Northern District of California
Press releases recorded for this federal judicial district.
Oakland Man Found Guilty of Murder in Christmas Marijuana Robbery Near Oakland AirportRead the Press Release
OAKLAND – Earlier today, a federal jury convicted Damion Sleugh of six felonies, including first degree murder, robbery, and drug conspiracy, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The charges stemmed from a robbery and shooting in a parking lot near the Oakland Airport three days before Christmas in 2013.
Evidence at trial showed that Sleugh, 28, of Oakland, helped arrange a meeting to purchase five pounds of marijuana. In the early afternoon of December 22, 2013, Sleugh met with Vincent Muzac, 24, of Alameda, in the parking lot of a Walmart store near Hegenberger Road and Interstate 880 in Oakland. Surveillance video showed Mr. Muzac enter a car where he remained for four minutes before he was robbed and shot. His body was seen lying on the ground as the car sped away. A joint investigation by the FBI and the Oakland Police Department revealed that Sleugh was the driver. The evidence submitted at trial included incriminating text messages, FBI crime scene recreations, and images of Sleugh with the stolen marijuana. The photographs of Sleugh included a “selfie” taken from Sleugh’s phone two hours after the shooting; in the photograph, Sleugh is pictured in the same passenger seat where Mr. Muzac had just been shot. On March 27, 2014, Sleugh was indicted in a six-count indictment charging him with conspiracy and attempt to possess with the intent to distribute marijuana, in violation of 21 U.S.C. § 841; robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a); the use of a firearm during a drug trafficking crime or a crime of violence, in violation of 18 U.S.C. § 924(c); the use of a firearm during a drug trafficking crime or a crime of violence resulting in murder, in violation of 18 U.S.C. § 924 (j); and being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g).
The jury convicted Sleugh of all six counts in the indictment. The verdict also included a special finding that Sleugh committed first degree murder. The guilty verdict followed a two-week jury trial before the Honorable Yvonne Gonzalez-Rogers, U.S. District Judge.
Sleugh’s sentencing hearing is scheduled for November 4, 2015, in Oakland before Judge Gonzalez-Rogers. Sleugh faces up to a life sentence for first degree murder. Sleugh’s sentence also may include a 10-year prison term for discharging a firearm during a crime of violence or drug-trafficking crime. 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 Damali Taylor and Joseph Alioto Jr. prosecuted the case, along with paralegals Patty Lau and Christine Tian. The prosecution is the result of an investigation led by Special Agent Russ Nimmo of the Federal Bureau of Investigation and detectives Randy Brandwood and Phong Tran of the Oakland Police Department.
Concord Resident Sentenced to Six Months in Custody for Role in Submitting Fraudulent Asylum ApplicationsRead the Press Release
SAN FRANCISCO – Buyantod Thomas was sentenced on July 9, 2015, to six months in prison, for aiding and abetting the submission of fraudulent asylum applications, announced United States Attorney Melinda Haag and Homeland Security Investigations Acting Special Agent in Charge Tatum King.
Thomas, 30, of Concord, Calif., pleaded guilty on March 27, 2015, to a one count indictment filed on January 27, 2015, charging her with knowingly aiding and abetting a person to make a false statement in an asylum application. Asylum applications generally are submitted to the U.S. Citizenship and Immigration Services in cases where removal from the United States would be contrary to law. To qualify for asylum, applicants must demonstrate that their removal would put them at significant risk based on their race, religion, nationality, political opinion, membership in a particular social group, or on account of a torture convention. In this case, Thomas admitted she helped Mongolian nationals apply for asylum based on fictitious stories and false documents.
At sentencing, the Honorable Susan Illston, U.S. District Judge found that Thomas assisted in filing at least 25 fraudulent asylum applications. In sentencing Thomas, Judge Illston emphasized the need for deterrence for crimes of this nature, explaining: “I find these to be very serious crimes. The asylum system is such a precious system we have and if it’s abused in the way that it was abused here, then it won’t be used anymore and we won’t have it… [this case] is really damaging to the immigration system that we have in place.” In addition to the prison term, Judge Illston also sentenced Thomas to a three year period of supervised release. The defendant will begin serving the sentence on September 4, 2015.
This case was prosecuted by the Office of the U.S. Attorney’s Special Prosecutions and National Security Unit. The prosecution is the result of a multi-year investigation by the Department of Homeland Security, Homeland Security Investigations San Francisco Document and Benefit Fraud Task Force.
Bay Area Man Sentenced to Prison for Coercion of Minors for ProstitutionRead the Press Release
SAN FRANCISCO – Omar Ahmad was sentenced to 63 months in prison for coercing and enticing two underage boys to engage in prostitution, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Ahmad, 29, of San Jose, pleaded guilty on April 2, 2015 to a superseding information charging him with one count of coercion and enticement of two male minors to travel interstate for commercial sexual activities. According to the plea agreement, Ahmad admitted that between October 2011 and September 2012, he traveled from California, to Las Vegas, Nevada, on two or three occasions in connection with the crime. On at least one occasion before leaving for Las Vegas, he attempted to knowingly persuade, entice, and induce the two male victims to travel from San Jose, California, to Las Vegas for the purpose of engaging in prostitution. Ahmad attempted to entice the minors by telling them of the amenities and opportunities available in Las Vegas. Ahmad also admitted the government could prove that both male victims were under the age of 18 at the time he attempted to persuade them to travel for prostitution.
Ahmad, was indicted by a federal grand jury on June 12, 2013. Initially, he was charged with two counts of sex trafficking of a minor, in violation of 18 U.S.C. § 1591; two counts of production of child pornography, in violation of 18 U.S.C.§ 2251, and one count of distribution of child pornography, in violation of 18 U.S.C. § 2252. The superseding information charging Ahmad with one count of coercion and enticement of travel for prostitution, in violation of 18 U.S.C. § 2422(a), was filed April 2, 2015. Ahmed has been in custody since his arrest in August 2013.
The sentence was handed down by the Honorable James Donato, U.S. District Judge, following Ahmad’s plea of guilty to the charge in the superseding information. Judge Donato also sentenced the defendant to a seven-year period of supervised release following his prison term, the first 12 months of which must be served under house arrest; to pay restitution to each of his victims in the amount of $2000 a piece (for a total restitution of $4000); and to register as a sex offender. The defendant will begin serving the sentence immediately.
Assistant U.S. Attorney Amie Rooney is prosecuting the case with the assistance of Laurie Worthen and Nina Burney. The prosecution is the result of an investigation by the FBI and the San Jose Police Department Human Trafficking Task Force.
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.
Partners in Scotts Valley Investment Company Sentenced to Prison for Fraud SchemeRead the Press Release
SAN JOSE – Keith Rode was sentenced yesterday to 70 months in prison and ordered to pay $32,880,811.82 in restitution for his role in an investment fraud, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The sentence brings a close the last of the three cases against the partners of Geringer, Luck, and Rode LLC, a Scotts Valley investment company.
Rode, 47, of Los Angeles, along with his co-defendants, John Geringer, 50, of Santa Cruz and Christopher Luck, 58, of Scotts Valley, pleaded guilty in 2014. Each defendant has acknowledged playing a role in an investment fraud scheme: Rode pleaded guilty to one count of mail fraud while Geringer and Luck each pleaded guilty to one count of conspiracy to commit mail and wire fraud, one count of mail fraud, and one count of securities fraud. According to the plea agreements, Geringer, Luck, and Rode, each admitted they made false and misleading statements to induce people to make investments in a fund managed by the partnership. Specifically, at the end of April 2009, Geringer confessed to Rode and Luck that he had been falsifying the investment fund’s trading records for several years. Instead of terminating the fund or reporting Geringer to the authorities, Rode and Luck admitted they continued to recruit investors by making false and misleading statements to members of the public, including that the fund had a positive historical performance and that the fund made diversified equity trades.
In each of their guilty pleas, Geringer, Luck, and Rode acknowledged that these false and misleading statements were necessary to cause new investors to contribute to the fund and to induce existing investors to maintain their investments or furnish more money. The defendants also admitted that new investor money was critical to keeping the fund afloat and that if they were truthful with potential investors, new investors most certainly would have chosen not to invest. The defendants also admitted that this new investor money was used to pay the partners’ salary and bonus payments. In total, between 2003 and 2012, Geringer defrauded investors out of over $50 million. Between May 2009 and 2012, after Geringer confessed the fraud to Luck and Rode, investors were defrauded out of over $30 million.
Geringer, Luck and Rode were indicted by a federal grand jury on December 20, 2012. Each defendant was charged with conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 1349; mail fraud, in violation of 18 U.S.C. § 1341; wire fraud, in violation of 18 U.S.C. § 1343; securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff and 17 C.F.R. §§ 240.10b-5 and 240.10b5-2; and money laundering, in violation of 18 U.S.C. § 1957. All the charges were related to the defendants’ conduct at Geringer, Luck, and Rode, LLC.
On January 15, 2015, Luck was sentenced to 130 months’ imprisonment. The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge, following Luck’s guilty plea to one count of conspiracy to commit mail and wire fraud, one count of mail fraud, and one count of wire fraud. Judge Davila also sentenced Luck to a three year period of supervised release, ordered the defendant to pay restitution in the amount of $32,880,811.82, and ordered him to forfeit $32,880,811.82 to the United States government. Luck began serving his prison term on April 9, 2015.
Geringer was sentenced to 145 months’ imprisonment on June 25, 2015. This sentence also was handed down by Judge Davila following Geringer’s plea of guilty to one count of conspiracy to commit mail and wire fraud, one count of mail fraud, and one count of wire fraud. Judge Davila also sentenced Geringer to a three year period of supervised release, ordered the defendant to pay restitution in the amount of $50,327,484.04, and ordered him to forfeit $50,327,484.04 to the United States government. Geringer will begin serving his prison term on August 20, 2015.
Yesterday, Judge Davila sentenced Rode to 70 months’ imprisonment following Rode’s guilty plea to one count of mail fraud. Judge Davila also sentenced Rode to a three year period of supervised release, ordered the defendant to pay restitution in the amount of $32,880,811.82, and to forfeit $32,880,811.82 to the United States government. Rode will begin serving his prison term on September 3, 2015.
Assistant U.S. Attorney Jeff Schenk is prosecuting the case with the assistance of Nina Williams and Laurie Worthen. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Danville Man Pleads Guilty to Possession of Child PornographyRead the Press Release
OAKLAND – Mitchell Phillip Wolf pleaded guilty in federal court in Oakland today to possession of child pornography, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson
As part of his plea agreement, Wolf, 59, of Danville, Calif., admitted to knowingly possessing approximately 50,000 digital files depicting minors engaged in sexually explicit conduct. Wolf admitted to intentionally saving the image and video files to his personal desktop computer and to assorted CD-ROMs and DVDs that he stored in his home office, bedroom, and briefcase. On many of the CD-ROMs and DVDs, Wolf hand-labeled their content with terms consistent with child pornography, such as “PTHC” for “pre-teen hardcore.” Wolf also admitted to downloading the digital files from the internet using an online peer-to-peer file sharing program. Wolf was charged by information on April 3, 2015, with a single count of possession of child pornography in violation of 18 U.S.C. § 2252 (a)(4)(B). Pursuant to the plea agreement, Wolf pleaded guilty to the count as charged.
Wolf is currently released on a $250,000 bond. His sentencing hearing is scheduled for October 21, 2015, before the Honorable Phyllis J. Hamilton, U.S. District Judge, in Oakland. The maximum statutory penalty for a violation of 18 U.S.C. § 2252 (a)(4)(B) is 10 years in prison, a fine of $250,000, a lifetime term of supervised release, and payment of 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 Wade M. Rhyne is prosecuting the case with the assistance of Janice Pagsanjan and Noble Hughes. The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Silicon Valley Internet Crimes Against Children’s Task Force, and the Contra Costa County District Attorney’s Office.
Former Top GSA Official Sentenced to Three Months Imprisonment and Three Months Home DetentionRead the Press Release
SAN FRANCISCO- Jeffrey Neely, the former Acting Regional Administrator of the U.S. General Services Administration (GSA), was sentenced to three months imprisonment, to be followed by three months of home confinement, in connection with his guilty plea for making a false claim to the United States, announced United States Attorney Melinda Haag and GSA Office of Inspector General, Special Agent in Charge David House.
From June 2003 to May 2012, Neely, 59, of Gardnerville, NV, was the Regional Commissioner for the Public Buildings Service for GSA’s Pacific Rim Region, which includes California, Arizona, Hawaii, Nevada, American Samoa, the Northern Mariana Islands, Guam, and Saipan, as well as certain properties in Japan, Korea, Singapore, and elsewhere. Between March 30, 2009, and July 31, 2011, Neely was also Acting Regional Administrator, making him the top GSA official for the region.
Neely was indicted on September 25, 2014, on three counts of making false claims under 18 U.S.C. § 287, and two counts of making false statements and using false documents, under 18 U.S.C. § 1001. He pleaded guilty to one false claim count on March 31, 2015, admitting that he submitted a false reimbursement claim for lodging expenses at M Resort Spa Casino Las Vegas that he had not incurred for official business. Neely also admitted that he submitted and caused GSA to pay additional false claims during his tenure, that he improperly failed to claim annual leave on certain dates, that these acts constitute an abuse of his position of trust with GSA, and that he obstructed justice during GSA’s investigation.
“Mr. Neely has acknowledged he violated the special trust that was placed in him as a public servant,” said U.S. Attorney Melinda Haag. “His position with the government required that he be a good steward of government funds. Instead, he has admitted he abused his position and obstructed the investigation into his wrongdoing. He is being held accountable for his decision to violate the law.”
The sentence imposed by U.S. District Judge Richard Seeborg also included payment of $8,000 in restitution, a $2,000 fine, and a two year period of supervised release. Neely is scheduled to surrender and begin serving his sentence on August 14, 2015.
Assistant U.S. Attorney Hartley M.K. West prosecuted the case with the assistance of Rosario Calderon and Trina Khadoo. The prosecution was the result of an investigation by the GSA’s Office of Inspector General.
Former State Senator Leland Yee and Three Others Plead Guilty to RacketeeringRead the Press Release
SAN FRANCISCO – Former State Senator Leland Yee, Brandon Jackson, Keith Jackson, and Marlon Sullivan all pleaded guilty in federal court in San Francisco today to charges that they engaged in racketeering activity announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. By changing their pleas from “not guilty” to “guilty” the four codefendants now each have acknowledged they have participated in the affairs of an enterprise through a pattern of racketeering activity. Each defendant, all residents of San Francisco, has acknowledged guilt with respect to separate facts.
For his part, Yee, 66, acknowledged that he participated in two criminal enterprises, the Leland Yee for Mayor Campaign 2011 and the Leland Yee for Secretary of State campaign. In connection with these campaigns, Yee admitted he (1) accepted $10,000 in exchange for using his influence as a state senator to assist in the process of obtaining a grant from the California Department of Public Health, (2) conspired to extort money from individuals by suggesting he would cast favorable votes for specific legislation only if the money were paid, (3) accepted a $11,000 bribe in exchange for arranging a meeting with another state senator to discuss specific legislation, (4) conspired with others to purchase weapons in the Philippines and import them illegally into the United States, and (5) provided more than $6,000 in cash to a campaign aide knowing the aide would launder the money by arranging to convert the cash into checks made payable to Yee’s Secretary of State campaign. On January 29, 2015, a federal grand jury indicted Yee under a second superseding indictment with conspiracy to conduct the affairs of an enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(d); conspiracy to obtain property under color of official right, in violation of 18 U.S.C. § 1951(a); honest services conspiracy, in violation of 18 U.S.C. § 1349; scheme to defraud citizens of honest services and wire fraud, in violation of 18 U.S.C. §§ 1343 and 1346; conspiracy to traffic in firearms without a license and to illegally import firearms, in violation of 18 U.S.C. §§ 371, 922(a)(1), and 922(l); and conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). According to his plea agreement, Yee pleaded guilty to the racketeering charge and the remaining charges will be dismissed.
“Mr. Yee must now live with the consequences of betraying the trust that was placed in him when he became a public servant,” said U.S. Attorney Melinda Haag. “It is particularly disappointing and troubling when our elected officials violate their obligation to fairly represent their constituents. This office will continue to devote the resources necessary to ensure that our elected officials govern within the law.”
"Senator Yee's admission of guilt today brings some measure of justice to the true victims of his crimes: the people of the state of California," said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office." When a public official uses his office for personal gain and as a platform for illegal activity, he not only betrays the people who elected him to office, but undermines the core principles of our system of government."
Keith Jackson, 50, was Yee’s political consultant and also pleaded guilty to a single charge of racketeering with respect to the same criminal enterprises: the Leland Yee for Mayor Campaign 2011 and the Leland Yee for Secretary of State campaign. In his plea agreement, Jackson admitted he (1) conspired with Yee to accept payments in exchange for providing official services from Yee in his capacity as a state senator, (2) conspired to extort money from individuals by suggesting he would cast favorable votes for specific legislation only if the money were paid, (3) received bribes on Yee’s behalf, (4) conspired with Yee to purchase weapons in the Philippines and import them illegally into the United States, and (5) reimbursed an individual with $3,000 in cash in exchange for two checks made payable to the Leland Yee for Secretary of State campaign knowing that the transaction constituted money laundering and was in furtherance of a weapons trafficking deal. Jackson was charged with 24 counts in the second superseding indictment (as compared to the 9 charges against Yee). The charges included use of interstate commerce facilities in the commission of murder for hire and conspiracy to distribute and possess with intent to distribute cocaine.
According to Sullivan’s plea agreement, he engaged in a separate criminal enterprise, the Chee Kung Tong (CKT). The plea agreement describes CKT as a predominantly Chinese American association, based in Chinatown in San Francisco, formed primarily for civic purposes to benefit the communities of Chinese immigrants and Chinese Americans. According to the plea agreement, CKT developed both positive legal community functions and criminal functions; “[s]ome members of the CKT were strictly involved the CKT’s legal functions and activities while other] members were also involved in illegal functions and activities.” Sullivan, 30, admitted he conspired with Keith Jackson and Brandon Jackson to purchase cocaine and to complete a murder-for-hire transaction. Sullivan further acknowledged being arrested just as he attempted to complete the cocaine transaction. With respect to the murder-for-hire transaction, Sullivan did not discover until after he agreed to perform the murder that both the person requesting the murder and the target were federal agents. Sullivan told one of the agents he could “‘pull it off’ because nobody would suspect me of being capable of murder, based on the fact that he was a licensed sports agent. Sullivan was referring to the fact that he was a sports agent licensed to represent players of, among other associations, the National Football League. Sullivan agreed to accept $10,000 in exchange for completing the murder. In addition, Sullivan admitted participating with Keith Jackson and Brandon Jackson in a scheme to illegally sell multiple firearms. Here again, Sullivan was unaware he was selling the arms to undercover federal agents. Sullivan was charged in the second superseding indictment with conspiracy to conduct the affairs of an enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(d); conspiracy to distribute and possess with intent to distribute cocaine, in violation of 21 U.S.C. § 846, 841(a)(1) and (b)(1)(A); three counts of dealing firearms without a license, in violation of 18 U.S.C. § 922(a)(1); and use of interstate commerce facilities in the commission of murder for hire, in violation of 18 U.S.C. § 1958.
According to Brandon Jackson’s plea agreement, he too participated in illegal activities through CKT. Jackson, 29, admitted that CKT was engaged in narcotics distribution, assault, robbery, extortion, collection of unlawful debt, murder for hire, money laundering, trafficking in stolen goods, illegal firearm possession, and obstruction of justice. Jackson admitted he tried to arrange for the purchase of 10 kilograms of cocaine from a Colombian supplier. The supplier turned out to be a non-existent person created by a federal agent. Jackson was arrested in Hartford, Connecticut, after flying there to complete the transaction. With respect to the murder-for-hire scheme, Jackson agreed to gather intelligence on the intended target including the target’s “daily routine.” Further, Jackson participated with Keith Jackson and Sullivan in the selling of multiple firearms. Brandon Jackson was charged in the second superseding indictment with conspiracy to conduct the affairs of an enterprise through a pattern of racketeering activity, in violation of 18 U.S.C. § 1962(d); conspiracy to distribute and possess with intent to distribute cocaine, in violation of 21 U.S.C. § 846, 841(a)(1) and (b)(1)(A); six counts of dealing firearms without a license, in violation of 18 U.S.C. § 922(a)(1); and use of interstate commerce facilities in the commission of murder for hire, in violation of 18 U.S.C. § 1958.
Yee and Keith Jackson remain out of custody pending their sentencing hearings. Sullivan and Brandon Jackson are in custody pending their sentencing hearings. All defendants are scheduled to be sentenced on October 21, 2015, at 10:00 a.m., before the Honorable Charles Breyer, U.S. District Judge, in San Francisco. The maximum statutory penalty for participating in the affairs of an enterprise through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(d) is a 20 years of imprisonment, a fine of $250,000, plus restitution. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
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; 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.
Former Silk Road Task Force Agent Pleads Guilty to Extortion, Money Laundering, and ObstructionRead the Press Release
SAN FRANCISCO – Carl M. Force pleaded guilty today to extortion, money laundering, and obstruction of justice in connection with his position as an undercover agent with the Drug Enforcement Administration announced U.S. Attorney Melinda Haag, Assistant Attorney General Leslie R. Caldwell, Chief Richard Weber of the IRS-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 Lori Hazenstab of the Department of Homeland Security’s Office of the Inspector General in Washington D.C.
Force, 46, of Baltimore, had been a Special Agent with the DEA for 15 years. Between 2012 and 2014, he was assigned to the Baltimore Silk Road Task Force, a multi-agency group investigating illegal activity on the Silk Road. Force was the lead undercover agent in communication with Ross Ulbricht, a/k/a “Dread Pirate Roberts,” who ran the Silk Road from the Northern District of California.
In the plea agreement entered today, Force admitted to being on Ulbricht’s payroll in a variety of ways while assigned to investigate Ulbricht and the Silk Road. For example, Force used his official undercover persona, “Nob,” to get Ulbricht to send bitcoin payments in exchange for information, including “insider” law enforcement information; ironically, Force duped Ulbricht into making payments in part by claiming Nob had access to a corrupt government employee. Then, rather than disclose Ulbricht’s payments or turn them over to the government, Force lied on official reports and stole the funds. Force liquidated the digital currency into dollars and had the funds deposited into his own bank account in order to convert the funds to his own personal use. Further, Force also created other unofficial and fictitious personas that he used to extort payment from Ulbricht. For example, Force convinced Ulbricht he was “French Maid” named Carla Sophia who was willing to sell inside law enforcement information about the government’s investigation into the Silk Road in exchange for approximately $100,000 worth of bitcoin. Ulbricht ultimately made the payment and Force, again, stole the funds.
Ulbricht and the government were not the only targets of Force’s scheme: Force also admitted in the plea agreement that he extorted “R.P.,” a California resident. R.P. maintained a digital currency balance with CoinMKT, a California digital currency exchange. Force directed CoinMKT to seize R.P.’s funds despite there being no legal basis to do so. Force then pocketed those sums belonging to R.P., once again transferring them to his own personal digital currency exchange and subsequently converting them to dollars using his personal bank account.
Force also admitted to abusing his position by engaging in a wide array of outside activities without permission while he was a federal agent, all designed to enrich himself. For example, in March 2014, while still employed as a DEA agent, Force entered into a movie contract with Twentieth Century Fox Film Studios related to a movie deal concerning the government’s investigation into the Silk Road. The movie deal called for up to $240,000 in payments to Force. Further, Force also moonlighted as a de facto compliance officer for CoinMKT, the same digital currency exchange involved with Force’s attempt to extort R.P. Force offered to help CoinMKT investigate its customers by using his position as a federal agent and his access to government databases. In addition, Force sent an unauthorized but official Justice Department subpoena to Venmo, a mobile payments company, directing them to unfreeze his own personal account. When Venmo did not comply, Force wrote to another agent suggesting a criminal seizure directed at Venmo’s accounts.
With the proceeds of his criminal activities, Force engaged in a series of complicated transactions, using the bitcoin block chain and several different accounts, all designed to conceal the true source and nature of the proceeds. In today’s plea agreement, Force also admitted he obstructed justice by interfering both with the evidence in the Baltimore case against Ulbricht, and with the San Francisco case into his own illegal acts. For example, Force admitted lying to federal prosecutors and investigators when he, among other things, denied ever using the moniker, “French Maid.” In his agreement with the government, Force has agreed to ask the Judge to impose sentencing enhancements for this obstruction.
“Mr. Force has admitted using his position of authority to weave a complex veil of deception for personal profit,” said U.S. Attorney Haag. “Mr. Force’s actions put at risk other important investigations and betrayed the trust placed in him by his law enforcement partners and the public. We are grateful for the work done by our federal partners to assist in unraveling this crime.”
“While investigating the Silk Road, former DEA Agent Carl Force crossed the line from enforcing the law to breaking it,” said Assistant Attorney General Caldwell. “Seduced by the perceived anonymity of virtual currency and the dark web, Force used invented online personas and encrypted messaging to fraudulently obtain bitcoin worth hundreds of thousands of dollars from the government and investigative targets alike. This guilty plea should send a strong message: neither the supposed anonymity of the dark web nor the use of virtual currency nor the misuse of a law enforcement badge will serve as a shield from the reach of the law.”
“Through following the money in the Silk Road investigation it became clear that the defendant was engaged in wire fraud, money laundering, and other related offenses,” said Chief Weber. “He used his position in the investigation to bring himself significant personal financial gain. This investigation sends a clear message -- no person, especially those entrusted with the public’s trust such as federal law enforcement, is above the law and IRS-CI will use their financial investigative skills to track you down.”
On June 22, 2015, Force was charged in a three-count information with money laundering with predicates of wire fraud and theft of government property, in violation of 18 U.S.C. § 1956(a)(1)(A) and (B); obstruction of justice, in violation of 18 U.S.C. § 1512(c)(2); and extortion under color of official right, in violation of 18 U.S.C. § 1951. Force’s sentencing is scheduled for October 19, 2015, at 2:00 p.m., before the Honorable Richard Seeborg, United States District Judge in San Francisco. The Plea Agreement calls for several sentencing enhancements that the parties agree the Court should impose. The maximum penalty for each count in the information is 20 years and $250,000, but any sentence following conviction would be imposed after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence.
Force is one of two federal agents to be charged with illegal activity in connection with the investigation into the Silk Road. Shaun W. Bridges, 32, of Laurel, Maryland, was a Special Agent with the U.S. Secret Service who also was assigned to the Baltimore Silk Road Task Force. Bridges was charged in a two-count information on June 16, 2015 with money laundering with a predicate of wire fraud, in violation of 18 U.S.C. § 1957, and obstruction of justice, in violation of 18 U.S.C. § 1512(c)(2), related to his diversion of over $800,000 in digital currency to which he gained control as part of the Silk Road investigation. In his plea agreement scheduled to be entered before Judge Seeborg on August 31, 2015, Bridges has admitted to the conduct with which he was charged.
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 U.S. Embassy in Slovenia, and the FBI Legal Attaché Office in Tokyo, Japan.
John Muir Health Agrees to Pay $550,000 to Resolve False Claims AllegationsRead the Press Release
SAN FRANCISCO – John Muir Health has agreed to pay the government $550,000 to resolve allegations that it submitted false claims for Medicare reimbursement, announced United States Attorney Melinda Haag, Department of Health and Human Services Office of Inspector General (OIG) Special Agent in Charge Ivan Negroni, and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
The settlement, unsealed by U.S. District Judge Samuel Conti, resolves a whistleblower lawsuit filed in the United States District Court for the Northern District of California. The United States’ investigation revealed that between January 1, 2009, and December 31, 2013, physicians who were contracted with John Muir Health to deliver radiation therapy failed to adequately supervise that treatment. The proper supervision of radiation therapy is a condition of payment for Medicare.
A former employee of John Muir Health filed the case pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. §§ 3729-33. Under those provisions, private citizens, known as “relators,” may file lawsuits on behalf of the United States and receive a portion of a settlement or judgment. In this case, the relator will receive $110,000 as her share of the government’s recovery.
Assistant U.S. Attorney Melanie L. Proctor handled the matter on behalf of the U.S. Attorney’s Office for the Northern District of California, with assistance of Paralegal Tiffani Chiu. The settlement with John Muir Health is the result of an investigation by the OIG and the Federal Bureau of Investigation.
Former American Samoa Government Official Sentenced to 22 Months in PrisonRead the Press Release
Evelyn Langford 49, of Copperas Cove, Texas, was sentenced today to 22 months in prison and ordered to pay $260,000 in restitution for her convictions for wire fraud and bribery, announced U.S. Attorney Melinda Haag of the Northern District of California, Special Agent in Charge David J. Johnson of the FBI’s San Francisco Division and Special Agent in Charge Paul Delacourt of the FBI’s Honolulu Division.
Langford pleaded guilty on March 20, 2015, to one count of wire fraud and one count of bribery. According to the plea agreement, Langford admitted that in 2012 she was the Director of the Department of Human Resources of the Government of American Samoa (ASG), a territory of the United States located in the South Pacific Ocean. As part of her duties, she was charged with partial oversight of a $24.8 million U.S. Department of Labor (DOL) National Emergency Grant (NEG). The grant was awarded to American Samoa in the wake of a September 2009 tsunami that caused significant damage in American Samoa. Langford admitted that while administering the funds, she accepted payments from a contractor. She then provided that contractor favorable official action.
In February 2012, a company known as the Native Hawaiian Holding Company Inc. (NHHC) entered into a service contract with the ASG. Under this contract, NHHC received approximately $4.7 million of the NEG funds to develop a “contact center” (or call center) industry in American Samoa. The NEG service contract was signed by an NHHC representative, Quin Rudin, and by Langford and other ASG representatives. The contract also contained provisions generally prohibiting employees of the ASG from soliciting or receiving gratuities from NHHC.
Notwithstanding the prohibition from soliciting gratuities, Langford nevertheless requested that Rudin extend her a “loan,” which Rudin agreed to do. Langford received a $10,000 payment from Rudin in April 2012 and a $250,000 payment in May 2012. After receiving the funds, Langford provided favorable official action on behalf of Rudin and NHHC. For example, Langford admitted making arrangements to have NHHC representatives, including Rudin, meet with the Governor of American Samoa for the purpose of “pitching” business ideas to him, including proposals regarding transportation and medical development projects. In addition, Langford concealed the true nature and scope of her dealings with Rudin and NHHC, including by failing to advise other employees of the ASG and employees of the DOL in San Francisco that she had received gifts and payments from NHHC and Rudin and from companies associated with him. Langford, waived indictment and was charged in an information on Jan. 15, 2015. She was charged with wire fraud and bribery concerning programs receiving federal funds in violation.
The individual who made the payments to Langford, Rudin, has been prosecuted separately for a scheme to defraud Cisco Systems Inc., and its subsidiary Cisco Systems Capital Corporation, related to the lease of Cisco equipment. Rudin’s case is pending in the Northern District of California.
The sentence was handed down by District Judge Jon S. Tigar of the Northern District of California, following the guilty plea. Judge Tigar also sentenced the defendant to a three year period of supervised release and ordered her to pay $260,000 in restitution to the ASG. The defendant will begin serving the sentence on Sept. 25, 2015.
The prosecution is the result of a two-year investigation by agents of the FBI’sHonolulu and San Francisco Divisions. The case is being prosecuted by Assistant U.S. Attorneys Kyle F. Waldinger and Hallie Mitchell Hoffman of the Northern District of California, with the assistance of Bridget Kilkenny, Jessica Meegan, Mary Mallory and Allen Williams.
Former American Samoa Government Official Sentenced to 22 Months in PrisonRead the Press Release
SAN FRANCISCO – Evelyn Langford was sentenced today to 22 months in prison and ordered to pay $260,000 in restitution for her convictions for wire fraud and bribery, announced United States Attorney Melinda Haag and Federal Bureau of Investigations Special Agents in Charge David J. Johnson (San Francisco) and Paul Delacourt (Hawaii).
Langford, 49, of Copperas Cove, Texas, pleaded guilty on March 20, 2015, to one count of wire fraud and one count of bribery. According to the plea agreement, Langford admitted that in 2012 she was the Director of the Department of Human Resources of the Government of American Samoa (ASG), a territory of the United States located in the South Pacific Ocean. As part of her duties, she was charged with partial oversight of a $24.8 million U.S. Department of Labor (DOL) National Emergency Grant (NEG). The grant was awarded to American Samoa in the wake of a September 2009 tsunami that caused significant damage in American Samoa. Langford admitted that while administering the funds, she accepted payments from a contractor. She then provided that contractor favorable official action.
In February 2012, a company known as the Native Hawaiian Holding Company, Inc. (NHHC) entered into a service contract with the ASG. Under this contract, NHHC received approximately 4.7 million dollars of the NEG funds to develop a “contact center” (or “call center”) industry in American Samoa. The NEG service contract was signed by an NHHC representative (Quin Rudin) and by Langford and other ASG representatives. The contract also contained provisions generally prohibiting employees of the ASG from soliciting or receiving gratuities from NHHC.
Notwithstanding the prohibition from soliciting gratuities, Langford requested that Rudin extend her a “loan,” which Rudin agreed to do. Langford received a $10,000 payment from Rudin in April 2012 and a $250,000 payment in May 2012. After receiving the funds, Langford provided favorable official action on behalf of Rudin and NHHC. For example, Langford admitted making arrangements to have NHHC representatives, including Rudin, meet with the Governor of American Samoa for the purpose of “pitching” business ideas to him, including proposals regarding transportation and medical development projects. In addition, Langford concealed the true nature and scope of her dealings with Rudin and NHHC. Langford did not advise other employees of the ASG nor employees of the DOL in San Francisco that she had received gifts and payments from NHHC, from Rudin, or from companies associated with Rudin. Langford, waived indictment and was charged in an information on January 15, 2015. She was charged with wire fraud, in violation of 18 U.S.C. § 1343, and bribery concerning programs receiving federal funds, in violation of 18 U.S.C. § 666.
The individual who made the payments to Langford – Quin Rudin – has been prosecuted separately for a scheme to defraud Cisco Systems, Inc. and its subsidiary, Cisco Systems Capital Corporation, related to the lease of Cisco equipment. Rudin’s case is pending in the Northern District of California (case number CR 13-00149 JST).
The sentence was handed down by the Honorable Jon S. Tigar, U.S. District Judge, following the guilty plea. Judge Tigar also sentenced the defendant to a three year period of supervised release and ordered her to pay $260,000 in restitution to the ASG. The defendant will begin serving the sentence on September 25, 2015.
Assistant U.S. Attorneys Kyle F. Waldinger and Hallie Mitchell Hoffman are prosecuting the case with the assistance of Bridget Kilkenny, Jessica Meegan, Mary Mallory, and Allen Williams. The prosecution is the result of a two-year investigation by agents of the Federal Bureau of Investigation located in Honolulu, Hawaii and San Francisco, California.
San Jose Man Charged with Tax Evasion, Obstructing the Administration of Internal Revenue Laws, Social Security Fraud, and Aggravated Identity TheftRead the Press Release
SAN FRANCISCO – A federal grand jury in San Francisco indicted Walter Rhodes today on tax evasion, obstructing the administration of internal revenue laws, social security fraud, and aggravated identity theft announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the indictment, on August 21, 2009, Rhodes, of San Jose, opened a bank account using another individual’s (Individual A’s) social security number, authorizing himself as a signatory. On December 28, 2010, Rhodes used Individual A’s social security number to complete an IRS W-4 relating to new employment. Rhodes directed the employer to deposit wages from that employment into the bank account previously opened with Individual A’s social security number. These actions caused the IRS to attribute Rhodes’ income to Individual A. Rhodes was charged with one count each of tax evasion, in violation of 26 U.S.C. § 7201; obstructing the administration of internal revenue laws, in violation of 26 U.S.C. § 7212(a); social security fraud, in violation of 42 U.S.C. § 408(a)(7)(B); and aggravated identity theft, in violation of 18 U.S.C. § 1028A.
Rhodes is scheduled to make his initial appearance in federal court in San Jose on July 7, 2015, before the Honorable Howard R. Lloyd, U.S. Magistrate Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of tax evasion, the defendant faces a maximum sentence of five years in prison and a fine of $250,000. The maximum sentence for obstructing the administration of internal revenue laws is three years in prison and a $5,000 fine. The maximum sentence for social security fraud is five years in prison and a fine of $250,000. The maximum sentence for aggravated identity theft is two years in prison, to be served consecutively 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.
Special Assistant U.S. Attorney Jennifer Tolkoff and Assistant United States Attorney Thomas Moore are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Justice Department Files Consent Decree to Ensure Equal Educational Opportunities for All English Learner Students in San FranciscoRead the Press Release
The Justice Department announced that it has sought court approval today of a comprehensive modified consent decree in the landmark case of Lau v. Nichols, in which the Supreme Court held that public schools must provide meaningful access to their educational programs for English Learner (EL) students. The proposed modified consent decree would require the San Francisco Unified School District (SFUSD) to provide language services to the more than 16,000 EL students enrolled in its 105 regular education schools and five court (i.e., serving detained and incarcerated students) and county schools.
The proposed modified consent decree was jointly filed by the department, SFUSD and the private plaintiffs, and would replace a 2008 court order. The proposed modified consent decree resulted from monitoring by the department and the private plaintiffs, and from SFUSD’s own recognition that the 2008 order needed to be updated to reflect current circumstances.
The proposed modified consent decree would require the district to implement comprehensive measures to ensure that ELs have equal opportunities to succeed academically in district educational programs. If approved by the court, the modified consent decree would require SFUSD to:
- ensure that EL students are appropriately identified and placed when they begin school;
- provide families with a suite of service options for their EL students’ education;
- ensure that EL students with disabilities receive language programs and services;
- require employees who serve EL students to have training appropriate to their roles;
- protect the educational rights of the district’s most at-risk and vulnerable EL students who are learning in alternative education or juvenile justice settings;
- communicate with Limited English Proficient families in a language they understand; and
- conduct robust monitoring.
“Today, the San Francisco Unified School District made important strides toward promoting the success of every student from the moment the child enters the district,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “As the American dream is rooted in education, we commend the district for taking this critical step toward ensuring that all students, no matter their language background, have an equal opportunity to access that dream.”
“The department applauds the Superintendent and Board of Education for agreeing to take these significant steps to fulfill the promise of the Supreme Court's holding in Lau,” said U. S. Attorney Melinda Haag of the Northern District of California. “Faithful implementation of this decree will ensure that all EL students are appropriately identified and served, and that Limited English Proficient families have an equal ability to participate in their child’s education.”
The enforcement of Title VI of the Civil Rights Act of 1964 and the Equal Educational Opportunities Act of 1974 are top priorities of the Justice Department’s Civil Rights Division. Additional information about these statutes and the obligations of school districts and states to EL students is available at http://www.justice.gov/crt/about/edu/documents/elsguide.php, and general information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.
Justice Department Files Consent Decree to Ensure Equal Educational Opportunities for All English Learner Students in San FranciscoRead the Press Release
SAN FRANCISCO – The Justice Department announced that it has sought court approval today of a comprehensive modified consent decree in the landmark case of Lau v. Nichols, in which the Supreme Court held that public schools must provide meaningful access to their educational programs for English Learner (EL) students. The proposed modified consent decree would require the San Francisco Unified School District (SFUSD) to provide language services to the more than 16,000 EL students enrolled in its 105 regular education schools and five court (i.e., serving detained and incarcerated students) and county schools.
The proposed modified consent decree was jointly filed by the department, SFUSD and the private plaintiffs, and would replace a 2008 court order. The proposed modified consent decree resulted from monitoring by the department and the private plaintiffs, and from SFUSD’s own recognition that the 2008 order needed to be updated to reflect current circumstances.
The proposed modified consent decree would require the district to implement comprehensive measures to ensure that ELs have equal opportunities to succeed academically in district educational programs. If approved by the court, the modified consent decree would require SFUSD to:
- ensure that EL students are appropriately identified and placed when they begin school;
- provide families with a suite of service options for their EL students’ education;
- ensure that EL students with disabilities receive language programs and services;
- require employees who serve EL students to have training appropriate to their roles;
- protect the educational rights of the district’s most at-risk and vulnerable EL students who are learning in alternative education or juvenile justice settings;
- communicate with Limited English Proficient families in a language they understand; and
- conduct robust monitoring.
“The department applauds the Superintendent and Board of Education for agreeing to take these significant steps to fulfill the promise of the Supreme Court's holding in Lau,” said U. S. Attorney Melinda Haag of the Northern District of California. “Faithful implementation of this decree will ensure that all EL students are appropriately identified and served, and that Limited English Proficient families have an equal ability to participate in their child’s education.”
“Today, the San Francisco Unified School District made important strides toward promoting the success of every student from the moment the child enters the district,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “As the American dream is rooted in education, we commend the district for taking this critical step toward ensuring that all students, no matter their language background, have an equal opportunity to access that dream.”
The enforcement of Title VI of the Civil Rights Act of 1964 and the Equal Educational Opportunities Act of 1974 are top priorities of the Justice Department’s Civil Rights Division.
Humboldt County Juvenile Corrections Officer Pleads Guilty to Possession of Child PornographyRead the Press Release
SAN FRANCISCO, Calif. – Keith Monroe Wallace pleaded guilty today to possession of child pornography, announced U.S. Attorney Melinda Haag and U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Tatum King.
Until he was arrested, Wallace, 53, of Eureka, Calif., was employed by the Humboldt County Juvenile Probation Office as a Supervising Juvenile Corrections Officer in the Northern California Regional Facility in Eureka. In connection with his guilty plea, Wallace admitted he knowingly possessed 600 or more visual depictions of prepubescent minors or minors who had not attained 12 years of age engaging in sexually explicit conduct. The images included depictions of sadistic or masochistic conduct or other depictions of violence.
According to court documents, federal law enforcement agents with HSI were led to Wallace as a result of an investigation into the sexual exploitation of children in the Northern District of California. On February 26, 2015, a federal search warrant was executed at Wallace’s residence in Eureka, California. HSI agents and Humboldt County District Attorney Investigators seized various computers and digital media storage devices pursuant to the search warrant. A forensic review of the computers and digital media storage devices seized from Wallace’s residence revealed the existence of videos and images depicting minors engaging in sexually explicit conduct. Wallace was taken into federal custody at the time of the execution of the search warrant.
Wallace was indicted by a federal grand jury on March 10, 2015, with one count of possession of child pornography, in violation of Title 18, United States Code, Sections 2252(a)(4)(B) and (b)(2). Under the plea agreement, Wallace pleaded guilty to that count.
Wallace is currently being held in custody. His sentencing hearing is scheduled for September 9, 2015, at 10:00 a.m. before the Honorable Charles R. Breyer, U.S. District Judge, in San Francisco. The maximum statutory penalty for one count of possession of child pornography in violation of Title 18, United States Code, Sections 2252(a)(4)(B) and (b)(2), is 20 years in prison, a fine of $250,000, and restitution to the victims. 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 Claudia A. Quiroz is prosecuting the case with the assistance of Marina Ponomarchuk. The prosecution is the result of an investigation by the HSI Child Exploitation Investigations Group, as well as investigators from the Humboldt County District Attorney’s Office.
If members of the public have any information relevant to this investigation or regarding online child sexual exploitation crimes they are encouraged to call the ICE tip line at 1-866-347-2423 (1-866-DHS-2ICE).
Operator of O.I.D. Process, $228 Million Fraudulent Tax Refund Scheme, Pleads GuiltyRead the Press Release
SAN FRANCISCO, Calif. – Duffy R. Dashner (a/k/a Kevin Dashner), pleaded guilty to one count of conspiracy to submit false claims United States Attorney Melinda Haag, Acting Assistant Attorney General for the Tax Division Caroline D. Ciraolo, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Jose M. Martinez, announced.
According to the plea agreement, Dashner, 42, of Reseda, Calif., and his co-conspirators, including Mark R. Maness, operated a business called O.I.D. Process through which they helped others to prepare and file individual federal income tax returns that claimed false Original Issue Discount (OID) interest income and federal tax withholdings, resulting in fraudulent claims for tax refunds (OID returns). Dashner and Maness charged clients of O.I.D. Process a non-refundable registration fee to join the organization, and a 20 percent “refund acquisition fee” for any refund check issued by the Internal Revenue Service (IRS). Dashner and Maness also operated a website and conducted weekly conference calls with clients to promote their business and to assist clients in preparing and filing OID returns.
Dashner and Maness required clients of O.I.D. Process to change their mailing address with the IRS to the address of another co-conspirator who was an attorney in San Francisco. As a result, all correspondence from the IRS to the clients, and the clients’ O.I.D. refund checks, were sent to the attorney’s address rather than the clients’ home address. In this way, Dashner and Maness ensured they would receive a 20 percent refund acquisition fee. O.I.D. Process clients filed approximately 200 O.I.D. returns claiming refunds that totaled approximately $228 million.
Dashner was charged by indictment with one count of conspiracy to submit false claims, in violation of Title 18, U.S.C. § 286, and two counts of aiding and assisting in the presentation of a false income tax return, in violation of Title 26, U.S.C. § 7206(2). Dashner pleaded guilty to one count of conspiracy to submit false claims, in violation of 18 U.S.C § 286. Dashner’s sentencing hearing is scheduled for October 2, 2015 at 11:00 a.m., before the Honorable Susan Illston, United States District Judge, in San Francisco. The maximum statutory penalty for the conspiracy to submit false claims, in violation of 18 U.S.C § 286 is 10 years in prison, and a $250,000 fine, although any sentence would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. Maness previously pleaded guilty to conspiracy to submit false claims against the United States and was sentenced in February 2015 to serve 41 months in prison, and ordered to pay $1,176,668 in restitution to the IRS.
United States Department of Justice Tax Division Trial Attorney Matthew J. Kluge and Assistant United States Attorney Michael G. Pitman are prosecuting this case. The prosecution is the result of an investigation by IRS-CI.
Napa Resident Sentenced to Five Years in Prison for Bank Robbery SpreeRead the Press Release
OAKLAND – Joshua James Metoxen was sentenced to five years in prison (to be served consecutive to a two-year state sentence), and ordered to pay $17,251 in restitution for robbing eight banks, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
Metoxen, 25, of Napa, pleaded guilty on April 2, 2015, to eight counts of bank robbery. According to the plea agreement, Metoxen admitted to using force or intimidation to rob banks in San Ramon, Middletown, Milpitas, Pleasant Hill, Castro Valley, and Santa Rosa. Metoxen entered the banks wearing sunglasses and a hooded sweatshirt, approached the victim tellers to ask for change, and presented a note that demanded money. Metoxen usually made verbal demands and ordered the tellers to comply with his demands.
Metoxen, was indicted by a federal grand jury on August 14, 2014. He was charged with unarmed robbery of the following banks:
- $2,108 from a U.S. Bank branch in San Ramon, California, on February 23, 2013
- $4,106 from a West America branch in Middletown, California, on February 27, 2013
- $1,350 from a U.S. Bank branch in Milpitas, California, on March 5, 2013
- $4,295 from a Tri-Counties Bank branch in Middletown, California, on March 7, 2013
- $1,479 from a U.S. Bank branch in Pleasant Hill, California, on March 18, 2013
- $1,133 from a U.S. Bank branch in Milpitas, California, on March 20, 2013
- $1,000 from a U.S. Bank branch in Castro Valley, California, on March 21, 2013
- $1,780 from a U.S. Bank branch in Santa Rosa, California, on March 26, 2013
A number of law enforcement bulletins describing the suspect and the cars he used were issued during this multi-agency investigation. Metoxen was apprehended on March 28, 2013, when he attempted to rob a bank in Novato for the second time in two months. The teller called 911 while Metoxen was still in the bank. A Novato detective was able to identify the car being driven by Metoxen as he drove it away from the bank. Novato police arrested Metoxen on Highway 101.
The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, U.S. District Judge. Judge Gonzalez Rogers also sentenced the defendant to a three year period of supervised release. Metoxen, who has been in custody since his March 2013 arrest, will begin serving his five year sentence immediately.
Assistant U.S. Attorney Christina McCall is prosecuting the case with the assistance of Patty Lau and Vanessa Quant. The prosecution is the result of an investigation by the Federal Bureau of Investigation, Lake County Sheriff’s Office, Novato Police Department, San Ramon Police Department, Milpitas Police Department, Marin County Sheriff’s Office, Pleasant Hill Police Department, Alameda County Sheriff’s Office, Livermore Police Department, and Santa Rosa Police Department.
Eleven Defendants Charged in Nationwide Conspiracy to Manufacture and Distribute Counterfeit 5-Hour ENERGY DrinkRead the Press Release
Defendants Sold Millions of Bottles of Counterfeit 5-Hour ENERGY Drink
U.S. Attorney Melinda Haag of the Northern District of California, Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office and Special Agent in Charge Lisa L. Malinowsk of the U.S. Food and Drug Administration’s (FDA) Los Angeles Field Office of Criminal Investigations announced today that 10 people were arrested after being charged with conspiracy to traffic in counterfeit goods, conspiracy to commit criminal copyright infringement and conspiracy to introduce misbranded food into interstate commerce. The defendants were arrested on charges stemming from the illegal distribution and counterfeit of the liquid dietary supplement 5-Hour ENERGY. One further defendant was not arrested but remains subject to an arrest warrant.
According to the indictment that was unsealed yesterday, all 11 defendants were involved in the illegal repackaging and eventual counterfeiting of 5-Hour ENERGY. The supplement is owned by a group of entities referred to in the indictment as Living Essentials, which manufactured all 5-Hour ENERGY at factories in Wabash, Indiana. Living Essentials has registered and owns all 5-Hour ENERGY trademarks and a copyright, including the “5-Hour ENERGY” name and various graphical elements of the product’s labeling and packaging. The 5-Hour ENERGY trademarks and copyrighted material are displayed on every bottle of 5-Hour ENERGY and display boxes. Living Essentials does not provide licenses to any individual or entity to manufacture 5-Hour ENERGY.
According to the indictment, defendants Joseph Shayota and Adriana Shayota, his wife, through their company Baja Exporting LLC, agreed with Living Essentials to distribute 5-Hour ENERGY in Mexico. Living Essentials manufactured the liquid 5-Hour ENERGY product and provided Spanish-language labeling and display boxes to Baja Exporting. Living Essentials additionally provided Baja a complete product package under the agreement that the 5-Hour ENERGY with Spanish-language labeling was only to be distributed by Baja in Mexico. Nevertheless, according to the indictment, rather than distributing authentic 5-Hour ENERGY with Spanish-language labeling in Mexico, the defendants attempted instead to divert the product and to sell it in the United States at a higher price. After initial efforts to sell the product failed because of the Spanish-language labeling and display boxes, the defendants replaced the labeling and display boxes with counterfeit labels and boxes designed to imitate Living Essentials’ packaging in the United States. The defendants repackaged over 350,000 bottles of 5-Hour ENERGY and sold them in the United States at a price that was 15 percent lower than what Living Essentials charged for authentic United States 5-Hour ENERGY. By December 2011, Joseph and Adriana Shayota had sold off Baja’s remaining stock of the repackaged/relabeled 5-Hour ENERGY.
Also according to the indictment, by early 2012, the defendants had moved into counterfeiting the entire 5-Hour ENERGY product. The defendants manufactured the counterfeit 5-Hour ENERGY liquid at an unsanitary facility using untrained day workers. The defendants mixed unregulated ingredients in plastic vats while attempting to mimic the real 5-Hour ENERGY products.
From December 2011 through October 2012, the defendants allegedly ordered more than seven million counterfeit label sleeves and hundreds of thousands of counterfeit display boxes and placed false lot and expiration codes on the bottles and boxes. The defendants often changed the lot and expiration codes on the counterfeit bottles and boxes to parallel the valid codes being used on the authentic product.
The indictment further alleges that the defendants travelled to Guadalajara, Mexico, and hired manufacturers for the blank plastic bottles and plastic bottle caps imprinted with the Living Essentials-trademarked “Running Man” logo. They also purchased equipment, including a steam tunnel machine, to shrink-wrap the counterfeit 5-Hour ENERGY labels on the counterfeit bottles and an inkjet printer to place false lot numbers and expiration dates on the bottoms of the counterfeit bottles.
The defendants also allegedly used code words in purchase orders and invoices for counterfeit 5-Hour ENERGY. For example, defendants Walid Jamil, Juan Romero and Leslie Roman referred to the counterfeit 5-Hour ENERGY liquid contents as “michelada,” “juice blend” and “spices.”
In addition, the indictment alleges that from May 2012 to October 2012, Midwest Wholesale Distributors, a company owned by Jamil, distributed more than four million bottles of counterfeit 5-Hour ENERGY into commercial channels throughout the United States. Midwest sold approximately 508,032 counterfeit 5-Hour ENERGY bottles to Baja Exporting and 3,521,232 counterfeit 5-Hour ENERGY bottles to the Dan-Dee Company, which was owned by defendants Kevin Attiq and Raid Attiq. A partial list of retail vendors and wholesale distributors to whom the alleged counterfeit product was sold is attached.
“The defendants’ alleged conduct demonstrates a complete disregard of the health and safety of consumers,” said U.S. Attorney Haag. “My office will continue to vigorously prosecute those individuals who place greed over the well-being of the community by distributing counterfeit dietary products.”
“The business of trafficking in counterfeit merchandise harms victims in many ways," said Special Agent in Charge Johnson. “Intellectual property crimes are anything but victimless. Intellectual property crimes can destroy jobs, suppress innovation and jeopardize the public health and safety. In this complex case, the suspects allegedly produced a product to counterfeit a popular dietary supplement that was ultimately consumed by the public. The FBI and its partners will continue to bring these types of criminals to justice.”
“U.S. consumers rely on FDA oversight of foods to ensure that they are safe and wholesome,” said Special Agent in Charge Malinowski. “Criminals who produce and sell counterfeit and misbranded dietary supplements put the public health at risk by utilizing unknown and unregulated ingredients that could put the consumer in danger of serious illness or death. This alleged counterfeit operation was especially egregious as the investigation revealed this product was sold, distributed and placed on the shelves of numerous retailers throughout the United States. We will continue to investigate violators of our laws and work to bring them to justice.”
The 11 indicted defendants, all of whom are charged with conspiracy to traffic in counterfeit goods, conspiracy to commit criminal copyright infringement and conspiracy to introduce misbranded food into interstate commerce, include:
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Joseph Shayota, 63, of El Cajon, California. Shayota was arrested yesterday at his residence. He made an initial appearance before the Honorable U.S. Magistrate Judge Nita L. Stormes in the Southern District of California, who ordered him released on $250,000 bond and to surrender his passport. Shayota’s next scheduled court appearance will be on July 9, 2015, at 1:30 p.m., before the Honorable U.S. Magistrate Judge Howard R. Lloyd to schedule further proceedings in U.S. District Court in San Jose, California.
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Adriana Shayota, 44, also of El Cajon. Shayota was arrested yesterday at her residence. She made an initial appearance before U.S. Magistrate Judge Stormes in the Southern District of California, who ordered her released on $100,000 bond and to surrender her passport. Shayota’s next scheduled court appearance is on July 9, 2015, at 1:30 p.m., before U.S. Magistrate Judge Lloyd to schedule further proceedings in U.S. District Court in San Jose.
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Justin Shayota, 32, of Troy, Michigan. Shayota was arrested yesterday at his residence. He made an initial appearance before the Honorable U.S. Magistrate Judge David T. Grand in the Eastern District of Michigan, who ordered him released on a $10,000 unsecured bond and to surrender his passport by noon tomorrow. Shayota’s next scheduled court appearance is on July 9, 2015, at 1:30 p.m., before U.S. Magistrate Judge Lloyd to schedule further proceedings in U.S. District Court in San Jose.
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Walid Jamil, aka Wally Jamil, 65, also of Troy. Jamil self-surrendered to the FBI yesterday. He made an initial appearance before U.S. Magistrate Judge Grand in the Eastern District of Michigan, who ordered him released on a $10,000 unsecured bond and to surrender his passport by noon tomorrow. Jamil’s next scheduled court appearance is on July 9, 2015, at 1:30 p.m., before the U.S. Magistrate Judge Lloyd to schedule further proceedings in U.S. District Court in San Jose.
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Raid Jamil, aka Brian Jamil, 46, of West Bloomfield, Michigan. Jamil surrendered to the FBI yesterday. He made an initial appearance before U.S. Magistrate Judge Grand in the Eastern District of Michigan, who ordered him released on a $10,000 unsecured bond and to surrender his passport by noon tomorrow. Jamil’s next scheduled court appearance is on July 9, 2015, at 1:30 p.m., before U.S. Magistrate Judge Lloyd to schedule further proceedings in U.S. District Court in San Jose.
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Kevin Attiq, 51, of El Cajon. Attiq was arrested yesterday at his residence. He made an initial appearance before U.S. Magistrate Judge Stormes in the Southern District of California, who released him on $100,000 bond and to surrender his passport. Attiq’s next scheduled court appearance is on July 9, 2015, before U.S. Magistrate Judge Lloyd to schedule further proceedings in U.S. District Court in San Jose.
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Fadi Attiq, 57, of El Cajon. Attiq was arrested yesterday at his residence. He made an initial appearance before U.S. Magistrate Judge Stormes in the Southern District of California, who released him on $100,000 bond and to surrender his passport. Attiq’s next scheduled court appearance is on July 9, 2015, at 1:30 p.m., before U.S. Magistrate Judge Lloyd to schedule further proceedings in U.S. District Court in San Jose.
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Leslie Roman, 61, of Rancho Cucamonga, California. Roman was arrested yesterday at his residence. He made an initial appearance before the Honorable U.S. Magistrate Judge David T. Bristow in the Central District of California, who released him on $50,000 bond after he surrendered his passport. Roman’s next scheduled court appearance is on July 9, 2015, at 1:30 p.m., before U.S. Magistrate Judge Lloyd to schedule further proceedings in U.S. District Court in San Jose.
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Mario Ramirez, 55, of San Diego.Ramirez was arrested yesterday at his residence. He made an initial appearance before U.S. Magistrate Judge Stormes in the Southern District of California, who released him on $100,000 cash via cashier’s check and ordered him to surrender his passport. Ramirez’s next scheduled court appearance is on July 9, 2015, at 1:30 p.m., before U.S. Magistrate Judge Lloyd to schedule further proceedings in U.S. District Court in San Jose.
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Camilo Ramirez, 30, of San Diego. Ramirez was arrested yesterday at his residence. He made an initial appearance before U.S. Magistrate Judge Stormes in the Southern District of California, who released him on $100,000 cash via cashier’s check and ordered him to surrender his passport. Ramirez’s next scheduled court appearance is on July 9, 2015, at 1:30 p.m., before U.S. Magistrate Judge Lloyd to schedule further proceedings in U.S. District Court in San Jose.
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Juan Romero, 68, of Upland, California. An arrest warrant remains outstanding for Romero.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face the following maximum statutory penalties:
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For each count of conspiracy to traffic in counterfeit goods: 10 years imprisonment, a $2 million fine, three years of supervised release and a $100 special assessment.
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For each count of conspiracy to commit criminal copyright infringement: five years imprisonment, a $250,000 fine, three years of supervised release and a $100 special assessment.
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For each count of conspiracy to introduce misbranded food into interstate commerce: five years imprisonment, a $250,000 fine, three years of supervised release and a $100 special assessment.
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.
Assistant U.S. Attorneys Matt Parrella and Susan Knight of the Northern District of California are prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the FBI and the FDA’s Office of Criminal Investigations.
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Eleven Defendants Charged in Nationwide Conspiracy to Manufacture and Distribute Counterfeit 5-Hour ENERGY DrinkRead the Press Release
SAN JOSE – United States Attorney Melinda Haag, Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office, and Lisa L. Malinowski, Special Agent in Charge, FDA Los Angeles Field Office of Criminal Investigations, announced that ten people were arrested after being charged with conspiracy to traffic in counterfeit goods, conspiracy to commit criminal copyright infringement, and conspiracy to introduce misbranded food into interstate commerce. The defendants were arrested on charges stemming from the illegal distribution and counterfeiting of the liquid dietary supplement 5-Hour ENERGY. One further defendant was not arrested, but remains subject to an arrest warrant.
According to the indictment that was unsealed yesterday, all 11 defendants were involved in the illegal repackaging and eventual counterfeiting of 5-Hour ENERGY. The supplement is owned by a group of entities referred to in the indictment as Living Essentials, which manufactured all 5-Hour ENERGY at factories in Wabash, Indiana. Living Essentials has registered and owns all 5-Hour ENERGY trademarks and a copyright, including the “5-Hour ENERGY” name and various graphical elements of the product’s labeling and packaging. The 5-Hour ENERGY trademarks and copyrighted material are displayed on every bottle of 5-Hour ENERGY and display boxes. Living Essentials does not provide licenses to any individual or entity to manufacture 5-Hour ENERGY.
According to the indictment, defendant Joseph Shayota and his wife Adriana Shayota, through their company Baja Exporting, LLC, agreed with Living Essentials to distribute 5-Hour ENERGY in Mexico. Living Essentials manufactured the liquid 5-Hour ENERGY product and provided Spanish-language labeling and display boxes to Baja Exporting. In addition, Living Essentials provided Baja a complete product package under the agreement that the 5-Hour ENERGY with Spanish-language labeling was only to be distributed by Baja in Mexico. Nevertheless, according to the indictment, rather than distributing authentic 5-Hour ENERGY with Spanish-language labeling in Mexico, the defendants attempted instead to divert the product and to sell it in the United States at a higher price. After initial efforts to sell the product failed because of the Spanish-language labeling and display boxes, the defendants replaced the labeling and display boxes with counterfeit labels and boxes designed to imitate Living Essentials’ packaging in the United States. The defendants repackaged over 350,000 bottles of 5-Hour ENERGY and sold them in the United States at a price that was 15 percent lower than what Living Essentials charged for authentic United States 5-Hour ENERGY. By December 2011, Joseph and Adriana Shayota had sold off Baja’s remaining stock of the repackaged/relabeled 5-Hour ENERGY.
Also according to the indictment, by early 2012, the defendants moved into counterfeiting the entire 5-Hour ENERGY product. The defendants manufactured the counterfeit 5-Hour ENERGY liquid at an unsanitary facility using untrained day workers. The defendants mixed unregulated ingredients in plastic vats while attempting to mimic the real 5-Hour ENERGY products.
From December 2011 through October 2012, the defendants allegedly ordered more than seven million counterfeit label sleeves and hundreds of thousands of counterfeit display boxes, and placed false lot and expiration codes on the bottles and boxes. The defendants often changed the lot and expiration codes on the counterfeit bottles and boxes to parallel the valid codes being used on the authentic product.
The indictment further alleges that the defendants travelled to Guadalajara, Mexico and hired manufacturers for the blank plastic bottles and plastic bottle caps imprinted with the trademarked “Running Man” logo. They also purchased equipment, including a steam tunnel machine, to shrink-wrap the counterfeit 5-Hour ENERGY labels on the counterfeit bottles, and an inkjet printer to place false lot numbers and expiration dates on the bottoms of the counterfeit bottles.
The defendants also allegedly used code words in purchase orders and invoices for counterfeit 5-Hour ENERGY. For example, defendants Walid Jamil, Juan Romero, and Leslie Roman referred to the counterfeit 5-Hour ENERGY liquid contents as “michelada,” “juice blend,” and “spices.”
In addition, the indictment alleges that from May 2012 to October 2012, Midwest Wholesale Distributors, a company owned by defendant Walid Jamil, distributed more than four million bottles of counterfeit 5-Hour ENERGY into commercial channels throughout the United States. Midwest sold approximately 508,032 counterfeit 5-Hour ENERGY bottles to Baja Exporting and 3,521,232 counterfeit 5-Hour ENERGY bottles to the Dan-Dee Company, which was owned by defendants Kevin Attiq and Raid Attiq. A partial list of retail vendors and wholesale distributors to whom the alleged counterfeit product was sold is attached.
United States Attorney Melinda Haag stated, “The defendants’ alleged conduct demonstrates a complete disregard of the health and safety of consumers. My office will continue to vigorously prosecute those individuals who place greed over the well-being of the community by distributing counterfeit dietary products.”
"The business of trafficking in counterfeit merchandise harms victims in many ways," said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office. "Intellectual property crimes are anything but victimless. Intellectual property crimes can destroy jobs, suppress innovation, and jeopardize the public health and safety. In this complex case, the suspects allegedly produced a product to counterfeit a popular dietary supplement that was ultimately consumed by the public. The FBI and its partners will continue to bring these types of criminals to Justice."
“U.S. consumers rely on FDA oversight of foods to ensure that they are safe and wholesome. Criminals who produce and sell counterfeit and misbranded dietary supplements put the public health at risk by utilizing unknown and unregulated ingredients that could put the consumer in danger of serious illness or death. This alleged counterfeit operation was especially egregious as the investigation revealed this product was sold, distributed, and placed on the shelves of numerous retailers throughout the United States,” said Lisa L. Malinowski, Special Agent in Charge, FDA Office of Criminal Investigations’ Los Angeles Field Office. “We will continue to investigate violators of our laws and work to bring them to justice.”
The eleven indicted defendants - all of whom are charged with conspiracy to traffic in counterfeit goods, in violation of 18 U.S.C. § 2320(a); conspiracy to commit criminal copyright infringement, in violation of 18 U.S.C. § 371; and conspiracy to introduce misbranded food into interstate commerce, in violation of 18 U.S.C. § 371 - include:
- Joseph Shayota, 63, of El Cajon, California. Shayota was arrested yesterday at his residence. He made an initial appearance before the Honorable Nita L. Stormes, United States Magistrate Judge in the Southern District of California, who ordered him released on $250,000 bond and ordered to surrender his passport. Shayota’s next scheduled court appearance will be on July 9, 2015 at 1:30 p.m. before the Honorable Howard R. Lloyd, United States Magistrate Judge, to schedule further proceedings in District Court in San Jose.
- Adriana Shayota, 44, of El Cajon, California. Shayota was arrested yesterday at her residence. She made an initial appearance before the Honorable Nita L. Stormes, United States Magistrate Judge in the Southern District of California, who ordered her released on $100,000 bond and ordered to surrender her passport. Shayota’s next scheduled court appearance is on July 9, 2015 at 1:30 p.m. before the Honorable Howard R. Lloyd, United States Magistrate Judge, to schedule further proceedings in District Court in San Jose.
- Justin Shayota, 32, of Troy, Michigan. Shayota was arrested yesterday at his residence. He made an initial appearance before the Honorable David T. Grand, United States Magistrate Judge, Eastern District of Michigan, who ordered him released on a $10,000 unsecured bond and ordered to surrender his passport by noon tomorrow. Shayota’s next scheduled court appearance is on July 9, 2015 at 1:30 p.m. before the Honorable Howard R. Lloyd, United States Magistrate Judge, to schedule further proceedings in District Court in San Jose.
- Walid Jamil, a/k/a Wally Jamil, 65, of Troy, Michigan. Jamil self-surrendered to the FBI yesterday. He made an initial appearance before the Honorable David R. Grand, United States Magistrate Judge in the Eastern District of Michigan, who ordered him released on a $10,000 unsecured bond and ordered to surrender his passport by noon tomorrow. Jamil’s next scheduled court appearance is on July 9, 2015 at 1:30 p.m. before the Honorable Howard R. Lloyd, United States Magistrate Judge, to schedule further proceedings in District Court in San Jose.
- Raid Jamil, a/k/a Brian Jamil, 46, of West Bloomfield, Michigan. Jamil surrendered to the FBI yesterday. He made an initial appearance before the Honorable David R. Grand, United States Magistrate Judge in the Eastern District of Michigan, who ordered him released on a $10,000 unsecured bond and ordered to surrender his passport by noon tomorrow. Jamil’s next scheduled court appearance is on July 9, 2015 at 1:30 p.m. before the Honorable Howard R. Lloyd, United States Magistrate Judge, to schedule further proceedings in District Court in San Jose.
- Kevin Attiq, 51, of El Cajon, California. Attiq was arrested yesterday at his residence. He made an initial appearance before the Honorable Nita L. Stormes, United States Magistrate Judge in the Southern District of California, who released him on $100,000 bond and ordered to surrender his passport. Kevin Attiq’s next scheduled court appearance is on July 9, 2015 before the Honorable Howard R. Lloyd, United States Magistrate Judge, to schedule further proceedings in District Court in San Jose.
- Fadi Attiq, 57, of El Cajon, California. Attiq was arrested yesterday at his residence. He made an initial appearance before the Honorable Nita L. Stormes, United States Magistrate Judge in the Southern District of California, who released him on $100,000 bond and ordered to surrender his passport. Fadi Attiq’s next scheduled court appearance is on July 9, 2015 at 1:30 p.m. before the Honorable Howard R. Lloyd, United States Magistrate Judge, to schedule further proceedings in District Court in San Jose.
- Leslie Roman, 61, of Rancho Cucamonga, California. Roman was arrested yesterday at his residence. He made an initial appearance before the Honorable David T. Bristow, United States Magistrate Judge in the Central District of California, who released him on $50,000 bond after he surrendered his passport. Roman’s next scheduled court appearance is on July 9, 2015 at 1:30 p.m. before the Honorable Howard R. Lloyd, United States Magistrate Judge, to schedule further proceedings in District Court in San Jose.
- Mario Ramirez, 55, of San Diego, California. Ramirez was arrested yesterday at his residence. He made an initial appearance before the Honorable Nita L. Stormes, United States Magistrate Judge in the Central District of California, who released him on $100,000 cash via cashier’s check and ordered to surrender his passport. Ramirez’s next scheduled court appearance is on July 9, 2015 at 1:30 p.m. before the Honorable Howard R. Lloyd, United States Magistrate Judge, to schedule further proceedings in District Court in San Jose.
- Camilo Ramirez, 30, of San Diego, California. Ramirez was arrested yesterday at his residence. He made an initial appearance before the Honorable Nita L. Stormes, United States Magistrate Judge in the Southern District of California, who released him on $100,000 cash via cashier’s check and ordered to surrender his passport. Ramirez’s next scheduled court appearance is on July 9, 2015 at 1:30 p.m. before the Honorable Howard R. Lloyd, United States Magistrate Judge, to schedule further proceedings in District Court in San Jose.
- Juan Romero, 68, of Upland, California. An arrest warrant remains outstanding for Romero.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face the following maximum statutory penalties:
- Count One: Conspiracy to Traffic in Counterfeit Goods, in violation of 18 U.S.C. § 2320(a): 10 years imprisonment, $2,000,000 fine, 3 years supervised release, $100 special assessment.
- Count Two: Conspiracy to Commit Criminal Copyright Infringement, in violation of 18 U.S.C. § 371: 5 years imprisonment, $250,000 fine, 3 years supervised release, $100 special assessment.
- Count Three: Conspiracy to Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371: 5 years imprisonment, $250,000 fine, 3 years supervised release, $100 special assessment.
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 Matt Parrella and Susan Knight are prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Food and Drug Administration Office of Criminal Investigations.
Oakland Bus Driver Sentenced to Prison in Tax Fraud SchemeRead the Press Release
OAKLAND – Akysha Rockwell was sentenced on June 12, 2015, to 18 months in prison and ordered to pay restitution of $285,034 for her role in a false tax refund scheme, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
Rockwell, 39, of Oakland, pleaded guilty on January 16, 2015, to conspiracy to file false claims and one count of filing false claims, in violation of a 18 U.S.C § 286 and 287. In pleading guilty, Rockwell admitted that, during late 2011 and early 2012, Rockwell’s boyfriend at the time taught her how to prepare and electronically file fraudulent income tax returns, targeting people at their church and drug-rehabilitation clinics with the promise of an “Obama Stimulus,” a non-existent government program fabricated to attract clients.
As part of their scheme, Rockwell and her former boyfriend prepared tax returns that claimed false income and false occupations, regardless of the information that was provided to them by their clients. Rockwell’s former boyfriend acquired an identification information form (ID-Doc), to obtain the means of identification of actual persons to prepare and electronically file false federal individual income tax returns, claiming fraudulent tax credits and fraudulent tax refunds. Together, Rockwell and her former boyfriend prepared 116 tax returns in 2012. All the tax returns fraudulently claimed one of the following sources of “Household Employee” income: babysitter, caretaker, cleaning person, domestic worker, housekeeper, maid, and yard-worker. In addition, even though a majority of the clients were unemployed or disabled with no income, Rockwell filed income tax returns reporting false earned income and false refundable education credits. Rockwell and her former boyfriend received at least $226,903 by filing false and fraudulent tax refund claims.
Rockwell received a portion of the false tax refunds and spent it on personal items such as clothing, hotels, rental cars and illegal drugs.
After ending their relationship, Rockwell continued to file numerous false tax returns from her residence in Oakland. She used the same fake “Obama Stimulus” program to attract victims. She obtained at least $58,131 by filing these false and fraudulent tax refund claims.
This sentenced was handed down by The Honorable Jon Tigar, U.S. District Court Judge. Judge Tigar also sentenced Rockwell to a three year period of supervised release. The defendant will begin serving the sentence on September 8, 2015.
Assistant U.S. Attorney Colin Sampson is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
San Jose Woman Charged with Filing False False Tax ReturnsRead the Press Release
SAN JOSE – A federal grand jury in San Francisco indicted Yolanda Aberin Scott on thirty-two counts of filing false tax returns announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the indictment, from 2010 through 2013, Scott willfully assisted in the preparation of false and fraudulent U.S. Individual Income Tax Returns, Forms 1040. The materially false items on the returns included head of household filing status, exemptions, charitable gifts by cash, medical expenses, unreimbursed employee expenses, and mortgage interest deduction.
Scott is expected to make her initial appearance in federal court in San Jose on June 29, 2015, before the Honorable Nathanael M. Cousins, U.S. Magistrate 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, the defendant faces a maximum sentence of three years in prison and a fine of $250,000 for each count of filing false tax returns, in violation of 26 U.S.C. § 7206(1). 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.
Thomas Moore is the Assistant U.S. Attorney who is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Washington Couple Admit Role in Scheme to Extort Money from Mother While Holding Her ChildrenRead the Press Release
SAN JOSE—Patricia Delatorre and Jesus Salinas pleaded guilty in federal court in San Jose yesterday to conspiracy to commit extortion for their role in a scheme involving the transportation of two minor children across the U.S.-Mexico border, announced United States Attorney Melinda Haag and FBI Special Agent in Charge Dave Johnson.
In pleading guilty, Delatorre and Salinas admitted that between June 2011 and December 2012, they knowingly participated in executing a scheme to extort money from a woman who had asked Salinas for assistance in bringing her minor U.S. citizen children to the United States from Mexico. After Salinas picked up the children in Mexico in July 2011, and after the mother had paid him approximately $1,800, he did not bring the children to the United States as he had promised. After a failed border crossing, Salinas instead brought the children to the residence of Delatorre’s mother, Maria Guadalupe Valenzuela Castaneda, in Juarez, Mexico. Salinas and Delatorre refused to tell the children’s mother the precise address where her children were located. The children resided in Juarez for many months, during which time the mother was permitted periodic contact with the children. For months, the mother sent payments to Delatorre, Salinas, and Valenzuela Castaneda, but the children were never returned. Salinas and Delatorre told the mother on numerous occasions that she owed additional money to them, and she needed to pay the money before the children could be returned to her. Delatorre also threatened to report the mother to immigration authorities as an illegal alien if she stopped making payments.
On December 11, 2012, the FBI, together with Mexican law enforcement, located the children in Juarez, Mexico, in the custody of Castaneda and placed the children into the temporary care of Mexican social services. In March 2013, the children, through the work of the FBI, the Watsonville Police Department, the National Center for Missing and Exploited Children, and the United States Department of State, were repatriated from Mexico to the United States, and reunited with their mother in California.
Delatorre, 28, and Salinas, 35, both of Mount Vernon, Washington, were indicted by a federal Grand Jury on December 19, 2012. Each pleaded guilty to a single count of conspiracy to commit extortion in violation of 18 U.S.C. § 371. Delatorre and Salinas were both ordered detained in a prior pretrial hearing and are in custody pending sentencing. An arrest warrant remains pending for Maria Guadalupe Valenzuela Castaneda.
The sentencing hearing for both Delatorre and Salinas is scheduled for October 5, 2015 at 1:30 p.m. before the Honorable Edward J. Davila, U.S. District Court Judge, in San Jose. The maximum statutory penalty for each count in violation of 18 U.S.C. § 371 is five years imprisonment and a fine of $250,000, plus restitution as determined by the Court. 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.
Jeff Nedrow, Jeff Schenk, and Daniel Kaleba are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Susan Kreider, Laurie Worthen, and Elise Etter. The prosecution is the result of an investigation by the FBI, the Watsonville Police Department, the Department of Homeland Security Customs and Border Protection, and the United States Department of State.
San Francisco Man Sentenced to 15 Months for Importing and Selling Counterfeit DVDsRead the Press Release
SAN JOSE – Christopher Breejen was sentenced yesterday to 15 months in prison and ordered to pay $117,439.50 in restitution for criminal copyright infringement, announced United States Attorney Melinda Haag and Homeland Security Investigations Acting Special Agent in Charge, Tatum King.
Breejen, 43, of San Francisco, pleaded guilty on November 18, 2014, to one count of criminal copyright infringement, in violation of 17 U.S.C. § 506(a)(1)(A) and 18 U.S.C. § 2319(b)(1). According to the plea agreement, Breejen admitted to importing counterfeit DVD’s and then selling them on the eBay website. Between 2011 and August 2014, he sold approximately 20,000 counterfeit DVDs nationwide. Breejen was charged on September 26, 2014.
Prior to Breejen being charged, agents from the United States Customers and Border Protection (CBP) seized 16 separate shipments of counterfeit DVDs sent to Breejen from Asia. Breejen was notified about the counterfeit goods in each of these shipments by CBP. Despite these seizures and notifications, Breejen continued to import and sell counterfeit DVDs until agents from Homeland Security Investigations executed a search warrant at his residence in San Francisco, where they seized additional counterfeit DVDs.
The investigation began with a tip from the Motion Picture Association of America.
The sentence was handed down by the Honorable Beth L. Freeman, U.S. District Court Judge. Judge Freeman also sentenced the defendant to a three year period of supervised release. The defendant will begin serving the sentence on August 8, 2015.
Hanley Chew is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by Homeland Security Investigations.
Three Methamphetamine Dealers Sentenced in San JoseRead the Press Release
SAN JOSE – Jorge Alejandro Sanchez Jimenez, and Francisco Ortiz, were each sentenced today to ten years in prison, for conspiring to distribute methamphetamine, and Macario Jimenez-Corona was sentenced to seven years in prison for attempting to possess methamphetamine with the intent to distribute it, announced United States Attorney Melinda Haag, Homeland Security Investigations (HSI) Acting Special Agent in Charge Tatum King and Drug Enforcement Administration (DEA) Acting Special Agent in Charge Bruce Balzano.
According to the government’s sentencing memorandum filed with respect to Sanchez Jimenez, Sanchez Jimenez had previously worked as a “runner” for a major methamphetamine dealer (Ademar Becerril, a/k/a Fredi Becerril, who was separately prosecuted in Case No. 13-CR-00798-RMW), and then sometime in mid-2013 Sanchez Jimenez split off and formed his own small organization. On June 1, 2015, Becerril was sentenced to over 16 years in prison.
According to his plea agreement, Sanchez Jimenez, 24, distributed methamphetamine in 2012 and 2013 using another person to deliver the drugs and collect cash for him (a runner). As part of his operation, Sanchez Jimenez rented a room in an apartment in San Jose that was used as a location to prepare drugs for delivery. Pursuant to court orders, law enforcement officers intercepted Sanchez Jimenez’ telephone conversations and observed his runner at the apartment. In September 2013, HSI agents searched the rented room and discovered digital scales, plastic containers, packaging material, a scale, rubber bands, approximately $4500 in cash, and handwritten notes which were a form of homemade accounting to track amounts owed by customers, listing the customers and the amounts owed. HSI and DEA agents then intercepted telephone calls in which Sanchez Jimenez indicated he had lost two pounds of drugs. He also indicated where the drugs were hidden. The agents returned to the room, removed an electric heater mounted along the floor of one wall, and found a hole in the wall. Inside the hole, they found approximately 1.2 kilograms of methamphetamine. Sanchez Jimenez fled to Mexico in September 2013, according to the plea agreement. He returned to the Bay Area and was arrested on March 3, 2014. He has been in custody since that date.
According to his plea agreement, Ortiz, 25, delivered methamphetamine on behalf of Becerril in 2013. On December 1, 2013, Ortiz was delivering methamphetamine when one of the other delivery persons, Arturo Cuevas-Quezadaz, was arrested with approximately 7.9 kilograms of methamphetamine. The next day, Ortiz was arrested at a restaurant in San Jose. He has been in custody since then. The agents also seized over $26,000 that Ortiz had delivered to Becerril and a list of drug customers and quantities that they were to receive. (Arturo Cuevas-Quezadaz, who is charged in the same case, pleaded guilty and is set for sentencing in July 2015.)
According to the government’s plea agreement with Jimenez-Corona, 49, on December 1, 2013, Jimenez-Corona was waiting to receive approximately three kilograms of methamphetamine from Arturo Cuevas-Quezadaz. Jimenez-Corona was in a car parked next to the car driven by Arturo Cuevas-Quezadaz, in a parking lot in San Jose when police officers arrested Cuevas-Quezadaz and seized the approximately 7.9 kilograms of methamphetamine he was transporting. Jimenez-Corona was released after being questioned by the officers. He was arrested the next day and has been in custody since then.
The sentences imposed on Francisco Ortiz and Macario Jimenez-Corona were handed down by the Honorable Ronald M. Whyte, U.S. District Judge. Jorge Alejandro Sanchez Jimenez was sentenced by the Honorable Edward J. Davila, U.S. District Judge. Ortiz and Sanchez Jimenez were each sentenced to a 5 year period of supervised release in addition to their prison terms. Macario Jimenez-Corona was sentenced to a 3 year period of supervised release in addition to the term of prison.
These cases are the products of an extensive investigation by the Organized Crime Drug Enforcement Task Force, a multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
Humboldt County Marijuana Farmer Sentenced to Life in Prison Plus 35 Years for Murdering Immigrant Worker and Related CrimesRead the Press Release
Mikal X. Wilde, 33, of Kneeland, California, was sentenced today to life in prison plus 35 years for murder and related drug trafficking charges, announced U.S. Attorney Melinda Haag for the Northern District of California and Special Agent in Charge David J. Johnson for the Federal Bureau of Investigations (FBI). The charges stemmed from the defendant’s murder of Mario Roberto Juarez-Madrid and the shooting of Pedro Fernando Lopez-Paz on August 25, 2010, on the defendant’s marijuana farm in Humboldt County, California.
Wilde was found guilty on March 2, 2015, of six felonies including marijuana conspiracy, manufacturing and possessing marijuana with the intent to distribute, murder during a narcotics offense, use and possession of a firearm in connection with a narcotics offense and crime of violence and use of a firearm resulting in first degree premeditated murder. Evidence at trial showed that Wilde began a large marijuana grow with more than 1500 plants on over 800 acres of mountain property in Kneeland, California, close to Eureka, during the summer of 2010. In the course of his marijuana cultivation operation, Wilde hired three workers to water and care for the plants, including Juarez-Madrid and Lopez-Paz, both from Guatemala. During August of 2010, Wilde provided the workers with firearms to protect against robbery of the marijuana grow. In late August, the workers became unhappy and wanted to leave with payment for the work they had already performed after Wilde altered their work conditions. Rather than paying the workers, Wilde took firearms away from them and on August 25, 2010, returned to the property armed and shot them. Wilde shot Lopez-Paz in the face, but he survived, hiding in the woods all night until he found help the following morning. Wilde shot Juarez-Madrid three times and hunted him down. The final shot was a contact wound to the back of Juarez-Madrid’s head. The third worker, Christopher Bigelow, also fled into the woods and hid until he was found by a jogger the following morning.
Wilde was indicted for using a firearm to commit first degree murder, in violation of 18 U.S.C. § 924(j); murder in the course of a narcotics offense, in violation of 21 U.S.C. § 848(e)(1)(A); conspiracy to commit marijuana offenses, in violation of 21 U.S.C. §§ 846 and 841; marijuana offenses, in violation of 21 U.S.C. § 841; and two counts of using a firearm during a crime of violence or narcotics trafficking offense, in violation of 18 U.S.C. § 924(c). The jury found the defendant guilty of a premeditated first degree murder, in addition to the other charges listed above.
According to the government’s filings, Wilde hired immigrants “to work on his marijuana grow in the belief that they were expendable, not in a position to complain and that they might not be missed if they disappeared forever into the woods of Humboldt County. When he could not pay them, he murdered one and tried to murder the other. The defendant preyed on their status and viewed them as free labor that could not stand up to him.” In contending the only appropriate sentence for defendant’s crimes included life in prison, the government argued,. . . the defendant undoubtedly committed the premeditated, heinous and cruel murder of Juarez Madrid by pursuing him and shooting him repeatedly from behind. Then the defendant finished Juarez Madrid off execution style by pushing the gun against the back of the victim’s head and firing into his head. This conduct is sufficient to earn him a life sentence alone. But in this case, the murder is further aggravated by the fact that the defendant also tried to murder Lopez Paz by shooting him in the face. Only good fortune kept this from being a double murder – what Wilde clearly intended to commit.
Wilde has been in federal custody since March 12, 2012, and will begin serving his sentence immediately.
The sentence was handed down by the Honorable U.S. District Judge Edward M. Chen. Judge Chen also sentenced Wilde to pay $50,000 in restitution to his victims and to pay a $600 special assessment.
The case was prosecuted by Assistant U.S. Attorneys Kimberly Hopkins and William Frentzen, paralegal specialist Kevin Costello and legal techs Lance Libatique, Ponly Tu, Daniel Charlier-Smith and Marina Ponomarchuk. The case was investigated by the San Francisco Division and Sacramento Division of the FBI, Humboldt County Sheriff’s Office, Humboldt County District Attorney’s Office, U.S. Marshals Service, California Highway Patrol, CalFire and Redding Police Department.
Humboldt County Marijuana Farmer Sentenced to Life in Prison Plus 35 Years for Murdering Immigrant Worker and Related CrimesRead the Press Release
SAN FRANCISCO– Mikal X. Wilde was sentenced today to life in prison plus 35 years for murder and related drug trafficking charges, announced U.S. Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The charges stemmed from the defendant’s murder of Mario Roberto Juarez-Madrid and the shooting of Pedro Fernando Lopez-Paz on August 25, 2010, on the defendant’s marijuana farm in Humboldt County, California.
Wilde, 33, of Kneeland, Calif., was found guilty on March 2, 2015, of six felonies including marijuana conspiracy, manufacturing and possessing marijuana with the intent to distribute, murder during a narcotics offense, use and possession of a firearm in connection with a narcotics offense and crime of violence, and use of a firearm resulting in first degree premeditated murder. Evidence at trial showed that Wilde began a large marijuana grow with more than 1500 plants on over 800 acres of mountain property in Kneeland, California – close to Eureka – during the summer of 2010. In the course of his marijuana cultivation operation, Wilde hired three workers to water and care for the plants, including Mr. Juarez-Madrid and Mr. Lopez-Paz, both from Guatemala. During August of 2010, Wilde provided the workers with firearms to protect against robbery of the marijuana grow. In late August, the workers became unhappy and wanted to leave with payment for the work they had already performed after Wilde altered their work conditions. Rather than paying the workers, Wilde took firearms away from them, and on August 25, 2010, returned to the property armed, and shot them. Wilde shot Mr. Lopez-Paz in the face, but he survived, hiding in the woods all night until he found help the following morning. Wilde shot Mr. Juarez-Madrid three times and hunted him down. The final shot was a contact wound to the back of Mr. Juarez-Madrid’s head. The third worker, Christopher Bigelow, also fled into the woods and hid until he was found by a jogger the following morning. Wilde was indicted for Using a Firearm to Commit First Degree Murder, in violation of 18 U.S.C. § 924(j); Murder in the Course of a Narcotics Offense, in violation of 21 U.S.C. § 848(e)(1)(A); Conspiracy to Commit Marijuana Offenses, in violation of 21 U.S.C. §§ 846 and 841; Marijuana Offenses, in violation of 21 U.S.C. § 841; and two counts of Using a Firearm During a Crime of Violence or Narcotics Trafficking Offense, in violation of 18 U.S.C. § 924(c). The jury found the defendant guilty of a premeditated first degree murder, in addition to the other charges listed above.
According to the government’s filings, Wilde hired immigrants “to work on his marijuana grow in the belief that they were expendable, not in a position to complain, and that they might not be missed if they disappeared forever into the woods of Humboldt County. When he could not pay them, he murdered one and tried to murder the other. The defendant preyed on their status and viewed them as free labor that could not stand up to him.” In contending the only appropriate sentence for defendant’s crimes included life in prison, the government argued,
. . . the defendant undoubtedly committed the premeditated, heinous, and cruel murder of Mr. Juarez Madrid by pursuing him and shooting him repeatedly from behind. Then the defendant finished Mr. Juarez Madrid off execution style by pushing the gun against the back of the victim’s head and firing into his head. This conduct is sufficient to earn him a life sentence alone. But in this case, the murder is further aggravated by the fact that the defendant also tried to murder Mr. Lopez Paz by shooting him in the face. Only good fortune kept this from being a double murder – what Wilde clearly intended to commit.
Wilde has been in federal custody since March 12, 2012 and will begin serving his sentence immediately.
The sentence was handed down by the Honorable Edward M. Chen, U.S. District Judge. Judge Chen also sentenced Wilde to pay $50,000 in restitution to his victims and to pay a $600 special assessment.
The case was prosecuted by Assistant United States Attorneys Kimberly Hopkins and William Frentzen, paralegal specialist Kevin Costello, and legal techs Lance Libatique, Ponly Tu, Daniel Charlier-Smith, and Marina Ponomarchuk. The case was investigated by the Federal Bureau of Investigation, San Francisco Division and Sacramento Division; Humboldt County Sheriff’s Office; Humboldt County District Attorney’s Office; United States Marshals Service; California Highway Patrol; CalFire; and Redding Police Department.
Federal Authorities Prosecute Passport OffensesRead the Press Release
SAN FRANCISCO – Federal authorities continue to devote resources to investigating and prosecuting federal passport offenses, announced United States Attorney Melinda Haag and U.S. Department of State, Diplomatic Security Service Special Agent in Charge David Zebley.
Illustrative of the cases being pursued are the following 12 cases, each of which involves a defendant accused or convicted of misrepresenting their identity on applications for United States passports or committing related offenses in violation of either 18 U.S.C. § 1542, false statement in application for a passport, or 18 U.S.C. § 1028, fraud in connection with identification documents:
CONVICTED:
Trinidad Campos Castro, of King City, Calif., was convicted of applying for a United States passport using another person’s birth certificate and related Social Security Administration benefit fraud. Castro was sentenced to eight months of imprisonment in September, 2014, and was ordered to repay $25,641 in restitution to the Social Security Administration.
Erick Jimenez, formerly of San Rafael, Calif., was convicted of applying for a United States passport and falsely stating that he was born in the United States. Jimenez was sentenced to eight months of imprisonment and three years of supervised release in October, 2014.
Jesus Sanchez Bastidas, formerly of Santa Rosa, Calif., was convicted of applying for a United States passport and falsely stating that he was born in the United States. Bastidas was sentenced to five months of imprisonment and three years of supervised release in October, 2014.
Richard Emmett Monroe, of Windsor, Calif., was convicted of applying for a United States passport and falsely stating his name. Monroe was sentenced to nine months of imprisonment and one year of supervised release in December, 2014.
Jamall Robinson, a/k/a Shakir Bey, formerly of Oakland, Calif., was convicted of conspiring to falsely state his name on an application for a United States passport. Robinson was arrested in January, 2015. Robinson’s scheduled sentencing is set for 9:30 a.m. on June 5, 2015, in front of the Honorable John S. Tigar, United States District Judge, in Oakland.
Neil Kennedy Lockhart, of Oakland, Calif., was convicted of applying for a United States passport and falsely stating he was born in the United States. Lockhart’s sentencing is scheduled for 11:00 a.m., September 4, 2015, before the Honorable Susan Illston, United States District Judge, in San Francisco.
Martha Lidia Donado, of Richmond, Calif., was convicted of possessing a falsely issued United States passport that she obtained by providing biographical information belonging to another person. Donado was sentenced to three years of probation in April, 2015, and she is responsible to pay restitution to the Social Security Administration in the amount of $40,131.00 for benefits she received under the false identity.
CHARGED (Please note, charges described in this document contain only allegations and, as with all defendants, the defendants in the cases listed below must be presumed innocent unless and until proven guilty.):
Maria Elena Hernandez-Garcia, of Salinas, Calif., is alleged to have applied for a United States passport and falsely stated she was born in the United States. Hernandez-Garcia was arrested in February, 2014, but fled after being released on bail in December, 2014. Hernandez-Garcia remains a fugitive.
Laureano Ayala Pulido, of Sunnyvale, Calif., is alleged to have applied for a United States passport and to have made several false statements, including that he was born in the United States. Pulido was arrested in January, 2015, but fled after being released on bail. Pulido remains a fugitive.
Rogelio Salazar, of Salinas, Calif., is alleged to have applied for a passport using a false birth certificate and driver’s license. Salazar was arrested in July, 2014, and his case remains in progress. Salazar’s next scheduled appearance is set for 1:30 p.m. on June 15, 2015 before the Honorable Edwards Davila, United States District Judge, in San Jose.
Arturo Preciado, of San Jose, Calif., is alleged to have applied for a United States passport using a false identity. Preciado made an initial appearance in March, 2015, and his case remains in progress. Preciado’s next scheduled appearance is set for 9:30 a.m. on July 1, 2015, beforethe Honorable Lucy H. Koh, United States District Judge, in San Jose.
Alejandro Musso Cortes, of San Jose, Calif., is alleged to have applied for a United States passport and falsely stated his name and Social Security Number. Cortes was arrested in April, 2015, and his case remains in progress. Cortes’ next scheduled appearance is set for 9:30 a.m. on June 3, 2015, in front of the Honorable Lucy Koh, United States District Court Judge, in San Francisco
These defendants are part of more than 265 Bay Area residents who have been charged with false passport related offenses since 2007. The prosecutions are the result of ongoing investigations by the Diplomatic Security Service.
Anyone with information about false or fraudulently issued passports or entry visas, or the whereabouts of the above fugitives, is encouraged to contact the Diplomatic Security Service at (415) 705-1176.
Morgan Hill Resident Sentenced to over 16 Years in Prison in Connection with Methamphetamine Distribution ConspiracyRead the Press Release
SAN JOSE – Fredi Becerril (a/k/a Ademar Becerril, a/k/a Pitufo) was sentenced today to 196 months in prison for conspiring to distribute methamphetamine, announced United States Attorney Melinda Haag, Homeland Security Investigations Acting Special Agent in Charge Tatum King, and Drug Enforcement Administration Acting Special Agent in Charge Bruce Balzano.
According to the plea agreement, Becerril, 30, of Morgan Hill, was apprehended after law enforcement officers, pursuant to court orders, intercepted telephone conversations between Becerril and co-conspirators Arturo Cuevas-Quezadaz and Francisco Ortiz. Becerril admitted in the plea agreement that on December 1, 2013, he met with Ortiz, Cuevas-Quezadaz, and other co-defendants, at 13805 Center Avenue, San Martin, Calif. These men worked for Becerril and delivered methamphetamine to Becerril’s customers. Becerril gave his co-conspirators handwritten lists of the customers who were to receive the drugs and the quantities of methamphetamine each customer was to receive. After Cuevas-Quezadaz and Ortiz left to make their deliveries, Becerril received a warning that Cuevas-Quezadaz and another man had been arrested. Becerril warned Ortiz about the arrests but directed him to complete certain additional deliveries. When Cuevas-Quezadaz was arrested, the arresting officers found methamphetamine in his car. The DEA laboratory analyzed the seized drugs and determined that the amount of actual (pure) methamphetamine in the seized drugs was 7,949 grams. The DEA laboratory also discovered Becerril’s fingerprints on three of the packages of methamphetamine.
Becerril was arrested the next day, December 2, 2013. At the time of his arrest, agents seized duplicates of the lists he had given to Cuevas-Quezadaz and Ortiz, as well as additional evidence, including $26,960.00 in cash that Ortiz had just delivered to Becerril. Also, on December 2, 2013, a search warrant was executed at Becerril’s house in Morgan Hill. In Becerril’s home, agents discovered a pistol, ammunition, a gold coin and an additional $195,605 in cash.
The sentence was handed down by the Honorable Ronald M. Whyte, U.S. District Judge. Judge Whyte also sentenced Becerril to a 5 year period of supervised release. The defendant has been in federal custody since December 2, 2013.
This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, (OCDETF) a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
Justice Department and Consumer Financial Protection Bureau Reach Settlement with Provident Funding Associates to Resolve Allegations of Mortgage Lending DiscriminationRead the Press Release
SAN FRANCISCO – The Justice Department and Consumer Financial Protection Bureau filed a consent order today to resolve allegations that Provident Funding Associates (Provident) engaged in a pattern or practice of discrimination, announced U.S. Attorney Melinda Haag, Principal Deputy Assistant Attorney General of the Civil Rights Division Vanita Gupta, and Consumer Financial Protection Bureau (CFPB) Director Richard Cordray. The consent order resolves allegations that Provident increased loan prices for African-American and Hispanic borrowers who obtained residential mortgages between 2006 and 2011 from Provident’s nationwide network of mortgage brokers.
The settlement, which is subject to court approval, was filed in conjunction with a complaint filed by U.S. Attorney Haag in the U.S. District Court for the Northern District of California. In the complaint, the government alleges Provident violated the Fair Housing Act and Equal Credit Opportunity Act by charging thousands of African-American and Hispanic borrowers higher fees on mortgage loans not based on borrower risk, but because of their race or national origin. The lawsuit originated from a 2011 referral by the Federal Trade Commission (FTC) to the Justice Department’s Civil Rights Division. In 2012, the CFPB joined the Justice Department’s investigation. Provident cooperated fully with the agencies’ investigation into its lending practices and agreed to settle this matter without contested litigation.
“The settlement demonstrates this U.S. Attorney’s office will devote the resources necessary to root out and address unfair lending practices that affect citizens of this district,” said U.S. Attorney Haag. “The law is clear: access to mortgage loans may not be made more difficult because of an applicant’s race or national origin. We are glad that Provident has agreed to put an end to this practice without engaging in protracted litigation.”
“The Civil Rights Division is committed to ensuring that all types of lending institutions, including wholesale mortgage lenders, comply with the fair lending laws,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “We look forward to further collaboration with the Bureau in protecting consumers from illegal and discriminatory lending practices.”
“Consumers should never be charged higher fees because of their race or national origin,” said CFPB Director Richard Cordray. “We will continue to root out illegal and discriminatory lending practices in the marketplace. I look forward to working closely with our partners at the Department of Justice to ensure consumers are treated fairly.”
Under the terms of the proposed settlement, Provident will pay $9 million dollars into a fund for the benefit of victims of its alleged mortgage lending discrimination. The proposed settlement provides for an independent administrator to contact and disburse payments to borrowers whom the agencies’ identify as victims of Provident’s discrimination, at no cost to the borrowers. Provident will pay all costs and expenses of the administrator. Borrowers who are eligible for compensation will be contacted by the administrator. The Justice Department will make a public announcement and post contact information on its website once the administrator begins contacting victims.
The U.S. Attorney’s Office for the Northern District of California, the Civil Rights Division, the CFPB, and the FTC are members of the Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
Methamphetamine Trafficker Sentenced to 10 Years in PrisonRead the Press Release
SAN JOSE – Alondra Nayali Torres-Sanchez was sentenced today to 10 years in prison, for distribution of methamphetamine, announced United States Attorney Melinda Haag and Drug Enforcement Administration Acting Special Agent in Charge Bruce Balzano.
Torres-Sanchez, 28, a citizen of Mexico living in Canada at the time of the offense, previously pleaded guilty on December 2, 2014, to one count of distribution and possession with the intent to distribute methamphetamine, in violation of 21 U.S.C. § 841(a).
According to government filings, Torres-Sanchez arranged for the distribution of 65.9 grams of 99% pure methamphetamine in San Jose, Calif., on May 31, 2012. Thereafter, again from Canada, she arranged the distribution of 1.929 kilograms of 99% pure methamphetamine in San Jose, Calif., on August 9, 2012. Torres-Sanchez was charged in an information on December 2, 2014, for distribution and possession with the intent to distribute methamphetamine—the charge to which she pleaded guilty.
The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge. Judge Koh also sentenced Torres-Sanchez to a 5 year period of supervised release. The defendant has been in federal custody since October 30, 2013.
Assistant U.S. Attorneys Richard Cheng and Chinhayi Cadet are prosecuting the case. The prosecution is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF), a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
Pittsburg Bay Point Resident Sentenced to 41 Months for Tax Fraud SchemeRead the Press Release
OAKLAND – Charles S. Moore was sentenced to 41 months in prison and ordered to pay restitution of $78,353 to the United States for his role in a false tax refund scheme, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
Moore, of Pittsburg Bay Point, Calif., pleaded guilty on January 16, 2015, to aiding and assisting in the preparation of false tax returns, in violation of 26 U.S.C. § 7206(2). In his plea agreement, Moore admitted that while he was a resident at a drug and alcohol rehabilitation facility, another resident asked him to assist with filing false tax returns. As payment for teaching him the false tax refund scheme, Moore paid the resident with coffee and cigarettes.
Moore realized that if he completed the Form 1040EZ a certain way, he would maximize a fraudulent tax refund, regardless of whether the people for whom the form was prepared earned money or paid taxes. After Moore successfully implemented the scheme once with his nephew, he began preparing false tax returns for people who had no reported income, no student loans, or unpaid child support. Moore usually took a portion of the fraudulent tax refunds as a fee. He prepared and filed no less than 242 tax returns for acquaintances and friends for the 2007 through 2010 tax years, claiming refunds of $166,462. The 41-month sentence was imposed by Judge Jon S. Tigar. Moore is currently in custody.
Assistant U.S. Attorneys Thomas Moore and Jose A. Olivera prosecuted this case. The prosecution is the result of an investigation by the IRS, Criminal Investigation.
Michigan Man Sentenced to 14 Months Prison for Making Telephone Bomb Threats to San Benito High SchoolRead the Press Release
SAN JOSE—Jason Keith Smith was sentenced to 14 months in prison for making multiple telephone bomb threats to San Benito High School, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Smith, 30, of Lincoln Park, Michigan, pleaded guilty on March 3, 2015, to an indictment charging him with communicating threats, in violation of 18 U.S.C. § 875(c). Smith admitted in his plea agreement that in November 2012, he began sending threatening Internet messages to a student at San Benito High School in Hollister, Calif. (the Student). In one instance, the defendant sent the Student a text message indicating that someone would be hurt unless she contacted him. The defendant admitted in his plea agreement that, in early December 2012, he knowingly placed a number of telephone bomb threats from his home in Michigan to San Benito High School. Specifically, on December 2 and 3, 2012, the defendant placed a call to San Benito High School claiming to be a police detective, stating that the Student was in trouble with the law and requesting that she contact him. The defendant also admitted in his plea agreement that on December 3, 2012, he called San Benito High School and left a series of telephone bomb threats on the school attendance message. In one of these messages, the defendant said that there was a bomb in the high school and that people should run and hide. The defendant further admitted that he left another telephone message indicating no one knew where he had placed the bomb, but he would blow the school to pieces. The defendant also admitted that he stated during one of these calls, “And by the way, I want you to look up this one chick named [the Student]. If she goes to school there, please let her know that I am watching her.” The defendant also admitted to making additional telephone bomb threats on December 4 and 7, 2014. As a result of defendant’s telephone bomb threats, San Benito High School had to be evacuated on several occasions and significant law enforcement resources were dedicated to investigate the threats.
Smith was charged in an indictment filed on February 19, 2014. Smith has been in federal custody since October 6, 2014. The sentence was handed down by U.S. District Judge Lucy H. Koh. Judge Koh also sentenced Smith to serve a three-year period of supervised release with special conditions. Among the special conditions of his supervised release are that he not telephone San Benito High School or possess any computer without permission from his probation officer.
The case was prosecuted by Northern District of California Assistant U.S. Attorney Joseph Fazioli and Eastern District of Michigan Assistant U.S. Attorney Kevin Mulcahy, with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the Federal Bureau of Investigation in Northern California and Detroit, the Hollister Police Department, and the Lincoln Park Police Department.
Former IRS Employee Sentenced to 24 Months for Tax FraudRead the Press Release
OAKLAND – Valorie Shaw was sentenced to 24 months in prison and ordered to pay restitution of $309,834 for conspiring to file false claims, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation Special Agent in Charge José M. Martinez.
Shaw, 38, of Oakland, pleaded guilty on January 23, 2015, to conspiracy to file false claims. Shaw was employed as a tax return preparer at “Kwiktax” for three years. Prior to working at Kwiktax, she held a variety of jobs, including working as a document transporter for the IRS. During 2011 and 2012, Shaw prepared false tax returns that she filed with the IRS. The purported filers listed on those tax returns were not entitled to tax refunds because the wage and tax withholding information listed on the returns were fictitious. Shaw also filed false W-2 information that stated the purported filers worked for the employers listed on the W-2s, even though she knew the information was false. Shaw filed the false tax returns using personal information she obtained illegally. Specifically, Shaw used personal identifying information of Kwiktax clients, including their names, dates of birth, and Social Security numbers, without these victims’ knowledge.
During 2011, Shaw assisted in filing false tax returns requesting refunds in an amount no less than $487,248, for the 2010 tax year. During 2012, Shaw assisted in filing false tax returns requesting refunds totaling $495,789 for the 2011 tax year.
Shaw was indicted on August 14, 2014. She was charged with conspiracy to file false claims, in violation of 18 USC § 286. Shaw pleaded guilty to that charge. The Honorable Jon Tigar, U.S. District Judge, imposed the sentence. Judge Tigar also ordered Shaw is to surrender on September 18, 2015, to begin serving her sentence.
Assistant U.S. Attorney Thomas Newman is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Watsonville Nursing Home Owners, Operators and Manager Agree to Pay $3.8 Million to Settle Allegations of False ClaimsRead the Press Release
SAN FRANCISCO – The owners, operators, and manager of two nursing homes in Watsonville, Calif., have agreed to pay $3.8 million to settle allegations that they submitted false claims to the United States, announced United States Attorney Melinda Haag, U.S. Department of Health and Human Services OIG (HHS-OIG) Special Agent in Charge Ivan Negroni, and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
Today’s settlement stems from a complaint filed by the United States on August 29, 2014, in U.S. District Court for the Northern District of California. In the complaint, the United States alleged the owners, operators, and managers of two nursing homes submitted to federal Medicare and Medi-Cal programs false claims for materially substandard or worthless services. Specifically, the complaint alleges between 2007 and 2012, the defendants persistently overmedicated elderly and vulnerable residents of the nursing homes, causing infection, sepsis, malnutrition, dehydration, falls, fractures, pressure ulcers, and for some residents, premature death. The complaint alleges the defendants violated the Federal False Claims Act, 31 U.S.C. §§ 3729-3733. The named defendants are the nursing homes, Country Villa Watsonville East Nursing Center (renamed Watsonville Nursing Center in April 2014) and Country Villa Watsonville West Nursing and Rehabilitation Center (renamed Watsonville Post-Acute Center in April 2014); the for-profit entities that own and operate the nursing homes, CF Watsonville East, LLC, and CF Watsonville West, LLC; the entity that exercised oversight and control over the finances and operations of the nursing homes, the ARBA Group; and the entities responsible for the management of the nursing homes under consulting agreements with the owners, Country Villa Health Service Corporation, dba Country Villa Health Services.
In addition to the monetary settlement, defendants CF Watsonville East, LLC, and CF Watsonville West, LLC have entered into a five-year Corporate Integrity Agreement (CIA) with HHS-OIG. Among other things, the CIA requires these defendants to implement and maintain a robust compliance program and retain an independent monitor to help ensure the nursing homes’ compliance with Medicare and Medicaid regulations and standards of care.
“Our nursing home residents rely on the Medicare and Medi-Cal programs to receive life sustaining, and other essential medical services,” said United States Attorney Haag. “The allegations in this complaint are appalling. It is my hope that the families whose loved ones suffer at the hands of nursing homes that provide substandard care can find solace in the commitment from me that these owners, operators, and managers will be held accountable for their actions.”
“It’s outrageous when nursing home owners accept Medicare and Medicaid money to care for vulnerable nursing home residents and in return provide care so lacking in quality and compassion it shocks the senses,” said Special Agent in Charge Ivan Negroni, HHS-OIG. “Our agency is committed to investigating such substandard care and, through our Corporate Integrity Agreement with these two nursing homes, requires an independent monitor and other protections designed to hold these nursing homes accountable for providing appropriate, high quality care in the future.”
“This case demonstrates our continued commitment to investigate, and hold accountable, individuals and organizations seeking to victimize the elderly through the misuse of taxpayer funded Medicare and Medi-Cal programs,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office. “The FBI remains vigilant on our continued effort to work with our civil enforcement partners on these cases and will seek to hold those responsible for providing substandard care accountable for both past violations and future compliance.”
Assistant U.S. Attorney Gioconda Molinari litigated the case with the assistance of paralegal Lucille Yee and auditor Michael Zehr. The lawsuit is the result of an investigation by the U.S. Attorney’s Office, the Federal Bureau of Investigation, and the HHS-OIG.
If you know someone who is the victim of elder abuse, neglect, or exploitation in a nursing home, you can report it to:
- California Long-term-Care Ombudsman, 1-800-231-4024, http://www.aging.ca.gov/Programs/LTCOP/
- Your local California Department of Public Health, Licensing and Certification Division, District office http://www.cdph.ca.gov/HealthInfo/Pages/NursingHomePatient.aspx
- Your local adult protective services office, and/or the police.
SFPD Officer Sentenced to 12 Months for Role in Conspiracy to Provide Drugs to InformantsRead the Press Release
SAN FRANCISCO– Former San Francisco Police Officer Reynaldo Vargas was sentenced today to 12 months in prison for his participation in a conspiracy to steal money and property and provide illegal drugs to informants, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Vargas, 46, was indicted by a federal grand jury on February 25, 2014. He pleaded guilty on October 21, 2014, to conspiracy to distribute controlled substances, in violation of 21 U.S.C. § 846; distribution of marijuana, in violation of 21 U.S.C. § 84; conspiracy to commit theft concerning a federally funded program, in violation of 18 U.S.C. § 666(a); and theft concerning a federally funded program, in violation of 18 U.S.C. § 666(a). According to the plea agreement, Vargas admitted that he and two other SFPD officers, Ian Furminger and Edmond Robles, repeatedly stole money and property during searches and arrests. Vargas also admitted the officers kept the stolen items for themselves and that he provided drugs seized by the SFPD to informants.
Vargas testified at the trial of Furminger and Robles, who were convicted by a jury in San Francisco on December 15, 2014. After their convictions, Furminger was sentenced to a term of 41 months in prison and Robles was sentenced to a term of 39 months.
Vargas’s 12-month sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge. Judge Breyer also sentenced Vargas to a three year term of supervised release. Vargas was given two months to voluntarily surrender to begin serving his sentence.
In sentencing Vargas, Judge Breyer described Vargas’s testimony as “crucial, essential, to the successful prosecution of the case.” Judge Breyer described the testimony as “genuine” and lauded Vargas for truly accepting responsibility and making a concerted effort to transform his life for the better. The Court acknowledged the difficulty of testifying as a police officer against other police officers and said that he “hope[d] that other police officers understand that when they see this type of activity by colleagues . . . it hurts them, as well as the police officers who are involved.”
The investigation that led to Vargas’s plea and cooperation began with the public release of a videotape showing SFPD officers entering a single room occupancy hotel room without a warrant. The investigation, which was conducted by the FBI and SFPD Internal Affairs Division, grew to include, among other things, allegations that Vargas, Robles, and Furminger engaged in the theft of tens of thousands of dollars and valuable property during the course of performing their official duties. The officers also filed false police reports that did not identify the money and property they had stolen.
“The misconduct of the police officers prosecuted in this case damaged the credibility of good police officers everywhere,” said United States Attorney Melinda Haag. “Without the trust of the community, police officers are not able to safely and effectively do their jobs,” she said.
At Vargas’s sentencing, Judge Breyer said that this is one of the most serious cases he has seen as a district judge. He described why it is critical that police officers act with honesty and integrity:
Police officers go out every day putting their lives at risk, and you have done that repeatedly. And whether they come back at night, whether they can perform their duties, in large part, depends on whether the public accepts them as guardians of their safety. You are the agents of all of us. You are the people out on the street representing every judge, every prosecutor, every defense lawyer, and everybody else who lives in this city, including those people who are so vulnerable that they have fallen susceptible to disease, to addiction, to a way of crime. You represent them. . . . And the success of your task, of all of our tasks, is that society accepts what we do, they think that the system is fair, they think that the prosecutor, the defense lawyer, the judge, the police officer, will be fair in administering the law. . . . [A]nything that detracts from the credibility of the people who are involved in the justice system, jeopardizes the justice system . . . . And unless we have a system that is credible, we are no different, no different at all, from any totalitarian state in which police, prosecutors, judges, lawyers, act capriciously, act without due process.
This case was prosecuted by the Special Prosecutions and National Security Unit of the U.S. Attorney’s Office for the Northern District of California. It is the result of an investigation conducted by the FBI’s San Francisco Division, with the assistance of the SFPD Internal Affairs Division.
Oakland Woman Sentenced to Three Years for Attempting to Smuggle Cocaine Through Airport SecurityRead the Press Release
OAKLAND – Cheryl Denise Frazier was sentenced today to three years in prison for possession with intent to distribute cocaine, announced United States Attorney Melinda Haag and Drug Enforcement Administration Acting Special Agent in Charge Bruce Balzano.
Frazier, 48, of Oakland, pleaded guilty on January 23, 2015, to possessing cocaine with intent to distribute. According to her plea agreement, Frazier admitted that on August 20, 2014, she entered the Oakland International Airport in Oakland, Calif., with 600 grams of cocaine hidden inside her clothing. She further admitted that she entered the airport with the cocaine concealed on her body for the purpose of smuggling the drugs onto a commercial flight for later distribution to another person. Frazier was charged by information on January 15, 2015, for possession with intent to distribute cocaine in violation of 21 U.S.C. § 841(a)(1).
The sentence was handed down by the Honorable James Donato, U.S. District Judge. The defendant will begin serving the sentence immediately and has been in custody since her arrest in August 2014.
Assistant U.S. Attorney Garth Hire is prosecuting the case with the assistance of Melissa Dorton. The prosecution is the result of an investigation by the U.S. Drug Enforcement Administration and the Alameda County Sheriff’s Office.
California Operator of MYREDBOOK.COM Sentenced to 13 Months in Prison for Facilitating ProstitutionRead the Press Release
SAN FRANCISCO – A California man was sentenced to 13 months today for his operation of the myRedBook.com website to facilitate prostitution announced U.S. Attorney Melinda Haag, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Federal Bureau of Investigation Special Agent in Charge David J. Johnson, and Special Agent in Charge José M. Martinez of the Internal Revenue Service-Criminal Investigation (IRS-CI) Oakland Field Office. This represents the first federal conviction of a website operator for facilitation of prostitution.
Eric Omuro, aka Red, 53, of Mountain View, Calif., pleaded guilty on Dec. 11, 2014, before U.S. District Judge William H. Orrick of the Northern District of California to using a facility of interstate commerce with the intent to facilitate prostitution. As part of his plea agreement, Omuro agreed to forfeit more than $1.28 million in cash and property, as well as the sfRedBook.com and myRedBook.com domain names.
In connection with his guilty plea, Omuro admitted that from April 2010 until June 25, 2014, he owned, managed and operated a website known as myRedBook.com, which was previously known as sfredbook.com. Omuro admitted that the website hosted advertisements posted by prostitutes containing explicit photos, graphic descriptions of sexual services offered, and rates for the sexual services. The advertisements were searchable by geographic location, including cities throughout California, other U.S. states and Canada.
Omuro admitted that members of his website and prostitutes typically used acronyms for sex acts, which were defined in graphic detail in the website’s “Terms and Acronyms” section. While prostitutes could post advertisements for free, myRedBook.com offered additional options for a fee. For example, prostitutes could pay a fee to have their advertisement featured more prominently on the website. Similarly, customers could access myRedBook.com for free. If a customer purchased a membership, however, the customer obtained early and enhanced access to prostitute reviews, enhanced prostitute review search options and access to additional VIP forums, among other things.
According to an affidavit submitted in connection with the sentencing hearing, the FBI identified more than 50 juveniles who were also advertised on myRedBook for the purpose of prostitution.
The U.S. Attorney’s Office for the Northern District of California and the U.S. Department of Justice Criminal Division’s Child Exploitation and Obscenity Section are prosecuting the case. This case was investigated by the FBI’s San Francisco Field Office, the IRS-CI and the Oakland, California, Police Department. The Criminal Division’s Office of International Affairs provided assistance to the prosecution.
San Francisco Art Fraudster Convicted of Mail Fraud, Wire Fraud, Making False Declarations, Escape, and Contempt After Three Week Jury TrialRead the Press Release
SAN FRANCISCO- A federal jury convicted Luke D. Brugnara today of mail fraud, wire fraud, false declarations to a court, escape, and contempt of court, announced United States Attorney Melinda Haag, Federal Bureau of Investigation Special Agent in Charge David Johnson and U.S. Marshal Don O’Keefe.
Brugnara, 51, of San Francisco, was originally charged with fraud in a criminal complaint filed May 27, 2014. The criminal complaint described Brugnara’s refusal to pay for several pieces of art after he convinced a New York art dealer to ship the art to his California home. Brugnara was arrested on May 28, 2014, but then escaped from custody of his lawyer on February 5, 2015. He was apprehended six days later and stood trial for the fraud charges and the additional escape charge beginning April 27, 2015.
The jury found that Brugnara committed wire and mail fraud in connection with his agreement to purchase several works of art for a combined total of approximately $11,000,000 from a New York art dealer, Rose Long. The jury also found that defendant made false declarations to the court when he testified at a preliminary hearing in June 2014 that he had received a phone call from someone at Sotheby’s telling him that the artwork in question was fake. Further, the jury found that the defendant escaped from the San Francisco federal building on February 5, 2015, in contempt of the orders of the district court. Defendant was also acquitted of two counts of wire fraud and one count of making false declarations to a court. The guilty verdict followed a three week jury trial before the Honorable William Alsup, U.S. District Court Judge.
Evidence at trial showed that, in late March and early April 2014, Brugnara told Ms. Long that he would pay approximately $11 million for works of art by Willem de Kooning, Pablo Picasso, Joan Miró, George Luks, and Edgar Degas that were owned by Ms. Long and others. Based on his representations that he would pay for the artwork and put it in a museum, Ms. Long and the owners shipped the artwork to Brugnara at his house in the Sea Cliff neighborhood of San Francisco.
The evidence at trial demonstrated that the artwork was shipped to Brugnara’s residence and, on April 7, 2014, delivered in five wooden crates. When the artwork arrived, Brugnara refused to pay for it, return it, or inspect it, and told Ms. Long that she had given the artwork to him as a gift. Eventually, Ms. Long reported the crime to the FBI, which executed a search warrant at Brugnara’s residence in late May 2014. During the search, the FBI recovered only four of the five crates of artwork. The fifth crate, containing a “Little Dancer” sculpture by Edgar Degas, was never recovered.
After Brugnara was charged with fraud in connection with the art transaction, he testified before Judge Alsup in a preliminary hearing regarding his probation status. During that testimony, Brugnara explained that he had not paid for the artwork because he had received a phone call from someone at the art auction house Sotheby’s in the days before the delivery of the artwork. The evidence at trial demonstrated that such a phone call never happened.
On December 23, 2014, while Brunaga was in custody, Judge Alsup issued an order furloughing Brugnara to the custody of his lawyer in the federal building for the purpose of preparing for trial. The furlough was ordered “from 9 A.M. to 3 P.M. on any business day by reservation the previous business day.” On February 5, 2015, Brugnara violated the terms of this court order when he escaped from his lawyer’s custody at 450 Golden Gate Avenue in San Francisco, California. Brugnara was filmed sprinting away from the Federal Building. The evidence at trial established that he called a friend from a pay telephone and had her meet him with a car so that they could drive away from the area. After he absconded, Brugnara was a fugitive for six days. He was apprehended in Los Gatos, California, on February 11, 2015, as a result of a cooperative effort by the United States Marshals Service and the Federal Bureau of Investigation. He thereafter remained in custody throughout the trial.
Brugnara waived his right to counsel and conducted the trial as a pro se defendant with the assistance of two attorneys appointed as advisory counsel. Judge Alsup found Brugnara in summary contempt of numerous ordersand sentenced him to well over a year of imprisonment for his outbursts and obstructive conduct during trial, to be served consecutive to any sentence imposed for the underlying offenses.
Brugnara is being held in the custody of the U.S. Marshals Service pending sentencing. Brugnara’s sentencing hearing on the convictions is scheduled for September 8, 2015, before Judge Alsup, in San Francisco. The maximum statutory penalty for mail fraud, in violation of Title 18, United States Code, Section 1341, and wire fraud, in violation of Title 18, United States Code, Section 1343, is 20 years in prison, a fine of $250,000, forfeiture, and restitution. The maximum statutory penalty for false declarations to a court, in violation of Title 18, United States Code, Section 1623, and escape, in violation of Title 18, United States Code, Section 751(a), is 5 years in prison, a fine of $250,000, forfeiture, and restitution. The penalty for contempt of court, in violation of Title 18, United States Code, Section 401(3), is at the discretion of the court. Any sentence following conviction, however, would be imposed by the Court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Robin Harris and Benjamin Kingsley are prosecuting the case with the assistance of Mary Mallory, Denise Oki, Jessica Meegan, and Trina Khadoo. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the United States Marshals Service.
Methamphetamine Traffickers Sentenced to 23 Years and 17 Years in PrisonRead the Press Release
SAN JOSE – Salvador Espinoza-Patino and Alejandro Espinoza Del Toro were sentenced to 23 and 17 years in prison, respectively, for conspiracy to possess with intent to distribute and to distribute methamphetamine, conspiracy to commit money laundering, and distribution of methamphetamine, announced United States Attorney Melinda Haag and Drug Enforcement Administration Acting Special Agent in Charge Bruce Balzano.
Espinoza-Patino, 32, of Fremont, Calif, was indicted by a federal grand jury on February 28, 2013, for one count of conspiring to possess with the intent to distribute and to distribute methamphetamine, in violation of 21 U.S.C. § 846; two counts of conspiring to commit money laundering, in violation of 18 U.S.C. § 1956(h) and §1956(a)(2)(b)(i), and two counts of distribution of methamphetamine, in violation of 21 U.S.C. § 841(a)(1). On October 27, 2014, Espinoza-Patino pleaded guilty without a plea agreement to all the charges alleged against him in the indictment.
Del Toro, (a/k/a “Marco Antonio Ortuno Del Toro”), 24, of Los Banos, Calif., was also indicted by a federal grand jury on February 28, 2013. He was charged in the indictment with one count of conspiracy to possess with the intent to distribute and to distribute methamphetamine, in violation of 21 U.S.C. § 841(a)(1); one count of conspiracy to commit money laundering in violation of 18 U.S.C. § 1956(h) and 18 U.S.C. § 1956(a)(2)(B)(i); and one count of distribution of methamphetamine, in violation of 21 U.S.C. § 841(a)(1). On December 5, 2014, he pleaded guilty to all the charges alleged against him in the indictment.
According to government filings, the investigation established that Espinoza-Patino was a leader within a drug trafficking organization that was involved in large scale methamphetamine trafficking. On November 30, 2012, agents executed search warrants at a number of locations. The bulk of the methamphetamine was seized from two stash houses that Espinoza-Patino and Del Toro maintained. Specifically, when agents executed a search warrant at the stash house located at 2219 Raquet Club Drive in Los Banos, agents seized approximately 554 pounds (259 kilograms) of methamphetamine, two firearms, and a vehicle that had a hidden compartment. Likewise, when agents executed a search warrant at the stash house located at 441 North Santa Venetia in Los Banos, agents seized approximately 104 pounds (47 kilograms) of methamphetamine, and a vehicle that had a hidden compartment.
The sentences of Espinoza-Patino and Del Toro were handed down by the Honorable Lucy H. Koh, U.S. District Judge. Judge Koh also sentenced both Espinoza-Patino and Del Toro to a 5-year period of supervised release. The defendants have been in federal custody since November 30, 2012.Assistant U.S. Attorneys Richard Cheng and Chinhayi Cadet are prosecuting the case. This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF), a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
Chinese Professors Among Six Defendants Charged with Economic Espionage and Theft of Trade Secrets for Benefit of People’s Republic of ChinaRead the Press Release
SAN FRANCISCO – United States Attorney Melinda Haag, Assistant Attorney General for National Security John Carlin, and FBI Special Agent-in-Charge David Johnson announced today that on May 16, 2015, Tianjin University Professor Hao Zhang was arrested upon entry into the United States from the People’s Republic of China (PRC) in connection with a recent superseding indictment in the Northern District of California. The thirty-two count indictment, which had previously been sealed, charged a total of six individuals with Economic Espionage and Theft of Trade Secrets for their roles in a long-running effort to obtain U.S. trade secrets for the benefit of universities and companies controlled by the PRC government.
According to the indictment, PRC nationals Wei Pang and Hao Zhang met at a university in Southern California during their doctoral studies in electrical engineering. While there, Pang and Zhang conducted research and development on thin-film bulk acoustic resonator (FBAR) technology under funding from United States Defense Advanced Research Projects Agency (DARPA). After earning their doctorates in approximately 2005, Pang accepted employment as an FBAR engineer with Avago Technologies (Avago) in Colorado, and Zhang accepted employment as an FBAR engineer with Skyworks Solutions, Inc. (Skyworks) in Massachusetts. The stolen trade secrets alleged in the indictment belong to Avago and Skyworks.
Avago is a designer, developer and global supplier of FBAR technology, which is a specific type of radio frequency (RF) filter. While Zhang was employed there, Skyworks also designed and developed FBAR technology. FBAR technology is primarily used in mobile devices like cellular telephones, tablets, and GPS devices. FBAR technology filters incoming and outgoing wireless signals so that a user only receives and transmits the specific communications intended by the user. Apart from consumer applications, FBAR technology has numerous applications for a variety of military and defense communications technologies.
According to the indictment, in 2006 and 2007, Pang, Zhang, and other co-conspirators prepared a business plan and began soliciting PRC universities and others, seeking opportunities to start manufacturing FBAR technology in China. Through efforts outlined in the indictment, Pang, Zhang, and others established relationships with officials from Tianjin University. Tianjin University is a leading PRC Ministry of Education University located in Tianjin, PRC, and one of the oldest universities in China.
As set forth in the indictment, in 2008, officials from the Tianjin University flew to San Jose, California, to meet with Pang, Zhang, and other co-conspirators. Shortly thereafter, Tianjin University agreed to support Pang, Zhang, and others in establishing an FBAR fabrication facility in China. Pang and Zhang continued to work for Avago and Skyworks in close coordination with Tianjin University. In mid-2009, both Pang and Zhang simultaneously resigned from the U.S. companies and accepted positions as full professors at Tianjin University. Tianjin University later formed a joint venture with Pang, Zhang, and others under the company name ROFS Microsystem, intending to mass produce FBARs.
The indictment alleges that Pang, Zhang, and other co-conspirators stole recipes, source code, specifications, presentations, design layouts, and other documents marked as confidential and proprietary from the victim companies and shared the information with one another and with individuals working for Tianjin University.
According to the indictment, the stolen trade secrets enabled Tianjin University to construct and equip a state-of-the-art FBAR fabrication facility, to open ROFS Microsystems, a joint venture located in PRC state-sponsored Tianjin Economic Development Area (TEDA), and to obtain contracts for providing FBARs to commercial and military entities.
United States Attorney Melinda Haag stated, “As this case demonstrates, sensitive technology developed by U.S. companies in Silicon Valley and throughout California continues to be vulnerable to coordinated and complex efforts sponsored by foreign governments to steal that technology. Combating economic espionage and trade secret theft remains one of the top priorities of this Office.”
FBI San Francisco Special Agent-in-Charge David Johnson stated, “The conduct alleged in this superseding indictment reveals a methodical and relentless effort by foreign interests to obtain and exploit sensitive and valuable U.S. technology through the use of individuals operating within the United States. Complex foreign-government sponsored schemes, such as the activity identified here, inflict irreversible damage to the economy of the United States and undercut our national security. The FBI is committed to rooting out industrial espionage that puts U.S. companies at a disadvantage in the global market.”
“According to the charges in the indictment, the defendants leveraged their access to and knowledge of sensitive U.S. technologies to illegally obtain and share U.S. trade secrets with the PRC for economic advantage,” said Assistant Attorney General Carlin. “Economic espionage imposes great costs on American businesses, weakens the global marketplace and ultimately harms U.S. interests worldwide. The National Security Division will continue to relentlessly identify, pursue and prosecute offenders wherever the evidence leads. I would like to thank all the agents, analysts and prosecutors who are responsible for this indictment.”
The six indicted defendants include:
- Hao Zhang, 36, a citizen of the PRC. Zhang is a former Skyworks employee and a full professor at Tianjin University. Zhang is charged with Conspiracy to Commit Economic Espionage, Conspiracy to Commit Theft of Trade Secrets, Economic Espionage, and Theft of Trade Secrets. Zhang was arrested upon entry into the United States on May 16, 2015.
- Wei Pang, 35, a citizen of the PRC. Pang is a former Avago employee and a full professor at Tianjin University. Pang is charged with Conspiracy to Commit Economic Espionage, Conspiracy to Commit Theft of Trade Secrets, Economic Espionage, and Theft of Trade Secrets.
- Jinping Chen, 41, a citizen of the PRC. Chen is a professor at Tianjin University and a member of the board of directors for ROFS Microsystems. Chen is charged with Conspiracy to Commit Economic Espionage and Conspiracy to Commit Theft of Trade Secrets.
- Huisui Zhang (Huisui), 34, a citizen of the PRC. Huisui studied with Pang and Zhang at a U.S. university and received a master’s degree in electrical engineering in 2006. Huisui is charged with Conspiracy to Commit Economic Espionage and Conspiracy to Commit Theft of Trade Secrets.
- Chong Zhou, 26, a citizen of the PRC. A Tianjin University graduate student and a design engineer at ROFS Microsystem, Zhou studied under Pang and Zhang. Zhou is charged with Conspiracy to Commit Economic Espionage, Conspiracy to Commit Theft of Trade Secrets, Economic Espionage, and Theft of Trade Secrets.
- Zhao Gang, 39, a citizen of the PRC. Gang is the General Manager of ROFS Microsystems. Gang is charged with Conspiracy to Commit Economic Espionage and Conspiracy to Commit Theft of Trade Secrets.
The maximum statutory penalty for each of the charges alleged in the Superseding Indictment is as follows:
- Count One: Conspiracy to Commit Economic Espionage, in violation of 18 U.S.C. § 1831(a)(5): 15 years imprisonment; $500,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment.
- Count Two: Conspiracy to Commit Theft of Trade Secrets, in violation of 18 U.S.C. § 1832(a)(5): 10 years imprisonment; $250,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment.
- Counts Three Through Seventeen: Economic Espionage; Aiding and Abetting, in violation of 18 U.S.C. § 1831(a)(1),(2),(3), & 2: 15 years imprisonment; $500,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment.
- Counts Eighteen Through Thirty-Two: Theft of Trade Secrets; Aiding and Abetting, in violation of 18 U.S.C. § 1832(a)(1),(2),(3), & 2: 10 years imprisonment; $250,000 fine or twice the gross gain/loss; three years’ supervised release; and $100 special assessment.
The defendant was arrested on May 16, 2015, upon landing at the Los Angeles International Airport on a flight from the PRC. He made his initial appearance yesterday afternoon in Los Angeles before The Honorable Alicia G. Rosenberg, United States Magistrate Judge, who ordered the defendant transported in custody to San Jose for further proceedings. His next scheduled appearance will be before The Honorable Edward J. Davila, United States District Judge, at a date to be determined.
The case is being prosecuted by Assistant United States Attorneys Matthew Parrella and David Callaway of the Computer Hacking and Intellectual Property Unit of the U.S. Attorney’s Office in San Francisco, in consultation with the Counterespionage Section of the U.S. Department of Justice in Washington, D.C. The investigation is being conducted by the Palo Alto Resident Agency/San Francisco Division of the Federal Bureau of Investigation.
Please note, an indictment contains only allegations and, as in all cases, the defendants must be presumed innocent unless and until proven guilty.
Airport Baggage Handlers Charged in Wide-Ranging Conspiracy to Transport Drugs Across the CountryRead the Press Release
Fourteen persons have been charged in connection with an alleged wide-ranging criminal conspiracy to violate airport security requirements and transport drugs throughout the country announced U.S. Attorney Melinda Haag of the Northern District of California, Special Agent in Charge José M. Martinez of the Internal Revenue Service-Criminal Investigation’s (IRS-CI) for the Northern District of California and Special Agent in Charge David J. Johnson Federal Bureau of Investigation (FBI). The case highlights the government’s determination to address security concerns in and around the nation’s airports.
In a criminal complaint partially unsealed today, the co-conspirators were described as a drug trafficking organization determined to use the special access some of them had been granted as baggage handlers at the Oakland International Airport to circumvent the security measures in place at the airport. As alleged in the complaint, the baggage handlers entered the Air Operations Area (AOA) of the Oakland Airport while in possession of baggage containing marijuana. The AOA is an area of the airport that is accessible to employees but not to passengers who have completed security screening through a Transportation Security Administration (TSA) checkpoint. The baggage handlers were not required to pass through a TSA security screening checkpoint to enter the AOA. The baggage handlers then used their security badges to open a secure door that separates the AOA from the sterile passenger terminal where outbound passengers, who have already passed through the TSA security and screening checkpoint, wait to board their flights. The baggage handlers then gave the baggage containing drugs to passengers who then transported the drugs in carry-on luggage on their outbound flights. After arriving in a destination city, the drugs were distributed and sold.
According to the complaint, the conspiracy was operating as early as July 2012. Baggage handlers Kenneth Wayne Fleming, 32, of San Leandro, California; Keith Ramon Mayfield, 34, of Oakland, California; and Michael Herb Videau, 28, of Oakland, California, are accused of using their security badges to cross security barriers while carrying unscreened baggage filled with packages of marijuana. They would then hand off the baggage to co-conspirators, including Major Alexander Session III, 24, of Oakland, California; Clyde Barry Jamerson, 41, of Oakland, California; Kameron Kordero Eldridge Davis, 26, of Dublin, California; Ronnell Lamar Molton, 34, of Oakland, California; Francisco Manuel Carrasco, 29, of Hayward, California; Sophia Cherise West, 44, of Castro Valley, California; and others, who then would board outbound aircraft and bring the drugs to destinations throughout the country. Proceeds from the sale of the marijuana eventually were deposited into accounts controlled by defendants Ahshatae Marie Millhouse, 27, of Oakland, California; Laticia Ann Morris, 40, of Little Rock, Arkansas; Donald Ray Holland II, 42, of Discovery Bay, California; and others. Additionally, Mayfield used his privileges as an airline employee to ship drugs as cargo and have co-conspirators such as Brandon Jarred Davillier, 27, of Slidell, Louisiana, receive them for distribution. The defendants have been charged in a complaint with conspiracy to distribute, and possess with intent to distribute, 100 kilograms or more of marijuana, in violation of 21 U.S.C. § 846.
Nine defendants were taken into custody in arrests coordinated throughout the San Francisco Bay Area and Arkansas. Eight defendants made their initial appearances this morning before the Honorable U.S. Magistrate Judge Kandis A. Westmore, in Oakland, California. The defendants’ next appearances are scheduled as follows: defendants Holland, Fleming, Baker, Session, Davis and West are scheduled to appear tomorrow morning for a hearing at which they may be appointed counsel. Defendants Mayfield and Videau are scheduled to appear on May 21, 2015, for detention hearings. Defendant Morris made her initial appearance in Little Rock, Arkansas, and was released on bond. Defendants Jamerson and Molton are currently serving state prison sentences in Arkansas and Louisiana, respectively, for possession with intent to distribute marijuana. Defendants Davillier, Millhouse and Carrasco are presently fugitives.
The maximum penalty for conspiracy to distribute and possess with intent to distribute marijuana is 40 years imprisonment and $5 million. The offense carries a mandatory minimum sentence of five years imprisonment.
Additional periods of supervised release, fines and special assessments also could be imposed. 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 unless and until proven guilty beyond a reasonable doubt.
Assistant U.S. Attorney Garth Hire is prosecuting the case with the assistance of Melissa Dorton, Michelle Alter, Kathleen Turner and Vanessa Vargas. This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
Airport Baggage Handlers Charged in Wide-Ranging Conspiracy to Transport Drugs Across the CountryRead the Press Release
OAKLAND – Fourteen persons have been charged in connection with an alleged wide-ranging criminal conspiracy to violate airport security requirements and transport drugs throughout the country announced United States Attorney Melinda Haag, Special Agent in Charge José M. Martinez of the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Northern District of California, and Federal Bureau of Investigation Special Agent in Charge David J. Johnson. The case highlights the government’s determination to address security concerns in and around the nation’s airports.
In a criminal complaint partially unsealed today, the co-conspirators were described as a drug trafficking organization determined to use the special access some of them had been granted as baggage handlers at the Oakland International Airport to circumvent the security measures in place at the airport. As alleged in the Complaint, the baggage handlers entered the Air Operations Area (AOA) of the Oakland Airport while in possession of baggage containing marijuana. The AOA is an area of the Airport that is accessible to employees but not to passengers who have completed security screening through a Transportation Security Administration (TSA) checkpoint. The baggage handlers were not required to pass through a TSA security screening checkpoint to enter the AOA. The baggage handlers then used their security badges to open a secure door that separates the AOA from the sterile passenger terminal where outbound passengers, who have already passed through the TSA security and screening checkpoint, wait to board their flights. The baggage handlers then gave the baggage containing drugs to passengers who then transported the drugs in carry-on luggage on their outbound flights. After arriving in a destination city, the drugs were distributed and sold.
According to the complaint, the conspiracy was operating as early as July 2012. Baggage handlers Kenneth Wayne Fleming, 32, of San Leandro; Keith Ramon Mayfield, 34, of Oakland; and Michael Herb Videau, 28, of Oakland, are accused of using their security badges to cross security barriers while carrying unscreened baggage filled with packages of marijuana. They would then hand off the baggage to co-conspirators, including Major Alexander Session III, 24, of Oakland; Clyde Barry Jamerson, 41, of Oakland; Kameron Kordero Eldridge Davis, 26, of Dublin; Ronnell Lamar Molton, 34, of Oakland; Francisco Manuel Carrasco, 29, of Hayward; Sophia Cherise West, 44, of Castro Valley; and others, who then would board outbound aircraft and bring the drugs to destinations throughout the country. Proceeds from the sale of the marijuana eventually were deposited into accounts controlled by defendants Ahshatae Marie Millhouse, 27, of Oakland; Laticia Ann Morris, 40, of Little Rock, Arkansas; Donald Ray Holland II, 42, of Discovery Bay; and others. Additionally, Mayfield used his privileges as an airline employee to ship drugs as cargo and have co-conspirators such as Brandon Jarred Davillier, 27, of Slidell, Louisiana, receive them for distribution. The defendants have been charged in a complaint with conspiracy to distribute, and possess with intent to distribute, 100 kilograms or more of marijuana, in violation of 21 U.S.C. § 846.
Nine defendants were taken into custody in arrests coordinated throughout the San Francisco Bay Area and Arkansas. Eight defendants made their initial appearances this morning before the Honorable Kandis A. Westmore, United States Magistrate Judge, in Oakland. The defendants’ next appearances are scheduled as follows: Defendants Holland, Fleming, Baker, Session, Davis, and West are scheduled to appear tomorrow morning for a hearing at which they may be appointed counsel. Defendants Mayfield and Videau are scheduled to appear on May 21, 2015, for detention hearings. Defendant Morris made her initial appearance in Little Rock, Arkansas and was released on bond. Defendants Jamerson and Molton are currently serving state prison sentences in Arkansas and Louisiana, respectively, for possession with intent to distribute marijuana. Defendants Davillier, Millhouse, and Carrasco are presently fugitives.
The maximum penalty for conspiracy to distribute and possess with intent to distribute marijuana is 40 years imprisonment and $5,000,000. The offense carries a mandatory minimum sentence of 5 years imprisonment.
Additional periods of supervised release, fines, and special assessments also could be imposed. 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 unless and until proven guilty beyond a reasonable doubt.
Assistant U.S. Attorney Garth Hire is prosecuting the case with the assistance of Melissa Dorton, Michelle Alter, Kathleen Turner, and Vanessa Vargas. This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state, and local law enforcement agencies.
United States Joins Lawsuit Against Bay Area Sleep ClinicsRead the Press Release
SAN JOSE – The United States has joined a whistleblower action pending in the Northern District of California against the owners and operators of Bay Sleep Clinic and their related businesses, Qualium Corporation and Amerimed Corporation, announced United States Attorney Melinda Haag and U.S. Department of Health and Human Services Special Agent in Charge, Ivan Negroni.
The action alleges that Saratoga, Calif., residents Anooshiravan Mostowfipour, 57, and Tara Nader, 56, fraudulently billed the Medicare program for diagnostic sleep tests. Defendants Mostowfipour and Nader own Qualium Corporation, which operates sixteen sleep clinics doing business as Bay Sleep Clinic. The defendants also own Amerimed Corporation, which distributes durable medical equipment under the name Amerimed Sleep Diagnostics. The defendants are alleged to have billed Medicare for tests that were conducted at unapproved locations and performed by technicians lacking the licenses or certifications required by Medicare payment rules and regulations. The government also alleges that the defendants fraudulently billed Medicare for medical devices in violation of Medicare rules and regulations that prohibit providers of diagnostic sleep tests from supplying medical devices and from sharing a sleep laboratory location with a durable medical equipment supplier.
The whistleblower action, captioned United States ex rel. Dresser v. Qualium Corp., et al., Civil Action No. 12-1745 (N.D. Cal.), was filed under the qui tam provisions of the False Claims Act. The False Claims Act allows for private persons, such as Elma F. Dresser in this case, to file actions to provide the government information about wrongdoing. Under the statute, if it is established that a person has submitted or caused others to submit false or fraudulent claims to the United States, the government can recover treble damages and $5,500 to $11,000 for each false or fraudulent claim filed. If the government is successful in resolving or litigating its claims, the whistleblower who initiated the action can receive a share of between 15 percent to 25 percent of the amount recovered.
The whistleblower action in this case contained additional allegations. However, the United States is intervening only with regard to allegations that Qualium Corporation (doing business as Bay Sleep Clinic), Amerimed Corporation (doing business as Amerimed Sleep Diagnostics), Tara Nader, and Anooshiravan Mostowfipour submitted false claims to Medicare for durable medical equipment and for sleep tests performed at unapproved locations or by unqualified technicians. The United States is not pursuing the whistleblower’s additional claims against the third-party company used by the defendants to submit claims to Medicare nor claims regarding alleged improper payments made by the defendants to medical providers.
Assistant U.S. Attorney Kimberly Friday is handling the case, with assistance from Financial Fraud Investigator Michael Zehr. The investigation was conducted by the U.S. Attorney’s Office for the Northern District of California and the Office of Inspector General of the Department of Health and Human Services.
The claims asserted in the complaint are allegations only, and there has been no determination of liability.
Pacifica Bookeeeper Charged with Bank Fraud, Identity Theft and Filing False Tax ReturnsRead the Press Release
SAN FRANCISCO – A federal grand jury indicted Krisinda Messer on charges of bank fraud, aggravated identity theft, and filing false tax returns, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the indictment, from 2007 through 2011, Messer, of Pacifica Calif., was employed as a bookkeeper by a San Francisco company, whose initials are J.A.E., Inc. Messer did not have signatory authority over J.A.E., Inc.’s account with Bank of America. She did, however, have signatory authority over a Wells Fargo Bank account held in the name of American Backflow Company (ABC), a company owned by a member of Messer’s family. ABC provided no goods or services to J.A.E., Inc. The indictment alleges that from May 12, 2008, through August 31, 2011, Messer executed a scheme to defraud Wells Fargo Bank by drafting J.A.E., Inc. checks payable to ABC, on which she forged her supervisor’s signature and then deposited the checks into the ABC bank account. Messer also unlawfully used her supervisor’s identification to make several of these transactions. The indictment further alleges Messer filed false tax returns for the 2009, 2010, and 2011 tax years that did not report to the IRS the income she received from her embezzlement activities. In sum, Messer is charged with twelve counts of bank fraud, in violation of 18 U.S.C. § 1344; four counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A; and three counts of filing false tax returns, in violation of 26 U.S.C. § 7206(1).
Messer is scheduled to make her initial appearance in federal court in San Francisco on May 28, 2015, at 9:30 a.m., before U.S. Magistrate Judge Jacqueline Scott Corley in San Francisco.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of thirty years in prison and a fine of $1,000,000 for each count of bank fraud. In addition, the maximum sentence for aggravated identity theft is two years in prison, consecutive to underlying felony for bank fraud. If convicted for filing a false tax return, the maximum penalties are three years in prison and a fine of $250,000 for each count of filing a false tax return. 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.
Special Assistant United States Attorney Jennifer Tolkoff and Assistant U.S. Attorney Thomas Moore are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Former Concord Resident Charged with Religious Hate Crime and Arson ChargesRead the Press Release
OAKLAND – Hugo John Scherzberg made his initial appearance and was arraigned in federal court today on religious hate crime and arson charges relating to the March 20, 2010, fire at a church in Pittsburg, Calif., announced United States Attorney Melinda Haag and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent in Charge, Joseph M. Riehl.
Scherzberg, 48, formerly of Concord, Calif., was indicted by a federal grand jury on March 5, 2015, with burning the Church of the Living God (C.W.F.F.) building in Pittsburg because of its religious character, and with arson of a building used in activities affecting interstate commerce.
Scherzberg made his appearance before the Honorable Kandis A. Westmore, U.S. Magistrate Judge, and entered not guilty pleas to the charges. On the government’s motion, Judge Westmore ordered Scherzberg detained pending trial. His next appearance, a status hearing, is scheduled to occur on June 8, 2015, at 2:00 p.m., before the Honorable Haywood S. Gilliam, U.S. District Judge.
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. The maximum statutory penalty for arson of a building used in interstate and foreign commerce, in violation of 18 U.S.C. § 844(i), is also 20 years imprisonment, with a mandatory minimum of 5 years, and a fine of $250,000. Restitution and an additional period of supervised release may also be ordered, if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
An indictment contains only allegations and, as with all defendants, Scherzberg must be presumed innocent unless and until proven guilty.
Assistant U.S. Attorney Andrew S. Huang is prosecuting the case with the assistance of Vanessa Vargas Quant. 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.
Dublin Resident Sentenced in False Tax Refund SchemeRead the Press Release
OAKLAND – Kenya Brown was sentenced Friday, May 8, 2015, to twelve months in prison and ordered to pay $221,124 in restitution for her involvement in a false tax refund scheme, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
Brown, 31, of Dublin, Calif., pleaded guilty today to conspiracy to file a false claim. According to the plea agreement, from April 2009 through June 2011, Brown conspired to file more than 139 false federal income tax returns with the IRS. As part of the conspiracy, Brown electronically filed false returns from residences in San Leandro and Oakland. The tax returns requested refunds based on fictitious W-2 forms. To carry out the scheme, Brown instructed the IRS to wire the fraudulent refunds onto debit cards. In total, Brown filed documents seeking in excess of $700,000 in false tax refunds.
On January 8, 2015, Brown was charged in a nine count indictment with conspiracy to file false claims, wire fraud, theft of public money, and aggravated identity theft. Brown pleaded guilty to conspiracy to file false claims. At sentencing, Brown was also ordered to pay restitution in the amount of $221,124.Brown is already in custody as a result of a prior conviction. During the execution by the IRS of a search warrant at Brown’s home on July 28, 2011, she was found in possession of nearly two pounds of cocaine and a firearm. Brown was charged with possession with the intent to distribute cocaine and being a felon in possession of a firearm. On December 7, 2011, as the tax investigation continued, Brown was sentenced on the drug and weapons charges, and is serving a 60 month sentence on those charges.
Assistant U.S. Attorney Thomas Newman is prosecuting this case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Richmond Man Charged with Cashing U.S. Treasury Checks Using Stolen IdentitiesRead the Press Release
OAKLAND – A federal grand jury indicted Hugh Robinson with theft of public money and aggravated identity theft, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the indictment, on March 18, 2014, Robinson, a resident of Richmond, Calif., used the stolen identities of others to cash U.S. Treasury checks. The U.S. Treasury checks cashed by Robinson were payments of tax refunds and/or Social Security benefits to which Robinson was not entitled. In the indictment, Robinson was charged with three counts of theft of public funds, in violation of 18 U.S.C. § 641, and three counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A. Robinson has been arrested and is currently detained.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces 10 years in prison and a fine of $250,000 for each violation of 18 U.S.C. § 641 as well as 2 years in prison and a fine of $250,000 for each violation of 18 U.S.C. § 1028A. The 2-year terms for identity theft violations would be served consecutive to the underlying felony. 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 Thomas Newman and Jose A. Olivera are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Thirty-Three Defendants Charged in Massive Criminal Conspiracies Including Allegations of Fraud, Prescription Drug Diversion, and Money LaunderingRead the Press Release
Thirty-two people were arrested yesterday after being charged variously with racketeering conspiracy, conspiracy to commit identity theft, conspiracy to commit access device fraud, conspiracy to commit mail, wire and bank fraud, conspiracy to commit money laundering, conspiracy to use a facility of interstate commerce to commit murder-for-hire and conspiracy to engage in the unlicensed wholesale distribution of drugs, announced U.S. Attorney Melinda Haag of the Northern District of California, Special Agent in Charge David J. Johnson of the Federal Bureau of Investigation, and Special Agent in Charge José M. Martinez of Internal Revenue Service (IRS) Criminal Investigation. A thirty-third defendant remains at large and is subject to an active arrest warrant.
According to an indictment that was unsealed yesterday, Ara Karapedyan, 45, Mihran Stepanyan, 29, and Artur Stepanyan, 38, were at the center of a nationwide conspiracy—with at least 18 other person—to conduct the affairs of a wide-ranging criminal enterprise through a pattern of racketeering. This enterprise was fueled by a broad range of criminal activity including unlicensed wholesale drug distribution, money laundering and fraud. The indictment names 33 defendants in all and describes an enterprise that spanned throughout California as well as in Minnesota, Ohio and Puerto Rico.
One key aspect of the alleged criminal activity described in the indictment was a multi-million dollar prescription drug diversion scheme. Members and associates of the enterprise are alleged to have procured prescription drugs from unlicensed sources and to have resold the drugs to unknowing customers. A central figure to these allegations is David Miller, 50. Miller is alleged to be the owner and operator of a drug wholesaler called Minnesota Independent Cooperative (MIC) that, between 2010 and 2014, bought approximately $157 million of drugs from Mihran Stepanyan and Artur Stepanyan. Miller and his employees allegedly knew the Stepanyans were not licensed to sell drugs and knew the Stepanyans procured their drugs through unlicensed sources. Miller and his employees nevertheless purchased the drugs from the Stepanyans’ various companies, including Panda Capital Group, Red Rock Capital, Trans Atlantic Capital, GC National Wholesale, Sky Atlantic Capital and Nationwide Payment Solutions and resold the drugs as legitimate products.
A separate investigation has resulted in another indictment in the Southern District of Ohio charging David Miller, Mihran Stepanyan, Artur Stepanyan and MIC with various crimes arising from their sale of millions of dollars of illicitly-procured drugs.
The indictment also charges Karapedyan and his associates with engaging in the fraudulent unlicensed distribution of drugs. For instance, from 2013 through 2015, Karapedyan, either personally or through an associate, sold several hundred thousand dollars’ worth of drugs such as Abilify, Liboderm, Cymbalta and Namenda, as well as HIV drugs such as Atripla, Truvada and Isentress and the cancer drug Gleevec. Likewise, from roughly the latter part of 2014 through early 2015, Karapdyan and his racketeer co-conspirator Maxwell Starsky, 36, sold to another complicit wholesaler more than $1 million in illicitly procured drugs. Karapedyan also supplied the Stepanyans with drugs.
Hugo Marquez, 41, Eric Figueroa, 29, Arman Zagaryan, 32, and their associates are likewise charged with procuring drugs from unlicensed sources and distributing the drugs to buyers. According to the indictment, Alexander Soliman, 46, was one of their principal customers. Between roughly 2012 and 2014, Soliman, through his companies Apex Pharmaceuticals and Maroon Pharma, knowingly purchased illicitly-procured drugs from Marquez, Figueroa and Zagaryan and then re-sold them as legitimate drugs. During this time period, Marquez, Figueroa, Zargaryan and Soliman engaged in the distribution of more than $20 million worth of drugs.
Another aspect of the alleged criminal activity is a massive check and bank fraud operation. As part of the enterprise, Karapedyan and his associates, including Asatour Magzanyan, 53, Tigran Sarkisyan, 38, and Hripsime Khachtryan, 41, allegedly used fraudulent identification information to prepare fraudulent tax returns, which were then filed with the government in order to induce the U.S. Treasury to issue tax refund checks. Karapedyan associate Khachig Geuydjian, 74, allegedly used his unlicensed mail-box business to provide addresses for these fraudulent tax filings. They and other members and associates of the enterprise then negotiated the tax refund checks using fraudulent identities or through a complicit check cashing business operated by Jean Dukmajian, 61, Karine Dukmajian, 33, and Angela Dukmajian, 26. In addition to the tax refund scheme, members and associates of the enterprise also engaged in negotiating counterfeit and stolen checks. In all, from roughly late 2012 to late 2014, Karapedyan and his associates negotiated more than 500 fraudulent checks worth more than $5 million.
In addition to the fraudulent unlicensed distribution of drugs and negotiating fraudulent checks, Karapedyan, the Stepanyans, Miller and others are charged with conspiring to launder money in an effort to promote their criminal activities and to conceal proceeds collected from their criminal activities. For example, a description of Miller’s activity between 2012 through 2014, wherein he attempted to hide the fact he was paying the Stepanyans for drugs is alleged in the indictment. The indictment further alleges Miller made the payments to the Stepanyans’ company GC National Wholesale through companies in Puerto Rico he controlled, such as B&Y Wholesalers and FMC Distributors. The payments were for sales of drugs that the Stepanyans actually delivered to Miller’s company MIC. Similarly, the indictment includes allegations Karapedyan and Starsky also arranged payments for more than $1 million of illicitly-procured drugs through a shell company. In addition, Karapedyan also allegedly laundered money for the Stepanyans. According to the indictment, in 2013, the Stepanyans transferred more than $1 million in proceeds derived from MIC to Karapedyan, who caused the money to be withdrawn as cash.
Furthermore, in addition to the foregoing, defendants Karapedyan and Gevork Ter-Mkrtchyan are charged with conspiring to use a facility of interstate commerce to commit murder-for-hire. According to the indictment, these defendants made several attempts to find a person who would be willing to kill someone who had angered Ter-Mkrtchyan. Although the defendants paid $1,500 for the hit, it was never carried out.
According to the indictment, a significant portion of the criminal activity took place in the Northern District of California. For example, one delivery of drugs took place in the Northern District of California and many of the checks were negotiated in the Northern District as well. In addition, much of the proceeds from the check and the drug schemes were laundered through the Northern District of California, where Karapedyan and his associates regularly picked up large amounts of cash. In addition, Miller’s company, MIC, posted fraudulent information relating to the origins of the drugs he sold via a website. The website was maintained by an Internet service provider in the Northern District of California. Furthermore, Karapedyan made numerous calls to the Northern District of California in order to find individuals willing to perform the hit he sought.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. All the defendants except Miller were arrested yesterday. Miller remains at large and is the subject of an active arrest warrant.
In sum, the indictment includes seven counts as follows: count One, RICO conspiracy, in violation of 18 U.S.C. § 1962(d) (maximum term of imprisonment, life or 20 years); Count Two, conspiracy to commit identity theft, in violation of 18 U.S.C. § 1028(f) (maximum term of imprisonment, 15 years); Count Three, conspiracy to commit access device fraud, 18 U.S.C. § 1029(b)(2) (maximum term of imprisonment, 5 years); Count Four, conspiracy to commit mail, wire, and bank fraud, in violation of 18 U.S.C. § 1349; Count Five, conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h) (maximum term of imprisonment, 20 years); Count Six, conspiracy to use interstate facility to commit murder-for-hire, in violation of 18 U.S.C. § 1958); Count Seven, conspiracy to engage in unlicensed wholesale distribution of drugs, in violation of 18 U.S.C. § 371 (maximum term of imprisonment, 5 years).
The following charges apply as against the following defendants are: Ara Karapedyan on Counts one through seven, Mihran Stepanyan on counts one through five and seven, Artur Stepanyan on counts one through five and seven, Gevork Ter-Mkrtchyan on counts 1-7, Khachig Geuydjian on counts one through five, Arman Petrosyan on counts one through five, Lanna Karapedyan on counts one through five, Maxwell Starsky on counts one through five and seven, Sevak Gharghani on counts one through five and seven, Jean Dukmajian, on counts one through five, Karine Dukmajian on counts one through five, Angela Dukmajian on counts one through five, Arman Danielian count one, four, five and seven, Asatour Magzanyan conts one through five, Tigran Sarkisyan counts one through five, Hripsime Khachtryan counts one through five, Loui Artin on counts one through five, Hugo Marquez on counts one through five and seven, Arman Zargaryan on counts one through five and seven, Dmitriy Kustov on counts two through four, Michael Inman on counts two through four, Araxia Nazaryian on counts two five and seven, Alexander Soliman on counts four, five and seven, Cheryl Barndt on counts four, five and seven, Eric Figueroa on counts four, five and seven, Marc Asheghian on counts four, five and seven, Michael Asheghian on counts four, five and seven, David Milleron counts one through five and seven, James Russoon on counts four, five and seven, Jeannette Couch counts four, five and seven, Marie Polichetti counts four, five and seven, Bernardo Guillen counts four, five and seven, Javier Ramirez on counts four and seven.
Additional periods of supervised release, fines and special assessments also could be imposed. 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.
Thirty-one defendants appeared before the Honorable Victor B. Kenton and Michael R. Wilner in the Central District of California on Wednesday, May 6, 2015, to be advised of the charges against them and to determine conditions of release. Some of those hearings have been continued at the request of the defendants. Specifically, the bail hearing for Eric Figueroa has been continued to Friday, May 8, 2015, and the hearings for Hugo Marquez and Michael Inman have been continued to Monday, May 11, 2015, before the Honorable Michael R. Wilner. In addition, Karapedyan will appear on Friday, May 8, 2015, before the Honorable Victor B. Kenton.
Further, Ter-Mkrtchyan has requested a hearing in which the government will be required to prove his identity, i.e., that he is the individual named in the indictment. That hearing will occur on Friday, May 8, 2015, before the Honorable Victor B. Kenton.
The remaining 26 defendants have been ordered to appear before the Honorable Jacqueline Scott Corley in the Northern District of California. Alexander Soliman, Araxia Nazaryian and Asatour Magzanyan will appear on May 12, 2015. Cheryl Barndt, Marc Asheghian, Michael Asheghian, Hripsime Khachtryan, Bernardo Guillen, Javier Ramirez, Jean Dukmajian, Karine Dukmajian, Angela Dukmajian, Khachig Geuydjian and Arman Zargaryan will appear on May 20, 2015. Jeannette Couch, Loui Artin, Dmitriy Kustov, Marie Polichetti, Arman Danielian, Lanna Karapedyan, Sevak Gharghani, Arman Petrosyan and Maxwell Starsky will appear on May 22, 2015.
Mihran Stepanyan, Artur Stepanyan and Tigran Sarkisyan are being transported to the Northern District of California by the U.S. Marshal Service and will make court appearances after their arrival.
Assistant U.S. Attorneys Damali A. Taylor, David Countryman and W.S. Wilson Leung are prosecuting the case with the assistance of Lance Libatique, Ponly Tu, Daniel Charlier-Smith. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service.
Thirty-Three Defendants Charged in Massive Criminal Conspiracies Including Allegations of Fraud, Prescription Drug Diversion, and Money LaunderingRead the Press Release
SAN FRANCISCO – Thirty-two people were arrested yesterday after being charged variously with racketeering conspiracy; conspiracy to commit identity theft; conspiracy to commit access device fraud; conspiracy to commit mail, wire, and bank fraud; conspiracy to commit money laundering; conspiracy to use a facility of interstate commerce to commit murder-for-hire; and conspiracy to engage in the unlicensed wholesale distribution of drugs, announced United States Attorney Melinda Haag, Federal Bureau of Investigation Special Agent in Charge David J. Johnson, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez. A thirty-third defendant remains at large and is subject to an active arrest warrant.
According to an indictment that was unsealed yesterday, Ara Karapedyan, 45, Mihran Stepanyan, 29, and Artur Stepanyan, 38, were at the center of a nationwide conspiracy, with at least eighteen other persons, to conduct the affairs of a wide-ranging criminal enterprise through a pattern of racketeering. This enterprise – referred to in the indictment as the “Karapedyan-Stepanyan Enterprise” – was fueled by a broad range of criminal activity including: (1) unlicensed wholesale drug distribution; (2) money laundering and (3) fraud. The indictment names thirty-three defendants in all and describes an enterprise that spanned throughout California as well as in Minnesota, Ohio, and Puerto Rico.
One key aspect of the alleged criminal activity described in the indictment was a multi-million dollar prescription drug diversion scheme. Members and associates of the enterprise are alleged to have procured prescription drugs from unlicensed sources and to have resold the drugs to unknowing customers. A central figure to these allegations is David Miller, 50. Miller is alleged to be the owner and operator of a drug wholesaler called Minnesota Independent Cooperative (“MIC”) that, between 2010 and 2014, bought approximately $157 million of drugs from Mihran Stepanyan and Artur Stepanayan. Miller and his employees allegedly knew the Stepanyans were not licensed to sell drugs and knew the Stepanyans procured their drugs through unlicensed sources. Miller and his employees nevertheless purchased the drugs from the Stepanyans’ various companies, including Panda Capital Group, Red Rock Capital, Trans Atlantic Capital, GC National Wholesale, Sky Atlantic Capital, and Nationwide Payment Solutions, and resold the drugs as legitimate products.
A separate investigation has resulted in another indictment in the Southern District of Ohio charging David Miller, Mihran Stepanyan, Artur Stepanyan, and MIC with various crimes arising from their sale of millions of dollars of illicitly-procured drugs. (United States v. Miller, et al., 15 CR 00052 (MRB) (S.D. Ohio).) http://www.justice.gov/opa/pr/three-california-men-and-minnesota-corporation-indicted-nationwide-prescription-drug
The Indictment also charges Karapedyan and his associates with engaging in the fraudulent unlicensed distribution of drugs. For instance, from 2013 through 2015, Karapedyan, either personally or through an associate, sold several hundred thousand dollars’ worth of drugs such as Abilify, Liboderm, Cymbalta, and Namenda, as well as HIV drugs such as Atripla, Truvada, and Isentress, and the cancer drug Gleevec. Likewise, from roughly the latter part of 2014 through early 2015, Karapdyan and his racketeer co-conspirator Maxwell Starsky, 36, sold to another complicit wholesaler more than $1 million in illicitly procured drugs. Karapedyan also supplied the Stepanyans with drugs.
Hugo Marquez, 41, Eric Figueroa, 29, Arman Zagaryan, 32, and their associates are likewise charged with procuring drugs from unlicensed sources and distributing the drugs to buyers. According to the indictment, Alexander Soliman, 46, was one of their principal customers. Between roughly 2012 and 2014, Soliman, through his companies Apex Pharmaceuticals and Maroon Pharma, knowingly purchased illicitly-procured drugs from Marquez, Figueroa, and Zagaryan and then re-sold them as legitimate drugs. During this time period, Marquez, Figueroa, Zargaryan, and Soliman engaged in the distribution of more than $20 million worth of drugs.
Another aspect of the alleged criminal activity is a massive check and bank fraud operation. As part of the enterprise, Karapedyan and his associates, including Asatour Magzanyan, 53, Tigran Sarkisyan, 38, and Hripsime Khachtryan, 41, allegedly used fraudulent identification information to prepare fraudulent tax returns, which were then filed with the government in order to induce the U.S. Treasury to issue tax refund checks. Karapedyan associate Khachig Geuydjian, 74, allegedly used his unlicensed mail-box business to provide addresses for these fraudulent tax filings. They and other members and associates of the enterprise then negotiated the tax refund checks using fraudulent identities or through a complicit check cashing business operated by Jean Dukmajian, 61, Karine Dukmajian, 33, and Angela Dukmajian, 26. In addition to the tax refund scheme, members and associates of the enterprise also engaged in negotiating counterfeit and stolen checks. In all, from roughly late 2012 to late 2014, Karapedyan and his associates negotiated more than 500 fraudulent checks worth more than $5 million.
In addition to the fraudulent unlicensed distribution of drugs and negotiating fraudulent checks, Karapedyan, the Stepanyans, Miller, and others are charged with conspiring to launder money in an effort to promote their criminal activities and to conceal proceeds collected from their criminal activities. For example, a description of Miller’s activity between 2012 through 2014, wherein he attempted to hide the fact he was paying the Stepanyans for drugs is alleged in the indictment. The indictment further alleges Miller made the payments to the Stepanyans’ company GC National Wholesale through companies in Puerto Rico he controlled, such as B&Y Wholesalers and FMC Distributors. The payments were for sales of drugs that the Stepanyans actually delivered to Miller’s company MIC. Similarly, the indictment includes allegations Karapedyan and Starsky also arranged payments for more than $1 million of illicitly-procured drugs through a shell company. In addition, Karapedyan also allegedly laundered money for the Stepanyans. According to the indictment, in 2013, the Stepanyans transferred more than $1 million in proceeds derived from MIC to Karapedyan, who caused the money to be withdrawn as cash.
Furthermore, in addition to the foregoing, defendants Ara Karapedyan and Gevork Ter-Mkrtchyan are charged with conspiring to use a facility of interstate commerce to commit murder-for-hire. According to the indictment, these defendants made several attempts to find a person who would be willing to kill someone who had angered Ter-Mkrtchyan. Although the defendants paid $1,500 for the hit, it was never carried out.
According to the indictment, a significant portion of the criminal activity took place in the Northern District of California. For example, one delivery of drugs took place in the Northern District of California and many of the checks were negotiated in the Northern District as well. In addition, much of the proceeds from the check and the drug schemes were laundered through the Northern District of California, where Karapedyan and his associates regularly picked up large amounts of cash. In addition, Miller’s company, MIC, posted fraudulent information relating to the origins of the drugs he sold via a website. The website was maintained by an Internet Service Provider in the Northern District of California. Furthermore, Karapedyan made numerous calls to the Northern District of California in order to find individuals willing to perform the hit he sought.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. All the defendants except David Miller were arrested yesterday; Miller remains at large and is the subject of an active arrest warrant.
In sum, the indictment includes seven counts as follows: Count One, RICO conspiracy, in violation of 18 U.S.C. § 1962(d) (maximum term of imprisonment, life or 20 years); Count Two, conspiracy to commit identity theft, in violation of 18 U.S.C. § 1028(f) (maximum term of imprisonment, 15 years); Count Three, conspiracy to commit access device fraud, 18 U.S.C. § 1029(b)(2) (maximum term of imprisonment, 5 years); Count Four, conspiracy to commit mail, wire, and bank fraud, in violation of 18 U.S.C. § 1349; Count five, conspiracy to commit money laundering , in violation of 18 U.S.C. § 1956(h); (maximum term of imprisonment, 20 years) Count Six, conspiracy to use interstate facility to commit murder-for-hire, in violation of 18 U.S.C. § 1958); Count Seven, conspiracy to engage in unlicensed wholesale distribution of drugs, in violation of 18 U.S.C. § 371 (maximum term of imprisonment, 5 years).
The following charges apply as against the following defendants:
DEFENDANT ALLEGED VIOLATIONS MAXIMUM PENALTY(1) ARA KARAPEDYAN
Counts 1-7
Life plus 85 years
(2) MIHRAN STEPANYAN
Counts 1-5 and 7
95 years
(3) ARTUR STEPANYAN
Counts 1-5 and 7
95 years
(4) GEVORK TER-MKRTCHYAN
Counts 1-7
Life plus 85 years
(5) KHACHIG GEUYDJIAN
Counts 1-5
90 years
(6) ARMAN PETROSYAN
Counts 1-5
90 years
(7) LANNA KARAPEDYAN
Counts 1-5
90 years
(8) MAXWELL STARSKY
Counts 1-5, and 7
95 years
(9) SEVAK GHARGHANI
Counts 1-5, and 7
95 years
(10) JEAN DUKMAJIAN
Counts 1-5
90 years
(11) KARINE DUKMAJIAN
Counts 1-5
90 years
(12) ANGELA DUKMAJIAN
Counts 1-5
90 years
(13) ARMAN DANIELIAN
Counts 1, 4, 5, and 7
75 years
(14) ASATOUR MAGZANYAN
Counts 1-5
90 years
(15) TIGRAN SARKISYAN
Counts 1-5
90 years
(16) HRIPSIME KHACHTRYAN
Counts 1-5
90 years
(17) LOUI ARTIN
Counts 1-5
90 years
(18) HUGO MARQUEZ
Counts 1-5 and 7
95 years
(19) ARMAN ZARGARYAN
Counts 1-5 and 7
95 years
(20) DMITRIY KUSTOV
Counts 2-4
50 years
(21) MICHAEL INMAN
Counts 2-4
50 years
(22) ARAXIA NAZARYIAN
Counts 2-5 and 7
75 years
(23) ALEXANDER SOLIMAN
Counts 4, 5 and 7
55 years
(24) CHERYL BARNDT
Counts 4, 5 and 7
55 years
(25) ERIC FIGUEROA
Counts 4, 5 and 7
55 years
(26) MARC ASHEGHIAN
Counts 4, 5 and 7
55 years
(27) MICHAEL ASHEGHIAN
Counts 4, 5 and 7
55 years
(28) DAVID MILLER
Counts 1-5 and 7
95 years
(29) JAMES RUSSO
Counts 4, 5 and 7
55 years
(30) JEANNETTE COUCH
Counts 4, 5 and 7
55 years
(31) MARIE POLICHETTI
Counts 4, 5 and 7
55 years
(32) BERNARDO GUILLEN
Counts 4, 5 and 7
55 years
(33) JAVIER RAMIREZ
Counts 4 and 7
35 years
Additional periods of supervised release, fines, and special assessments also could be imposed. 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.
Thirty-one defendants appeared before the Honorable Victor B. Kenton and Michael R. Wilner in the Central District of California on Wednesday, May 6, 2015, to be advised of the charges against them and to determine conditions of release. Some of those hearings have been continued at the request of the defendants. Specifically, the bail hearing for Eric Figueroa has been continued to Friday, May 8, 2015, and the hearings for Hugo Marquez and Michael Inman have been continued to Monday, May 11, 2015, before the Honorable Michael R. Wilner. In addition, Ara Karapedyan will appear on Friday, May 8, 2015, before the Honorable Victor B. Kenton.
Further, Gevork Ter-Mkrtchyan has requested a hearing in which the government will be required to prove his identity, i.e., that he is the individual named in the indictment. That hearing will occur on Friday, May 8, 2015, before the Honorable Victor B. Kenton.
The remaining 26 defendants have been ordered to appear before the Honorable Jacqueline Scott Corley in the Northern District of California on the following dates:
May 12, 2015
- Alexander Soliman
- Araxia Nazaryian
- Asatour Magzanyan
May 20, 2015- Cheryl Barndt
- Marc Asheghian
- Michael Asheghian
- Hripsime Khachtryan
- Bernardo Guillen
- Javier Ramirez
- Jean Dukmajian
- Karine Dukmajian
- Angela Dukmajian
- Khachig Geuydjian
- Arman Zargaryan
May 22, 2015- Jeannette Couch
- Loui Artin
- Dmitriy Kustov
- Marie Polichetti
- Arman Danielian
- Lanna Karapedyan
- Sevak Gharghani
- Arman Petrosyan
- Maxwell Starsky
Mihran Stepanyan, Artur Stepanyan, and Tigran Sarkisyan are being transported to the Northern District of California by the United States Marshal Service and will make court appearances after their arrival.Assistant United States Attorneys Damali A. Taylor, David Countryman, and W.S. Wilson Leung are prosecuting the case with the assistance of Lance Libatique, Ponly Tu, Daniel Charlier-Smith. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service.
Ripple Labs Inc. Resolves Criminal InvestigationRead the Press Release
SAN FRANCISCO – Ripple Labs Inc., and its wholly-owned subsidiary, XRP II, LLC (formerly XRP Fund II, LLC), have agreed to resolve a criminal investigation in exchange for a Settlement Agreement calling for a series of substantial remedial measures, including a migration of a portion of Ripple’s virtual currency business to a separate entity; the company’s ongoing cooperation in other investigations; an extensive remedial framework to ensure future compliance with federal laws; and forfeiture and penalties totaling $700,000, announced United States Attorney Melinda Haag, U.S. Treasury Department Financial Crimes Enforcement Network (“FinCEN”) Director Jennifer Shasky Calvery, and Internal Revenue Service Criminal Investigation Division Chief Richard Weber. The agreement will resolve allegations that Ripple and its subsidiary failed to follow the law while engaging in the exchange of virtual currency and that the entities failed to establish and maintain an appropriate anti-money laundering program.
Ripple Labs Inc. is headquartered in San Francisco and developed and sold virtual currency known as “XRP.” As of 2015, the currency of the Ripple network, XRP, is the second-largest digital currency by market capitalization.
The agreement formalizes the steps Ripple and its subsidiary must take to bring its virtual currency operation within the existing regulatory framework for money services businesses. The agreement consists of a Settlement Agreement, an agreed Statement of Facts, and a Remedial Framework for the company going forward. Aside from monetary penalties in the form of forfeiture, the Remedial Framework requires the migration of any component of Ripple’s business that is engaged in the exchange of virtual currency into an entity registered with FinCEN. In addition, the agreement calls for continued enhancements to the company’s anti-money laundering (AML) controls and training program. Further, the Remedial Framework calls for external audits through the year 2020, enhancements to the Ripple Protocol, increased transaction monitoring, and an extensive review of historical activity.
“By these agreements, we demonstrate again that we will remain vigilant to ensure the security of, and prevent the misuse of, the financial markets,” said U.S. Attorney Melinda Haag. “Ripple Labs Inc. and its wholly-owned subsidiary both have acknowledged that digital currency providers have an obligation not only to refrain from illegal activity, but also to ensure they are not profiting by creating products that allow would-be criminals to avoid detection. We hope that this sets an industry standard in the important new space of digital currency.”
The agreement is the culmination of a criminal investigation conducted by U.S. Attorney’s office and the Internal Revenue Service’s Criminal Investigation Division. FinCEN joined the investigation with a parallel civil enforcement action. In that action, Ripple Labs and XRP II have agreed to pay a $700,000 civil penalty, $450,000 of which will be designated a forfeiture to settle issues raised in the U.S. Attorney’s investigation. “Virtual currency exchangers must bring products to market that comply with our anti-money laundering laws," said FinCEN Director Jennifer Shasky Calvery. "Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.”
“Federal laws that regulate the reporting of financial transactions are in place to detect and stop illegal activities, including those in the virtual currency arena,” said Richard Weber, Chief, IRS Criminal Investigation, “Unregulated, virtual currency opens the door for criminals to anonymously conduct illegal activities online, eroding our financial systems and creating a Wild West environment where following the law is a choice rather than a requirement.”
Ripple described itself as an exchanger of virtual currency in a December 2013, filing made in San Francisco federal court in an unrelated case. As an exchanger, Ripple was required to register with FinCEN and to comply with applicable federal laws and regulations. Yet Ripple sold XRP even though it had not registered with FinCEN, effectuating sales of over approximately $1.3 million U.S. dollars in April 2013 alone. Ripple also failed to establish and maintain an appropriate AML program, and failed to have policies, procedures, and internal controls to ensure compliance with the Bank Secrecy Act and anti-money laundering laws. In July 2013, Ripple incorporated a subsidiary, now known as XRP II, that replaced Ripple as the seller of XRP. Although XRP II registered with FinCEN, it failed to have an effective AML program or to file appropriate suspicious activity reports. In late 2013, for example, it negotiated a $250,000 transaction with an individual who had prior felony convictions for dealing in explosive devices and had been sentenced to prison, failing to follow its own internal “know your customer” requirements.
Assistant U.S. Attorneys Kathryn R. Haun and Arvon J. Perteet handled the matter on behalf of the U.S. Attorney’s Office with the assistance of Daniel Charlier-Smith and Leslie Cook. The Settlement Agreement with Ripple Labs was the result of a coordinated effort by the United States Attorney’s Office and IRS Criminal Investigation, working in tandem with FinCEN.