence, Judge Seeborg concluded that the unauthorized withdrawals exceeded $250,000.
In addition, Bushart admitted as part of her plea agreement that she never declared as income any of the funds she obtained through the unauthorized withdrawals she made. As a result of failing to declare the income on her annual federal income tax returns, she failed to report $105,000 in income for tax year 2014, resulting in a tax loss suffered by the Internal Revenue Service that year in the amount of $24,469.
Bushart was charged by information on November 23, 2016, with one count of misapplication and embezzlement of credit union funds, in violation of 26 U.S.C. § 7206(l), and one count of making and subscribing a false tax return, in violation of 18 U.S.C. § 981(A)(1)(C). Pursuant her plea agreement she pleaded guilty to both counts in the information.
In addition to the prison sentence, Judge Seeborg sentenced Bushart to three years of supervised release. The court scheduled a hearing on May 2, 2017, at 10:00 a.m., to determine the amount of restitution that Bushart will be ordered to pay. Bushart was ordered to surrender no later than May 26, 2017, to begin serving her sentence.
Assistant U.S. Attorney Kyle Waldinger is prosecuting the case with the assistance of Patricia Mahoney. The prosecution is the result of an investigation by the FBI and IRS, Criminal Investigation.
Bay Area Fraudster Sentenced to 30 Months in Prison for Duping Investors Out of More Than $3 MillionRead the Press Release
SAN FRANCISCO- Marc Christopher Harmon was sentenced today to 30 months in prison for his role in a conspiracy to commit wire fraud and wire fraud, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The sentence was handed down by the Honorable Richard Seeborg, U.S. District Judge, after Harmon was tried and found guilty by a federal jury.
Harmon, 44, formerly of San Leandro, Calif., was charged in an indictment filed July 3, 2014, along with co-conspirator Jason George Rivera, Jr., 38, of Danville, Calif., in a scheme to defraud multiple investors of more than $3 million. The evidence at trial demonstrated that between October 2008 and January 2011, Harmon and Rivera used a Nevada corporation known as Executive Members Management Group, or EMMG, as a vehicle to defraud investors. The scheme involved promises that EMMG would purchase or trade collateralized mortgage obligations (CMOs) using funds provided by the investors, or would invest their funds in other lucrative transactions. Rivera and Harmon convinced victims to invest substantial sums of money, by promising, among other things, high rates of returns by participating in exclusive trading markets overseas and funding short-term loans for banks. The evidence at trial demonstrated Harmon’s role included recruiting investors to EMMG and making many false representations to induce the investors to contribute to non-existent investment programs.
On July 3, 2014, a grand jury returned an indictment charging defendants with eight counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349. Rivera also was charged with two counts of tax evasion, in violation of 26 U.S.C. § 7201. On July 29, 2015, Rivera pleaded guilty to the conspiracy to commit wire fraud charge and the two tax evasion counts. As against Harmon, the government dismissed two counts of fraud and the jury convicted him of all the remaining charges. Following trial, on October 11, 2016, Harmon entered into a post-trial plea agreement with the government in which he pleaded guilty to one count of fraud.
In addition to the prison sentence, Judge Seeborg sentenced Harmon to three years of supervised release and $1,837,500 in restitution. Harmon is in custody and will begin serving his sentence immediately.
Rivera was sentenced on February 8, 2017, to 33 months of imprisonment, three years of supervised release, and $2,045,207 in restitution.
Assistant U.S. Attorneys Benjamin Kingsley and Shailika Kotiya are prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the FBI and IRS, Criminal Investigation.
Oakland Man Pleads Guilty to Role in Conspiracy to Manufacture Counterfeit DrugsRead the Press Release
OAKLAND – Antoine King pleaded guilty today to his role in a conspiracy to manufacture counterfeit Xanax pills and to launder the proceeds gained by the illegal scheme, announced United States Attorney Brian J. Stretch; Drug Enforcement Administration Special Agent in Charge John J. Martin; Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf; and U.S. Food and Drug Administration Office of Criminal Investigations Special Agent in Charge Lisa L. Malinowski. The Honorable Jeffrey S. White, U.S. District Judge, accepted the plea.
According to the guilty plea, King, 27, of Oakland, Calif., admitted that from October 6, 2014 through December 12, 2015, he was involved in a conspiracy with his co-defendant David Beckford and others to manufacture and distribute pills that were designed to resemble Xanax® pills as nearly as possible. King admitted that he knew his co-defendants and others obtained the components and equipment to manufacture the counterfeit Xanax pills from foreign sources. King further admitted that from October 6, 2014, through December 12, 2015, he sold counterfeit Xanax pills that were created as part of the operation.
On May 12, 2016, a federal grand jury returned a 33-count indictment charging King and four co-defendants, David Beckford, Stephan Florida, Isaiah Clayton, and Beau Sankene, with numerous crimes related to the conspiracy. For his role, King was charged with one count of conspiracy to manufacture, distribute, and possess with intent to distribute a controlled substance, in violation of 21 U.S.C. § 846; one count of conspiracy to commit international money laundering, in violation of 18 U.S.C. § 1956(h); four counts of international money laundering, in violation of 18 U.S.C. § 1956(a)(2)(A); and one count of trafficking in a counterfeit drug, in violation of 18 U.S.C. § 2320(a)(4). Pursuant to today’s plea agreement, King pleaded guilty to violating one count each of 21 U.S.C. § 846, 18 U.S.C. § 1956(h), and 18 U.S.C. § 2320(a)(4). The maximum statutory sentence for a violation of 21 U.S.C. § 846 is 5 years, the maximum statutory sentence for a violation of 18 U.S.C. § 1956(h) is 20 years, and the maximum statutory sentence for a violation of 18 U.S.C. § 2320(a)(4) is 10 years. 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.
On February 9, 2017, Judge White sentenced David Beckford, 28, of Oakland, Calif., to serve 123 months in prison to be followed by a three-year period of supervised release for his role in the scheme. Judge White also ordered forfeiture of currency, firearms, ammunition, and custom jewelry. Co-defendants Stephan Florida, 27, of San Francisco, Calif., and Isaiah Clayton, 24, of Oakland, Calif., were sentenced to 14 months’ imprisonment and 36 months’ probation, respectively, for their roles in the scheme. Beau Sankene of Oakland, Calif., has pleaded guilty to crimes related to her roles in the conspiracy. A date for Sankene’s sentencing has not yet been scheduled.
Assistant U.S. Attorneys Sheila Armbrust and Marc Wolf are prosecuting the case with the assistance of Ana Guerra and Yanira Osorio. The prosecution is the result of an investigation by the Drug Enforcement Administration, Internal Revenue Service, Criminal Investigation, and U.S. Food and Drug Administration Office of Criminal Investigations.
Dublin Resident Pleads Guilty to Making and Subscribing False Income Tax ReturnsRead the Press Release
OAKLAND – Shiv D. Kumar pleaded guilty in federal court in Oakland today to making and subscribing false U.S. corporation income tax returns, announced U.S. Attorney Brian J. Stretch, Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, and Internal Revenue Service Special Agent in Charge Michael T. Batdorf. The plea was accepted by Honorable Judge Jon S. Tigar, U.S. District Judge.
In pleading guilty, Kumar, 60, of Dublin, admitted he was the sole shareholder and president of A-Paratransit Inc. (API), a company that provided transportation services to disabled individuals. Kumar filed false corporate tax returns with the Internal Revenue Service for tax years 2009 and 2010, which underreported API’s gross receipts by $2,229,216 and $2,412,435, causing a tax loss of $1,584,055. Kumar attempted to conceal those gross receipts from the IRS by diverting those gross receipts into two bank accounts that he failed to disclose to his accountant. The unreported funds were used for personal expenditures, including purchasing real property in the area of Vallejo, Calif.
Kumar was charged by information with one count of making and subscribing a false tax return, in violation of 26 U.S.C. § 7206(1). Under the plea agreement, Kumar pleaded guilty to the single count.Kumar’s sentencing hearing is scheduled for July 7, 2017, at 9:30 a.m. before Judge Tigar. The maximum statutory sentence for making and subscribing a false tax return in violation of 26 U.S.C. § 7206(1) is three years in prison and a fine of $250,000. 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. Attorney José A. Olivera and Trial Attorney Rebecca J. Sable of the Tax Division are prosecuting the case with the assistance of Ed Solis and Kathy Tat. The prosecution is the result of an investigation by the Internal Revenue Service.California Man Pleads Guilty to Filing False Corporate ReturnRead the Press Release
Underreported His Company’s Sales by More than $4.6 Million
A Dublin, California man pleaded guilty today in U.S. District Court in the Northern District of California to filing a false tax return, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Brian Stretch for the Northern District of California.
According to documents filed with the court, Shiv D. Kumar, 60, of Dublin, California, was the sole shareholder and president of A-Paratransit Inc. (API), a company that provided transportation services to disabled individuals. Kumar filed false corporate returns with the Internal Revenue Service (IRS) for tax years 2009 and 2010, which underreported API’s gross receipts by $2,229,216 and $2,412,435, causing a tax loss of $1,584,055. Kumar deposited API’s receipts into three separate bank accounts held at different banks. To conceal API’s true gross receipts, Kumar provided his accountant with false books and records, which omitted gross receipts that he diverted to two of API’s accounts. Kumar used the unreported funds for personal expenditures, including purchasing property in the Vallejo, California area.
Sentencing is scheduled for July 7, 2017. The statutory maximum sentence for filing a false return is three years in prison. Kumar also faces a period of supervised release, restitution and monetary penalties.
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Brian Stretch thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney José A. Olivera and Trial Attorney Rebecca J. Sable 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.
San Jose Cleric Convicted of Bank FraudRead the Press Release
SAN JOSE –San Jose cleric Hien Minh Nguyen was convicted on bank fraud charges announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The guilty verdict followed a bench trial before the Honorable Beth Labson Freeman, United States District Judge.
From 2005 through 2011, Nguyen, 57, was a priest for the Diocese of San Jose (the Diocese), a pastor of St. Patrick’s Church (St. Patrick’s) and the director of the Vietnamese Catholic Center, also known as the Trung Tam Cong Giao (VCC). The evidence at trial showed that while employed as a priest in the Diocese, Nguyen received donations for St. Patrick’s from parishioners, some of which he deposited into his own personal bank account. Nguyen also signed checks drawn on VCC’s bank accounts to pay his personal expenses.
Further, the evidence demonstrated that Nguyen received from parishioners fourteen separate checks made payable to the VCC, which the parishioners intended would be used for the benefit of VCC. Rather than depositing those checks into VCC’s bank accounts, Nguyen intentionally deposited them into his personal bank account. On December 1, 2015, Nguyen was charged by way of a superseding indictment with fourteen counts of bank fraud, in violation of both 18 U.S.C. §§ 1344(1) and 1344(2), and four counts of tax evasion, in violation of 26 U.S.C. § 7201. He pleaded guilty to the tax evasion charges on August 9, 2016. With today’s verdict, the Court concluded Nguyen also was guilty of all fourteen counts of bank fraud.
Nguyen is scheduled to be sentenced on June 30, 2017, at 9:00 before Judge Freeman in San Jose. The maximum statutory penalty for bank fraud, in violation of 18 U.S.C. § 1344(2), is thirty years in prison and a $1,000,000 fine or twice the gain/loss from the offense. The maximum statutory penalty for tax evasion, in violation of 26 U.S.C. § 7201, is five 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 Michael G. Pitman and Thomas Moore and Trial Attorney Gregory Bernstein of the Tax Division are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Director of Hercules Medical Office Pleads Guilty to Tax EvasionRead the Press Release
SAN FRANCISCO – Christine Hill pleaded guilty today to tax evasion announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The plea agreement was accepted by the Hon. Richard Seeborg, U.S. District Judge, following the filing of an information in which Hill was charged with tax evasion.
Hill, 54, of Vallejo, pleaded guilty to knowingly and willingly filing a fraudulent 2010 U.S. Individual Income Tax Return, Form 1040. According to the plea agreement, Hill is the Director of Operations at John Compagno, MD, Inc., with offices in Hercules, Calif. She is responsible for the payroll including collecting time sheets and processing paychecks. Hill acknowledged she knew that bonus payments are subject to federal income tax withholding and that she processed numerous bonus checks for herself and other employees in which federal taxes were withheld and bonus payments were reported on IRS Forms W-2. Nevertheless, Hill also admitted she received additional year-end bonus payments from at least 2003 through 2011. These bonus payment checks were paid to Hill directly and not processed through the payroll account. Because the extra bonus payments were not processed through the payroll account, they were not reported on IRS Forms W-2 and therefore not reported to the IRS.
In addition, Hill’s spouse received payments from John Compagno, MD, Inc. for repairs, maintenance, and construction work he did for the company for the period of 2004 through 2011. John Compagno, MD, Inc. did not issue Forms 1099 for those services. For the period of 2003 through 2011, Hill omitted income from additional bonuses and payments to her spouse in the amount of $122,391. This resulted in additional tax due of $35,566.
On March 1, 2017, Hill was charged with tax evasion, in violation of 26 U.S.C. § 7201. Pursuant to the plea agreement, Hill pleaded guilty to the charge in the one-count information. Judge Seeborg scheduled a hearing for sentencing on June 20, 2017. The maximum sentence for a violation of 26 U.S.C. § 7201 is five years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
U.S. Charges Russian FSB Officers and Their Criminal Conspirators for Hacking Yahoo and Millions of Email AccountsRead the Press Release
A grand jury in the Northern District of California has indicted four defendants, including two officers of the Russian Federal Security Service (FSB), for computer hacking, economic espionage and other criminal offenses in connection with a conspiracy, beginning in January 2014, to access Yahoo’s network and the contents of webmail accounts. The defendants are Dmitry Aleksandrovich Dokuchaev, 33, a Russian national and resident; Igor Anatolyevich Sushchin, 43, a Russian national and resident; Alexsey Alexseyevich Belan, aka “Magg,” 29, a Russian national and resident; and Karim Baratov, aka “Kay,” “Karim Taloverov” and “Karim Akehmet Tokbergenov,” 22, a Canadian national and a resident of Canada.
The defendants used unauthorized access to Yahoo’s systems to steal information from about at least 500 million Yahoo accounts and then used some of that stolen information to obtain unauthorized access to the contents of accounts at Yahoo, Google and other webmail providers, including accounts of Russian journalists, U.S. and Russian government officials and private-sector employees of financial, transportation and other companies. One of the defendants also exploited his access to Yahoo’s network for his personal financial gain, by searching Yahoo user communications for credit card and gift card account numbers, redirecting a subset of Yahoo search engine web traffic so he could make commissions and enabling the theft of the contacts of at least 30 million Yahoo accounts to facilitate a spam campaign.
The charges were announced by Attorney General Jeff Sessions of the U.S. Department of Justice, Director James Comey of the FBI, Acting Assistant Attorney General for National Security Mary McCord, U.S. Attorney Brian Stretch for the Northern District of California and Executive Assistant Director Paul Abbate of the FBI’s Criminal, Cyber, Response and Services Branch.
“Cyber crime poses a significant threat to our nation’s security and prosperity, and this is one of the largest data breaches in history,” said Attorney General Sessions. “But thanks to the tireless efforts of U.S. prosecutors and investigators, as well as our Canadian partners, today we have identified four individuals, including two Russian FSB officers, responsible for unauthorized access to millions of users’ accounts. The United States will vigorously investigate and prosecute the people behind such attacks to the fullest extent of the law.”
“Today we continue to pierce the veil of anonymity surrounding cyber crimes,” said Director Comey. “We are shrinking the world to ensure that cyber criminals think twice before targeting U.S. persons and interests.”
“ The criminal conduct at issue, carried out and otherwise facilitated by officers from an FSB unit that serves as the FBI’s point of contact in Moscow on cybercrime matters, is beyond the pale,” said Acting Assistant Attorney General McCord. “Once again, the Department and the FBI have demonstrated that hackers around the world can and will be exposed and held accountable. State actors may be using common criminals to access the data they want, but the indictment shows that our companies do not have to stand alone against this threat. We commend Yahoo and Google for their sustained and invaluable cooperation in the investigation aimed at obtaining justice for, and protecting the privacy of their users.”
“This is a highly complicated investigation of a very complex threat. It underscores the value of early, proactive engagement and cooperation between the private sector and the government,” said Executive Assistant Director Abbate. “The FBI will continue to work relentlessly with our private sector and international partners to identify those who conduct cyber-attacks against our citizens and our nation, expose them and hold them accountable under the law, no matter where they attempt to hide.”
“Silicon Valley’s computer infrastructure provides the means by which people around the world communicate with each other in their business and personal lives. The privacy and security of those communications must be governed by the rule of law, not by the whim of criminal hackers and those who employ them. People rightly expect that their communications through Silicon Valley internet providers will remain private, unless lawful authority provides otherwise. We will not tolerate unauthorized and illegal intrusions into the Silicon Valley computer infrastructure upon which both private citizens and the global economy rely,” said U.S. Attorney Stretch. “Working closely with Yahoo and Google, Department of Justice lawyers and the FBI were able to identify and expose the hackers responsible for the conduct described today, without unduly intruding into the privacy of the accounts that were stolen. We commend Yahoo and Google for providing exemplary cooperation while zealously protecting their users’ privacy.”
Summary of Allegations
According to the allegations of the Indictment:
The FSB officer defendants, Dmitry Dokuchaev and Igor Sushchin, protected, directed, facilitated and paid criminal hackers to collect information through computer intrusions in the U.S. and elsewhere. In the present case, they worked with co-defendants Alexsey Belan and Karim Baratov to obtain access to the email accounts of thousands of individuals.
Belan had been publicly indicted in September 2012 and June 2013 and was named one of FBI’s Cyber Most Wanted criminals in November 2013. An Interpol Red Notice seeking his immediate detention has been lodged (including with Russia) since July 26, 2013. Belan was arrested in a European country on a request from the U.S. in June 2013, but he was able to escape to Russia before he could be extradited.
Instead of acting on the U.S. government’s Red Notice and detaining Belan after his return, Dokuchaev and Sushchin subsequently used him to gain unauthorized access to Yahoo’s network. In or around November and December 2014, Belan stole a copy of at least a portion of Yahoo’s User Database (UDB), a Yahoo trade secret that contained, among other data, subscriber information including users’ names, recovery email accounts, phone numbers and certain information required to manually create, or “mint,” account authentication web browser “cookies” for more than 500 million Yahoo accounts.
Belan also obtained unauthorized access on behalf of the FSB conspirators to Yahoo’s Account Management Tool (AMT), which was a proprietary means by which Yahoo made and logged changes to user accounts. Belan, Dokuchaev and Sushchin then used the stolen UDB copy and AMT access to locate Yahoo email accounts of interest and to mint cookies for those accounts, enabling the co-conspirators to access at least 6,500 such accounts without authorization.
Some victim accounts were of predictable interest to the FSB, a foreign intelligence and law enforcement service, such as personal accounts belonging to Russian journalists; Russian and U.S. government officials; employees of a prominent Russian cybersecurity company; and numerous employees of other providers whose networks the conspirators sought to exploit. However, other personal accounts belonged to employees of commercial entities, such as a Russian investment banking firm, a French transportation company, U.S. financial services and private equity firms, a Swiss bitcoin wallet and banking firm and a U.S. airline.
During the conspiracy, the FSB officers facilitated Belan’s other criminal activities, by providing him with sensitive FSB law enforcement and intelligence information that would have helped him avoid detection by U.S. and other law enforcement agencies outside Russia, including information regarding FSB investigations of computer hacking and FSB techniques for identifying criminal hackers. Additionally, while working with his FSB conspirators to compromise Yahoo’s network and its users, Belan used his access to steal financial information such as gift card and credit card numbers from webmail accounts; to gain access to more than 30 million accounts whose contacts were then stolen to facilitate a spam campaign; and to earn commissions from fraudulently redirecting a subset of Yahoo’s search engine traffic.
When Dokuchaev and Sushchin learned that a target of interest had accounts at webmail providers other than Yahoo, including through information obtained as part of the Yahoo intrusion, they tasked their co-conspirator, Baratov, a resident of Canada, with obtaining unauthorized access to more than 80 accounts in exchange for commissions. On March 7, the Department of Justice submitted a provisional arrest warrant to Canadian law enforcement authorities, requesting Baratov’s arrest. On March 14, Baratov was arrested in Canada and the matter is now pending with the Canadian authorities.
An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.
The FBI, led by the San Francisco Field Office, conducted the investigation that resulted in the charges announced today. The case is being prosecuted by the U.S. Department of Justice National Security Division’s Counterintelligence and Export Control Section and the U.S. Attorney’s Office for the Northern District of California, with support from the Justice Department’s Office of International Affairs.
Defendants: At all times relevant to the charges, the Indictment alleges as follows:
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- Dmitry Aleksandrovich Dokuchaev, 33, was an officer in the FSB Center for Information Security, aka “Center 18.” Dokuchaev was a Russian national and resident.
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- Igor Anatolyevich Sushchin, 43, was an FSB officer, a superior to Dokuchaev within the FSB, and a Russian national and resident. Sushchin was embedded as a purported employee and Head of Information Security at a Russian investment bank.
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- Alexsey Alexseyevich Belan, aka “Magg,” 29, was born in Latvia and is a Russian national and resident. U.S. Federal grand juries have indicted Belan twice before, in 2012 and 2013, for computer fraud and abuse, access device fraud and aggravated identity theft involving three U.S.-based e-commerce companies and the FBI placed Belan on its “Cyber Most Wanted” list. Belan is currently the subject of a pending “Red Notice” requesting that Interpol member nations (including Russia) arrest him pending extradition. Belan was also one of two criminal hackers named by President Barack Obama on Dec. 29, 2016, pursuant to Executive Order 13694, as a Specially Designated National subject to sanctions.
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- Karim Baratov, aka “Kay,” “Karim Taloverov” and “Karim Akehmet Tokbergenov,” 22. He is a Canadian national and a resident of Canada.
Victims: Yahoo; more than 500 million Yahoo accounts for which account information about was stolen by the defendants; more than 30 million Yahoo accounts for which account contents were accessed without authorization to facilitate a spam campaign; and at least 18 additional users at other webmail providers whose accounts were accessed without authorization.
Time Period: As alleged in the Indictment, the conspiracy began at least as early as 2014 and, even though the conspirators lost their access to Yahoo’s networks in September 2016, they continued to utilize information stolen from the intrusion up to and including at least December 2016.
Crimes:
Count(s)
Defendant(s)
Charge
Statute 18 U.S.C.
Conduct
Maximum Penalty
1
All
Conspiring to commit computer fraud and abuse
§ 1030(b)
Defendants conspired to hack into the computers of Yahoo and accounts maintained by Yahoo, Google and other providers to steal information from them.
First, Belan gained access to Yahoo’s servers and stole information that allowed him, Dokuchaev, and Sushchin to gain unauthorized access to individual Yahoo user accounts.
Then, Dokuchaev and Sushchin tasked Baratov with gaining access to individual user accounts at Google and other Providers (but not Yahoo) and paid Baratov for providing them with the account passwords. In some instances, Dokuchaev and Sushchin tasked Baratov with targeting accounts that they learned of through access to Yahoo’s UDB and AMT (e.g., Gmail accounts that served as a Yahoo user’s secondary account).
10 years
2
Dokuchaev
Sushchin
Belan
Conspiring to engage in economic espionage
§ 1831(a)(5)
Starting on Nov. 4, 2014, Belan stole, and the defendants thereafter transferred, received and possessed the following Yahoo trade secrets:
- the Yahoo UDB, which was proprietary and confidential Yahoo technology and information, including subscriber names, secondary accounts, phone numbers, challenge questions and answers;
- the AMT, Yahoo’s interface to the UDB; and
- Yahoo’s cookie “minting” source code, which enabled the defendants to manufacture account cookies to then gain access to individual Yahoo user accounts.
15 years
3
Dokuchaev
Sushchin
Belan
Conspiring to engage in theft of trade secrets
§ 1832(a)(5)
See Count 2
10 years
4-6
Dokuchaev
Sushchin
Belan
Economic espionage
§§ 1831(a)(1), (a)(4), and 2
See Count 2
15 years (each count)
7-9
Dokuchaev
Sushchin
Belan
Theft of trade secrets
§§ 1832(a)(1), and 2
See Count 2
10 years (each count)
10
Dokuchaev
Sushchin
Belan
Conspiring to commit wire fraud
§ 1349
The defendants fraudulently schemed to gain unauthorized access to Yahoo’s network through compromised Yahoo employee accounts and then used the Yahoo trade secrets to gain unauthorized access to valuable non-public information in individual Yahoo user accounts.
20 years
11-13
Dokuchaev
Sushchin
Belan
Accessing (or attempting to access) a computer without authorization to obtain information for the purpose of commercial advantage and private financial gain.
§§ 1030(a)(2)(C), 1030(c)(2)(B)(i)-(iii), and 2
The defendants gained unauthorized access to Yahoo’s corporate network and obtained information regarding Yahoo’s network architecture and the UDB.
5 years
(each count)
14-17
Dokuchaev
Sushchin
Belan
Transmitting code with the intent to cause damage to computers.
§§ 1030(a)(5)(A), 1030(c)(4)(B), and 2
During the course of their unauthorized access to Yahoo’s network, the defendants transmitted code on Yahoo’s network in order to maintain a persistent presence, to redirect Yahoo search engine users and to mint cookies for individual Yahoo accounts.
10 years (each count)
18-24
Dokuchaev
Sushchin
Belan
Accessing (or attempting to access) a computer without authorization to obtain information for the purpose of commercial advantage and private financial gain.
§§ 1030(a)(2)(C), 1030(c)(2)(B)(i)-(iii), and 2
Defendants obtained unauthorized access to individual Yahoo user accounts.
5 years
(each count)
25-36
Dokuchaev
Sushchin
Belan
Counterfeit access device fraud
§§ 1029(a)(1), 1029(b)(1), and 2
Defendants used minted cookies to gain unauthorized access to individual Yahoo user accounts.
10 years (each count)
37
Dokuchaev
Sushchin
Belan
Counterfeit access device making equipment
§§ 1029(a)(4)
Defendants used software to mint cookies for unauthorized access to individual Yahoo user accounts.
15 years
38
Dokuchaev
Sushchin
Baratov
Conspiring to commit access device fraud
§§ 1029(b)(2)
Defendants Dokuchaev and Sushchin tasked Baratov with gaining unauthorized access to individual user accounts at Google and other Providers and then paid Baratov for providing them with the account passwords. In some instances, Dokuchaev and Sushchin tasked Baratov with targeting accounts that they learned of through access to Yahoo’s UDB and AMT (e.g., Gmail accounts that served as a Yahoo user’s secondary account).
7 ½ years.
39
Dokuchaev
Sushchin
Baratov
Conspiring to commit wire fraud
§ 1349
See Count 38
20 years
40-47
Dokuchaev
Baratov
Aggravated identity theft
§ 1028A(a)(1)
See Count 38
2 years
The language of this release was updated to reflect the current citizenship of Karim Baratov.
Dmitri Dokuchae et al Indictment Redacted-
U.S. Charges Russian FSB Officers and Their Criminal Conspirators for Hacking Yahoo and Millions of Email AccountsRead the Press Release
Watch the press conference
Remarks by U.S. Attorney Brian StretchSAN FRANCISCO – A grand jury in the Northern District of California has indicted four defendants, including two officers of the Russian Federal Security Service (FSB), for computer hacking, economic espionage and other criminal offenses in connection with a conspiracy, beginning in January 2014, to access Yahoo’s network and the contents of webmail accounts. The defendants are Dmitry Aleksandrovich Dokuchaev, 33, a Russian national and resident; Igor Anatolyevich Sushchin, 43, a Russian national and resident; Alexsey Alexseyevich Belan, aka “Magg,” 29, a Russian national and resident; and Karim Baratov, aka “Kay,” “Karim Taloverov” and “Karim Akehmet Tokbergenov,” 22, a Canadian and Kazakh national and a resident of Canada.
The defendants used unauthorized access to Yahoo’s systems to steal information from about at least 500 million Yahoo accounts and then used some of that stolen information to obtain unauthorized access to the contents of accounts at Yahoo, Google and other webmail providers, including accounts of Russian journalists, U.S. and Russian government officials and private-sector employees of financial, transportation and other companies. One of the defendants also exploited his access to Yahoo’s network for his personal financial gain, by searching Yahoo user communications for credit card and gift card account numbers, redirecting a subset of Yahoo search engine web traffic so he could make commissions and enabling the theft of the contacts of at least 30 million Yahoo accounts to facilitate a spam campaign.
The charges were announced by U.S. Attorney Brian J. Stretch, Attorney General Jeff Sessions, Director James Comey of the FBI, Acting Assistant Attorney General Mary McCord of the National Security Division, and Executive Assistant Director Paul Abbate of the FBI’s Criminal, Cyber, Response and Services Branch.
“Silicon Valley’s computer infrastructure provides the means by which people around the world communicate with each other in their business and personal lives. The privacy and security of those communications must be governed by the rule of law, not by the whim of criminal hackers and those who employ them. People rightly expect that their communications through Silicon Valley internet providers will remain private, unless lawful authority provides otherwise. We will not tolerate unauthorized and illegal intrusions into the Silicon Valley computer infrastructure upon which both private citizens and the global economy rely,” said U.S. Attorney Stretch. “Working closely with Yahoo and Google, Department of Justice lawyers and the FBI were able to identify and expose the hackers responsible for the conduct described today, without unduly intruding into the privacy of the accounts that were stolen. We commend Yahoo and Google for providing exemplary cooperation while zealously protecting their users’ privacy.”
“Cyber crime poses a significant threat to our nation’s security and prosperity, and this is one of the largest data breaches in history,” said Attorney General Sessions. “But thanks to the tireless efforts of U.S. prosecutors and investigators, as well as our Canadian partners, today we have identified four individuals, including two Russian FSB officers, responsible for unauthorized access to millions of users’ accounts. The United States will vigorously investigate and prosecute the people behind such attacks to the fullest extent of the law.”
“Today we continue to pierce the veil of anonymity surrounding cyber crimes,” said Director Comey. “We are shrinking the world to ensure that cyber criminals think twice before targeting U.S. persons and interests.”
“The criminal conduct at issue, carried out and otherwise facilitated by officers from an FSB unit that serves as the FBI’s point of contact in Moscow on cybercrime matters, is beyond the pale,” said Acting Assistant Attorney General McCord. “Once again, the Department and the FBI have demonstrated that hackers around the world can and will be exposed and held accountable. State actors may be using common criminals to access the data they want, but the indictment shows that our companies do not have to stand alone against this threat. We commend Yahoo and Google for their sustained and invaluable cooperation in the investigation aimed at obtaining justice for, and protecting the privacy of their users.”
“This is a highly complicated investigation of a very complex threat. It underscores the value of early, proactive engagement and cooperation between the private sector and the government,” said Executive Assistant Director Abbate. “The FBI will continue to work relentlessly with our private sector and international partners to identify those who conduct cyber-attacks against our citizens and our nation, expose them and hold them accountable under the law, no matter where they attempt to hide.”
Summary of Allegations
According to the allegations of the Indictment:
The FSB officer defendants, Dmitry Dokuchaev and Igor Sushchin, protected, directed, facilitated and paid criminal hackers to collect information through computer intrusions in the U.S. and elsewhere. In the present case, they worked with co-defendants Alexsey Belan and Karim Baratov to obtain access to the email accounts of thousands of individuals.
Belan had been publicly indicted in September 2012 and June 2013 and was named one of FBI’s Cyber Most Wanted criminals in November 2013. An Interpol Red Notice seeking his immediate detention has been lodged (including with Russia) since July 26, 2013. Belan was arrested in a European country on a request from the U.S. in June 2013, but he was able to escape to Russia before he could be extradited.
Instead of acting on the U.S. government’s Red Notice and detaining Belan after his return, Dokuchaev and Sushchin subsequently used him to gain unauthorized access to Yahoo’s network. In or around November and December 2014, Belan stole a copy of at least a portion of Yahoo’s User Database (UDB), a Yahoo trade secret that contained, among other data, subscriber information including users’ names, recovery email accounts, phone numbers and certain information required to manually create, or “mint,” account authentication web browser “cookies” for more than 500 million Yahoo accounts.
Belan also obtained unauthorized access on behalf of the FSB conspirators to Yahoo’s Account Management Tool (AMT), which was a proprietary means by which Yahoo made and logged changes to user accounts. Belan, Dokuchaev and Sushchin then used the stolen UDB copy and AMT access to locate Yahoo email accounts of interest and to mint cookies for those accounts, enabling the co-conspirators to access at least 6,500 such accounts without authorization.
Some victim accounts were of predictable interest to the FSB, a foreign intelligence and law enforcement service, such as personal accounts belonging to Russian journalists; Russian and U.S. government officials; employees of a prominent Russian cybersecurity company; and numerous employees of other providers whose networks the conspirators sought to exploit. However, other personal accounts belonged to employees of commercial entities, such as a Russian investment banking firm, a French transportation company, U.S. financial services and private equity firms, a Swiss bitcoin wallet and banking firm and a U.S. airline.
During the conspiracy, the FSB officers facilitated Belan’s other criminal activities, by providing him with sensitive FSB law enforcement and intelligence information that would have helped him avoid detection by U.S. and other law enforcement agencies outside Russia, including information regarding FSB investigations of computer hacking and FSB techniques for identifying criminal hackers. Additionally, while working with his FSB conspirators to compromise Yahoo’s network and its users, Belan used his access to steal financial information such as gift card and credit card numbers from webmail accounts; to gain access to more than 30 million accounts whose contacts were then stolen to facilitate a spam campaign; and to earn commissions from fraudulently redirecting a subset of Yahoo’s search engine traffic.
When Dokuchaev and Sushchin learned that a target of interest had accounts at webmail providers other than Yahoo, including through information obtained as part of the Yahoo intrusion, they tasked their co-conspirator, Baratov, a resident of Canada, with obtaining unauthorized access to more than 80 accounts in exchange for commissions. On March 7, the Department of Justice submitted a provisional arrest warrant to Canadian law enforcement authorities, requesting Baratov’s arrest. On March 14, Baratov was arrested in Canada and the matter is now pending with the Canadian authorities.
An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.
The FBI, led by the San Francisco Field Office, conducted the investigation that resulted in the charges announced today. The case is being prosecuted by the U.S. Department of Justice National Security Division’s Counterintelligence and Export Control Section and the U.S. Attorney’s Office for the Northern District of California, with support from the Justice Department’s Office of International Affairs.
Defendants: At all times relevant to the charges, the Indictment alleges as follows:
- Dmitry Aleksandrovich Dokuchaev, 33, was an officer in the FSB Center for Information Security, aka “Center 18.” Dokuchaev was a Russian national and resident.
- Igor Anatolyevich Sushchin, 43, was an FSB officer, a superior to Dokuchaev within the FSB, and a Russian national and resident. Sushchin was embedded as a purported employee and Head of Information Security at a Russian investment bank.
- Alexsey Alexseyevich Belan, aka “Magg,” 29, was born in Latvia and is a Russian national and resident. U.S. Federal grand juries have indicted Belan twice before, in 2012 and 2013, for computer fraud and abuse, access device fraud and aggravated identity theft involving three U.S.-based e-commerce companies and the FBI placed Belan on its “Cyber Most Wanted” list. Belan is currently the subject of a pending “Red Notice” requesting that Interpol member nations (including Russia) arrest him pending extradition. Belan was also one of two criminal hackers named by President Barack Obama on Dec. 29, 2016, pursuant to Executive Order 13694, as a Specially Designated National subject to sanctions.
- Karim Baratov, aka “Kay,” “Karim Taloverov” and “Karim Akehmet Tokbergenov,” 22. He is a Canadian and Kazakh national and a resident of Canada.
Victims: Yahoo; more than 500 million Yahoo accounts for which account information about was stolen by the defendants; more than 30 million Yahoo accounts for which account contents were accessed without authorization to facilitate a spam campaign; and at least 18 additional users at other webmail providers whose accounts were accessed without authorization.
Time Period: As alleged in the Indictment, the conspiracy began at least as early as 2014 and, even though the conspirators lost their access to Yahoo’s networks in September 2016, they continued to utilize information stolen from the intrusion up to and including at least December 2016.
Crimes:
Count(s)
Defendant(s)
Charge
Statute 18 U.S.C.
Conduct
Maximum Penalty
1
All
Conspiring to commit computer fraud and abuse
§ 1030(b)
Defendants conspired to hack into the computers of Yahoo and accounts maintained by Yahoo, Google and other providers to steal information from them.
First, Belan gained access to Yahoo’s servers and stole information that allowed him, Dokuchaev, and Sushchin to gain unauthorized access to individual Yahoo user accounts.
Then, Dokuchaev and Sushchin tasked Baratov with gaining access to individual user accounts at Google and other Providers (but not Yahoo) and paid Baratov for providing them with the account passwords. In some instances, Dokuchaev and Sushchin tasked Baratov with targeting accounts that they learned of through access to Yahoo’s UDB and AMT (e.g., Gmail accounts that served as a Yahoo user’s secondary account).
10 years
2
Dokuchaev
Sushchin
Belan
Conspiring to engage in economic espionage
§ 1831(a)(5)
Starting on Nov. 4, 2014, Belan stole, and the defendants thereafter transferred, received and possessed the following Yahoo trade secrets:
- the Yahoo UDB, which was proprietary and confidential Yahoo technology and information, including subscriber names, secondary accounts, phone numbers, challenge questions and answers;
- the AMT, Yahoo’s interface to the UDB; and
- Yahoo’s cookie “minting” source code, which enabled the defendants to manufacture account cookies to then gain access to individual Yahoo user accounts.
15 years
3
Dokuchaev
Sushchin
Belan
Conspiring to engage in theft of trade secrets
§ 1832(a)(5)
See Count 2
10 years
4-6
Dokuchaev
Sushchin
Belan
Economic espionage
§§ 1831(a)(1), (a)(4), and 2
See Count 2
15 years (each count)
7-9
Dokuchaev
Sushchin
Belan
Theft of trade secrets
§§ 1832(a)(1), and 2
See Count 2
10 years (each count)
10
Dokuchaev
Sushchin
Belan
Conspiring to commit wire fraud
§ 1349
The defendants fraudulently schemed to gain unauthorized access to Yahoo’s network through compromised Yahoo employee accounts and then used the Yahoo trade secrets to gain unauthorized access to valuable non-public information in individual Yahoo user accounts.
20 years
11-13
Dokuchaev
Sushchin
Belan
Accessing (or attempting to access) a computer without authorization to obtain information for the purpose of commercial advantage and private financial gain.
§§ 1030(a)(2)(C), 1030(c)(2)(B)(i)-(iii), and 2
The defendants gained unauthorized access to Yahoo’s corporate network and obtained information regarding Yahoo’s network architecture and the UDB.
5 years
(each count)
14-17
Dokuchaev
Sushchin
Belan
Transmitting code with the intent to cause damage to computers.
§§ 1030(a)(5)(A), 1030(c)(4)(B), and 2
During the course of their unauthorized access to Yahoo’s network, the defendants transmitted code on Yahoo’s network in order to maintain a persistent presence, to redirect Yahoo search engine users and to mint cookies for individual Yahoo accounts.
10 years (each count)
18-24
Dokuchaev
Sushchin
Belan
Accessing (or attempting to access) a computer without authorization to obtain information for the purpose of commercial advantage and private financial gain.
§§ 1030(a)(2)(C), 1030(c)(2)(B)(i)-(iii), and 2
Defendants obtained unauthorized access to individual Yahoo user accounts.
5 years
(each count)
25-36
Dokuchaev
Sushchin
Belan
Counterfeit access device fraud
§§ 1029(a)(1), 1029(b)(1), and 2
Defendants used minted cookies to gain unauthorized access to individual Yahoo user accounts.
10 years (each count)
37
Dokuchaev
Sushchin
Belan
Counterfeit access device making equipment
§§ 1029(a)(4)
Defendants used software to mint cookies for unauthorized access to individual Yahoo user accounts.
15 years
38
Dokuchaev
Sushchin
Baratov
Conspiring to commit access device fraud
§§ 1029(b)(2)
Defendants Dokuchaev and Sushchin tasked Baratov with gaining unauthorized access to individual user accounts at Google and other Providers and then paid Baratov for providing them with the account passwords. In some instances, Dokuchaev and Sushchin tasked Baratov with targeting accounts that they learned of through access to Yahoo’s UDB and AMT (e.g., Gmail accounts that served as a Yahoo user’s secondary account).
7 ½ years.
39
Dokuchaev
Sushchin
Baratov
Conspiring to commit wire fraud
§ 1349
See Count 38
20 years
40-47
Dokuchaev
Baratov
Aggravated identity theft
§ 1028A(a)(1)
See Count 38
2 years
Three Bay Area Insurance Agents Convicted of Conspiracy and Aggravated Identity TheftRead the Press Release
SAN FRANCISCO – Behnam Halali, Ernesto Magat, and Karen Gagarin were found guilty on March 13, 2017, by a federal jury for their respective roles in a scheme to commit wire fraud and identity theft involving fraudulent life insurance policies, announced U.S. Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The verdict follows a four-week trial before the Honorable Susan Illston, United States District Judge in San Francisco.
According to the evidence produced at trial, Halali, 32, of San Jose, Magat, 35, of Hayward, and Gagarin, 32, of San Jose, were former agents of the American Income Life Insurance Company (AIL). While working at AIL, the defendants participated in a conspiracy involving the submission of applications for life insurance policies on behalf of people at least some of whom did not know that a policy was applied for or issued in their name and/or did not want a life insurance policy. The defendants then shared the commissions and bonuses issued by AIL in connection with the fraudulent policies. The defendants paid recruiters to find people willing to take medical exams in exchange for approximately $100, and then took the personal information associated with those people and submitted applications for life insurance in their names, in many cases without the individuals’ knowledge. The defendants and their co-conspirators also paid people to participate in a fictitious survey of a medical exam company, and took the personal information associated with those people and submitted applications for life insurance, in many cases without the individuals’ knowledge. The evidence also demonstrated that the defendants and their co-conspirators created phony driver’s licenses so that their co-conspirators could take medical exams purporting to be the applicants. The defendants opened hundreds of bank accounts to fund the premiums on the fraudulent policies, and typically paid one to four months of premiums before letting the policies lapse. The defendants and their co-conspirators returned verification calls to AIL purporting to be the applicants on the fraudulent applications from telephones set up exclusively for the fraudulent scheme.
All three defendants were charged with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, wire fraud, in violation of 18 U.S.C. § 1343, and aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1). Pursuant to today’s verdict, the defendants were found guilty of all these counts. Halali and Magat were also charged with money laundering, in violation of 18 U.S.C. § 1957; these charges were dropped before trial.
Judge Illston scheduled hearings to sentence all three defendants on July 28, 2017. The maximum statutory penalties for conspiracy to commit wire fraud and for wire fraud charges in violation of 18 U.S.C. §§ 1349 and 1343 are a prison term of 20 years, and a fine of $250,000 or twice the gross gain or loss from the offense, plus restitution. The maximum statutory penalty for aggravated identity theft in violation of 18 U.S.C. § 1028A is a mandatory prison sentence of 2 years. Additional fines, restitutions and a term of supervised release may also be ordered, however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant United States Attorneys Robert Leach and Matthew McCarthy are prosecuting the case with the assistance of Daniel Charlier-Smith, Denise Oki, and Bridget Kilkenny. This prosecution is the result of an investigation by the FBI; the IRS, Criminal Investigation; and the Commissioner of the California Department of Insurance.
Armed Drug Dealer from East Bay Sentenced to over Eight Years in PrisonRead the Press Release
OAKLAND – Ricky Keith Barnette was sentenced today to one hundred months in prison for possession with intent to distribute methamphetamine, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
Barnette, 34, of Antioch, pleaded guilty on November 10, 2016, to one count of possession with intent to distribute methamphetamine, in violation of Title 21, United States Code, Section 841(a)(1). According to his plea agreement, Barnette admitted that on January 8, 2016, he was driving a stolen BMW in Antioch, Calif., while in possession of more than 167 grams of methamphetamine for sale and a stolen 9mm Ruger LC9 pistol loaded with eight rounds of ammunition. Officers from the Antioch Police Department attempted to pull Barnette over but he drove onto the off-ramp of Highway 4 and sped westbound in the eastbound lanes of the highway. While driving the wrong direction on the highway, Barnette collided head-on with another vehicle and caused great bodily injury to the other driver.
Barnette was charged in an information with one count of possession with intent to distribute methamphetamine. Pursuant to his plea agreement, Barnette pleaded guilty to the charge.
The sentence was handed down by the Honorable Jon S. Tigar, U.S. District Judge. In addition to the prison term, Judge Tigar also ordered Barnette to serve a five-year period of supervised release and ordered him to forfeit the firearm and $1,760, that Barnette admitted was the proceeds of his drug trafficking. Barnette is in custody and will begin serving the sentence immediately.
Assistant U.S. Attorney Garth Hire is prosecuting the case with the assistance of Vanessa Quant. The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Antioch Police Department, and the Contra Costa County Safe Streets Task Force.
Richmond Man Pleads Guilty to Possession of Child PornographyRead the Press Release
OAKLAND– Dumaka Hammond pleaded guilty today to possession of child pornography, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The guilty plea follows a federal grand jury indictment issued on March 10, 2016.
Hammond, 40, is a resident of Richmond, Calif. According to his plea agreement, Hammond 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.
Hammond was charged with one count of possession of child pornography and access with intent to view child pornography, in violation of 18 U.S.C. §§ 2252(a) and (b). Pursuant to the plea agreement, Hammond pleaded guilty to the single count in the indictment.
The plea colloquy was conducted by the Honorable James Donato, U.S. District Judge. Judge Donato has scheduled a sentencing hearing for May 24, 2017, at 10:30 a.m., in San Francisco. The maximum statutory sentence for violating 18 U.S.C. § 2252 is a 20-year prison term. Additional fines, victim restitution, and a term of supervised release also may be imposed by Judge Donato. 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 Thomas Green is prosecuting the case with the assistance of 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, they should contact Homeland Security Investigations through the toll-free Tip Line at 1-866-DHS-2-ICE or complete the online tip form at: https://www.ice.gov/webform/hsi-tip-form. Both are staffed around the clock by investigators. Suspected child sexual exploitation or missing children may also be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.
Oakland Man Pleads Guilty to Production of Child PornographyRead the Press Release
OAKLAND– D’mar Dwain Jennings Conway pleaded guilty today to sexual exploitation of a child, 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. The guilty plea follows the filing of a complaint and indictment in the spring of 2016.
According to his plea agreement, Conway, 29, of Oakland, admitted that on at least one occasion between 2007 and 2010, he induced a victim, for whom he was a caregiver, to engage in a sex act. Conway further admitted that the victim was under12 years old and that he induced the child to engage in sex acts so that Conway could produce visual depictions of the conduct. Also in the plea agreement, Conway acknowledged that law enforcement found and removed from his home a digital memory card containing numerous images depicting Conway engaging in different sexual acts with a child who was approximately three to six years old. Conway admitted that the images of the sexual abuse of the child were taken inside his residence.
A federal grand jury indicted Conway on June 16, 2016, charging him with one count of sexual exploitation of children, in violation of 18 U.S.C. §§ 2251(a) and (e); and one count of possession and access with intent to view child pornography, in violation of 18 U.S.C. §§ 2252(a) and (b). Pursuant to the plea agreement, Conway pleaded guilty to the first charge.
The Honorable Jeffrey S. White, U.S. District Judge, accepted Conway’s guilty plea and scheduled a sentencing hearing for June 6, 2017, at 1:00 pm. The maximum statutory sentence for violating 18 U.S.C. § 2251 is a 30-year prison term, and the minimum mandatory sentence for that crime is a 15-year prison term. Additional fines, victim restitution, and a term of supervised release also may be imposed by Judge White. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Christina McCall and Erin Cornell are prosecuting the case with the assistance of Vanessa Quant and Noble Hughes. The prosecution is the result of an investigation by HSI.
If members of the public have any information relevant to this investigation or to suspected child predators or suspicious activity, they should contact HSI through the toll-free Tip Line at 1-866-DHS-2-ICE or by completing 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.
Methamphetamine Trafficker Sentenced to 10 Years in PrisonRead the Press Release
SAN FRANCISCO – Kiet Ly was sentenced today to 120 months in prison for possessing more than 1.5 kilograms of methamphetamine, announced United States Attorney Brian J. Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin. The sentence follows a guilty plea entered September 21, 2016, in which Ly admitted he possessed with the intent to distribute 500 grams or more of methamphetamine.
Ly, 37, of San Francisco, was indicted on July 5, 2016, by a federal grand jury and charged with one count of possession with intent to distribute 500 grams or more of methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A). Ly pleaded guilty to the charge.
The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge. In addition to the prison term, Judge Breyer sentenced Ly to a 5-year period of supervised release. The defendant is in federal custody and will begin serving his sentence immediately.
Assistant U.S. Attorney Andrew F. Dawson is prosecuting the case with the assistance of Marina Ponomarchuk. The prosecution is the result of an investigation by the DEA and the San Francisco Police Department.
San Francisco Residents Charged in Alleged Bank Robbery SpreeRead the Press Release
SAN FRANCISCO – Andre Mitchell Brown and Javier Raymond Jenkins were charged with conspiracy and armed bank robbery announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. Brown also was charged with being a felon in possession of a firearm and with use of a firearm during and in relation to a crime of violence.
The defendants both made an initial appearance today before the Hon. Maria-Elena James, U.S. Magistrate Judge, on an indictment issued by a federal grand jury on February 28, 2017. According to the indictment, San Francisco residents Brown and Jenkins surveilled five separate locations in an effort to find a bank or credit union to rob. The indictment further alleges that on August 12, 2016, the defendants traveled to a Richmond District bank on Geary Street where Brown, carrying a .38 caliber pistol in his jacket, approached the bank wearing a wig, fake beard and mustache, sunglasses, jacket, and a glove on his left hand. According to the indictment, the men attempted to rob the bank. The defendants were charged with conspiracy to commit bank robbery, in violation of 18 U.S.C. § 371, and attempted armed bank robbery and aiding and abetting attempted armed bank robbery, in violation of 18 U.S.C. §§ 2113 and 18 U.S.C. § 2. In addition, Brown was charged with being a felon in possession of firearms, in violation of 18 U.S.C. § 922(g)(1), and using, carrying, and possessing a firearm in relation to a crime of violence, in violation of 18 U.S.C. § 924(c).
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The maximum penalty each defendant faces upon conviction for the conspiracy charge is five years’ imprisonment and the maximum penalty each defendant faces upon conviction for the attempted bank robbery charge is 25 years’ imprisonment. Further, upon conviction, the maximum penalty Brown faces for being a felon in possession of a firearm is 10 years’ imprisonment and the maximum penalty Brown faces upon conviction for using, carrying or possessing a firearm in relation to a crime of violence is life imprisonment, with a minimum mandatory sentence of 25 years’ imprisonment. Additionally, periods of supervised release, fines, forfeitures, and special assessments also could be imposed. 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.
Magistrate Judge Maria-Elena James ordered defendant Brown to appear on March 8, 2017, for a detention hearing, and ordered defendant Jenkin to appear on March 13, 2017, for a detention hearing.
Assistant U.S. Attorney Helen L. Gilbert is prosecuting the case with the assistance of Heidi Dittmer. The prosecution is the result of an investigation by the FBI.
Cocaine Trafficker Sentenced to 10 Years in PrisonRead the Press Release
SAN JOSE – Jesus Alberto Bueno-Meza was sentenced today to 120 months in prison for conspiracy to possess with intent to distribute and to distribute cocaine, announced United States Attorney Brian Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin.
Bueno-Meza, 48, a citizen of Mexico who was living in the San Jose area at the time of the offense, pleaded guilty on November 28, 2016, to 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). According to the plea agreement, Bueno-Meza admitted he conspired with other individuals to distribute five kilograms or more of cocaine between July 2013 and September 2015. He also admitted that, in furtherance of the conspiracy, he distributed cocaine and possessed with the intent to distribute cocaine on numerous occasions over his approximately two years of participation in the conspiracy.
Bueno-Meza was indicted by a federal grand jury on October 8, 2015. He was charged with one count of conspiracy to possess with the intent to distribute and to distribute cocaine and methamphetamine, one count of distribution and possession with intent to distribute cocaine, three counts of use of a communication facility (telephone) to commit a felony drug offense, and one count of illegal re-entry after deportation.
The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge. In addition to the prison term, Judge Davila also sentenced Bueno-Meza to a five-year period of supervised release. The defendant currently is released on bond and has been ordered to begin serving his sentence on June 22, 2017.
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.
Southern California Man Pleads Guilty to Bank Fraud, Embezzlement, and Making False Statements in Connection with Position as Trustee for Pension PlansRead the Press Release
SAN FRANCISCO –Alan Weissman pleaded guilty today to committing bank fraud, embezzlement from an employee pension benefit plan, and making false statements in documents required by the Employee Retirement Income Security Act (ERISA), announced United States Attorney Brian J. Stretch and the Employee Benefits Security Administration of the Department of Labor. The guilty plea follows charges filed by a federal grand jury in February of 2016, including that the defendant stole assets from ERISA plans for which he was supposed to be acting as a trustee.
According to the plea agreement, Weissman, 71, of Rancho Palos Verdes, Calif., served as a professional trustee and fiduciary of pension plans. Weissman admitted that he embezzled money from bank accounts belonging to two of the pension plans for which he was a trustee. Specifically, Weissman admitted he moved money from plan bank accounts to bank accounts under his control, and then used the money for his own purposes. The defendant admitted he did so without the authorization or knowledge of the pension plan owners, their plan sponsors, or their participants. Further, Weissman admitted that he attempted to hide the illegal transactions by falsely recording payments to himself in such a way as to make the payments look like legitimate plan expenses. Weissman also admitted he altered account statements to conceal missing funds. In sum, Weissman admitted embezzling over $750,000 of plan funds.
A grand jury indicted Weissman on February 11, 2016, charging him with five counts of bank fraud, in violation of 18 U.S.C. § 1344; six counts of wire fraud, in violation of 18 U.S.C. § 1343; two counts of theft or embezzlement from an employee benefit plan, in violation of 18 U.S.C. § 664; and one count of making false statements and concealment of facts in relation to documents required by ERISA, in violation of 18 U.S.C. § 1027. Pursuant to today’s plea agreement, Weissman pleaded guilty to one count of bank fraud, the two embezzlement counts, and the false statements and concealment count.
The guilty plea was accepted by the Honorable Charles R. Breyer, U.S. District Judge. Weissman is scheduled to appear for sentencing on June 7, 2017, at 10:00 a.m. The maximum statutory penalty for bank fraud is 30 years’ imprisonment and a fine of $1,000,000 or twice the gross gain or loss resulting from the offense. The maximum statutory penalty for each count in violation of 18 U.S.C. § 664 and 18 U.S.C. § 1027 is 5 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss resulting from the offense. Additional periods of supervised release and restitution also apply. 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. Attorney Benjamin Kingsley is prosecuting the case with assistance from Bridget Kilkenny. The prosecution is the result of an investigation by the San Francisco Field Office of the Employee Benefits Security Administration of the Department of Labor.
Palo Alto Man Sentenced to More Than Seven Years in Murder-For-Hire PlotRead the Press Release
SAN FRANCISCO – Ulices Cazarez was sentenced today to 87 months in prison for seeking to hire someone to murder his accuser in a sexual harassment case, announced United States Attorney Brian J. Stretch and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder.
Cazarez, 39, of East Palo Alto, pleaded guilty on December 6, 2016. A civil sexual harassment lawsuit was filed against Cazarez in late May 2015. According to his plea agreement, Cazarez admitted that in June 2015 he was willing to pay thousands of dollars to have his accuser murdered. The plea agreement describes the process by which Cazarez discussed prices as high as $40,000 with certain individuals. Ultimately, Cazarez met with an undercover agent (UC) with the ATF. On June 12, 2015, the UC posed as a hitman and met with the defendant in the parking lot of the Stonestown Mall in San Francisco to discuss the killing. The two negotiated a price for the murder and Cazarez told the UC that he would obtain the address for the intended victim within days. Federal agents and task force officers arrested Cazarez on June 26, 2015. On July 9, 2015, a federal grand jury indicted Cazarez for use of interstate commerce facilities in the commission of murder-for-hire, in violation of 18 U.S.C. § 1958.
The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge, in San Francisco. In addition to the prison term, Judge Breyer also sentenced the defendant to a three-year period of supervised release. The defendant was immediately remanded into custody.
Assistant U.S. Attorneys Scott D. Joiner and William Frentzen prosecuted the case with the assistance of Christine Tian, Lance Libatique, and Yanira Osorio. The prosecution is the result of an investigation by the ATF and the San Francisco Police Department.
San Francisco Resident Sentenced to More Than 10 Years in Prison for String of Armed Bank RobberiesRead the Press Release
SAN FRANCISCO – Yolanda Brown, AKA Yo-Yo, was sentenced today to 130 months in prison, and ordered to pay $19,285.00 in restitution, for five robberies of Bay Area banks and credit unions, the unlawful possession of a firearm, and distribution of methamphetamine, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder.
Brown, 48, of San Francisco, pleaded guilty to the charges on November 21, 2016. According to the plea agreement, Brown admitted to robbing the following banks and credit unions:
Date
Bank / Credit Union
Location
January 11, 2016
Wells Fargo
2055 Chestnut Street, San Francisco, CA
January 13, 2016
Patelco Credit Union
1358 Fairmont Drive, San Leandro, CA
February 19, 2016
Patelco Credit Union
1358 Fairmont Drive, San Leandro, CA
June 9, 2016
Citibank
2400 19th Avenue, San Francisco, CA
June 16, 2016
Wells Fargo
3365 Deer Valley Road, Antioch, CA
In her plea agreement, Brown also admitted to being a convicted felon in possession of a firearm and possessing with intent to distribute and distributing more than fifty grams of methamphetamine.
On October 20, 2016, a federal grand jury indicted Brown for the robberies and unlawful possession of a firearm. The indictment charged her with five counts of bank or credit union robbery, in violation of 18 U.S.C. § 2113(a), and one count of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1). Further, on September 15, 2015, Brown was indicted for distribution of methamphetamine, in violation of 21 U.S.C. § 841(a)(1). Under the plea agreement, Brown pleaded guilty to all charges in both indictments.
The sentence of 130 months’ imprisonment was handed down by the Honorable Thelton E. Henderson, U.S. District Judge, in San Francisco. Judge Henderson also sentenced the defendant to a five-year period of supervised release. The defendant was immediately remanded into custody.
Assistant U.S. Attorney Scott D. Joiner prosecuted the case with the assistance of Lance Libatique and Linda Love. The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the San Francisco Police Department, the San Leandro Police Department, and the Antioch Police Department.
Former Deputy Attorney General Selected as Corporate Monitor over Pacific Gas and Electric CompanyRead the Press Release
SAN FRANCISCO— Former Acting Attorney General and Deputy Attorney General of the U.S. Department of Justice Mark Filip, now a Chicago-based partner with the law firm Kirkland & Ellis, has been jointly selected by the U.S. Attorney’s Office for the Northern District of California and Pacific Gas and Electric Company (PG&E) to serve as Compliance and Ethics Monitor of PG&E. On January 26, 2017, the Honorable Thelton E. Henderson, Senior United States District Judge, ordered PG&E to submit to a five-year period of monitorship as a condition of the company’s probation following its five felony convictions for willful violations of the Natural Gas Pipeline Safety Act. The jury also convicted PG&E of corruptly obstructing the federal investigation of the 2010 gas transmission line explosion in San Bruno. Mr. Filip previously served as a federal judge in the U.S. District Court for the Northern District of Illinois, as well as an Assistant United States Attorney in the United States Attorney’s Office for the Northern District of Illinois.
East Bay Chemical Company and Owner Indicted for Illegal Transportation and Smuggling of Hazardous MaterialsRead the Press Release
OAKLAND – A Union City man and the corporation he owns were charged with conspiracy to defraud the United States, smuggling, and multiple violations of the Toxic Substances Control Act and the Hazardous Materials Transportation Act, announced U.S. Attorney Brian J. Stretch; Environmental Protection Agency Criminal Investigation Division Special Agent in Charge Jay Green; U.S. Department of Transportation Office of the Inspector General Regional Special Agent in Charge William Swallow; and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan Spradlin. The indictment alleges that Peiwen Zhou and his company, AK Scientific, conspired to defraud the United States, smuggled materials into the United States, and illegally transported chemicals within the United States by mislabeling and improperly packaging hazardous chemicals.
According to the indictment, Zhou, 53, of Palo Alto, was the founder, owner, and chief executive officer of AK Scientific. Zhou and AK Scientific were in the business of purchasing and then selling research and specialty chemicals to customers that included universities, research laboratories, and other entities. AK Scientific purchased chemicals from chemical supply companies in, among other places, South Korea, Poland, India, and New Zealand.
The indictment alleges the defendants defrauded the United States and smuggled hazardous chemicals into the United States by mislabeling the contents of containers. Further, defendants allegedly transported chemicals in violation of the Toxic Substances Control Act (TSCA) by failing to complete required import certifications and by failing to properly label packages containing hazardous materials. In addition, according to the indictment, the defendants also arranged to transport hazardous materials on several occasions without labeling the packages as required by the Hazardous Materials Transportation Act (HMTA).
Defendants are charged with one count of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371; one count of smuggling, in violation of 18 U.S.C. § 545; two counts of violating the TSCA, in violation of 15 U.S.C. § 2611(b) and 40 C.F.R. §§ 721.20 and 721.4880; and seven counts of violating 49 C.F.R. § 172.400 of the HMTA, in violation of 49 U.S.C. § 5124(a) and 18 U.S.C. § 2. For defendant Zhou, if convicted, the maximum statutory penalties are as follows:
Conspiracy- 5 years in prison term and a $250,000 fine
Smuggling- 20 years in prison and a $250,000 fine
Each count of violating the TSCA- 1 year in prison term and a $50,000 fine
Each count of violating the HMTA- 5 years in prison term and a $250,000 fine
For defendant AK Scientific, if convicted, the corporation faces the following maximum statutory penalties:
Conspiracy- 5 years of probation and a $500,000 fine
Smuggling- 5 years of probation and a $500,000 fine
Each count of violating the TSCA- 5 years of probation and a $200,000 fine
Each count of violating the HMTA- 5 years of probation and a $500,000 fine
Further, additional special assessments may be imposed on either defendant and Zhou may be subject to additional terms of supervised release. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Zhou and a representative for AK Scientific are scheduled to appear on Tuesday, February 21, 2017, at 9:30 am before United States Magistrate Judge Donna Ryu for an initial appearance.
The case is being prosecuted by the Special Prosecutions and National Security Unit of the United States Attorney’s office in San Francisco. The prosecution is the result of an investigation by the U.S. Environmental Protection Agency’s Criminal Investigation Division, the U.S. Department of Transportation’s Office of Inspector General, and the U.S. Department of Homeland Security’s Homeland Security Investigations.
Methamphetamine Trafficker Sentenced to over 15 Years in PrisonRead the Press Release
SAN JOSE – Nicholas Anthony Rodriguez was sentenced to 188 months (15.7 years) in prison for his role in a conspiracy to possess with intent to distribute methamphetamine, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence follows a guilty plea entered July 25, 2016, in which Rodriguez admitted he conspired to and did in fact possess with the intent to distribute methamphetamine.
According to records filed in connection with his plea agreement, Rodriguez, 40, of San Jose, acknowledged that between April and June of 2014, he conspired with others to possess and did possess with intent to distribute 451 grams of actual methamphetamine. In his plea agreement, Rodriguez admitted that, on June 25, 2014, he and another individual were found in possession of 42 grams of actual methamphetamine and $9,215 in cash, as well as a machete, while driving in the San Jose area. Rodriguez further admitted that he and another individual also possessed an additional 409 grams of actual methamphetamine located at the other individual’s home that same day. Rodriguez also acknowledged that, while out of custody on pretrial release on July 28, 2014, he was found in possession of an additional 145 grams of a mixture containing methamphetamine and 2 grams of cocaine.
Rodriguez was indicted by a federal grand jury on July 2, 2014. He was charged with one count of conspiracy to possess with intent to distribute and to distribute methamphetamine, in violation of 21 U.S.C. §§ 846 and 841(b)(1)(C), and one count of possession with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(C). Pursuant to his plea agreement, Rodriguez pleaded guilty to both counts in the Indictment.
The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge. In addition to the prison term, Judge Davila sentenced Rodriguez to a 3-year period of supervised release. The defendant has been in federal custody since August 7, 2014, and will begin serving his sentence immediately.
Assistant U.S. Attorney Maia Perez is prosecuting the case. The prosecution is the result of an investigation by the FBI and the Santa Clara County Sheriff’s Office.
Former Securities Lawyer Sentenced to Six Years of Imprisonment for Securities FraudRead the Press Release
SAN JOSE – James Seltzer, a former attorney and resident of Marin County, was sentenced to 72 months’ imprisonment for securities fraud, announced United States Attorney Brian J. Stretch, FBI Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The sentence, issued today by U.S. District Judge Lucy H. Koh, follows a guilty plea entered September 14, 2016.
According to his plea agreement, beginning no later than October of 2007 through at least May of 2011, Seltzer, 69, formerly of Belvedere, defrauded and deceived multiple individuals in connection with the purchase and sale of securities. Seltzer admitted he misrepresented to the investors that he would use their money to make certain investments for their exclusive benefit but instead diverted the funds to other uses. Seltzer acknowledged that in many cases, he diverted all or virtually all of the monies he had obtained from his investors and spent the monies on his own personal and business expenses after depositing the funds into his own personal bank accounts. The court found Seltzer defrauded 16 investors of more than $4.5 million and ordered Seltzer to pay restitution to his victims in the amount of $4,646,555.
According to papers filed by the government, Seltzer’s victims included several women with whom he conducted personal relationships in order to gain their trust as a precursor to stealing from them. During today’s sentencing proceedings, after hearing from several of Seltzer’s victims, Judge Koh described Seltzer’s conduct as “callous.” Furthermore, in addition to the victims in his criminal case, bankruptcy filings reveal Seltzer accumulated a debt of well over $20 million to numerous other individuals. Seltzer fled the country in 2010 and remained overseas for 5 years.
On June 18, 2015, a federal grand jury indicted Seltzer charging him with five counts of securities fraud, in violation of 15 U.S.C. § 78; one count of mail fraud, in violation of 18 U.S.C. § 1341; and three counts of money laundering, in violation of 18 U.S.C. § 1957. He was apprehended in Hawaii in September 2015, and, pursuant to the plea agreement, pleaded guilty to one count of securities fraud. The remaining counts were dismissed.
In addition to the prison term and restitution, Judge Koh also sentenced Seltzer to serve a three-year period of supervised release. Judge Koh ordered Seltzer to surrender no later than April 19, 2017, to begin serving his sentence.
Assistant U.S. Attorneys Timothy Lucey and Arvon Perteet are prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the IRS-Criminal Investigation and the Federal Bureau of Investigation.
Ringleader of Prostitution Racketeering Enterprise Sentenced to 46 Months in Prison and $5,269,698 in ForfeitureRead the Press Release
SAN FRANCISCO – Allen Fong was sentenced to 46 months in prison and was ordered to pay a $5,269,698 forfeiture money judgment for his role in operating an international prostitution racketeering enterprise, announced United States Attorney Brian J. Stretch and Homeland Security Investigations ("HSI") Special Agent in Charge Ryan Spradlin.
Fong, 60, of San Mateo, pleaded guilty on July 5, 2016, to numerous crimes, including racketeering, in connection with a broad-ranging indictment filed in federal court on October 16, 2014. In pleading guilty to all 32 counts in the indictment, Allen Fong admitted that from August 2006 through July 2014, he was involved in the day-to-day operations of an ongoing racketeering enterprise that recruited women from overseas to work in brothels in Bay Area cities, including Foster City, Cupertino, San Bruno, San Mateo, and Santa Clara. Fong’s activities included renting apartments for use as brothels, paying the rent, telephone and utility services for operating the enterprise, arranging for telecommunications services for prostitution advertisements and appointments for sexual activity between prostitutes and their customers, and transferring proceeds in amounts of thousands of dollars from the United States to Singapore. Fong also admitted he met a co-conspirator at the San Francisco International Airport traveling from Singapore to the United States and drove her to an enterprise brothel where she was housed and worked as a prostitute.Court papers described the operation of the enterprise, Fong’s role as the leader of that enterprise, and Fong’s activities such as providing logistical support for the brothels, determining how much the prostitutes could charge customers for sexual services, determining and collecting the enterprise's share of the prostitutes' earnings, and deciding additional policy matters. Court papers also documented Fong’s own words in recorded conversations such as his comment that “tons” of “girls” from Asian countries such as Singapore, Taiwan, and Hong Kong would be arriving “next month.”
In all, Fong pleaded guilty to one count of conspiracy to conduct enterprise affairs through a pattern of racketeering activity, in violation of 18 U.S.C. § l962(d); one count of conspiracy to use interstate and foreign commerce to promote prostitution in aid of a racketeering enterprise, in violation of 18 U.S.C. §§ 371 and 1952(a)(3); eleven counts of use of interstate commerce to promote prostitution in aid of a racketeering enterprise, in violation of 18 U.S.C. §§ 1952(a)(3) and 2; one count of conspiracy to launder monetary instruments, in violation of 18 U.S.C. §§ 1956(h) and 1956(a)(1)(A)(i); nine counts of substantive money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i) and 2; one count of conspiracy to transport funds from the United States to a foreign country to promote unlawful activity, in violation of 18 U.S.C. §§ 1956(h) & 1956(a)(2)(A); seven counts of transporting funds from the United States to a foreign country to promote unlawful activity, in violation of 18 U.S.C. §§ 1956(a)(2)(A) and 2; and one count of conspiracy to transport an individual in interstate and foreign commerce for prostitution and importation of alien for immoral purpose, in violation of 18 U.S.C. §§ 371 & 2421, and 8 U.S.C. § 1328.
Fong’s prison term includes sentencing enhancements for his leadership role in the Enterprise and the number of prostitute victims involved. The forfeiture money judgment of $5,269,698 represents proceeds generated by the conspiracy. Judge Seeborg also sentenced Fong to a $12,500 fine, $3,200 in special assessments, and a three-year period of supervised release with conditions that include the supervising officer’s access to Fong’s financial information. Fong was ordered to self-surrender to the Bureau of Prisons to begin serving his prison term on April 18, 2017.
Assistant U.S. Attorney Deborah R. Douglas is prosecuting the case assisted by Christine Tian and Lance Libatique. Assistant United States Attorney David Countryman assisted with forfeiture matters. The prosecution results from a joint investigation by the Department of Homeland Security, Homeland Security Investigations San Francisco Field Office, and the San Mateo Police Department.Oakland Man Sentenced to 70 Months in Prison for Possession of Child PornographyRead the Press Release
OAKLAND – Arnold Fischman was sentenced to 70 months in prison for possession of child pornography, announced United States Attorney Brian J. Stretch and Homeland Security Investigations (“HSI”) Special Agent in Charge Ryan Spradlin The sentence, entered yesterday by the Honorable Haywood Gilliam, U.S. District Judge, follows a guilty plea entered by the defendant.
Fischman, 69, of Oakland, pleaded guilty on September 12, 2016, to one count of possession of pornography depicting minors under the age of 12 engaging in sexually explicit conduct. According to his guilty plea, Fischman acknowledged that he was in possession of more than 600 images of child pornography on January 8, 2015, when federal agents executed a search of his residence. Papers filed by the government reveal that a search warrant executed by HSI agents at Fischman’s home found more than 10,000 images and videos of child pornography on his electronic devices, including images depicting the sexual abuse of children as young as three to five years old. The government charged Fischman with possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B).
The sentence was handed down by the Honorable Haywood Gilliam, U.S. District Judge. Judge Gilliam ordered Fischman to self-surrender to begin serving his sentence no later than March 27, 2017. Judge Gilliam also imposed a five year period of supervised release to follow Fischman’s prison term.
Assistant U.S. Attorney Thomas R. Green prosecuted the case with the assistance of Trina Khadoo. The prosecution is the result of an investigation by the HSI.
Suspected child sexual exploitation or missing children may be reported to the National Center for Missing & Exploited Children, via its toll-free 24-hour hotline, 1-800-843-5678.
El Cerrito Resident Pleads Guilty to Stealing IDs and U.S. Treasury ChecksRead the Press Release
OAKLAND – An El Cerrito man pleaded guilty today to aggravated identity theft and conspiring to steal government funds, announced U.S. Attorney Brian J. Stretch and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.
According to the plea agreement, Brandon Robinson, 35, conspired to steal names of deceased individuals and to use them to file federal tax returns seeking refunds. Robinson paid cashiers at stores in the Richmond-area to cash the fraudulently obtained refund checks. Robinson also cashed stolen tax refund and social security benefit checks that were intended for other individuals. Robinson admitted that he and his co-conspirators attempted to cash more than $500,000 in fraudulently obtained and stolen checks.
Sentencing is scheduled for May 23, 2017. Robinson faces a statutory maximum sentence of five years in prison for the conspiracy count and a mandatory minimum sentence of two years in prison for the aggravated identity theft count. Robinson also faces a period of supervised release, restitution, and monetary penalties.
U.S. Attorney Stretch and Deputy Assistant Attorney General Goldberg commended special agents of Internal Revenue Service–Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorneys Thomas Newman and Jose A. Olivera, and Trial Attorney Gregory Bernstein of the Tax Division, who are prosecuting the case.
California Man Pleads Guilty to Stealing IDs and U.S. Treasury ChecksRead the Press Release
An El Cerrito, California man pleaded guilty today to aggravated identity theft and conspiring to steal government funds, 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 the plea agreement, Brandon Robinson, 35, and his co-conspirators, stole names of deceased individuals and used them to file federal tax returns seeking refunds. Robinson paid cashiers at stores in the Richmond-area to cash the fraudulently obtained refund checks. Robinson also cashed stolen tax refund and social security benefit checks that were intended for other individuals. Robinson admitted that he and his co-conspirators attempted to cash more than $500,000 in fraudulently obtained and stolen checks.
Sentencing is scheduled for May 23. Robinson faces a statutory maximum sentence of five years in prison for the conspiracy count and a mandatory minimum sentence of two years in prison for the aggravated identity theft count. Robinson also faces a period of supervised release, restitution and monetary penalties.
Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch commended special agents of Internal Revenue Service–Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorneys Thomas Newman and Jose A. Olivera, 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.
South Bay Residents Charged with Conspiracy to Commit Extortion by Force, Drug TraffickingRead the Press Release
SAN JOSE- A federal grand jury indicted ten South Bay residents for conspiring to commit extortion by force and conspiring to engage in drug trafficking, announced United States Attorney Brian J. Stretch and Homeland Security Investigations (“HSI”) Special Agent in Charge Ryan Spradlin. According to the indictment unsealed today, seven of the defendants conspired to extort drug dealers while the other three defendants conspired to engage in trafficking methamphetamine.
According to the indictment, the following defendants conspired to engage in extortion:
- Velarmino Escobar-Ayala (aka Meduza)
- Tomas Rivera (aka Profugo, aka Caballo)
- Ismael Alvarenga-Rivera (aka Casper)
- Willfredo Edgardo-Ayala (aka Chino)
- Jose David Abrego-Galdamez (aka Largo)
- Melvin Lopez (aka Sharky)
- Alexander Martinez-Flores (aka Pocar)
In addition, the indictment alleges that these defendants conspired to obtain property from drug dealers in Santa Cruz by threatening violence against the dealers and other persons close to them. Further, the indictment alleges the defendants had a plan and purpose to engage in the extortion and threatened force, violence, and fear to obtain money that was demanded. The seven defendants have been charged with conspiracy to commit extortion by force in violation of 18 U.S.C. § 1951(a).
Also, the indictment alleges defendants Gerber Morales (aka Choco), Emilio Escobar-Albarnga (aka Diablo), and Josue Alcedis Escobar-Cerritos (aka Penguino) were engaged in a conspiracy engage in drug trafficking. According to the indictment, from March of 2015 until the present, the three defendants conspired to possess with intent to distribute 50 grams of more of a mixture of substance containing a detectable amount of methamphetamine, in violation of 21 U.S.C. §§ 846, 841(a)(1), and 841(b)(1)(B)(viii).
According to additional court papers filed by the government today, the current charges in this case stem from a multi-year investigation into the activities of a violent Santa Cruz street gang known as Santa Cruz Salvatrucha Locos 13 (SCSL13). The government’s papers state that “SCSL13 is a subset of the larger Mara Salvatrucha 13 (MS-13) gang organization.” According to the government, the defendants all are alleged to be either active members or recruits performing criminal tasks on behalf of SCSL13.
The defendants were arrested this morning as part of a criminal enforcement operation that included more than 200 local and federal law enforcement personnel. The coordinated arrests and searches took place in three cities – Santa Cruz, Watsonville, and Daly City. Defendants made appearances before the Honorable Nathanael Cousins, U.S. Magistrate Judge.
An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. The maximum statutory sentence for a conviction of conspiracy to commit extortion is 20 years in prison and a $250,000 fine. A conviction for conspiracy to possess with intent to distribute 50 grams or more of methamphetamine carries a mandatory minimum sentence of five years in prison, a maximum prison term of 40 years, and a maximum fine of $5,000,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Joseph Alioto and William Edelman are prosecuting the case. The prosecution is the result of an investigation by the HSI.
California Mother and Son Convicted for Fraudulent Corporate Income Tax ReturnsRead the Press Release
A San Francisco, California mother and son were convicted today following a six-day trial for conspiring to file fraudulent corporate income tax returns, 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 the evidence presented at trial, Howard Hsu owned and operated Didsee Corporation (Didsee), a Nevada company that provided advertisement marketing services to online websites and marketplaces. Tracy Chang, Hsu’s mother, was Didsee’s bookkeeper and was listed as the President, Secretary, Treasurer and Director. Chang opened bank accounts for the business, transferred money between the various accounts, and paid Didsee’s bills.
Hsu and Chang conspired together to file fraudulent 2008 through 2009 corporate income tax returns, and an amended 2007 corporate tax return, cheating the Internal Revenue Service (IRS) out of approximately $400,000. provided false summaries to Didsee’s return preparers, which claimed business expenses that were never incurred and included Hsu’s personal expenses. Chang signed the fraudulent returns as Didsee’s President.
“Owners can’t use their businesses as piggybanks, paying personal expenses out of their corporate accounts and falsely claiming them as business expenses,” said Acting Deputy Assistant Attorney General Goldberg. “All employers are legally required to file accurate and complete returns and pay their fair share – just like their employees.”
“This case was not about a mistake or a misunderstanding, it was about greed,” said Special Agent in Charge Michael T. Batdorf of IRS Criminal Investigation (CI). “Tracy Chang agreed to help her son, Howard Hsu and his business cheat the IRS. Hsu fabricated millions of dollars in expenses and Chang knew the expenses were false. She maintained the books and signed the tax returns while Hsu gave the CPA the “cooked books”. In today’s economic environment, it’s more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe.”
A sentencing date has not been scheduled. Hsu and Chang face a statutory maximum sentence of five years in prison for the conspiracy count and three years in prison for the false return counts. Hsu and Chang 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 Colin Sampson and Trial Attorney Matthew Kluge 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.
California Mother and Son Convicted for Fraudulent Corporate Income Tax ReturnsRead the Press Release
SAN FRANCSICO – San Francisco residents Howard Hsu and his mother, Tracy Chang, were convicted today following a one-week trial for conspiring to file fraudulent corporate income tax returns, announced U.S. Attorney Brian J. Stretch and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.
According to the evidence presented at trial, Hsu, 36, owned and operated Didsee Corporation (Didsee), a Nevada company that provided advertisement marketing services to online websites and marketplaces. Tracy Chang, 65, was Disdee’s bookkeeper and was listed as the President, Secretary, Treasurer and Director. Chang opened bank accounts for the business, transferred money between the various accounts, and paid Didsee’s bills.
Hsu and Chang conspired together to file fraudulent 2008 through 2009 corporate income tax returns, and an amended 2007 corporate tax return, cheating the Internal Revenue Service (IRS) out of approximately $400,000. Hsu provided false summaries to Didsee’s return preparers, which claimed business expenses that were never incurred and included Hsu’s personal expenses. Chang signed the fraudulent returns as Didsee’s President.
“Owners can’t use their businesses as piggybanks, paying personal expenses out of their corporate accounts and falsely claiming them as business expenses,” said Acting Deputy Assistant Attorney General Goldberg. “All employers are legally required to file accurate and complete returns and pay their fair share – just like their employees.”
“This case was not about a mistake or a misunderstanding, it was about greed ,” said Special Agent in Charge Michael T. Batdorf of IRS Criminal Investigation (CI). “Tracy Chang agreed to help her son, Howard Hsu and his business cheat the IRS. Hsu fabricated millions of dollars in expenses and Chang knew the expenses were false. She maintained the books and signed the tax returns while Hsu gave the CPA the “cooked books”. In today’s economic environment, it’s more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe.”
A date for sentencing has not yet been scheduled. Hsu and Chang face a statutory maximum sentence of five years in prison for the conspiracy count and three years in prison for the false return counts. Hsu and Chang 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 Colin Sampson and Trial Attorney Matthew Kluge of the Tax Division, who are prosecuting the case.
“Bearded Bandit” Sentenced to 45 Months in Prison for Bank Robbery SpreeRead the Press Release
OAKLAND – Kenneth Michael Ellis was sentenced today to 45 months in prison for bank robberies covering much of Northern California, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
Ellis, 31, from Stockton, pleaded guilty on November 16, 2016, to eight separate counts of unarmed bank robbery and agreed to pay more than $28,000 in restitution. According to the plea agreement, Ellis admitted to using force or intimidation to rob banks in Fremont, Gilroy, Concord, Dublin, Pleasanton, and Lafayette. Ellis typically entered the banks wearing dark glasses and a hat, approached the victim tellers to ask to cash a check, and presented a note that demanded money and told the tellers not to take certain actions.
Ellis admitted the following robberies:
- $3,000 from a Chase Bank branch in Fremont, California, on February 12, 2016
- $4,400 from a Wells Fargo Bank branch in Gilroy, California, on March 4, 2016
- $3,180 from a Wells Fargo Bank branch in Concord, California, on March 11, 2016
- $1,700 from a US Bank branch in Dublin, California, on March 15, 2016
- $1,083 from a US Bank branch in Gilroy, California, on March 16, 2016
- $1,434 from a US Bank branch in Fremont, California, on March 17, 2016
- $5,145 from a Wells Fargo Bank branch in Pleasanton, California, on March 17, 2016
- $4,600 from a Chase Bank branch in Lafayette, California, on March 21, 2016
As part of his plea agreement, Ellis also agreed to pay restitution to the following banks as a result of robberies he committed in the Eastern District of California:
- $1,000 to Chase Bank located at 5010 Elk Grove Boulevard, Elk Grove, California (for a robbery on March 1, 2016)
- $1,400 to Wells Fargo Bank located at 3518 Marconi Avenue, Sacramento, California (for a robbery on March 1, 2016)
- $1,500 to Bank of Stockton located at 230 Main Street, Rio Vista, California (for a robbery on March 21, 2016).
Media reports of the robberies described Ellis as the “Bearded Bandit,” recounting the description provided of the suspect and the car he used during this multi-agency investigation in a number of law enforcement bulletins. Ellis was arrested on March 23, 2016, by the Brentwood Police Department after they received a call from a citizen who reported seeing someone who fit the description of the robbery suspect.
The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, U.S. District Judge. Judge Gonzalez Rogers also sentenced the defendant to a three-year period of supervised release. Ellis, who has been in custody since his March 2016 arrest, will begin serving his sentence immediately.
Assistant U.S. Attorney Christina McCall is prosecuting the case with the assistance of Vanessa Quant, Melissa Dorton, and Noble Hughes. The prosecution is the result of an investigation by the Federal Bureau of Investigation, the United States Attorney’s Offices of the Eastern and Northern Districts of California, the Contra Costa County District Attorney’s Office, the Alameda County District Attorney’s Office, the Santa Clara District Attorney’s Office, the Brentwood Police Department, the Concord Police Department, the Gilroy Police Department, the Alameda County Sheriff’s Office, the Fremont Police Department, the Pleasanton Police Department, the Contra Costa County Sheriff’s Office, the Sacramento Sheriff’s Department, the Elk Grove Police Department, the Rio Vista Police Department, and the Dixon Police Department.
Joint Law Enforcement Operation Leads to Conviction of East Bay Counterfeit Drug ManufacturerRead the Press Release
SAN FRANCISCO – David Beckford was sentenced to more than 10 years in prison for his role in a conspiracy to manufacture counterfeit Xanax pills, for engaging in international money laundering, and for his use and possession of a firearm in furtherance of drug trafficking and in violation of the felon-in-possession statute, announced United States Attorney Brian J. Stretch; Drug Enforcement Administration Special Agent in Charge John J. Martin; Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf; and U.S. Food and Drug Administration Office of Criminal Investigations Special Agent in Charge Lisa L. Malinowski. The sentence was issued by the Honorable Jeffrey S. White, U.S. District Judge, following a guilty plea entered in November of 2016.
According to the guilty plea, Beckford, 28, of Oakland, Calif., admitted that from January 17, 2014, through December 12, 2015, he engaged in a scheme to import controlled substances from China and other foreign sources, obtain manufacturing equipment, including a press to make pills, and press fake Xanax pills at locations in the Northern District of California. Beckford acknowledged the pills he manufactured were designed to appear as close as possible to brand-name Xanax pills. Beckford further admitted to wiring money to China and other foreign countries to pay for the materials that he used to operate his illegal Xanax manufacturing business. In total, Beckford was found to be responsible for 161,474 counterfeit Xanax pills. Beckford further admitted to possessing firearms and ammunition.
This investigation is one example of law enforcement efforts to combat prescription pill abuse and counterfeit pill manufacturing. On May 12, 2016, a federal grand jury returned a thirty-three count superseding indictment charging Beckford and four co-defendants with various crimes related to the scheme. For his role, Beckford was charged with conspiracy to manufacture, distribute, and possess with intent to distribute a controlled substance, in violation of 21 U.S.C. § 846; three counts of substantive manufacture, distribution, and possession with intent to distribute a controlled substance, in violation of 21 U.S.C. § 841(a); being a felon in possession of a firearm and ammunition, in violation of 18 U.S.C. § 922(g)(1); possession of a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c); sale of counterfeit drugs, in violation of 21 U.S.C. § 331(i)(3); conspiracy to engage in international money laundering, in violation of 18 U.S.C. § 1956(h); twenty-three counts of substantive international money laundering, in violation of 18 U.S.C. § 1956(a)(2)(A); and trafficking in a counterfeit drug, in violation of 18 U.S.C. § 2320(a)(4). Pursuant to his plea agreement, Beckford pleaded guilty to all but the substantive counts of money laundering and manufacture, distribution, and possession with intent to distribute a controlled substance.
“Prescription drug abuse threatens the very fabric of our society,” said U.S. Attorney Stretch. “David Beckford intentionally and illegally manufactured and distributed counterfeit prescription drugs. His plan to put more than 150,000 counterfeit pills into circulation presented a serious risk to public safety. This office is proud of the work done by our federal law enforcement partners to put an end to his scheme.”
“Mr. Beckford’s sentence reflects the seriousness of this crime,” said Michael T. Batdorf, Special Agent in Charge, IRS-Criminal Investigation. “The defendant was the mastermind of this elaborate scheme. He found international suppliers through the internet and solicited others, including his girlfriend, to handle the wire transfer payments of funds to the overseas suppliers. IRS CI is committed to following the money to the other side of the world and back so we can financially disrupt and dismantle narcotics trafficking organizations.”
“The FDA’s regulation of the production and distribution of prescription drugs is designed to ensure that they are safe and effective. Criminals who manufacture and sell drugs outside of FDA’s oversight put the health of U.S consumers at risk,” said Lisa L. Malinowski, Special Agent in Charge, FDA Office of Criminal Investigations, Los Angeles Field Office. “Our office will continue to pursue and bring to justice those who endanger the public’s health by distributing counterfeit, unapproved, and adulterated prescription medications.”
“Prescription drug misuse is a national epidemic affecting all segments of society. Sadly, individuals like David Beckford who produced counterfeit pills for personal gain, feed this problem,” stated Drug Enforcement Administration Special Agent in Charge John J. Martin. “As DEA continues an unprecedented dialogue with foreign counterparts to address the availability of pharmaceuticals and manufacturing equipment, we will simultaneously investigate traffickers operating in our own backyard.”
In addition to the 123-month prison term, Judge White also sentenced the defendant to a three-year period of supervised release and forfeiture of currency, firearms, ammunition, and custom jewelry. The defendant currently is in custody and will begin serving the sentence immediately. Also sentenced as part of the conspiracy were co-defendants Stephan Florida and Isaiah Clayton, whose sentences were for 14 months’ imprisonment and 36 months’ probation, respectively, for their roles in the scheme. In addition, co-defendant Beau Sankene has pleaded guilty to crimes related to her roles in the conspiracy and has not yet been sentenced.
Assistant U.S. Attorneys Sheila Armbrust and Marc Wolf prosecuted the case with the assistance of Ana Guerra and Yanira Osorio. The prosecution is the result of an investigation by the Drug Enforcement Administration, Internal Revenue Service, Criminal Investigation, and U.S. Food and Drug Administration Office of Criminal Investigations.
Hayward Resident Sentenced to over 17 Years’ Imprisonment for Trafficking CocaineRead the Press Release
SAN FRANCISCO – Leshawn Lawson was sentenced to 214 months in prison for possession with intent to distribute cocaine, announced United States Attorney Brian J. Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin. The sentenced was handed down yesterday by the Honorable Phyllis J. Hamilton, United States District Judge, who found Lawson guilty of the drug charge after a bench trial in July of last year.
According to court papers, Lawson, 41, of Hayward, Calif., acknowledged he was driving a white Bentley in Livermore, Calif., when he was pulled over by a Livermore police officer. The officer seized more than $10,000 in cash from Lawson and found packaging in the trunk of the car for ten kilograms of cocaine. Lawson admitted that at the time he was pulled over, he knew a controlled substance was in the trunk. Testing revealed that there were actually 9,957 grams of 87.6% pure cocaine in the trunk of the Bentley. A federal grand jury indicted Lawson on February 19, 2015, charging him with one count of possession with intent to distribute cocaine, in violation of 21 U.S.C. § 841(a)(1). Judge Hamilton found Lawson guilty of the charge after a bench trial on July 6, 2016.
In addition to the prison term, Judge Hamilton sentenced Lawson to a five-year period of supervised release. Lawson has been in custody since his arrest and will begin serving his sentence immediately.
Assistant U.S. Attorneys Sheila Armbrust and Aaron Wegner are prosecuting the case with the assistance of Michelle Alter and Yanira Osorio. The prosecution is the result of an investigation by the DEA and the Livermore Police Department.
Richmond Resident Sentenced to 12 Years’ Imprisonment for Filing Fraudulent Tax Returns and Appropriating Fraudulent and Stolen Treasury ChecksRead the Press Release
OAKLAND– Hugh Robinson was sentenced to 144 months in prison for his role in a conspiracy to commit theft of government property, 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.
Robinson, 46, of San Pablo, Calif., was charged along with ten codefendants on November 5, 2015, in a 71-count indictment with conspiracy to commit theft of public money, theft of public money, wire fraud, and aggravated identity theft. On October 31, 2016, a jury convicted Robinson of all charges against him in the indictment. The sentence was handed down yesterday by the Honorable Jeffrey S. White, U.S. District Judge.
According to the indictment and evidence presented at trial, from at least August 21, 2013, through April 27, 2015, the defendants conspired with one another to commit the offenses against the United States charged in the indictment, which included theft of government money. The scheme involved obtaining the names of deceased individuals, filing false tax returns in the names of those individuals, obtaining false identifications, and illegally cashing U.S. Treasury checks.
Robinson, with the assistance of others, obtained names of deceased individuals for use in filing false tax returns. To obtain identities for use in the scheme, the defendants searched California death records and obtained the names and personal identifying information of deceased individuals. The defendants then used the identities obtained from the death records to electronically file false federal income tax returns and caused the returns to be filed in the name of the deceased individuals with the IRS. The returns falsely represented that the individuals earned wages or other income and that the individuals listed on the tax returns were entitled to tax refunds. Robinson and other individuals working with them also listed on the tax returns certain physical addresses to which the defendants had access, enabling the defendants to retrieve the refund checks.
Also described in the indictment and at trial is the process by which the defendants cashed the fraudulently obtained U.S. Treasury checks. The evidence established that a co-conspirator provided false and fraudulent California identification documents which was used to negotiate the U.S. Treasury checks. The false identifications contained the pictures of designated co-conspirators who would cash the checks. In addition, Robinson and others brought some of the checks to a Walmart store in Richmond, Calif., where other co-conspirators cashed the checks. According to the indictment, two of the coconspirators were Walmart employees who knew the checks belonged to others and the U.S. Treasury. Further, Robinson and his coconspirators obtained false identification documents that matched other names on the U.S. Treasury checks and negotiated those illegally-obtained checks at various other Walmart stores. According to the criminal complaint filed in the case, a search of the location where Robinson resided yielded $237,394 worth of uncashed U.S. Treasury checks.
U.S. Attorney Stretch and Acting Deputy Assistant Attorney General Goldberg commended special agents of IRS–Criminal Investigation who conducted the investigation; as well as Assistant United States Attorneys Thomas Newman and Jose A. Olivera, and Trial Attorney Gregory Bernstein of the Justice Department Tax Division, who prosecuted the case.
California Man Sentenced to Prison for Filing Tax Returns in the Name of Deceased Individuals and Stealing Social Security and Refund ChecksRead the Press Release
Hugh Robinson, a San Pablo, California resident, was sentenced yesterday to serve 144 months in prison for filing tax returns using the identities of deceased individuals and stealing social security and refund checks destined for other individuals, 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.
In October 2016, Robinson, 46, was convicted of conspiring to steal public money, stealing public money, and aggravated identity theft. According to the evidence presented at his trial, from at least August 2013 through April 2015, Robinson and his co-conspirators took names and personal identification information of deceased individuals from California death records and used them to file income tax returns seeking refunds. Robinson and his co-conspirators directed the refunds to addresses and bank accounts that they controlled. Robinson also bought and cashed legitimate refund and social security benefits checks that he knew had been stolen. Robinson and his co-conspirators obtained fraudulent California IDs and used them to cash the refund and social security checks at various stores, including in the Richmond-area. total, Robinson intended to cause a loss of more than $1.5 million.
In addition to the term of prison imposed, Robinson was ordered to serve three years of supervised release and to pay restitution in the amount of $900,402 to the Internal Revenue Service (IRS).
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch commended special agents of IRS–Criminal Investigation who conducted the investigation, and Assistant U.S. Attorneys Thomas Newman and Jose A. Olivera, and Trial Attorney Gregory Bernstein of the Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Danville Resident Pleads Guilty to Conspiracy to Defraud United StatesRead the Press Release
SAN FRANCISCO, Calif. – Kamran Azizi pleaded guilty today to conspiring to defraud the United States, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
According to the plea agreement, during 2005 through 2008, Azizi, 59, of Danville, was responsible for compiling donations made to Maktab Tarighe Oveyssi Shahmaghsoudi (MTO), a Sufi Islamic organization with several centers in the Northern District of California. Azizi acknowledged that during that period, with the assistance of his co-conspirator, Hedyeh Shoar, aka Hedyeh Azizi (to whom he was married until 2007), he kept more than $250,000 of members’ donations to MTO for his own benefit. Azizi and Shoar then worked together to hide this income from the United States by, among other things, concealing it from the individual who prepared their federal income tax returns, and signing and filing tax returns which omitted this income.
A federal grand jury indicted Azizi with one count of conspiracy, in violation of 18 U.S.C. § 371, and two counts of filing a false tax return, in violation of 26 U.S.C. § 7206(1). Pursuant to today’s agreement, Azizi pleaded guilty to the conspiracy count. Azizi is scheduled to appear on June 23, 2017, before the Honorable Vince Chhabria, U.S. District Judge, for sentencing.
The maximum statutory penalty for the conspiracy violation is five years in prison and a $250,000 fine. In addition, a term of supervised release may 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 Michael G. Pitman is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
San Francisco Sheriff’s Deputy and A Former San Francisco Jail Inmate Arrested on Gun and Fraud ChargesRead the Press Release
SAN FRANCISCO – Agents of the Federal Bureau of Investigation and investigators from the San Francisco Public Corruption Task Force arrested San Francisco Sheriff’s Deputy April Myres and a former San Francisco Jail inmate, Antoine Fowler, on gun and fraud charges, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
A criminal complaint was filed in federal court against Fowler, 32, yesterday afternoon. An amended complaint was filed against Myres, 52, earlier today.
According to the complaints, Myres gave her Sheriff’s Department-issued firearm, a Glock 17 9mm pistol, to Fowler and later claimed that it had been stolen in a burglary of her home. The gun was located yesterday by FBI agents under the front driver-side console of Fowler’s car after Fowler was pulled over in Oakland by FBI SWAT agents.
According to the criminal complaints, Myres made a claim to her insurance company that numerous items, including her Sheriff’s Department-issued firearm, body armor, and handcuffs (as well as a mink jacket and a number of Louis Vuitton, Chanel, and Versace handbags, and Manolo Blahnik, Gucci, and Christian Louboutin shoes) were stolen from her home in San Francisco on March 25, 2016. The FBI conducted a search of Myres’ residence on February 2, 2017, and found a number of the items Myres claimed had been stolen. The amended criminal complaint against Myres charges her with mail fraud, wire fraud, and conspiracy, in violation of 18 U.S.C. §§ 1341, 1343, and 1349, as well as disposing of a firearm by providing it to a convicted felon, in violation of 18 U.S.C. § 922(d).
Fowler, who was released from the San Francisco Jail on January 11, 2016, is alleged to have had a romantic relationship with Myres before his release. According to the complaints, when Fowler was arrested on February 2, Myres’ service firearm, which she had reported stolen to the insurance company, was in his car. The criminal complaint against Fowler charges him with being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g).
The charges and successful recovery of the firearm were the result of close cooperation and coordination by members of the San Francisco Public Corruption Task Force, including the FBI, the San Francisco Police Department Internal Affairs Unit, the San Francisco District Attorney’s Office, and the San Francisco Sheriff’s Department Investigative Services Unit. The investigation began shortly after Myres claimed the firearm and other items were stolen from her house in March 2016.
Defendants Myres and Fowler were arrested on February 2, 2017, and made their initial appearances in San Francisco on February 3, 2017, before U.S. Magistrate Judge Laurel Beeler. Fowler is being detained pending further hearings now scheduled for February 7, 2017, at 9:30 am before Magistrate Judge Beeler. Myres was released on a $1 million secured bond and is scheduled to appear before Magistrate Judge Beeler on February 15, 2017.
If convicted, the maximum statutory penalty Fowler faces for being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g), is 10 years in prison. If convicted, the maximum statutory penalty Myres faces for each count of mail fraud, wire fraud, and conspiracy is 20 years in prison, and the maximum statutory penalty for a violation of 18 U.S.C. § 922(d), is 10 years. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
A criminal complaint merely alleges there is probable cause to believe crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The case is being prosecuted by the Special Prosecutions and National Security Unit of the United States Attorney’s Office.
Mongols Motorcycle Club Member Sentenced to Seven Years in Prison for Use and Possession of Firearm in Connection with KidnappingRead the Press Release
SAN FRANCISCO– Eric Lundin was sentenced today to 84 months in prison for use and possession of a firearm in furtherance of a crime of violence announced United States Attorney Brian J. Stretch and FBI Special Agent in Charge John F. Bennett. The sentence follows a guilty plea entered November 10, 2016, in which Lundin admitting using the weapon to enhance or maintain his status with the racketeering enterprise of the Mongols Motorcycle Club.
According to his guilty plea, Lundin, 67, of Arcadia, Calif., admitted that on April 22, 2013, he used a Colt .38 caliber revolver and a semi-automatic handgun to instill fear in, intimidate, and detain a female kidnapping victim. Lundin admitted that he targeted the victim at least in part because he believed his daughter and his home had been robbed by an associate of a relative of the victim. Lundin believed it was important to maintain respect for the Mongols, and his status as a member, by responding to the robbery. Lundin acknowledged that during the course of the kidnapping, his victim was trapped in the vehicle and he stated “Mongols don’t leave witnesses.”
The sentence was handed down by the Honorable Jon S. Tigar, U.S. District Judge. In addition to the prison term, Judge Tigar also imposed a term of three years of supervised release during which time he may not associate with any members of the Mongols. The defendant currently is in custody and will begin serving the sentence immediately.
Assistant United States Attorneys William Frentzen and Zinzi Bonilla are prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Arcada Police Department, and the Humboldt County Sherriff’s Office.
Former TSA Transportation Security Officer Sentenced to 21 Months in Prison for Circumventing Security Checkpoint ScreeningRead the Press Release
OAKLAND – Kiana Scott Clark, 29, of Oakland, Calif., was sentenced today to 21 months in prison for conspiring to defraud the United States by obstructing, impeding, and interfering with the aviation security functions of the Transportation Security Administration (TSA) and for conspiring to distribute controlled substances, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and TSA Office of Inspection, Investigations Division Acting Special Agent in Charge Connie M. Youngers. The sentence follows a plea agreement entered June 17, 2016.
According to the plea agreement, Clark admitted she abused her official, public, and sensitive position as a TSA Transportation Security Officer between 2013 and 2015 to enable drug smugglers, with whom she conspired, to circumvent the required TSA screening of carry-on baggage. Clark acknowledged that on April 16, 2015, she was a TSA officer at the Oakland International Airport and had informed her co-conspirators of the security lane where she was positioned and the time when she was the TSA officer responsible for the x-ray screening of carry-on baggage at the TSA security checkpoint. Instead of performing or requesting additional screening as her TSA duties required, Clark allowed her co-conspirator and the carry-on baggage to clear the TSA security checkpoint. Clark’s co-conspirator entered the secure area of the airport and boarded a commercial aircraft. Clark admitted that her conduct on April 16, 2015, facilitated the smuggling of approximately 10.9 kilograms of marijuana. Clark further admitted that she had engaged in such corrupt and criminal conduct on multiple prior occasions and had conspired in such conduct between 2013 and 2015.
“Congress created the TSA two months after the terrorist attacks on September 11, 2001, to ensure the security of aircraft and airports throughout the United States,” said U.S Attorney Stretch. “As federal employees charged and entrusted with carrying out this mission, TSA Transportation Security Officers take an oath to faithfully discharge their duties. In this case, through her deception and dishonesty, Clark corruptly and repeatedly violated this oath. Clark betrayed not only the public trust and the TSA, but also her fellow TSA officers who strive to perform their duties consistently, conscientiously, and faithfully to ensure aviation security. This office will vigorously prosecute people who violate the law and put the public at risk.”
Clark was indicted by a federal grand jury on December 15, 2015, and charged with two counts of conspiring to defraud the United States, in violation of 18 U.S.C. § 371, and two counts of conspiring to distribute a controlled substance, in violation of 21 U.S.C. §§ 846, 841. Pursuant to her plea agreement, Clark pleaded guilty to one count of conspiring to defraud the United States and one count of conspiring to distribute a controlled substance.
The sentence was handed down by the Honorable Jon S. Tigar, U.S. District Judge. In addition to the prison term, Judge Tigar also sentenced the defendant to a three-year period of supervised release. The defendant will begin serving her sentence on April 7, 2017.
This case is being prosecuted by the Special Prosecutions and National Security Unit at the United States Attorney’s Office, and is the result of an investigation by the Federal Bureau of Investigation, Alameda County Sheriff’s Office, TSA Office of Inspection, Investigations Division, City of Tracy Police Department, and San Joaquin County District Attorney’s Office.
Cupertino Couple Sentenced to More Than Five Years in Prison for Wire Fraud, Identity TheftRead the Press Release
SAN JOSE – Yujen Chen and Maria Chen were sentenced yesterday to 75 months in prison and 64 months in prison, respectively, announced United States Attorney Brian J. Stretch, Internal Revenue Service Special Agent in Charge Michael T. Batdorf, FBI Special Agent in Charge John F. Bennett, and U.S. Customs and Border Protection Director of Field Operations Brian J. Humphrey. The sentences follow the December 17, 2015, guilty pleas entered by the married couple in which they admitted committing aggravated identity theft and conspiring to commit wire fraud in connection with their ownership of the Sunnyvale auto dealership 888 Auto Corporation.
According to their guilty pleas, Yujen Chen, 61, and Maria Chen, 59, both of Cupertino, used their automotive business to fraudulently lease luxury vehicles, including vehicles from Porsche, Mercedes-Benz, Audi, BMW, and Toyota, and then to export those vehicles abroad. As part of the scheme, the Chens recruited friends and associates to serve as lessees on the vehicles and sometimes paid these people $500 to lease cars on the Chens’ behalf. The Chens promised the lessees that they would assume the lease payments and that the lessees would not be financially responsible for the lease. However, once the Chens convinced the person to sign the lease arrangement and the lessees turned the vehicles over to the Chens, the Chens typically made only initial payments to the automotive finance companies on behalf of the lessees. Then, as a part of the scheme, the Chens would identify foreign purchasers for the leased vehicles. The Chens admitted they falsified DMV paperwork reflecting a transfer of title from the financing company or lessor to an entity owned or controlled by the Chens. The title transfer allowed the Chens to then forward the vehicle to a freight forwarder for the purpose of exporting the car to a foreign buyer. As a part of the scheme, the Chens also provided or caused to be provided customs paperwork to a freight forwarder that included a fraudulently obtained, or “washed,” DMV title. The Chens eventually caused the leased vehicles to be shipped abroad, then ceased making the financing payments on the leased vehicles, leaving the nominal lessees with a broken lease and no car.
In the latter stages of the scheme, the Chens expanded the scope of their illegal conduct by using stolen identities. Specifically, the Chens collected money and personal identifying information from individuals who had come into their business expressing interest in making a legitimate vehicle purchase. Then, instead of providing dealers the money received from the persons for the vehicles, the Chens simply kept the purchase money provided by the victims for themselves. Moreover, the Chens misappropriated the personal identifying information of these individuals in order to gain possession of cars using fraudulent leases or finance agreements. The vehicles were then exported using the same title washing, and exporting techniques.
The defendants were originally charged in a 24-count indictment filed November 20, 2013. They each pleaded guilty to one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1343, and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A. As part of the plea agreement, the government agreed to dismiss the remaining open charges at the time of sentencing.
The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge. Judge Davila also imposed a term of three years supervised release on each defendant. Judge Davila set a further restitution hearing in the case for March 2, 2017, at 1:30 p.m. for the purpose of considering an appropriate order of restitution for the individual and corporate victims in the case. The defendants currently are out of custody on bond.
Assistant United States Attorneys Daniel Kaleba and Jeffrey Nedrow are prosecuting the case with the assistance of Susan Kreider and Laurie Worthen. The prosecution is the result of an investigation by the Internal Revenue Service, the Federal Bureau of Investigation, the United States Customs and Border Protection, the California Department of Motor Vehicles, and the California Highway Patrol.
US Attorney’s Office to Review Applications for Compliance and Ethics MonitorRead the Press Release
Today, the Honorable Thelton E. Henderson imposed a sentence on Pacific Gas and Electric Company, following its six felony convictions last August. As part of that sentence, Judge Henderson ordered PG&E to be supervised by a Compliance and Ethics Monitor. The United States Attorney’s Office for the Northern District of California is in the process of reviewing candidates for this monitorship. If you would like to be considered for the position of Monitor, please send a letter to:
Brian J. Stretch
United States Attorney
Northern District of California
450 Golden Gate Ave, 11th floor
San Francisco, CA 94102If you have previously contacted this office regarding your interest to serve as a Monitor in this matter, you do not need to re-submit a letter.
PG&E Ordered to Develop Compliance and Ethics Program as Part of Its Sentence for Engaging in Criminal ConductRead the Press Release
SAN FRANCISCO— Pacific Gas and Electric Company (“PG&E”) was sentenced today to submit to an expansive program of probation after having been found guilty of multiple willful violations of the Natural Gas Pipeline Safety Act of 1968 (“PSA”) and obstructing an agency proceeding, announced U.S. Attorney Brian J. Stretch, San Mateo County District Attorney Stephen M. Wagstaffe, U.S. Department of Transportation Office of Inspector General Special Agent in Charge William Swallow, and FBI Special Agent in Charge John F. Bennett. Among the provisions included in the program of probation issued by the Honorable Thelton E. Henderson, District Judge, are the obligation to submit to a corporate compliance and ethics monitorship, the obligation to complete 10,000 hours of community service, and the requirement to spend up to $3 million to inform the public in print advertisements and television commercials to notify the public of the utility’s criminal and neglectful behavior.
On August 9, 2016, after a 5 ½ week trial, a federal jury found PG&E guilty of multiple willful violations of the PSA and obstructing an agency proceeding. The PSA-related charges stem from PG&E’s record keeping and pipeline “integrity management” practices and were uncovered in the course of the San Bruno investigation. The obstruction charge was added after investigators discovered PG&E attempted to mislead the National Transportation Safety Board (NTSB) during its investigation. The evidence at trial demonstrated that, between 2007 and 2010, PG&E willfully failed to address recordkeeping deficiencies concerning its larger natural gas pipelines knowing that its records were inaccurate or incomplete. The evidence further demonstrated that PG&E willfully failed to identify threats to its larger natural gas pipelines and to take appropriate actions to investigate the seriousness of threats to pipelines when they were identified. In addition, PG&E willfully failed to adequately prioritize as high risk and properly assess threatened pipelines after they were over pressurized, as the PSA and its regulations required. These charges were filed in an indictment on April 1, 2014. In finding PG&E guilty, the jury concluded the company knowingly and willfully violated the PSA and its regulations between 2007 and 2010. The jury found PG&E guilty of six felony counts—five willful violations of the PSA and one count of corruptly obstructing the federal investigation into the 2010 fatal pipeline explosion in San Bruno, in violation of 18 U.S.C. § 1505. The jury acquitted PG&E of an additional six alleged violations of the PSA.
The charge of obstructing an agency proceeding was included in a superseding indictment filed July 29, 2014. The evidence at trial demonstrated that during the course of the NTSB’s investigation, PG&E provided a version of a policy outlining the way in which PG&E addressed manufacturing threats on its pipelines, and then sought to withdraw the document. According to PG&E’s letter, the policy was produced in error and was an unapproved draft. In finding PG&E guilty of obstructing an agency proceeding, the jury concluded PG&E intentionally and corruptly tried to influence, obstruct, or impede the NTSB investigation, in violation of 18 U.S.C. § 1505.
“Today, the Pacific Gas and Electric Company was sentenced for its crimes after having been found guilty of violating federal regulations designed to keep our citizens safe and obstructing an agency proceeding,” said U.S. Attorney Stretch. “As a part of the sentence, the court has imposed upon PG&E a monitor to ensure the company’s future compliance with the rules and regulations the company has chosen in the past to flaunt. As we know from the horrible explosion in San Bruno in 2010, the failure of PG&E to deliver gas safely can have devastating consequences that no amount of fines and no monetary penalties can ever remedy. While the conviction and sentence in this case will not bring back those who were lost on September 9, 2010, or eliminate the suffering of their surviving family members, it does take necessary steps toward ensuring PG&E will never again engage in this type of criminal behavior that puts all of its customers at substantial risk. I would like to acknowledge the many public servants—including the men and women of this office, the California Attorney General’s Office, the San Mateo County District Attorney’s Office, the San Bruno Police Department, the Federal Bureau of Investigation, and the U.S. Department of Transportation Office of Inspector General—whose hard work uncovered PG&E’s violations of the law and the company’s efforts to obstruct the investigation. We are gratified that the verdicts and sentence memorialize PG&E’s criminal conduct.”
“Today’s sentencing of PG&E makes clear the solemn obligation that those entrusted with the public’s safety must make it their highest priority,” said William Swallow, regional Special Agent-in-Charge, USDOT OIG. “The pipeline system is a critical part of our Nation’s infrastructure, and working with our Federal, state and local law enforcement and prosecutorial colleagues, we will continue to protect the safety and integrity of our transportation infrastructure from fraud, waste, abuse and violations of law.”
“The residents of San Mateo County are indebted to the public servants of the Office of the United States Attorney,” said District Attorney Wagstaffe. “We are very thankful for their hard work and perseverance without which we would not have seen such a successful conclusion to this case.”
"The FBI San Francisco Division echoes the sentiments of our law enforcement and prosecutorial partners. PG&E demonstrated a lack of concern and irresponsibility to our community,” said FBI San Francisco Special Agent in Charge Jack Bennett. “We have a responsibility not only to uphold and enforce the laws of the United States but also to do everything within our power to protect our citizen’s and our community. This sentence is symbolic of the FBI’s commitment to serving justice and to show that no company is too large to be held accountable for criminal acts.”
In handing down the $3 million monetary penalty, Judge Henderson ordered PG&E to pay the maximum statutory penalty allowable for each count charged under the PSA and for obstruction of justice. In addition to the monetary penalty, Judge Henderson ordered PG&E to the maximum term of five years’ probation. While on probation, PG&E will submit to a corporate compliance and ethics monitorship, pay for advertising in national media outlets to publicize its criminal conduct, and engage in community service.
Judge Henderson ordered PG&E to develop within the first six months “an effective compliance and ethics program” as well as a schedule for implementation of the program. Judge Henderson’s order directs PG&E to create a program that will prevent criminal conduct with respect to gas pipeline transmission safety. In addition, during the five-year period, PG&E will be supervised by a Compliance and Ethics Monitor whose job it will be to approve the program, oversee PG&E’s compliance with the program, inspect PG&E’s records, and receive notifications from PG&E regarding any changes in the company’s financial status.
With respect to publicity, Judge Henderson ordered PG&E to spend $3 million to publicize “the nature of the offenses it committed, the convictions, the nature of the punishment imposed and the steps that will be taken to prevent the recurrence of similar offences.” The $3 million expenditure will include two parts. PG&E must purchase a full page advertisement in both the Wall Street Journal and the San Francisco Chronicle. Also, PG&E was ordered to purchase television time to air commercials “to the greatest extent possible replicating the same channels and air times that PG&E used” in the time period around when the case was being tried.
Judge Henderson also ordered PG&E to engage in 10,000 hours of community service that must be pre-approved by a federal probation officer. Of the 10,000 hours, 2,000 must be completed by “high level” employees. In addition, Judge Henderson stated his expectation that the planned community service would be approved only if is separate from, and in addition to, service that PG&E already had planned to do. Judge Henderson also advised PG&E that he expected the community service would be completed, to the greatest extent possible, in San Bruno.
Assistant United States Attorneys Hallie Hoffman, Jeff Schenk, and Hartley West prosecuted the case with the assistance of Denise Oki, Beth Margen, Maryam Beros, Alycee Lane, Bridget Kilkenny, and Maureen French. The prosecution is the result of an investigation conducted by the U.S. Attorney’s Office for the Northern District of California, the California Attorney General’s Office, the San Mateo County District Attorney’s Office, the United States Department of Transportation Office of Inspector General, the FBI, the Pipeline and Hazardous Material Safety Administration, and the City of San Bruno Police Department.
Las Vegas Resident Charged with Murder in Aid of RacketeeringRead the Press Release
SAN FRANCISCO- A federal grand jury indicted Las Vegas resident Wen Bing Lei, aka Raymond Lei, aka Black Raymond, aka Skinny Raymond, for murder in aid of racketeering, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. According to the indictment filed today, the defendant was a member of the Chee Kung Tong (CKT), a predominantly Chinese-American association based in San Francisco’s Chinatown. The indictment accuses Lei, 50, of aiding, abetting, and causing the death of Allen Leung, one of the association’s previous leaders.
According to the indictment, the CKT is an organization formed in the late 1800s primarily for civic purposes. The indictment alleges that while some of CKT’s members are involved strictly in legal functions and activities of the organization, other members were involved in illegal activities including narcotics distribution, assault, robbery, extortion, collection of unlawful debts, murder for hire, money laundering, trafficking in stolen goods, illegal firearms possession, and obstruction of justice. The indictment further alleges that members protected and expanded the enterprise’s criminal operation by using violence, including murder, solicitation to commit murder, assaults, intimidation, and threats of violence directed against those who would act against CKT, its members, and its associates. Allegedly, on February 27, 2006, Lei conspired with other members of CKT to aid, abet, and commit the murder of Allen Leung. Among the purposes listed in the indictment for Lei’s involvement in the murder is to gain entrance to, and to maintain and increase his position in, the CKT. Lei is charged with one count of murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(1).
Lei currently is in the custody of the Bureau of Prisons on other charges and will be transported to the Northern District of California to make his initial appearance before U.S. Magistrate Judge Sallie Kim on January 31, 2017.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a mandatory minimum sentence of life in prison. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney William Frentzen is prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the FBI.
Bay Area Resident Pleads Guilty to Concealing Assets in A Bankruptcy ProceedingRead the Press Release
SAN JOSE – Steve McVay pleaded guilty to concealing assets in a bankruptcy proceeding announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The plea was accepted yesterday by the Honorable Lucy H. Koh, United States District Judge.
According to the plea agreement, McVay, 68, whose last known address was in Morgan Hill, Calif., admitted he filed a voluntary petition for bankruptcy in the United States Bankruptcy Court for the Northern District of California, on February 9, 2010, through which he sought relief for approximately $1.5 million in debts. McVay acknowledged that in connection with the petition, he signed documents under penalty of perjury that he knew contained false and fraudulent information. Further, McVay acknowledged he signed the documents with the intent to hide assets from his creditors, the United States Trustee, the court, and other persons charged with control or custody of the bankruptcy estate. Information about the false and fraudulent information in McVay’s bankruptcy filings is contained in the plea agreement. For example, as part of the agreement McVay admitted that prior to filing for bankruptcy, he had opened a bank account in his wife’s name, without either her knowledge or consent, and that he had been using the account to receive and transmit monies under his exclusive control; McVay further admitted he failed to disclose the account in his bankruptcy filings. Further, McVay admitted he knowingly concealed multiple additional bank accounts that he was required to disclose as part of his filings.
McVay was indicted on April 28, 2016, and charged with two counts of concealing assets in bankruptcy proceedings, in violation of 18 U.S.C. § 152(1), and one count of false testimony in bankruptcy proceedings, in violation of 18 U.S.C. § 152(2). Pursuant to his plea agreement, McVay pleaded guilty to one count of concealing assets in bankruptcy proceedings.
McVay is scheduled to appear before Judge Koh for sentencing on May 17, 2017. The maximum statutory penalty for a violation of 18 U.S.C. § 152(1) is five years in prison and $250,000 or twice the amount of gain or loss resulting from the scheme. In addition, a term of supervised release and restitution may 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. Timothy J. Lucey is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the FBI.
Bayview/Hunter’s Point Tax Shop Owner Sentenced to Prison for Tax FraudRead the Press Release
SAN FRANCISCO – Josiah Larkin was sentenced to 37 months in prison and was ordered to pay $184,798 in restitution for filing, and conspiring to file, false federal income tax returns announced United States Attorney Brian J. Stretch and Assistant Special Agent in Charge IRS Criminal Investigation, Tyrone W. Blanchette. The sentence was handed down today by the Honorable Susan Illston, United States District Judge, after a six-day trial in September of 2016.
Evidence at trial showed that Larkin, 40, of San Francisco, set up an unauthorized franchise, Colbert Ball Tax, on Third Street in the Bayview/Hunter’s Point neighborhood of San Francisco. Larkin opened the tax shop on December 15, 2012, ten days before Christmas, and advertised “Get Up to $600- Even if Unemployed, On SSA or SSI.” Larkin filed false tax returns reporting that taxpayers with $0 income had paid $4,000 in qualified education expenses to attend college. This combination of $0 income and $4,000 in qualified education expenses resulted in a $1,000 tax refund based on the American Opportunity Tax Credit (“AOTC”). Larkin took approximately half of the $1,000 tax refund and gave the remaining half to his clients. On September 15, 2016, the jury convicted Larkin of one count of conspiring to file false tax returns, in violation of 18 U.S.C. § 286, and seven counts of filing false tax returns, in violation of 18 U.S.C. § 287.
“Today’s 37-month sentence should be a clear reminder that tax cheats who defraud the federal government wind up in jail,” said U.S. Attorney Stretch.
“With his storefront and neon sign, Josiah Larkin appeared to operate a legitimate tax business,” said Assistant Special Agent in Charge Blanchette. “In reality, he targeted vulnerable individuals with the promise of cash just days before Christmas. He filed false federal refund claims and kept half. IRS, Criminal Investigation will continue to aggressively pursue those who file false tax returns to claim refunds for which they are not entitled.”
In addition to the prison term and restitution, Judge Illston ordered the defendant to serve three years of supervised release. The defendant will begin serving the sentence on April 28, 2017.
Assistant U.S. Attorneys Cynthia Stier and Laurie Kloster Gray prosecuted the case. The prosecution is the result of an investigation by the Internal Revenue Service.
Former Marin County Resident Convicted for Using Prisoner Identities and Filing Fraudulent Tax ReturnsRead the Press Release
SAN FRANCISCO – Howard Webber, a former resident of Marin County, Calif., was convicted today by a federal jury for conspiring to use identities of others and file fraudulent income tax returns, announced U.S. Attorney Brian J. Stretch and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. The verdict follows a two-week trial before the Honorable Richard Seeborg, U.S. District Judge.
According to the evidence presented at trial, from June 2010 through January 2012, Webber, 52, conspired with Clifford Bercovich, 69, of San Rafael, Calif., to obtain the names and social security numbers of fellow inmates while Webber was incarcerated at various prisons and jails, including San Quentin State Prison and Santa Clara County jail in California, and the Milwaukee Secure Detention Facility in Milwaukee, Wisconsin.
Webber convinced inmates to give their names and social security numbers by explaining that they could help inmates take advantage of government programs. Webber recruited certain inmates to help solicit the identities of other inmates, and created a limited-liability company, Inmate Assets Recovery and Liquidation Services LLC, to make their scheme appear legitimate. Webber and Bercovich then used these identities to file false federal income tax returns with the Internal Revenue Service (IRS). The returns falsely represented that the inmates earned wages or other income and fraudulently claimed refunds. Webber and Bercovich opened a post office box, which they listed as the taxpayer address on each false return and used it to receive the fraudulently obtained refund checks. In some cases, they also directed that the refunds be wired to bank accounts that they opened and controlled. According to the evidence presented at trial, Webber and Bercovich filed more than 700 false returns and received over $600,000 in fraudulently obtained income tax refunds.
“Today’s guilty verdict brings a just end to Mr. Webber’s scheme to defraud the United States,” said U.S. Attorney Stretch. “This office will continue to devote its resources to ensure that those who enrich themselves by using the identities of others and filing false tax returns are apprehended and prosecuted.”
“As the IRS filing season begins this week, today’s conviction sends a clear message to those contemplating stealing identities and using the information to obtain fraudulent refunds – plan on getting caught and facing significant jail time,” said Acting Deputy Assistant Attorney General Goldberg.
“We want everyone who files a tax return to take advantage of the deductions and credits to which they are entitled by law,” said Tyrone W. Blanchette, Internal Revenue Service, Criminal Investigation, Assistant Special Agent in Charge. “However, no one is entitled to defraud the United States and the American Taxpayers. Today’s guilty verdict should send a clear message that those involved in these types of schemes will be held accountable for their crimes.”
Webber is scheduled to be sentenced by Judge Seeborg on May 16, 2017. Webber faces a statutory maximum sentence of 20 years in prison for mail fraud and conspiracy to commit mail and wire fraud. Further, Webber faces a mandatory minimum of two years in prison for aggravated identity theft. An additional period of supervised release, restitution, and monetary penalties also may 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. Bercovich pleaded guilty in December 2016 to conspiracy, mail fraud and aggravated identity theft. He is scheduled to be sentenced by Judge Seeborg on April 11, 2017.
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 William Frentzen and Trial Attorneys Gregory Bernstein and Arthur J. Ewenczyk of the Tax Division, who are prosecuting the case.
California Man Convicted for Stealing Prisoner Identities and Filing Fraudulent Tax ReturnsRead the Press Release
A Marin County, California man was convicted today by a federal jury in the Northern District of California of identity theft and conspiring to file fraudulent income tax returns, 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.
“As the IRS filing season begins this week, today’s conviction sends a clear message to those contemplating stealing identities and using the information to obtain fraudulent refunds – plan on getting caught and facing significant jail time,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg.
“Today’s guilty verdict brings a just end to Mr. Webber’s scheme to defraud the United States,” said U.S. Attorney Stretch. “This office will continue to devote its resources to ensure that those who enrich themselves by using the identities of others and filing false tax returns are apprehended and prosecuted.”
According to the evidence presented at the two week trial, from June 2010 through January 2012, Howard Webber, 52, conspired with Clifford Bercovich to obtain the names and social security numbers of fellow inmates while Webber was incarcerated at various prisons and jails, including San Quentin State Prison and Santa Clara County jail in California, and the Milwaukee Secure Detention Facility in Milwaukee, Wisconsin.
Webber and Bercovich convinced inmates to give them their names and social security numbers by explaining that they could help the inmates take advantage of government stimulus programs or secret tax loopholes. Webber and Bercovich recruited certain inmates to help them solicit the identities of other inmates, and created a limited-liability company, Inmate Assets Recovery and Liquidation Services LLC, to make their scheme appear legitimate.
Webber and Bercovich then used these identities to file false federal income tax returns with the Internal Revenue Service (IRS). The returns falsely represented that the individuals earned wages or other income and fraudulently claimed refunds. Webber and Bercovich opened a post office box, which they listed as the taxpayer address on each false return and used to receive the fraudulently obtained refund checks. In some cases, they also directed that the refunds be wired to bank accounts, which they opened and controlled. According to the evidence presented at trial, Webber and Bercovich filed more than 700 false returns and received over $600,000 in fraudulently obtained income tax refunds.
“We want everyone who files a tax return to take advantage of the deductions and credits to which they are entitled by law,” said Assistant Special Agent in Charge Tyrone W. Blanchette of IRS Criminal Investigation (CI). “However, no one is entitled to defraud the United States and the American taxpayers. Today’s guilty verdict should send a clear message that those involved in these types of schemes will be held accountable for their crimes.”
Webber is scheduled to be sentenced on May 16 before U.S. District Court Judge Richard Seeborg. Webber faces a statutory maximum sentence of 20 years in prison for conspiracy to commit mail and wire fraud and mail fraud and a mandatory minimum of two years in prison for aggravated identity theft, as well as a period of supervised release, restitution and monetary penalties. Bercovich pleaded guilty in December 2016 to conspiracy, mail fraud and aggravated identity theft. He is scheduled to be sentenced on April 11.
Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch thanked special agents of IRS-CI, who conducted the investigation, and Assistant U.S. Attorney William Frentzen and Trial Attorneys Gregory Bernstein and Arthur J. Ewenczyk 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.