Northern District of California
Press releases recorded for this federal judicial district.
San Francisco Residents Sentenced for Robbery and Assault with A Dangerous Weapon in the PresidioRead the Press Release
SAN FRANCISCO – Tiffany Smith was sentenced today to 60 months in prison and ordered to pay $8,946 in restitution for robbery and assault with a dangerous weapon, announced United States Attorney Brian Stretch and United States Park Police Chief Robert MacLean. Smith’s co-defendant, Daron McClinton of San Francisco, was sentenced one week ago to 63 months in prison and also ordered to pay $8,946 in restitution for the same crimes. The sentences, imposed by the Honorable William H. Orrick, U.S. District Judge, followed guilty pleas entered by the defendants earlier this year.
According to the plea agreements, Smith and McClinton admitted that on Saturday October 3, 2015, they were at the Palace of Fine Arts when they spotted their victim, a professional photographer, and followed him to the Presidio. The defendants confronted the photographer after he parked his car and began unloading his equipment. Smith pointed what appeared to be a gun at the victim and demanded the victim’s property. When the victim did not comply, both Smith and McClinton repeatedly struck the victim in his head with dangerous weapons until he relinquished the equipment. The defendants then fled with the property.
The defendants were indicted by a federal grand jury on October 29, 2015. They were charged with robbery on federal land, in violation of 18 U.S.C. § 2111; conspiracy to commit robbery, in violation of 18 U.S.C. § 371; and assault with a dangerous weapon on federal land, in violation of 18 U.S.C. § 113(a)(3). Smith pleaded guilty to the charges on July 7, 2016, and McClinton pleaded guilty to the charges on May 5, 2016.
In addition to the prison terms and restitution, Judge Orrick sentenced Smith and McClinton each to three-year terms of supervised release. The defendants were both immediately remanded to custody after sentencing.
Special Assistant U.S. Attorney William J. Edelman prosecuted the case with the assistance of Patricia Mahoney. The prosecution is the result of an investigation by the U.S. Park Police.
The United States Settles False Claims Act Case with Nursing Home Company to Settle Allegations of Medically Unnecessary Rehabilitation Therapy ServicesRead the Press Release
SAN FRANCISCO- North American Health Care, Inc. (NAHC), its chairman of the board, John Sorenson, and its senior vice president of Reimbursement Analysis, Margaret Gelvezon, have agreed to pay a total of $30 million to resolve allegations that they violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary rehabilitation therapy services provided to residents at NAHC’s skilled nursing facilities (SNFs), announced United States Attorney Brian J. Stretch. Under the settlement agreement, NAHC will pay $28.5 million. Mr. Sorensen has agreed to pay $1 million and Ms. Gelvezon has agreed to pay $500,000.
NAHC is a private, for-profit company headquartered in Orange County, California, that has service agreements to operate 35 SNFs, most of them in California, that provide inpatient rehabilitation services, including physical, occupational, and speech therapy. The United States contends that NAHC caused false claims to be submitted to Medicare and TRICARE for medically unnecessary rehabilitation therapy services provided to residents of the NAHC nursing homes, including keeping the residents at the SNFs longer than necessary. The United States alleged that this conduct occurred during the period from January 21, 2005 to October 31, 2009 for the 35 SNFs, and continued during the period of November 1, 2009 to December 3, 2011, for three of the SNFs located in the Northern District of California: Apple Valley Convalescent, Petaluma Care and Rehab, and Linda Mar Care Center.
The United States also contends that Mrs. Gelvezon, in her capacity as an officer of NAHC, contributed to this conduct by creating the improper billing scheme, and that Mr. Sorensen, in his capacity as a Chairman of the Board of NAHC, reinforced this scheme at the NSFs.
In addition to the monetary settlement, NAHC has also entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) which applies to all facilities managed by NAHC and requires an independent review organization to annually review therapy services billed to Medicare.
“This office is committed to safeguarding the federal health care programs and the patients who are enrolled in them. Skilled nursing facilities such as NAHC treat some of the most vulnerable patients in the health care system. These facilities, and the individuals who run them, must be held accountable when they provide treatment based on financial motivations instead of the patients’ needs,” said Brian J. Stretch, United States Attorney for the Northern District of California.
“Medicare patients and those insured by TRICARE are entitled to receive care necessary for their clinical needs and not the financial needs of their health providers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Health care providers will be held accountable if they bill for unnecessary services or treatment.”
“Providing medically unnecessary services to this fragile population can be taxing both for the patient and the program,” said Department of Health and Human Services-Office of the Inspector General (HHS-OIG) Special Agent in Charge Steven Ryan. “Today’s settlement should send a message to others engaging in these schemes that we will pursue justice for our beneficiaries and the programs.”
Special Agent in Charge Chris Hendrickson, of the Defense Criminal Investigative Service (DCIS) Western Field Office, commented for TRICARE, “DCIS and our law enforcement partners will steadfastly pursue those who violate the public’s trust by corrupting the federal health care system, to include the Department of Defense TRICARE program. Health care fraud compromises the well-being of the general public and undermines the efforts of the Department of Defense to support our men and women in uniform.” TRICARE is a United States health benefit plan for uniformed personnel, retirees, their dependents and reserve components.
FBI Special Agent in Charge John F. Bennett said, “this settlement reinforces the FBI San Francisco Division’s commitment to working with our law enforcement partners to pursue those who seek to harm the integrity of our federal health care programs for personal gain. Programs such as TRICARE and Medicare are in place to treat and take care of members of our community including our servicemen, servicewomen and their loved ones and the elderly. We will not tolerate such a gross violation of public trust,” said Special Agent in Charge John F. Bennett.
Assistant United States Attorney Gioconda Molinari handled the case with the assistance of Paralegal Lucille Yee. This case is the result of an investigation by the U.S. Attorney’s Office, the Civil Division’s Commercial Litigation Branch of the U.S. Department of Justice, the Federal Bureau of Investigation, and HHS-OIG, and DCIS.
The claims resolved by the settlements are allegations only and there has been no determination of liability.
San Francisco-Based Tax Preparer Convicted of Tax FraudRead the Press Release
SAN FRANCISCO – A federal jury convicted Josiah Larkin of conspiracy to file false claims and presenting false claims to the IRS, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The guilty verdicts, reached yesterday, followed a six-day jury trial before the Honorable Susan Illston, U.S. District Court Judge.
Evidence at trial showed that Larkin, 40, of San Francisco, set up a storefront on Third Street in the Bayview/Hunter’s Point neighborhood of San Francisco in December of 2012. Although not authorized to do so, he identified the shop as a Colbert Ball Tax franchise. Larkin advertised “Get Up to $600- Even if Unemployed, On SSA or SSI.” Larkin prepared false tax returns for clients, reporting that they had no income and that they paid $4,000 in qualified education expenses to attend college. This combination of zero 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 fraudulently-obtained tax refunds and gave the remaining half to his clients. Larkin was indicted on January 6, 2015, and charged with one count of conspiracy to file false federal income tax returns as well as multiple counts of filing false claims and aiding and abetting filing false claims, all in violation of 18 U.S.C. §§ 286 and 287. The jury found Larkin guilty of the conspiracy charge and five counts of filing false claims.
“The fraudulent preparation of tax returns is an insidious drain on the public fisc,” said U.S. Attorney Brian J. Stretch. “This office will continue to devote resources to prosecute those who seek to profit by submitting fraudulently prepared tax returns to the IRS.”
“Josiah Larkin’s verdict today marks another example of a tax return preparer who preyed on the vulnerable,” said Michael T. Batdorf, Special Agent in Charge IRS Criminal Investigation. “He used personal identifying information to make a quick buck. Educating the public about these schemes is a continuing focus for IRS-CI. Tax preparers should take note that if they attempt to defraud the IRS they will be caught and held accountable.”
Defendant's sentencing hearing is scheduled for January 13, 2017, before Judge Illston. The maximum statutory penalty for conspiracy to file false claims is ten years’ imprisonment and a fine of $250,000. The maximum statutory penalty for presenting false claims to an agency of the United States is five years’ imprisonment and a fine of $250,000, plus restitution if appropriate. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Cynthia Stier and Laurie Gray prosecuted the case. The prosecution is the result of an investigation by the Internal Revenue Service.
Former San Francisco Restaurant Owner Pleads Guilty to Concealing Facts About Employee WagesRead the Press Release
SAN FRANCISCO – Ming Lian Zhou pleaded guilty in federal court in San Francisco today to a scheme to conceal a material fact from a government agency, announced United States Attorney Brian J. Stretch and Department of Labor Office of the Inspector General Special Agent in Charge Abel Salinas.
In pleading guilty, Zhou, 58, of San Francisco, admitted that he covered up the fact that he had not paid back wages to employees at two San Francisco restaurants he formerly owned, Hong Kong Lounge and Hong Kong Lounge II. On March 16, 2012, Zhou was notified by a representative of the Department of Labor Wage and Hour Division that he owed employees of those two restaurants $92,966.51 in overtime wages. Zhou admitted that, on or about March 27, 2012, he signed and submitted to the Wage and Hour Division two Forms WH-56, in which he represented and agreed that he would pay his employees the assessed amount and would mail proof of that payment to the Wage and Hour Division. In April 2012, he deliberately signed and submitted to the Wage and Hour Division 46 Forms WH-58, in which he reported that he had paid 46 employees their overtime back wages. In truth, he did not pay the employees their overtime back wages. He nevertheless signed the forms, and asked his employees to sign the forms, confirming that the employees had received their wages.
This case originated with an investigation by the Department of Labor’s Wage and Hour Division into whether restaurants in the Bay Area were in compliance with the Fair Labor Standard Act.
Zhou was indicted by a federal Grand Jury on September 17, 2015. He was charged with one count of concealing a material fact from a government agency, in violation of 18 U.S.C. § 1001(a)(1), and three counts of interfering with commerce by threats of economic harm, in violation of 18 U.S.C. § 1951. Under the plea agreement, Zhou pleaded guilty to a single count under 18 U.S.C. § 1001(a)1(1).
Zhou is currently on release on bond. Zhou’s sentencing hearing is scheduled for January 17, 2017, at 2:30 p.m., before the Honorable Richard Seeborg, U.S. District Judge, in San Francisco. The maximum statutory penalty for a count in violation of 18 U.S.C. § 1001(a)(1) is five years in prison and a fine of $250,000, plus restitution. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by Assistant U.S. Attorney John Hemann and Special Assistant U.S. Attorney Katherine Lloyd-Lovett with the assistance of Marina Ponomarchuk and Matthew Swartsfager. The prosecution is the result of an investigation by the Department of Labor’s Office of the Inspector General and the Wage and Hour Division.
Former Securities Lawyer Pleads Guilty to Securites FraudRead the Press Release
SAN JOSE – James Seltzer, a former attorney and resident of Marin County, pleaded guilty to securities fraud, announced United States Attorney Brian Stretch, FBI Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The guilty plea was accepted yesterday by U.S. District Judge Lucy H. Koh.
According to the plea agreement, beginning no later than October of 2007 through at least May of 2011, Seltzer, 67, 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. Seltzer further admitted that he had more than ten victims resulting in losses of more than $2,500,000.
Seltzer was indicted by a federal grand jury on June 18, 2015. He was charged 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. Pursuant to the plea agreement, Seltzer admitted his guilt to one count of securities fraud and the remaining counts were dismissed. After being apprehended in Hawaii in September 2015, Seltzer was ordered to appear in San Jose to face the charges presented in the indictment.
The maximum term of imprisonment for securities fraud is 20 years. Additional periods of supervised release, fines, and special assessments also could be imposed. 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. Seltzer remains free on a bond and is scheduled to appear before Judge Koh on February 15, 2017, for sentencing.
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.
Contra Costa Resident Sentenced to 12 Years’ Imprisonment for Trafficking Methamphetamine and Illegally Possessing FirearmsRead the Press Release
OAKLAND – Francisco Gonzalez was sentenced to 144 months’ imprisonment for possession with intent to distribute methamphetamine and for being a felon in possession of a firearm and ammunition, announced United States Attorney Brian J. Stretch and U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder. The sentence was handed down yesterday by the Honorable Jeffrey S. White, United States District Judge, following entry of a guilty plea on June 1, 2016.
Gonzalez, 25, of Concord, Calif., pleaded guilty to drug possession and distribution charges as well as being a felon in possession of firearms and ammunition. According to records filed in connection with his plea agreement, Gonzalez is a known Norteño gang member. As part of his plea agreement, Gonzalez acknowledged that between July 21, 2015, and August 17, 2015, he sold 973 grams of actual methamphetamine, 15 grams of cocaine, nine firearms, and 208 rounds of ammunition to an undercover agent. Several of the firearms were stolen during a residential burglary in Antioch, Calif. According to the plea agreement, Gonzalez made the sales over the course of eight transactions that occurred in numerous venues throughout Concord and Pittsburgh, Calif. Gonzalez also acknowledged he told the undercover agent he could get the agent a “better price” if the agent purchased methamphetamine more frequently and/or in larger quantities. Gonzalez was charged by Information on March 17, 2016, with one count of possession with intent to distribute and distribution of methamphetamine, in violation of 21 U.S.C. § 841(a)(1); and one count of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1).
In addition to the prison term, Judge White sentenced the defendant to a five-year period of supervised release. Gonzalez has been in custody since his arrest in September 2015 and will begin serving his sentence immediately.
Assistant U.S. Attorney Kimberly Hopkins is prosecuting the case. The prosecution is the result of an investigation by the ATF.
San Jose Resident Sentenced to 33 Months in Prison for Conspiracy and Wire FraudRead the Press Release
SAN JOSE- Skylar Ariel Phoenix was sentenced to 33 months’ imprisonment and ordered to pay over $1.69 million in restitution for wire fraud and conspiracy to commit wire fraud, announced United States Attorney Brian J. Stretch and FBI Special Agent in Charge John F. Bennett. The sentence, handed down yesterday by the Honorable Lucy H. Koh, U.S. District Judge, follows a guilty plea entered March 15, 2016.
According to the guilty plea, Phoenix, 52, of San Jose, admitted she was an employee in the marketing department of an insurance company from approximately June 2003 until September 2011. While she was employed as a manager of the company, Phoenix arranged to have the company billed for work that was not authorized. Specifically, Phoenix conspired to hire her spouse as an independent contractor under her sole supervision in clear violation of internal policies and procedures. Further, she took steps to conceal the familial relationship by using an alias for her spouse and by using another family member’s home as her spouse’s address. Phoenix’s former employer identified 13 checks between September 21, 2004, and April 28, 2006, totaling $97,652,00 for work that was never provided. In addition, between June 2007 and March 2011, Phoenix created four requisition forms to provide further supposed employment for her spouse. The requisition forms generated additional billings to her then-employer of $382,562.50 and no work was completed in exchange for the money.
In addition, Phoenix admitted as part of her plea agreement that she engaged in a second, separate scheme to defraud the insurance company by placing marketing business with a friend’s company as an outside vendor in exchange for a total of $357,452 in kickbacks over several years. Phoenix acknowledged she knew the receipt of the kickbacks was a direct violation of her employer’s ethics policy.
A federal grand jury indicted Phoenix on June 18, 2014, for two counts of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; multiple counts of wire fraud, in violation of 18 U.S.C. §§ 1343 and 2; and two counts of making false statements to a government agent, in violation of 18 U.S.C. § 1001. Pursuant to her plea agreement, Phoenix pleaded guilty to one count of conspiracy and one count of wire fraud covering each of the two separate schemes.
In addition to the prison term and restitution, Judge Koh sentenced Phoenix to a three-year term of supervised release. Judge Koh ordered Phoenix to surrender on or before November 2, 2016 to begin serving her sentence.
Assistant U.S. Attorneys Amie Rooney and Maia Perez prosecuted the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the FBI.
Justice Department Settles with Humboldt County, California, to Resolve Americans with Disabilities Act ViolationsRead the Press Release
The Justice Department filed a proposed consent decree today with Humboldt County, California, resolving claims that the county violated Title II of the Americans with Disabilities Act (ADA).
The consent decree, which is still subject to approval by the U.S. District Court for the Northern District of California, resolves the department’s complaint that the county’s facilities, programs, services and activities are inaccessible to individuals with disabilities in violation of the ADA, despite the county’s previous commitment to improve access by entering into a Project Civic Access (PCA) agreement with the United States.
“State and local governments must ensure that people with disabilities can access community services, programs and facilities without facing unlawful and discriminatory barriers,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “ADA compliance is not optional and the Justice Department works tirelessly to make sure that people with disabilities can live their lives with the dignity, respect and independence they deserve.”
“This office is committed to ensuring equal access to programs, both public and private,” said U.S. Attorney Brian J. Stretch of the Northern District of California. “The federal government will not tolerate discrimination that results when individuals are excluded from public access.”
The consent decree is a court-enforceable commitment by Humboldt County to bring its facilities, programs, services and activities into compliance with the ADA and make the county more accessible to individuals with disabilities. Under the terms of the consent decree, the county will pay $275,000 to compensate individuals with disabilities who faced barriers to access while attempting to use county facilities and programs. Under the decree, Humboldt County will also implement a wide range of actions to comply with the ADA, including the following:
- bring all county facilities, programs, services and activities into compliance with the ADA within three and a half years;
- ensure that the county website conforms to, at minimum, the Web Content Accessibility Guidelines 2.0 Level AA Success Criteria;
- provide curb ramps at all county intersections;
- ensure that emergency management procedures, policies and shelters are accessible to individuals with disabilities; and
- hire an ADA coordinator, independent licensed architect, web accessibility coordinator and website accessibility consultant.
The United States has over 220 agreements with localities across the country under PCA, the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the nation comply with the ADA. Humboldt County is one of the rare public entities that did not take the remedial actions required by a PCA agreement to comply with the ADA.
To read the consent decree and complaint, please visit www.ada.gov. For more information about the ADA, call the department’s toll-free ADA Information Line at 800-514-0301 (TDD 800-514-0383) or access the ADA website at www.ada.gov.
Humboldt County Consent Decree
Justice Department Settles with Humboldt County to Resolve Americans with Disabilities Act ViolationsRead the Press Release
SAN FRANCISCO– The Justice Department announced a proposed consent decree today with Humboldt County resolving claims that the county violated Title II of the Americans with Disabilities Act (ADA).
The consent decree, which is still subject to approval by the U.S. District Court for the Northern District of California, resolves the department’s complaint that the county’s facilities, programs, services and activities are inaccessible to individuals with disabilities in violation of the ADA, despite the county’s previous commitment to improve access by entering into a Project Civic Access (PCA) agreement with the United States.
“This office is committed to ensuring equal access to programs, both public and private,” said U.S. Attorney Brian J. Stretch. “The federal government will not tolerate discrimination that results when individuals are excluded from public access.”
“State and local governments must ensure that people with disabilities can access community services, programs and facilities without facing unlawful and discriminatory barriers,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “ADA compliance is not optional and the Justice Department works tirelessly to make sure that people with disabilities can live their lives with the dignity, respect and independence they deserve.”
The consent decree is a court-enforceable commitment by Humboldt County to bring its facilities, programs, services and activities into compliance with the ADA and make the county more accessible to individuals with disabilities. Under the terms of the consent decree, the county will pay $275,000 to compensate individuals with disabilities who faced barriers to access while attempting to use county facilities and programs. Under the decree, Humboldt County will also implement a wide range of actions to comply with the ADA, including the following:
- bring all county facilities, programs, services and activities into compliance with the ADA within three and a half years;
- ensure that the county website conforms to, at minimum, the Web Content Accessibility Guidelines 2.0 Level AA Success Criteria;
- provide curb ramps at all county intersections;
- ensure that emergency management procedures, policies and shelters are accessible to individuals with disabilities; and
- hire an ADA coordinator, independent licensed architect, web accessibility coordinator and website accessibility consultant.
The United States has over 220 agreements with localities across the country under PCA, the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the nation comply with the ADA. Humboldt County is one of the rare public entities that did not take the remedial actions required by a PCA agreement to comply with the ADA.
To read the consent decree and complaint, please visit www.ada.gov. For more information about the ADA, call the department’s toll-free ADA Information Line at 800-514-0301 (TDD 800-514-0383) or access the ADA website at www.ada.gov.
International Fugitive Extradited to United States to Face Charges Regarding Alleged Cedar Funding Investment Fraud SchemeRead the Press Release
SAN JOSE - A former Monterey-area man, Manoel Antonio Errico, was extradited to the United States from Argentina on August 23, 2016, to face fraud charges brought against him in September 2009, announced United States Attorney Brian J. Stretch, Monterey County District Attorney Dean D. Flippo, United States Postal Inspection Service Inspector in Charge Rafael Nuñez, and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
In a federal indictment returned on September 8, 2009, Errico, 62, is accused of defrauding investors in Cedar Funding, a Monterey-based “hard money” lender. Errico allegedly induced victims to invest in loans purportedly secured by deeds of trust and in a fund that invested in those same loans. According to the thirty-one count indictment, Cedar Funding had more than 1,000 investors while in existence.
The indictment describes various ways in which Errico allegedly defrauded investors by inducing them to purchase fractional interests in loans secured by deeds of trusts, and shares of Cedar Funding Mortgage Fund, LLC. According to the indictment, Errico engaged in a scheme, plan and artifice to defraud his targets, failed to disclose material facts, and made materially false statements. Specifically, the indictment alleges that, among other things, by using documents provided to investors, advertisements, interest payments and verbal communications, Errico participated in creating the false and misleading appearance that the investors’ funds were invested in sound, secured real estate loans, which offered high returns and safety of principal. In truth, by in or about 2004 and increasingly thereafter, most of the loans were not performing, and the investors’ funds were not secure. Moreover, as borrowers increasingly failed to pay off loans, Errico, without the investors’ prior knowledge or consent, allegedly participated in extending the loan maturity dates and advanced more investor funds, which caused the loan balances to balloon beyond the initial loan amounts, diluted the investors’ fractional interests in the loans and increased the likelihood that they would lose some or all of their principal.
The indictment also alleges that, unknown to investors, the source of a substantial part of the interest that Errico caused Cedar Funding to pay to existing investors came from new investors’ funds rather than from performing borrowers.
Errico was arrested in April 2016 when he traveled from his home country of Brazil to Argentina. He was arrested by Argentine authorities based on an Interpol “Red Notice” that had been submitted by the United States. The United States thereafter made a formal extradition request to Argentina, and on August 1, 2016, the Argentine authorities ordered Errico extradited to the United States.
After being extradited, Errico made his initial appearance in federal court in San Jose on September 1, 2016, before U.S. Magistrate Judge Howard R. Lloyd. On that date, Judge Lloyd conducted a bail hearing and ordered that Errico be detained pending trial. The defendant’s next scheduled appearance is September 19, 2016, before U.S. District Judge Edward J. Davila.
Errico is named in each of the thirty-one counts alleged in the indictment. The charges and maximum statutory penalties for each count in the indictment are as follows:
- Count 1, conspiracy, in violation of 18 U.S.C. § 1349: twenty years’ imprisonment, a fine of $250,000 or twice the amount of gain or loss, whichever is greater, three years supervised release.
- Counts 2 through 12, mail fraud, in violation of 18 U.S.C. § 1341: twenty years’ imprisonment, a fine of $250,000 or twice the amount of gain or loss, whichever is greater, three years supervised release.
- Counts 13 through 20, wire fraud, in violation of 18 U.S.C. § 1343: twenty years’ imprisonment, a fine of $250,000 or twice the amount of gain or loss, whichever is greater, three years supervised release.
- Counts 21 through 31, securities fraud and aiding and abetting, in violation of 15 U.S.C. §§ 78j(b) and 78ff; 17 C.F.R. §§ 240.10b-5 and 240.10b5-2; and 18 U.S.C. § 2: twenty years’ imprisonment, a fine of $5,000,000 or twice the amount of gain or loss, whichever is greater, three years supervised release.
The court may also order that the defendant pay restitution, if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Please note, an indictment contains only allegations against an individual and, as with all defendants, Mr. Errico must be presumed innocent unless and until proven guilty.
Assistant U.S. Attorney Kyle F. Waldinger is prosecuting the case with the assistance of paralegal Beth Margen and legal assistant Stephanie Mitchell. The prosecution is the result of a sixteen-month joint investigation by the United States Postal Inspection Service, the Federal Bureau of Investigation, and the Monterey County District Attorney’s Office. The U.S. Attorney’s Office recognizes the substantial assistance provided by the Monterey County District Attorney’s Office in this case.
Florida Computer Programmer Arrested for HackingRead the Press Release
SAN FRANCISCO – A South Florida-based computer programmer made an appearance in the Southern District of Florida today after being arrested Sunday on charges of hacking into computers operated by the Linux Kernel Organization and the Linux Foundation, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
The Linux Kernel Organization operates the www.kernel.org website from which it distributes the Linux kernel software. The Linux Foundation is a separate nonprofit foundation that supports the www.kernel.org website.
Donald Ryan Austin, 27, of El Portal, Fla., was arrested during a traffic stop on August 28, 2016, by officers of the Miami Shores Police Department. Austin was arrested pursuant to a four-count indictment returned by a federal grand jury in the Northern District of California on June 23, 2016, and unsealed Tuesday.
Austin is charged with causing damage to four servers located in the Bay Area by installing malicious software. Specifically, he is alleged to have gained unauthorized access to the four servers by using the credentials of an individual associated with the Linux Kernel Organization. According to the indictment, Austin used that access to install rootkit and trojan software, as well as to make other changes to the servers. Austin is charged with four counts of intentional transmission causing damage to a protected computer, in violation of 18 U.S.C. § 1030(a)(5)(A).
Austin made his initial appearance in federal court in Miami, Fla., on August 29, 2016. He was released on bond today. Bail was set at $50,000. Austin’s next scheduled appearance is in San Francisco at 9:30 a.m. on September 21, 2016, before the Honorable Sallie Kim, United States Magistrate Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of ten years of imprisonment, and a fine of $250,000, plus restitution, for each violation of 18 U.S.C. § 1030(a)(5)(A). However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Former San Francisco Police Officer Sentenced to PrisonRead the Press Release
SAN FRANCISCO – Former San Francisco Police Officer Arshad Razzak was sentenced yesterday afternoon to 14 months in prison, and ordered to pay a $12,500 fine for violating the civil rights of a resident of a single room occupancy hotel and writing a false police report in connection with the incident announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
Following a jury trial, Razzak, 44, of San Francisco, was convicted on January 22, 2015, of engaging in a conspiracy against civil rights, in violation of 18 U.S.C. § 241; deprivation of rights under color of law, in violation of 18 U.S.C. § 242; and falsification of records, in violation of 18 U.S.C. § 1519. The evidence at trial proved that Razzak was the sergeant in charge of a group of undercover San Francisco Police Officers who entered a room in the Henry Hotel on December 23, 2010, without a warrant or other legal justification, in violation of the Fourth Amendment. In a report written after the illegal search, Razzak falsely represented that there were exigent circumstances that justified entry into the room. A hotel surveillance video recorded the incident and proved that Razzak’s account of the entry into the room was false. The evidence also showed that Razzak falsified documents related to a confidential informant in an improper effort to bolster his justification for searching the room.
Razzak was indicted by a federal grand jury on February 25, 2014. The incident came to the attention of the FBI after the San Francisco Public Defender released the videotape of Razzak and other officers entering the room at the Henry Hotel.
United States Attorney Brian J. Stretch said, “The fair administration of criminal justice requires police officers to uphold the constitution and to honestly document their activities. When officers intentionally violate their oath, as Mr. Razzak did, it is essential to the integrity of the criminal justice system that they be held responsible.”
The sentence was handed down by the Honorable Richard Seeborg, U.S. District Judge. Judge Seeborg also sentenced the defendant to a three-year period of supervised release. The defendant will begin serving the sentence on December 2, 2016, after the Bureau of Prisons designates the facility where he will be incarcerated.
The case was prosecuted by members of the Special Prosecutions Unit of the U.S. Attorney’s Office and the FBI.
San Francisco Man Sentenced to 366 Months for A String of Bank RobberiesRead the Press Release
SAN FRANCISCO – Darius Gilbert was sentenced today to over 30 years in prison, and ordered to pay over $148,000 in restitution for a series of nine bank robberies, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
Gilbert, 49, of San Francisco, pleaded guilty on May 10, 2016, to five counts of armed bank robbery, three counts of unarmed bank robbery, escape, being a felon in possession of a firearm, and using, carrying, or possessing a firearm during and in relation to a crime of violence. According to the plea agreement, Gilbert admitted that he had escaped on March 26, 2015, while transferring to a halfway house after serving a prior sentence in federal prison for bank robbery. Shortly after his escape, Gilbert robbed eight banks in the Bay Area and one in Elk Grove, Calif., between March and June 2015. During three of the robberies, Gilbert pointed a gun at tellers and bank managers. He brandished a knife during two of the robberies, and verbally threatened tellers in four of the robberies. In total, Gilbert took $148,090 from the nine banks.
Gilbert was indicted by a federal grand jury on June 18, 2015. He was charged with five counts of armed bank robbery, in violation of 18 U.S.C. §§ 2113(a) and (d); three counts of unarmed bank robbery, in violation of 18 U.S.C. § 2113(a); escape, in violation of 18 U.S.C. § 751(a); two counts of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1); and three counts of using, possessing, and carrying a firearm during and in relation to a crime of violence, in violation of 18 U.S.C. § 924(c). Pursuant to his plea agreement, Gilbert pleaded guilty to all the charges except for one of the § 922(g) counts and two of the § 924(c) counts.
The sentence was handed down by the Honorable Vince Chhabria. Judge Chhabria also sentenced the defendant to a five-year period of supervised release following his term of imprisonment, and ordered Gilbert to pay $148,090 in restitution. The defendant was immediately remanded into custody.
Assistant U.S. Attorney Rita F. Lin is prosecuting the case with the assistance of Marina Ponomarchuk and Theresa Benitez. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Novato Landscaper Pleads Guilty to Filing A False Tax ReturnRead the Press Release
SAN FRANCISCO – Marina Zuk pleaded guilty to filing a false tax return 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 2008 through 2010, Zuk, 57, of Novato, Calif., owned and operated Growing Works, a landscaping and yard maintenance business. For those years, Zuk admitted that she filed false federal income tax returns with the IRS by willfully underreporting the gross receipts she received from the operation of her business. She also did not report interest income that she received from a nominee bank account she maintained in the name of her deceased grandmother. For the years 2008, 2009 and 2010, Zuk underreported gross receipts from Growing Works in the amounts of $350,861.51, $409,976.19 and $287,073.40, respectively.
Zuk was charged on April 7, 2015, with three counts of filing a false tax return. Zuk is scheduled to be sentenced on February 6, 2017, before the Honorable Thelton E. Henderson, U.S. District Judge.
The maximum sentence for filing 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 is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Sixteen Defendants Charged in Criminal Complaints Alleging Broad-Ranging Drug Trafficking ConspiracyRead the Press Release
SAN FRANCISCO – A total of sixteen defendants have been named thus far in a federal criminal complaint alleging a broad-ranging criminal conspiracy to traffic methamphetamine, heroin, cocaine, and other drugs in both the Eastern and Northern Districts of California, announced United States Attorney Brian J. Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin. The complaint, unsealed today, and related documents filed in the Eastern District of California allege that the following defendants participated in the conspiracy:
- Oscar Vladimir Escalante, aka “Cuddy,” aka “Hoggy”
- Melina Patricia Escalante
- Claudia Munoz
- Jorge Gomez, aka “George”
- Alfredo Guadalupe Ortiz, aka “Pep”
- David Vigil aka “Chepp,” aka “Carlos”
- Julian Marc Reayoung, aka “Marcus”
- Christian Victor Vanleer, aka “Buggy,” aka “Buggy B”
- Michael Anthony Vicochea, aka “Mikey,” aka "Money Mike"
- Ignacio Gonzalez, aka “Pelon”
- Daniel Medina-Garay;
- Adam Mustafa Abdelwahhab
- Louis Ramirez, aka “Louie”
- Joel Salcedo
- Sean Constantine Chin, aka “Miami”
- James Hinkle, aka “Big Jim”
According to the complaint, the defendants all were part of a conspiracy whose objective was to distribute large quantities of heroin, cocaine, methamphetamine and prescription pills. The conspirators also maintained marijuana grow houses in San Francisco, Oakland, Antioch, Discovery Bay, Tracy, and Delano, California.
According to the complaint, Oscar Escalente orchestrated many aspects of the alleged conspiracy, including working with an armorer to modify firearms so as to make them fully automatic for use in furtherance of the conspiracy. The complaint also describes the various roles that the defendants allegedly played in the conspiracy. The allegations set out the following:
- Melina Escalante, Oscar’s wife, assisted him in laundering the proceeds of his drug business;
- Claudia Munoz, Oscar’s girlfriend, managed utilities and rental of real property for the grow houses;
- Jorge Gomez managed a number of the grow houses;
- David Vigil managed cultivation in a grow house and supplied methamphetamine;
- Alfredo Ortiz assisted in the operations at four grow houses;
- Julian Reayoung distributed heroin, methamphetamine, and marijuana;
- Christian Vanleer distributed heroin, cocaine, and alprazolam;
- Michael Vicochea operated a grow house and distributed methamphetamine;
- Ignacio Gonzalez managed a grow house and collected money from people who received drugs;
- Daniel Medina-Garay distributed heroin and functioned as a street-level dealer;
- Adam Abdelwahhab modified firearms to make them fully automatic and then supplied them to the conspirators;
- Louis Ramirez assisted in growing and distributing marijuana and concentrated cannabis;
- Joel Salcedo supplied heroin and methamphetamine to Oscar Escalante and Michael Vicochea;
- Sean Chin was involved with at least one marijuana grow; and
- James Hinkle assisted with growing and transporting marijuana plants.
All the defendants were charged with engaging in a conspiracy to distribute heroin, cocaine, methamphetamine, alprazolam, and 100 or more marijuana plants, in violation of 21 U.S.C. § 846; and illegal use of a communication facility, in violation of 21 U.S.C. § 843(b). In addition, Oscar Escalante, Vicochea, Abdelwahhab, and Salcedo were charged with possession of a machine gun, in violation of 18 U.S.C. § 922(o); and Oscar and Melina Escalante, Munoz, Reayoung, and Vicochea were charged with money laundering, in violation of 18 U.S.C. § 1956(h). The maximum statutory penalty for a violation of 21 U.S.C. §§ 841(a)(1) and 846 is 40 years’ imprisonment and a fine of $5,000,000; the maximum statutory penalty for a violation of 21 U.S.C. § 843(b) is 4 years’ imprisonment and a fine of $250,000; the maximum statutory penalty for a violation of 18 U.S.C. § 922(o) is 10 years; and the maximum statutory penalty for a violation of 18 U.S.C. § 1956(h) is 20 years. 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.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Yesterday, the DEA made 17 arrests and searched at least 14 locations in coordinated activity. The defendants are scheduled to make the following appearances for detention hearings:
Defendant
Next appearance before
U.S. Magistrate Judge*
David Vigil
8/26/2016
James Hinkle
8/29/2016
Oscar Escalante
8/31/2016
Melina Escalante
8/29/2016
Claudia Munoz
8/29/2016
Jorge Gomez
8/30/2016
Alfredo Ortiz
8/30/2016
Julian Reayoung
Not yet scheduled
Christian Vanleer
8/26/2016
Michael Vicochea
8/31/2016
Ignacio Gonzalez
8/30/2016
Daniel Medina-Garay
8/30/2016
Adam Abdelwahhab
8/31/2016
Louis Ramirez
8/29/2016
Joel Salcedo
9/6/2016
Sean Chin
8/29/2016
* All appearances will be made before U.S. Magistrate Judge Kandis Westmore except Vigil and Hinkle who will appear before U.S,. Magistrate Judge Stanley A. Boone, in Sacramento and Salcedo who will appear before U.S. Magistrate Judge Donna M. Ryu in San Jose.
This case is the product of an 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. Special assistance was provided by the San Ramon Police Department with additional assistance from the Marin County Sheriff and the Oakland Police Department.
U. S. Citizen Sentenced to Ten Years’ Imprisonment for Traveling to Foreign Country to Have Sex with A MinorRead the Press Release
SAN FRANCISCO – Shaun Vincent Kelley was sentenced to ten years in prison today for engaging in illicit sexual conduct in foreign places, 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 May 13, 2016.
Pursuant to his guilty plea, Kelley, 57, who has resided in several states, admitted that on September 1, 2013, he traveled from the United States to Thailand, where he stayed until April 2016. Kelly further admitted that while in Thailand on June 10, 2015, he paid a 14-year-old boy, who he knew to be under 18 years of age, to engage in sexual conduct with him. Kelley also acknowledged he took a video of this encounter that depicts the sexual conduct.
On February 2, 2016, a grand jury indicted Kelley with a single count of engaging in illicit sexual conduct in foreign places, in violation of 18 U.S.C. § 2423(c).
The sentence was handed down by the Honorable Susan Illston, United States District Judge. In addition to the prison term, Judge Illston sentenced Kelley to serve five years of supervised release.
The case is being prosecuted by Special Assistant U.S. Attorney Philip Kopczynski with the assistance of Marina Ponomarchuk. The case was investigated by the FBI.
East Bay Resident Pleads Guilty to Possession with Intent to Distribute Crystal MethamphetamineRead the Press Release
OAKLAND – Joseph Edward Conner pleaded guilty in federal court in Oakland yesterday to possessing with the intent to distribute over four pounds of crystal methamphetamine announced United States Attorney Brian J. Stretch, U.S. Drug Enforcement Administration (DEA) Special Agent in Charge John J. Martin, Internal Revenue Service (IRS), Criminal Investigation, Special Agent in Charge Michael Batdorf, U.S. Postal Inspection Service, Inspector in Charge Rafael E. Nunez, U.S. Customs and Border Protection Director of Field Operations Brian J. Humphrey, and Acting Special Agent in Charge for U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Ryan L. Spradlin. All of the methamphetamine was at least 97.5% pure.
In pleading guilty, Conner, 47, of Bay Point, Calif., admitted he engaged in three transactions with an undercover officer working with the DEA in an effort to distribute the methamphetamine. On August 22, 2014, Conner negotiated the sale of a half-pound of 99% pure methamphetamine for $3,000. Conner sold the drugs to an undercover DEA Task Force officer in the parking lot of the Sun Valley Mall in Concord, Calif. Later, Conner used text messages to arrange another meeting with the undercover officer that would take place on November 6, 2014, at the same parking lot. Upon meeting with the undercover, Conner handed the officer a pound of 99.5% pure methamphetamine in exchange for $5,400. The third transaction occurred on December 16, 2014, for three pounds of 97.5% pure methamphetamine. On this occasion, Conner sought to sell the drugs for $14,400, but was arrested prior to completing the sale.
Conner was indicted by a federal grand jury on June 2, 2015. He was charged with three counts of possession of methamphetamine with intent to distribute, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(C). Under the plea agreement, Conner pleaded guilty to all three counts alleged in the indictment.
Following his arrest on December 16, 2014, Conner was released on a $150,000 secured bond. His next court appearance is scheduled for November 28, 2016, for a sentencing hearing before the Honorable Haywood S. Gilliam, Jr., U.S. District Judge, in Oakland. The maximum penalty for a violation of 21 U.S.C. § 841 is 20 years’ imprisonment and a $1,000,000 fine. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Claudia A. Quiroz, Andrew Dawson, and David Countryman are prosecuting the case with the assistance of Lance Libatique and Carolyn Jusay. The prosecution is the result of an investigation by the DEA, assisted by IRS Criminal Investigations, U.S. Postal Inspection Service, U.S. Customs and Border Protection, Homeland Security Investigations, Contra Costa County Sheriff’s Office, South San Francisco Police Department, Oakland Police Department, Oakland School Police Department, Walnut Creek Police Department, and San Ramon Police Department.
The 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.
San Francisco Resident Sentenced to More Than Eight Years in Prison for Brandishing A Firearm and Assaulting Persons Assisting A Federal OfficerRead the Press Release
SAN FRANCISCO – Donnie Bell was sentenced to 97 months and one day in prison today after pleading guilty to assaulting a person assisting a federal officer in the performance of official duties and brandishing a firearm during and in relation to a crime of violence, announced United States Attorney Brian J. Stretch and U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder. The sentence was handed down by the Honorable William H. Orrick, United States District Judge.
As part of his plea agreement, Bell, 34, of San Francisco, admitted he met with two individuals at a gas station in San Francisco and later learned that the individuals were working as confidential informants on behalf of special agents of the ATF. He then entered the back seat of the informants’ car and brandished a firearm in such a way as to put the informants in fear of immediate bodily harm.
Bell was originally charged by complaint on April 29, 2015. On March 16, 2016, he was charged by superseding information with one count of assault on a person assisting a federal officer or employee in the performance of official duties, in violation of 18 U.S.C. § 111(b); and one count of brandishing a firearm during and in relation to a crime of violence, in violation of 18 U.S.C. § 924(c). On March 24, 2016, Bell pleaded guilty to both counts in the superseding information.
Judge Orrick also sentenced Bell to a five-year period of supervised release, to commence after Bell completes his prison sentence. Bell has been in custody since his arrest in April of 2015. He will begin serving his sentence immediately.
Assistant U.S. Attorney Scott Joiner prosecuted the case with assistance from Ponly Tu. The prosecution is the result of an investigation by the ATF.
Oakland Resident Sentenced to Twelve Years in Prison for Armed Bank RobberyRead the Press Release
OAKLAND – Shawn Hermann McGee, AKA Shawn Burris, was sentenced today to 12 years in prison, and ordered to pay $7,200 in restitution for an armed bank robbery, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence, imposed by Honorable Yvonne Gonzalez Rogers, U.S. District Court Judge, follows a guilty plea entered by McGee on April 7, 2016.
According to the plea agreement, on May 16, 2015, McGee, 52, of Oakland, entered the Wells Fargo bank located inside a Safeway in Antioch. He was wearing a hard hat, a blue jumpsuit, dark sunglasses, and gloves. McGee placed a note demanding money on the teller counter, pointed a gun at the victim teller’s chest, ordered her to give him money, and threatened to shoot her if she pushed the silent alarm button. McGee fled the bank using a bicycle in the parking lot, then threw the bicycle into a pickup truck and led police on a high speed chase toward East Oakland. After reaching speeds of over 100 miles per hour, McGee eventually crashed his truck. McGee then ran toward an apartment complex in Oakland and, in an attempt to evade capture, entered one of the apartments. Inside the apartment, McGee found a resident who he told to keep quiet, remain on the sofa, and not alert the police. McGee remained inside the apartment with the resident for several hours. McGee eventually was arrested at the entrance to the apartment and officers collected the proceeds of the robbery near the location where McGee crashed his truck. McGee, was indicted by a federal grand jury on July 2, 2015. He was charged with armed bank robbery, in violation of 18 U.S.C. § 2113, and forced accompaniment, in violation of 18 U.S.C. § 2113.
In addition to the prison term, Judge Gonzalez Rogers also sentenced the defendant to a three-year period of supervised release. McGee, who has been in custody since his May, 2015 arrest, will begin serving his 12-year sentence immediately.
Assistant U.S. Attorney Christina McCall is prosecuting the case with the assistance of Vanessa Quant, Melissa Dorton, and Patty Lau. The prosecution is the result of an investigation by the Federal Bureau of Investigation, Antioch Police Department, Oakland Police Department and California Highway Patrol.
San Jose Resident Sentenced to over 12 Years’ Imprisonment for Trafficking MethamphetamineRead the Press Release
SAN JOSE – Edgardo Reyes was sentenced to 154 months’ imprisonment for conspiracy to distribute methamphetamine and possession with intent to distribute methamphetamine announced United States Attorney Brian J. Stretch and Drug Enforcement Administration (DEA) Special Agent in Charge John J. Martin. Reyes’s co-conspirator, Armando Solorio, was sentenced to 73 months’ imprisonment for his part in the drug trafficking scheme. The sentences were handed down by the Honorable Edward J. Davila, United States District Judge on August 15, 2016, following guilty pleas entered earlier this year.
Reyes, 34, of San Jose, pleaded guilty on March 18, 2016, to one count of conspiracy to distribute methamphetamine, in violation of 21 U.S.C. Section 846, and two counts of possession of methamphetamine with intent to distribute, in violation of 21 U.S.C. Section 841. Pursuant to his plea agreement, Reyes acknowledged as true the facts set out in a complaint filed on February 20, 2015. The complaint describes two transactions in which Reyes took part. The first transaction took place January 30, 2015, and involved Reyes’ efforts to sell a pound of methamphetamine to an undercover Task Force Officer of the DEA. This transaction led to a second transaction in February of 2015 in which Reyes attempted to sell another twelve pounds of the drug to the same undercover officer.
Solorio, 27, of San Jose, pleaded guilty on February 29, 2016, for his part in the drug trafficking scheme. Solorio acknowledged his role as a courier for both the January and February transactions which led to Reyes’ arrest.
In addition to the prison terms, Judge Davila sentenced each defendant to a three-year period of supervised release. Remarking on the large quantity of drugs at issue, Judge Davila referred to the case as a tragedy and stated that methamphetamine is “not good for anyone.” Both Reyes and Solorio have been in custody since their arrest in February 2015 and both will begin serving their sentences immediately.
Assistant U.S. Attorneys Jeffery Nedrow and Scott Simeon are prosecuting the case. The prosecution is the result of an investigation by the DEA.
Northern California Restaurant Owner Pleads Guilty to Obstructing the Internal Revenue Laws and Harboring Illegal Aliens for ProfitRead the Press Release
WASHINGTON – A Ukiah restaurateur pleaded guilty today to corruptly endeavoring to obstruct the due administration of the internal revenue laws and to harboring illegal aliens for profit, announced U.S. Attorney Brian J. Stretch, Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, Special Agent in Charge Ryan Spradlin of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and Special Agent in Charge Michael T. Batdorf of the Internal Revenue Service’s Criminal Investigation (IRS-CI).
Yaowapha Ritdet, 54, admitted that she knowingly hired Thai nationals who were illegally present in the United States to work at her restaurants, Ruen Tong Thai Cuisine and Walter Café, both located in Ukiah. Ritdet further admitted that she underpaid employees and instructed them not to speak to anyone about their immigration status. Ritdet also admitted that she willfully filed false individual income tax returns for tax years 2007 through 2011, failing to disclose gross receipts, sales and income received from their two restaurants, as well as rental income and a foreign bank account and failed to accurately report employment taxes owed for her restaurant employees, who were paid in cash.The guilty plea was accepted by U.S. District Judge Edward M. Chen. The maximum statutory penalty for a violation of 26 U.S.C. § 7212 is three years’ imprisonment and $250,000 or twice the gross gain or loss resulting from the criminal activity. The maximum statutory penalty for a violation of 8 U. S. C. § 1324(a)(1) is 10 years’ imprisonment and $250,000, or twice the gain or loss resulting from the criminal activity. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Ritdet is scheduled to be sentenced by Judge Chen on Feb. 22, 2017.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Brian J. Stretch commended special agents of IRS-CI and HSI, who investigated the case; the U.S. Department of Labor, Wage and Hour Division, which identified the underpayment of wages and overtime; and Trial Attorney Charles A. O’Reilly of the Tax Division and Assistant U.S. Attorney Jose A. Olivera, who are prosecuting the case.Oakland Resident Sentenced to Nine Years in Prison for Being A Felon in Possession of A FirearmRead the Press Release
OAKLAND – Anton Coker was sentenced to nine years’ imprisonment today after pleading guilty to being a felon in possession of a firearm, announced United States Attorney Brian J. Stretch and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder. The sentence was handed down by the Honorable Jeffrey S. White, United States District Judge, following a guilty plea entered on April 19, 2016.
As part of his plea agreement, Coker, 42, of Oakland, admitted he had previous felony convictions which prevented him from being entitled to legally possess firearms or ammunition. Nevertheless, between June 30, 2015, and July 31, 2015, Coker possessed and sold to a confidential informant and undercover agents a total of five guns and ammunition. During the same period, Coker also sold crack cocaine from his Oakland residence. On August 17, 2015, agents executed a search warrant at Coker’s residence and the storage unit next to it. In the storage unit, agents seized two more handguns and ammunition that Coker admitted belonged to him.
Coker was indicted on August 27, 2015, and charged with four counts of being a felon in possession of firearms and ammunition, in violation of 18 U.S.C. § 922(g)(1). Pursuant to his plea agreement, he pleaded guilty to one count and admitted the conduct underlying the other three counts, which were dismissed.
Judge White also sentenced Coker to a three-year period of supervised release, to commence after Coker completes his prison sentence. Coker has been in custody since his arrest in January of 2016. He will begin serving his sentence immediately.
Assistant U.S. Attorney Jonas Lerman is prosecuting the case with assistance from Assistant U.S. Attorney Denise Barton and Jeanne Carstensen. The prosecution is the result of an investigation by the ATF with the assistance of the United States Marshal’s Service.
San Francisco Tax Return Preparer Pleads Guilty to Filing False Tax ReturnRead the Press Release
SAN FRANCISCO – Thomalyn Virden pleaded guilty in federal court in San Francisco today to filing a false tax return with the Internal Revenue Service, announced United States Attorney Brian J. Stretch and Michael T. Batdorf, Special Agent in Charge of Internal Revenue Service.
In pleading guilty, Virden, 53, of San Francisco, admitted that she prepared and caused to be filed a false tax return which falsely reported that a taxpayer had paid $4,000 in education expenses for post-secondary education. By stating that the filer incurred the post-secondary education expenses, the taxpayer was able to make a claim to receive a refund of approximately $1,000 to which the taxpayer was not entitled. Virden charged a fee for preparing the tax returns. As part of her plea agreement, Virden further acknowledged she prepared other similar false returns as part of a course of conduct and common scheme. She also acknowledged that the additional tax returns were false because they claimed a refund based on education expenses that were not incurred by the taxpayers and that she charged a fee for preparing the tax returns.
Virden, was indicted by a federal grand jury on January 6, 2015. She was charged with one count of conspiracy to file false claims, in violation of 18 U.S.C. § 286, and three counts of filing false claims in violation of 18 U.S.C. § 287. Under the plea agreement, Virden pleaded guilty to one count of filing a false claim, in violation of 18 U.S.C. § 287.
Virden was released on bond. Her next court appearance is scheduled for December 9, 2016, for a sentencing hearing before the Honorable Susan Illston, U.S. District Judge, in San Francisco. The maximum statutory penalty for a violation of 18 U.S.C. § 287 is 5 years’ imprisonment and a fine of $250,000 plus restitution, if appropriate. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Cynthia Stier and Laurie Gray are the Assistant U.S. Attorneys prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service.
Owner of Bankrupt Berkeley Wine Shop Pleads Guilty to Running A Wine Ponzi SchemeRead the Press Release
OAKLAND – John E. Fox, the owner of Premier Cru, a now-bankrupt wine shop based in Berkeley, has pleaded guilty to wire fraud, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The plea agreement follows the filing of charges in June 2016 that the wine shop owner engaged in fraud.
Fox, 66, of Concord, Calif., co-founded Premier Cru in 1980, and eventually moved it to University Avenue in Berkeley. Premier Cru generally sold wine in two ways: through a physical retail store and through a “pre-arrival” or “wine futures” business. Though its pre-arrival wine business, Premier Cru sold to its customers wine of which Premier Cru had not taken possession. The business was based on the premise that Premier Cru would contract to buy wine from Europe and then, after having contracted to purchase wine, would sell it, through Premier Cru’s website or salespeople, to customers before it arrived in the United States. Specifically, Fox agreed that, through the website, he promised that the company would deliver European wines to customers within a time period of approximately six months to two years after customers had paid for the wine.
According to today’s plea agreement, Fox acknowledged he orchestrated a massive scheme to defraud through Premier Cru’s pre-arrival wine business by selling wine that he knew he would never be able to deliver to his customers. Fox admitted that, in many instances, he falsified purchase orders for wine that he had not contracted to purchase, entered them into Premier Cru’s inventory for sale, and then sold or caused Premier Cru’s salespeople to sell the phantom wine. He acknowledged that, between 2010 to 2015, he sold or attempted to sell approximately $20 million worth of phantom wine that he had never actually purchased prior to entering them onto Premier Cru’s inventory.
In addition, in instances where Fox actually did contract with foreign suppliers on behalf of Premier Cru to purchase wine, he generally promised to pay the foreign suppliers within 30 days. Fox admitted that he knew Premier Cru would not be able to make payment within 30 days, or in some cases, ever, because he embezzled money from Premier Cru’s business accounts and diverted money coming in from current customers to obtain wine for prior customers who had never received their wine.
According to the plea agreement, Fox embezzled funds from the Premier Cru accounts by both using Premier Cru’s business account to make payments for personal expenses and by making substantial cash transfers from the Premier Cru business accounts to personal accounts in his own name and in fake names. Fox used the embezzled funds to pay for personal credit cards; memberships to private golf clubs; the purchase or lease of expensive cars including Corvettes, Ferraris, a Maserati, and various Mercedes-Benzes; and a variety of additional personal expenses, including more than $900,000 on women he met online.
Premier Cru eventually filed for bankruptcy under Chapter 7 of the Bankruptcy Code. At the time of Premier Cru’s bankruptcy, customers had paid at least approximately $45 million for wine that they had not received. On June 28, 2016, Fox was charged with a single count of wire fraud in violation of 18 U.S.C. § 1343.
Fox’s sentencing hearing is scheduled for December 14, 2016, before the Honorable James Donato, U.S. District Judge, in Oakland. The maximum statutory penalty for a violation of 18 U.S.C. § 1343 is twenty years’ imprisonment and $250,000 or twice the amount gained or lost as a result of the scheme. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Benjamin Kingsley is prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
PG&E Found Guilty of Obstruction of an Agency Proceeding and Multiple Violations of the Natural Gas Pipeline Safety ActRead the Press Release
SAN FRANCISCO—A federal jury found Pacific Gas and Electric Company (“PG&E”) guilty today 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, California Attorney General Kamala D. Harris, San Mateo County District Attorney Stephen M. Wagstaffe, U.S. Department of Transportation Office of Inspector General Special Agent in Charge William Swallow, FBI Special Agent in Charge John F. Bennett, and San Bruno Police Chief Ed Barberini. The PSA violations were uncovered in the course of an investigation initiated after the fatal San Bruno natural gas pipeline explosion in 2010. The obstruction charge was added later after investigators discovered PG&E attempted to mislead the National Transportation Safety Board (NTSB) during its investigation.
The verdict follows a 5 ½ week trial before the Honorable Thelton E. Henderson, U.S. District Judge. The PSA-related charges stem from PG&E’s record keeping and pipeline “integrity management” practices. The evidence at trial demonstrated that PG&E willfully failed to address recordkeeping deficiencies concerning its larger natural gas pipelines knowing that their 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 required by the PSA and its regulations. On April 1, 2014, a federal grand jury for the Northern District of California returned an indictment charging PG&E with multiple pipeline violations. 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 5 out of the 11 separate violations of the PSA charged.
The charge of obstructing an agency proceeding was included in a superseding indictment filed July 29, 2014. The charge centers around PG&E’s use of a letter in an attempt to mislead the NTSB during an investigation. The NTSB began its investigation immediately after the deadly San Bruno explosion. 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. In accordance with this policy, PG&E did not prioritize as high-risk, and properly assess, many of its oldest natural gas pipelines, which ran through urban and residential areas. Although PG&E was operating under the policy from 2009 through April 5, 2011, the company submitted a letter to the NTSB attempting 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 United States Code Section 1505.
U.S. Attorney Brian J. Stretch provided the following statement:
On occasion an event occurs that is sufficiently devastating that a public account must be made, either through an admission of wrongdoing and acceptance of responsibility, or through the judgment of the people acting through a jury. Such an event was the explosion in San Bruno on September 9, 2010, and the physical and emotional injuries suffered by so many that terrible day.
In the aftermath of the explosion, our office, along with the District Attorney of San Mateo and the California Attorney General’s Office, charted a course to examine whether PG&E had complied with the federal regulations designed to keep people safe, or willfully disregarded those regulations. To honor the memory of those who perished in the explosion required nothing less. The jury has determined that PG&E management chose willfully not to follow certain of those regulations.
This verdict in no way diminishes or calls into question the hard, honest work done by PG&E’s employees in the field, as they labor tirelessly day and night to provide us with light and heat. It is a reflection only of the choices and priorities set at the top.
PG&E provides gas and electricity to the citizens of Northern California and must adhere to certain safety requirements and financial limitations. We hope that the verdict today insures that PG&E’s management will adhere faithfully to this compact in the future.
I want to thank the many prosecutors and team members whose singular focus and dedication was nothing short of heroic. The Assistant United States Attorneys who tried the case to the jury -- Hallie Hoffman, Jeff Schenk, and Hartley West – represented the Department of Justice with highest degree of professionalism.
Our office was teamed up with the California Attorney General’s Office, the San Mateo County District Attorney’s Office, and the San Bruno Police Department. This was a shared responsibility and we are deeply appreciative of their commitment to joining us in the pursuit of justice.
In addition, the Federal Bureau of Investigation and the U.S. Department of Transportation Office of Inspector General were relentless in their pursuit of facts.
Finally, the City of San Bruno is a strong community with deep civic pride. It has steadfastly supported this prosecution and advocated for reform. Today’s verdict is an important step toward achieving the lasting change that San Bruno so very much deserves.
“We are very pleased with the verdict and commend the jury for their hard work and thoughtful deliberation,” said California Attorney General Kamala D. Harris. “The California Department of Justice is proud to have worked with the U.S. Attorney’s Office and various federal and state partners to investigate and ultimately prosecute this important case.”
“We are grateful to the US Attorney’s Office for outstanding work with the support of San Bruno Police Department and our office,” said San Mateo County District Attorney Stephen M. Wagstaffe. “Justice was done today and PG&E was properly convicted of multiple felonies insuring justice for our community.”
“These guilty verdicts against PG&E are a sobering reminder to those entrusted with ensuring public safety that we have a solemn obligation to place that safety foremost in our actions,” said William Swallow, regional Special Agent-in-Charge, USDOT OIG. “We appreciate the committed efforts of everybody who helped achieve this result, including our law enforcement peers and prosecutorial colleagues. DOT OIG remains committed to working with them to prosecute to the fullest extent of the law those who endanger public safety. On behalf of the Inspector General, I offer our deepest condolences to the family and friends of those who perished in the San Bruno explosion.”
“The San Bruno Police Department is extremely proud of the complex investigative work that led to a conviction in this case,” said San Bruno Police Chief Ed Barberini. “We are very grateful to the United States Attorney’s Office and all of the partners that contributed to a successful conclusion to this case.”
The maximum statutory penalty for each count for a corporation is $500,000. Judge Henderson has scheduled post-trial motions to be heard on October 11, 2016.
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.
Four Nuestra Familia Gang Members Convicted in California for Their Roles in Racketeering Conspiracy, Murder and Related OffensesRead the Press Release
After an approximately three-month trial, four Nuestra Familia gang members have been convicted for their roles in a wide-ranging racketeering conspiracy that involved several murders, drug trafficking and firearms offenses, among other related offenses.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Brian Stretch of the Northern District of California and Special Agent in Charge John Bennett of the FBI’s San Francisco Division made the announcement.
Henry Cervantes, 52, aka Happy, of Lodi, California; Alberto Larez, 48, aka Bird, of Salinas, California; Jaime Cervantes, 33, aka Hennessy, of San Mateo, California; and Andrew Cervantes, 60, aka Mad Dog, of Stockton, California, were each convicted today of racketeering conspiracy and other offenses. In addition, Larez was convicted of murder in aid of racketeering, use of a firearm in furtherance of a crime of violence and use of a firearm in furtherance of a crime of violence causing death; Jaime Cervantes and Larez were convicted of conspiracy to commit murder in aid of racketeering and conspiracy to commit assault with a dangerous weapon in aid of racketeering; Jaime Cervantes was convicted of two counts of assault with a dangerous weapon in aid of racketeering, conspiracy to commit a robbery affecting interstate commerce, robbery affecting interstate commerce and possession of a firearm in furtherance of a crime of violence; Henry Cervantes and Jaime Cervantes were convicted of use of fire to commit a felony, conspiracy to obstruct justice and obstruction of justice; and Henry and Andrew Cervantes and Larez were convicted of conspiracy to distribute controlled substances.
According to evidence presented at trial, Nuestra Familia is a prison gang that originally formed in the California state prison system in the 1960s. Nuestra Familia leaders control and direct the gang’s criminal activities both inside and outside of the prison system.
According to evidence presented at trial, the defendants were members or associates of the federal branch of the Nuestra Familia, which was controlled by two principal overseers incarcerated in the Federal Bureau of Prisons (BOP), one of whom was Andrew Cervantes while he was serving a 210-month sentence for a 1999 racketeering conviction. Larez and Henry Cervantes were senior gang members who reported to Andrew Cervantes. In 2010, Henry Cervantes and Larez were released from the BOP after serving sentences for racketeering conspiracy convictions in 2004 involving the distribution of controlled substances on behalf of Nuestra Familia. Larez recruited individuals, including Jaime Cervantes, to commit crimes on behalf of the gang and Henry Cervantes supervised the criminal activities of the gang in Oakland, California.
From approximately fall 2010 through March 2013, under the supervision of Henry Cervantes and Larez, members and associates of Nuestra Familia engaged in the trafficking of methamphetamine, cocaine and heroin and committed robberies to raise money for themselves and the gang. At the direction of Andrew Cervantes, Larez instructed his subordinates to send proceeds from their criminal activities by Western Union to the commissary accounts of gang leaders incarcerated in several BOP facilities, including the account of Andrew Cervantes. Larez communicated with Andrew Cervantes primarily through prison phone calls and correspondence using coded language.
Between May and August 2011, Larez and Jaime Cervantes robbed and assaulted a woman making a bank deposit of proceeds from a gas station, then robbed the same woman at gunpoint at the gas station, and stabbed a suspected rival gang member. All of these crimes were planned and orchestrated by Larez, whose wife worked at the same gas station.
In September 2011, Henry Cervantes stabbed two victims to death at an apartment in Oakland and ordered Jaime Cervantes and another gang member to burn the bodies at the apartment to cover up evidence, which they proceeded to do.
In January 2012, Jaime Cervantes and two other members committed a home invasion robbery of a drug dealer. During the robbery, Jaime Cervantes beat one victim over the head with a baseball bat and another victim was shot.
In August 2012, Larez and two other gang members traveled to San Jose, California, and lured another gang member suspected of cooperating with law enforcement to a “meeting,” where he was shot to death while sitting in his vehicle.
In late 2012, while incarcerated at U.S. Penitentiary (USP) Lewisburg in Pennsylvania, Andrew Cervantes ordered via coded letters the murder of an inmate at USP McCreary in Kentucky. In March 2013, the inmate – whom Andrew Cervantes believed had violated gang rules – was assaulted and stabbed by two Nuestra Familia inmates in the prison dining facility and survived.
Eight co-defendants previously pleaded guilty to racketeering conspiracy and other offenses in connection with this case.
The FBI Oakland Resident Agency investigated the case with the U.S. Attorney’s Office of the Northern District of California, with assistance from the BOP. The Santa Clara County, California, District Attorney’s Office; Oakland Police Department; San Jose Police Department; Red Bluff, California, Police Department; Livermore, California, Police Department; Alameda County, California, Sheriff’s Office; Tehama County, California, District Attorney’s Office; and Tehama County Sheriff’s Office also assisted in the investigation.
Trial Attorney Robert S. Tully of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys William Frentzen and Joseph M. Alioto of the Northern District of California are prosecuting the case with assistance from Kevin Costello, Courtney Fisher, Melissa Dorton, Daniel Charlier-Smith, Lance Libatique and Lauren Hipolito
Four Nuestra Familia Gang Members Convicted for Their Roles in Racketeering Conspiracy and Related OffensesRead the Press Release
OAKLAND— After an approximately three-month trial, four Nuestra Familia gang members have been convicted for their roles in a wide-ranging racketeering conspiracy that involved several murders, drug trafficking, and firearms offenses, among other related offenses. The announcement was made by U.S. Attorney Brian J. Stretch, U.S. Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
Henry Cervantes, 52, aka Happy, of Lodi; Alberto Larez, 48, aka Bird, of Salinas; Jaime Cervantes, 33, aka Hennessy, of San Mateo; and Andrew Cervantes, 60, aka Mad Dog, of Stockton, were each convicted today of racketeering conspiracy and other offenses. In addition, Larez was convicted of murder in aid of racketeering, use of a firearm in furtherance of a crime of violence, and use of a firearm in furtherance of a crime of violence causing death; Jaime Cervantes and Larez were convicted of conspiracy to commit murder in aid of racketeering and conspiracy to commit assault with a dangerous weapon in aid of racketeering; Jaime Cervantes was convicted of two counts of assault with a dangerous weapon in aid of racketeering, conspiracy to commit a robbery affecting interstate commerce, robbery affecting interstate commerce, and possession of a firearm in furtherance of a crime of violence; Henry Cervantes and Jaime Cervantes were convicted of use of fire to commit a felony, conspiracy to obstruct justice, and obstruction of justice; and Henry and Andrew Cervantes and Larez were convicted of conspiracy to distribute controlled substances.
According to evidence presented at trial, Nuestra Familia is a prison gang that originally formed in the California state prison system in the 1960s. Nuestra Familia leaders control and direct the gang’s criminal activities both inside and outside of the prison system.
The evidence also demonstrated that defendants were members or associates of the federal branch of the Nuestra Familia, which was controlled by two principal overseers incarcerated in the Federal Bureau of Prisons (BOP), one of whom was Andrew Cervantes while he was serving a 210-month sentence in federal prison. The evidence demonstrated that Andrew Cervantes was the national "overseer" of the gang; i.e., the top member who was not in a supermax prison. Larez and Henry Cervantes were senior gang members who reported to Andrew Cervantes. In 2010, Henry Cervantes and Larez were released from the BOP. Larez recruited individuals, including Jaime Cervantes, to commit crimes on behalf of the gang and Henry Cervantes supervised the criminal activities of the gang in Oakland.
From approximately fall 2010 through March 2013, under the supervision of Henry Cervantes and Larez, members and associates of Nuestra Familia engaged in the trafficking of methamphetamine, cocaine, and heroin and committed robberies to raise money for themselves and the gang. At the direction of Andrew Cervantes, Larez instructed his subordinates to send proceeds from their criminal activities by Western Union to the commissary accounts of gang leaders incarcerated in several BOP facilities, including the account of Andrew Cervantes. Larez communicated with Andrew Cervantes primarily through prison phone calls and correspondence using coded language.
Between May and August 2011, Larez and Jaime Cervantes robbed and assaulted a woman making a bank deposit of proceeds from a gas station, then robbed the same woman at gunpoint at the gas station, and stabbed a suspected rival gang member. All of these crimes were planned and orchestrated by Larez, whose wife worked at the same gas station.
In September 2011, Henry Cervantes ordered Jaime Cervantes and another gang member to burn the bodies of two stabbing victims. The bodies were in an apartment in Oakland and Henry Cervantes ordered the bodies burned to cover up evidence that the victims had been killed. Jaime Cervantes and the other gang member complied with Henry Cervantes’ instructions.
In January 2012, Jaime Cervantes and two other members committed a home invasion robbery of a drug dealer. During the robbery, Jaime Cervantes beat one victim over the head with a baseball bat and another victim was shot.
In August 2012, Larez and two other gang members traveled to San Jose, and lured another gang member suspected of cooperating with law enforcement to a “meeting,” where he was shot to death while sitting in his vehicle.
In late 2012, while incarcerated at U.S. Penitentiary (USP) Lewisburg in Pennsylvania, Andrew Cervantes ordered via coded letters the murder of an inmate at USP McCreary in Kentucky. In March 2013, the inmate – whom Andrew Cervantes believed had violated gang rules – was assaulted and stabbed by two Nuestra Familia inmates in the prison dining facility and survived.
Eight co-defendants previously pleaded guilty to racketeering conspiracy and other offenses in connection with this case.
The case was investigated by the FBI and the U.S. Attorney’s Office of the Northern District of California, with assistance from the BOP. Additional assistance was provided by the Santa Clara County District Attorney’s Office; the Campbell Police Department; the Oakland Police Department; the San Jose Police Department; the Red Bluff Police Department; the Livermore Police Department; the Alameda County Sheriff’s Office; the Tehama County District Attorney’s Office; and the Tehama County Sheriff’s Office.
Assistant U.S. Attorneys William Frentzen and Joseph M. Alioto and trial Attorney Robert S. Tully of the Criminal Division’s Organized Crime and Gang Section are are prosecuting the case with assistance from Kevin Costello, Courtney Fisher, Melissa Dorton, Daniel Charlier-Smith, Lance Libatique, and Lauren Hipolito
San Jose Man Sentenced to Eight Years in Prison for Sex Tourism and Obstruction of JusticeRead the Press Release
SAN FRANCISCO – Michael Lindsay was sentenced to eight years’ imprisonment yesterday after being convicted of traveling with intent to engage in illicit sexual conduct, engaging in illicit sexual conduct in foreign places, attempted witness tampering, and obstruction of justice announced United States Attorney Brian J. Stretch and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin. The sentence was handed down by Honorable Charles R. Breyer, U.S. District Judge.
Lindsay, 56, of San Jose, was convicted after a 4-day jury that concluded on May 19, 2016. The jury found that Lindsay traveled from San Francisco to Manila, the capital of the Republic of the Philippines, intending to have sex with a 13-year-old girl. He used instant messaging to communicate with the girl’s mother and to arrange meetings for sex. During trips to Manila in May and August of 2012, Lindsay had sex with the minor and paid the girl’s mother. HSI arrested Lindsay on November 8, 2012, at San Francisco International Airport, when he attempted to return to the Philippines for another visit.
“Sex tourism is a dangerous and insidious industry,” said U.S. Attorney Brian J. Stretch. “Today’s sentence serves as a reminder that U.S. law reaches and punishes those who, like the defendant, exploit the poverty and vulnerability of young children wherever in the world they may live in order to engage in illicit sexual conduct.”
“This sentence has brought accountability for the heinous actions of the defendant,” said Ryan L. Spradlin, special agent in charge of HSI San Francisco. “Sex tourism is a cruel global underground industry. HSI will continue to work closely with our law enforcement partners to pursue anyone who seeks to exploit innocent victims through this crime.”
On December 13, 2012, a grand jury returned an indictment charging Lindsay with traveling with intent to engage in illicit sexual conduct in foreign places, in violation of 18 U.S.C. § 2423(b), and one count of engaging in illicit sexual conduct in foreign places, in violation of 18 U.S.C. § 2423(c). Email communications established that after a federal grand jury charged him, Lindsay engaged in attempted witness tampering and obstruction of justice. On February 9, 2016, a federal grand jury returned a second superseding indictment, adding charges of attempted witness tampering, in violation of 18 U.S.C. § 1512(b), and obstruction of justice, in violation of 18 U.S.C. § 1503. He was convicted on counts.
Judge Breyer also ordered a five-year term of supervised release, which includes a requirement that defendant register as a sex offender.
Assistant U.S. Attorneys Laura Vartain and Katherine Wawryzniak are prosecuting the case with the assistance of Helen Yee, Theresa Benitez, and Patricia Mahoney. This prosecution is the result of HSI investigations in both the Philippines and the United States.
Raymond “Shrimp Boy” Chow Sentenced to Life in Prison for Murder and Various Racketeering CrimesRead the Press Release
SAN FRANCISCO – Kwok Cheung Chow, AKA Raymond Chow, AKA Ha Jai, AKA Shrimp Boy was sentenced today to life in prison following his convictions for racketeering, murder, money laundering, and conspiracy charges, 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 Batdorf. The sentence was handed down by the Honorable Charles R. Breyer, United States District Judge.
Chow, 55, of San Francisco, served as the Dragonhead, or leader, of the San Francisco-based Chee Kung Tong organization. On January 8, 2016, a federal jury found Chow guilty of criminal activities in connection with the racketeering organization and additional conspiracies. In all, Chow was charged with 162 counts including 125 counts of money laundering, aiding and abetting the laundering of proceeds of narcotics sales, conspiring to deal in illegal sales of goods (including 50 cases of Hennessey XO and 27 cases of Johnnie Walker Blue Label Scotch Whiskey), and engaging in the illegal sale of cigarettes (over 10,000). Chow originally was charged with various racketeering related crimes in a criminal complaint filed March 24, 2015. The complaint charged that the purposes of the organization included the illegal trafficking of controlled substances, extortion, and participation in the collection of illegal debts. On October 15, 2015, the charges were formally amended in a Third Superseding Indictment to include murder. Chow was charged with and convicted of arranging the murder of Allen Leung and conspiring with others to murder Jim Tat Kong. The jury found Chow guilty of every one of the 162 charges leveled against him.
In sentencing Chow, Judge Breyer said, “The murder in this case [of Mr. Leung] that requires the life sentence was particularly callous because it was the removal of an obstacle to your ascension to power. So whether you paid for it, or not, the question is: what is your motivation for doing so? And your motivation for doing so was to take over the leadership role of the tong and corrupt their purposes.”
“Today, Mr. Chow was sentenced to serve the rest of his life in prison,” said U.S. Attorney Brian J. Stretch. “We hope that this prosecution and the resulting sentence provides the victims and their families with some measure of satisfaction that Mr. Chow will never again be free to continue with his life of crime.”
“This sentence reflects our commitment to vigorously pursue justice for the victims and community that Mr. Chow preyed off of for so long,” said FBI Special Agent in Charge John F. Bennett. “We hope that the sentence brings some form of closure for the families of Allen Leung and Jim Tat Kong, and shows that type of greed and violence will not be tolerated.”
“This was a case about power and greed,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “From narcotics trafficking to public corruption and murder, Mr. Chow laundered millions of dollars in drug and other illegal proceeds for a profit. Today’s sentencing closes the chapter on Mr. Chow’s life of crime.”
In addition to the life term of imprisonment, Judge Breyer also sentenced Chow to pay a special assessment of $16,200, to pay restitution in the amount of $15,881.60, and to forfeit $225,000. The Judge also issued an order enjoining Chow and others from profiting from his life story. Chow has been in custody since his arrest on March 26, 2014, and will begin serving his life sentence immediately.
Assistant U.S. Attorneys William Frentzen, Susan Badger, S. Waqar Hasib, and David Countryman prosecuted the case with the assistance of Rosario Calderon, Kurt Kosek, Ana Guerra, Marina Ponomarchuk, Victoria Etterer, Lance Libatique, and Bridget Kilkenny. The prosecution is the result of an investigation by Federal Bureau of Investigation; the U.S. Marshal Service, San Francisco Police Department Gang Task Force; Oakland Police Department; Internal Revenue Service, Criminal Investigation; New York Police Department; Mercer County New Jersey Sheriff's Office; and the San Francisco and Alameda County Sheriff’s Departments.
Former Southwest Airlines Baggage Handler Pleads Guilty to Violating Airport Security Requirements for the Purpose of Drug TraffickingRead the Press Release
OAKLAND – Former Southwest Airlines baggage handler Michael Herb Videau pleaded guilty in federal court today to entering an airport area in violation of security requirements and distribution of marijuana, 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.
In pleading guilty, Videau, 29, of Oakland, admitted that he conspired with other former Southwest Airlines baggage handlers to violate airport security requirements for the purpose of narcotics trafficking. Videau specifically admitted that on eight occasions in 2013 he used his access to the Oakland International Airport as a baggage handler for Southwest Airlines to smuggle luggage containing kilograms of marijuana around the Transportation Security Administration (TSA) checkpoint to outbound passengers who had already cleared the TSA security checkpoint. These passengers then flew to their destinations with unscreened luggage containing marijuana that was then sold in destination cities throughout the United States. Videau also admitted that, as a baggage handler for Southwest Airlines, he abused a position of public and private trust in a manner that significantly facilitated the commission and concealment of his crimes.
Videau was indicted along with 12 co-defendants by a federal grand jury on May 28, 2015. He was charged with one count of conspiracy to enter an airport area in violation of security requirements and to defraud the United States, in violation of 18 U.S.C. § 371; one count of conspiracy to distribute, and possess with intent to distribute, marijuana, in violation of 21 U.S.C. § 846; one count of distribution, and possession with intent to distribute, marijuana, in violation of 21 U.S.C. § 841(a)(1); and one count of entering an airport area in violation of security requirements, in violation of 49 U.S.C. §§ 46314(a), 46314(b)(2). Under his plea agreement, Videau pleaded guilty to one count of entering an airport area in violation of security requirements and one count of distributing marijuana.
Videau is currently free on pretrial release on a $150,000 bond.
Videau’s sentencing hearing is scheduled for 2:30 p.m. on November 9, 2016, before the Honorable Phyllis J. Hamilton, Chief U.S. District Judge, in Oakland. The maximum statutory penalty for a violation of 49 U.S.C. §§ 46314(a), 46314(b)(2) is ten years’ imprisonment and a fine of $250,000. The maximum statutory penalty for a violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(D) is five years’ imprisonment and a fine of $250,000. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Garth Hire is prosecuting the case with the assistance of Melissa Dorton. The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Internal Revenue Service—Criminal Investigation, and the Alameda County Sheriff’s Office. 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.
Whitehorn Woman Sentenced to 12 Months’ Imprisonment for Environmental Damage from Marijuana Grow on National Conservation LandRead the Press Release
SAN FRANCISCO – Melinda Van Horne was sentenced today to 12 months and a day in prison for damaging national conservation land through her marijuana cultivation operation, announced United States Attorney Brian J. Stretch.
Van Horne, 43, of Whitethorn, pleaded guilty on March 23, 2016, to depredation against the property of the United States. According to the plea agreement, Van Horne admitted to causing over $100,000 in environmental damage to federal lands in the King Range National Conservation Area through her marijuana cultivation operation. In October 2007, Van Horne purchased a house next to Paradise Ridge in Humboldt County, Calif. Paradise Ridge is part of a congressionally designated National Conservation Area administered by the Bureau of Land Management for the conservation and protection of public lands for the benefit and enjoyment of present and future generations. In 2008, Van Horne made a proposal to the government offering to trade portions of her private property in exchange for the federal conservation land. The Bureau of Land Management rejected the trade based on the national conservation status of the land. Van Horne nonetheless decided to proceed with her marijuana cultivation operation, causing substantial damage to the protected area.
“Marijuana cultivation operations on public lands present an ongoing threat to these important national resources,” said United States Attorney Brian J. Stretch. “This office will protect these vital wilderness areas from the marijuana growers who endanger public safety and leave environmental destruction in their wake.”
With Van Horne’s consent and knowledge, and later at her direction, vegetation was stripped from portions of the federally managed conservation area, land was excavated and graded, and eleven greenhouses and other structures were constructed on federal lands. The work was done in order to grow marijuana plants for sale. Van Horne also used facilities that diverted water from the nearby Bridge Creek to irrigate the marijuana plants. The bulldozing and excavation of federal land caused that land to become unstable and to erode into two rivers that provide crucial spawning and rearing habitats for threatened and federally protected salmon and steelhead.
In September 2013, agents executing warrants to search the property found 1,654 marijuana plants growing on federal land and in the garage of the adjoining house. The agents also found over 17 kilograms of marijuana at another location where Van Horne was residing. Van Horne admitted growing marijuana with at least five other people and admitted she was one of the organizers of the operation.
Van Horne was indicted by a federal Grand Jury on November 17, 2015. She was charged with conspiracy to distribute marijuana, in violation of 21 U.S.C. § 846; possession with intent to distribute 1,000 or more marijuana plants, in violation of 21 U.S.C. § 841(a)(1) and 841(b)(1)(A)(vii); possession with intent to distribute marijuana, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(C); maintaining a place for manufacturing marijuana, in violation of 21 U.S.C. § 856(a); and depredation against property of the United States, in violation of 18 U.S.C. § 1361. Under the plea agreement, Van Horne pleaded guilty to the depredation against property of the United States.
The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge, following a guilty plea to depredation against property of the United States, in violation of 18 U.S.C. § 1361. In addition to the prison term, Judge Breyer also sentenced the defendant to perform 300 hours of community service, ordered the defendant to pay restitution, and ordered her to serve a three-year period of supervised release. Bureau of Land Management engineers estimate the cost to repair the damage at $107,754, which Van Horne has agreed to pay as restitution in connection with her guilty plea. The defendant will begin serving the sentence on November 4, 2016.
Assistant U.S. Attorney Rita F. Lin is prosecuting the case with the assistance of Theresa Benitez, Rawaty Yim, and Marina Ponomarchuk. The prosecution is the result of an investigation by the Bureau of Land Management and Drug Enforcement Administration.
San Pablo Man Pleads Guilty to Cashing Fraudulent and Stolen ChecksRead the Press Release
OAKLAND – A San Pablo, California resident pleaded guilty to his role in a conspiracy to commit theft of government property, announced U.S. Attorney Brian J. Stretch; Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division; and Special Agent in Charge Michael T. Batdorf for the Internal Revenue Service’s Criminal Investigation (IRS-CI).
According to the plea agreement, from about August 2013 through April 2015, Devonnie Davison, participated in a conspiracy to illegally obtain money from the federal government by negotiating misappropriated U.S. Treasury checks. Davison admitted that some of the checks were obtained by filing false tax returns with the IRS while others were stolen U.S. Treasury checks acquired by his coconspirators. Davison cashed those checks under false pretenses at Walmart stores in the Bay Area. To carry out the scheme, Walmart cashiers were paid by members of the conspiracy to cash the fraudulent and stolen U.S. Treasury checks. Davison also conspired with other individuals who prepared and filed false tax returns with the IRS and attempted to cash stolen U.S. Treasury checks during 2013, 2014 and 2015, which totaled $521,318.
Davison, along with 10 codefendants, was charged on Nov. 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. Pursuant to today’s agreement, Davison pleaded guilty to one count of conspiracy to commit theft of public money and two counts of theft of public money.
Davison faces a statutory maximum term of five years in prison for the count of conspiracy to commit theft of public money and 10 years in prison for the count of theft of public money. He also faces a term of supervised release and monetary penalties.
U.S. Attorney Stretch, Principal Deputy Assistant Attorney General Ciraolo, and Special Agent in Charge Batdorf commended special agents of IRS-CI, who investigated the case and Assistant U.S. Attorneys Thomas Newman and Jose A. Olivera and Trial Attorney Gregory Bernstein of the Justice Department’s Tax Division, who are prosecuting the case.
Self-Styled Diamond and Gold Exporter Charged with Wire Fraud and Commodities FraudRead the Press Release
SAN JOSE - A federal grand jury in San Jose indicted Fritz Kramer on Thursday on charges of wire fraud and commodities fraud, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to the indictment, Kramer, 68, with a last known residence in Norway, solicited funds from investors, stating that their money would be invested in an export project in which Kramer would export gold and diamonds from the Democratic Republic of Congo to Europe, Asia, and the United States. Kramer told investors that they were investing in a short-term, quasi-philanthropic undertaking in which corrupt middlemen in Africa would be cut out of the gold and diamond export process, providing greater profits to African miners. Kramer promised the investors they would receive returns of up to ten times the amount of their investments in as short a time as one month.
Kramer, a dual citizen of the United States and Switzerland, used e-mail, phone calls, and Skype to communicate with investors, according to the indictment. In an effort to lull investors and keep them investing money in the scheme, Kramer frequently claimed that events had arisen that required an additional investment of funds in order for the export project to succeed. Over the years, Kramer cited, at one time or another, the following reasons for delays and the need for additional money from investors as a prerequisite to the success of the export project: (1) the need to pay for multiple urgent surgeries for a partner in the scheme, including brain and liver surgeries; (2) the loss of approximately $80,000-$90,000 in investor cash which was incinerated in a car accident; (3) a lawyer’s role in seizing approximately $95,000 cash in order to address Kramer’s unpaid legal bills; (4) the need to bribe alleged corrupt government officials in Africa; (5) the need to renew expired documents and certifications; (6) the need to pay for insurance; (7) the need to pay additional storage and shipping costs; (8) additional loan payments; and (9) taxes.
In furtherance of the scheme, Kramer also allegedly sent e-mails to investors which contained fake or altered documents as attachments. These fraudulent documents included falsified or altered versions of government certificates from the Democratic Republic of Congo pertaining to shipments of gold and diamonds, diamond certification documents purporting to be affiliated with an international diamond certification process Kramer described as the “Kimberley process,” and invoices for purported gold and diamond shipments. Kramer represented these fraudulent documents as official documents he received from government agencies, organizations and private companies in Africa and elsewhere. The fraudulent documents allegedly lulled investors into believing that the export project was legitimate, and provided a basis for Kramer’s ongoing requests for additional investments in the program. Kramer also sent e-mails to investors discussing a Kimberley process for the certification of gold, when in truth and fact, no such certification process existed. Kramer directed investors to send cash via Western Union and MoneyGram to financial institutions in Tanzania, South Africa, Zambia, and Zimbabwe. Kramer also instructed investors to send cash to Kramer in Switzerland via Western Union, and in Kenya via MoneyGram. As Kramer well knew, the funds provided by investors were not being used to develop an actual gold and diamond export project, and Kramer and his associates never intended to provide any return on the money that they obtained from investors.
To date, at Kramer’s direction, approximately 40 different investors have sent approximately $11 million to bank accounts associated with the export project. No investor has received any return on their investment.
The indictment charges Kramer with eleven counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of commodities fraud, in violation of 18 U.S.C. § 1348. Kramer was arrested on July 6, 2016, and made his initial appearance in federal court in San Jose on July 21, 2016. Kramer is currently detained. Kramer’s next scheduled appearance is on August 22, 2016, before the Honorable Edward J. Davila, U.S. District Court Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of violating 18 U.S.C. § 1343, the defendant faces a maximum sentence of 20 years’ imprisonment for each count, and a fine of $250,000, plus restitution. If convicted of violating 18 U.S.C. § 1348, the defendant faces a maximum sentence of 25 years’ imprisonment, and a fine of $250,000, plus restitution. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Jeff Nedrow is prosecuting the case with the assistance of Susan Kreider. The prosecution is the result of an investigation by the FBI.
Oakland Resident Pleads Guilty to Possession of Child PornographyRead the Press Release
OAKLAND – Lawrence Ham pleaded guilty in federal court in Oakland today to possession of child pornography, announced United States Attorney Brian J. Stretch and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin.
In pleading guilty, Ham, 52, of Oakland, admitted that between June 26, 2015, and July 14, 2015, he possessed child pornography images on his computer and in print. He further admitted that the images included depictions of prepubescent children engaged in sexually explicit conduct involving sadistic or masochistic abuse of the victims.
As described in a Complaint filed February 16, 2016, in June of 2015, a computer repairman was working on Ham’s computer and viewed images of children in various states of undress on the computer. The repairman contacted the Concord Police Department and the matter was referred to the Oakland Police Department. On July 14, 2015, the Alameda County Sheriff’s Office and Oakland Police Department executed a search warrant at Ham’s apartment and found computer-based and printed images of child pornography.
On March 31, 2016, Ham was charged by an Information with one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4). Under the plea agreement, Ham pled guilty to the sole count in the Information.
Ham is currently being held in the custody of the United States Marshal.
Ham’s sentencing hearing is scheduled for October 28, 2016, before the Honorable Yvonne Gonzalez Rogers, U.S. District Judge, in Oakland. The statutory penalties for a conviction of 18 U.S.C. § 2252(a)(4) is ten years’ imprisonment and $250,000. A person convicted of § 2252(a)(4) following a prior conviction for possession of child pornography faces a mandatory minimum prison sentence of 10 years; a maximum prison sentence of 20 years; a fine of $250,000; and restitution, if appropriate. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Denise Marie Barton is prosecuting the case with the assistance of Trina Khadoo. The prosecution is the result of an investigation by ICE HIS.
Former San Francisco Unified School District Teacher Charged with Possession of Child PornographyRead the Press Release
OAKLAND –Christian Lancaster appeared in court today and was arraigned on charges he possessed child pornography, announced United States Attorney Brian Stretch and Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin. The appearance follows an indictment handed down by a federal grand jury on July 14, 2016, and unsealed earlier today.
According to the indictment, Lancaster is alleged to have knowingly possessed or knowingly accessed with intent to view one or more images of prepubescent minors engaging in sexually explicit conduct. Until January 2016, Lancaster was a teacher with the San Francisco Unified School District.
Lancaster voluntarily surrendered and was arraigned on the indictment today. Lancaster was remanded into the custody of the U.S. Marshal pending a bail hearing. The defendant’s next scheduled appearance is at Wednesday, July 27, 2016, before the Honorable Donna M. Ryu for a hearing on bail.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of Possession of Child Pornography, in violation of 18 U.S.C. § 2252(a)(4), the defendant faces a maximum sentence of 20 years, a fine of $250,000, plus restitution if appropriate. 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.
AUSAs Denise Marie Barton is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Trina Khadoo. The prosecution is the result of an investigation by the United States Department of Homeland Security.
If members of the public have any information relevant to this investigation or to suspected child predators or suspicious activity, HSI encourages them to contact HSI through the toll-free Tip Line at 1-866-DHS-2-ICE or by completing its online tip form at https://www.ice.gov/webform/hsi-tip-form. Both are staffed around the clock by investigators. Suspected child sexual exploitation or missing children may also be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.
Former Lawrence Hall of Science Employee Sentenced to 18 Months in Prison for EmbezzlementRead the Press Release
OAKLAND - DeSondra Michell Ward was sentenced yesterday to 18 months in prison, and ordered to pay $389,948.57 in restitution for stealing from and defrauding the University of California, Berkeley’s Lawrence Hall of Science, announced United States Attorney Brian J. Stretch and FBI Special Agent in Charge John F. Bennett.
Ward pleaded guilty on February 9, 2016, to five counts of theft from a program receiving federal funds. According to the plea agreement, Ward admitted to stealing $389,948.57 while working at U.C. Berkeley, a public university, from 2008 through 2014. Ward worked at U.C. Berkeley’s Lawrence Hall of Science, first as an administrative assistant with the Full Option Science System (“FOSS”) program and later as a financial analyst with budget and finance responsibilities over FOSS. Ward admitted to using the university’s travel systems to arrange personal air travel for herself, her family, and her friends, and also purchasing tickets which she sold to individuals for her own profit. She also admitted that she used her university-issued procurement card for personal transactions and processed vouchers to generate payments to herself, her family, and her friends.
The Lawrence Hall of Science’s FOSS program developed and maintains a science curriculum for elementary and middle school students. FOSS also undertakes research projects to improve the learning and teaching of science. Each year U.C. Berkeley receives funding and other benefits from the federal government. In fact, 25% of the Lawrence Hall of Science’s annual budget is comprised of federal funding.
Ward, 45, formerly of Pinole, California, was charged in an information filed on November 16, 2015. She was charged with five counts of theft from programs receiving federal funds in violation of 18 U.S.C. § 666(a)(1)(A). The sentence was handed down by The Honorable Jeffrey S. White, U.S. District Court Judge, following Ward’s guilty pleas to all five charged counts. Judge White also sentenced the defendant to a three-year period of supervised release and ordered her to forfeit $308,817.58. Ward is currently out of custody on bond, but was ordered to surrender and begin serving her sentence on October 20, 2016.
Andrew S. Huang is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Vanessa Quant and Stephanie Mitchell. The prosecution is the result of an investigation by the Federal Bureau of Investigation, with significant assistance from the University of California Police Department and U.C. Berkeley’s Audit and Advisory Services.
Marin Doctor Sentenced to Three Years in Prison for Prescribing Oxycodone Outside the Usual Course of Professional Practice and Without A Legitimate Medical PurposeRead the Press Release
OAKLAND – Dr. Michael Roger Chiarottino was sentenced today to three years in prison for illegally prescribing oxycodone and other controlled substances, announced United States Attorney Brian J. Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin.
Dr. Chiarottino pleaded guilty on March 8, 2016, to one count of distributing oxycodone, a Schedule II controlled substance, outside the usual course of professional practice and without a legitimate medical purpose, in violation of Title 21, United States Code, Section 841(a)(1). According to his plea agreement, Chiarottino admitted that between February 12, 2013, and March 6, 2014, he prescribed large quantities of controlled substances (including oxycodone, oxymorphone, hydromorphone, methadone, and hydrocodone) to undercover DEA agents posing as patients in exchange for cash. On each occasion, Dr. Chiarottino failed to conduct an appropriate medical examination of, or obtain a sufficient patient medical history from, the undercover agent to support a prescription for such a large quantity of narcotics. In total, Dr. Chiarottino prescribed 46.8 grams of oxycodone (numbering 1,530 thirty-milligram pills) and admitted doing so with the intent to act outside the usual course of professional practice and without a legitimate medical purpose. In his plea agreement, Dr. Chiarottino also admitted that he met with patients and wrote prescriptions for controlled substances at North Bay Pain Management Services and therefore maintained a premises for the distribution of controlled substances. Dr. Chiarottino also admitted that, as a licensed physician and DEA registrant, he abused a position of trust and used a special skill to intentionally prescribe controlled substances without a legitimate medical purpose.
Dr. Chiarottino, age 68, of San Rafael, was indicted by a federal Grand Jury on September 14, 2014. He was charged with fifteen counts of distribution of controlled substances in violation of Title 21, United States Code, Section 841(a)(1).
The sentence was handed down by The Honorable Jeffrey S. White, U.S. District Court Judge. Judge White also sentenced the defendant to a five-year period of supervised release. During this period of supervised release, Dr. Chiarottino is barred from providing medical treatment or examining any patient in the course of any employment or professional practice. Dr. Chiarottino is also forbidden from prescribing medication or controlled substances to any person and may not supervise any medical practitioner in treating any medical patient or prescribing any medication. Finally, as a condition of his supervised release, Dr. Chiarottino is required to cooperate with and not contest any administrative action to revoke or suspend his license to practice medicine or prescribe controlled substances by the Medical Board of California and the Drug Enforcement Administration. Dr. Chiarottino’s medical license is currently suspended. The defendant will begin serving the sentence on October 20, 2016.
Garth Hire is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Legal Technician Melissa Dorton. The prosecution is the result of an investigation by the Drug Enforcement Administration, the Livermore Police Department, the Pleasanton Police Department, and the Medical Board of California. 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.
Cocaine Trafficker Sentenced to 10 Years in PrisonRead the Press Release
SAN JOSE - Misael Ledesma-Renteria, a/k/a “Miguel Angel Barreto-Mora,” a/k/a “Misael Renteria,” was sentenced today to 10 years in prison for conspiracy to possess with intent to distribute and conspiracy to distribute cocaine and methamphetamine, announced United States Attorney Brian Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin.
Renteria previously pleaded guilty on April 11, 2016 to one count of conspiracy to possess with intent to distribute and conspiracy to distribute cocaine and methamphetamine, in violation of 21 U.S.C. §§ 846, 841(a)(1), and 841(b)(1)(A)(viii). According to the plea agreement, Renteria admitted to conspiring with other individuals to distribute 5 kilograms or more of cocaine in the Northern District of California between July 5, 2013, and May 25, 2015. He admitted that, in furtherance of the conspiracy, he distributed cocaine and possessed with the intent to distribute cocaine on numerous occasions over his approximately 2 years of participation in the conspiracy.
Renteria, 32, a citizen of Mexico who was living in the San Jose area at the time of the offense, was indicted by a federal grand jury on October 8, 2015
The sentence of Renteria was handed down by The Honorable Edward J. Davila, U.S. District Court Judge, following a guilty plea to one count in violation of 21 U.S.C. §§ 846, 841(a)(1). Judge Davila also sentenced Renteria to a 5-year period of supervised release. The defendant has been in federal custody since September 24, 2015.
Chinhayi Cadet is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Theresa Benitez. 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.
Redwood City Resident Pleads Guilty to Defrauding Produce Vendors of Millions of Dollars Worth of Fruits and VegetablesRead the Press Release
SAN JOSE – Remon Issa Daniel pleaded guilty in federal court late yesterday to three counts of wire fraud for his scheme to defraud produce vendors, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The plea follows charges Daniel pretended to be employed by reputable produce companies and ordered loads of fruits and vegetables on credit, when he knew he did not have the funds to pay for the loads and had no intention of paying for them.
In pleading guilty, Daniel admitted that between 2014 and his arrest on February 25, 2016, he defrauded at least 38 different businesses of more than $1.5 million worth of fruits and vegetables. Daniel ordered produce primarily from companies in California, Arizona, and Texas, and usually claimed to be from Bay Produce, New San Jose Wholesale, or General Produce, each a genuine produce wholesaler in Northern California. In fact, Daniel had no association with any of these companies. Daniel admitted to sending some of the vendors a copy of a deposit slip as proof that he had made a payment for the product. Only after the vendor released the produce to Daniel did the vendor learn that the deposited check was returned for insufficient funds.
Daniel was indicted by a grand jury on March 10, 2016, on 14 counts of wire fraud, in violation of 18 U.S.C. § 1343. Pursuant to yesterday’s plea, Daniel has admitted he is guilty of three of the counts in the indictment and the remaining counts will be dismissed. He is currently being held in in the Santa Clara County Main Jail, pending sentencing, which is set for October 19, 2016, at 9:45 a.m., before the Honorable United States District Judge Lucy Koh. The maximum statutory penalty for a violation of 18 U.S.C. § 1343, is 20 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss from the offense, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Amber Rosen is prosecuting the case with the assistance of Susan Kreider, Yolanda Singletary, and Nina Williams. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
San Mateo Resident Pleads Guilty to Operating A Bay Area Prostitution Racketeering EnterpriseRead the Press Release
SAN FRANCISCO –Allen Fong pleaded guilty in federal court yesterday for his role in an international prostitution racketeering enterprise announced United States Attorney Brian J. Stretch and U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan Spradlin. The defendant acknowledged being part of an enterprise that recruited women and facilitated their travel and entry into the United States to work as prostitutes in brothels located in the Bay Area.
Fong, 59, of San Mateo, is one of ten defendants named in a broad-ranging indictment filed October 16, 2014. Fong pleaded guilty to all 32 counts charged in the indictment. In pleading guilty, Fong admitted that, from at least 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 located in Bay Area cities, including Foster City, Cupertino, San Bruno, San Mateo, and Santa Clara. His activities included renting apartments for use as brothels; arranging for telecommunications services for advertising and arranging 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 who was traveling from Singapore to the United States and drove her to an enterprise brothel where she was housed and worked as a prostitute.
In all, the defendant pleaded guilty to one count of conspiracy to conduct enterprise affairs through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(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 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 is scheduled to be sentenced by the Honorable Richard Seeborg, U.S. District Judge, in San Francisco on October 25, 2016, at 2:30. p.m. The defendant is facing the following maximum statutory penalties for the offenses to which he has pleaded guilty:
Statute
Offense
Maximum Penalty
18 U.S.C. § 1962(d)
Conspiracy to conduct enterprise affairs through a pattern of racketeering activity
20 years’ imprisonment and a $250,000 fine, or twice the gross profits or other proceeds
18 U.S.C. §§ 371 and
1952(a)(3)
Conspiracy to use facility in interstate commerce to promote prostitution
5 years’ imprisonment
$250,000 fine, or twice the gross gain or gross loss, whichever is greater
18 U.S.C. §§ 1952(a)(3)
and 2
Use of facility in interstate commerce to promote prostitution
5 years’ imprisonment
$250,000 fine, or twice the gross gain or gross loss, whichever is greater
18 U.S.C. §§ 1956(h) and 1956(a)(1)(A)(i)
Conspiracy to launder monetary instruments
20 years’ imprisonment
$500,000 fine or twice the value of the monetary instrument or funds involved in the transmission or transfer, whichever is greater
18 U.S.C. § 1956(a)(1)(A)(i) and 2
Money laundering
20 years’ imprisonment
$500,000 fine or twice the value of the monetary instrument or funds involved in the transmission or transfer, whichever is greater
18 U.S.C. §§ 1956(h) and 1956(a)(2)(A)
Conspiracy to transport funds from the United States to a foreign country to promote unlawful activity
20 years’ imprisonment
$500,000 fine or twice the value of the monetary instrument or funds involved in the transmission or transfer, whichever is greater
18 U.S.C. §§ 371 & 2421; 8 U.S.C. § 1328
Conspiracy to transport an individual in interstate and foreign commerce for prostitution and importation of alien for immoral purpose
10 years’ imprisonment and $250,000 fine, or twice the gross gain or gross loss, whichever is greater.
In addition to prison terms and fines, assessments, terms of supervised release, and forfeitures 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 Deborah R. Douglas is prosecuting the case with the assistance of Lance Libatique. Assistant United States Attorney David Countryman is handling aspects of the forefeiture matters. The prosecution is the result of a joint investigation by the Department of Homeland Security, Homeland Security Investigations San Francisco Field Office, and the San Mateo Police Department.
Jury Convicts Lake County Man of MurderRead the Press Release
SAN FRANCISCO – Jonathan Mota was convicted of murder caused by a firearm; for Hobbs Act robbery; and use and carry of a firearm during and in relation to that robbery, announced United States Attorney Brian J. Stretch and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder. The guilty verdict, delivered yesterday, followed a four-week jury trial before the Honorable Jon S. Tigar, U.S. District Judge.
According to the evidence presented at trial, on January 18, 2013, Mota, 34, of Lake County, Calif., a convicted felon, parked a stolen vehicle in the vicinity of the Mount Konocti Gas & Mart in Kelseyville, Calif., to rob it. Mota left an unwitting passenger in the vehicle and wore a hoodie, ski mask, baggy jeans, and gloves in an attempt to hide his identity. Store clerk Forrest Seagrave was mopping up and preparing to end his shift when Mota arrived brandishing a silver handgun. Seagrave did not know Mota was armed when Seagrave attempted to interrupt the robbery. Mota shot Seagrave in the neck, causing Seagrave to bleed to death on the floor of the convenience store. Video footage from the store cameras showed Mota stepping over Seagrave’s body to grab the money from the cash register.
“Today’s verdict is the result of cooperation and months of tireless work between state and federal law enforcement partners, including the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Lake County District Attorney, and the Lake County Sheriff’s Office,” said U.S. Attorney, Brian J. Stretch. “I want to thank all the members of the team who contributed the time and resources necessary to bring Mr. Mota to justice.”
"Through this cooperative effort, ATF and our partners were able to apprehend and successfully prosecute a violent and dangerous individual who posed a significant threat to the public," said ATF Special Agent in Charge Jill A. Snyder. "Today we took a killer off our streets."
A federal grand jury handed down a Superseding Indictment on June 27, 2013, charging Mota with murder caused by a firearm; Hobbs Act robbery; and use and carry of a firearm during and in relation to that robbery. With yesterday’s verdict, Mota has been convicted of all of these charges.
Sentencing has been scheduled for October 28, 2016, before Judge Tigar. The maximum statutory penalty for use and carry of a firearm during and in relation to the Hobbs Act robbery, in violation of Title 18 U.S.C. § 924(c), is life imprisonment and a fine of $250,000. The maximum statutory penalty for the use of the firearm resulting in murder, in violation of 18 U.S.C. § 924(j), is life imprisonment and a fine of $250,000. The maximum statutory penalty for Hobbs Act robbery, in violation of 18 U.S.C. § 1951(a), is 20 years’ imprisonment and a fine of $250,000. Mota’s sentence also may include a 10-year consecutive prison term for discharging the firearm during the robbery. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case was tried by Assistant United States Attorneys Damali Taylor and Sarah Hawkins, with assistance from Kurt Kosek. The prosecution is the result of an investigation led by the ATF and the Lake County Sheriff’s Office.
Santa Rosa Man Sentenced for Tax Evasion and Conspiracy to Defraud the United StatesRead the Press Release
SAN FRANCISCO – Today, Jay Scott Soderling was sentenced to 36 months in prison and ordered to pay $345,697 in restitution, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
After a five-day trial in December of 2015, Soderling and his wife, Jessica Lynn Soderling, were convicted by a federal jury of conspiracy to defraud the United States. Jay Soderling was also convicted on one count of tax evasion. The evidence at trial showed that the Santa Rosa couple were involved in efforts to conceal assets from the IRS to avoid payment of Jay Soderling’s tax liabilities. During 2004 and 2005, Jay Soderling evaded payment of his taxes by hiding money and assets in the name of a corporation. In 2008 and 2009, after the IRS discovered Jay Soderling was keeping his personal assets in the name of the corporation, the couple worked together to further conceal assets by, among other things, moving money into a bank account opened for this purpose in Jessica Soderling’s name. Jay Soderling was indicted on August 9, 2011, for a single count of tax evasion, in violation of 26 U.S.C. § 7201. A superseding indictment was later filed adding the 18 U.S.C. § 371 conspiracy charge against the couple.
In finding Jay Soderling guilty of conspiracy, the jury concluded he agreed to obstruct the lawful functions of the IRS by deceitful or dishonest means. In addition, the evidence demonstrated Jay Soderling willfully evaded payment of taxes he owed to the United States. According to papers filed with the court, beginning in July 2004, the IRS began attempting to collect Jay Soderling’s tax liabilities. Jay Soderling admitted owing the IRS approximately $90,000, but he made written and oral statements to IRS employees misrepresenting his ability to pay the debt. Among other things, Jay Soderling told the IRS he had no significant assets, he had negligible income, and he did not expect his financial situation to change. In reality, Jay Soderling knew that he was about to receive an enormous financial windfall from several real-estate transactions. The government also demonstrated Jay Soderling failed to disclose his use of corporate funds to purchase a Dodge Viper, a new boat, and other personal items.
The sentence was handed down by the Honorable Vince Chhabria, U.S. District Judge. In addition to the prison term, Judge Chhabria also sentenced Jay Soderling to three-year periods of supervised release. Jessica Soderling was sentenced to a three-year term of probation, and ordered to pay $153,242 in restitution, in April 2016.
Assistant United States Attorneys Michael G. Pitman and Jose A. Olivera are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Alameda County Resident Charged with Wire Fraud, Mail Fraud, and Interstate Transportation of Stolen PropertyRead the Press Release
SAN JOSE –Ferdinand Pasion Arafiles, AKA Dennis Arafiles, appeared in court today and was arraigned on charges he defrauded a Bay Area manufacturer and seller of networking equipment and services, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The appearance follows an indictment handed down by a federal grand jury on June 23, 2016, and unsealed earlier today.
Arafiles, 49, of Alameda County, was an employee of a Bay Area public school district. According to the indictment, beginning in October of 2009, more than four years after Arafiles ceased to be an employee of the school district, he began taking advantage of the relationship between the district and a leading networking equipment and services corporation. Specifically, Arafiles is accused of manipulating the company’s warranty contract and service program for the district in order to receive, and then sell, replacement computer parts to which he was not entitled.
According to the indictment, Arafiles’s used fictitious names or stolen identities to create multiple bogus user accounts purporting to be a legitimate user of the school district account. Arafiles allegedly used these accounts to submit fraudulent warranty and service contract claims to the networking equipment and services corporation. The fraudulent claims allegedly resulted in delivery of replacement parts from the networking equipment and services corporation to addresses designated by Arafiles. Further, after Arafiles received the replacement computer parts to which he was not entitled, he allegedly sold at least some of those replacement parts to customers and, in the process, obtained money for his personal use and gain. The indictment charges Arafiles with five counts each of wire fraud, in violation of 18 U.S.C. § 1343; interstate transportation of stolen property, in violation of 18 U.S.C. § 2314; and mail fraud, in violation of 18 U.S.C. § 1341.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of violating 18 U.S.C. §§ 1341 or 1343, the defendant faces a maximum sentence, per count, of 20 years’ imprisonment and a fine of $250,000 plus restitution, if appropriate. If convicted of violating 18 U.S.C. § 2314, the defendant faces a maximum sentence, per count, of 10 years’ imprisonment, a fine of $250,000, plus restitution, if appropriate. Additional fines and a term of supervised release 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.
Arafiles currently is in custody and he is scheduled to appear in court for a detention hearing on Tuesday, July 5, 2016, before Nathaniel Cousins, U.S. Magistrate Judge.
Assistant U.S. Attorney Timothy Lucey is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the FBI.
Woodside Resident Pleads Guilty to Structuring Financial Transactions to Evade Reporting RequirementsRead the Press Release
SAN FRANCISCO, Calif. – Per Alftin pleaded guilty today to structuring financial transactions to evade reporting requirements, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The plea follows the June 3, 2016, filing in federal court charging Alftin with circumventing the federal reporting requirement.
According to the plea agreement, Alftin, 51, of Woodside, admitted to using structured transactions to transfer at least $1,493,500 of cash from the gross receipts of his company, Alftin Construction, between 2009 and 2012. Specifically, Alftin admitted knowing that the banks he used had an obligation to report certain transactions in excess of $10,000, and that he sought to prevent such reports by structuring transactions to avoid the $10,000 threshold. Alftin drew more than $100,000 in cash from his business’s gross receipts in structured transactions during each year from 2009 through 2012 for a total of $1,493,500 during the entire period.
Alftin was charged in an Information with a single count of structuring financial transactions to evade reporting requirements, in violation of 31 U.S.C. § 5324(a)(3). Pursuant to today’s agreement, Alftin pleaded guilty to that count. Alftin is scheduled to appear on October 7, 2016, at 11:00 am before the Honorable Susan Ilston, U.S. District Judge for sentencing.
The maximum penalty for a violation of 31 U.S.C. § 5324(a)(3), is ten years’ imprisonment and a fine of $500,000. In addition, a fine and a term of supervised release may be imposed; however, any sentence following this 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 US Attorney Michael G. Pitman is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Northern California Man Sentenced to 210 Months’ Imprisonment for Production and Possession of Child PornographyRead the Press Release
SAN FRANCISCO – Lesley James McNeal was sentenced to 210 months in prison for production and possession of child pornography, announced United States Attorney Brian J. Stretch and Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin. The sentence was handed down on June 21, 2016, by the Honorable William Alsup, U.S. District Judge.
McNeal, 53, of San Francisco, pleaded guilty on March 15, 2016, to one count of production of child pornography, in violation of 18 U.S.C. § 2251(a); and one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B). According to his guilty plea, McNeal acknowledged that, beginning on or about March 26, 2011, and through September 28, 2013, he made 14 videos depicting a girl under the age of 12 engaged in sexually explicit conduct. McNeal further admitted he then installed a program into a computer that allowed others to see and download the videos. McNeal also acknowledged that, on December 14, 2014, he possessed electronic devices that contained no fewer than 26,000 images and 700 videos of child pornography. McNeal was indicted on August 18, 2015, and charged with one count each of production of child pornography and possessing child pornography.
In addition to the prison term, Judge Alsup also sentenced the defendant to a 10-year period of supervised release and ordered him to pay restitution.
Assistant U.S. Attorney Michael Maffei prosecuted the case with the assistance of Rawaty Yim and Patricia Mahoney. The prosecution is the result of an investigation by HSI and the San Francisco Police Department.
San Jose Resident Pleads Guilty to Tax EvasionRead the Press Release
SAN FRANCISCO – Walter Rhodes 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.
According to the plea agreement, Rhodes, 64, of San Jose, admitted he attempted to evade the payment of more than $300,000 that he owed in federal income tax liabilities for the years 2002 through 2007. Rhodes admitted that between 2006 and 2011, he received numerous notices from the IRS explaining that he owed income taxes for the years 2002 through 2007. In 2009, the IRS levied his bank account. Subsequently, Rhodes opened a bank account using the name and social security number of another person. Rhodes also used that other person’s name and social security number to obtain employment as the vice president of an energy company. In an effort to further evade payment of his employment taxes, Rhodes arranged for the salary he received from his employment to be deposited into the account he opened in the other person’s name. As of September 24, 2013, Rhodes owed $514,476 in taxes and interest for 2002 through 2007.
Rhodes was indicted on July 25, 2015. He was charged with one count each of tax evasion, in violation of 26 U.S.C. § 7201; obstructing administration of Internal Revenue Laws, in violation of 26 U.S.C. § 7212(a); social security fraud, in violation of 42 U.S.C. § 408(a)(7); and aggravated identity theft, in violation of 18 U.S.C. § 1028A. Pursuant to today’s agreement, Rhodes pleaded guilty to tax evasion. The remaining charges will be dismissed.
The maximum penalty for a violation of 26 U.S.C. § 7201 is five years in prison and a fine of $250,000. Additional monetary assessments and supervised release may be imposed; however, any sentence following this 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. Rhodes’ sentencing is scheduled for October, 11, 2016, before the Honorable Beth Labson Freemen, U.S. District Judge.
Assistant U.S. Attorney José A. Olivera is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Salinas Man Pleads Guilty to Embezzling More Than $182,700 from Carmel Golf ClubRead the Press Release
SAN JOSE – Neal Morton pleaded guilty to bank fraud, 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 signed yesterday, from 2009 through February 4, 2014, Morton, 50, of Salinas, was employed in the accounting department of Tehama Golf Club (TGC), a private golf course and residential community center in Carmel, Calif. Morton oversaw TGC’s accounting department and was responsible for keeping TGC’s books and records. During this period, Morton devised a scheme to embezzle funds from TGC by causing TGC to issue checks drawn on its bank accounts with forged signatures. Morton saved digital copies of TGC employees’ signatures who were authorized to sign checks and drafted checks listing himself as the payee. To conceal the offense, Morton authored false entries in TGC’s books to give the appearance that the checks were used to pay for a valid business expense. In addition to the checks, Morton also stole more than $100,000 in TGC’s petty cash fund.
Morton was indicted on September 29, 2015. He was charged with bank fraud, in violation of 18 U.S.C. § 1344(2); and aggravated identity theft, in violation of 18 U.S.C. § 1028A. Pursuant to yesterday’s agreement, Morton pleaded guilty to bank fraud. Morton is scheduled to appear on October 24, 2016, at 1:30 pm for sentencing.
The maximum statutory penalty for bank fraud, in violation of 18 U.S.C. § 1344(2) is thirty years in prison and a fine of $1,000,000. 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 United States Attorneys Thomas Newman and Jose A. Olivera are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Point Richmond Resident Convicted of Tax EvasionRead the Press Release
OAKLAND - A federal jury in Oakland returned a guilty verdict against Richard Thomas Grant yesterday afternoon on three counts of tax evasion, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The trial and conviction follows a three count superseding indictment on December 4, 2014, of tax evasion, in violation of 26 U.S.C. § 7201.
According to evidence presented at trial, Grant, 64, of Point Richmond, Calif., was a partner in Grant Engineering & Manufacturing, an engineering company in Richmond. Grant Engineering used a bookkeeper for monthly and annual bookkeeping who had access to Grant Engineering’s invoices, company checkbook, and monthly bank statements. From at least 2005 to 2009, the bookkeeper provided the company’s records to a CPA to prepare Grant Engineering’s annual partnership returns. From 2005 through 2009, Grant Engineering’s partnership income was $509,339, $566,741, $486,062, $598,977, and $604,706, respectively. Although the defendant’s share was half of these amounts during each of these years, the IRS nevertheless has no record of receiving Grant’s personal tax returns from 2005 through at least 2009. The evidence demonstrated Grant paid no federal income tax on his income from Grant Engineering during the years charged.
During 2005 and 2006, Grant took steps to conceal the income he received through Grant Engineering. For example, in 2005 Grant significantly curbed the use of his two checking accounts and began moving his partnership distributions from Grant Engineering to a warehouse bank known as MyICIS in Berryville, Ariz. Warehouse banks can be used to conceal ownership of funds in part by commingling such funds with those of other individuals. In addition, between April 2005 and October 2006, Grant wrote hundreds of checks drawn on the MYICIS account and funded multiple prepaid debit cards. Grant used the checks and debit cards to pay his mortgage and other personal expenses.
Eventually, the federal government shut down MYICIS. Grant, however, took additional steps to prevent the IRS from discovering the income he received from Grant Engineering. Specifically, Grant used another bank to convert his partnership distributions to cashier’s checks and cash, all the while avoiding depositing the vast majority of the funds into any one bank account. He also used cash to purchase dozens of U.S. Postal Money Orders and then used the money orders to pay bills and expenses, including utilities, taxes, and expenses for his classic aircraft.
Grant, was convicted on all three counts of tax evasion in the superseding indictment.
Assistant U.S. Attorney Colin Sampson, and Department of Justice Tax Division Trial Attorney Matthew Kluge are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
United States Dismisses Prosecution Against Federal ExpressRead the Press Release
The United States Attorney's Office announced today that it moved to dismiss the indictment in United States v. FedEx. The Honorable Charles R. Breyer, U.S. District Judge, granted the motion today and dismissed the indictment.
Oakland Man Charged with Production of Child PornographyRead the Press Release
OAKLAND –D’mar Dwain Jennings Conway appeared in court today and was arraigned on charges he produced and possessed child pornography, 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 appearance follows an indictment handed down by a federal grand jury yesterday and a complaint and affidavit filed May 26, 2016.
Conway, 28, is a resident of Oakland. According to the indictment and complaint, during a search of Conway’s Fruitvale neighborhood residence, HSI agents seized a video camera and a digital storage card for the video camera. On the storage card, agents found numerous digital images that allegedly show Conway abusing a young boy between the ages of 3 and 6 years old by engaging in various sex acts with him in Conway’s residence. In the indictment, Conway is charged 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). The indictment alleges Conway abused the child between the years of 2007 and 2010.
Conway was arrested on May 26, 2016, and made his initial appearance in federal court on the federal complaint on May 27, 2016. He was remanded into the custody of the U.S. Marshal on May 26, 2016, and remains in custody. The defendant’s next scheduled appearance is at 1:00 p.m. on July 19, 2016, before the Honorable Jeffrey S. White, U.S. District Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of violating 18 U.S.C. § 2251, the defendant faces a mandatory minimum prison sentence of 15 years, a maximum sentence of 30 years, and a fine of $250,000 plus restitution, if appropriate. If convicted of violating 18 U.S.C. § 2252(a)(4), the defendant faces a maximum sentence of 20 years, a fine of $250,000, plus restitution, if appropriate. Additional fines and a term of supervised release 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.
Assistant U.S. Attorneys Denise Marie Barton and Brian Lewis are prosecuting the case with the assistance of Trina Khadoo. The prosecution is the result of an ongoing investigation by the United States Department of Homeland Security.
If members of the public have any information relevant to this investigation or to suspected child predators or suspicious activity, HSI encourages them to contact HSI through the toll-free Tip Line at 1-866-DHS-2-ICE or by completing its online tip form at https://www.ice.gov/webform/hsi-tip-form. Both are staffed around the clock by investigators. Suspected child sexual exploitation or missing children may also be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.