Northern District of California
Press releases recorded for this federal judicial district.
South Bay Man and Utah Man Charged with Defrauding Japanese Investors in $7 Million Ponzi SchemeRead the Press Release
SAN FRANCISCO –A federal grand jury indicted John Holdaway and Kevin Kyes yesterday with conspiracy, wire fraud, and money laundering, announced United States Attorney Brian J. Stretch, the Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
Holdaway, 72, of Sandy, Utah, and Kyes, 68, of Campbell, Calif., allegedly ran an approximately $7 million Ponzi scheme, primarily involving Japanese investors, from December 2012 through July 2015. According to the indictment, Holdaway and Kyes offered investors the opportunity to invest with a group of entities that they controlled and referred to as “Money Management Strategies,” or “MMS.” The defendants allegedly told the investors their money would be invested in currency or derivatives trading with returns of 100% annually. The defendants also allegedly told investors that their investments would be safe, in part because their principal would never leave the bank accounts into which the funds were sent and that any trading losses would be borne by MMS. Based on the representations of Holdaway and Kyes, these investors wired or otherwise transferred money to bank accounts in Northern California controlled by Holdaway and Kyes. The Japanese investors sent approximately $7 million to Holdaway and Kyes during the scheme.
The indictment alleges that in reality, Holdaway and Kyes did not invest the money as promised. Instead, they spent the money themselves, used it to fund Ponzi-type payments back to investors, spent the money to pay back prior investors from other investment programs that they had run, and spent it on gold-related businesses. In addition, Holdaway and Kyes allegedly told investors that they were receiving distributions or returns on their investment. To back up their claims, the defendants also allegedly created and sent to investors fake documents, including account statements and letters from an accountant. Holdaway also sent emails to investors under fake names, to give the appearance that multiple people worked for Holdaway and Kyes, and lied about traveling to Europe or elsewhere to work on their investments.
Holdaway and Kyes are charged with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; eighteen counts of wire fraud, in violation of 18 U.S.C. § 1343; one count of conspiracy to engage in monetary transactions in property derived from specified unlawful activity, in violation of 18 U.S.C. § 1956(h); and five counts of engaging in monetary transactions in property derived from specified unlawful activity, in violation of 18 U.S.C. § 1957.
Both defendants were arrested this morning and made their initial appearances in federal court, where they were released pending further hearings. Holdaway’s next scheduled appearance is at 9:30 a.m. on Tuesday, June 28, 2016, before the Honorable Laurel Beeler, U.S. Magistrate Judge. Kyes’s next scheduled appearance is at 11:00 a.m. on Friday, July 22, 2016, before the Honorable Susan Illston, U.S. District Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the maximum statutory penalty for each count of wire fraud or conspiracy to commit wire fraud is 20 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss resulting from the offense. The maximum statutory penalty for each count of conspiracy to engage in monetary transactions in property derived from specified unlawful activity or of engaging in monetary transactions in property derived from specified unlawful activity is 10 years’ imprisonment and a fine of $250,000 or twice the amount of property involved in the offense. Additional periods of supervised release and restitution also apply. 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 Benjamin Kingsley is prosecuting the case with assistance from Jessica Meegan and Daniel Charlier-Smith. The prosecution is the result of an investigation by the FBI and the IRS-Criminal Investigation.
Sanford “Spam King” Wallace Sentenced to Two and A Half Years in Custody for Spamming Facebook UsersRead the Press Release
SAN JOSE – Sanford Wallace was sentenced yesterday to 30 months’ imprisonment and was ordered to pay $310,628.55 in restitution for sending millions of spam messages to Facebook users and disobeying a court order not to access Facebook announced the Office of the United States Attorney for the Northern District of California and the Federal Bureau of Investigation.
Wallace, 47, of Las Vegas, pleaded guilty on August 24, 2015 to one count of fraud and related activity in connection with electronic mail, in violation of 18 U.S.C. §§ 1037(a)(1) and (b)(2)(A); and one count of criminal contempt, in violation of 18 U.S.C. § 401(3). According to the plea agreement Wallace admitted to executing a scheme from approximately November 2008 through March 2009 to send spam messages to Facebook users that compromised approximately 500,000 legitimate Facebook accounts, and resulted in over 27 million spam messages being sent through Facebook’s servers.
Wallace illegally obtained, stored, and exploited Facebook user account information and earned money by redirecting users to other websites. Specifically, Wallace admitted he opened a fictitious Facebook account in the name of “David Frederix” to test his spam messages and created an automated process to sign into a Facebook user’s account, retrieve a list of all of the user’s friends, and then send a message to each of the user’s friends’ Facebook accounts. The message was designed to trick legitimate Facebook account holders into accessing a website listed in the message that was purportedly from a Facebook friend. Once the user entered his or her information, the user would be redirected to an affiliate website. Wallace further admitted that he earned money for directing traffic to the websites and stored users’ email addresses and passwords in order to continue sending spam messages.
In addition, Wallace admitted that during three time periods he accessed Facebook’s computer network to send spam messages to Facebook’s users. First, on or about November 5, 2008, and continuing to November 6, 2008, he accessed Facebook’s computer network in order to initiate the transmission of a program that resulted in more than 128,883 spam messages being sent to Facebook users. Second, he admitted that on December 28, 2008, he accessed Facebook’s computer network in order to initiate the transmission of a program that resulted in nearly 300,000 spam messages being sent to Facebook users. Third, he admitted that on February 17, 2009, he accessed Facebook’s computer network in order to initiate the transmission of a program that resulted in more than 126,000 spam messages being sent to Facebook users.
Facebook filed a lawsuit against him in United States District Court for the Northern District of California alleging violations of the CAN-SPAM Act of 2003, the Computer Fraud and Abuse Act, and California’s Anti-Phishing and Computer Data Access and Fraud Acts. (Facebook, Inc. v. Wallace, et al, No. C-09-00798 JF). On March 2, 2009, March 24, 2009, and September 18, 2009, U.S. District Court Judge Jeremy Fogel ordered Wallace not to access or attempt to access Facebook’s computer network in any manner whatsoever nor create or maintain a Facebook account. Wallace admitted that on April 17, 2009, he willfully disobeyed Judge Fogel’s order by logging into his Facebook account while aboard a flight from Las Vegas to New York.
Wallace was indicted by a federal grand jury on July 6, 2011. He was charged with multiple counts of fraud and related activity in connection with electronic mail, in violation of 18 U.S.C. §§1037(a)(1) and (b)(2)(A); 18 U.S.C. §§ 1037(a)(2) and (b)(2)(C); and 18 U.S.C. §§ 1037(a)(4) and (b)(2)(B). Wallace was also charged with three counts of intentional damage to a protected computer, in violation of 18 U.S.C. §§ 1030(a)(5)(A) and (c)(4)(B)(i), for accessing Facebook’s computer network and two counts of criminal contempt, in violation of 18 U.S.C. § 401(3) for disobeying Judge Fogel’s order.
The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge. Judge Davila also sentenced the defendant to a five-year period of supervised release. The defendant will begin serving the sentence on September 7, 2016.
Assistant U.S. Attorney Susan Knight is prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Federal Investigation Yields Multiple Convictions in Connection with Bribery of Veterans Affairs Contracting OfficerRead the Press Release
SAN JOSE – Today, Justin Tolentino became the last of seven defendants involved in a Veterans Affairs (VA) contracting officer bribery scandal to be sentenced, announced United States Attorney Brian J. Stretch, FBI Special Agent in Charge John F. Bennett, and VA Office of Inspector General (OIG) Special Agent in Charge Michael Seitler. The sentence brings to a close the five-year investigation into a bribery scandal pursuant to which former VA contacting officer, Tracy Marasco, accepted cash, trips, and gifts in exchange for steering million-dollar contracts to particular contractors.
In 2011, the VA OIG and the FBI began their probe into alleged corrupt contracting activities at the VA Medical Centers (VAMCs) in Palo Alto, Calif. and Sacramento, Calif. Since then, the multi-year investigation resulted in the charging of seven individuals including one VA contracting officer, three VA contracting officer’s representatives, and three construction contractors. With today’s sentence, all of the defendants have been convicted and sentenced. The individuals charged and convicted in connection with the scheme include the following:
- Tracy Marasco, 49, of Modesto, pleaded guilty on February 21, 2014, to one count of Receipt of a Bribe as a Public Official, in violation of 18 U.S.C. § 201(b)(2)(A). Marasco admitted using her position as a Veterans Affairs contracting officer to steer valuable construction and maintenance contracts to certain prime contractors in exchange for cash payments and gifts. Marasco was indicted by a federal grand jury on May 4, 2011 and was charged with five counts of receiving bribes within her capacity as a public official, in violation of 18 U.S.C. § 201(b)(2)(A); and one count of making false statements to a government agency, in violation of 18 U.S.C. § 1001(a)(2). Marasco admitted that between 2007 and 2010, she received tens of thousands of dollars in cash payments and two used cars from various private contractors and subcontractors. In addition, during the same period, she received paid trips to Puerto Rico, Disneyland, and Las Vegas. On June 6, 2016, she was sentenced by U.S. District Judge Edward J. Davila to six months in prison and an additional six months of home detention as a term of supervised release.
- Xerxes “Ike” Zapata, a former Palo Alto VAMC contracting officer’s representative, pleaded guilty to one count of Receipt of a Bribe by a Public Official, in violation of 18 U.S.C. § 201(b)(2)(A). Zapata admitted accepting cash, flight tickets, and payments to credit cards in exchange for steering construction and maintenance contracts to the benefit of those providing the bribes. Zapata was sentenced by U.S. District Judge Edward J. Davila to 16 months in prison and a $25,000 fine.
- Russell Allgire, a former Palo Alto VAMC contracting officer’s representative engineer, pleaded guilty to one count of Receipt of a Bribe by a Public Official, in violation of 18 U.S.C. § 201(b)(2)(A). Allgire admitted accepting cash and car payments in exchange for steering construction and maintenance contracts to the benefit of those providing the bribes. Allgire was sentenced by U.S. District Judge Edward J. Davila to a term of three years of probation with a term of 12 months of home detention and a $7,500 fine.
- Conrad Alfaro, a former Palo Alto VAMC contracting officer’s representative, pleaded guilty to one count of Receipt of a Gratuity by a Public Official, in violation of 18 U.S.C. § 201(c)(1)(B). Alfaro admitted receiving roofing work on his home which was paid for by a VA general contractor while overseeing a Palo Alto VAMC project to install a new MRI scanner by the same VA general contractor. Alfaro was sentenced by U.S. District Judge Lucy H. Koh to 5 years of probation with a term of 12 months of home detention, and a $25,000 fine.
- Jack Stringer, a former VA contractor, pleaded guilty to one count of Providing a Gratuity to a Public Official, in violation of 18 U.S.C. § 201(c)(1)(A). Stringer admitted that he provided cash and gifts to several VA employees, including entertainment tickets, gift cards, vacation packages, and the payment of credit card bills. Stringer was sentenced by U.S. District Judge Edward J. Davila to a term of 3 years of probation and a special condition of eight months of home detention, and a $27,500 fine.
- Jacobo Herrera, a former VA contractor, pleaded guilty to one count of Providing a Gratuity to a Public Official, in violation of 18 U.S.C. § 201(c)(1)(A). Herrera admitted providing cash payments, Disneyland Tickets, and hotel accommodations to VA officials. Herrera was sentenced by U.S. District Judge Lucy H. Koh to a term of 3 years of probation and eight months’ home detention, and a $20,000 fine.
- Justin Tolentino a former VA contractor, pleaded guilty to one count of Providing a Gratuity to a Public Official, in violation of 18 U.S.C. § 201(c)(1)(A). Tolentino admitted providing flight and hotel accommodations to a VA official on three occasions. Tolentino was sentenced by U.S. District Judge Beth L. Freeman to a term of 3 years of probation, and ordered to pay a $5,000 fine.
Assistant U.S. Attorneys Jeff Nedrow and Amber Rosen are prosecuting the case with the assistance of Susan Kreider. The prosecution is the result of an investigation by the FBI and VA-OIG.
Three Defendants Arrested in Connection with Illegal Fentanyl Pill Manufacturing OperationRead the Press Release
SAN FRANCISCO - Kia Zolfaghari, King Edward Harris II, and Candelaria Dagandan Vazquez were named in a federal criminal complaint alleging that they conspired to run an illegal fentanyl pill manufacturing operation out of an apartment in the Sunset District of San Francisco, announced United States Attorney Brian J. Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin.
According to the complaint, which is now unsealed, Zolfaghari, 39, of San Francisco, is alleged to have operated a pill press in his apartment to manufacture counterfeit oxycodone pills, which did not contain oxycodone but instead were laced with fentanyl. Fentanyl, a Schedule II controlled substance, is a highly potent opiate that can be diluted with cutting agents to create counterfeit pills that attempt to mimic the effects of oxycodone, and can typically be obtained at a lower cost than genuine oxycodone. However, small variations in the amount or quality of fentanyl can have significant effects on the potency of the counterfeit pills, raising the danger of overdoses.
The complaint alleges that Zolfaghari sold over 1,500 fentanyl-laced pills, over the course of six transactions, to a confidential source working with law enforcement. The complaint further alleges that Harris, 34, of Oxnard, brokered these narcotics sales in a series of recorded calls with the confidential source and hand-delivered two of those purchases to the confidential source.
According to the complaint, Zolfaghari also sold the fentanyl-laced pills to customers through an online marketplace. The complaint alleges that Zolfaghari’s wife, Vazquez, 38, of San Francisco, conspired with him to carry out his drug trafficking operation, and delivered packages of pills for mailing, purchased packaging supplies, and accepted payments for narcotics via her bank account.
Zolfaghari, Harris, and Vazquez were arrested this morning and made their initial appearance today in federal court in San Francisco before the Honorable Laurel Beeler, U.S. Magistrate Judge. Their next court appearance will be before Judge Beeler at 9:30 a.m. on Monday, June 13, 2016.
A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of 20 years, and a fine of $1,000,000 or twice the gain or loss from their criminal activity, for each violation of 21 U.S.C. §§ 841(a)(1) and 846. 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 Rita Lin is prosecuting the case with the assistance of Amanda Martinez and Theresa Benitez. The prosecution is the result of a seven-month investigation by the Drug Enforcement Administration, Homeland Security Investigations, the Internal Revenue Service, the United States Postal Service, and Customs and Border Protection, with assistance from the San Francisco Police Department and San Francisco Fire Department.
This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, (OCDETF) 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.
East Bay Home Health Care CFO Pleads Guilty to Failing to Truthfully Account for and Pay Employment TaxesRead the Press Release
OAKLAND – Muzaffar Hussain pleaded guilty in federal court today to failing to account for and pay employment taxes to the United States, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
In pleading guilty, Hussain, 68, of Pleasanton, admitted that as CFO of Crossroads Home Health Care, Inc., he had the duty to file the Employer’s Quarterly Federal Tax Returns [Forms 941] with the Internal Revenue Service (“IRS”) and to pay over the employment taxes. Such taxes, referred to as trust fund taxes, include income tax, social security tax, and a hospital insurance (Medicare) tax collected from the wages of Crossroads’ employees. Hussain admitted he knew the trust fund taxes were required to be paid to the IRS and that the funds were not monies he could use or borrow. Further, Hussain acknowledged that during the relevant period, he had sole authority and control over Crossroads’ Bank of America account in which monies for the trust fund taxes were deposited. Nevertheless, for each pay period between July 1, 2004, and February 27, 2008, Hussain transferred funds in an amount equal to, or close to, the amount of employment taxes from the Bank of America account to other bank accounts. Hussain thereafter used the monies, including the trust fund taxes, to fund other business and personal interests. Hussain also admitted to knowingly causing the submission to the IRS of false Forms 1120 for Crossroads—the false forms underreported gross receipts received from Medicare. In sum, the total amount of taxes either underpaid or underreported was $495,000.
On July 30, 2015, a federal grand jury returned a superseding indictment charging Hussain with thirteen counts of making or subscribing a false tax return, in violation of 26 U.S.C. § 7206(1); seventeen counts of willful failure to truthfully account for an pay over taxes, in violation of 26 U.S.C. § 7202; and one count of structuring transactions to evade reporting requirements, in violation of 31 U.S.C. § 5324(a)(3). Under the plea agreement, Hussain pled guilty to one count of willful failure to truthfully account for and pay over taxes, in violation of 26 U.S.C. § 7202.
Hussain currently released on bond. His sentencing hearing is scheduled for January 20, 2017, at 9:30 a.m. before the Honorable Jon Tigar, U.S. District Court Judge, in Oakland. The maximum statutory penalty for a violation of 26 U.S.C. § 7202 is five years’ imprisonment and a fine of $250,000, plus restitution if appropriate. Additional fines and a term of supervised release also may be ordered, however, any sentence will be imposed only after consideration of the U.S. sentencing guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. s 3553.
Assistant U.S. Attorneys Cynthia Stier and Jose Olivera are prosecuting the case with the assistance of Kathy Tat. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Former Employee of Silicon Valley Company Pleads Guilty to Damaging Ex-Employer’s ComputersRead the Press Release
SAN JOSE – Kenneth Kezeor pleaded guilty yesterday to intentionally damaging a protected computer, announced United States Attorney Brian J. Stretch and FBI Special Agent in Charge John F. Bennett. In pleaded guilty, Kezeor acknowledged attacking a corporate computer application of his former employer.
As part of his plea agreement, Kezeor, 47, of Felton, Calif., acknowledged he was hired by a Silicon Valley company on July 7, 1997, and worked for the company and its successor until he was terminated on October 31, 2012, as part of a reduction in force. Prior to his termination, Kezeor worked as the system administrator for a customer support application and therefore had high-level access to the application and the associated database. Kezeor admitted that, for about four months after his termination, he used his administrator accounts to intentionally cause damage to his former employer’s application by transmitting information, codes, and commands. Kezeor also admitted to using the account of another employee to cause damage to the application. Kezeor’s transmissions impaired the availability and integrity of data, programs, systems, or information.
Kezeor was indicted by a federal grand jury on April 30, 2014. He was charged with one count of intentional transmission causing damage to a protected computer, in violation of 18 U.S.C. § 1030(a)(5)(A); and one count of intentional access to a protected computer recklessly causing damage, in violation of 18 U.S.C. § 1030(a)(5)(B). On April 28, 2016, the grand jury handed down a superseding indictment adding an additional charge of aggravated identity theft, in violation of 18 U.S.C. § 1028A. Pursuant to yesterday’s agreement, Kezeor pleaded guilty to a single count of intentional transmission causing damage to a protected computer.
Kezeor remains free on bond. He is scheduled to be sentenced by the Honorable Beth Labson Freeman, U.S. District Judge, on September 20, 2016. The defendant faces a statutory maximum term of ten years’ imprisonment and a maximum $250,000 fine. An additional term of supervised release, fines, and restitution may be imposed, however, any sentence 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. As part of his plea agreement, Kezeor has agreed to pay restitution in an amount to be set by the Court at the time of sentencing.
Assistant U.S. Attorneys Michelle J. Kane and Matthew A. Parrella are prosecuting the case with the assistance of Elise Etter and Melissa Dorton. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
San Francisco Resident Sentenced to More Than 5 Years in Prison for Bank Fraud and Aggravated Identity TheftRead the Press Release
SAN FRANCISCO – Charlyne Basada, AKA Charlyne Melendres, was sentenced today to 65 months of imprisonment for bank fraud and identity theft, announced United States Attorney Brian J. Stretch and Jean Ackerman, Regional Director of the U.S. Department of Labor, Employee Benefits Security Administration. The sentence follows Basada’s guilty plea to the charges and her acknowledgement that she helped to defraud four employers collectively of more than a million dollars.
Basada, 38, of San Francisco, pleaded guilty on January 13, 2016, to charges that she fraudulently made payments to herself from her former employers’ checking accounts. Basada worked as a bookkeeper or office manager for four companies from 2009 through 2015. In her position at each company, she obtained access to the payment systems of each company. Basada admitted she devised and executed a scheme to defraud each of her former employers by using the corporate payment systems to initiate fraudulent payments to herself. In so doing, she created the false appearance that she was entitled to funds for wages, reimbursements, and other payments. Her theft diverted money from, among other things, employee pension benefit plans.
Basada also prepared checks that were intended to pay personal vendors of one of her former employers. Her employer signed these checks believing that they would be paid to vendors. However, Basada fraudulently completed the payee portion of the check to “cash” and deposited the checks into her own personal bank account. Basada admitted that the total loss to all four employers from her scheme was $1,085,918.90 and that she abused a position of trust at each employer. Further, Basada acknowledged that she made some repayments to some of her former employers, but the total amount still owed to her former employers is $1,063,975.78.
Basada was indicted by a federal grand jury on September 11, 2015, and was charged with twelve counts of bank fraud, in violation of 18 U.S.C. § 1344; four counts of wire fraud, in violation of 18 U.S.C. § 1343; and two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1). Pursuant to her plea agreement, Basada pleaded guilty to one count of bank fraud and one count of aggravated identity theft.
The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge. In addition to the prison term, Judge Breyer sentenced the defendant to five years of supervised release. Restitution is to be determined at a later date. Basada was ordered to surrender to begin serving her sentence on September 6, 2016.
Assistant U.S. Attorney Benjamin Kingsley is prosecuting the case with the assistance of Jessica Meegan. The prosecution is the result of an investigation conducted by the San Francisco Regional Office of the United States Department of Labor, Employee Benefits Security Administration.
Pharmaceutical Companies to Pay $67 Million to Resolve False Claims Act Allegations Relating to TarcevaRead the Press Release
SAN FRANCISCO- Pharmaceutical companies Genentech, Inc. and OSI Pharmaceuticals, LLC will pay $67 million to resolve False Claims Act allegations that Genentech and OSI Pharmaceuticals, Inc. made misleading statements about the effectiveness of the drug Tarceva to treat non-small cell lung cancer. The announcement was made today by United States Attorney Brian J. Stretch; Principal Deputy Assistant U.S. Attorney General Benjamin C. Mizer; Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General Steven Ryan; and Howard R. Sklamberg, the Federal Food and Drug Administration’s Deputy Commissioner for Global Regulatory Operations and Policy.
Genentech, located in South San Francisco, California, and OSI Pharmaceuticals, located in Farmingdale, New York, co-promote Tarceva, which is approved to treat certain patients with non-small cell lung cancer or pancreatic cancer. OSI Pharmaceuticals LLC is the successor to OSI Pharmaceuticals Inc., which was acquired by Astellas Holding US Inc. in 2010 and converted to a limited liability company in 2011. The settlement resolves allegations that, between January 2006 and December 2011, Genentech and OSI Pharmaceuticals made misleading representations to physicians and other health care providers about the effectiveness of Tarceva to treat certain patients with non-small cell lung cancer, when there was little evidence to show that Tarceva was effective to treat those patients unless they had never smoked or had a mutation in their epidermal growth factor receptor, which is a protein involved in the growth and spread of cancer cells.
As a result of today’s $67 million settlement, the federal government will receive $62.6 million and state Medicaid programs will receive $4.4 million. The Medicaid program is funded jointly by the state and federal governments.
“This settlement demonstrates the government’s unwavering commitment to pursue violations of the False Claims Act and recover taxpayer dollars spent as a result of misleading marketing campaigns,” said U.S. Attorney Brian Stretch for the Northern District of California.
“Pharmaceutical companies have a responsibility to provide accurate information to patients and health care providers about their prescription drugs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department of Justice will hold those companies accountable that mislead the public about the efficacy of their products.”
“Pharmaceutical companies that make misleading or unsubstantiated statements about their products can put patients at risk,” said Deputy Commissioner Howard R. Sklamberg for FDA’s global regulatory operations and policy. “The FDA will continue to work to protect the public's health by ensuring that companies do not mislead healthcare providers about their products.”
“Drug manufacturers that make misleading claims about their product’s effectiveness can jeopardize the health of patients -- in this case, cancer patients,” said Special Agent in Charge Steven J. Ryan for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Our agency will continue to protect both patients and taxpayers by holding those who engage in such practices accountable for their actions.”
The settlement resolves allegations filed in a lawsuit by former Genentech employee Brian Shields, in federal court in San Francisco. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. Shields will receive approximately $10 million. The claims resolved by the settlement are allegations only, and there has been no determination of liability.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $29.8 billion through False Claims Act cases, with more than $18.2 billion of that amount recovered in cases involving fraud against federal health care programs.
Assistant U.S. Attorney Ila C. Deiss and U.S. Department of Justice Civil Division Trial Attorney Jennifer Cihon handled the case with the assistance of Paralegal Jonathan Birch. The settlement is the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Northern District of California, with assistance from the HHS-OIG, the HHS Office of Counsel to the Inspector General, the HHS Office of the General Counsel-CMS Division, the FDA’s Office of Chief Counsel, the FDA’s Office of Criminal Investigations, the Office of the Inspector General for the Office of Personnel Management, the FBI, the Department of Defense Office of the Inspector General, the Office of the General Counsel for the Defense Health Agency and the National Association of Medicaid Fraud Control Units.
San Jose Resident Sentenced to A Year in Custody for Damaging Computers of Silicon Valley CompanyRead the Press Release
SAN JOSE – Robert Saunders was sentenced to twelve months in prison and ordered to pay $124,003.79 in restitution for attacking a corporate computer network, announced United States Attorney Brian J. Stretch and FBI Special Agent in Charge John F. Bennett.
Saunders, 30, of San Jose, pleaded guilty on February 24, 2016, to one count of intentional damage to a protected computer. As part of his plea agreement, Saunders admitted he intentionally accessed the computer network of a Silicon Valley corporation based in San Mateo that provides integrated business management solutions over a web-based architecture. On numerous occasions between July 26, 2012, and August 31, 2012, Saunders accessed the computer network of the publicly-traded corporation without authorization and caused losses with an aggregate value of approximately $189,000.
Saunders admitted that on one occasion he changed information for a demonstration account belonging to a retail business customer of the corporation and that his actions prevented potential customers from accessing the test account. On other occasions, Saunders obtained information through his unlawful access to a database and posted offensive content in the corporation’s test account. The corporation incurred approximately $189,000 in costs responding to the offense and restoring its systems.
Saunders was originally indicted by a federal grand jury on April 30, 2014. A Second Superseding Indictment was filed on February 24, 2016, charging him with one count of Intentional Damage to a Protected Computer, in violation of 18 U.S.C. § 1030(a)(5)(A) and (c)(4)(B)(i); four counts of Obtaining Information from a Protected Computer without Authorization, in violation of 18 U.S.C. § 1030(a)(2)(C) and (c)(2)(B)(i); and two counts of Possession of a Firearm in Interstate Commerce while Unlawfully Using A Controlled Substance, in violation of 18 U.S.C. § 922(g)(3). Pursuant to his plea agreement, he pleaded guilty to the intentional damage to a protected computer charge.The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge on June 1, 2016. Judge Koh also sentenced the defendant to a three-year period of supervised release and ordered him to forfeit property seized during the execution of a search warrant at his apartment, including computer equipment used to facilitate the offense. FBI agents arrested the defendant on May 8, 2014, in Portland, Oregon. On September 12, 2014, he was ordered released on bond and remains out of custody. The defendant will begin serving the sentence on July 29, 2016.
Assistant U.S. Attorneys Michelle J. Kane and Susan Knight are prosecuting the case with the assistance of Melissa Dorton and Elise Etter. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
South Carolina Club Owners Sentenced to More Than Three Years in Prison for Money Laundering and Drug ConspiracyRead the Press Release
SAN FRANCISCO – South Carolina businessmen Vladimir Handl and Michael Rose each were sentenced to more than three years in prison for their respective roles in a racketeering, money-laundering, and drug trafficking scheme, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. Pursuant to the sentences handed down yesterday by United States District Judge William Alsup, Handl was sentenced to 44 months in prison, and Rose was sentenced to 40 months in prison.
Handl, 38, and Rose, 45, both operated clubs and restaurants in Myrtle Beach, South Carolina at the time of their involvement in the charged scheme. Handl owned and operated a night club called Heat Lounge in Myrtle Beach, and Rose operated several strip clubs in South Carolina, Delaware, and New Hampshire under the name “The Gold Club.”
Handl and Rose are two of the eleven defendants charged in a superseding indictment filed on March 24, 2015, for their alleged participation in a conspiracy to conduct a criminal enterprise through a pattern of racketeering. According to the indictment, between 2011 and 2015, the defendants knowingly accepted more than $2.3 million that they believed either had been fraudulently diverted from a bankruptcy court proceeding or were the proceeds of drug trafficking. After they each received cash from undercover FBI agents, the defendants laundered the money through fake business entities. As part of the scheme, the defendants created fraudulent invoices, contracts, and other business records to make it appear that the cash they received and then returned as “cleaned” funds was for legitimate business transactions. During the scheme, Handl also sought to purchase kilograms of cocaine, and Rose agreed to assist with the drug transaction. Handl and Rose, among others, where charged with racketeering conspiracy, in violation of 18 U.S.C. § 1962(d). Handl and Rose also were charged with substantive racketeering, in violation of 18 U.S.C. § 1962(c), and conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). In addition, Handl was charged with 118 counts of money laundering, in violation of 18 U.S.C. § 1956(a)(3); and conspiring to distribute cocaine, in violation of 21 U.S.C. § 846. Rose was charged with 105 counts of substantive money laundering and conspiring to distribute cocaine. Rose pleaded guilty to all the charges. Handl was found guilty after a bench trial before Judge Alsup in which Handl acknowledged he would not contest any of the facts alleged in the superseding indictment.
In addition to the prison terms, Judge Alsup also imposed a term of three years of supervised release on each defendant. Rose also was ordered to pay a fine of $15,000. Both defendants remain free on bond. The defendants have been ordered to surrender and begin serving their sentence no later than August 1, 2016, for Handl and August 2, 2016, for Rose.
Assistant United States Attorneys Lloyd Farnham and Andrew Dawson are prosecuting the case with the assistance of Michelle Alter, Yanira Osorio, and Marina Ponomarchuk. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Northern District of California Litigative Team and Paralegal Specialist Honored by Department of Justice at Executive Office for United States Attorneys Director’s Awards CeremonyRead the Press Release
WASHINGTON – Former and current Assistant United States Attorneys Wilson Leung, Stephen J. Meyer, Andrew M. Scoble, Benjamin P. Tolkoff, Acadia Leigh Senese, along with Kevin Costello, Maureen French, Ponly J. Tu, Daniel Charlier-Smith and Maryam Beros of the Northern District of California U.S. Attorney’s office; in addition to Anthony R. Tillett, Travis Jones, Jill Brenny, Paul Viglienzone, Anthony L. Bordigon, and Michael Carlos Garcia were among the 160 recipients recognized by Deputy Attorney General Sally Yates and Executive Office for U.S. Attorneys (EOUSA) Director Monty Wilkinson at the 32nd annual Director’s Awards Ceremony today in Washington D.C.
The Northern District of California was one of 33 districts represented at the ceremony which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building.
In her prepared remarks, Deputy Attorney General Yates said, “The achievements being recognized today reflect the breadth of the department’s responsibilities, and some of our most significant challenges. From dismantling dangerous gangs, drug cartels and human trafficking operations to tackling political corruption, white collar crimes, and international terrorism, these awardees have taken on our toughest cases. And the citizens of our country are safer because of their work.”
“We honor the truly talented and dedicated legal and administrative personnel in the 94 U.S. Attorneys’ offices and our law enforcement partners who everyday touch lives in our communities, protect the American people, and work to ensure the fair and impartial administration of justice,” said Director Wilkinson.
The Northern District of California litigative team was recognized for their exceptional contributions to the investigation and prosecution of the 500 Block/C Street Gang. After an 18-month investigation by Homeland Security Investigations and the South San Francisco and Daly City Police Departments, a three-month trial resulted in the convictions of 18 members and associates of the gang on various charges including racketeering conspiracy, racketeering murder and attempted murder, Hobbs Act robbery, obstruction of justice, and attempted murder of federal agents. The 500 Block/C Street Gang terrorized the streets of South San Francisco and was responsible for one of the most violent episodes in the city’s history – a shooting that killed three young men and wounded three federal agents.
Paralegal Specialist Maryam Beros was honored with an individual award for providing more than 20 years of innovative and exceptional leadership in her development of policies, procedures, and systems for the management of health care fraud cases in the United States Attorney’s. Ms. Beros received the Director’s Award for Superior Performance in a Litigative Support Role. Her efforts have assisted law enforcement with developing leads and uncovering evidence of potential health care fraud violations, and allowed her office to track health care fraud cases from the moment of referral through sentencing and appeal. She has also developed processes for organizing, managing, and producing in discovery the voluminous, yet highly-sensitive records acquired in the course of large-scale health care fraud investigations. Ms. Beros has shared her knowledge and techniques within this district and nationwide by training Assistant United States Attorneys and paralegals in annual discovery and orientation courses, and by leading classes at the National Advocacy Center on issues unique to health care fraud cases.
“I congratulate all the recipients of the Director’s Awards and I am especially proud of the 16 exceptional employees of the Northern District of California who have received this well-deserved recognition,” said U.S. Attorney Brian J. Stretch. “The contributions made by these public servants reflect not only the deep well of talent that resides in this district but also the hard work, dedication, and sacrifice it takes to serve so honorably in the law enforcement profession.”
EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.
Oakland Dentist Pleads Guilty to Tax EvasionRead the Press Release
OAKLAND – Jack Carlo Isaacs 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, Isaacs, 73, of Oakland, has been a practicing dentist since 1972, specializing in endodontics, root canals, and dental implants. From 1997 through the present, Isaacs owned and operated Isaacs Dental, Inc. Isaacs acknowledged that as of September 26, 2012, he knew he had unpaid federal income tax liabilities for 2002, 2003, 2005, 2009, 2010 and 2011in the amounts of $35,128.09; $47,313.00; $6,418.00; $31,692.00; $41,739.00; and $9,013.00, respectively. Further, Isaacs admitted that between September 26, 2012, and April 2, 2013, he attempted to evade and defeat the payment of his federal income tax liabilities by committing various affirmative acts, including the following:
- On or about September 26, 2012, Isaacs sent a check to the IRS in the amount of $414,300, to be applied to his tax liabilities for 2003, 2005, 2009 and 2010, knowing that there were insufficient funds in that account, and that he had closed the account.
- On or about November 9, 2012, Isaacs sent a check to the IRS in the amount of $9,122, to be applied to his 2011 tax liability, knowing there were insufficient funds in that account, and that he had also closed this account.
- On or about March 8, 2013, Isaacs caused fake money orders to be sent to the IRS to be applied to his 2002, 2003, 2005, 2009, 2010 and 2011 tax liabilities. He did so knowing that these money orders were fake because they were drawn on a fictitious account at the Federal Reserve Bank.
- On or about August 26, 2013, Isaacs filed a Petition to Cease and Desist in the United States District Court for the Northern District of California, Case No. 13-cv-01394-WHO (N.D. Calif.) requesting that the court order the IRS to “cease and desist all collection activities” because Isaacs had paid his taxes. He filed the suit to mislead the Court into believing that his taxes had been paid with the fake money orders referenced above, along with submitting a copy of another fake money order to the district court and to the IRS in the amount of $1,272,338.
Issacs was charged on April 21, 2016, with one count of attempting to evade and defeat the payment of tax for 2002, 2003, 2005, 2009, 2010 and 2011. He pleaded guilty to the charge. He also agreed to pay $219,371.08 to the IRS which includes the sum of the taxes he owed plus interest. Isaacs is scheduled to be sentenced by the Honorable James Donato on October 27, 2016, at 9:30 a.m., in Oakland.
The maximum statutory penalty for attempting to evade and defeat the payment of tax, in violation of 26 U.S.C. § 7201, is five years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Cynthia Stier is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
JSG Capital Investments’ Officers Charged with Wire FraudRead the Press Release
SAN FRANCISCO - On May 24, 2016, a federal grand jury in San Francisco indicted both Jaswant Singh Gill, also known as Jason Gill, the Chief Executive Officer of JSG Capital Investments LLC in San Diego (“JSG Capital”), and Javier Carlos Rios, the Strategic Relationship Manager at JSG Capital, with one count of conspiracy to commit wire fraud and one count of wire fraud, announced United States Attorney Brian Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
According to the indictment, Gill, 48, of San Diego, Calif., and Rios, 33, of National City, Calif., are alleged to have made false and misleading representations and promises to investors in JSG Capital, including, but not limited to, promises to purchase so-called pre-IPO shares of private companies like Uber Technologies and Airbnb using investor funds. In fact, Gill and Rios are alleged to have fraudulently diverted and stolen investor funds for their own personal use and benefit by, among other things, converting investor funds into cash, transferring investor funds to their own personal bank accounts, and using investor funds for personal expenses like rent, restaurants, nightclubs, hotels, and retail shopping. Gill and Rios allegedly concealed their fraud by paying earlier investors “interest” payments or so-called lulling payments using more recent investor funds in a manner that was consistent with a classic Ponzi scheme. In this manner, Gill and Rios raised in excess of $9.3 million in investor funds and are alleged to have fraudulently diverted and stolen in excess of $5.5 million.
Gill was arrested on May 27, 2016 by the FBI in Nashville, Tennessee, and will make his initial appearance today in federal court in the Middle District of Tennessee. Rios was arrested on May 25, 2016 by the FBI in San Diego, Calif., and will also make his initial appearance today in federal court in the Southern District of California. The United States Attorney’s Office anticipates that both cases will be moved to San Francisco for an appearance in federal court in Northern District of California on a date that remains to be scheduled. The case has been assigned to the Honorable William H. Orrick, 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. This indictment charged both defendants with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and one count of wire fraud, in violation of 18 U.S.C. § 1343. If convicted, the defendants face, on each count, a maximum sentence of twenty years in prison; a fine of $250,000 (or twice the gain or loss, whichever is greater); asset forfeiture and restitution, if appropriate, in amounts to be determined by the court; and other penalties. 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 Adam A. Reeves is prosecuting the case with the assistance of Paralegal Specialist Daniel Charlier-Smith and Legal Assistant Bridget Kilkenny. The prosecution is the result of an investigation by the FBI. The San Francisco Regional Office of the United States Securities and Exchange Commission provided assistance during the investigation.
Former CalPERS CEO Sentenced to 54 Months’ Imprisonment for Role in Corruption ConspiracyRead the Press Release
SAN FRANCISCO – Fred Buenrostro, the former Chief Executive Officer of the California Public Employee Retirement System (CalPERS) was sentenced today to 54 months in prison for corruption and fraud charges stemming from a conspiracy to trade official acts for cash and benefits, announced U.S. Attorney Brian J. Stretch, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, U.S. Postal Inspection Service (USPIS) Inspector in Charge Rafael Nuñez, and U.S. Secret Service (USSS) Special Agent in Charge David Thomas. The sentence follows Buenrostro’s guilty plea entered July 11, 2014.
Buenrostro, 67, of Sacramento, is the former Chief Executive Officer (CEO) of CalPERS and admitted that in 2004 he began receiving secret benefits from a placement agent for the purpose of influencing him in the exercise of his powers and duties as CEO. Buenrostro admitted the placement agent gave him approximately $250,000, as well as gifts, domestic and international travel, meals, entertainment, and payment for Buenrostro’s wedding. Further, Buenrostro admitted he also improperly received employment at ARVCO Capital Research LLC (ARVCO) after he left CalPERS in May of 2008. In exchange, Buenrostro attempted to influence the CalPERS investment staff and Board to the benefit of the placement agent and his clients, and provided the agent with access to CalPERS’ confidential information relating to investments, internal deliberations, and other proprietary matters.
In addition, Buenrostro conspired to create a series of fraudulent investor disclosure letters in a scheme to secure fees from a private equity firm based in New York City and agreed with a co-conspirator to make false misrepresentations to, and concealed information from, the Securities and Exchange Commission (SEC), the USPIS, and the FBI after these agencies opened investigations into the operations of ARVCO and its role as a placement agent in connection with CalPERS' investments.
Buenrostro was originally charged by indictment on March 14, 2013, but later charged by superseding information on July 11, 2014, with a single count of conspiracy, in violation of Title 18, United States Code, Section 371. Buenrostro pleaded guilty to the charge in the superseding information.
The sentence was handed down by the Honorable Charles R. Breyer, United States District Judge. In sentencing Buenrostro, Judge Breyer stated the defendant’s conduct amounted to “a spectacular breach of trust for the most venal of purposes.” Judge Breyer also remarked that, “without trust, our public institutions cannot function.” Judge Breyer also imposed a $250,000 fine on the defendant but allowed that fine to be reduced if Buenrostro makes payments in response to certain proceedings brought by the State of California or the SEC.
Buenrostro currently is in custody and will begin to serve his term immediately.
Assistant United States Attorneys Timothy J. Lucey and Philip A. Guentert are prosecuting the case with the assistance of Laurie Worthen and Beth Margen. The prosecution is the result of an investigation by the USPIS and the FBI, with substantial assistance from the Los Angeles Regional Office of the SEC as well as the USSS.
Northern California Man Sentenced to 108 Months’ Imprisonment for Receipt of Child PornographyRead the Press Release
OAKLAND – Konrad Wolff was sentenced to 108 months in prison for receipt of child pornography announced United States Attorney Brian J. Stretch. The sentence was handed down today by the Honorable James Donato, U.S. District Judge and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.
Wolff, 28, previously of Albany, Calif., was arrested early last year at Ft. Benning, GA. On December 18, 2015, after a bench trial before Judge Donato, Wolff was convicted of receiving thousands of images and hundreds of videos of child pornography in violation of 18 U.S.C. § 2252(a)(2). The evidence at trial established that Wolff possessed videos and images of minor and prepubescent children engaging in sexually explicit and sadomasochistic conduct. Judge Donato also found at sentencing that the defendant was in possession of certain manuals which provided step-by-step instructions on how to sexually exploit children while avoiding detection by law enforcement.
Wolff was originally indicted on December 18, 2014, and charged with one count of possessing child pornography in violation of 18 U.S.C. § 2252 (a)(4)(B). On February 19, 2015, the grand jury returned a two-count superseding indictment that added the more serious receipt of child pornography charge, a violation of 18 U.S.C. § 2252(a)(2).
In addition to the prison term, Judge Donato also sentenced the defendant to a 15-year period of supervised release and ordered him to pay restitution.
Assistant U.S. Attorney Scott D. Joiner prosecuted the case with the assistance of Ponly Tu and Patricia Mahoney. The prosecution is the result of a three-month investigation by the FBI and the University of California Berkeley Police Department.
San Jose Man Sentenced to 27 Months’ Imprisonment for Money LaunderingRead the Press Release
SAN JOSE – Maxito Pean was sentenced to 27 months in prison and ordered to pay $233,200 in restitution for money laundering announced United States Attorney Brian J. Stretch. The sentence was handed down late yesterday by the Honorable Lucy H. Koh, U.S. District Judge.
Pean, 52, who is from Haiti and had been residing in Florida, pleaded guilty on February 24, 2016, to one count of engaging in monetary transactions using criminally derived property. According to the plea agreement, Pean admitted that in January and February of 2013, he recruited people to open two bank accounts for the purpose of receiving proceeds of criminal activity. For the first account, Pean arranged for a homeless man from Florida to open a bank account in Lauderhill, Florida, in the name of "Southeastern Capital Group, Inc." For the second account, Pean arranged for a person to open an account in the name of "Meade Financial Services." Pean acknowledged he intended to use those accounts to receive and transfer the funds in a way he hoped would not be traceable back to him.
Further, according to the plea agreement, Pean admitted an unknown person fraudulently caused an employee at Deutsche Bank in San Francisco to transfer $233,200 from a victim’s bank account to one of the accounts controlled by Pean. Pean admitted that the money was, in fact, the proceeds of wire fraud committed against the victim of an email takeover scam.
Pean was indicted on October 29, 2014, for conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; wire fraud, in violation of 18 U.S.C. § 1343; conspiracy to commit money laundering, in violation of 18 U.S.C.§ 1956(h); money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i); engaging in monetary transactions using the proceeds of specified unlawful activity, in violation of 18 U. S.C. § 1957; and aiding and abetting, in violation of 18 U.S.C. § 2.
In addition to the prison term and restitution, Judge Koh also sentenced the defendant to a 3-year period of supervised release.
Assistant U.S. Attorney Cynthia Frey prosecuted the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the IRS and the Regional Enforcement Allied Computer Team (REACT) task force.
Two Saratoga Doctors Indicted for Health Care Fraud and Money LaunderingRead the Press Release
SAN JOSE - A federal grand jury indicted Dr. Vilasini M. Ganesh and Dr. Gregory Belcher last week with conspiracy to commit health care fraud, health care fraud, conspiracy to commit money laundering, and money laundering, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. Dr. Ganesh is a family practitioner and Dr. Belcher is an orthopedic surgeon.
According to the indictment, between 2009 and continuing through at least September 2014, Ganesh, 46, of Saratoga, Calif., together with her partner, Belcher, 54, also of Saratoga, engaged in a scheme to defraud insurance companies administering health care benefit programs (“HCBPs”). As alleged in the indictment, Ganesh and Belcher used their Saratoga medical practice, Campbell Medical Group (“CMG”), to unlawfully enrich themselves. Ganesh and Belcher are alleged to have submitted false and fraudulent claims to the HCBPs, concealed the submission of false and fraudulent claims to the HCBPs, and diverted proceeds of the fraud for their personal use. In addition, Ganesh allegedly submitted and caused to be submitted to HCBPs claims for services that she knew were not properly payable because she included (1) false codes that artificially inflated both the seriousness of the patient’s condition as well as the time that the physician spent examining the patient; (2) false diagnoses in the claims that did not correspond with the true health and presentation of the patient; (3) claims for days when the patient had not been seen by the provider; and (4) representations that the patients were seen by another physician provider (not herself) no longer affiliated with Dr. Ganesh and her practice at CMG.
The indictment further alleges that Ganesh compounded these illegal acts by misrepresenting, concealing, and hiding or directing her subordinates to misrepresent, conceal, or hide, acts done in furtherance of the scheme. Specifically, when approached by representatives of the HCBPs, or the patients themselves, to provide documentation or additional information to substantiate the claims that were being submitted at her direction and on her behalf, Ganesh either directed her office staff to have no further discussions with anyone about the claims or to simply resubmit the false information, all to avoid disclosing the truth of the underlying the scheme. Furthermore, the indictment alleges Ganesh, together with the assistance and knowledge of Belcher, submitted hundreds of claims for reimbursement from the HCBPs for: (i) days that were weekends when the CMG office located in Saratoga was closed; (ii) days on which the patient denied they were seen; and/or (iii) days when the patient could not have been seen by Ganesh or her staff because either the patient or the doctor was not physically present in California. The defendants allegedly also used billing codes that indicated Ganesh and/or Belcher had spent more than 24 hours in a single day seeing patients. The defendants also maintained multiple bank accounts through which they are alleged to have attempted to conceal the nature and source of the illegally obtained funds which resulted from their scheme to defraud.
Defendants were charged with one count of health care fraud conspiracy, in violation of 18 U.S.C. § 1349; one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(b); and six counts of money laundering, in violation of 18 U.S.C. §§ 1956(a)(l)(B)(i) and 2. In addition, defendant Ganesh was charged with five counts of health care fraud, in violation of 18 U.S.C. §§ 1347 and 2, and five counts of false statements relating to health care matters, in violation of 18 U.S.C. § 1035. Both defendants were arrested this morning in Saratoga and made their initial appearance in federal court in San Jose this afternoon in front of U.S. Magistrate Judge Nathanael M. Cousins. Both defendants were released on bond, pending further hearings. Bail was set at $250,000 per defendant. The defendants’ next scheduled appearance is at 1:30 on Friday, May 27, 2016, for identification of counsel and further bond proceedings before the Honorable Nathanael M. Cousins, U.S. Magistrate Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of 10 years imprisonment and a fine of $250,000, plus restitution for each violation of 18 U.S.C. §§ 1349 and 1347; and 20 years imprisonment and fine of $500,000 or twice the value of the laundered funds, whichever is greater, plus restitution, for each violation of 18 U.S.C. §§ 1956(h) and 1956(a)(1)(B). 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 Amie D. Rooney is prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the FBI.
New York Attorney Charged in Scheme to Defraud in Connection with Northern District LitigationRead the Press Release
SAN FRANCISCO – Joel Zweig, an attorney who resides in New York, was charged with wire fraud, obstruction of justice, perjury, aggravated identity theft, and false statements to a government agency announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and U.S. Postal Inspection Service Inspector in Charge Rafael Nuñez. The charges stem from allegations that Zweig attempted to manufacture evidence to prove losses suffered by a litigant in a federal case pending in the Northern District of California.
According to the indictment, Zweig, 52, was asked to provide documents in connection with the lawsuit Pet Food Express, Limited v. Royal Canin USA, Inc., C09-1483 EMC. The underlying lawsuit involved allegations that Pet Food Express suffered losses due to a breach of contract and that some of the losses were directly attributable to the planned opening of a retail store in Manhattan. On November 8, 2010, Zweig allegedly received an email that a witness was going to be deposed and that the witness needed the lease documenting Pet Food Express's intention to open the Manhattan store. Zweig allegedly manufactured a phony lease and then followed up with false declarations he knew would be submitted to the district court.
On or before November 11, 2010, Zweig allegedly caused the signature of a fictitious individual, "Anthony Guida," to be forged on a phony lease. Then, Zweig allegedly electronically scanned and transmitted by email a copy of the phony lease to the founder of Pet Food Express for use in the lawsuit. Moreover, sometime after November 8, 2010, and before July 26, 2011, Zweig allegedly misappropriated a copy of a notary seal to make it appear that a notary had witnessed and notarized signatures on the phony lease.
Further, according to the indictment, Zweig created two false affidavits and additional evidence in an effort to support the claim for damages. The first affidavit was supposedly by one of the signors of the phony lease. According to the indictment, Zweig created the affidavit and caused the signature of the supposed signor to be forged on it. The second affidavit was Zweig’s. According to the indictment, Zweig made material false statements under penalty of perjury concerning, among other matters, his receipt of the purported 2008 lease and his knowledge about the creation of the lease. Zweig allegedly knew when he delivered his affidavit to Pet Food Express’s attorneys that it would be submitted to the district court in the Northern District of California.
Zweig was charged with four counts of wire fraud, in violation of 18 U.S.C. § 1343; two counts of obstruction of justice, in violation of 18 U.S.C. § 1503; four counts of perjury, in violation of 18 U.S.C. § 1623(a); one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A; and one count of false statements to a government agency, in violation of 18 U.S.C. § 1001. Zweig is next scheduled to appear on June 15, 2016, at 9:30 a.m., before the Honorable Laurel Beeler, 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 statutory penalty for wire fraud of 20 years’ imprisonment and a $250,000 fine, or twice the gain or loss. The maximum statutory penalty for obstruction of justice is ten years’ imprisonment and a fine of $250,000, or twice the gross gain or loss. The maximum statutory penalty for use of false documents and perjury is five years’ imprisonment and a $250,000 fine. The maximum statutory penalty for aggravated identity theft is a mandatory two-year consecutive sentence imposed on the underlying fraud count. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Robin Harris and Benjamin Kingsley are prosecuting the case. The prosecution is the result of an investigation by the FBI and the U.S. Postal Inspection Service.
Bay Area Resident Sentenced to 45 Months for Aggravated Identity Theft and Use of A Counterfeit Access DeviceRead the Press Release
SAN FRANCISCO – William Monroe Mills, Jr., was sentenced yesterday to 45 months in prison and ordered to pay $21,132 in restitution for committing aggravated identity theft and using counterfeit California driver’s licenses announced United States Attorney Brian J. Stretch and United States Secret Service Special Agent in Charge Dave Thomas.
Mills, 63, pleaded guilty on February 8, 2016, to three counts of use of a counterfeit access device, in violation of 18 U.S.C. § 1029(a)(1)(A), and three counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1). According to the plea agreement, Mills admitted he possessed fraudulent California driver’s licenses with the true identifying information of six victims, but bearing his photograph. He acknowledged he presented these fraudulent California driver’s licenses at financial institutions throughout the Bay Area and at one retail store, and used them to impersonate his victims. Mills obtained $21,132 by using the counterfeit licenses. Mills, was indicted by a federal grand jury on July 30, 2015. Pursuant to his plea agreement, Mills, Jr., pleaded guilty to all six counts in the indictment.
The sentence was handed down by the Honorable Thelton E. Henderson, U.S. District Judge. Judge Henderson also sentenced the defendant to a 3-year period of supervised release and ordered him to pay a total of $21,132.40 in restitution to his victims. The defendant has been in continuous federal custody since November 25, 2015.
Assistant U.S. Attorney Sheila A.G. Armbrust is prosecuting the case with the assistance of Patricia Mahoney. The prosecution is the result of an investigation by the United States Secret Service.
San Jose Man Convicted on Sex Tourism and Obstruction ChargesRead the Press Release
SAN FRANCISCO – A federal jury convicted Michael Lindsay 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 Homeland Security Investigations (“HSI”) Special Agent in Charge Ryan Spradlin.
In its verdict, handed down late yesterday, the jury found that defendant traveled from San Francisco to Manila, the capital of the Republic of the Philippines, intending to have sex with a minor, and had sex with a minor while there. The jury also found that defendant attempted to tamper with a witness and obstructed justice. The guilty verdict followed a 4-day jury trial before the Honorable Charles R. Breyer, U.S. District Judge.
The evidence at trial established that Lindsay, 56, of San Jose, owned a condominium in the Manila area, and frequently traveled there. During trips in May and August of 2012, Lindsay had sex with a 13-year-old girl. Evidence at trial showed that defendant used instant messaging to communicate with the girl’s mother and arrange meetings for sex. After meetings, defendant paid the girl’s mother. In addition, defendant’s later email communications established that after a federal grand jury charged him, he engaged in attempted witness tampering and obstruction of justice.
On December 13, 2012, a grand jury returned an indictment charging defendant 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). 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.
The investigation began when the HSI received a report in the Philippines that defendant had sex with a minor while in the Philippines, and that he paid the minor’s mother. HSI arrested defendant on November 8, 2012, at San Francisco International Airport, when he attempted to return to the Philippines for another visit.
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.
Defendant is currently in custody. Defendant's sentencing hearing is scheduled for August 3, 2012, before Judge Breyer in San Francisco. The maximum statutory penalty for each count in violation of 18 U.S.C. § 2423(b) and 18 U.S.C. § 2423(c) is 30 years, the maximum penalty for attempted witness tampering in violation of 18 U.S.C. § 1512(b) is 20 years, and the maximum penalty for obstruction of justice in violation of 18 U.S.C. § 1503 is 10 years. In addition, the maximum fine is $250,000 for each count, 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.
Bay Area Fraudster Convicted of Duping Investers Out of More Than $3 MillionRead the Press Release
SAN FRANCISCO- A federal jury convicted Marc Christopher Harmon today of conspiracy to commit wire fraud and five counts of wire fraud, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation Acting Special Agent in Charge Bertram Fairries, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
Harmon, 43, of San Leandro, Calif., was charged, along with co-conspirator Jason George Rivera, Jr., 37, of Danville, Calif., in a scheme to defraud multiple investors of more than $3 million between October 2008 and January 2011. In an indictment filed July 3, 2014, Harmon and Rivera were accused of using a Nevada corporation known as Executive Members Management Group, or EMMG, as a vehicle to defraud investors. The scheme involved promises that EMMG would purchase or trade collateralized mortgage obligations (CMOs) using funds provided by the investors, or would invest their funds in other lucrative transactions. Rivera and Harmon convinced victims to invest substantial sums of money, by promising, among other things, high rates of returns by participating in exclusive trading markets overseas and funding short-term loans for banks.
The evidence at trial demonstrated that Harmon’s role in the conspiracy was to recruit investors to EMMG. Harmon made many false representations to induce the investors to invest. These false representations included representations about Rivera and Harmon’s investment expertise, connections, history, and success; about the historical returns generated by the particular investment programs for which investments were being solicited; about future returns expected, promised, or guaranteed by these transactions; about the “blocked” nature of the transactions, wherein their funds would be held in something like an escrow account, would never leave EMMG’s account, and thus would be entirely safe; about the short time periods for payout (days, weeks, or a month, generally); and about how Rivera and Harmon would only be paid after the transactions returned a profit for the customers. In reality, there were no actual investment programs overseas, and both defendants simply spent investors’ money as it came in, and then lied about it for months and months afterwards.
On July 3, 2014, a grand jury returned an indictment charging defendants with eight counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349. Rivera also was charged with two counts of tax evasion, in violation of 26 U.S.C. § 7201.
On July 29, 2015, Rivera pleaded guilty to the conspiracy to commit wire fraud charge and the two tax evasion counts. The government dismissed two counts of fraud, as it related to Harmon and the jury convicted Harmon of each of the remaining charges. Harmon now faces a maximum statutory penalty of 20 years in prison, a fine of $250,000, forfeiture, and restitution for the conspiracy charge and for each of the five wire fraud counts. However, any sentence following conviction would be imposed by the Court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The guilty verdict followed a one-week jury trial before the Honorable Richard Seeborg, U.S. District Judge. The trial got off to a shaky start when Harmon failed to appear on the first day and Judge Seeborg issued a warrant for his arrest. FBI and IRS agents were prepared for his possible failure to appear, and Harmon was arrested and in custody within 20 minutes of Judge Seeborg issuing the arrest warrant. Harmon remains in custody pending his sentencing scheduled for August 23, 2016, before Judge Seeborg.
Assistant U.S. Attorneys Benjamin Kingsley and Shailika Kotiya are prosecuting the case with the assistance of Jessica Meegan. The prosecution is the result of an investigation by the FBI and IRS, Criminal Investigation.
Craigslist Robber Who Impersonated Law Enforcement Sentenced to 12 Years in PrisonRead the Press Release
OAKLAND, Calif. – Tuan Ngoc Luong was sentenced today to 12 years in prison following his conviction for Hobbs Act robbery and brandishing a firearm during and in relation to a crime of violence, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Acting Special Agent in Charge Bertram Fairries.
A federal jury convicted Luong, 38, of Castro Valley, Calif., on January 28, 2016, for setting up and committing an armed robbery using Craigslist as the bait to lure his robbery victim. When Luong was convicted of the charges, he already had been convicted in September 2015 of being a felon in possession of a firearm and ammunition.
Evidence at his trials showed that Luong posted an advertisement on Craigslist in February 2015 purportedly to sell his car. An unsuspecting potential buyer found the advertisement online and contacted Luong. The two agreed to meet at the Castro Valley BART station where Luong represented to the buyer that he was a sheriff’s deputy. At Luong’s urging, the victim took the car for a test drive with Luong in the car. During the test drive, Luong claimed he needed to stop at home to get the title to the car and instructed the victim to stop in a secluded residential neighborhood. After they stopped and got out of the car, Luong pulled out a black semi-automatic handgun, pointed it at the victim, and demanded money. Ultimately, Luong robbed the victim of a cellular phone, credit card, and a number of personal items before fleeing in the car. Luong was captured two days later as part of an undercover sting operation after an Alameda County Sheriff’s Deputy posed as an interested buyer in response to the same Craigslist advertisement. When Luong arrived to meet the prospective “buyer,” he was arrested with a black semi-automatic pistol clipped to his belt on the small of his back.
On March 26, 2015, a federal grand jury charged Luong in a three-count indictment with Hobbs Act robbery, in violation of 18 U.S.C. § 1951(a); brandishing a firearm during and in relation to a crime of violence, in violation of 18 U.S.C. § 924(c)(1)(A)(ii); and being a felon in possession of a firearm and ammunition, in violation of 18 U.S.C. § 922(g).
The sentence was handed down by the Honorable Haywood S. Gilliam, U.S. District Judge. Judge Gilliam also sentenced Luong to a three year period of supervised release and ordered Luong to pay full restitution to his victim.
Assistant U.S. Attorney Brian Lewis and Special Assistant U.S. Attorney Kelsey Linnett are prosecuting the case with the assistance of Janice Pagsanjan, Jeanne Carstensen, Melissa Dorton, Patty Lau, Noble Hughes, Trina Khadoo, and Katie Turner. The prosecution is the result of an investigation by the Alameda County Sheriff’s Office and the FBI.
Bay Area and Nevada Residents Charged with Visa Fraud Conspiracy, Mail Fraud, Witness Tampering, and Related CrimesRead the Press Release
SAN JOSE – Sunitha Guntipally, Venkat Guntipally, Pratap “Bob” Kondamoori, and Sandhya Ramireddi were charged with conspiracy to commit visa fraud, use of false documents, and mail fraud, among other offenses, announced United States Attorney Brian J. Stretch, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan Spradlin, and U.S. State Department, Diplomatic Security Service, San Francisco Field Office Special Agent in Charge David Zebley. Sunitha Guntipally and Ramireddi also were charged with witness tampering, and Kondamoori was charged with obstruction of justice. The four defendants were charged in a 33-count indictment filed yesterday alleging crimes in connection with the submission of fraudulent applications for H-1B specialty-occupation work visas.
According to the indictment, the four defendants allegedly used three California corporations to orchestrate the improper submission of more than one hundred H-1B visa applications. The indictment identifies Venkat and Sunitha Guntipally, of Fremont, as a husband and wife team who founded and owned DS Soft Tech and Equinett, two employment-staffing companies for technology firms. Venkat Guntipally served as the president of both companies, and Sunitha Guntipally served as the vice president. Kondamoori, of Incline Village, Nev., is alleged to be the founder and owner of SISL Networks. Kondamoori’s sister, Ramireddy, of Pleasanton, is alleged to have been the human resources manager and operations manager of all three companies.
The H-1B Specialty Occupation Workers Program allows an employer to temporarily employ a foreign worker in the United States on a nonimmigrant basis in a specialty occupation. A specialty occupation requires the theoretical and practical application of a body of specialized knowledge and a bachelor’s degree or its equivalent in the specific specialty. According to the indictment, the defendants submitted to the government, or caused to be submitted, H-1B visa application materials stating that the foreign workers named in the applications would be placed at specific companies in the United States. However, according to the indictment, those companies either did not exist or never intended to receive the foreign workers named in the defendants’ applications. For example, the indictment alleges that between approximately 2012 and 2013, DS Soft Tech and Equinett submitted approximately 22 separate petitions, signed under penalty of perjury, for H-1B workers to be placed at a company called SemSolar, Inc., operated by Kondamoori. Although the petitions and supporting documents stated that the foreign workers would be placed at SemSolar to work on a specific software product, the defendants allegedly knew that SemSolar was not working on that product, the defendants did not intend to place any of the H-1B workers at SemSolar, and none of the workers who received H-1B visas through the defendants’ scheme ever worked at SemSolar. Further, according to the indictment, between approximately 2010 and 2014, the defendants’ companies submitted more than one hundred additional fraudulent petitions for foreign workers to be placed at other purported companies. The indictment alleges that through their ownership, direction, and control of DS Soft Tech and Equinett, the Guntipallys generated net profits from 2010 to 2014 of approximately $3.3 million and gross profits of approximately $17 million.
All four defendants are charged with conspiracy to commit visa fraud, false statements, mail fraud, obstruction of justice, and witness tampering, in violation of 18 U.S.C. § 371; visa fraud, in violation of 18 U.S.C. § 1546(a); use of false documents, in violation of 18 U.S.C. § 1001(a)(3); mail fraud, in violation of 18 U.S.C. § 1341; and aiding and abetting these offenses, in violation of 18 U.S.C. § 2.
In addition, Kondamoori, Sunitha Guntipally, and Ramireddi are charged in connection with alleged efforts to conceal the defendants’ conduct.
According to the indictment, Kondamoori responded to federal law enforcement officers investigating the visa fraud conspiracy with various false representations. Kondamoori allegedly represented that, among other things, he and SemSolar were developing a product called “Eftia Master.Scribe” for which he required H-1B workers; that Softbank, Sprint’s parent company, was both an investor in SemSolar and a business partner of SISL Networks; and that Kondamoori was a general partner of Focus Ventures. According to the indictment, all of those representations were false. Kondamoori is charged with one count of obstruction of justice, in violation of 18 U.S.C. § 1505.
According to the indictment, on at least four occasions, Guntipally either provided H-1B foreign workers with false documents or advised the workers to mislead government agents. In each instance, the indictment alleges, Guntipally’s objective was to hinder, delay, and prevent the beneficiary from communicating truthful information to government agents. Ramireddi also is alleged to have advised an H-1B worker to mislead a government agent for the purpose of hindering, delaying, or preventing the government investigation. Sunitha Guntipally is charged with four counts and Ramireddi with one count of witness tampering, in violation of 18 U.S.C. § 1512(b)(3).
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face the following maximum sentences:
DEFENDANT
STATUTE
CHARGE
MAXIMUM PENALTY
All Defendants
18 U.S.C. § 371
Conspiracy to Commit Visa Fraud, False Statements, Mail Fraud, Obstruction of Justice, and Witness Tampering
Maximum term of imprisonment: 5 years
Maximum fine: $250,000 or twice the gross gain or loss, whichever is greater
Maximum term of supervised release: 3 years
Forfeiture
Possible Deportation
All Defendants
18 U.S.C. § 1546(a)
Visa Fraud
Maximum term of imprisonment: 10 years
Maximum fine: $250,000 or twice the gross gain or loss, whichever is greater
Maximum term of supervised release: 3 years
Forfeiture
Possible Deportation
All Defendants
18 U.S.C. § 1001(a)(3)
Use of False Documents
Maximum term of imprisonment: 5 years
Maximum fine: $250,000 or twice the gross gain or loss, whichever is greater
Maximum term of supervised release: 3 years
Possible Deportation
All Defendants
18 U.S.C. § 1341
Mail Fraud
Maximum term of imprisonment: 20 years
Maximum fine: $250,000 or twice the gross gain or loss, whichever is greater
Maximum term of supervised release: 3 years
Forfeiture
Possible Deportation
Pratap “Bob” Kondamoori
18 U.S.C. § 1505
Obstruction of Justice
Maximum term of imprisonment: 5 years
Maximum fine: $250,000 or twice the gross gain or loss, whichever is greater
Maximum term of supervised release: 3 years
Possible Deportation
Sunitha Guntipally
and
Sandhya Ramireddi
18 U.S.C. § 1512(b)(3)
Witness Tampering
Maximum term of imprisonment: 20 years
Maximum fine: $250,000 or twice the gross gain or loss, whichever is greater
Maximum term of supervised release: 3 years
Possible Deportation
Assistant U.S. Attorney Jonas Lerman is prosecuting the case with the assistance of Nina Burney. The prosecution is the result of an investigation led by the U.S. Department of State Diplomatic Security Service’s representative to the Document and Benefit Fraud Task Force (DBFTF) overseen by the Department of Homeland Security’s Homeland Security Investigations. The DBFTF is a multi-agency task force that coordinates investigations into fraudulent immigration documents. U.S. Citizenship and Immigration Service’s Office of Fraud Detection and National Security also assisted with the investigation.
Novato Resident Charged in Id Theft Tax Fraud SchemeRead the Press Release
SAN FRANCISCO – Parnian Djafarzadeh, aka Parnian Clark, aka Saundra Djafarzadeh, was charged with possession of stolen mail, false claims, wire fraud, and aggravated identity theft announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
According to the indictment, Djafarzadeh prepared and filed 2010 and 2011 federal income tax returns in the names of other individuals who were not entitled to the claimed tax refunds. Djafarzadeh knew the claims for refunds were false and that the individuals were not entitled to the refunds that were being requested. The defendant was also charged with unlawfully having in her possession a check addressed to another individual that had been stolen or taken from the mail receptacle.
Djafarzadeh, of Novato, was indicted on April 21, 2016. She was charged with one count of possession of stolen mail, fourteen counts of false claims, three counts of wire fraud, and three counts of aggravated identity theft. She was arrested this morning and made her initial appearance before United States Magistrate Judge Elizabeth D. Laporte in San Francisco. She is being held pending a detention hearing before Magistrate Judge Laporte scheduled for May 10, 2016.
The maximum statutory penalty for possession of stolen mail, in violation of 18 U.S.C. § 1708, is five years in prison and a fine of $250,000. The maximum sentence for false claims, in violation of 18 U.S.C. § 287, is five years in prison and a fine of $250,000. The maximum sentence for wire fraud, in violation of 18 U.S.C. § 1343, is twenty years in prison and a fine of $250,000. The maximum sentence for aggravated identity theft, in violation of 18 U.S.C. § 1028A, is two years in prison—to be served consecutively to the underlying felony—and a $250,000 fine. 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 Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Former South Carolina State Trooper Convicted of Conspiracy to Distribute A Controlled SubstanceRead the Press Release
SAN FRANCISCO- A federal jury convicted John David McGaha today of conspiracy to distribute a controlled substance, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Acting Special Agent in Charge Bertram Fairries.
McGaha, 36, of Myrtle Beach, South Carolina, was charged, along with six co-conspirators, with conspiracy to distribute a controlled substance and conspiracy to possess with intent to distribute a controlled substance as part of a superseding indictment filed March 24, 2015. McGaha was a state trooper with the South Carolina Highway Patrol at the time of the charged conduct. McGaha was accused of agreeing to accept $5,000 in exchange for providing security during a planned drug transaction.
The superseding indictment described a criminal conspiracy that worked for years laundering what the defendants believed to be the proceeds of cocaine trafficking. According to the indictment, some of the defendants eventually decided to become drug traffickers themselves. The evidence at trial showed that other members of the conspiracy asked McGaha to protect a drug transaction that would take place the following day. McGaha stated that the less he knew about the transaction the better, but he agreed to be present at the transaction in his marked Highway Patrol car. Later, McGaha was questioned by investigating agents from the Federal Bureau of Investigation and he admitted he met with the co-conspirators, that he was asked to be present in a parking lot while the business was conducted, that he knew the transaction was illegal, and that he accepted $5,000 to be present in the parking lot.
The jury found that McGaha conspired to distribute a controlled substance or to possess a controlled substance with the intent to distribute it, in violation of 21 U.S.C. § 846. Each of his co-conspirators pleaded guilty to charges related to the conspiracy.
The guilty verdict followed a four-day jury trial before the Honorable William Alsup, U.S. District Court Judge. McGaha remains free pending his sentencing scheduled for August 23, 2016, before Judge Alsup, in San Francisco.
Assistant U.S. Attorneys Lloyd Farnham and Andrew Dawson are prosecuting the case with the assistance of Michelle Alter. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Southbay Resident Charged with Transportation of Stolen GoodsRead the Press Release
SAN JOSE - Alfred Georgis and Davis Kiryakoz were charged with conspiracy to transport stolen goods and transportation of stolen goods, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Acting Special Agent in Charge Bertram Fairries. The stolen goods are alleged to include a number of bottles of high end wines stolen from The French Laundry in Yountville and Alexander’s Steakhouse in Cupertino.
In an indictment unsealed today, Georgis, 53, of Mountain View, and Kiryakoz, 44, of Modesto, are accused of transporting in interstate commerce stolen wines worth hundreds of thousands of dollars. According to the indictment, thefts began as early as March of 2013 when approximately 142 bottles were stolen from a San Francisco wine merchant. The indictment describes the alleged theft and transportation of additional wines including the November 2014 burglary of approximately 39 bottles of wine from Alexander’s Steakhouse and the December 2014 burglary of about 100 bottles of valuable wines from the French Laundry. Defendants are charged with one count of conspiracy to transport stolen goods, in violation of 18 U.S.C. § 371 and two counts of transportation of stolen goods, in violation of 18 U.S.C. §§ 2314 and 2.
Defendants were arrested on April 27, 2016, and made their initial appearances on April 28, 2016, in federal court in Fresno and San Jose. Kiryakoz was released and Georgis was detained pending a bail hearing scheduled for May 4, 2016 before United States Magistrate Judge Nathanael Cousins.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of 10 years’ imprisonment, a fine of $250,000 or twice the gross gain or twice the gross loss, plus restitution for each violation of 18 U.S.C. § 2314. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Cynthia Frey is prosecuting the case with the assistance of Daniel Charlier-Smith. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Napa County Sheriff's Office, with assistance from the Santa Clara County Sheriff's Office, Los Gatos Monte Sereno Police Department, San Francisco Police Department, Walnut Creek Police Department, and Carmel Police Department.
Armed Drug Dealer Sentenced to Fifteen Years in PrisonRead the Press Release
OAKLAND – Jeffery Andrew Sardell was sentenced today to fifteen years in prison for possession of a firearm in furtherance of a drug trafficking crime announced United States Attorney Brian J. Stretch and Homeland Security Investigations Special Agent In Charge Ryan L. Spradlin. The sentence was handed down by United States District Court Judge James Donato following a guilty plea entered by the defendant last year.
Sardell, 29, of Hayward, pleaded guilty on December 14, 2015, to possessing two firearms in furtherance of drug trafficking. According to the plea agreement, Sardell admitted that on January 22, 2015, he knowingly possessed approximately 340 grams (net weight) of methamphetamine in his residence, packaged for distribution in 12 separate one-ounce baggies. Sardell also admitted that in furtherance of his drug trafficking, he was carrying a loaded .22 caliber firearm in his car, and possessed a second loaded .45 caliber firearm inside his residence near his methamphetamine stash.
Sardell was charged by a federal grand jury in a Superseding Indictment returned on August 27, 2015. He was charged with being a felon in possession of a firearm and ammunition, in violation of 18 U.S.C. § 922(g); possession with intent to distribute marijuana and methamphetamine, in violation of 21 U.S.C. § 841; and possession of firearms in furtherance of drug trafficking, in violation of 18 U.S.C. § 924(c).
According to filed court documents, Sardell was arrested in January of 2015, after a parole search. The search, conducted by Hayward Police officers, yielded more than $1,700 in cash on Sardell’s person, loaded firearms in his car and house, and methamphetamine, packaging materials, and a scale in his bedroom. At the time of the search, Sardell already was on parole following an assault conviction, as well as on probation for possessing methamphetamine for sale.
This case was the result of an investigation by the Department of Homeland Security, Homeland Security Investigations San Francisco Field Office, and the Hayward Police Department.
Santa Clara Insurance Broker Charged with Wire Fraud and Mail Fraud in Alleged Theft from Widow’S Insurance PolicyRead the Press Release
SAN JOSE – Gary Thornhill was charged with wire fraud and mail fraud in connection with an alleged attempt to steal more than a million dollars from a client’s trust account, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Acting Special Agent in Charge Bertram Fairries.
In an indictment unsealed today, Thornhill, 63, of Santa Clara, is accused of using his position in a boutique insurance brokerage to withdraw funds from a widow’s client trust account. According to the indictment, Thornhill was a fiduciary who had responsibility for management and oversight of an account containing the proceeds of an insurance policy he created for a married couple years earlier. Beginning in January 2011, several years after the husband passed away, Thornhill allegedly transmitted written requests for funds to be drawn against the cash value of the widow’s insurance policy and then deposited the proceeds into an account he exclusively controlled as trustee for the policy. Throughout calendar year 2011, Thornhill allegedly withdrew almost $1.5 million from the account and put the funds into the account which he controlled and used for his own personal benefit. Thornhill is charged with one count of wire fraud, in violation of 18 U.S.C. § 1343, and one count of mail fraud, in violation of 18 U.S.C. § 1341.
Thornhill was arrested today and made his initial appearances in federal court in San Jose before the Honorable Paul S. Grewal, U.S. Magistrate Judge. Thornhill was released on a $500,000 bond with conditions. His next scheduled appearance is set for Monday, May 2, at 1:30 p.m. before Magistrate Judge Cousins for review of the bond conditions.
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 for each count a maximum sentence of 20 years’ imprisonment, a fine of $250,000 or twice the gross gain or twice the gross loss, 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 Timothy J. Lucey is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation the by the Federal Bureau of Investigation.
Danville Real Estate Agent Sentenced to Four Years in Prison for Bank Fraud and Money Laundering SchemeRead the Press Release
OAKLAND – Anthony Keslinke, 48, of Danville, was sentenced to four years in prison today for his leadership role in a large-scale bank fraud conspiracy and a separate money laundering conspiracy, announced United States Attorney Brian J. Stretch, Drug Enforcement Administration Special Agent in Charge John J. Martin, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
Keslinke pleaded guilty in May of 2015 to one count of conspiracy to commit bank fraud and one count of conspiracy to commit money laundering. In pleading guilty, Keslinke admitted that he used straw buyers to purchase real estate throughout Northern California between 2011 and 2014. Keslinke identified properties, including his own properties, that were potential candidates for a “short sale.” A “short sale” is a sale of real estate in which the sale proceeds are less than the balance owed on the mortgage loan pertaining to the property and often occurs when a borrower cannot pay the mortgage loan.
In furtherance of the scheme, Keslinke submitted offers to the financial institutions on behalf of straw buyers. In order to induce a bank to accept a short sale offer, Keslinke would draft fraudulent financial hardship letters and submit them on behalf of the seller of a property. In addition, in order to give the appearance to the financial institutions that the properties were worth significantly less than true fair market value, Keslinke often altered engineering and pest reports associated with the properties. Moreover, in furtherance of his scheme, Keslinke often altered bank account documents to create the appearance that the straw buyers had sufficient funds to purchase the properties in cash. Once a financial institution accepted a particular property for a short sale, Keslinke used his own funds to purchase the property in the name of the straw buyer. After a short sale was completed on a particular property, Keslinke maintained control of the property and often sold the property for a significant financial gain. Keslinke admitted using this mortgage fraud scheme to orchestrate the short sale of properties in Danville, Walnut Creek, and Kings Beach, California.
Keslinke also admitted that between August of 2013 and February of 2014, he met on multiple occasions with an undercover agent purporting to be a drug dealer. Keslinke accepted a total of $550,000 from the undercover agent. In an attempt to conceal the true source of the funds, Keslinke repeatedly deposited the money received from the undercover agent into business bank accounts under his control. Keslinke then attempted to launder the money by wiring it from his business bank accounts to an account controlled by the undercover agent. Keslinke routinely kept 8-10% of the money provided to him from the undercover agent as a fee for his services.
The sentence was handed down by United States District Judge Jon S. Tigar. In addition to the prison term, Judge Tigar also ordered the defendant to pay a forfeiture judgment in the amount of $2,086,405 and a fine of $50,000. Keslinke also agreed to forfeit $1,722,426 in cash seized from his residence and his bank accounts. Judge Tigar also ordered Keslinke to pay $1,427,916 in restitution to the victims of the charged crimes. Judge Tigar also sentenced Keslinke to a three-year period of supervised release.
Assistant U.S. Attorneys Aaron Wegner and David Countryman are prosecuting the case with the assistance of Vanessa Vargas and Carolyn Jusay. The prosecution is the result of an investigation by the DEA and IRS. The Contra Costa Sheriff’s Office and Livermore Police Department also provided assistance during the investigation. The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force (OCDETF), a multi-agency task force that coordinates long-term narcotics trafficking investigations.
U.S. Attorneys for the Northern District of California and Southern District of New York Announce $1.2 Billion Settlement of Claims Against Wells Fargo Bank, N.A., for Improper Mortgage Lending PracticesRead the Press Release
Brian J. Stretch, the United States Attorney for the Northern District of California, Preet Bharara, United States Attorney for the Southern District of New York, Benjamin C. Mizer, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division, Julián Castro, Secretary of the U.S. Department of Housing and Urban Development (HUD), and David A. Montoya, Inspector General of HUD (HUD-OIG), announced today that the United States has settled civil mortgage fraud claims against Wells Fargo Bank, N.A. (“Wells Fargo” or the “Bank”), and Wells Fargo executive Kurt Lofrano (Lofrano), stemming from Wells Fargo’s participation in the Federal Housing Administration (FHA) Direct Endorsement Lender Program. In the settlement, Wells Fargo agreed to pay $1.2 billion and admitted, acknowledged, and accepted responsibility for, among other things, certifying to HUD, during the period from May 2001 through December 2008, that certain residential home mortgage loans were eligible for FHA insurance when in fact they were not, resulting in the Government having to pay FHA insurance claims when certain of those loans defaulted. The agreement resolves an investigation conducted by the U.S. Attorney’s Office for the Northern District of California into whether American Mortgage Network, LLC (AMNET), a mortgage lender acquired by Wells Fargo in 2009, falsely certified and submitted ineligible residential mortgage loans for FHA insurance. The agreement also resolves the United States’ civil claims in its lawsuit in the Southern District of New York as well as an investigation conducted by the U.S. Attorney’s Office for the Southern District of New York regarding Wells Fargo’s FHA origination and underwriting practices subsequent to the claims in its lawsuit.
Northern District of California U.S. Attorney Brian Stretch said: “Misconduct in the mortgage industry helped lead to a destructive financial crisis that spanned the globe. American Mortgage Network’s origination of FHA-insured loans that did not comply with Government requirements also caused major losses to the public fisc. Today’s settlement demonstrates the Department of Justice’s resolve to pursue remedies against those who engaged in this type of misconduct.”
Manhattan U.S. Attorney Preet Bharara said: “Today, Wells Fargo, one of the biggest mortgage lenders in the world, has been held responsible for years of reckless underwriting, while relying on government insurance to deal with the damage. Wells Fargo has long taken advantage of the FHA mortgage insurance program, designed to help millions of Americans realize the dream of home ownership, to write thousands and thousands of faulty loans. Driven to maximize profits, Wells Fargo employed shoddy underwriting practices to drive up loan volume, at the expense of loan quality. Even though Wells Fargo identified through internal quality assurance reviews thousands of problematic loans, the Bank decided not to report them to HUD. As a result, while Wells Fargo enjoyed huge profits from its FHA loan business, the government was left holding the bag when the bad loans went bust. With today’s settlement, Wells Fargo has finally resolved the years-long litigation, adding to the list of large financial institutions against which this Office has successfully pursued civil fraud prosecutions.”
HUD Secretary Julián Castro said: “This Administration remains committed to holding lenders accountable for their lending practices. The $1.2 billion settlement with Wells Fargo is the largest recovery for loan origination violations in FHA’s history. Yet, this monetary figure can never truly make up for the countless families that lost homes as a result of poor lending practices.”
Principal Deputy Assistant Attorney General Benjamin C. Mizer said: “This settlement is another step in the Department of Justice’s continuing efforts to hold accountable FHA approved lenders that knowingly submit false claims at the expense of American homeowners and taxpayers. In addition to today's resolution with Wells Fargo, the Department has pursued similar misconduct by many other lenders, returning more than $4 billion to the FHA fund and the U.S. Treasury, and filing suit where appropriate. We remain committed to protecting the public fisc from all who seek to abuse it, whether they do business on Wall Street or Main Street.”
HUD Inspector General David A. Montoya said: “This matter is not just a failure by Wells Fargo to comply with federal requirements in FHA’s Direct Endorsement Lender program – it’s a failure by one of our trusted participants in the FHA program to demonstrate a commitment to integrity and to ordinary Americans who are trying to fulfill their dreams of homeownership.”
According to the Second Amended Complaint filed in Manhattan federal court:
WELLS FARGO has been a participant in the Direct Endorsement Lender program, a federal program administered by FHA. As a Direct Endorsement Lender, WELLS FARGO has the authority to originate, underwrite, and certify mortgages for FHA insurance. If a Direct Endorsement Lender approves a mortgage loan for FHA insurance and the loan later defaults, the holder or servicer of the loan may submit an insurance claim to HUD for the outstanding balance of the defaulted loan, along with any associated costs, which HUD must then pay. Under the Direct Endorsement Lender program, neither FHA nor HUD reviews a loan for compliance with FHA requirements before it is endorsed for FHA insurance. Direct Endorsement Lenders are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance and maintaining a quality control program that can prevent and correct any deficiencies in their underwriting. The quality control program requirements include conducting a full review of all loans that go 60 days into default within the first six payments, known as “early payment defaults”; taking prompt and adequate corrective action upon discovery of fraud or serious underwriting problems; and disclosing to HUD in writing all loans containing evidence of fraud or other serious underwriting deficiencies. WELLS FARGO failed to comply with these basic requirements.
First, between at least May 2001 and October 2005, WELLS FARGO, the largest HUD-approved residential mortgage lender, engaged in a regular practice of reckless origination and underwriting of its FHA retail loans, all the while knowing that it would not be responsible when the defective loans went into default. To maximize its loan volume (and profits), WELLS FARGO elected to hire temporary staff to churn out and approve an ever increasing quantity of FHA loans, but neglected to provide this inexperienced staff with proper training. At the same time, WELLS FARGO’s management applied pressure on its underwriters to approve more and more FHA loans. The Bank also imposed short turnaround times for deciding whether to approve the loans, employed lax underwriting standards and controls, and paid bonuses to underwriters and other staff based on the number of loans approved. Predictably, as a result, WELLS FARGO’s loan volume and profits soared, but the quality of its loans declined significantly. Yet, when WELLS FARGO’s senior management was repeatedly advised by its own quality assurance reviews of serious problems with the quality of the retail FHA loans that the Bank was originating, management disregarded the findings and failed to implement proper and effective corrective measures, leaving HUD to pay hundreds of millions of dollars in claims for defaulted loans.
Second, WELLS FARGO failed to self-report to HUD the bad loans that it was originating, in violation of FHA program reporting requirements. During the period 2002 through 2010, HUD required Direct Endorsement Lenders to perform post-closing reviews of the loans that they originated and to report to HUD in writing loans that contained fraud or other serious deficiencies. This requirement provided HUD with an opportunity to investigate the defective loans and request reimbursement for any claim that HUD had paid or request indemnification for any future claim, as appropriate. During this nine-year period, WELLS FARGO, through its post-closing reviews, internally identified thousands of defective FHA loans that it was required to self-report to HUD, including a substantial number of loans that had gone into “early payment default.” However, instead of reporting these loans to HUD as required, WELLS FARGO engaged in virtually no self-reporting during the four-year period from 2002 through 2005, and only minimal self-reporting after 2005.
In his capacity as Vice President of Credit-Risk – Quality Assurance at WELLS FARGO, LOFRANO executed on WELLS FARGO’s behalf the annual certifications required by HUD for the Bank’s participation in the Direct Endorsement Lender program for certain years. LOFRANO also organized and participated in the working group responsible for creating and implementing WELLS FARGO’s self-reporting policies and procedures. In contravention of HUD’s requirements, that group failed to report to HUD loans that WELLS FARGO had internally identified as containing material underwriting findings. Moreover, LOFRANO received WELLS FARGO quality assurance reports identifying thousands of FHA loans with material findings – very few of which WELLS FARGO reported to HUD.
* * *
As part of the settlement, Wells Fargo has admitted, acknowledged, and accepted responsibility for, among other things, the following conduct: During the period from May 2001 through on or about December 31, 2008, Wells Fargo submitted to HUD certifications stating that certain residential home mortgage loans were eligible for FHA insurance when in fact they were not, resulting in the Government having to pay FHA insurance claims when certain of those loans defaulted. From May 2001 through January 2003, Wells Fargo’s quality assurance group conducted monthly internal reviews of random samples of the retail FHA mortgage loans that the Bank had already originated, underwritten, and closed which identified for most of the months that in excess of 25 percent of the loans, and in several consecutive months, more than 40 percent of the loans, had a material finding. For a number of the months during the period from February 2003 through September 2004, the material finding rate was in excess of 20%. A “material” finding was defined by Wells Fargo generally as a loan file that did not conform to internal parameters and/or specific FHA parameters, contained significant risk factors affecting the underwriting decision, and/or evidenced misrepresentation.
Wells Fargo also admitted, acknowledged, and accepted responsibility for the following additional conduct: Between 2002 and October 2005, Wells Fargo made only one self-report to HUD, involving multiple loans. During that same period, the Bank identified through its internal quality assurance reviews approximately 3,000 FHA loans with material findings. Further, during the period between October 2005 and December 2010, Wells Fargo only self-reported approximately 300 loans to HUD. During that same period, Wells Fargo’s internal quality assurance reviews identified more than 2,900 additional FHA loans containing material findings that the Bank did not self-report to HUD. The Government was required to pay FHA insurance claims when certain of these loans that Wells Fargo identified with material findings defaulted.
Lofrano admitted, acknowledged, accepted responsibility for, among other things, the following matters in which he participated: From January 1, 2002, until December 31, 2010, he held the position of Vice President of Credit Risk – Quality Assurance at Wells Fargo; in that capacity, he supervised the Decision Quality Management group; in 2004, he was asked to organize a working sub-group to address reporting to HUD; in or about October 2005, he organized a working group that drafted Wells Fargo’s new self-reporting policy and procedures; and during the period October 2005 through December 31, 2010, based on application of the Bank’s new self-reporting policy and by committee decision, Wells Fargo did not report to HUD the majority of the FHA loans that the Bank’s internal quality assurance reviews had identified as having material findings.
* * *
Mr. Stretch and Mr. Bharara thanked HUD’s Office of General Counsel, HUD-OIG, and the Commercial Litigation Branch of the U.S. Department of Justice’s Civil Division for their extraordinary assistance with the prosecution and settlement of this case.
This resolution with Wells Fargo is the latest in a string of civil fraud cases pursued by the United States in recent years alleging fraudulent lending practices by residential mortgage lenders.
The American Mortgage Network investigation was handled by Assistant U.S. Attorney Sara Winslow with assistance from Jacqueline Hollar.
Former Hedge Fund Manager Sentenced to 15 Years’ Imprisonment for Wire Fraud, Money Laundering, and Contempt of CourtRead the Press Release
SAN FRANCISCO – James Murray was sentenced to 15 years in prison announced U.S. Attorney Brian J. Stretch, FBI Special Agent in Charge David J. Johnson, and U.S. Secret Service Special Agent in Charge David Thomas. The sentence, handed down late yesterday, follows a jury conviction for 23 felonies—including wire fraud, money laundering, and aggravated identity theft—and contempt of court.
Murray, 47, formerly of Larkspur, was the sole member and investment advisor of Market Neutral Trading, LLC (MNT), a purported hedge fund. MNT’s marketing materials claimed the fund was audited by Jones, Moore & Associates (JMA), a sham entity that Murray started and controlled. After being charged in a criminal complaint with wire fraud in February of 2012, Murray was charged on March 17, 2015, in a fourth superseding indictment with 23 felonies including 16 counts of wire fraud, in violation of 18 U.S.C. § 1343; 4 counts of engaging in money transactions in criminally derived property, in violation of 18 U.S.C. § 1957; 2 counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1); as well as contempt of court, in violation of 18 U.S.C. § 401(3). On October 13, 2015, a jury convicted Murray of all the charges in the fourth superseding indictment.
According to the proof submitted at trial, beginning in 2007, Murray used JMA and MNT to defraud merchant banks and investors. Among the schemes devised by Murray was a scheme involving fraudulent credit card transactions in JMA’s merchant account. Murray used credit cards he controlled to process more than $650,000 in sham transactions, followed by fraudulent refunds on those same cards, leading to a loss of more than $550,000 to the credit card processing company.
Murray defrauded victim investors out of more than $2.5 million. Murray caused false and misleading marketing materials to be created and provided potential investors with false monthly performance numbers for the fund. For example, the materials indicated that the fund had been audited by accountants with JMA. Murray never disclosed JMA was not a real auditing firm and never disclosed that JMA did not actually conduct an audit and that the performance numbers in the JMA audit reports grossly overstated the performance of the fund in 2009. Murray also provided potential investors with a fake resume that included honors and a master’s degree he had never achieved.
The government produced evidence at trial that in July of 2012, Murray convinced a New York brokerage to advance 50,000 shares of stock in Netflix in order to complete a short sale stock transaction. Murray represented to the bank that at the time MNT had $5 million of assets available to invest, a fact Murray knew was not true.
In addition, the government produced evidence at trial that, while the case was pending, the Honorable Edward M. Chen, U.S. District Judge, issued an order setting conditions for Murray’s release on bond. According to Judge Chen’s order, Murray was prohibited from using a computer to access the Internet, prohibited from using a telephone other than at the halfway house, and prohibited from contacting witnesses. Murray nevertheless obtained a computer and used it to access the Internet, sent messages to and communicated with a witness in the case, and committed additional violations of the order. The evidence at trial established that Murray used the computer at his former attorney’s office when he was released from the halfway house for the purpose of meeting with his counsel. A search conducted pursuant to a warrant revealed Murray hid the computer above ceiling tiles in a conference room in his former attorney’s office. In its memorandum to the court requesting that Murray be sentenced for his crimes, the government argued, “[i]n the world of economic criminals, the unrelenting nature of defendant’s non-stop crime spree and his willingness to victimize anyone and everyone he encounters (his wife, his closest friends, his parents, elderly retirees, credit card companies, investment banks, on-line trading firms, and, most disturbingly, this Court) sets him apart as among the worst white collar defendants to have stood trial in this district for many years.”
The sentence was handed down by Judge Chen. In addition to the prison term, Judge Chen also sentenced Murray to three years’ supervised release following his incarceration.
Assistant U.S. Attorneys Robin Harris and Lloyd Farnham are prosecuting the case with the assistance of Jessica Meegan. The prosecution is a result of an investigation by the FBI and U.S. Secret Service.
Northern California Man Sentenced to 30 Years in Prison for Interstate Travel to Engage in Sexual Acts with a MinorRead the Press Release
94 Minor Victims Identified Through Federal Investigation
Blake Robert Johnston, 42, of Martinez, California, was sentenced to 30 years in prison late yesterday and ordered to serve a lifetime on supervised release for traveling across state lines with the intent to engage in sexual acts with a minor, announced Acting U.S. Attorney Brian Stretch and Special Agent in Charge Ryan L. Spradlin for Homeland Security Investigations.
Johnston pleaded guilty on Dec. 1, 2015, to travel with intent to engage in illicit sexual conduct with a minor. According to the plea agreement, Johnston admitted to flying to Oregon for the purpose of engaging in a sexual act with a 14-year-old victim. Johnston also admitted that, approximately a week later, he drove to Oregon, picked up the victim, drove her to California and engaged in sexual acts with her at his home in Martinez.
Johnston was indicted by a federal grand jury on April 2, 2015. He was charged with: travel with intent to engage in illicit sexual conduct with a minor; transportation of a minor with intent to engage in criminal sexual activity; online enticement of a minor, production of child pornography (two counts with different victims); possession of child pornography; and distribution of child pornography.
According to the criminal complaint, this investigation began in October of 2014, when the first identified victim’s mother called police in Salem, Oregon, to report that her 14-year-old daughter was missing. Based on mobile phone records and the victim’s computer history, Salem police were able to determine the probable location of the victim and the identity of the suspect. Within 24 hours of the victim’s disappearance, Martinez police found the missing girl in Johnston’s bed. According to a status conference update filed by the government, a hard drive seized from Johnston’s bedroom contained approximately 500 folders labeled with different females’ names. The majority of those 500 folders each appear to contain images and/or videos of child pornography no law enforcement investigators had previously encountered.
At the time the government’s sentencing memorandum was filed, investigators identified 94 minor victims, from at least 30 states and six countries, whom Johnston enticed into creating child pornography or sexually exploited online. Investigators confirmed that four minor victims met with Johnston and engaged in illicit sexual activity with him. In Johnston’s communications with underage victims, he encouraged the girls to commit harmful and violent acts such as cutting themselves, penetrating their bodies with foreign objects, strangulation and drug abuse.
“Blake Johnston sexually exploited an untold number of children to satisfy his demented fantasies,” said Acting U.S. Attorney Stretch. “Today he was sentenced to 30 years in prison, a just sentence we can only hope provides some measure of closure to the victims and their families who had to endure Johnston’s torment. This office remains vigilant, ready to prosecute child predators who troll the internet targeting the most vulnerable among us.”
“A cyber monster’s perverse desires often turn into physical victimization and a child’s worst nightmare,” said Special Agent in Charge Spradlin. “While we are satisfied with the 30 year sentence for the horrific crimes committed, we must remember the young victims who are left with permanent psychological, physical and emotional scars. HSI works tirelessly with our law enforcement partners to seek out and bring to justice those who mercilessly exploit children.”
During the sentencing hearing before the U.S. District Judge Jeffrey S. White for the Northern District of California, some of the victims and their parents testified about the impact of Johnston’s actions. One of the victims, who was between 13 and 14 years old at the time of the offenses, told Johnston during the sentencing hearing, “You took away my childhood. You took me away from my family. You killed who I could have been. But I am free now, free to live without fears.” Another minor victim told the judge that “In November of 2014, when Homeland Security contacted me . . . when I found out the nature of the situation, I was sick to my stomach.” “Telling my mother broke her heart because she had no idea whatsoever of what was going on.” Two mothers of victims said that they had no idea what was going on with their daughters until Homeland Security agents showed up at their door. One mother of a teenage victim told the judge that her family and her daughter have been dealing with nightmares almost every night.
In handing down the sentence, U.S. District Judge White described Johnston’s conduct as “unusually heinous,” “cruel, degrading and completely inhumane to other individuals and it is a sad day for our society when people engage in the kind of behavior that the defendant [did].” U.S. District Judge White said that Johnston “preyed upon [the child victims’] low self-esteem” and used “extreme cunning, guile, intelligence, strategies and a lot of thought and a lot of skill.” U.S. District Judge White said that, in all of his years as a judge, the “Court has never seen . . . such serious, heinous behavior.”
U.S. District Judge White sentenced the defendant to a lifetime period of supervised release and ordered no contact with victims or minors without the permission of his probation officer. Johnston must register as a sexual offender as required by state law. Full restitution to the victims of defendant’s crimes will be ordered, and the court will determine the final restitution amounts on June 28. The defendant has been detained since his arrest, so he will immediately begin serving his sentence.
Assistant U.S. Attorneys Maureen Bessette and Christina McCall are prosecuting the case with the assistance of Vanessa Vargas Quant, Melissa Dorton and Patty Lau. The prosecution is the result of an investigation by: Homeland Security Investigation’s Cyber Crimes Child Exploitation Group; Martinez Police Department; Salem Police Department in Oregon; the Contra Costa County District Attorney’s Office; the Malaysia Royal Police; numerous law enforcement agencies in the United Kingdom; the Irish Garda; the Royal Canadian Mounted Police; and the Australian Federal Police.
Martinez Man Sentenced to 30 Years in Prison for Interstate Travel to Engage in Sexual Acts with A MinorRead the Press Release
OAKLAND – Blake Robert Johnston was sentenced to 30 years in prison late yesterday, and ordered to serve a lifetime on supervised release, for traveling across state lines with the intent to engage in sexual acts with a minor, announced United States Attorney Brian Stretch and Homeland Security Investigations Special Agent in Charge Ryan L. Spradlin.
Johnston pleaded guilty on December 1, 2015, to violating 18 U.S.C. § 2423(b), travel with intent to engage in illicit sexual conduct with a minor. According to the plea agreement, Johnston admitted to flying to Oregon for the purpose of engaging in a sexual act with a 14-year-old victim. Johnston also admitted that, approximately a week later, he drove to Oregon, picked up the victim, drove her to California, and engaged in sexual acts with her at his home in Martinez.
Johnston, age 42, of Martinez, California, was indicted by a federal grand jury on April 2, 2015. He was charged with: Travel with Intent to Engage in Illicit Sexual Conduct with a Minor; Transportation of a Minor with Intent to Engage in Criminal Sexual Activity; Online Enticement of a Minor, Production of Child Pornography (two counts with different victims); Possession of Child Pornography; and Distribution of Child Pornography.
According to the criminal complaint, this investigation began in October of 2014, when the first identified victim’s mother called police in Salem, Oregon, to report that her 14-year-old daughter was missing. Based on mobile phone records and the victim’s computer history, Salem police were able to determine the probable location of the victim and the identity of the suspect. Within 24 hours of the victim’s disappearance, Martinez police found the missing girl in Johnston’s bed. According to a status conference update filed by the government, a hard drive seized from Johnston’s bedroom contained approximately 500 folders labeled with different females’ names. The majority of those 500 folders each appear to contain images and/or videos of child pornography no law enforcement investigators had previously encountered.
At the time the government’s sentencing memorandum was filed, investigators identified 94 minor victims, from at least 30 states and six countries, whom Johnston enticed into creating child pornography or sexually exploited online. Investigators confirmed that four minor victims met with Johnston and engaged in illicit sexual activity with him. In Johnston’s communications with underage victims, he encouraged the girls to commit harmful and violent acts such as cutting themselves, penetrating their bodies with foreign objects, strangulation, and drug abuse.
“Blake Johnston sexually exploited an untold number of children to satisfy his demented fantasies," said U.S. Attorney Brian J. Stretch. "Today he was sentenced to 30 years in prison, a just sentence we can only hope provides some measure of closure to the victims and their families who had to endure Johnston's torment. This office remains vigilant, ready to prosecute child predators who troll the internet targeting the most vulnerable among us.”
“A cyber monster's perverse desires often turn into physical victimization and a child’s worst nightmare,” said Ryan L. Spradlin, HSI Special Agent in Charge. “While we are satisfied with the 30 year sentence for the horrific crimes committed, we must remember the young victims who are left with permanent psychological, physical and emotional scars. HSI works tirelessly with our law enforcement partners to seek out and bring to justice those who mercilessly exploit children.”
During the sentencing hearing before the Hon. Jeffrey S. White, U.S. District Judge, some of the victims and their parents testified about the impact of Johnston’s actions. One of the victims, who was between 13 and 14 years old at the time of the offenses, told Johnston during the sentencing hearing, “You took away my childhood. You took me away from my family. You killed who I could have been. But I am free now, free to live without fears.” Another minor victim told the judge that “In November of 2014, when Homeland Security contacted me . . . when I found out the nature of the situation, I was sick to my stomach.” “Telling my mother broke her heart because she had no idea whatsoever of what was going on.” Two mothers of victims said that they had no idea what was going on with their daughters until Homeland Security agents showed up at their door. One mother of a teenage victim told the judge that her family and her daughter have been dealing with nightmares almost every night.
In handing down the sentence, Judge White described Johnston’s conduct as “unusually heinous,” “cruel, degrading and completely inhumane to other individuals, and it is a sad day for our society when people engage in the kind of behavior that the defendant [did].” Judge White said that Johnston “preyed upon [the child victims’] low self-esteem” and used “extreme cunning, guile, intelligence, strategies, and a lot of thought and a lot of skill.” Judge White said that, in all of his years as a judge, the “Court has never seen . . . such serious, heinous behavior.”
Judge White sentenced the defendant to a lifetime period of supervised release, and ordered no contact with victims or minors without the permission of his probation officer. Johnston must register as a sexual offender as required by state law. Full restitution to the victims of defendant’s crimes will be ordered, and the Court will determine the final restitution amounts on June 28, 2016. The defendant has been detained since his arrest, so he will immediately begin serving his sentence.
Assistant U.S. Attorneys Maureen Bessette and Christina McCall are prosecuting the case with the assistance of Vanessa Vargas Quant, Melissa Dorton, and Patty Lau. The prosecution is the result of an investigation by: Homeland Security Investigation’s Cyber Crimes Child Exploitation Group; Martinez Police Department; Salem Police Department in Oregon; the Contra Costa County District Attorney’s Office; the Malaysia Royal Police; numerous law enforcement agencies in the United Kingdom; the Irish Garda; the Royal Canadian Mounted Police; and the Australian Federal Police.
Investigators believe there may be hundreds of other victims not yet identified. Therefore, anyone with information related to this case is urged to call HSI’s national toll-free tip line at 1-866-DHS-2-ICE (1-866-347-2423), or the Martinez Police Department’s tip line at 925–372–3457.
Napa Physician Agrees to Pay $400,000 to Settle Allegations That He Submitted False Claims to the Medicare ProgramRead the Press Release
SAN FRANCISCO – Ali S. Vaziri, a gastroenterologist who had a private gastroenterologist practice in Napa, California, has agreed to pay the United States $400,000 to settle allegations that he submitted false claims for reimbursement to the Medicare program in violation of the False Claims Act, announced United States Attorney Brian J. Stretch; David J. Johnson, Special Agent in Charge, Federal Bureau of Investigation; Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf; and Special Agent in Charge Steve Ryan, Office of Inspector General for the U.S. Department of Health and Human Services.
From 2007 to 2011, Dr. Vaziri allegedly billed Medicare for patient office visits that reflected more time and services than he actually spent with patients. In addition, Dr. Vaziri allegedly billed Medicare for patient office visits that were required to be billed together with routine colonoscopies as one charge.
This case is the result of an investigation by the U.S. Attorney’s Office, the Federal Bureau of Investigation, Office of Inspector General for the U.S. Department of Health and Human Services, and the Internal Revenue Service, Criminal Investigations.
Assistant U.S. Attorney Gioconda R. Molinari handled the matter on behalf of the U.S. Attorney’s Office for the Northern District of California, with assistance of Paralegal Tiffani Chiu.
Former Concord Resident Sentenced to over Three Years in Prison for Religious Hate CrimeRead the Press Release
OAKLAND - Hugo John Scherzberg was sentenced to 41 months in prison yesterday for his religious hate crime conviction in relation to the March 20, 2010, fire at a church in Pittsburg, Calif., announced Acting United States Attorney Brian J. Stretch and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge Jill A. Snyder.
Scherzberg, 48, formerly of Concord, admitted in his plea agreement to using gasoline and a lighter to set fire to the Church of the Living God, Christian Workers for Fellowship, Temple #21 (Workers Fellowship) located on Harbor Street in Pittsburg. Scherzberg admitted he set fire to the church because he felt God had dealt him a poor hand in life. He also admitted he chose the Pittsburg church in particular because it had the words “Living God” in its name and it was “readily accessible.” At the time of the fire, a separate congregation, Shiloh Missionary Baptist Church, also rented the church building for religious services. Scherzberg admitted that his actions caused significant damage to the entire church building and property within the building, and that almost the entire church building required reconstruction. Losses totaled more than $490,000, according to insurance claims.
Scherzberg was indicted by a federal grand jury on March 5, 2015, on one count of burning the church building because of its religious character, in violation of 18 U.S.C. §§ 247(a)(1) and (d)(3), and on a second count of arson of a building used in activities affecting interstate commerce, in violation of 18 U.S.C. § 844(i). Scherzberg pleaded guilty to the first charge on January 13, 2016.
Scherzberg has been detained since his arrest on November 23, 2014, for setting fire to another church, the Pilgrim Community Church of San Francisco. He was prosecuted, convicted, and sentenced in state court to an 18-month jail term for that incident before being taken into custody by federal authorities and making his first federal court appearance on May 11, 2015. He will begin serving his sentence immediately .
The Honorable Haywood S. Gilliam, Jr., U.S. District Judge, in Oakland ordered the sentence. In addition to the term of imprisonment, Judge Gillium ordered the defendant to 3 years supervised release and $491,940.99 in restitution. In ordering the sentence, Judge Gilliam noted, among other things, that the defendant’s actions likely created fear and terror in the community, and that this sentence reflects the seriousness of the crime.
Assistant U.S. Attorney Andrew S. Huang prosecuted this case with the assistance of Vanessa Quant, Trina Khadoo, and Stephanie Mitchell. The Civil Rights Division, U.S. Department of Justice, also assisted in the prosecution. The prosecution is the result of an investigation by the ATF and the Contra Costa County Fire Investigation Unit, with assistance from the San Francisco Fire Department, San Francisco Police Department, and San Francisco District Attorney’s Office.
Whitehorn Woman Admits to Causing over $100,000 in Environmental Damage to Federal LandRead the Press Release
SAN FRANCISCO – Melinda Van Horne pleaded guilty in federal court in San Francisco on Wednesday, March 23, 2016, to depredation against the property of the United States, announced Acting United States Attorney Brian Stretch and Nathan Mendes, Bureau of Land Management Assistant Special Agent-in-Charge.
In pleading guilty, 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. As described in the factual basis for the plea agreement, in October 2007, Van Horne purchased a house next to Paradise Ridge in Humboldt County, California. Paradise Ridge is part of a congressionally designated National Conservation Area administered by the Bureau of Land Management. Commercial activity and development are prohibited on the land, which is to be preserved for the enjoyment of future generations. In 2008, Van Horne proposed to trade portions of her private property for the federal conservation land, but 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.
Van Horne admitted that, with her 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 water the marijuana plants.
Van Horne further admitted that, in September 2013, when law enforcement executed a search on the property, agents found 1,654 marijuana plants that she had been growing on federal land and in the adjoining garage in the house. Van Horne admitted that she was continuing to use the land although it had been foreclosed upon by the bank. Agents also executed a search warrant at Van Horne’s residence, where she had moved after the foreclosure, and found over 17 kilograms of marijuana at that location.
Van Horne further admitted that the bulldozing and excavation of federal land she orchestrated 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. Bureau of Land Management engineers estimate the cost to repair the damage at $107,754.01, which Van Horne has agreed to pay as restitution in connection with her guilty plea.
Van Horne, 43, of Whitethorn, Calif., 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. Section 846; possession with intent to distribute 1,000 or more marijuana plants, in violation of 21 U.S.C. Section 841(a)(1) and 841(b)(1)(A)(vii); possession with intent to distribute marijuana, in violation of 21 U.S.C. Section 841(a)(1) and 841(b)(1)(C); maintaining a place for manufacturing marijuana, in violation of 21 U.S.C. Section 856(a); and depredation against property of the United States, in violation of 18 U.S.C. Section 1361. Under the plea agreement, Van Horne pleaded guilty to the depredation against property of the United States.
Van Horne is currently released on bond. Bail was set at $130,000.
Van Horne’s sentencing hearing is scheduled for June 29, 2016, at 10:00 a.m., before The Honorable Charles R. Breyer, U.S. District Court Judge, in San Francisco. The maximum statutory penalty for depredation against property of the United States in violation of 18 U.S.C. Section 1361 is ten years in prison and a fine of $250,000, or twice the gross gain or loss generated from the operation, 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. Section 3553.
Rita F. Lin is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Theresa Benitez, Rawaty Yim, and Marina Ponomarchuk. The prosecution is the result of a two-year investigation by the Bureau of Land Management and Drug Enforcement Administration.
Pacifica Man Sentenced to Ten Years in Prison for Possession of Child PornographyRead the Press Release
SAN FRANCISCO – Robert Spence II was sentenced yesterday to ten years in prison for possession of child pornography, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
Spence, 66, of Pacifica, pleaded guilty on December 1, 2015, to one count of possession of pornography depicting minors under the age of 12 engaging in sexually explicit conduct. According to his guilty plea, Spence acknowledged that, beginning no later than September 15, 2013, he communicated with individuals in the Philippines to obtain child pornography. Papers filed by the government reveal that a search warrant executed by FBI agents and Pacifica Police Department officers at Spence’s home found more than 1,200 images and videos of child pornography, including images depicting the sexual abuse of children as young as three and four years old. A federal grand jury indicted Spence on June 2, 2015, with possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B).
The sentence was handed down by the Honorable Vince Chhabria, U.S. District Judge. Judge Chhabria concluded that, because defendant had sustained prior convictions for sexual battery pursuant to California Penal Code § 243.4(a), he was subject to the mandatory minimum ten year term of imprisonment in 18 U.S.C. § 2252(b)(2). Spence has been ordered to self-surrender to begin serving his sentence no later than May 5, 2016. Judge Chhabria also imposed a seven year period of supervised release.
Assistant U.S. Attorney Sheila A.G. Armbrust prosecuted the case with the assistance of Patricia Mahoney. The prosecution is the result of an investigation by the Pacifica Police Department and the Federal Bureau of Investigation.
Suspected child sexual exploitation or missing children may be reported to the National Center for Missing & Exploited Children, via its toll-free 24-hour hotline, 1-800-843-5678.
Former Joint Powers Authority Finance Director Sentenced to A Year in Prison and Six Months Home ConfinementRead the Press Release
SAN FRANCISCO– Clarke J. Howatt was sentenced today to a year and a day in prison for his conviction for wire fraud stemming from a series of embezzlements from the Association of Bay Area Governments (ABAG) and the related ABAG Finance Authority for Nonprofit Corporations (FAN), announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
Howatt, 56, who now resides in Portland, Ore., pleaded guilty on December 15, 2015, to committing wire fraud. In connection with his plea agreement, Howatt acknowledged perpetrating a scheme to embezzle funds from various bond accounts and other accounts established by FAN. Howatt is the former finance director of ABAG, a state Joint Powers Agency formed in the 1960s for the principal purpose of providing its members with planning and advice regarding land use issues. FAN was formed as a separate legal entity to act as a conduit issuer of debt instruments, or bonds. As part of his plea agreement, Howatt admitted he provided false information to the trustees of bond accounts and to others in order to fraudulently induce people to wire funds from FAN bond accounts and other accounts, to bank accounts that Howatt controlled. Howatt admitted that from June 2011 through January 2015, he embezzled a total of $3,876,135.21. Howatt, was charged in an information filed on February 13, 2015, with the single count of wire fraud, in violation of 18 U.S.C. § 1343, and pleaded guilty to that charge.
The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge. In addition to the prison term, Judge Breyer also sentenced the defendant to a three year period of supervised release, six months of which will be served in home confinement. Howatt will begin serving the sentence no later than May 23, 2016.
Assistant U.S. Attorneys Kyle Waldinger and David Countryman are prosecuting the case with the assistance of Jessica Meegan and Carolyn Jusay. The prosecution is the result of an investigation by the FBI.
Owner of Castro Valley Pizzeria Sentenced for Failing to Pay Employment TaxesRead the Press Release
OAKLAND, Calif. – Frank Eugene Gemignani III was sentenced today to 12 months in prison and ordered to pay $255,452 in restitution for failing to pay over employment taxes, announced Acting U.S. Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
According to the plea agreement, Gemignani, 47, of Concord, operated Pyzano’s Pizzeria in Castro Valley from 1991 through 2012. As the sole proprietor, Gemignani exercised control over Pyzano’s business affairs, including signing and filing Pyzano’s tax returns and paying to the IRS payroll taxes withheld from Pyzano’s employees’ paychecks. From April 1, 2008, through December 31, 2010, Gemignani deducted and collected approximately $184,267 in federal income taxes and Federal Insurance Contributions Act taxes (FICA) from Pyzano’s employees’ wages, but he failed to pass these taxes on to the IRS. Additionally, Gemignani failed to pay at least $63,333 of FICA and Federal Unemployment Tax Act (FUTA) taxes that the business, Pyzano’s, itself owed for 2009 and 2010. Gemignani also claimed a credit for amounts withheld from his Pyzano’s paychecks on his U.S. Individual Income Tax Return, Form 1040, for 2007, even though he knew he had never paid those withholdings over to the IRS. Gemignani was charged by indictment on June 19, 2014, with 11 counts of failure to pay over employment taxes, in violation of Title 26, U.S.C § 7202, and one count of filing a false tax return, in violation of 26 U.S.C. § 7206(1). He pleaded guilty to one count failure to pay over employment taxes.
The sentence was handed down by the Honorable Jeffrey S. White, U.S. District Judge, in Oakland. In addition to the prison term, Judge White also sentenced Gemignani to a one year period of supervised release. Gemignani has been ordered to begin serving his sentence no later than June 6, 2016.
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.
South Bay Resident Charged with Illegal Dumping in Wetlands and Other Protected WatersRead the Press Release
SAN FRANCISCO – Violations of the Federal Clean Water Act were filed last week against James Philip Lucero for the unpermitted discharge of pollutants into waters of the United States, including wetlands, announced Acting United States Attorney Brian J. Stretch, Environmental Protection Agency Acting Special Agent in Charge Jay Green, Federal Bureau of Investigation Special Agent in Charge David J. Johnson, and Alameda County District Attorney Nancy E. O’Malley.
In the indictment filed March 15, 2016, and unsealed this afternoon, a federal grand jury charged Lucero, 59, of Carmel, Calif., a self-described “dirt broker,” with illegally discharging pollutants into waters of the United States adjacent to Mowry Slough, part of the Don Edwards San Francisco Bay National Wildlife Refuge located in Newark, Calif. As a dirt-broker, Lucero is alleged to have charged a fee to contractors and trucking companies in exchange for providing open space to dump fill material, including construction debris. The defendant is alleged to have caused construction debris and fill material to be dumped on property containing federally-protected wetland and other waters of the United States, without applying for or obtaining a permit from either the U.S. Army Corps of Engineers or the Environmental Protection Agency. According to the two count indictment, beginning on or about June 2014 and extending through on or about September 8, 2014, Lucero, without a permit, caused dirt, soil and other materials to be discharged from a point source into waters of the United States, including 11.85 acres of wetlands and 1.33 acres of other waters. Lucero is charged with one count of unpermitted filling of wetlands, in violation of 33 U.S.C. §§ 1311, 1319(c)(2)(A) and 1344, and one count of the filling of other waters, in violation of the same statutes.
Lucero was arraigned this morning before U.S. Magistrate Judge Donna M. Ryu. He is next scheduled to appear on April 25, 2016, before U.S. District Judge Haywood S. Gilliam for an initial appearance.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the maximum statutory penalty for a violation of 33 U.S.C. §§ 1311, 1319(c)(2)(A) and 1344 is three years in prison and $50,000 fine. Additional fines, forfeitures, and a period of supervised release also may be imposed. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Philip J. Kearney is prosecuting the case with the assistance of paralegal Alycee Lane. The prosecution is the result of an investigation by the Environmental Protection Agency, the Federal Bureau of Investigation, the Alameda County District Attorney’s Office, and the Newark Police Department.
Petaluma Slaughterhouse Employee Sentenced for Scheme to Distribute Adulterated MeatRead the Press Release
SAN FRANCISCO – Felix Sandoval Cabrera, the kill floor foreperson at the now-defunct Rancho Feeding Corporation in Petaluma, was sentenced today for his role in a scheme to distribute adulterated, misbranded, and uninspected meat, announced Acting United States Attorney Brian J. Stretch and Special Agent in Charge of the Western Region of the U.S. Department of Agriculture (USDA), Office of Inspector General, Investigations, Lori Chan.
Cabrera, 56, of Santa Rosa, was sentenced by U.S. Senior District Judge Charles R. Breyer to three months’ imprisonment, to be followed by two years of supervised release, conditions of which include three months of home confinement, and a $1,000 fine.
Cabrera was charged along with Rancho Feeding’s owner Jesse Amaral, 78, of Petaluma and Eugene Corda, 66, of Petaluma, with distribution of adulterated, misbranded, and uninspected meat, in violation of the Federal Meat Inspection Act (FMIA), 21 U.S.C. §§ 610(c) & 676(a), conspiracy to commit the same, in violation of 18 U.S.C. § 371, and conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349. For his part in the scheme, a fourth defendant, Robert Singleton, 79, owner of Petaluma-based Rancho Veal Corporation, was charged in a separate information on August 18, 2014, with one count of distributing adulterated, misbranded, and uninspected meat in violation of the FMIA.
On November 26, 2014, Cabrera pleaded guilty to one count of conspiracy to distribute adulterated, misbranded and uninspected meat. As part of his plea agreement, Cabrera admitted he directed other kill floor employees to carve “USDA Condemned” stamps out of carcasses of condemned cattle and to process the carcasses for transport, sale, and distribution. Cabrera further acknowledged placing heads from apparently healthy cows next to the carcasses of cows showing signs of “cancer eye” in an effort to circumvent government meat inspection procedures, and then processing the uninspected cattle for transport, sale, and distribution.
Amaral, Corda, and Singleton have each pleaded guilty and acknowledged their separate roles in the scheme. Each has been sentenced by Judge Breyer. Amaral pleaded guilty to FMIA conspiracy on February 18, 2015. Judge Breyer sentenced him to 12 months and one day of imprisonment for leading the conspiracy. Corda, Rancho’s yardman, pleaded guilty to one of the underlying distribution counts, admitting that he knowingly switched uninspected cancer eye cattle with inspected, healthy cattle as part of a scheme to circumvent USDA inspection procedures. Judge Breyer sentenced Corda to three years’ probation, including six months of home detention. Singleton pleaded guilty to the information, admitting that he participated in a scheme by which Rancho employees were instructed to carve “USDA Condemned” stamps out of cattle carcasses, to conceal from USDA inspection cows showing signs of cancer eye by switching the diseased heads with healthy heads, and to process the adulterated and uninspected carcasses for human consumption. Judge Breyer sentenced Singleton to three months’ imprisonment, to be followed by one year of supervised release, conditions of which include three months of home confinement and fifty hours of community service.
Cabrera’s sentence was a result of the United States’ motion for downward departure based on his cooperation, pursuant to U.S.S.G. § 5K1.1. Judge Breyer set a self-surrender deadline of September 2, 2016.
Assistant U.S. Attorney Hartley M.K. West prosecuted this case with the assistance of Rosario Calderon and Bridget Kilkenny. The prosecution is the result of an investigation by agents of the USDA’s Office of Inspector General, Investigations and USDA’s Food Safety Inspection Service, Office of Investigation, Enforcement and Audit, Compliance and Investigations.
Marin Resident Charged with Fraudulently Misrepresenting Military ServiceRead the Press Release
SAN FRANCISCO – Federal charges were filed against Gregory Bruce Allen yesterday for fraudulently representing that he received the Purple Heart military medal, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The charges include the allegation that Allen made the representation with the intent to obtain money, property, and other tangible benefits.
The allegations were made in an information filed in federal court yesterday. According to the information, beginning no later than October 19, 2013, Allen, 68, of Santa Rosa, fraudulently held himself out to be the recipient of a Purple Heart. Additional papers filed by the government explain that Allen allegedly served in the United States Navy for about eight months during 1968 and 1969 but was discharged due to a previously unreported knee injury. Allen nevertheless ran a business as a personal trainer and started a military recruit training program for youths interested in military service in part by representing to others that he was a decorated 1st Lieutenant in the United States Marine Corps who served in the Vietnam and Gulf Wars. Allen also allegedly held himself out as a Purple Heart recipient in connection with fundraising efforts that resulted in donations of approximately $23,000 into accounts that Allen controlled. Allen was charged with one count of fraudulent representations about receipt of military decorations or medals, in violation of 18 U.S.C. § 704(b). The offense is a Class A Misdemeanor.
No appearance in federal court has been scheduled yet. An information merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the maximum statutory penalty for a violation of 18 U.S.C. ? 704 is one year in prison and a $100,000 fine. Additional fines and supervised release also may be imposed. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. ? 3553.
Assistant U.S. Attorney Andrew F. Dawson is prosecuting the case. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Former Hillsborough Resident Sentenced for Wire FraudRead the Press Release
SAN JOSE – Resat Otus Nuri was sentenced to 24 months in prison and ordered to pay $562,149.90 in restitution for wire fraud, announced Acting United States Attorney Brian J. Stretch, U.S. Secret Service Special Agent in Charge David Thomas, and U.S. Postal Inspection Service Inspector in Charge Rafael Nuñez. The sentence, handed down yesterday, follows the July 28, 2015, court proceedings in which the defendant—who was known to his victims by numerous aliases including Otus Resat Nuri, Resat Nuri Otus, and Nuri Resat Otus— pleaded guilty to a single count of wire fraud.
According to the plea agreement, Otus, 50, formerly a resident of Hillsborough, admitted he fraudulently induced a Texas company to wire him nearly $100,000 in connection with the sale of computer equipment he never intended to deliver. At sentencing, the Court determined that the total amount of loss associated with the defendant’s criminal conduct was approximately $468,910.
Otus was indicted by a federal grand jury on November 14, 2012. He was charged with allegedly engaging in a scheme to defraud wholesale businesses and individuals to enter into agreements to buy or sell telecommunications equipment that he had neither the intention nor capacity to perform. According to the indictment, in his communications to victims, Otus often falsely held himself out as having contacts at prominent technology firms, telling his potential victims that he was able to obtain good deals on valuable merchandise as a result of these purported contacts. After receiving the funds from a victim buyer or the goods from a victim seller, Otus would fail to perform his part of the bargain as he had promised and refuse to return the funds or goods to his victims, offering them instead a pattern of excuses for his inability to perform. Otus was charged with fifteen counts of wire fraud in violation of 18 U.S.C. § 1343. Under the plea agreement, Otus pleaded guilty to one of the counts in the indictment.
The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge. In handing down the sentence, Judge Koh found that Otus had chosen to engage in a disturbing pattern of fraud over a long period of time with real harm to victims. The Court went to say that the harm to the victims was not just the loss of money, but the headaches and stress it imposed on their finances and their well-being.
In addition to the prison term, Judge Koh also sentenced Otus to a three year period of supervised release. The defendant will begin serving the sentence on May 11, 2016.
Assistant United States Attorney Timothy J. Lucey is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the U.S. Secret Service and the U.S. Postal Inspection Service.
Redwood City Man Indicted for Alleged Scheme to Defraud Produce VendorsRead the Press Release
SAN JOSE, CA— Remon Issa Daniel was indicted on charges of wire fraud for allegedly defrauding produce vendors of over one million dollars of fruit and vegetables announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
According to the indictment filed yesterday, Daniel, 35, of Redwood City, obtained fruit and vegetables from at least 10 different vendors during the course of his scheme, which began in 2014. He ordered this produce primarily from companies in Southern California, Arizona, and Texas, and usually claimed to be from one of three genuine produce wholesalers in Northern California: Bay Produce, New San Jose Wholesale, or General Produce. According to the indictment, Daniel had no association with any of these companies. Further, Daniel often used his own name but also allegedly used the false identity of Rick Stevens. The indictment alleges that Daniel sometimes sent the vendor 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 would the vendor learn that the deposited check was returned for insufficient funds. The indictment charges Daniel with fourteen counts of wire fraud, in violation of 18 U.S.C. § 1343.
Daniel was arrested on February 25, 2016, based on a federal complaint alleging similar conduct. He is currently in federal custody and will be arraigned on the indictment on March 14, 2016, at 1:30, before the Honorable Howard R. Lloyd, U.S. Magistrate Judge, in San Jose.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Daniel faces a maximum statutory penalty for each count of wire fraud of 20 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss from the offense. Additional fines, supervised release and restitution may be ordered, 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 and Yolanda Singletary. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Real Estate Development Company and Its President Ordered to Pay $1 Million in Restitution for Securities Fraud and Wildlife ViolationsRead the Press Release
Wildlife Management, LLC, an Alameda County development company, and its President, James Tong, were sentenced today for securities fraud and violations of the Endangered Species Act, announced Acting U.S. Attorney Brian J. Stretch and U.S. Fish and Wildlife Service (USFWS) Special Agent in Charge Jill Birchell. Today’s sentence, handed down by the Honorable Jon S. Tigar, U.S. District Judge, is a global resolution of state and federal criminal charges against the defendants that will include payments totaling $1 million in restitution to entities that protect the environment and a conservation easement on 107 acres of land in Contra Costa County.
Wildlife Management, LLC, based in Dublin, Calif., financed and developed residential and commercial real estate projects in the East Bay. Real estate developers like Wildlife Management are required to mitigate for the loss of threatened or endangered species when a project impacts a protected species or its habitat. During the development of the Dublin Ranch North real estate project in Dublin, a person acting on behalf of Wildlife Management submitted to the City of Dublin a forged $3.2 million mitigation receipt from the Ohlone Preserve Conservation Bank with the intent to deceive the City into believing Wildlife Management had purchased mitigation credits when it had not. Wildlife Management pleaded guilty to securities fraud, in violation of 18 U.S.C. § 513(a), on January 8, 2016.
As part of the sentence, Judge Tigar ordered Wildlife Management to serve one year probation and pay $175,000 in restitution to resolve the federal case. The restitution will be paid to the National Fish & Wildlife Foundation, a non-profit organization established by Congress to administer such funds.
Tong, 70, of Pleasanton, Calif., and President of Wildlife Management, pleaded guilty to a criminal violation of the Endangered Species Act, 16 U.S.C. §§ 1538(a)(1)(G) and 1540(b)(1), on January 8, 2016. In his plea agreement, Tong admitted that he directed the grading activities at Dublin Ranch North without the City’s required mitigation measure and without authorization from wildlife officials. The grading activities caused sediment to run off into a pond that provided habitat for the California Tiger Salamander. In the federal case, Tong was charged with one count of violating the Endangered Species Act. Tong also pleaded nolo contendere to a criminal forgery charge pending against him in state court. To resolve both the federal and state criminal cases, Tong has agreed to pay $350,000 to the Alameda County Fish and Game Commission, $175,000 to the Contra Costa County Fish and Wildlife Propagation Fund, and $300,000 to the California Department Fish and Wildlife. The funds paid to the California Department of Fish and Wildlife will be split equally between the Pollution Account and the Preservation Fund. Judge Tigar’s sentence today converts the parties’ agreements to an order of the Court. Judge Tigar also ordered Tong to serve one year of probation, to serve four months home detention, and to provide a conservation easement on a 107-acre parcel of land in Contra Costa known as the Brown Ranch. The conservation easement provides habitat for endangered species and will prohibit any future owners from developing the property. The easement has an estimated value of $3 million. In addition, Judge Tigar ordered Tong to place more than $300,000 into an account to manage the Brown Ranch conservation easement in perpetuity.
Assistant U.S. Attorney Maureen Bessette is prosecuting the federal case with the assistance of Melissa Dorton. Deputy Attorney Generals Jason Malinsky and Brett Morris prosecuted the state case. The prosecution was the result of an investigation by the California Department of Fish and Wildlife and the USFWS Office of Law Enforcement.
Saratoga Resident Charged in International Elephant Ivory Trading SchemeRead the Press Release
SAN FRANCISCO – Shahram “Ron” Roohparvar was arrested today in connection with an alleged international elephant ivory trafficking scheme announced Acting United States Attorney Brian Stretch and U.S. Fish and Wildlife Service (USFWS) Special Agent in Charge Jill Birchell.
In an indictment unsealed today, Roohparvar, 61, of Saratoga, was charged with selling art objects made of elephant ivory on the international market. According to the indictment, the sale of elephant ivory has been largely banned and highly regulated since 1976. Federal statutes and international agreements regulate the export of elephant ivory and make it a crime to, among other things, export such products without the proper permits and declarations. According to the indictment, Roohparvar nevertheless offered ivory for sale on the internet, and he exported it in violation of these rules.
The indictment describes three transactions in which Roohparvar allegedly took part between 2012 and 2015. In January of 2012, Roohparvar is alleged to have offered to sell an ivory carving for sale and shipped it to New Zealand; in December of 2013, Roohparvar is alleged to have directed the export of an ivory carving to Australia; and in July of 2015, Roohparvar is alleged to have attempted to export an ivory statue to New Zealand. In all three cases, Roohparvar allegedly initiated the transactions without obtaining the required permits and without filing the necessary declarations with the USFWS. Roohparvar was charged with three counts each of wildlife trafficking, in violation of 16 U.S.C. § § 3373(d), and smuggling, in violation of 18 U.S.C. § 554.
Roohparvar was arrested this morning by Special Agents from the USFWS. He was then arraigned before U.S. Magistrate Judge Joseph C. Spero and released on a $250,000 bond. His next court appearance is scheduled for April 6, 2016, at 2p.m., for an initial appearance before U.S. District Judge Charles R. Breyer.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the maximum statutory penalty for each count of wildlife trafficking is five years’ imprisonment and a $250,000 fine. The maximum statutory penalty for each count of smuggling is 10 years’ imprisonment and $250,000. Additional periods of supervised release, fines, and special assessments also could 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 Laura Vartain Horn is prosecuting the case with the assistance of Yanira Osorio. The prosecution is the result of an investigation conducted by the USFWS Office of Law Enforcement.
Marin Doctor Pleads Guilty to Illegally Prescribing OxycodoneRead the Press Release
OAKLAND – Dr. Michael Roger Chiarottino pleaded guilty in federal court in Oakland yesterday to distribution of oxycodone outside the usual course of professional practice and without a legitimate medical purpose, announced Acting United States Attorney Brian J. Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin.
In pleading guilty, Dr. Chiarottino, 67, of San Rafael, admitted that on six occasions 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 which amounts to 1,530 thirty-milligram pills. Dr. Chiarottino admitted that in prescribing the pills, he did so with the intent to act outside the usual course of professional practice and without a legitimate medical purpose. 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 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). Pursuant to the agreement, Dr. Chiarottino pleaded guilty to one count of distributing oxycodone, a Schedule II Controlled Substance.
Dr. Chiarottino is currently free on pretrial release on a $75,000 bond. His sentencing hearing is scheduled for 1:00 p.m. on June 14, 2016, before the Honorable Jeffrey S. White, U.S. District Judge, in Oakland. The maximum statutory penalty for a violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(C) is twenty years’ imprisonment and a fine of $1,000,000. 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 DEA, the Livermore Police Department, the Pleasanton Police Department, and the Medical Board of California. 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.
Petaluma Cattle Owner and Slaughterhouse Employee Sentenced for Scheme to Distribute Adulterated MeatRead the Press Release
SAN FRANCISCO – Robert Singleton, owner of Petaluma-based cattle company Rancho Veal Corporation, and Eugene Corda, an employee of the now-defunct Rancho Feeding Corporation, a Petaluma slaughterhouse, were sentenced today for their roles in a scheme to distribute adulterated, misbranded, and uninspected meat, announced Acting United States Attorney Brian J. Stretch and Special Agent in Charge of the Western Region of the U.S. Department of Agriculture (USDA), Office of Inspector General, Investigations, Lori Chan.
Singleton, 79, of Petaluma, was sentenced by U.S. District Judge Charles R. Breyer to three months’ imprisonment, to be followed by one year of supervised release, conditions of which include three months of home confinement and fifty hours of community service. Singleton was charged in a one-count information on August 18, 2014, with distribution of adulterated, misbranded, and uninspected meat, in violation of the Federal Meat Inspection Act (FMIA), 21 U.S.C. §§ 610(c) & 676(a). He pleaded guilty to the information on August 22, 2014, as part of a cooperation plea agreement, admitting his participation in a scheme to distribute condemned cattle and uninspected cattle showing signs of “cancer eye.” He also admitted his participation in a separate false invoicing scheme. Singleton’s sentence was a result of the United States’ motion for downward departure based on his cooperation, pursuant to U.S.S.G. § 5K1.1. A restitution hearing is set for May 31, 2016, at 10:00 a.m., also before Judge Breyer, with a self-surrender deadline of the same date.
Corda, 65, of Petaluma, was sentenced by Judge Breyer to three years’ probation, including six months of home detention. Corda was indicted along with Rancho Feeding’s owner Jesse Amaral, 78, of Petaluma, and Rancho Feeding employee Felix Cabrera, 56, of Santa Rosa, for distribution of adulterated, misbranded, and uninspected meat, in violation of the FMIA, 21 U.S.C. §§ 610(c) & 676(a); conspiracy to commit the same, in violation of 18 U.S.C. § 371; and conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349. On October 10, 2014, Corda pleaded guilty to one count of violating the FMIA, admitting that he knowingly switched uninspected cancer eye cattle with inspected, healthy cattle as part of a scheme to circumvent USDA inspection procedures. His sentence also reflected a downward departure as a result of cooperating with the government’s investigation.
For his role in the scheme, Amaral was sentenced on February 10, 2016, to one year and one day imprisonment and two years of supervised release, one of which will be served in a residential re-entry facility.
The sentencing hearing for Cabrera is set for March 9, 2016, also before Judge Breyer.
Assistant U.S. Attorney Hartley M.K. West is prosecuting this case with the assistance of Rosario Calderon and Bridget Kilkenny. The prosecution is the result of an investigation by agents of the USDA’s Office of Inspector General, Investigations and USDA’s Food Safety Inspection Service, Office of Investigation, Enforcement and Audit, Compliance and Investigations.
San Francisco Resident Pleads Guilty to “Straw Hat Bandit” Bank RobberiesRead the Press Release
SAN FRANCISCO - Richard Laurence Stewart pleaded guilty today to robbing four San Francisco banks announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. As part of the plea agreement, Stewart acknowledged his role in committing a string of additional bank robberies throughout San Francisco.
Stewart, 52, of San Francisco, was indicted on October 27, 2015, and charged with four counts of bank robbery or attempted bank robbery, in violation of 18 U.S.C. § 2113(a).
According to today’s plea agreement, Stewart admitted robbing San Francisco banks on May 12, 2015; May 13, 2015; October 14, 2015; and October 16, 2015. The agreement also describes Stewart’s robberies of an additional eight banks in San Francisco from October 27, 2014, through February 27, 2015.
According to papers filed by the government, the FBI was investigating the bank robberies of the so-called Straw Hat Bandit since October of 2014. The government documents describe the FBI’s investigation of the person who wore a number of different disguises during bank robberies. The disguises included glasses, hats, a black curly wig, a fake beard and mustache, and a single surgical glove. According to these documents, Stewart eventually was identified as the bandit after a witness saw him leaving the scene of one of the robberies in a taxicab. Stewart was arrested on October 18, 2015, after authorities linked him to the taxicab request.
Stewart faces a maximum sentence of 20 years’ imprisonment and $250,000 on each of the bank robbery counts. Further, additional terms of supervised release, penalties, and restitution may be ordered upon conviction. 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. Sentencing is scheduled to take place before the Honorable William Alsup on June 14, 2016.
The case is being prosecuted by Assistant U.S. Attorney Shailika Kotiya with the assistance of Patricia Mahoney. The prosecution is the result of an investigation by the FBI and the San Francisco Police Department.
Martinez Resident Pleads Guilty in ID Theft Tax Fraud ConspiracyRead the Press Release
OAKLAND – Lynsey Hartsinck pleaded guilty to conspiracy to file false claims and aggravated identity theft announced Acting United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
According to the plea agreement filed late yesterday, in 2013 and 2014, Hartsinck, 30, of Martinez, Calif., devised a scheme to defraud the United States by filing false tax returns and then claiming the fraudulently obtained tax refund payments. As part of the scheme, Hartsinck conspired with a codefendant to obtain the names and Social Security numbers of at least twelve individuals, most of whom resided in Alameda and Contra Costa Counties. Hartsinck then used the information to prepare and electronically file false tax returns in the names of the individuals without their knowledge or consent.
Hartsinck obtained the tax returns using several methods. For example, on some of the fraudulently-obtained tax returns, Hartsinck listed a home in Martinez she was renting at the time. Hartsinck also opened an account with a UPS store in San Ramon using a false California driver’s license. The license had Hartsinck’s name and another individual’s picture. Hartsinck used the UPS account to rent a postal deposit box and then used the postal box as the address on some of the false tax returns. Hartsinck’s scheme claimed federal tax refunds amounting to at least $198,249. On many of the fraudulent returns that Hartsinck prepared and filed, she directed the IRS to deposit the fraudulent refunds onto prepaid debit card accounts that she controlled.
A federal grand jury indicted Hartsinck on June 16, 2015, with conspiracy to file false claims, thirteen counts of wire fraud, three counts of identity theft, and one count of possession of stolen mail. Pursuant to the plea agreement, Hartsinck pleaded guilty to conspiracy to file false claims, in violation of 18 U.S.C. § 286, and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A.
The maximum statutory penalty for conspiracy to file false claims is ten years in prison and a fine of $250,000. The maximum sentence for aggravated identity theft is two years in prison, to serve consecutively to the underlying felony, and a $250,000 fine. 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 U.S. Attorney Colin Sampson is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.