Northern District of California
Press releases recorded for this federal judicial district.
Baggage Handler Sentenced to over 9 Years in Prison for Smuggling Methamphetamine Through Oakland AirportRead the Press Release
OAKLAND – Siosiua Fihaki was sentenced to 112 months in prison today for his role in smuggling nine pounds of methamphetamine through a secured door at the Oakland International Airport announced Acting United States Attorney Brian Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin.
Fihaki, 32, of Hayward, Calif., pleaded guilty on December 15, 2015, to one count of distributing methamphetamine. In pleading guilty, Fihaki admitted that on May 29, 2014, he was working as a baggage handler at the Oakland International Airport for a flight bound for Honolulu. Early that morning, Fihaki used his airport employee credentials to access a secure door at the airport while carrying a duffel bag full of methamphetamine. Fihaki admitted that he put the duffel bag into the belly of the airplane with other checked luggage. The duffel bag was seized by U.S. Drug Enforcement Administration agents in Honolulu and the subsequent search revealed nine pounds of methamphetamine.
The sentence was handed down by the Honorable Jeffrey S. White, U.S. District Judge. In handing down the sentence, Judge White noted that the case was particularly troubling given that the defendant, as a baggage handler, was entrusted with the safety of everyone who flies through the airport. Judge White also stated that he was extremely concerned that in an era of enhanced security for airlines, Fihaki chose to abuse the trust of the flying public. Judge White’s sentence also included a three-year period of supervised release.
Assistant U.S. Attorney Aaron Wegner is prosecuting the case with the assistance of Vanessa Vargas. The prosecution is the result of an investigation by the U.S. Drug Enforcement Administration, the Internal Revenue Service, and the Alameda County Sheriff’s Office. The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force, a multi-agency task force that coordinates long-term narcotics trafficking investigations.
Former State Senator Leland Yee Sentenced to Five Years’ Imprisonment on Racketeering Conspiracy ChargesRead the Press Release
SAN FRANCISCO – Former State Senator Leland Yee was sentenced to 60 months’ imprisonment and Keith Jackson was sentenced to 108 months’ imprisonment today for their respective roles in a racketeering conspiracy announced Acting United States Attorney Brian J. Stretch and FBI Special Agent in Charge David J. Johnson. Brandon Jamelle Jackson and Marlon Sullivan also were sentenced today; Jackson to 54 months and Sullivan to 66 months, for their respective roles in a separate, but related, conspiracy. Today’s sentences are the first four to result from the second superseding indictment filed January 29, 2015, in federal court.
The second superseding indictment stemmed from allegations that former Senator Yee, along with 27 other defendants, was involved in a broad array of criminal activity. All four defendants who were sentenced today had pleaded guilty to one count of conducting the affairs of a racketeering enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(d). Central to the allegations in the indictment is the existence of two criminal enterprises through which some of the defendants engaged in patterns of racketeering (RICO) activity. Yee and Keith Jackson acknowledged participating in one RICO conspiracy while Sullivan and Brandon Jackson admitted to participating in a related conspiracy.
On July 1, 2015, Yee and Keith Jackson pleaded guilty to using the Leland Yee for Mayor 2011 campaign and the Leland Yee for Secretary of State 2014 campaign to conduct RICO crimes. According to government filings, the conspiracy involved three different, but related, areas of criminal activity: (1) honest services fraud in which he exchanged official acts for money, (2) a weapons trafficking conspiracy, and (3) money laundering. Federal wiretaps established in November of 2012 revealed that Yee devised extortion schemes in which he “tutored and directed [Keith] Jackson.” Yee planned to obtain campaign contributions by leveraging his Senate committee vote on an upcoming decision to dissolve the California State Athletic Commission. According to the government’s papers, Yee requested campaign contributions from individuals interested in keeping the Commission alive. In the second scheme, Yee was prepared to vote for or against pending legislation on workers compensation for professional athletes playing in California depending on which competing interest gave him the most money.
While addressing Yee, Judge Breyer commented during the hearing that the public had to have trust in the integrity of its institutions, but that Yee “abused that trust,” and “did not have that integrity.” Judge Breyer also said that the fact that Yee’s vote as a state senator was “for sale” was, in his view, “a very serious violation of trust.”
Keith Jackson, as part of his plea agreement, acknowledged that he participated in the RICO conspiracy with Yee. Keith Jackson also admitted he committed several crimes to further the conspiracy. Among the activities Keith Jackson acknowledged he participated in to further the conspiracy are accepting cash and checks for bribes, wire fraud, money laundering, and conspiracy to illegally import firearms and ammunition from the Philippines.
Sullivan and Brandon Jackson pleaded guilty on July 1, 2015, to participating in a second RICO conspiracy described in the second superseding indictment. As part of their guilty pleas, both Sullivan and Brandon Jackson acknowledged being associated with a San Francisco Chinese American civic association and conducting RICO crimes. Both Sullivan and Brandon Jackson admitted that between September of 2012 and March of 2014, they arranged the purchase of cocaine and participated in multiple illegal firearms sales. They also admitted that they discussed with an undercover agent the need to kill an associate of the undercover agent. Brandon Jackson admitted to telling the undercover agent he would gather intelligence and bring a family member from out of state to complete the murder-for-hire conspiracy. Sullivan admitted he received $10,000 to ensure that the job would be completed.
The sentences were handed down by the Honorable Charles R. Breyer, U.S. District Judge. Judge Breyer sentenced the defendants as follows:
Leland Yee: 60 months, to begin within the next 30 days, a $20,000 fine, 3 years of supervised release, and forfeiture of certain property.
Keith Jackson: 108 months, to begin within the next 30 days, 3 years of supervised release, and forfeiture of certain property
Marlon Sullivan: 66 months (including time already served), 3 years of supervised release, and forfeiture of certain property
Brandon Jackson: 54 months (including time already served), 3 years of supervised release, and forfeiture of certain property.
Assistant U.S. Attorneys William Frentzen, Susan Badger, and S. Waqar Hasib are prosecuting the case with the assistance of Rosario Calderon, Kurk Kosek, Ana Guerra, Marina Ponomarchuk, Victoria Etterer, and Lance Libatique. The prosecution is the result of an investigation by the Federal Bureau of Investigation; Internal Revenue Service – Criminal Investigation; San Francisco Police Department Gang Task Force; Oakland Police Department, Criminal Investigation; New York Police Department; and the Mercer County New Jersey Sheriff's Office.
Oakland Resident Sentenced to 12 Months’ Imprisonment in Tax Fraud ConspiracyRead the Press Release
OAKLAND – Tanya Keith was sentenced today to 12 months’ imprisonment for conspiracy to file false federal tax returns, announced Acting United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. Today’s sentence follows Keith’s September 17, 2015, guilty plea to the conspiracy charge.
On January 15, 2015, Keith, 48, of Oakland, was charged in a thirteen-count indictment along with co-defendants, Cassandra Tompkins, 48, of Oakland, Cordia Spearman, 46, of Vacaville; and Damien Mitchell, 52, of El Sobrante. All four defendants were charged with conspiracy to file false federal tax returns, in violation of 18 U.S.C. § 286. Keith was also charged with wire fraud, in violation of 18 U.S.C. § 1343, and aggravated identity theft, in violation of 18 U.S.C. § 1028A. Tompkins and Mitchell faced additional related charges.
Pursuant to her plea agreement, Keith admitted that between January 15, 2011, and May 15, 2012, she, along with Tompkins, Spearman and Mitchell, obtained the names and social security numbers of other individuals and used the information to prepare false federal income tax returns. Keith acknowledged that defendants filed a total of 219 false federal income tax returns with the IRS. Defendants claimed over $678,000 in tax refunds of which $287,498 was paid by the IRS.
All four defendants entered guilty pleas to the conspiracy change. Tompkins, Spearman, and Mitchell pleaded guilty on August 20, 2015. Tompkins acknowledged maintaining notebooks that listed the names and other personal identifying information for taxpayers, along with false W-2s, which she filed with the IRS. Further, all four defendants admitted to receiving a portion of the improperly obtained tax refunds.
Keith’s sentence was handed down by the Honorable James Donato, U.S. District Judge. Judge Donato also sentenced Keith to pay $19,944 in restitution and to serve 3 years of supervised release. Keith will begin serving her sentence on April 18, 2016.
Judge Donato previously sentenced Tompkins and Spearman for their respective roles in the scheme. Judge Donato sentenced Tompkins to 20 months’ imprisonment and Spearman to 3 years of probation, 6 months of which will include electronic monitoring. Mitchell’s sentencing has not yet been scheduled.
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.
Southern California Man Charged with Bank Fraud, Wire Fraud, and Theft or Embezzlement of Pension Funds in Marin and San Mateo CountiesRead the Press Release
SAN FRANCISCO –A federal grand jury indicted Alan Weissman with bank fraud, wire fraud, theft or embezzlement from an employee pension benefit plan, and making false statements in documents required by the Employee Retirement Income Security Act (ERISA), announced Acting United States Attorney Brian J. Stretch and the Employee Benefits Security Administration of the Department of Labor
Weissman, 70, of Rancho Palos Verdes, Calif., allegedly served as a professional trustee of pension plans. According to the indictment, from September 2010 to November 2011, he used his position as trustee of two plans to funnel money into his own bank accounts and the accounts of a business he controlled. ERISA is the federal statute governing most pension plans. Under ERISA, a trustee of a plan is responsible for safeguarding pension plan assets and ensuring that they are invested prudently and in conformity with the directives of the trust agreement, and is prohibited from self-dealing. Nevertheless, according to the indictment, Weissman made hundreds of thousands of dollars of payments to himself and his business without the authorization or knowledge of the pension funds, the plan sponsors, or participants. The payments also allegedly violated the plans’ trust agreements, Weissman’s fiduciary obligations, and the ERISA statute.
The indictment further alleges that Weissman attempted to hide the fact that he stole the money. In part, Weissman accomplished this by falsely telling representatives of the pension plan that the entity holding the funds had been “hacked” and that, as a result, he had not been able to produce account statements. In addition, the indictment alleges that Weissman (1) altered and forged account statements and other documents to give the appearance that the money he converted was not missing from the accounts, (2) falsely reported to an auditor that some of the stolen funds were actually paid as investment fees, and (3) falsely stated at a deposition that some of the funds were moved from one account to another so as to earn “a higher rate of return.”
Weissman is charged with five counts of bank fraud, in violation of 18 U.S.C. § 1344; six counts of wire fraud, in violation of 18 U.S.C. § 1343; two counts of theft or embezzlement from an employee benefit plan, in violation of 18 U.S.C. § 664; and one count of making false statements and concealment of facts in relation to documents required by ERISA, in violation of 18 U.S.C. § 1027.
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 bank fraud is 30 years’ imprisonment and a fine of $1,000,000 or twice the gross gain or loss resulting from the offense. The maximum statutory penalty for each count of 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 in violation of 18 U.S.C. § 664 and 18 U.S.C. § 1027 is 5 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss resulting from the offense. Additional periods of supervised release and restitution also apply. However, any sentence following conviction 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. The prosecution is the result of an investigation by the San Francisco Regional Office of the Employee Benefits Security Administration of the Department of Labor.
Petaluma Slaughterhouse Owner Sentenced to 12 Months and One Day of Imprisonment for Conspiring to Distribute Adulterated MeatRead the Press Release
SAN FRANCISCO – Jesse “Babe” Amaral, Jr., owner of the now-defunct Petaluma slaughterhouse Rancho Feeding Corporation, was sentenced today to 12 months and one day of imprisonment for leading a conspiracy 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.
Amaral, 78, of Petaluma, was indicted on August 14, 2014, in connection with two separate schemes: the first scheme involved a conspiracy to distribute adulterated, misbranded, and uninspected meat while the second scheme involved defrauding farmers with false invoicing.
With respect to the first scheme, Amaral was indicted along with Rancho employees Eugene Corda, 66, of Petaluma, and Felix Cabrera, 56, of Santa Rosa, 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.
Amaral pleaded guilty to the conspiracy charge on February 18, 2015. In connection with his guilty plea, Amaral admitted that from 2012 through January 10, 2014, he directed Rancho employees to process cattle for human consumption that had been condemned by the USDA veterinarian. Amaral also admitted he sought to circumvent inspection procedures for certain cattle exhibiting symptoms of cancer eye and to process these cancer eye cattle for human consumption without full inspection. Cabrera, Rancho’s “kill floor” supervisor, also pleaded guilty to the conspiracy charge. Corda, Rancho’s yardman, pleaded guilty to one of the underlying distribution counts. 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.
With respect to the second scheme, Amaral was indicted for mail fraud, in violation of 18 U.S.C. § 1341, and conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349. As part of his plea agreement, Amaral admitted that he caused Rancho to submit fraudulent cattle invoices to farmers between at least 2012 and January 2014. Singleton, as part of his plea agreement, also admitted participating in this scheme.
The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge. In addition to the prison term, Judge Breyer sentenced Amaral to two years’ supervised release, one of which will be served in a residential re-entry facility. Judge Breyer concluded that Amaral had reached out of court settlements with nearly all of his fraud victims, and ordered restitution to the remaining two victims. Amaral was ordered to surrender by March 25, 2016, to begin serving his sentence.
The sentencing hearings for Singleton and Corda are set for March 2, 2016, and the sentencing hearing for Cabrera is set for March 23, 2016. The sentencings will be held 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.
Morgan Stanley Agrees to Pay $2.6 Billion Penalty in Connection with Its Sale of Residential Mortgage Backed SecuritiesRead the Press Release
WASHINGTON – The Justice Department today announced that Morgan Stanley will pay a $2.6 billion penalty to resolve claims related to Morgan Stanley’s marketing, sale and issuance of residential mortgage-backed securities (RMBS). This settlement constitutes the largest component of the set of resolutions with Morgan Stanley entered by members of the RMBS Working Group, which have totaled approximately $5 billion. As part of the agreement, Morgan Stanley acknowledged in writing that it failed to disclose critical information to prospective investors about the quality of the mortgage loans underlying its RMBS, and about its due diligence practices. Investors, including federally insured financial institutions, suffered billions of dollars in losses from investing in RMBS issued by Morgan Stanley in 2006 and 2007.
“Today’s settlement holds Morgan Stanley appropriately accountable for misleading investors about the subprime mortgage loans underlying the securities it sold,” said Acting Associate Attorney General Stuart F. Delery. “The Department of Justice will not tolerate those who seek financial gain through deceptive or unfair means, and we will take appropriately aggressive action against financial institutions that knowingly engage in improper investment practices.”
“Those who contributed to the financial crisis of 2008 cannot evade responsibility for their misconduct,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “This resolution demonstrates once again that the Financial Institutions Reform, Recovery and Enforcement Act is a powerful weapon for combatting financial fraud and that the department will not hesitate to use it to hold accountable those who violate the law.”
An RMBS is a type of security comprised of a pool of mortgage loans created by banks and other financial institutions. The expected performance and price of an RMBS is determined by a number of factors, including the characteristics of the borrowers and the value of the properties underlying the RMBS. Morgan Stanley was one of the institutions that issued RMBS during the period leading up to the economic crisis in 2007 and 2008.
As acknowledged by Morgan Stanley in a detailed statement of facts that is a part of this agreement (and is quoted below), the company made representations to prospective investors about the characteristics of the subprime mortgage loans underlying its RMBS – representations with which it did not comply:
- In particular, Morgan Stanley told investors that it did not securitize underwater loans (loans that exceeded the value of the property). However, Morgan Stanley did not disclose to investors that in April 2006 it had expanded its “risk tolerance” in evaluating loans in order to purchase and securitize “everything possible.” As Morgan Stanley’s manager of valuation due diligence told an employee in 2006, “please do not mention the ‘slightly higher risk tolerance’ in these communications. We are running under the radar and do not want to document these types of things.” As a result, Morgan Stanley ignored information – including broker’s price opinions (BPOs), which are estimates of a property’s value from an independent real estate broker – indicating that thousands of securitized loans were underwater, with combined-loan-to-value ratios over 100 percent. From January 2006 through mid-2007, Morgan Stanley acknowledged that “Morgan Stanley securitized nearly 9,000 loans with BPO values resulting in [combined loan to value] ratios over 100 percent.”
- Morgan Stanley also told investors that it did not securitize loans that failed to meet originators’ guidelines unless those loans had compensating factors. Morgan Stanley’s offering documents “represented that ‘[the mortgage loans originated or acquired by [the originator] were done so in accordance with the underwriting guidelines established by [the originator]’ but that ‘on a case-by-case-basis, exceptions to the [underwriting guidelines] are made where compensating factors exist.’” Morgan Stanley has now acknowledged, however, that “Morgan Stanley did not disclose to securitization investors that employees of Morgan Stanley received information that, in certain instances, loans that did not comply with underwriting guidelines and lacked adequate compensating factors . . . were included in the RMBS sold and marketed to investors.” So, in fact, “Morgan Stanley . . . securitized certain loans that neither comported with the originators’ underwriting guidelines nor had adequate compensating factors.”
- Likewise, “Morgan Stanley also prepared presentation materials . . . that it used in discussions with potential investors that described the due diligence process for reviewing pools of loans prior to securitization,” but “certain of Morgan Stanley’s actual due diligence practices did not conform to the description of the process set forth” in those materials.
- For example, Morgan Stanley obtained BPOs for a percentage of loans in a pool. Morgan Stanley stated in these presentation materials that it excluded any loan with a BPO value exhibiting an “unacceptable negative variance from the original appraisal,” when in fact “Morgan Stanley never rejected a loan based solely on the BPO results.”
- Through these undisclosed practices, Morgan Stanley increased the percentage of mortgage loans it purchased for its RMBS, notwithstanding its awareness about “deteriorating appraisal quality” and “sloppy underwriting” by the sellers of these loans. The bank has now acknowledged that “Morgan Stanley was aware of problematic lending practices of the subprime originators from which it purchased mortgage loans.” However, it “did not increase its credit-and-compliance due diligence samples, in part, because it did not want to harm its relationship with its largest subprime originators.” Indeed, Morgan Stanley’s manager of credit-and-compliance due diligence was admonished to “stop fighting and begin recognizing the point that we need monthly volume from our biggest trading partners and that . . . the client [an originator] does not have to sell to Morgan Stanley.”
“In today’s agreement, Morgan Stanley acknowledges it sold billions of dollars in subprime RMBS certificates in 2006 and 2007 while making false promises about the mortgage loans backing those certificates,” said Acting U.S. Attorney Brian J. Stretch of the Northern District of California. “Morgan Stanley touted the quality of the lenders with which it did business and the due diligence process it used to screen out bad loans. All the while, Morgan Stanley knew that in reality, many of the loans backing its securities were toxic. Abuses in the mortgage-backed securities industry such as these helped bring about the most devastating financial crisis in our lifetime. Our office is committed to dedicating the resources necessary to hold those who engage in such reckless actions responsible for their conduct.”
The $2.6 billion civil monetary penalty resolves claims under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). FIRREA authorizes the federal government to impose civil penalties against financial institutions that violate various predicate offenses, including wire and mail fraud. The settlement expressly preserves the government’s ability to bring criminal charges against Morgan Stanley, and likewise does not release any individuals from potential criminal or civil liability. In addition, as part of the settlement, Morgan Stanley promised to cooperate fully with any ongoing investigations related to the conduct covered by the agreement.
In conjunction with today’s announcement of the federal government’s settlement with Morgan Stanley, the states of New York and Illinois – also members of the RMBS Working Group – have announced settlements with Morgan Stanley for $550 million and $22.5 million, respectively, arising from its sale of RMBS. Among other resolutions, Morgan Stanley previously paid $225 million to resolve claims brought by the National Credit Union Administration arising from losses related to corporate credit unions’ purchases of RMBS; $1.25 billion to resolve claims by Federal Housing Finance Agency (FHFA) for Morgan Stanley’s alleged violations of federal and state securities laws and common law fraud in connection with RMBS purchased by Fannie Mae and Freddie Mac; and $86.95 million to resolve federal and state securities laws claims brought by the Federal Deposit Insurance Corporation as receiver on behalf of failed financial institutions. Morgan Stanley also previously entered into a consent decree with the U.S. Securities and Exchange Commission (SEC) to pay $275 million to resolve certain RMBS claims. With today’s announcement, Morgan Stanley will have paid nearly $5 billion to members of the RMBS Working Group in connection with its sale of RMBS.
Today’s settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered billions of dollars arising from misconduct related to the financial crisis. The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis. The RMBS Working Group brings together attorneys, investigators, analysts and staff from multiple state and federal agencies, including the Department of Justice, U.S. Attorneys’ Offices, the FBI, the SEC, the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA Office of Inspector General (OIG), the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s OIG, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network and multiple state Attorneys General offices around the country. The RMBS Working Group is led by Director Joshua Wilkenfeld and five co-chairs: Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Director Andrew Ceresney of the SEC’s Division of Enforcement, U.S. Attorney John Walsh of the District of Colorado and New York Attorney General Eric Schneiderman.
“The securitization of defective mortgages and the billions of dollars that were lost as a result caused such a hardship to our economy, the housing industry and our nation as a whole that we are still feeling the effects years after,” said Deputy Inspector General for Investigations Rene Febles of FHFA-OIG. “Morgan Stanley is responsible for their role, which caused enormous losses to investors. This settlement is one step in recovering from those losses. We are proud to work with the RMBS Working Group and the U.S. Department of Justice on this and all RMBS matters.”
The settlement was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the Northern District of California, with investigative support from FHFA-OIG.
Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: www.stopfraud.gov
Former Lawrence Hall of Science Employee Pleads Guilty to Theft and FraudRead the Press Release
OAKLAND - DeSondra Michell Ward pleaded guilty in federal court to stealing from and defrauding the University of California, Berkeley, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. In the plea agreement filed late yesterday, Ward admitted she stole $389,948.57 while working at U.C. Berkeley from 2008 through 2014.
Ward, 44, formerly from Pinole, Calif., worked at U.C. Berkeley’s Lawrence Hall of Science, first as an administrative assistant with the Full Option Science System (“FOSS”) program and later as a financial analyst with budget and finance responsibilities over FOSS. Ward admitted she used the university’s travel systems to arrange personal air travel for herself, her family, and her friends. She also admitted she purchased tickets that she sold to individuals for her own benefit. In addition, she used her university-issued procurement card for personal transactions and processed vouchers to generate payments to herself, her family, and her friends. In an information filed November 16, 2015, Ward was charged with five counts of theft from programs receiving federal funds, in violation of 18 U.S.C. § 666(a)(1)(A). About one quarter of the Lawrence Hall of Science’s annual budget is comprised of federal funding. Under the plea agreement, Ward pleaded guilty to all five counts. Ward also agreed to pay restitution and forfeiture pursuant to the agreement.
Ward is currently on release on bond.
Ward’s sentencing hearing is scheduled for June 21, 2016, at 1:00 p.m. before the Honorable Jeffrey S. White, U.S. District Court Judge, in Oakland. The maximum statutory penalty for each count in violation of 18 U.S.C. § 666(a)(1)(A) is 10 years’ imprisonment and a fine of $250,000, or twice the gross gain or loss resulting from the offense. In addition, forfeiture, restitution and additional terms of supervised release may be imposed. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Andrew S. Huang is prosecuting the case with the assistance of Vanessa Quant and Stephanie Mitchell. The prosecution is the result of an investigation by the FBI, with significant assistance from the University of California Police Department and U.C. Berkeley’s Audit and Advisory Services.
Pittsburg Resident Pleads Guilty to Stolen Identity Tax FraudRead the Press Release
OAKLAND – Michael Johnson pleaded guilty to conspiracy to file false claims and filing false claims, announced Acting United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.
In a plea agreement filed late yesterday, Johnson admitted that he, or his co-conspirators, used client files stolen from an Antioch, Calif. tax preparation service to file false tax returns. According to the plea agreement, Johnson acknowledged that he devised a scheme to file false federal income tax returns that contained materially false representations including fake income and fraudulently-claimed tax refunds of at least $375,105. In addition, Johnson admitted that he and his co-conspirators requested that the fraudulent tax refunds be loaded onto prepaid debit cards and sent to the addresses listed on the tax returns.
Johnson was indicted on March 26, 2015. He was charged with conspiracy to file false claims, in violation of 18 U.S.C. § 286; and five counts each of filing false claims, in violation of 18 U.S.C. § 287; theft of public money, in violation of 18 U.S.C. § 641; effecting fraudulent transactions with access device, in violation of 18 U.S.C. § 1029(a)(5); wire fraud, in violation of 18 U.S.C. § 1343; and aggravated identity theft, in violation of 18 U.S.C. § 1028A. Under the plea agreement, Johnson pleaded guilty to the conspiracy charge and three counts of filing false claims. Sentencing currently is scheduled for August 22, 2016, before the Honorable Haywood S. Gilliam, U.S. District Judge.
Johnson faces a maximum sentence of ten years in prison and a $250,000 fine for the conspiracy charge. Johnson also faces and a maximum sentence of five years in prison and a $250,000 fine for each of the three counts of filing false claims. Additional terms of supervised release and other fines may apply. 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. Attorneys Thomas Newman and Jose Olivera are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Cupertino Couple Indicted for Embezzeling Donated FundsRead the Press Release
SAN JOSE - A federal grand jury indicted Jonathan Chang and Grace Chang last week with conspiracy to commit wire fraud, wire 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 David J. Johnson.
According to the indictment unsealed late yesterday, Jonathan Chang, 60, of Cupertino, Calif., together with his wife, Grace Chang, 57, engaged in a scheme to defraud a wealthy donor of money intended to support the Home of Christ 4 Christian Church (HOC4), located in Saratoga, Calif. Jonathan Chang, who served as an “elder” responsible for managing the finances of the church, established his own charitable organization with a name similar to the church. He then secretly directed that monthly donations from the donor be wired to his own organization rather than to the HOC4.
Jonathan Chang is also alleged to have solicited funds from the same donor for the stated purpose of acquiring a new HOC4 building. In response to Chang’s requests, the donor provided a $2 million donation and a $3 million loan to acquire the new building. Jonathan Chang and Grace Chang did not disclose the existence of the funds to HOC4. Instead the Changs directed the $5 million to accounts under their control.
In total, between 2004 and January 2016, the defendants are alleged to have obtained approximately $7.4 million in funds from the donor, all of which was intended for HOC4’s use but was instead misappropriated for the couple’s own purposes. The defendants were each charged with one count of conspiracy to commit wire or mail fraud, in violation of 18 U.S.C. § 1349; four counts of wire fraud, in violation of 18 U.S.C. § 1343; one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h); and three counts of money laundering, in violation of 21 U.S.C. § 1956(a).
Both defendants were arrested yesterday morning at their home in Cupertino and made their initial appearance in federal court in San Jose before U.S. Magistrate Judge Nathanael M. Cousins. Both defendants were released on bond, pending further hearings. Bail was set at $200,000 per defendant. The defendants’ next scheduled appearance is at 1:30 p.m. on Thursday, February 11, 2016, for identification of counsel and further bond proceedings before the Magistrate Judge 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 20 years imprisonment and a fine of $250,000 for each violation of 18 U.S.C. §§ 1349 and 1343. The defendants also face a maximum of 20 years imprisonment and fine of $500,000 or twice the value of the laundered funds, whichever is greater, for each violation of 18 U.S.C. §§ 1956(h) and 1956(a)(1)(B). Additional periods of supervised release, fines and restitution may 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. Attorneys Amie D. Rooney and David Countryman are prosecuting the case with the assistance of Laurie Worthen and Carolyn Jusay. The prosecution is the result of an investigation by the FBI.
Craigslist Robbery Crew Member Convicted on Multiple CountsRead the Press Release
OAKLAND – Michael Anthony Martin was convicted by a federal jury today of conspiracy to commit robbery affecting interstate commerce and robbery affecting interstate commerce announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The jury found that Martin robbed victims on four separate occasions and conspired to rob victims selling jewelry on Craigslist.org.
The guilty verdict followed a jury trial before the Honorable Jeffrey S. White, U.S. District Judge. Evidence at trial showed that Martin, 42, of Tracy, was part of a robbery crew that targeted individuals selling high-end jewelry, such as diamonds and Rolex watches, on Craigslist. The robbery crew targeted victims located nationwide and was responsible for numerous robberies and attempted robberies between November 2012 and December 2013.
Crew members frequently posed as music producers or pretended to be in the market for diamond engagement rings when they contacted their intended victims. In each case, a crew member contacted their victims by e-mail or cell phone and negotiated a price to purchase the jewelry item. The conspirators then lured their victims to the Bay Area, sometimes by paying for the victim’s airplane ticket or promising to reimburse the victim for travel. Often, a robbery crew member posed as an airport limousine driver and picked up the victim at the airport using a rented SUV. The victims, believing they were going to meet the buyer at a jewelry store or bank to complete the sale, were instead delivered to a different, predetermined location where two or more additional crew members robbed them. Crew members used guns and physical violence to rob their victims of jewelry items and other personal property. It is estimated the robbery crew stole more than $500,000 worth of jewelry from victims traveling from more than six states, including Arizona, California, Colorado, Oregon, Washington, and Wisconsin.
Martin was indicted by a grand jury on April 10, 2014. He was charged with conspiracy to commit robbery, in violation of 18 U.S.C. § 1951(a), and four counts of interference with interstate commerce by robbery, in violation of 18 U.S.C. § 18 U.S.C. 1952(a) and 2.
Martin is currently in federal custody. His sentencing hearing is scheduled for April 19, 2016, before Judge White in Oakland. The maximum statutory penalty for each of the five counts for which Martin was found guilty is 20 years’ imprisonment and a fine of $250,000. Additional fines, restitution and periods of supervised release also may be imposed. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Brigid S. Martin and Claudia A. Quiroz are prosecuting the case with the assistance of Melissa Dorton, Katie Turner, and Patty Lau. The prosecution is the result of an investigation by the Federal Bureau of Investigation (San Francisco Division, assisted by Sacramento, St. Louis, San Antonio, and Mobile, Alabama Divisions); U.S. Bureau of Prisons; Fremont Police Department; California Department of Corrections; El Cerrito Police Department; Richmond Police Department; San Francisco Police Department; Alameda County Sheriff’s Office; Oakland Police Department; Berkeley Police Department; Danville Police Department; Concord Police Department; Livermore Police Department; Manteca Police Department; Tracy Police Department; Contra Costa Sheriff’s Office; Hayward Police Department; Burlingame Police Department; San Leandro Police Department; Berkeley, Missouri Police Department; Olivette, Missouri Police Department; and the Northern California Regional Intelligence Center (NICRIC).
Owner of San Franciso Business Pleads Guilty to Filing False Tax ReturnRead the Press Release
SAN FRANCISCO – Sean Love was charged and pleaded guilty to filing a false federal income tax return, announced Acting United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Michael T. Batdorf.
In pleading guilty, Love, 46, of San Francisco, admitted he owned and operated Love Painting, a San Francisco-based sole proprietorship that provided painting services in and around the Bay Area. For the 2009 tax year, Love informed his tax return preparer that Love Painting had received $391,810 in gross business receipts during 2009. Love knew the return preparer would use that figure to report the gross business receipts on Schedule C of his 2009 federal income tax return and that his gross receipts were underreported by an additional $357,135. As a result of underreporting the gross business receipts that should have been reported on Schedule C of his 2009 federal income tax return, additional tax was due and owing to the Internal Revenue Service for his 2009 federal income tax liability in the amount of $119,839. On January 7, 2016, Love was charged by information with filing a false return in violation of 26 U.S.C. §7206(1).
Defendant’s sentencing hearing is scheduled to take place in San Francisco on June 14, 2016, before the Honorable Richard Seeborg, United States District Judge. The maximum penalty for filing a false tax return in violation of 26 U.S.C. § 7206(1) is 3 years in prison and a fine of $250,000. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Cynthia Stier is prosecuting this case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Two San Jose Men Sentenced to Prison for Posting Information About A Minor Online to Solicit Sex CustomersRead the Press Release
SAN JOSE- Two San Jose residents were sentenced to approximately five years in prison yesterday for posting information about a minor under the age of 16 on the Internet in order to solicit prostitution customers, announced Acting United States Attorney Brian Stretch and FBI Special Agent in Charge David Johnson. Justin Everett Crutchfield was sentenced to 57 months’ imprisonment and Demontae Terrell Toliver was sentenced to 60 months’ imprisonment for their respective roles in posting information about the minor online for the purpose of making her available for prostitution. A sentence of 60 months’ imprisonment is the maximum sentence allowed by the statute of conviction.
Crutchfield, 28, and Toliver, 24, both of San Jose, pleaded guilty on July 20, 2015, to a superseding information charging them with use of the internet to post information about a minor for sexual activity. According to the defendants’ plea agreements, Crutchfield and Toliver admitted that on June 18, 2013, they posted a telephone number and sexually suggestive photographs of the minor on the now-shuttered Internet site myRedbook.com. The posting was made with the intent to solicit others to pay to engage in sexual activity with the minor. At the time of his arrest, Crutchfield was employed as a Peer Health Counselor with the Santa Clara County Department of Mental Health.
Crutchfield and Toliver were indicted by a federal grand jury on January 29, 2014. They were charged with two counts of sex trafficking of a minor, in violation of 18 U.S.C. §1591, and two counts of production of child pornography, in violation of 18 U.S.C. § 2251(a). Pursuant to the plea agreement, both Crutchfield and Toliver pleaded guilty to a superseding information charging a single count of use of an interstate wire to transmit information about a minor for criminal sexual activity, in violation of 18 U.S.C. § 2425.
The sentence was handed down by the Honorable Ronald M. Whyte, U.S. District Judge. Judge Whyte also sentenced each defendant to a 7-year period of supervised release and ordered each to pay $2000 in restitution to their minor victims. Both men also will be required to register as sex offenders under federal and state law. Toliver, who has been in custody since his arrest in February 2014, will begin serving the sentence immediately. Crutchfield, who had been released to home confinement on $150,000 bond, was ordered to self-surrender on or before March 17, 2016.
Assistant U.S. Attorney Amie Rooney prosecuted the case with the assistance of Laurie Worthen. The prosecution is the result of a joint investigation by the San Jose Police Department Human Trafficking Task Force and the FBI. The arrest and prosecution of these individuals was part of the FBI and San Jose Police Department’s increased efforts and cooperation in rooting out instances of human trafficking in Santa Clara County and the greater Bay Area.
Anyone who suspects instances of human trafficking are encouraged to call the FBI or the Human Trafficking Hotline at 1-888-373-7888. Anonymous calls are welcome.
In addition, 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 Marin County Mortgage Broker Sentenced to 41 Months in PrisonRead the Press Release
SAN FRANCISCO– Diane Cobb was sentenced to 41 months in prison yesterday for her role in a Ponzi scheme, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The sentencing follows a guilty plea in which Cobb admitted to running a fraudulent scheme with co-defendant Paul Sloane Davis through which they profited by more than a million dollars.
Cobb, 58, of Ada, Ohio, was charged by indictment on October 31, 2013, for her part in the scheme. According to the indictment, Davis and Cobb operated a financial services company in Marin County known as DM Financial. Davis and Cobb, through DM Financial, allegely offered investors the opportunity to fund purported “bridge loans” to borrowers who, according to Davis and Cobb, needed short-term financing for residential real estate transactions. Cobb was charged with providing investors with, among other things, the identity of the purported borrower, a promissory note reflecting the amount and terms of the loan, and a deed of trust securing the loan to the borrower’s real property. Based upon these documents and other representations made by Davis and Cobb, the investors believed the defendants were directing the funds into secured loans with borrowers.
As part of her plea agreement, Cobb admitted that she falsely represented to investors that the bridge loans would be secured by, in part, residential property that the borrowers were purchasing with the bridge loans. Cobb also acknowledged falsely telling investors that they would receive regular interest payments from the borrowers and a return of principal after the loan period ended. Cobb admitted she knew all of these representations were false. Further, Cobb admitted that to convince the borrowers that the loans were legitimate, she prepared fake promissory notes and deeds of trust for the purported bridge loan agreements that she knew did not exist. Purported borrowers received none of the investors’ money and did not even know that their identities were being used to solicit investments. Instead, Davis and Cobb diverted substantially all the money—approximately $2.4 million—for their own personal use or to make interest payments to prior investors to keep them from discovering the true nature of the scheme.
On March 19, 2015, Cobb pleaded guilty to one count of conspiracy, in violation of 18 U.S.C. § 1349; four counts of mail fraud, in violation of 18 U.S.C. § 1341; and nine counts of wire fraud, in violation of 18 U.S.C. § 1343.
The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge. Judge Breyer also sentenced the defendant to a three year period of supervised release, and ordered restitution of approximately $1.7 million to the victims of Davis’s offense. Davis pleaded guilty to the same charges and was sentenced by Judge Breyer to 36 months of prison.
Assistant U.S. Attorney Benjamin Kingsley is prosecuting the case with the assistance of Jessica Meegan. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
San Francisco Resident Pleads Guilty to Bank Fraud and Aggravated Identity TheftRead the Press Release
SAN FRANCISCO – Charlyne Basada, also known as Charlyne Melendres, pleaded guilty today to bank fraud and identity theft announced Acting United States Attorney Brian J. Stretch and Jean Ackerman, Regional Director of the U.S. Department of Labor, Employee Benefits Security Administration. In connection with the plea agreement, Basada acknowledged her role in a scheme to defraud four employers collectively of more than a million dollars.
According to the plea agreement, Basada, 38, of San Francisco, acknowledged she fraudulently made payments to herself from her former employers’ checking accounts. Basada worked as a bookkeeper or office manager for four companies from 2011 through 2015. In her position at each company, she obtained access to the payment systems of each former employer. 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. 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 today’s plea agreement, Basada pleaded guilty to one count of bank fraud and one count of aggravated identity theft.
The maximum statutory penalty for bank fraud is 30 years’ imprisonment and $1,000,000 or twice the gross gain or loss. The maximum statutory penalty for aggravated identity theft is a mandatory two years of imprisonment in addition to any sentence imposed. 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. As part of her plea agreement, Basada agreed that the Court may order her to pay restitution in the amount $1,063,975.78.
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.
Former Wells Fargo Bank Manager Sentenced to 41 Months’ Imprisonment for Fraud and TheftRead the Press Release
SAN JOSE – Sharon Lynn Shaw was sentenced yesterday to 41 months in prison and ordered to pay over $992,000 in restitution for her involvement in a bank fraud and theft by bank officer scheme, announced Acting United States Attorney Brian Stretch and U.S. Secret Service Special Agent in Charge David Thomas.
Shaw, 68, of San Jose, Calif., pleaded guilty on February 17, 2015. In pleading guilty, Shaw admitted that from 2001 through 2012 she engaged in a scheme to defraud Wells Fargo Bank while serving as a manager at that bank. Shaw admitted that she used the names, Social Security numbers, and other personal information belonging to her parents, without their knowledge or authorization, to create false and fraudulent business loan applications that she submitted to her employer Wells Fargo Bank. Shaw also used a checking account in the name of her parents to receive the proceeds of the loans. Shaw admitted that she used her position as a bank manager to submit fraudulent applications to Wells Fargo Bank to approve the loans and to conceal their fraudulent nature. Furthermore, Shaw admitted that she arranged credit advances based on the fraudulent loans and then converted the proceeds for her own personal use (including paying off the mortgage on her house) without Wells Fargo’s knowledge or authorization. Shaw also admitted she embezzled from Wells Fargo bank a $12,800 line of credit advance in January 2010 as well as a $20,000 line of credit advance in February 2010.
Shaw was charged in an indictment filed in San Jose federal district court on May 21, 2014. The indictment alleged four counts of bank fraud, in violation of Title 18, United States Code, Section 1344, and two counts of theft by a bank officer, in violation of Title 18, United States Code, Section 656. Shaw pleaded guilty to all six counts in the indictment.
The sentence was handed down by U.S. District Judge Beth Labson Freeman. In imposing sentence, Judge Freeman stated that Shaw engaged in “a personal Ponzi scheme” and had also abused a private position of trust to facilitate her offense. The defendant was also sentenced to a five year period of supervised release with conditions that limit her ability to hold fiduciary roles, and ordered to pay over $992,000 in restitution. At the sentencing hearing, Judge Freeman ordered Shaw to self-surrender by March 14, 2016, at which time she will begin serving her prison sentence.
Assistant U.S. Attorney Joseph Fazioli is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the U.S. Secret Service.
Former Concord Resident Pleads Guilty to Religious Hate CrimeRead the Press Release
OAKLAND - Hugo John Scherzberg pleaded guilty in federal court in Oakland to committing a religious hate crime 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.
In pleading guilty, Scherzberg, 48, formerly of Concord, admitted 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 agreed to make restitution for these losses.
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). Under Monday’s plea agreement, Scherzberg pleaded guilty to the first charge.
Scherzberg currently is being held in the custody of the United States Marshals.
Scherzberg’s sentencing hearing is scheduled for March 28, 2016, at 2:00 p.m. before the Honorable Haywood S. Gilliam, Jr., U.S. District Judge, in Oakland. The maximum statutory penalties for damaging religious property by the use of fire, in violation of 18 U.S.C. §§ 247(a)(1) and (d)(3), is 20 years imprisonment and a fine of $250,000 (or twice the gross gain or loss caused by the offense, whichever is greater), plus restitution. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Andrew S. Huang is prosecuting the case with the assistance of Vanessa Quant, Trina Khadoo, and Stephanie Mitchell. The Civil Rights Division, U.S. Department of Justice is also assisting 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.
Alameda Real Estate Developer and Its President Plead Guilty to Securities Fraud and Wildlife ViolationsRead the Press Release
OAKLAND- An Alameda County development company, Wildlife Management, LLC, and its President, James Tong, pleaded guilty to crimes related to the illegal submission to the City of Dublin of a forged payment receipt, announced Acting U.S. Attorney Brian J. Stretch and U.S. Fish and Wildlife Service Special Agent in Charge Jill Birchell. The two plea agreements relate to charges that the defendants, after submitting the forged document, illegally caused a residential development site to be graded while sediment flowed off-site into a pond which was habitat for the California Tiger Salamander, a species protected under the Endangered Species Act. If accepted by the court, the plea agreements will result in a global resolution of state and federal criminal charges pending against the defendants that will result in a $1 million payment for restitution and a conservation easement on 107 acres of land in Contra Costa County.
Wildlife Management, LLC, based in Dublin, California, 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 or its habitats when a project impacts a protected species or its habitat. According to the plea agreement, during the development of the Dublin Ranch North real estate project in Dublin, Calif., 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). In connection with the plea, Wildlife Management would pay $175,000 in restitution to resolve the federal case. The restitution would be paid to the National Fish and 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. In connection with the plea, Tong admitted 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 on the adjoining property which provided habitat for the California Tiger Salamander. In the federal case, Tong was charged with one count of violating the Endangered Species Act, in violation of 16 U.S.C. §§ 1538(a)(1)(G) and 1540(b)(1). 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 would be split equally between the Pollution Account and the Preservation Fund. If the plea agreement is accepted by the court, Tong also will provide a conservation easement on a 107-acre parcel of land in Contra Costa known as the Brown Ranch that provides habitat for endangered species. The value of the easement is estimated to be $3 million and it would prohibit any future owners from developing the property. In addition, Tong put $330,000 into an account to help manage the Brown Ranch.
The guilty pleas were received by United States District Judge Jon S. Tigar on January 8, 2016. Sentencing for Tong and Wildlife Management is scheduled to take place before Judge Tigar in Oakland on March 11, 2016, at 9:30 a.m.
Assistant U.S. Attorney Maureen Bessette is prosecuting the federal case with the assistance of Vanessa Quant. Deputy Attorney General Jason Malinsky prosecuted the state case. The prosecution was the result of an investigation by the California Department of Fish and Wildlife and the U.S. Fish & Wildlife Service.
Kwok Cheung Chow (Aka “Raymond Chow,” Aka “Ha Jai,” Aka “Shrimp Boy”) Convicted of Murder and Various Racketeering CrimesRead the Press Release
SAN FRANCISCO - A federal jury in San Francisco convicted Kwok Cheung Chow, aka Raymond Chow, aka “Ha Jai,” aka “Shrimp Boy,” today of racketeering, murder, money laundering, and conspiracy charges, announced Acting United States Attorney Brian J. Stretch, FBI Special Agent in Charge David J. Johnson and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael Batdorf. In completing its verdict form, the jury found Chow guilty of every one of the 162 charges leveled against him.
Chow, 55, of San Francisco, stood trial for participating in a racketeering organization. Chow originally was charged with various racketeering related crimes in a criminal complaint filed March 24, 2015. The complaint charged that the purposes of the organization included the illegal trafficking of controlled substances, extortion, and participation in the collection of illegal debts. On October 15, 2015, the charges were formally amended in a Third Superseding Indictment to include murder. Chow was charged with and today convicted of arranging the murder of Allen Leung, conspiring with others to murder Jim Tat Kong.
“I want to personally thank all the hard-working men and women whose efforts resulted in bringing Mr. Chow to justice,” said Acting U.S. Attorney Brian J. Stretch. “Those dedicated public servants include the prosecutors in this office and the staff that ably assisted them; the employees of our federal partners at the FBI, IRS and the U.S Marshal Service; the employees of our law enforcement partners from the police departments of San Francisco, Oakland, and New York; and the Mercer County New Jersey Sheriff's Office.”
“This conviction represents a just and final end to Mr. Chow's long running and deadly criminal career,” said San Francisco FBI Special Agent in Charge David J. Johnson. “The FBI is dedicated to investigating and prosecuting violent criminal enterprises operating in the Bay Area and will continue to work closely with our state and local partners to make our communities and residents safe.”
The jury’s verdict finds Chow guilty of a register of activities in connection with the racketeering organization and additional conspiracies. In all, Chow was convicted of 162 counts including 125 counts of money laundering, aiding and abetting the laundering of proceeds of narcotics sales, conspiring to deal in illegal sales of goods (including 50 cases of Hennessey XO and 27 cases of Johnnie Walker Blue Label Scotch Whiskey) and engaging in the illegal sale of cigarettes (over 10,000).
The jury trial was held before the Honorable Charles R. Breyer, United States District Judge.
Chow remains in custody where he has been since his arrest on March 26, 2014. His sentencing currently is scheduled to take place on March 23, 2016, before Judge Breyer. Chow is subject to a mandatory life sentence for his conviction of murder with special circumstances in connection with racketeering activity. Chow also faces a maximum sentence of life in prison and a $250,000 fine as a result of his convicted of the racketeering charge; a maximum ten year sentence and $250,000 fine for his conviction of conspiring to commit murder in aid of racketeering; a maximum 20 year sentence and $500,000 fine (or twice the value of the property laundered) for each violation of money laundering; and a maximum charge of five years in prison and $250,000 for each charge of conspiracy. 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 William Frentzen, Susan Badger, and S. Waqar Hasib are prosecuting the case with the assistance of Rosario Calderon, Kurk Kosek, Ana Guerra, Marina Ponomarchuk, Victoria Etterer, and Lance Libatique. The prosecution is the result of an investigation by Federal Bureau of Investigation; the U.S. Marshal Service, San Francisco Police Department Gang Task Force; Oakland Police Department; Internal Revenue Service, Criminal Investigation; New York Police Department; and the Mercer County New Jersey Sheriff's Office.
Father and Son Charged with Drug Related Murder on the Hoopa Indian ReservationRead the Press Release
SAN FRANCISCO – Rodney Vincent Ortiz and Vincent Rudy Ortiz were arraigned in federal court today for their alleged involvement in the March 21, 2015, drug related shooting and murder on the Hoopa Indian Reservation in Humboldt County, California, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation, Special Agent in Charge David J. Johnson.
Rodney Ortiz, 53, and Vincent Ortiz, 26, of Willow Creek, Calif., were indicted by a federal grand jury on December 17, 2015. In the indictment, the defendants are charged with conspiracy to distribute and possess with intent to distribute marijuana, use of a firearm during and in relation to a drug trafficking crime, use of a firearm during a drug trafficking crime causing murder, obstruction of justice, and use of a firearm during and in relation to a crime of violence.
Rodney and Vincent Ortiz made their initial appearances before the Honorable Laurel Beeler, United States Magistrate Court Judge today. The defendants are being held pending a bail hearing currently scheduled for January 14, 2016, before Chief United States Magistrate Judge Joseph C. Spero. A status conference is scheduled for February 2, 2016, before U.S. District Judge Richard Seeborg.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The maximum statutory penalty for each of the charged offenses is:
- Drug conspiracy, in violation of Title 21, United States Code, Section 846 and 841(a)(1) and (b)(1)(D): five years imprisonment, two years supervised release, and a fine of $250,000;
- Use of a Firearm During and in Relation to a Drug Trafficking Crime, in violation of Title 18, United States Code, Section 924(c): life imprisonment, mandatory minimum term of 10 years imprisonment, and carries a 25 year mandatory minimum consecutive term of prison for each second or successive 924(c) conviction, five years supervised release, and a $250,000 fine;
- Use of a Firearm During a Drug Trafficking Crime Causing Murder, in violation of Title 18, United States Code Section 924(j): death or life imprisonment, and a $250,000 fine;
- Conspiracy to Obstruct Justice and Obstruction of Justice, in violation of Title 18, United States Code, Section 1512(1)(1)(C) and (k): 30 years imprisonment, five years supervised release, and a $250,000 fine;
- Use of a Firearm During and in Relation to a Crime of Violence, in violation of Title 18, United States Code, Section 924(c): life imprisonment, mandatory minimum term of 10 years imprisonment, and carries a 25 year mandatory minimum consecutive term of prison for each second or successive 924(c) conviction, up to five years supervised release, 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 Kimberly Hopkins is prosecuting the case with the assistance of Lance Libatique. The prosecution is the result of an investigation by the Humboldt County Sherriff’s Office, Humboldt County District Attorney’s Office, Eureka Police Department, and the Federal Bureau of Investigation.
United States Files Complaint Against Volkswagen, Audi and Porsche for Alleged Clean Air Act ViolationsRead the Press Release
WASHINGTON – The Department of Justice, on behalf of the Environmental Protection Agency (EPA), today filed a civil complaint in federal court in Detroit, Michigan, against Volkswagen AG, Audi AG, Volkswagen Group of America Inc., Volkswagen Group of America Chattanooga Operations LLC, Porsche AG and Porsche Cars North America Inc. (collectively referred to as Volkswagen). The complaint alleges that nearly 600,000 diesel engine vehicles had illegal defeat devices installed that impair their emission control systems and cause emissions to exceed EPA’s standards, resulting in harmful air pollution. The complaint further alleges that Volkswagen violated the Clean Air Act by selling, introducing into commerce, or importing into the United States motor vehicles that are designed differently from what Volkswagen had stated in applications for certification to EPA and the California Air Resources Board (CARB).
“Car manufacturers that fail to properly certify their cars and that defeat emission control systems breach the public trust, endanger public health and disadvantage competitors,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “The United States will pursue all appropriate remedies against Volkswagen to redress the violations of our nation’s clean air laws alleged in the complaint.”
“With today’s filing, we take an important step to protect public health by seeking to hold Volkswagen accountable for any unlawful air pollution, setting us on a path to resolution,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “So far, recall discussions with the company have not produced an acceptable way forward. These discussions will continue in parallel with the federal court action.”
“Today’s complaint is the first stage in bringing Volkswagen to justice for failing to disclose the defeat device while seeking certification for its diesel vehicles from EPA’s Office of Transportation and Air Quality in Ann Arbor, Michigan,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan. “The alleged misrepresentations allowed almost 600,000 diesel engines to emit excessive air pollution across the country, harming our health and cheating consumers.”
Consistent with EPA’s Notices of Violation, issued on Sept. 18, 2015, for 2.0 liter engines and Nov. 2, 2015 for certain 3.0 liter engines, the complaint alleges that the defeat devices cause emissions to exceed EPA’s standards during normal driving conditions. The Clean Air Act requires vehicle manufacturers to certify to EPA that their products will meet applicable federal emission standards to control air pollution. Motor vehicles equipped with illegal defeat devices cannot be certified.
The complaint alleges that Volkswagen equipped certain 2.0 liter vehicles with software that detects when the car is being tested for compliance with EPA emissions standards and turns on full emissions controls only during that testing process. During normal driving situations the effectiveness of the emissions control devices is greatly reduced. This results in cars that meet emissions standards in the laboratory and at the test site, but during normal on-road driving emit oxides of nitrogen (NOx) at levels up to 40 times the EPA compliance level. In total, the complaint covers approximately 499,000 2.0 liter diesel vehicles sold in the United States since the 2009 model year.
The complaint further alleges that Volkswagen also equipped certain 3.0 liter vehicles with software that senses when the vehicle is undergoing federal emissions testing. When the vehicle senses the test procedure, it operates in a “temperature conditioning” mode and meets emissions standards. At all other times, including during normal vehicle operation, the vehicles operate in a “normal mode” that permits NOx emissions of up to nine times the federal standard. In total, the complaint covers approximately 85,000 3.0 liter diesel vehicles sold in the United States since the 2009 model year.
NOx pollution contributes to harmful ground-level ozone and fine particulate matter. These pollutants are linked with asthma and other serious respiratory illnesses. Exposure to ozone and particulate matter is also associated with premature death due to respiratory-related or cardiovascular-related effects. Children, the elderly and people with pre-existing respiratory disease are particularly at risk of health effects from exposure to these pollutants. Recent studies indicate that the direct health effects of NOx are worse than previously understood, including respiratory problems, damage to lung tissue and premature death.
Today’s filing of a civil complaint under Sections 204 and 205 of the Clean Air Act seeks injunctive relief and the assessment of civil penalties. A civil complaint does not preclude the government from seeking other legal remedies. The United States will seek to transfer its case and fully participate in the pretrial proceedings now initiated in the related multi-district litigation in the Northern District of California. The United States’ investigation is ongoing, in close coordination with CARB. EPA and CARB have been in active discussion with Volkswagen about potential remedies and recalls to address the noncompliance, and those discussions are ongoing.
Affected 2.0 liter diesel models and model years include:
- Jetta (2009-2015)
- Jetta Sportwagen (2009-2014)
- Beetle (2013-2015)
- Beetle Convertible (2013-2015)
- Audi A3 (2010-2015)
- Golf (2010-2015)
- Golf Sportwagen (2015)
- Passat (2012-2015)
Affected 3.0 liter diesel models and model years include:
- Volkswagen Touareg (2009-2016)
- Porsche Cayenne (2013-2016)
- Audi A6 Quattro (2014-2016)
- Audi A7 Quattro (2014-2016)
- Audi A8 (2014 – 2016)
- Audi A8L (2014-2016)
- Audi Q5 (2014-2016)
- Audi Q7 (2009-2015)
East Bay Real Estate Agent Charged with Multimillion Dollar Property Scheme Related to Fraudulent LawsuitsRead the Press Release
SAN FRANCISCO – An indictment returned by a federal grand jury in San Francisco was unsealed today, charging Robert Jacobsen with wire fraud and with engaging in financial transactions involving criminally derived proceeds, announced Acting United States Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge David J. Johnson, Acting Special Agent in Charge Andrew Toth of the Internal Revenue Service-Criminal Investigation, and the Special Inspector General for the Troubled Asset Relief Program, Christy Goldsmith Romero.
According to the indictment, Jacobsen, 67, formerly of Lafayette, Calif., is alleged to have devised a scheme to defraud homeowners and mortgage holders. To accomplish this scheme, Jacobsen created a company called “American Brokers’ Conduit Corporation.” This company was not related to a mortgage originator known as “American Brokers’ Conduit,” which had originated mortgages in the Bay Area and elsewhere. Jacobsen, through intermediaries, gained control of homes with mortgage liens that secured loans originated by the real “American Brokers’ Conduit,” and then, again through intermediaries, sued the phony “American Brokers’ Conduit Corporation” in court, claiming that the legitimate mortgage liens were invalid. As he controlled both the plaintiff and the defendant in these lawsuits, he instructed the attorneys for both sides to enter into stipulated judgments, signed by the courts, resolving the lawsuits by purporting to declare the mortgage liens invalid. In so doing, he omitted to tell the courts that neither he nor any other person involved in the lawsuits was a legitimate representative of either the real “American Brokers’ Conduit” or the then-current owners of the liens. Jacobsen filed those agreements with the relevant county recorder’s offices, to give the appearance to anyone conducting a title search that the liens had been declared invalid by a court, and then sold the homes to unsuspecting buyers without paying off the original loans on the homes. Jacobsen kept the vast majority of the proceeds of these sales to himself, laundering the money through multiple bank accounts in the United States and in Belize, and buying property and a yacht with the money.
Jacobsen successfully completed his scheme by selling two homes, one in Danville, Calif., and the other in San Francisco, for a total of over $1.6 million. He attempted the scheme on another home, in Monterey, Calif., which was last sold approximately 15 years ago for $2.5 million.
Defendant was indicted on November 5, 2015, and surrendered to federal agents today at the federal building at 450 Golden Gate Avenue in San Francisco. He made his initial appearance before the Honorable Nador J. Vadas, United States Magistrate Judge, and was released on a $200,000 bond. Defendant’s next scheduled appearance is at 9:30 a.m. on December 28, 2015, before Judge Vadas, for a bail review hearing, and then before the Honorable Richard Seeborg, United States District Judge, at 2:30 p.m. on January 12, 2016, for his initial appearance before the district court.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of 20 years of imprisonment, and a fine of $250,000 or twice the gross gain or loss, plus restitution, for each count of wire fraud in violation of 18 U.S.C. § 1343. If convicted, the defendant faces a maximum sentence of 10 years of imprisonment, and a fine of $250,000 or twice value of the property involved in the financial transaction, for each count of engaging in monetary transactions involving the criminally derived proceeds, in violation of 18 U.S.C. § 1957. 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.
Benjamin Kingsley is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Lillian ArauzHaase and Jessica Meegan. The prosecution is the result of a two-year investigation by the Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigations, and the Office of the Special Inspector General for the Troubled Asset Relief Program.
East Bay CEO and Corporation Plead Guilty to $5.4 Million Wire Fraud ConspiracyRead the Press Release
OAKLAND – David Tung and Concord Farms, Inc. pleaded guilty in federal court in Oakland today to conspiracy to commit wire fraud and wire fraud, announced Acting United States Attorney Brian J. Stretch and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan Spradlin.
In pleading guilty, Tung, 73, formerly of Hillsborough, admitted that while serving as Concord Farms’ Chief Executive Officer, he conspired to carry out a scheme to defraud the United States out of approximately $5.4 million of duties owed on imported items, namely produce items such as gourmet mushrooms. On its website, Concord Farms, based in Union City, once claimed to be one of the largest importers and growers of gourmet mushrooms in the United States, with multiple business locations operating in California and New York.
Duties are taxes assessed on the value of imported items. The duties accrue when the items arrive at a United States port of entry.
Tung and Concord Farms carried out the scheme by creating fraudulent invoices that undervalued Concord Farms’ imports and then caused those fraudulent invoices to be transmitted through unknowing customs brokers to the U.S. Customs and Border Protection (CBP), who relied on the invoices in assessing the amount of import duties owed by the defendants. In order to carry out part of the scheme, Tung conspired with a Concord Farms employee to use computer file templates and photocopy machines to create some of the fraudulent undervalued invoices that were transmitted to CBP. Through the scheme, Tung and Concord Farms were able to avoid the full payment of duties actually owed on the imported items since approximately 2001.
Tung and Concord Farms were indicted by a federal Grand Jury on January 29, 2015. They were charged with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and with ten counts of wire fraud, in violation of 18 U.S.C. § 1342. Under the plea agreement, Tung and Concord Farms pleaded guilty to conspiracy to commit wire fraud and to one substantive count of wire fraud.
Tung is currently released on a bond in the amount of $250,000.
The defendants’ sentencing hearing is scheduled for May 6, 2016, at 9:30 a.m. before the Honorable Jon S. Tigar, U.S. District Judge, in Oakland. Tung faces a maximum statutory penalty of 20 years in prison, and a fine of $250,000, plus restitution for each alleged violation of 18 U.S.C. § 1349 (conspiracy to commit wire fraud) and 18 U.S.C. § 1343 (wire fraud). Concord Farms faces a fine of $500,000 and five years of probation for each alleged violation. 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 Wade M. Rhyne is prosecuting the case with the assistance of Katie Turner and Noble Hughes. The prosecution is the result of an investigation by the Department of Homeland Security, Homeland Security Investigations.
San Jose Couple Pleads Guilty to Wire Fraud and Aggravated Identity TheftRead the Press Release
SAN JOSE—Yujen Chen and Maria Chen, husband and wife, pleaded guilty yesterday in federal court to conspiracy to commit wire fraud and aggravated identity theft arising out of their ownership of 888 Auto Corporation, announced Acting United States Attorney Brian Stretch; Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Andrew Toth; and FBI Special Agent in Charge David J. Johnson; and U.S. Customs and Border Protection Director of Field Operations Brian J. Humphrey. In connection with their guilty pleas, defendants acknowledged their crimes involved sophisticated means, ten or more victims, and that the loss amount was in excess of $3.4 million.
According to their plea agreements, Yujen Chen, 60, and Maria Chen, 58, both of Cupertino, used their automotive business to fraudulently lease luxury vehicles, including vehicles from Porsche, Mercedes-Benz, Audi, BMW, and Toyota, and then to export those vehicles abroad. As part of the scheme, the Chens recruited friends and associates to serve as straw lessees and sometimes paid these friends $500 to lease cars on the Chens’ behalf. Subsequently, the Chens took custody of the cars and promised the straw lessees they would make the car payments. Instead, the Chens exported the cars and never paid off the lease obligations. The Chens also used without permission the identities of others to lease cars.
In addition, as part of the plea agreements, the Chens acknowledged they also acted as vehicle brokers and received money from people to purchase vehicles on their behalf. However, instead of paying the dealers the money received from the purchasers, the Chens allegedly used the identities of these purchasers, without authorization, to lease or finance the vehicles and kept the money for themselves.
The defendants were originally charged in a 24-count indictment filed November 20, 2013. They are currently out of custody on bond. They pleaded guilty to conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1343, and aggravated identity theft, in violation of 18 U.S.C. § 1028A. As part of the plea agreement, the government agreed to dismiss the remaining open charges at the time of sentencing.
U.S. District Judge Edward J. Davila set this matter for sentencing on April 25, 2016, at 1:30 p.m. The maximum statutory penalty for conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, is 20 years' imprisonment and a fine of $250,000 or twice the gross gain or loss from the offense, plus restitution. The maximum penalty for aggravated identity theft, in violation of 18 U.S.C. § 1028A, is 24 months’ imprisonment consecutive to any other sentence of imprisonment 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 Joseph Fazioli is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigative Division; the Federal Bureau of Investigation; the United States Customs and Border Protection; the California Department of Motor Vehicles; and the California Highway Patrol.
Oakland Resident Sentenced to 20 Months’ Imprisonment in Tax Fraud ConspiracyRead the Press Release
OAKLAND – Cassandra Tompkins was sentenced to 20 months’ imprisonment on a charge of conspiracy to file false federal tax returns, announced Acting United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Thomas McMahon. Today’s sentence follows Tompkins’ guilty plea to one count of conspiracy to file false federal tax returns.
According to the plea agreement, on January 15, 2015, Tompkins, 48, of Oakland, was charged in a thirteen-count indictment along with co-defendants, Cordia Spearman, 46, of Vacaville; Damien Mitchell, 52, of El Sobrante; and Tanya Keith, 48, of Oakland, with conspiracy to file false federal tax returns, in violation of 18 U.S.C. § 286. Tompkins was also charged with theft of government property, in violation of 18 U.S.C. § 641; filing false claims, in violation of 18 U.S.C. § 287; and aggravated identity theft, in violation of 18 U.S.C. § 1028A. Mitchell was also charged with theft of government property and aggravated identity theft. Keith was also charged with wire fraud, in violation of 18 U.S.C. § 1343, and aggravated identity theft.
On August 20, 2015, Tompkins, Spearman, and Mitchell pleaded guilty to conspiracy to file false claims. On September 17, 2015, Keith pleaded guilty to conspiracy to file false claims. Pursuant to the terms of her plea agreement, Tompkins admitted that between January 15, 2011, and May 15, 2012, she, along with Spearman, Mitchell, and Keith, obtained and used personal identifying information to prepare false federal income tax returns. Specifically, defendants used names and social security numbers of individuals to prepare and file 219 false federal income tax returns with the IRS claiming $678,426 in tax refunds, of which $287,498 was paid by the IRS. Tompkins maintained notebooks that listed the names and other personal identifying information for taxpayers, along with false W-2s, which she filed with the IRS. Tompkins, Spearman and Mitchell all received a portion of certain tax refunds.
The sentence for Tompkins was handed down by the Honorable James Donato, U.S. District Judge. Judge Donato also sentenced Tompkins to pay $678,426 in restitution and to serve a 3 year period of supervised release. Tompkins will begin serving the sentence on February 11, 2016.
Spearman is scheduled for sentencing on January 21, 2016, before Judge Donato in San Francisco. The sentencing hearing for Damien Mitchell and Tanya Keith is not yet scheduled.
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.
Oakland International Airport Transportation Security Officer Indicted for Conspiring to Obstruct TSA and Smuggle DrugsRead the Press Release
OAKLAND - A federal grand jury returned an indictment that was unsealed today, charging Kiana Scott Clark with conspiring to defraud the United States by obstructing, impeding, and interfering with the aviation security functions of the Transportation Security Administration (TSA) and conspiring to distribute controlled substances, announced Acting United States Attorney Brian J. Stretch, Federal Bureau of Investigation, Special Agent in Charge David J. Johnson, and TSA Office of Inspection, Investigations Division Special Agent in Charge Regan O. Fong.
According to the indictment, Clark, 28, of San Mateo, Calif., is alleged to have used her position as a Transportation Security Officer corruptly to facilitate the smuggling of drugs into and through the Oakland International Airport for delivery throughout the United States. Specifically, when her co-conspirators had carry-on baggage containing controlled substances, Clark operated the x-ray machine at the TSA security checkpoint deceptively and dishonestly, and permitted her co-conspirators to clear the TSA security checkpoint without the required screening of their baggage for explosives, incendiaries, weapons, and other threats to security. Clark’s criminal conduct is alleged to have taken place no later than September 2013 through October 2015 and is alleged to have involved 100 kilograms and more of marijuana.
Clark was arrested on December 16, 2015, and made her initial appearance in federal court in Oakland on December 17, 2015. Clark is currently being held pending arraignment and appointment of counsel. Clark’s next scheduled appearance is tomorrow, December 18, 2016, before the Honorable Donna M. Ryu, 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. Clark is charged with two counts of conspiring to defraud the United States by obstructing, impeding, and interfering with the TSA, in violation of 18 U.S.C.§ 371; and two counts of conspiring to distribute and to possess with intent to distribute controlled substances, in violation of 21 U.S.C. §§ 846, 841(a)(1). If convicted, the defendant faces a maximum sentence of 5 years in prison, and a fine of $250,000, for each violation of 18 U.S.C. § 371. For the violations of 21 U.S.C. §§ 846, 841(a)(1), one count carries a mandatory minimum sentence of 5 years in prison, a maximum sentence of 40 years in prison, and a fine of $5,000,000; conviction on a second count carries a maximum sentence of 5 years in prison, and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
This case is being prosecuted by the Special Prosecutions and National Security Unit at the United States Attorney’s Office, and is the result of an investigation by the Federal Bureau of Investigation, Alameda County Sheriff’s Office, and TSA Office of Inspection, Investigations Division.
Fremont Man Indicted for Attempting to Travel to Join Terrorist GroupRead the Press Release
SAN FRANCISCO - A federal grand jury in San Francisco returned an indictment that was unsealed today, charging Adam Shafi with one count of attempting to provide material support or resources to a designated foreign terrorist organization, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation, Special Agent in Charge David J. Johnson.
According to the indictment, Shafi, 22, of Fremont, Calif., is alleged to have attempted to provide personnel to al-Nusrah Front (ANF), an organization designated by the Department of State as a Foreign Terrorist Organization and as a Specially Designated Global Terrorist entity. The indictment alleges that at the time Shafi provided the support, he knew ANF was a designated foreign terrorist organization and that the organization had engaged and was engaging in terrorist activity and terrorism in violation of Title 18, United States Code, Section 2339B.
An affidavit filed by an agent of the Federal Bureau of Investigation in connection with a criminal complaint filed in the same matter also alleges that Shafi was stopped at San Francisco International Airport on June 30, 2015, as he was about to board a non-stop flight to Istanbul, Turkey. As explained in the affidavit, Turkey is a common point of entry into Syria for foreign fighters hoping to join terrorist organizations such as ANF and Islamic State of Iraq and the Levant (ISIL). The affidavit details a number of telephone conversations Shafi had with his friends in the days and weeks leading up to his trip during which he expressed his love of “Jaulani,” the amir of ANF, his willingness to “die with them,” his hope that “Allah doesn’t take [his] soul until [he has] at least, like, a couple gallons of blood that [he’s] spilled for him,” his fear of meeting Allah “when [his] face has no scars on it,” and his progress in saving enough money for his trip.
Shafi was arrested on July 3, 2015, based on the complaint filed in this matter. Both the complaint and indictment were unsealed late this morning in open court when Shafi appeared before the Honorable Sallie Kim, United States Magistrate Judge, for his arraignment. Shafi is currently in custody, but has moved for bail. A bail hearing is scheduled for December 22, 2015 at 1:30 p.m. before the Honorable Magistrate Judge Kim.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted for a violation of 18 U.S.C. § 2339B, the defendant faces a maximum sentence of 20 years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
This case is being prosecuted by the Special Prosecutions and National Security Unit at the United States Attorney’s Office, the Federal Bureau of Investigation, and members of the Joint Terrorism Task Force.
Former East Bay Mortgage Brokerage Owner Sentenced to PrisonRead the Press Release
SAN FRANCISCO – Gabriela Tigges was sentenced today to 12 months and one day in prison, and ordered to pay a $20,000 fine and $208,186.78 in restitution, for her involvement in a bank fraud scheme related to a fraudulent mortgage loan application and a fraudulent mortgage loan modification application, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
Tigges, 60, of Martinez, Calif., pleaded guilty on October 1, 2015, to two counts of bank fraud. According to the plea agreement, Tigges admitted she caused a client to submit a fraudulent mortgage loan application to World Savings Bank in approximately October 2005. She also admitted submitting a fraudulent mortgage loan modification. Tigges’ conduct eventually cost the bank $208,186.78
The loan at issue was for the purchase of Tigges’s own home by a client of her mortgage brokerage located in the East Bay, Pan American Funding Group. That mortgage loan application contained numerous misrepresentations regarding the transaction and Tigges’s client. For example, the loan application inflated Tigges’s client’s income and misrepresented the source of that individual’s down payment, which had been provided by Tigges. The application also failed to disclose that Tigges and her client had agreed on a much higher purchase price than that disclosed to the lender and that Tigges would be placing her own $275,000 lien on the property after World Savings funded the loan. Ultimately, Tigges’ client was unable to make the mortgage payments and, in early 2008, deeded the property back to Tigges.
Tigges then posed as her client to negotiate a modification of the loan with the mortgage holder, Wachovia Mortgage (which, by then, had purchased World Savings before being purchased by Wells Fargo Bank). Tigges later stopped making payments on the loan (which was still held in Tigges’ client’s name), prompting Wells Fargo to foreclose on the property in September 2010. Wells Fargo sold the property in 2011, and calculated its losses on the loan to be $208,186.78.
Tigges, was indicted by a federal grand jury on August 9, 2012. She was charged with two counts of bank fraud and one count of aggravated identity theft.
The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, U.S. District Judge, following a guilty plea on two counts in violation of 18 U.S.C. § 1344. The government agreed to move for dismissal of the aggravated identity theft charge as part of the plea agreement. Judge Gonzalez Rogers also sentenced the defendant to a three-year period of supervised release, imposed a $20,000 fine, and ordered the defendant to pay restitution to Wells Fargo in the amount of $208,186.78. The defendant has been in custody since April 2015, when she returned to the United States from Brazil after a five-year absence from this country.
Assistant U.S. Attorney Kyle F. Waldinger is prosecuting the case with the assistance of Jessica Meegan. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Former Executive Sentenced for Conspiracy to Bribe Panamanian OfficialsRead the Press Release
A former regional director of the technology company SAP International Inc. was sentenced to prison today for his role in a scheme to bribe Panamanian officials to secure the award of government technology contracts.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Brian J. Stretch of the Northern District of California, Special Agent in Charge George L. Piro of the FBI’s Miami Division and Acting Special Agent in Charge Thomas McMahon of Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.
Vicente Eduardo Garcia, 65, of Miami, was sentenced to 22 months in prison by U.S. District Judge Charles R. Breyer of the Northern District of California. On Aug. 12, 2015, Garcia pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA). On July 15, 2015, Garcia and the U.S. Securities and Exchange Commission (SEC) entered into a settlement of the parallel SEC investigation in which Garcia agreed, among other things, to pay disgorgement of $85,965 plus prejudgment interest. For this reason, the United States did not request, and the court did not order, forfeiture in the criminal action.
In his plea, Garcia admitted that in late 2009, to secure for SAP a multimillion-dollar contract to provide a Panamanian state agency with a technology upgrade package, Garcia conspired with others to bribe two Panamanian government officials directly and a third official through an agent. Garcia admitted that the conspirators used sham contracts and false invoices to disguise the true nature of the bribes and that he believed paying such bribes was necessary to secure the initial and any future Panamanian government contracts. Panamanian officials awarded the $14.5 million contract, which included $2.1 million in SAP software licenses, to SAP’s partner as well as subsequent contracts that also included the provision of SAP products. Garcia personally received over $85,000 in kickbacks for arranging the bribes.
The FBI and IRS-CI investigated the case. Trial Attorney Aisling O’Shea of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Adam A. Reeves of the Northern District of California are prosecuting the case. The Criminal Division’s Office of International Affairs and the SEC, which previously announced separate civil charges against Garcia, provided assistance.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Former Executive Sentenced to 22 Months’ Imprisonment for Conspiracy to Bribe Panamanian OfficialsRead the Press Release
SAN FRANCISCO – A former regional director of the technology company SAP International Inc. was sentenced to prison today for his role in a scheme to bribe Panamanian officials to secure the award of government technology contracts announced Acting U.S. Attorney Brian J. Stretch, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge George L. Piro of the FBI’s Miami Division, and Acting Special Agent in Charge Thomas McMahon of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Vicente Eduardo Garcia, 65, of Miami, was sentenced to 22 months’ imprisonment by U.S. District Judge Charles R. Breyer of the Northern District of California. In addition to the prison term, Judge Breyer sentenced Garcia to three years of supervised release. On Aug. 12, 2015, Garcia pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA). On July 15, 2015, Garcia and the United States Securities and Exchange Commission (“SEC”) entered into a settlement of the parallel SEC investigation in which Garcia agreed, among other things, to pay disgorgement of $85,965 plus prejudgment interest. For this reason, the United States did not request, and the Court did not order, forfeiture in the criminal action.
In his plea, Garcia admitted that in late 2009, to secure for SAP a multimillion-dollar contract to provide a Panamanian state agency with a technology upgrade package, Garcia conspired with others to bribe two Panamanian government officials directly and a third official through an agent. Garcia admitted that the conspirators used sham contracts and false invoices to disguise the true nature of the bribes and that he believed paying such bribes was necessary to secure the initial and any future Panamanian government contracts. Panamanian officials awarded the $14.5 million contract, which included $2.1 million in SAP software licenses, to SAP’s partner as well as subsequent contracts that also included the provision of SAP products. Garcia personally received over $85,000 in kickbacks for arranging the bribes.
The FBI and IRS-CI investigated the case. Assistant U.S. Attorney Adam A. Reeves of the Northern District of California and Trial Attorney Aisling O’Shea of the Criminal Division’s Fraud Section are prosecuting the case. The Criminal Division’s Office of International Affairs and the SEC, which previously announced separate civil charges against Garcia, provided assistance.
Santa Rosa Couple Convicted of Conspiracy to Defraud the United StatesRead the Press Release
SAN FRANCISCO – A federal jury convicted Jay Scott Soderling and Jessica Lynn Soderling today, a married couple from Santa Rosa, on one count of conspiracy to defraud the United States announced Acting United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Andrew Toth. The jury also convicted Mr. Soderling of one count of tax evasion.
The verdict follows a five-day jury trial before the Honorable Vince Chhabria, United States District Judge. The evidence at trial showed that the defendants were both involved in efforts to conceal assets from the IRS to avoid payment of Mr. Soderling’s tax liabilities. Specifically, during 2004 and 2005, Jay Soderling evaded payment of his tax liabilities by hiding money and assets belonging to him in the name of a corporation. Subsequently, in 2008 and 2009, after the IRS discovered he was keeping his personal assets in the corporation, The Soderlings worked together to further conceal assets by, among other things, moving money from the corporation’s account into a bank account opened for this purpose in Mrs. Soderling’s name. Jay Soderling originally was indicted on August 9, 2011, for a single count of tax evasion, in violation of 26 U.S.C. § 7201. A superseding indictment was later filed adding the 18 U.S.C. § 371 conspiracy charge against the couple.
In finding Jay and Jessica Soderling guilty of conspiracy, the jury concluded that the evidence demonstrated the defendants obstructed the lawful functions of the IRS by deceitful or dishonest means as charged in the indictment. In addition, the evidence produced at trial demonstrated that Mr. Soderling willfully evaded payment of taxes he owed to the United States. According to papers filed with the court, beginning in July 2004, the IRS began attempting to collect Mr. Soderling’s tax liabilities. Mr. Soderling admitted owing the IRS approximately $90,000, but he made written and oral statements to IRS employees misrepresenting his ability to pay the debt. Among other things, Jay Soderling told the IRS he had no significant assets, that he had negligible income, and that he did not expect his financial situation to change. In reality, Mr. Soderling knew that he was well on his way to receiving an enormous financial windfall from several real-estate transactions. The government also demonstrated Mr. Soderling failed to disclose his use of corporate funds to purchase a Dodge Viper, a new boat, and other personal items.
The maximum statutory penalty for conspiracy to defraud the United States, in violation of 18 U.S.C § 371, is five years in prison and a fine of $250,000. The maximum statutory penalty for each count of tax evasion, 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 after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant United States Attorneys Michael G. Pitman and Jose A. Olivera are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Oakland-Based Government Finance Director Pleads Guilty to Embezzling Public FundsRead the Press Release
SAN FRANCISCO – Clarke J. Howatt, a former public finance director of the Association of Bay Area Governments (ABAG), pleaded guilty today to embezzling almost $3.9 million from that government authority, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The guilty plea stems from the February 13, 2015, information filed by the federal government charging Howatt with wire fraud for fraudulently inducing ABAG and its related Finance Authority for Non-Profit Corporation (FAN) to make payments to accounts he controlled.
In the plea agreement, Howatt, 56, formerly of Oakland, admits he engaged in a scheme to fraudulently obtain funds from ABAG/FAN. The plea agreement describes the transactions Howatt conducted to purloin the money.
ABAG, headquartered in Oakland, is a Joint Powers Agency formed in the 1960s. As ABAG’s Financial Services Director, Howatt oversaw all bonds issued on its behalf by FAN. In some case, Howatt also had the power to request that FAN make certain payments to, among others, entities completing work for certain public capital improvement projects. In the plea agreement, Howatt admits he used his power to convince FAN to make payments to accounts he controlled by disguising the transactions as legitimate expenditures.
One of the transactions described in the plea agreement involves Howatt’s creation of a Nevada corporation and the establishment of a related bank account to receive FAN funds. In June of 2006, FAN approved an indenture and issued a series of bonds to pursue a public capital improvement project in the South of Market neighborhood of San Francisco. The project was intended to offset the impact of a high-rise building to be built on Rincon Hill. Howatt admitted that he opened a Citibank account in the name of the Nevada corporation. Then, in August of 2014, Howatt requested that the FAN reimburse the corporation for more than a million dollars in expenditures incurred as part of the capital improvement project. The request for reimbursement was purported to be for “reimbursable costs, fees, and expenses submitted to the ABAG Finance Authority [FAN]” by the developer of the Rincon Hill project; however, the request was truly from Howatt. FAN eventually made a wire transfer of $1,296,340.66 to the Citibank account controlled by Howatt.
In another scheme, Howatt convinced FAN to issue over a million dollars to “Windemere BLC Land Company LLC,” another company associated with Howatt. This company was purported to be a developer of a housing development located in San Ramon, Calif. FAN issued several bonds and made numerous legitimate expenditures in connection with the public capital improvements associated with Windemere Ranch and its special districts. Nevertheless, several years after the improvements funded by the bonds had been completed, there remained surplus funds from bonds issued by the FAN. In 2011, Howatt convinced the FAN to issue a wire transfer moving over a million dollars of the surplus funds to an account created for the company he controlled.
In total, Howatt admitted he illegally obtained $3,876,135.21 as a result of his scheme to defraud. He pleaded guilty to the single count of wire fraud in the information, a violation of 18 U.S.C. § 1343.
Howatt currently is released from custody pending sentencing. He is scheduled to appear for sentencing on March 23, 2016, before the Honorable Charles R. Breyer, District Judge. The maximum penalty for a violation of 18 U.S.C. § 1343 is 20 years’ imprisonment; a fine of $250,000 or twice the gross gain or loss, whichever is greater; and 3 years of supervised release. However, any sentence following conviction for this offense 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 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.
Former San Jose Immigration Consultant Sentenced to 18 Months Imprisonment on Fraud and Tax ChargesRead the Press Release
SAN JOSE – Evelyn Sineneng-Smith was sentenced yesterday to 18 months in prison and ordered to pay a $15,000 fine for encouraging and inducing illegal immigration for private financial gain, mail fraud, and willfully subscribing to a false tax return, announced Acting United States Attorney Brian J. Stretch; Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Andrew Toth; U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan Spradlin; and United States Postal Inspection Service Inspector in Charge Rafael Nuñez. The sentence follows Sineneng-Smith’s conviction after a jury trial on the immigration and mail fraud charges and her subsequent guilty plea to the tax return- related charge.
After a 12-day jury trial, Sineneng-Smith, 68, of San Jose, was convicted on July 30, 2013, of two counts of encouraging and inducing illegal immigration for personal financial gain and two counts of mail fraud. During the trial, evidence showed that Sineneng-Smith operated an immigration consultation business in San Jose from 1990 to 2008. Through her service, she induced several people to stay in the country illegally by intentionally providing them with dishonest advice. For example, she advised foreign nationals, many of whom were Filipino citizens who came to the United States on visitors’ visas, to apply for a labor certification from the U.S. Department of Labor as path towards obtaining lawful permanent residence. She charged six victims $5,900 each to file such applications all the while knowing that the law had changed and that her clients did not qualify for lawful permanent residence under existing immigration regulations. According to the testimony of the victims, Sineneng-Smith failed to inform them that they were ineligible to obtain permanent residence. In addition, Sineneng-Smith encouraged these victims to overstay the time allowed under their tourist visas and work illegally in residential healthcare facilities.
In addition, Sineneng-Smith pleaded guilty on January 12, 2015, to two counts of willfully subscribing to a false tax return, in violation of 26 U.S.C. § 7206(1). In her plea agreement, Sineneng-Smith admitted she failed to disclose on her tax returns some of the income she received from her immigration consultation business for the 2002 and 2003 tax years. The omission of this income materially understated her gross income on the returns.
Sineneng-Smith was indicted by a federal grand jury on July 14, 2010. She was charged with three counts of encouraging and inducing illegal immigration for private financial gain, in violation of 8 U.S.C. §§ 1324(a)(1)(A)(iv) and (B)(i); three counts of mail fraud, in violation of 18 U.S.C. § 1341; and two counts of willfully subscribing to a false tax return, in violation of 26 U.S.C. § 7206(1). One of the immigration charges and one of the mail fraud charges were later dismissed by the government.
The sentence was handed down by the Honorable Ronald M. Whyte, U.S. District Judge. Judge Whyte also sentenced the defendant to six months home confinement as a special condition of a three year period of supervised release and ordered restitution to the victims and to the IRS. The defendant will begin serving the sentence on March 16, 2016.
Assistant U.S. Attorneys Susan Knight and Philip Guentert are prosecuting the case with the assistance of Elise Etter and Nina Burney. The prosecution is the result of an investigation by the Department of Homeland Security, Immigration and Customs Enforcement, United States Citizenship and Immigration Services, the United States Department of Labor, Internal Revenue Service - Criminal Investigation, and the United States Postal Inspection Service.
Turlock and Merced Hydroponics Supply Store Owner Pleads Guilty to Structuring Cash Transactions and Filing a False Tax ReturnRead the Press Release
FRESNO, Calif. —Branden Adam Eidson, 35, of Turlock, pleaded guilty today to structuring financial transactions and filing a false tax return, United States Attorney Benjamin B. Wagner announced.
According to court documents, Eidson, the owner of Hooked Up Hydroponics, a hydroponics supply store, failed to report more than $1.2 million in income from his business for the tax years 2008 through 2010. This unreported income resulted in a tax loss to the Internal Revenue Service of more than $430,000. In addition to misreporting his income, Eidson deposited more than $1.5 million in cash into his bank accounts in amounts of $10,000 or less to prevent his banks from filing Currency Transaction Reports on those transactions.
This case is the product of an investigation by the Internal Revenue Service, Criminal Investigation and the Drug Enforcement Administration. Assistant United States Attorney Grant B. Rabenn and Special Assistant U.S. Attorney Katherine Plante are prosecuting the case.
Eidson is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on March 21, 2016. Edison faces a maximum statutory penalty of five years in prison and a $250,000 fine for structuring, and three years and a $250,000 fine for filing a false tax return. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
San Jose Man Pleads Guilty to $37M Cisco FraudRead the Press Release
SAN JOSE – Cuong Cao “Calvin” Dang pleaded guilty in federal court late Friday afternoon to running a business selling products stolen from Cisco Systems by its employees, Acting United States Attorney Brian Stretch, and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Andrew Toth announced today. In pleading guilty, Dang admitted to running Network Genesis, whose business, according to the plea agreement, was “overwhelmingly that of buying and selling merchandise stolen from Cisco” by its employees. Dang admitted that from January 2006 until Network Genesis was raided by federal law enforcement officers in January 2013, sales revenues totaled approximately $37,000,000.
According to the plea agreement, Dang, 45, of San Jose, Calif., owned and operated Network Genesis, based in San Jose, from approximately January 2006 until January 23, 2013. He also owned The Dang’s Investment, Inc. (TDI), which managed residential and commercial real estate properties Dang bought using profits generated from Network Genesis. Dang also worked at Cisco for almost five years between 1999 and 2004. He admitted to having a small network of Cisco employees who delivered stolen Cisco merchandise to Network Genesis for resale to customers both in and outside California. Dang admitted that, to cover his tracks, he changed the serial numbers on the stolen merchandise and created fraudulent “test sheets” to give to customers. (A test sheet shows the diagnostic information, including the serial number, for a particular part.)
To conceal how much he was making from the scheme, Dang admitted using nominees to launder the illicit proceeds. He directed some of his customers to send checks to his co-defendants instead of paying Network Genesis directly. In return for commissions from Dang, his co-defendants cashed some of those checks and deposited others into their own bank accounts, then withdrew the cash in structured amounts and funneled the money back to Dang. In this way, Dang was able to obtain large amounts of cash without having the money go through bank accounts associated with him or his businesses.
Dang was initially indicted by a federal Grand Jury on July 24, 2013, when he was charged with conspiracy to commit mail fraud, in violation of 18 U.S.C. § 1349; six substantive mail fraud counts, in violation of 18 U.S.C. § 1341; two counts of engaging in financial transactions using criminally derived proceeds, in violation of 18 U.S.C. § 1957; and forfeiture allegations.
The grand jury returned a superseding indictment on October 30, 2013, in which seven additional defendants were charged with various offenses relating to Dang’s scheme. In the superseding indictment, Dang was also charged with six counts of money laundering, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i) and (a)(1)(B)(i). Under the plea agreement, he admitted guilt to one count each of conspiracy to commit mail fraud (Count One), substantive wire fraud (Count Two), money laundering (Count Eight), and engaging in financial transactions using criminally derived proceeds (Count Seventeen). Dang is currently free on a $2.5M secured bond.
Dang’s sentencing hearing is scheduled for March 28, 2016, at 1:30 p.m., before the Honorable Edward J. Davila, United States District, in San Jose. The maximum statutory penalties he faces are: (1) for Count One, 20 years’ imprisonment and twice the gross gain he derived from the offense; (2) for Count Two, the same penalty as Count One; (3) for Count Eight, 20 years’ imprisonment and $500,000, or twice the value of the property involved in the transaction, whichever is greater; and (4) for Count Seventeen, 10 years’ imprisonment and $250,000, or twice the value of the property involved in the transaction, whichever is greater. 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. Restitution would usually also be ordered to be paid to the victim; however the parties agreed in the plea agreement that no restitution should be ordered in light of a Civil Settlement Agreement entered into between Dang and Cisco in Case No. 5:14-cv-01789-EJD.
A co-defendant, former Cisco employee Loc Xuan Hoang, pleaded guilty on February 11, 2015, to conspiring with Dang to commit mail fraud. His sentencing is pending. The superseding indictment remains pending against the following co-defendants: Emily Le, David Huynh, Thuy Nguyen, Long Pham, and Edwin Lin, each of whom is scheduled to return to court on December 21, 2015, at 1:30 p.m., for further status. Co-defendant Hieu Nguyen is a fugitive. (Any person with knowledge of his whereabouts is urged to contact IRS Criminal Investigation at 510-529-1923.)
Assistant United States Attorney David R. Callaway is prosecuting the case with the assistance of Elise Etter and Karen Bishop. The prosecution is the result of an investigation by the IRS Criminal Investigation, with the assistance of the Santa Clara R.E.A.C.T. Task Force.
Seventeen Defendants Targeted in A Criminal Complaint Alleging Broad-Ranging Drug Trafficking ConspiracyRead the Press Release
SAN FRANCISCO – Seventeen defendants were named in a federal criminal complaint alleging a criminal conspiracy to traffic heroin announced Acting United States Attorney Brian J. Stretch, Drug Enforcement Administration Special Agent in Charge John J. Martin, and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Andrew Toth.
The complaint, unsealed today, alleges the following defendants participated in the conspiracy:
- Eutimio Reyna-Ceron, aka "Tony" aka "Gordo" aka "Little Tony"
- Marcelino Reyna-Ceron, aka "Anthony Rodriguez," aka "Anthony Rodriguez Carrillo"
- Cornelio Reyna-Ceron, aka "Carlos Alberto Mondragon-Guzman"
- Elizabeth Reyna-Rodriguez, aka "Lisa”
- Ramon Medina, aka "Mon"
- Remigio Madrigal Solorio, aka "Mingo"
- Santiago Rubio Chavez, aka "Calamargo"
- Rodolfo Rivera Herrera, aka "Fito"
- Raymundo Doval-Duran, aka "Brian"
- Cristino Vargas Mondragon, aka "Kiti" aka "Kiki" aka "Kitz"
- Julio Cesar Barbosa, aka "Montana”
- Brigido Rangel
- Angel Gudino-Urbina, aka "Ramon Gudino-Urbina"
- Robert Erickson
- William Anderson, aka "Billy"
- Jaime Sandoval, aka "Cajas"
- Valentin Camacho Toledo, aka "Leobardo Carillo Mondragon," aka "Arturo Hernandez Salazar”
According to the complaint, beginning in August of 2014 or earlier, the defendants conspired with one another to manufacture, possess, and distribute heroin. The complaint describes a sophisticated operation including the receipt, processing and distribution of the drugs.
Eutimio Reyna-Ceron is alleged to have managed the day-to-day distribution operation by, among other things, taking calls from customers and dispatching couriers to deliver drugs to the customers. He is alleged to have directed the distribution of about a kilogram of heroin per week. According to the complaint, Marcelino Reyna-Ceron allegedly managed the money generated by the illegal drug proceeds with the help of Elizabeth Reyna-Rodriguez, who maintained the group’s bank accounts. Marcelino Reyna-Ceron also allegedly obtained cars for the couriers to use when distributing the drugs. Cornelio Reyna-Ceron is alleged to have sold drugs to confidential government informants and to have delivered money to suppliers. Defendants Medina, Solorio, and Chavez are alleged to have been couriers who processed, prepared and delivered the drugs.
Defendants Herrera and Doval-Duran are alleged to have run separate distribution networks and to have shared intelligence with Eutimio Reyna-Ceron regarding sources of supply and law enforcement activity in their area. Herrera and another drug dealer who is alleged to have frequently purchased heroin from him, Robert Erickson, are charged with distributing heroin that resulted in the overdose death of a Santa Rosa woman in September.
Defendants Toledo, Mondragon, and Sandoval are alleged to have taken part in the conspiracy by supplying the organization with drugs. Mondragon and his lieutenants, Rangel and Gudino, were arrested in an August 12, 2015, raid. In that raid, law enforcement agents found over twenty kilograms of heroin and just under ten kilograms of 99.1% pure methamphetamine hidden in secret compartments inside car tires in Mondragon’s garage. On the same day, officers also arrested Barbosa, who worked as a courier for Mondragon. William Anderson is alleged to have been a frequent customer of Mondragon, purchasing an ounce of heroin each day for resale to others.
The complaint charges that all defendants were engaged in a conspiracy to distribute one kilogram of heroin or more, in violation of 21 U.S.C. § 846, which carries a ten-year mandatory minimum sentence. Additionally, a number of defendants were also charged with violation of 21 U.S.C. § 841(a)(1) for distribution or possession with intent to distribute heroin. The maximum statutory penalty for a violation of 21 U.S.C. §841(a)(1) and 846 is life imprisonment and a fine of $10,000,000. Herrera and Erickson are charged with distribution of heroin resulting in death, which carries a twenty-year mandatory minimum sentence. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Most of the defendants were taken into custody during raids that took place at ten separate locations yesterday. The locations included five Santa Rosa homes, as well as homes in Manteca, Modesto, Rohnert Park, San Jose, and Newman, Calif. An additional defendant, Jose Ricardo Chavez-Yanez, was arrested and charged with possession with intent to distribute methamphetamine after he was allegedly found “attempting to flush suspected methamphetamine down the drain of a sink in the garage,” during the raid of one of the homes. All the defendants, with the exception of Gudino-Urbina and Erickson made an initial appearance today before the Honorable Sallie Kim, United States Magistrate Judge. Gudino-Urbina is a fugitive and Erickson currently is incarcerated on other charges. The defendants will appear before the court again in a series of further hearings that will begin on Tuesday, December 15, 2015.
The prosecution is the result of a two-year joint investigation by the Drug Enforcement Administration, Internal Revenue Service, and Santa Rosa Police Department. The prosecution team is also thankful for the efforts of the Sonoma County District Attorney’s Office whose support provided valuable assistance.
Jury Convicts Gang Member of Trafficking Crystal Methamphetamine in San JoseRead the Press Release
SAN JOSE – Eduardo Arriaga was convicted today of trafficking crystal methamphetamine and using a firearm as part of his narcotics trafficking, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigations Special Agent in Charge David J. Johnson. The guilty verdict followed a jury trial before the Honorable Edward J. Davila, U.S. District Judge, and represents the ninth conviction resulting from a proactive operation by the FBI’s Santa Clara County Violent Gang Task Force.
According to the evidence presented at trial, Arriaga, 40, of San Jose, has been a Sureño gang member for over 20 years. On April 29, 2012, Arriaga possessed a pound of crystal methamphetamine, and sold a half-ounce of it to a confidential informant working for the FBI. Arriaga, believing the confidential informant was a Sureño gang member from Southern California, conducted the drug deal out of his garage in San Jose while armed with a handgun. Approximately two months later, in the same garage, the confidential informant witnessed Arriaga with approximately a half-pound of additional crystal methamphetamine, a portion of which Arriaga sold to a fellow Sureño gang member. During that drug deal, Arriaga had two different handguns in his garage. In reaching its verdict, the jury found that Arriaga possessed 50 grams and more of crystal methamphetamine with the intent to distribute it and that he possessed a firearm in furtherance of his narcotics trafficking.
Arriaga was indicted on July 31, 2013, as part of the FBI’s crackdown on Sureño gangs in Santa Clara County. The FBI’s investigation into these gangs culminated in eight separate indictments alleging the distribution and conspiracy to distribute methamphetamine throughout Santa Clara County. The defendants charged in the crackdown include the following: (1) the reputed “matriarch,” of 8th Street Gilroy (Maria Salinas); (2) the co-conspirator mother and daughter combination associated with the Sureño gang “Varrio Sur Town” (Laura Garcia and Vanessa Pulido), and (3) known members of the Sureño gangs “Colonias,” “Varrio Mexicanos Locos,” “Poco Way,” and “Varrio Paisanos Locos.” The status of the matters against these additional defendants is as follows:
Defendant
Charges
Docket Number
Sentence
LAURA GARCIA
a/k/a “Blinky” and
VANESSA PULIDO
a/k/a “Bunny”
Distribution of Methamphetamine and Conspiracy to Distribute Methamphetamine
CR 13-00508 LHK
9/24/14
65 months
12/9/14
24 months home detention
RAFAEL MEDINA
a/k/a “Conejo”
Distribution and Conspiracy to Distribute Methamphetamine
CR 13-00507 LHK
10/22/14
75 months
RAUL VALLE MORFIN a/k/a “Green Eyes”
Distribution of Methamphetamine
CR 13-00509 DLJ
6/19/14
78 months
JESUS QUINONES
a/k/a “Canas”
Distribution of Methamphetamine
CR 13-00503 DLJ
10/9/14
60 months
JAIRO QUINTANA
a/k/a “Hido”
Distribution of Methamphetamine and Conspiracy to Distribute Methamphetamine
CR 13-00506 LHK
7/23/14
70 months
MARIA SALINAS
a/k/a “Grumpy”
Distribution of Methamphetamine
CR 13-00504 LHK
6/4/14
26 months
ULYSSES VASQUEZ a/k/a “Dreamer”
Distribution and Conspiracy to Distribute Methamphetamine
CR 13-00502 RMW
Pleaded guilty to conspiracy; sentencing is pending
Arriaga is currently being held in custody and is scheduled to be sentenced on February 29, 2016, before Judge Davila in San Jose. Arriaga faces a maximum penalty of two life sentences, and a minimum term of imprisonment of 15 years. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant United States Attorneys Marissa Harris and Stephen Meyer are prosecuting the case with the assistance of Yolanda Singletary, Nina Burney, and Ryka Barghi. The case is the result of an investigation by the FBI.
Eleven Defendants Named in Seventy-One Count Indictment Charging Conspiracy to Commit Theft of Public Money and Identity TheftRead the Press Release
OAKLAND – Nine California residents and two Texas residents were charged with conspiracy to commit theft of public money, theft of public money, wire fraud, and aggravated identity theft announced Acting United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Andrew Toth.
The indictment, unsealed yesterday, charges the following eleven defendants with participating in the conspiracy:
- Hugh Robinson, of Richmond
- Gary Bostick, of Pittsburg
- Ana Bostick, of Pittsburg
- Ronald Blake, of Fort Worth, TX
- Kyadrian Dennis, of Fort Worth, TX
- William Odom, of Berkeley
- Jamia Lewis, of Fairfield
- Devonnie Davison, of San Pablo
- Brandon Robinson, of El Cerrito
- Janel McDonald, of Los Angeles
- Everardo Laurian, of Daly City
According to the indictment, from at least August 21, 2013, through April 27, 2015, the defendants conspired with one another to commit offenses against the United States, including theft of government money. The scheme involved obtaining the names of deceased individuals, filing false tax returns in the names of the individuals, obtaining false identifications, and illegally cashing U.S. Treasury checks.
According to the indictment, Hugh Robinson, Gary Bostick, and Ronald Blake, with the assistance of others, are alleged to have obtained names of deceased individuals for use in filing false tax returns. To obtain identities for use in the scheme, these defendants searched California death records and obtained the names and personal identifying information of deceased individuals. The defendants then used the identities obtained from the death records to electronically file false federal income tax returns and caused the returns to be filed in the name of the deceased with the IRS. The returns falsely represented that the individuals earned wages or other income and that the individuals listed on the tax returns were entitled to tax refunds. Hugh Robinson, Gary Bostick, Ronald Blake, and other individuals working with them also listed on the tax returns certain physical addresses to which the defendants had access, enabling the defendants to retrieve the refund checks.
Also described in the indictment is the process by which the defendants are alleged to have cashed the fraudulently obtained U.S. Treasury checks. According to the indictment, Janel McDonald provided false and fraudulent California identification documents to co-conspirators who used them to negotiate the U.S. Treasury checks. The false identifications contained the pictures of designated co-conspirators who would cash the check. In addition, Hugh Robinson, Brandon Robinson, and Devonnie Davison brought some of the checks to a Walmart store in Richmond, California, where Jamia Lewis and William Odom assisted in cashing the checks. According to the indictment, Lewis and Odom were Walmart employees who knew the checks belonged to others and the U.S. Treasury. Further, Hugh Robinson and his co-conspirators obtained false identification documents that matched other names on the U.S. Treasury checks and negotiated those illegally-obtained checks at various other Walmart stores. According to the criminal complaint filed in the case, a search of the location where Hugh Robinson resided yielded $237,394 worth of uncashed U.S. Treasury checks.
The indictment charges each defendant with conspiracy to commit theft of public money. In addition, the defendants have been charged with the following federal offenses:
Hugh Robinson
7 counts of Theft of Public Money, 18 U.S.C. § 641
7 counts of Aggravated Identity Theft, 18 U.S.C. § 1028A
Gary Bostick
4 counts of Wire Fraud, 18 U.S.C. § 1343
4 counts of Aggravated Identity Theft, 18 U.S.C. § 1028A
Ana Bostick
2 counts of Theft of Public Money, 18 U.S.C. § 641
2 counts of Aggravated Identity Theft, 18 U.S.C. § 1028A
Ronald Blake
3 counts of Theft of Public Money, 18 U.S.C. § 641
3 counts of Aggravated Identity Theft, 18 U.S.C. § 1028A
Kyadrian Dennis
4 counts of Theft of Public Money, 18 U.S.C. § 641
4 counts of Aggravated Identity Theft, 18 U.S.C. § 1028A
William Odom
3 counts of Theft of Public Money, 18 U.S.C. § 641
3 counts of Aggravated Identity Theft, 18 U.S.C. § 1028A
Jamia Lewis
3 counts of Theft of Public Money, 18 U.S.C. § 641
3 counts of Aggravated Identity Theft, 18 U.S.C. § 1028A
Devonnie Davison
2 counts of Theft of Public Money, 18 U.S.C. § 641
2 counts of Aggravated Identity Theft, 18 U.S.C. § 1028A
Brandon Robinson
3 counts of Theft of Public Money, 18 U.S.C. § 641
3 counts of Aggravated Identity Theft, 18 U.S.C. § 1028A
Janel McDonald
2 counts of Theft of Public Money, 18 U.S.C. § 641
2 counts Aggravated Identity Theft, 18 U.S.C. § 1028A
Everardo Laurian
2 counts of Theft of Public Money, 18 U.S.C. § 641
2 counts of Aggravated Identity Theft, 18 U.S.C. § 1028A
Hugh Robinson has been in custody since his arrest in April 2015. Jamia Lewis, William Odom, Ronald Blake, Brandon Robinson, and Everardo Laurian are scheduled to appear on December 15, 2015, before United States District Judge Jeffrey S. White. Janel McDonald is scheduled to appear on December 16, 2015, before United States Magistrate Judge Donna M. Ryu. Hugh Robinson, Gary Bostick, Ana Bostick, and Devonnie Davison are scheduled to appear on January 12, 2016, before Judge White.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The maximum sentence for conspiracy to commit theft of public money, in violation of 18 U.S.C. § 371, is 5 years in prison and a fine of $250,000. The maximum penalty for theft of public money, in violation of 18 U.S.C § 641, is 10 years in prison and a fine of $250,000. The maximum penalty for wire fraud, in violation of 18 U.S.C § 1343, is 20 years in prison and a fine of $250,000. The maximum penalty for each count of identity fraud, in violation of 18 U.S.C § 1028A, is two years in prison, consecutive to the underlying felony and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Thomas Newman and Jose A. Olivera are prosecuting this case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Northern District of California U.S. Attorney’S Office Collects $284,894,493 in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2015Read the Press Release
SAN FRANCISCO- Acting U.S. Attorney Brian J. Stretch announced today that the Northern District of California collected $284,894,493 in criminal and civil actions in Fiscal Year 2015. Of this amount $255,375,956 was collected in criminal actions and $29,518,537 was collected in civil actions.
Additionally, the U.S. Attorney’s Office worked with other offices and components of the Department of Justice to collect an additional $40,522,904 in cases pursued jointly with these offices. Of this amount, $32,438 was collected in criminal actions and $40,490,465 was collected in civil actions.
Attorney General Loretta E. Lynch announced on December 3, 2015, that the Justice Department collected $23 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2015. The more than $23 billion in collections in FY 2015 represents more than seven and a half times the approximately $2.93 billion of the Justice Department’s combined appropriations for the 94 U.S. Attorneys’ Offices and the main litigating divisions in that same period.
“The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources and protecting the American people from exploitation and abuse,” said Attorney General Lynch. “The collections we are announcing today demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
“The recovery of hundreds of millions of dollars from criminal and civil defendants by this Office is a testament to the hard work of our Financial Litigation Unit,” said Acting U.S. Attorney Brian J. Stretch. "Our Office will continue to work tirelessly to recoup victims' losses and to disgorge profits from those who enrich themselves through crime and other violations of federal law.”
The U.S. Attorneys’ Offices, along with the Justice Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal financial, health, safety, civil rights, and environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration, and Department of Education.
In addition to the amounts listed above, the U.S. Attorney’s office in the Northern District of California, working with partner agencies and divisions, collected $5,015,667 in asset forfeiture actions in FY 2015. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
Former Secret Service Agent Sentenced to 71 Months in Scheme Related to Silk Road InvestigationRead the Press Release
A former Secret Service special agent who had been a member of the Baltimore Silk Road Task Force was sentenced to 71 months in prison today on charges of money laundering and obstruction of justice.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Brian Stretch of the Northern District of California, Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI), Special Agent in Charge David J. Johnson of FBI’s San Francisco Division, Special Agent in Charge Michael P. Tompkins of the Department of Justice Office of the Inspector General’s Washington, D.C., Field Office and Special Agent in Charge James E. Ward of the Department of Homeland Security Office of the Inspector General’s Atlanta Field Office made the announcement.
U.S. District Judge Richard Seeborg of the Northern District of California sentenced Shaun W. Bridges, 33, of Laurel, Maryland, in San Francisco following his guilty plea to one count of money laundering and one count of obstructing justice. Judge Seeborg also ordered Bridges to forfeit $651,000.
Between 2012 and 2014, Bridges was assigned to the Baltimore Silk Road Task Force, a multi-agency group investigating illegal activity on the Silk Road, a covert online marketplace for illicit goods, primarily drugs. Bridges’s responsibilities included, among other things, conducting forensic computer investigations in an effort to locate, identify and prosecute targets, including Ross Ulbricht, aka Dread Pirate Roberts, who ran the Silk Road from the Northern District of California.
As part of his guilty plea, Bridges admitted to using account information that he obtained during the January 2013 search and arrest of Curtis Green, a customer support representative on Silk Road, to reset passwords and pins of various accounts on Silk Road and move approximately 20,000 bitcoin, at the time worth approximately $350,000, from those accounts into a bitcoin “wallet” that Bridges controlled. When Ulbricht learned that Green’s access to Silk Road had been used to transfer bitcoin from Silk Road into a wallet, Ulbricht cancelled Green’s administrator access to Silk Road and attempted to have him killed in retaliation for the bitcoin thefts.
Bridges admitted that he moved the stolen bitcoin into an account at Mt. Gox, an online digital currency exchange based in Japan, and that between March and May 2015, he liquidated the bitcoin into $820,000 in U.S. currency and had the funds transferred to a personal investment account in the United States. In June 2014, Bridges transferred money from the investment account into a personal bank account that he shared with another person.
Bridges also admitted that he used Green’s access to Silk Road to steal bitcoin from the site, thereby limiting Green’s access to further the Baltimore grand jury investigation of Ulbricht and Silk Road. Additionally, Bridges admitted that he made multiple false and misleading statements to both prosecutors and investigators in connection with the San Francisco grand jury investigation into his own illegal acts.
Bridges is the second of two federal agents to be sentenced in connection with the Baltimore Silk Road Task Force’s investigation into the Silk Road. Carl M. Force, 46, of Baltimore, was a special agent with the Drug Enforcement Administration who pleaded guilty on July 1, 2015, to a three-count information charging him with money laundering with predicates of wire fraud and theft of government property, obstruction of justice and extortion under color of official right, related to his theft and diversion of more than $700,000 in digital currency to which he gained control as part of undercover role on the Baltimore Silk Road Task Force. On Oct. 19, 2015, Judge Seeborg sentenced Force to 78 months in prison.
The FBI’s San Francisco Division, the IRS-CI San Francisco Division, the Department of Justice Office of the Inspector General and the Department of Homeland Security Office of the Inspector General in Washington, D.C., are investigating the case. Assistant U.S. Attorneys Kathryn Haun and William Frentzen of the Northern District of California and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section are prosecuting the case. Assistant U.S. Attorney Arvon Perteet of the Northern District of California handled the asset forfeiture aspects of the case.
Former Secret Service Agent Sentenced to 71 Months’ Imprisonment in Scheme Related to Silk Road InvestigationRead the Press Release
SAN FRANCISCO – A former Secret Service special agent who had been a member of the Baltimore Silk Road Task Force was sentenced to prison on charges of money laundering and obstruction of justice announced Acting U.S. Attorney Brian Stretch, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI), Special Agent in Charge David J. Johnson, Special Agent in Charge Michael P. Tompkins of the Department of Justice Office of the Inspector General’s Washington, D.C., Field Office, and Special Agent in Charge James E. Ward of the Department of Homeland Security-Office of the Inspector General’s Atlanta Field Office.
This afternoon, U.S. District Judge Richard Seeborg sentenced Shaun W. Bridges, 33, of Laurel, Maryland, to 71 months in prison following his guilty plea to one count of money laundering and one count of obstructing justice. Bridges was also ordered to forfeit more than $650,000.
Between 2012 and 2014, Bridges was assigned to the Baltimore Silk Road Task Force, a multi-agency group investigating illegal activity on the Silk Road. The Silk Road is a covert online marketplace for illicit goods, primarily drugs. Bridges’ responsibilities included, among other things, conducting forensic computer investigations in an effort to locate, identify, and prosecute targets, including Ross Ulbricht, aka Dread Pirate Roberts, who ran the Silk Road from the Northern District of California.
As part of his guilty plea, Bridges admitted to using account information that he obtained during the January 2013 search and arrest of Curtis Green, a customer support representative on Silk Road. Bridges used the information to reset passwords and pins of various accounts on Silk Road and move approximately 20,000 bitcoin, at the time worth approximately $350,000, from those accounts into a bitcoin “wallet” that Bridges controlled. When Ulbricht learned that Green’s access to Silk Road had been used to transfer bitcoin from Silk Road into a wallet, Ulbricht cancelled Green’s administrator access to Silk Road and attempted to have him killed in retaliation for the bitcoin thefts.
Bridges admitted that he moved the stolen bitcoin into an account at Mt. Gox, an online digital currency exchange based in Japan, and that between March and May 2015, he liquidated the bitcoin into $820,000 in U.S. currency and had the funds transferred to a personal investment account in the United States. In June 2014, Bridges transferred money from the investment account into a personal bank account that he shared with another person. Moreover, days after Bridges removed the illegally-obtained proceeds from Mt. Gox, he then served as an affiant in a warrant to enable federal authorities to seize Mt. Gox’s assets.
Bridges also admitted he used Green’s access to Silk Road to steal bitcoin from the site, thereby limiting Green’s access to further the Baltimore Grand Jury investigation of Ulbricht and Silk Road. Additionally, Bridges admitted that he made multiple false and misleading statements to both prosecutors and investigators in connection with the San Francisco Grand Jury investigation into his own illegal acts.
During the sentencing, Judge Seeborg stated, “nothing in [Bridges’] background mitigates the shocking and reprehensible abandonment of his public duty.” The judge found that a sentence on the high end of the sentencing guidelines was appropriate in light of Bridges’ “inexcusable” conduct which, the judge pointed out, might have gotten a witness killed.
Bridges is the second of two federal agents to be sentenced in connection with the Baltimore Silk Road Task Force’s investigation into the Silk Road. Carl M. Force, 46, of Baltimore, was a Special Agent with the Drug Enforcement Administration who pleaded guilty on July 1, 2015, to a three-count information charging him with money laundering with predicates of wire fraud and theft of government property, obstruction of justice, and extortion under color of official right, related to his theft and diversion of over $700,000 in digital currency to which he gained control as part of undercover role on the Baltimore Silk Road Task Force. On Oct. 19, 2015, Judge Seeborg sentenced Force to 78 months in prison.
The case is being prosecuted by Assistant U.S. Attorneys Kathryn Haun and William Frentzen of the Northern District of California and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section, with the assistance of San Francisco Legal Assistant Daniel Charlier-Smith, Christine Tian, and Lance Libatique. Assistant U.S. Attorney Arvon Perteet assisted with Asset Forfeiture aspects of the case. The case was investigated by the FBI’s San Francisco Division, the IRS-CI’s San Francisco Division, the Department of Justice Office of the Inspector General, and the Department of Homeland Security Office of the Inspector General in Washington D.C. The prosecution team is also thankful for the assistance of the following components for their support throughout the investigation of this case: IRS Criminal Investigation – New York Field Office, HSI’s Chicago/O’Hare Division, the U.S. Attorney’s Office for the Southern District of New York, the Department of Justice’s Computer Crime and Intellectual Property Section, the Financial Crimes Enforcement Network, the U.S. Embassy in Slovenia, and the FBI Legal Attaché Office in Tokyo, Japan.
Man Sentenced to 5 Years’ Probation and Community Confinement for Aiming Laser at California Highway Patrol HelicopterRead the Press Release
OAKLAND – Christian Palomino was sentenced today to five years of probation, including 6 months of community confinement at a halfway house, for aiming a laser at a California Highway Patrol (CHP) Helicopter, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
In pleading guilty, Palomino, 19, of Oakland, admitted that on June 7, 2014, he knowingly aimed the beam of a laser pointer at a CHP Helicopter. The lasing incident was captured by Palomino in a “selfie” video on his phone. In the videos, Palomino can be heard yelling at the helicopter pilot, “Look at this laser!” In addition, a woman can be heard in the background admonishing Palomino, “Don’t do that! You know you could blind . . . You[’re] going to go to jail if you do that. Don’t do that!”
At the time of the lasing incident, the CHP helicopter was assisting the Oakland Police Department in its efforts to locate a domestic violence suspect. Palomino was indicted by a federal grand jury on August 28, 2014, for aiming a laser pointer at an aircraft, in violation of 18 U.S.C. § 39A.
The sentence was handed down late yesterday by the Honorable Phyllis J. Hamilton, U.S. District Judge. Judge Hamilton also imposed conditions of probation requiring Palomino to refrain from possessing a laser pointer and to perform 200 hours of community service, including educating people about the consequences of aiming laser pointers at aircrafts. Palomino was ordered to self-surrender to the halfway house on January 4, 2016.
Assistant U.S. Attorney Brian C. Lewis prosecuted this case with the assistance of Janice Pagsanjan and Melissa Dorton. This prosecution is the result of an investigation by the FBI and the CHP.
Thirteen Defendants Indicted in State-Wide Drug Trafficking ConspiracyRead the Press Release
OAKLAND – A federal grand jury indicted thirteen defendants for conducting a state-wide conspiracy to possess with the intent to distribute and the distribution of controlled substances, announced Acting United States Attorney Brian J. Stretch, Drug Enforcement Administration (DEA) Special Agent in Charge John J. Martin, and Department of Treasury, Internal Revenue Service (IRS) Acting Special Agent in Charge Thomas P. McMahon. All thirteen defendants are charged with trafficking numerous controlled substances, including cocaine, methamphetamine, and heroin, several defendants are charged with possession of a firearm in furtherance of a drug trafficking crime, and one defendant is changed with money laundering.
The indictment, filed on November 19, 2015, alleges that between December of 2013, and October of 2015, the following individuals were involved in a large-scale drug trafficking organization whose network extended throughout California and into Mexico:
Carlos Olivares Hernandez, 49, of Turlock
Manuel Gonzalez Chavez, 39, of Stockton
Daniel Jimenez, 45, of Ballico
Manuel Lara Andrade, 61, of Delhi
Gabriel Estrada, 39, of Los Angeles
Vanessa Valdez, 29, of Chula Vista
Ruben Franco Lopez, 45, of Turlock;
Carlos Martinez, Jr; 23, of Hayward
Michael Anthony Sherman Sr., 45, of Lathrop
Ismael Mendoza Rodriguez, 35, of Turlock
Elias Dominguez, 43, of Patterson
Jesus Guadalupe Rojas, 29, of Delhi
Jose Armando Mendoza Linares, 39, of TurlockAccording to the indictment, underlying criminal complaints, and public records, a federal investigation revealed that Olivares Hernandez and his co-defendants regularly received large shipments of drugs from couriers transporting the contraband from San Diego area to the Central Valley of California. The defendants are further alleged to have distributed the drugs in the Central Valley and Bay Area of California. The thirteen defendants were charged with conspiracy to possess with intent to distribute and distribution of controlled substances, in violation of 21 U.S.C. §§ 846 and 841. The grand jury also indicted three of the defendants, Andrade, Chavez Gonzalez, and Mendoza Rodriguez, for possession of a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c). The grand jury further charged Olivares Hernandez with fifty-six counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i).
"This investigation demonstrates the size and scope of the drug trafficking organizations that we can effectively target through the combined efforts of federal and local law enforcement,” said Acting U.S. Attorney Brian J. Stretch. “These long-term wiretap investigations and resulting charges strike at the heart of sophisticated drug trafficking and will take hundreds of thousands of doses of drugs off our streets."
DEA Special Agent in Charge John J. Martin stated, “No stone was left unturned in this investigation and its success can be attributed to the excellent collaborative effort between federal and local law enforcement. These arrests and seizures have disabled an organization with tentacles operating throughout California. DEA will diligently work with our law enforcement partners to identify and dismantle drug distribution networks at the highest levels.”
IRS Criminal Investigations Acting Special Agent in Charge Thomas McMahon said, “The combined efforts of law enforcement agencies in an investigation of this magnitude produce a formidable force against narcotics trafficking and money laundering. It’s critical to determine where the money comes from and where it goes. Finding and connecting those ‘dots’ is what IRS-CI brings to this cooperative effort.”
According to documents filed in connection with the indictment and public records, the investigation also revealed the defendants used sophisticated means to attempt transporting the drugs without detection from Southern California to the Central Valley. For example, law enforcement stopped Valdez while he was driving a vehicle containing 33 pounds of methamphetamine on September 5, 2015. The drugs were secreted inside an electronically-operated compartment built beneath the front seats and operated via buttons concealed in the center console. The defendants are also alleged to have routinely sent bulk cash payments to Mexico via couriers based in Southern California. For example, law enforcement discovered approximately $399,000 in U.S. currency hidden behind the truck-bed liner of a vehicle driven by Estrada while headed southbound on Highway-99 on October 12, 2015. In sum, searches executed at the conclusion of the investigation resulted in the cumulative seizure of more than $1.3 million in U.S. currency; numerous firearms, including an AK-47 with an extended magazine; pieces of body armor; vehicles containing aftermarket traps; and additional items. Agents also seized suspected drugs in the following quantities: 38 kilograms of cocaine, 58.1 pounds of methamphetamine, and 11.4 pounds of heroin. The drugs are alleged to have an estimated street value of over $4 million.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of the drug conspiracy charge, all of the defendants, with the exception of Carlos Olivares Hernandez, face a mandatory 10-year term of imprisonment and maximum sentence of life, and a maximum fine of $10 million for the alleged violations of 21 U.S.C. §§ 846 and 841 (a)(1),(b)(1)(A)(viii). Carlos Olivares Hernandez faces a mandatory 20-year term of imprisonment and maximum of life and a maximum fine of $20 million for the alleged violations of 21 U.S.C. §§ 846 and 841 (a)(1),(b)(1)(A)(viii) based on the Information for Increased Punishment.
If convicted of possession of a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c), defendants Daniel Jimenez, Manuel Lara Andrade, Manuel Gonzalez Chavez, and Ismael Mendoza Rodriguez face a consecutive mandatory minimum term of imprisonment of 5 years, 7 years if the firearm was brandished, or 10 years if the firearms was discharged. In addition, if, for any of the three defendants, it is his second conviction under § 924(c), the defendant faces a minimum 25 years’ imprisonment and a maximum lifetime of imprisonment.
If convicted, Carlos Olivares Hernandez also faces a maximum 20 years of imprisonment and maximum fine of $500,000 or twice the value of the property involved in the transactions for the alleged money laundering charges, in violation of 18 U.S.C. § 1956(a)(1)(B)(i).
Any sentences following the defendants’ convictions would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The defendants are scheduled for an initial appearance on the indictment before the Honorable Judge James Donato, U.S. District Court Judge, on December 17, 2015. All of the defendants, with the exception of Carlos Martinez Jr., are in custody.
Assistant U.S. Attorneys Katie Burroughs Medearis, Aaron D. Wegner, and Gregg Lowder are prosecuting the case with the assistance of Michelle Alter and Vanessa Vargas. The prosecution is the result of a multi-year investigation by the DEA, the Concord Police Department, and the IRS Criminal Investigations. The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force (OCDETF), a multi-agency task force that coordinates long-term narcotics trafficking investigations.
San Francisco Tax Preparer Indicted for Wire Fraud, Money LaunderingRead the Press Release
SAN FRANCISCO - A federal grand jury indicted Cary S. Collins on charges of wire fraud, money laundering, and preparing a false tax return, announced Acting United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Thomas McMahon.
According to the indictment, unsealed today, Collins, 53, of San Francisco, is alleged to have engaged in a scheme to defraud clients of more than $1.3 million, and used those funds for personal expenditures. For this scheme, the indictment alleges four counts each of wire fraud, in violation of 18 U.S.C. § 1343, and money laundering, in violation of 18 U.S.C. § 1957. The indictment also alleges that Collins assisted in preparing a false tax return for a client, in violation of 26 U.S.C. § 7206(2).
Collins was arrested at his San Francisco home and made his initial appearance in federal court in San Francisco on November 18, 2015. The Honorable Laurel Beeler, U.S. Magistrate Judge, ordered Collins released on a $250,000 secured bond. Collins’ next scheduled appearance is at 2:30 p.m. on December 8, 2015, for an initial appearance before the Honorable Richard Seeborg, U.S. District Court Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of wire fraud, the defendant faces a maximum sentence per count of 20 years’ imprisonment, a $250,000 fine, 3 years of supervised release, a $100 special assessment, restitution, and criminal forfeiture. If convicted of money laundering, the defendant faces a maximum sentence per count of 10 years’ imprisonment, a $250,000 fine, 3 years of supervised release, a $100 special assessment, restitution, and criminal forfeiture. If convicted of assisting in the preparation of a false tax return, the defendant faces a maximum sentence of 3 years’ imprisonment, a $100,000 fine; 3 years of supervised release, a $100 special assessment, and restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Hartley M. K. West is prosecuting the case with the assistance of Hayden Leadford and Trina Khadoo. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Humboldt County Resident Sentenced to 15 Years’ Imprisonment for MurderRead the Press Release
SAN FRANCISCO– Ryan Carroll was sentenced to 15 years in prison for aiding and abetting the use of a firearm in furtherance of a crime of violence and thus causing murder, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. Carroll’s codefendant, Robert Lee, received a sentence of seven years for being an accessory after the fact and destruction of a vehicle by means of fire. The sentences follow guilty pleas entered by the codefendants in which they acknowledged their respective roles in an attempt to rob a Humboldt resident who asked for help in purchasing marijuana.
Carroll, 31, of no fixed residence, pleaded guilty on July 30, 2015, to being one of the people who robbed and killed Reetpaul Rana in a drug deal gone bad. According to the plea agreement, Carroll told Rana in August of 2008 that he would help Rana purchase 8 or 9 pounds of marijuana. In September of 2008, rather than help Rana purchase the marijuana, Carroll and three other people decided to rob Rana. Rana was shot and killed during the robbery. On August 22, 2013, a federal grand jury indicted Carroll; he was charged with robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a); use of a firearm in furtherance of a crime of violence, in violation of 18 U.S.C. § 924(c); use of a firearm causing murder, in violation of 18 U.S.C. § 924(j); conspiracy to destroy an object to obstruct an investigation, in violation of 18 U.S.C. § 371; destruction of an object to obstruct an investigation, in violation of 18 U.S.C. § 1519; and use of fire in the commission of a federal felony, in violation of 18 U.S.C. § 844(h). Pursuant to the plea agreement, Carroll pleaded guilty to using a firearm in furtherance of a crime of violence causing murder. Today, Carroll was sentenced to 15 years’ imprisonment for the conduct to which he admitted in the plea agreement.
On July 17, 2015, Lee, 30, of no fixed residence, pleaded guilty to criminal conduct that followed the murder of Rana in September 2008. According to the plea agreement, Lee agreed with two other people to “torch” Rana’s car in a suitable location. Lee admitted that he knew the car belonged to Rana and that Rana recently had been robbed and killed with a firearm during the course of the robbery. Lee acknowledged assisting in transporting the car to an access road near a lagoon in Arcata, Calif., spraying the inside of Rana’s car with WD-40, and igniting the car for the purpose of preventing the apprehension, trial, and punishment of the person responsible for robbing and killing Rana. On August 22, 2003, Lee was charged with use of a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c); use of a firearm causing murder, in violation of 18 U.S.C. § 924(j); conspiracy to destroy an object to obstruct investigation, in violation of 18 U.S.C. § 371; destruction of an object to obstruct investigation, in violation of 18 U.S.C. § 1519; and use of fire in the commission of a federal felony, in violation of 18 U.S.C. § 844(h); accessory after the fact, in violation of 18 U.S.C. §§ 2 and 3; and manufacture and possession with intent to distribute a controlled substance, in violation of 21 U.S.C. § 841. In May of 2015, a grand jury amended the charges against Lee to add malicious destruction and conspiracy to maliciously destroy a vehicle by means of fire, in violation of 18 U.S.C. § 844. Pursuant to the plea agreement, Lee pleaded guilty to being an accessory after the fact to the use of a firearm causing murder, and to the malicious destruction of a vehicle by means of fire.
The sentence was handed down by the Honorable Edward Chen, U.S. District Judge. Carroll has been in custody since June 2010, and Lee has been in custody since October 2011. Both defendants will begin serving their respective sentences immediately. Judge Chen also sentenced each of the defendants to a five-year period of supervised release and ordered defendants to pay $6,000 in restitution to Rana’s parents. Both defendants are liable for the $6,000 jointly and severally and the court set a date of January 20, 2016, to consider any further restitution claims that may be made by Rana’s parents.
Assistant U.S. Attorneys Andrew M. Scoble and Scott D. Joiner are prosecuting the case with the assistance of Kurt Kosek, Lance Libatique, and Ponly Tu. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Humboldt County Sheriff’s Office.
Federal Murder Charges Unveiled in 73-Count Indictment Against Gang MembersRead the Press Release
SAN JOSE – A 73-count superseding indictment was unsealed today charging nine defendants with racketeering, murder, attempted murder, armed bank robbery, robbery affecting interstate commerce, and the use of firearms, announced Acting United States Attorney Brian J. Stretch. The arrests followed an investigation referred to as “Operation Daybreak,” so named for the early morning attacks that characterized the alleged criminal activity in this case.
Eight of the defendants- Daniel Chavez, AKA Youngster (age 33); Victor Skates, AKA Demon (age 26); Eduardo Lebron, AKA Warlord (age 36); Eder Torres, AKA Flaco (age 29); Julian Ruiz, AKA JJ (age 26); Antonio Cruz (age 28); Terrell Golden, AKA G (age 24); and Anthony Lek (age 28) are alleged to be Salinas-based Norteño gang members, while the ninth defendant, Robert Loera (age 35), is alleged to be an associate of the gang. According to the superseding indictment, all nine defendants conspired to commit murder and other violent crimes as part of a criminal RICO enterprise tied to their Norteño gang activity. The superseding indictment alleges that, over a two year time period, the defendants committed 12 murders, seven attempted murders, and seven bank robberies.
With respect to the murders and attempted murders, the superseding indictment alleges that the defendants hunted for rival gang members and other enemies, and shot and killed them and others suspected of being rival gang members. One of the homicides charged in the superseding indictment occurred on the campus of Alisal High School in Salinas, California.
“We greatly appreciate the tireless efforts of the Salinas Police Department in reducing violent crime in the Salinas Valley,” said U.S. Attorney Brian J. Stretch. “Operation Daybreak has been a critical part of exposing crime in the area. While there remains more work to be done, today’s indictment is the result of collective leadership of the Salinas Police Department, and the FBI.”
"This years-long investigation involved thousands of investigative hours by Salinas police detectives with the assistance of the Federal Bureau of Investigation,” said Chief Kelly J. McMillin of the Salinas Police Department. “This case demonstrates what we have known for many years; that very few individuals drive the majority of violence in Salinas. It should also serve to remind us all that the role of prevention and intervention efforts cannot be overlooked and in fact must be strengthened further to ensure other young men never think it's okay to shoot another. The Salinas Police Department would like to thank the people of the Office of the United States Attorney, Northern District of California, for their incredible dedication to bringing these individuals to justice."
As alleged in the superseding indictment, the armed bank robberies occurred in the cities of Salinas, Watsonville, and San Jose. In addition, there was an armed robbery of a Zales jewelry store in Gilroy.
All nine defendants have been charged with the crimes set forth in the first four counts of the superseding indictment:
- racketeering conspiracy, in violation of 18 U.S.C. § 1962(d);
- conspiracy to commit murder and assault with a dangerous weapon in aid of racketeering, in violation of 18 U.S.C. § 1959;
- use of firearms in furtherance of crimes of violence, in violation of 18 U.S.C. § 924(c); and
- robbery and conspiracy to commit robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a).
In addition, the following defendants have been charged with the following counts and additional crimes under the indictment:
Defendant
Charges
Counts in the Indictment
Daniel Chavez a/k/a Youngster
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1) and 2
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(3) and 2
Attempted Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(5) and 2
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. §§ 1951(a) and 2
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
5-14, 21- 33,
46-48, 65-67,
71-73
Victor Skates a/k/a Demon
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1) and 2
Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(3), (5) and 2
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. § 1951(a) and 2
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 2
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
5-17, 21-25, 29-34, 38-44, 46-55, 59-64, 68-70
Eduardo Lebron a/k/a Warlord
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1)
Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(3), (5) and 2
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
35-37, 49-58
Eder Torres a/k/a Flaco
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1)
Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(3), (5) and 2
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(3) and 2
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. § 1951(a) and 2
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
5-7, 29-31,
65-67, 71-73
Julian Ruiz a/k/a JJ
Only charges in counts 1-4
Only counts 1-4
Antonio Cruz
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1)
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. § 1951(a) and 2
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
5-7, 18-20,
24-28, 59-64,
68-70
Terrell Golden a/k/a G
Murder in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(1)
Use of Firearm Causing Murder, in violation of 18 U.S.C. § 924(j)
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
15-17
Anthony Lek
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. § 1951(a)
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
5-7, 24, 25
Robert Loera
Conspiracy to Commit Robbery Affecting Interstate Commerce, in violation of 18 U.S.C. § 1951(a)
Robbery and Conspiracy to Commit Robbery of Banks and Credit Unions, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371
Use of Firearm in Furtherance of Crime of Violence, in violation of 18 U.S.C. §§ 924(c)(1)(A) and 2
Accessory After the Fact to Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering, in violation of 18 U.S.C. §§ 1959(a)(5) and 3
5-7, 45
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The maximum penalty each defendant faces upon conviction is life imprisonment. Chavez, Skates, Golden, Cruz, Torres, and Lebron are charged with death-eligible offenses. The decision whether to seek the death penalty against any or all of these defendants is pending. Additionally, periods of supervised release, fines, forfeitures, and special assessments also could be imposed. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The defendants are all currently in law enforcement custody in various jurisdictions, including in the custody of the United States Marshals Service. Defendants are scheduled to appear before the Honorable Lucy Koh, United States District Judge, on Wednesday, November 18, 2015, at 9:30 a.m.
Assistant U.S. Attorney Stephen Meyer is prosecuting the case with the assistance of Nina Burney and Susan Kreider. The prosecution is the result of an investigation by the Salinas Police Department.
Violent Gang Member Sentenced to 28 Years in Federal Prison for Racketeering Murder in San JoseRead the Press Release
SAN JOSE – Jose Farias Barajas, a/k/a "Bear," was sentenced today to 28 years in federal prison for his part in a racketeering conspiracy and other crimes announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The sentence follows a guilty plea in which Barajas acknowledged his guilt relating to several gang-related crimes including robbery, narcotics trafficking, and murder.
Barajas, 25, of San Jose, is a member of the Varrio Colonias Trece (Colonias), a Sureño street gang in San Jose. According to court records, members of the Colonias gang are allied with members of another Sureño gang in San Jose, Varrio Tamilee Gangsters (“VTG”). On March 20, 2014, Barajas pleaded guilty to conspiracy to commit murder, possession and use of a firearm during and in relation to a crime of violence, use of a firearm in furtherance of a crime of violence resulting in murder, and distribution of methamphetamine. As part of his plea agreement, Barajas acknowledged his participation in Colonias/VTG gang activity including attacks on members of rival Norteño gangs.
Also as part of his plea agreement, Barajas acknowledged the facts underlying the killing on August 13, 2012, of an innocent victim. Barajas and a codefendant, Victor Manuel Rodriguez, a/k/a “Silencer,” were in a car “hunting” for rival Norteño gang members. The codefendants were retaliating because someone had spray painted graffiti in the Colonias/VTG Gang’s territory. According to court documents:
In carrying out this RICO conspiracy, in August 2013, defendant Barajas drove co-defendant Rodriguez around hunting for rival Norteños who had been spray painting their gang graffiti on the defendants’ gang’s turf. Barajas knew that Rodriguez was armed with a .38 caliber revolver. Upon seeing [the victim], the defendants thought he was a Norteño and Rodriguez directed Barajas to make a U-turn, which he did. Barajas then stopped the car right in front of [the victim’s] driveway, and Rodriguez exited the car, pulled out the .38 caliber revolver that he had been carrying on his person, and shot [the victim] once in the head at close range. After shooting the victim in the head, Rodriguez reentered Barajas’s car and laughed about the shooting.
The victim died two days later. The investigation revealed that he was not in fact a Norteño gang member. The victim had just arrived home with his girlfriend from the veterinarian where they had taken their sick dog.
The Honorable Edward J. Davila, United States District Judge, handed down the sentence. Rodriguez was previously sentenced to 38 years in prison. Both defendants have been in custody since their arrest on October 3, 2012.
Assistant U.S. Attorneys Stephen Meyer and Daniel Kaleba prosecuted the case with the assistance of paralegal Nina Burney. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the San Jose Police Department.
Two California Residents Convicted in $819,000 Insider Trading SchemeRead the Press Release
SAN FRANCISCO – Today, Christian Keller and John Gray each pleaded guilty to one count of conspiracy and one count of securities fraud, announced Acting United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The guilty pleas stem from an insider trading scheme involving material, non-public, inside information from Rovi Corporation, and one other publicly-traded company, that generated illegal profits in excess of $819,000.
Keller, 41, of Los Altos, and Gray, 39, of Irvine, were charged by information filed September 2, 2015, with participating in an insider trading scheme. According to the information, Keller provided Gray with material, non-public, inside information between 2009 and 2012. Prior to 2012, Keller worked at a public company, the name of which was not disclosed in the information, where Keller had access to material, non-public, confidential information, which Keller provided to Gray and which Gray used to execute securities transactions.
In early 2012, Keller was employed by Rovi Corporation, in Santa Clara, Calif., as a Vice President of Corporate Finance and Investor Relations. Keller provided Gray with material, non-public, confidential information relating to the performance and revenue estimates of Rovi Corporation. Gray, and others, then executed a series of securities transactions using the inside information, sometimes in the brokerage accounts of third persons to conceal the scheme. From the illegal trading profits, Gray paid Keller a total of approximately $46,000 in cash. Each defendant was changed with one count of conspiracy, in violation of 18 U.S.C. § 371, one count of securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff, and related regulations, and aiding and abetting securities fraud, in violation of 18 U.S.C. § 2.
Both defendants currently are released from custody pending sentencing. Keller is scheduled to appear for sentencing on April 19, 2015, before the Honorable Jeffrey S. White, District Judge. Gray’s sentencing, also before Judge White, is scheduled for April 5, 2015.
The maximum statutory penalty for conspiracy in violation of 18 U.S.C. § 371 is 5 years in prison and a fine of not more than $250,000, or twice the gross gain or twice the gross loss, whichever is greater. The maximum statutory penalty for securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff is 20 years in prison and a fine of not more than $5 million. However, any sentence following convictions for these offenses 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 Beth Margen and Bridget Kilkenny. The prosecution is the result of an investigation by the FBI.
Justice Department Convenes Summit on Digital Currency and the BlockchainRead the Press Release
SAN FRANCISCO – The U.S. Department of Justice sponsored a day-long conference today on digital currency at the Federal Reserve Bank in San Francisco, announced Acting U.S. Attorney Brian J. Stretch. The event brought together approximately 175 participants involved with digital currency and blockchain—the public ledger of all bitcoin transactions. With the goal of identifying and examining effective strategies to reduce criminal activity on digital currency platforms, the conference was attended by representatives from law enforcement, government regulators, major financial institutions, technology companies, legislative staff, non-profits, and universities.
The summit represents a large scale outreach by government enforcement and regulators on the one hand, and industry participants on the other, to discuss common goals. Today’s formal program included four panels that described emerging issues in digital currency from the perspective of: (1) the digital currency industry, (2) law enforcement, (3) regulators, and (4) the blockchain industry.
Acting U.S. Attorney Brian J. Stretch gave the keynote address. “As emerging technologies such as digital currency and block chains expand into new and legitimate applications, it becomes all the more critical for industry leaders and government agencies to share insights and perspectives in order to combat the illicit use of these technologies,” said Mr. Stretch. “The exchange of ideas at today's summit is an important step toward allowing creative thinkers to responsibly develop innovative tools to service the world economy.” Mr. Stretch recognized many of the participates in the conference who, he pointed out, included Assistant U.S. Attorneys from other districts around the country.
“FinCEN [Financial Crimes Enforcement Network] was the first regulator to address virtual currency.” said FinCEN Director Jennifer Shasky Calvery. “But we only opened the door for the hundreds of other questions beyond our anti-money laundering perspective. It is vitally important that government regulators and law enforcement agencies engage with the leaders of the virtual currency sector to make sure we understand each other. Working together will benefit all sides.”
The summit was planned by the Digital Currency Task Force, a multi-agency task force comprised of the U.S. Attorney’s Office for the Northern District of California, the U.S. Secret Service, the Federal Bureau of Investigation, the Department of Homeland Security, and local partners, and based in San Francisco. The U.S. Attorney’s Office in the Northern District of California is one of a number of districts that has developed an expertise in investigating and prosecuting crimes using digital currency, the dark net, and related technologies.
Three San Francisco International Airport Security Screeners Charged with Fraud and Smuggling DrugsRead the Press Release
SAN FRANCISCO – Three San Francisco International Airport security screeners have been arrested on charges of defrauding the government and smuggling cocaine, announced Acting United States Attorney Brian J. Stretch, Drug Enforcement Administration Special Agent in Charge John J. Martin, Federal Bureau of Investigation Special Agent in Charge David J. Johnson, and Transportation Security Administration Office of Inspection Special Agent in Charge Regan Fong. A federal indictment charging the three individuals with fraud and drug smuggling was unsealed yesterday.
The three defendants named in the indictment were employees of Covenant Aviation Security (CAS), a private company that contracts with the Transportation Security Administration (TSA) to provide security screening services at San Francisco International Airport (SFO). The defendants are Joseph Scott, 35, of Vallejo, a former Supervisory Transportation Security Officer for CAS; Michael Castaneda, 32, of Daly City, a former Lead Transportation Security Officer for CAS; and Jessica Scott, 27, of San Pablo, a current Supervisory Transportation Security Officer for CAS.
The indictment alleges that the three defendants conspired to use their positions as Transportation Security Officers to allow passengers to smuggle real and simulated cocaine through airport security checkpoints. The defendants all were assigned to SFO. The defendants arranged for passengers carrying narcotics in their carry-on luggage to pass through the x-ray machine at a security checkpoint line without adequately screening the luggage for explosives, incendiaries, weapons, or other threats to security. Through the use of confidential sources and undercover agents, law enforcement discovered that defendants made these arrangements for a fee on five occasions between May 2013 and April 2014.
The indictment further alleges that, once the passenger carrying drugs or simulated drugs arrived at the security checkpoint lane, s/he was directed or escorted to a particular security line. On that line, one of the defendants was either operating or overseeing the operation of the x-ray machine. The defendant operating or overseeing the x-ray machine either knew the carry-on baggage contained narcotics, viewed images that suggested the need for secondary inspection, or both. Nevertheless, in each instance, the defendant responsible for the x-ray machine failed to call for a secondary screening of the baggage or alert law enforcement or a supervisor to the presence of suspected narcotics. In each case, the drugs and simulated drugs were smuggled as part of undercover operations performed by the Drug Enforcement Administration and TSA-Office of Inspection designed to determine the scope and nature of the conspiracy.
All three defendants are charged with two counts. The first count is conspiring to defraud the TSA by obstructing a lawful government function, in violation of 18 U.S.C. § 371. Violation of this statute carries a maximum term of imprisonment of five years and a maximum fine of $250,000. The second count is conspiring to distribute and possess with intent to distribute more than five kilograms of cocaine, in violation of 21 U.S.C. §§ 846 and 841. Violation of this statute carries a mandatory minimum of ten years, a maximum sentence of life imprisonment, and a maximum fine of $10 million.
An indictment contains only allegations. Jessica Scott, Joseph Scott, and Michael Castaneda, as with all defendants, must be presumed innocent unless and until proven guilty. In addition, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The indictment was unsealed on November 5, 2015, after all three defendants were arrested and appeared before U.S. Magistrate Judge Laurel Beeler. Joseph Scott and Jessica Scott were released today, each subject to a $50,000 bond. Michael Castaneda remains in federal custody and is scheduled to appear for a detention hearing Monday, November 9, 2015, before Magistrate Judge Beeler.
Assistant U.S. Attorneys Adam Wright and Marc Price Wolf are prosecuting the case with the assistance of Amanda Martinez, Rawaty Yim, Jacquelyn Lovrin, and Yanira Osorio. The investigation has involved officers and agents from the Drug Enforcement Administration, Federal Bureau of Investigation, the TSA Office of Inspection, San Francisco Police Department, and the Oakland Police Department.
This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state, and local law enforcement agencies.
Three Bay Area Defendants Charged in False Tax Refund SchemesRead the Press Release
SAN FRANCISCO – Carol Bryant, AKA Carol Lawson, Mark Russell, and Anyssa Hall were charged with conspiracy to file false claims, wire fraud, theft of public money, aiding and abetting, and aggravated identity theft announced Acting United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Thomas McMahon.
According to the indictment, beginning on January 9, 2009, through May 4, 2013, Mark Russell and Anyssa Hall, both of Richmond, and Carol Bryant, of San Pablo, conspired to defraud the Internal Revenue Service (IRS). As part of the scheme, the defendants and others procured the names and identities of individual taxpayers through illegal means or by agreement as participants in the scheme. Using the names and identities, the defendants filed, or helped others file, false federal income tax returns with the IRS. These federal income tax returns falsely reported that the individual taxpayers earned wages in amounts specified on fictitious Forms W-2 that were filed with the false federal income tax returns. The federal income tax returns falsely reported that taxes had been withheld by employers and falsely claimed refunds from the IRS that the taxpayers were not entitled to receive. The defendants and other co-conspirators requested that the IRS transmit the fraudulent refunds into bank accounts they controlled and that were linked to debit cards they used to access the fraudulent refunds.
All three defendants were charged with conspiracy. Bryant was also charged with two counts of theft of government property, wire fraud, and two counts of aggravated identity theft. Russell was also charged with two counts of wire fraud and two counts of aggravated identity theft. Hall was also charged with theft of government property.
Russell and Bryant were arrested on November 2, 2015, and made their initial appearance before the Honorable Kandis Westmore, U.S. Magistrate Judge, in Oakland on November 4, 2015. Both Russell and Bryant are scheduled to appear before the Honorable Yvonne Gonzalez-Rogers on December 3, 2015, at 3:00 p.m. in the Oakland Federal Building. Hall currently is a fugitive.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The maximum sentence for conspiracy to file false claims, in violation of 18 U.S.C § 286, is 10 years in prison and a fine of $250,000. The maximum penalty for theft of public money, in violation of Title 18, U.S.C § 641, is 10 years in prison and a fine of $250,000. The maximum penalty for wire fraud, in violation of Title 18, U.S.C § 1343, is 20 years in prison and a fine of $250,000. The maximum penalty for each count of identity fraud, in violation of a Title 18, U.S.C § 1028A, is two years in prison, consecutive to the underlying felony and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Cynthia Stier is prosecuting this case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.