Northern District of California
Press releases recorded for this federal judicial district.
Ripple Labs Inc. Resolves Criminal InvestigationRead the Press Release
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 U.S. Attorney Melinda Haag of the Northern District of California, Director Jennifer Shasky Calvery of the U.S. Treasury Department Financial Crimes Enforcement Network (FinCEN) and Chief Richard Weber of the Internal Revenue Service (IRS) Criminal Investigation Division. 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, California, 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 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 Director Calvery for FinCEN. “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 Chief Weber of the IRS Criminal Investigation Division. “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, California, 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 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 U.S. Attorney’s Office and IRS Criminal Investigation, working in tandem with FinCEN.
Members of Norteño Gang Vsp Sentenced for Racketeering Conspiracy, Accessory to Murder, Threats Against Witnesses, and RobberyRead the Press Release
SAN FRANCISCO – Three members and one associate of the Varrio South Park (VSP), a Norteño gang in Santa Rosa, Calif., were sentenced yesterday to federal prison for their participation in a racketeering conspiracy to commit violent crimes, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
Ruben Quiroz, 29, Samuel Tewolde, 32, and Cesar Castellanos, 31, were each sentenced to 10 years in prison. VSP leader David Martinez, 34, was sentenced to an 18-year prison term. These defendants, all Santa Rosa residents, were the last four out of the eight total defendants charged and sentenced in the case.
The case stems from a seventeen-count indictment returned by a federal grand jury on December 10, 2013. In the indictment, six members and an associate of the VSP were charged with conspiracy to commit violent crimes, including murder and assault with a dangerous weapon, in aid of racketeering; use of firearms in furtherance of crimes of violence; robbery affecting interstate commerce; narcotics trafficking; and witness tampering. According to the indictment, VSP members and associates agreed to conduct the affairs of the enterprise through, among other crimes, narcotics trafficking, witness intimidation, robbery, and murder. Also in the indictment are allegations that Andrew Hill-Piccola, not alleged to be a gang member or associate, violated federal laws prohibiting felons from possessing firearms.
All of the defendants charged in the racketeering conspiracy — Martinez, a/k/a “Oso,” a/k/a “Fat Boy,” a/k/a “Big Homie”; Quiroz; Castellanos, a/k/a “Cheese”; Tewolde; Kalin Carrel; Lucio Mendoza; and Edmund Deneiliom — pleaded guilty to conspiring to conduct the affairs of VSP through a pattern of racketeering, in violation of 18 U.S.C. § 1962(d). They also pleaded guilty to using firearms in furtherance of crimes of violence, in violation of 18 U.S.C. § 924(c). Martinez and Quiroz also pleaded guilty to conspiracy to commit a robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a). Martinez also pleaded guilty to trafficking methamphetamine, in violation of 21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(A). Defendants Tewolde and Castellanos pleaded guilty to separate counts of attempted murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(5).
The acts upon which these convictions were based are wide-ranging. According to the indictment and plea agreements, on August 19, 2013, Martinez and Quiroz committed a robbery that resulted in a high-speed car chase during which they threatened victims with a firearm. On September 5, 2013, Tewolde fired shots in the parking lot of a restaurant in downtown Santa Rosa at a person whom he believed to have “snitched” against other members of VSP. On October 9, 2012, Castellanos shot at a fellow gang member whom Castellanos believed had challenged his status and authority within the gang. In addition, Castellanos pleaded guilty to a count of witness tampering related to his September 14, 2013, threat to kill a witness he believed would testify against Tewolde.
Defendants Deneiliom, Mendoza, and Carrell each pleaded guilty in prior proceedings to conspiring to conduct the affairs of VSP through a pattern of racketeering, in violation of 18 U.S.C. § 1962(d), and to using firearms in furtherance of crimes of violence, in violation of 18 U.S.C. § 924(c). Andrew Hill-Piccola, not charged with racketeering, pleaded guilty in a prior proceeding on charges he was a felon in possession of a firearm.
In sum, the punishments received by the defendants are as follows:
- David Martinez – 18 years
- Edmund Deneiliom – 11 years and 3 months
- Ruben Quiroz – 10 years
- Cesar Castellanos – 10 years
- Lucio Mendoza – 6 years and 6 months
- Samuel Tewolde – 10 years
- Kalin Carell – 6 years and 6 months
- Andrew Hill-Piccola – 3 years and 1 month.
The sentences were handed down by the Honorable William H. Alsup, U.S. District Judge. Judge Alsup also sentenced the defendants to five-year periods of supervised release each. Due to their association with Norteños, Judge Alsup also ordered the defendants not to associate with Norteño gang members or any other gang members during the period of their supervised release. All the defendants are currently in custody.
Assistant U.S. Attorneys Damali A. Taylor and Marc Price Wolf prosecuted the case with the assistance of Kurt Kosek, Kevin Costello, and Daniel Charlier-Smith. The prosecution is the result of an investigation by the Federal Bureau of Investigation’s North Bay Regional Gang Task Force, with the assistance of the Santa Rosa Police Department and the Sonoma County District Attorney’s Office.
Gang Member Sentenced to Life for South San Francisco Murders, Attempted Murder of Federal Agents and Racketeering ConspiracyRead the Press Release
Victor Flores, 23, of Petaluma, California, a member of the 500 Block/C Street Gang of South San Francisco, was sentenced to life in prison, announced U.S. Attorney Melinda Haag, Acting Special Agent in Charge Tatum King of Homeland Security Investigations and Special Agent in Charge David J. Johnson of FBI.
Flores was convicted after a three-month trial spanning from April through July of 2014 before the Honorable U.S. District Judge Susan Illston. According to the evidence presented at trial, during the evening of Dec. 22, 2010, Flores, along with fellow 500 Block/C Street gang member Joseph Ortiz, shot at seven victims who they perceived to be members of the rival Cypress Park Locos gang as the victims walked down Eighth Lane in South San Francisco. Gonzalo Avalos, Omar Cortez and Hector Flores were killed while three of the others were wounded. In addition, on May 3, 2012, when special agents of the Los Angeles Special Response Team of Homeland Security Investigations tried to arrest Flores at his home in Petaluma, Flores shot at the agents with an AK-47-style assault rifle, emptying two full magazines of ammunition and wounding three agents before eventually surrendering to law enforcement.
The jury convicted Flores of racketeering murders of Avalos, Cortez, and Flores; racketeering attempted murders of the other four victims on Eighth Lane; attempted murders of three federal agents; using a firearm in furtherance of the December 22, 2010, and May 3, 2012, murders and attempted murders; conspiring to conduct the affairs of the 500 Block/C Street Gang through a pattern of racketeering; conspiring to commit murder in aid of racketeering; and conspiring to commit assault with a dangerous weapon in aid of racketeering.
“Nothing can erase the pain and sorrow caused by Flores’ vicious, unrepentant, criminal behavior,” said U.S. Attorney Haag. “I hope that the life sentence imposed against him brings some measure of relief to Flores’ victims and their families and that they will at least feel a sense of justice. I am extraordinarily proud of the professionalism and bravery demonstrated by the men and women of law enforcement in this case. They are true heroes and we are especially thankful for their service and commitment to the pursuit of justice.”
“Today’s sentence assures that no one else will risk being killed or maimed by an individual who has shown no regard for our laws or human life,” said Acting Special Agent in Charge King. “As we said when this defendant was arrested, ‘justice is patient and justice is resolute.’ Well today, justice was served. We owe a profound debt of gratitude to the prosecutors in this case, the FBI and the investigators with the police departments in South San Francisco and Daly City, all of whom worked tirelessly in collaboration with HSI to bring this outcome about.”
“The South San Francisco Police Department is very pleased with today’s sentencing of Victor Flores,” said Chief of Police Jeff Azzoparti. “Our ultimate goal as a police department is to provide a safe community for our residents to live in. Flores is an extremely violent criminal and today’s sentence removes Flores from our streets and brings us closer to a safer community. Our thoughts are with the victim’s families and while today’s sentence will not bring back their loved ones, hopefully it helps bring closure to the case knowing justice has been served. The South San Francisco Police Department is determined to rid our community of violent gang members and we will continue to utilize any and all resources available to us to meet that end. We would like to thank the Department of Homeland Security and the U.S. Attorney’s Office for their steadfast contributions in this case, which ultimately brought it to a successful resolution.”
“The conviction of Victor Flores for murder and for his attempted murder of three Department of Homeland Security agents represents a significant victory for the rule of law and for the agents and officers who put their lives on the line every day to enforce those laws,” said Special Agent in Charge Johnson. “The severity of the sentencing demonstrates that our court system will not tolerate violent behavior towards law enforcement agents and those who engage daily in the pursuit of justice.”
Assistant U.S. Attorneys Acadia L. Senese, Stephen Meyer and Benjamin Tolkoff are prosecuting this case, with the assistance of paralegal Kevin Costello and legal technician Daniel Charlier-Smith. The sentence imposed on Flores is the culmination of a lengthy investigation initiated by the South San Francisco and Daly City Police Departments more than four years ago. In 2011, Homeland Security Investigations joined the investigation and the FBI investigated the attempted murder of the Homeland Security Investigations agents. In all, more than 19 defendants were charged and convicted in crimes related to the 500 Block/C Street Gang activity.
Gang Member Sentenced to Life for South San Francisco Murders, Attempted Murder of Federal Agents, and Racketeering ConspiracyRead the Press Release
SAN FRANCISCO – Victor Flores, a member of the 500 Block/C Street Gang of South San Francisco, was sentenced to life in prison announced United States Attorney Melinda Haag, Homeland Security Investigations Special Agent in Charge Tatum King, and FBI Special Agent in Charge, David J. Johnson.
Flores, 23, of Petaluma, Calif., was convicted after a three-month trial spanning from April through July of 2014 before the Honorable Susan Illston, U.S. District Judge. According to the evidence presented at trial, during the evening of December 22, 2010, Flores, along with fellow 500 Block/C Street gang member Joseph Ortiz, shot at seven victims who they perceived to be members of the rival Cypress Park Locos gang as the victims walked down Eighth Lane in South San Francisco. Gonzalo Avalos, Omar Cortez, and Hector Flores were killed while three of the others were wounded. In addition, on May 3, 2012, when special agents of the Los Angeles Special Response Team of Homeland Security Investigations tried to arrest Flores at his home in Petaluma, Flores shot at the agents with an AK-47-style assault rifle, emptying two full magazines of ammunition and wounding three agents before eventually surrendering to law enforcement.
The jury convicted Flores of: (1) the December 22, 2010, racketeering murders of Avalos, Cortez, and Flores; (2) the December 22, 2010, racketeering attempted murders of the other four victims on Eighth Lane; (3) the May 3, 2012, attempted murders of three federal agents; (4) using a firearm in furtherance of the December 22, 2010, and May 3, 2012, murders and attempted murders; (5) conspiring to conduct the affairs of the 500 Block/C Street Gang through a pattern of racketeering; (6) conspiring to commit murder in aid of racketeering; and (7) conspiring to commit assault with a dangerous weapon in aid of racketeering.
“Nothing can erase the pain and sorrow caused by Flores’ vicious, unrepentant, criminal behavior. I hope that the life sentence imposed against him brings some measure of relief to Flores’ victims and their families, and that they will at least feel a sense of justice,” U.S. Attorney Haag said. “I am extraordinarily proud of the professionalism and bravery demonstrated by the men and women of law enforcement in this case. They are true heroes and we are especially thankful for their service and commitment to the pursuit of justice.”
“Today’s sentence assures that no one else will risk being killed or maimed by an individual who has shown no regard for our laws or human life,” said Tatum King, Acting Special Agent in Charge for Homeland Security Investigations (HSI) San Francisco. “As we said when this defendant was arrested, ‘justice is patient and justice is resolute.’ Well today, justice was served. We owe a profound debt of gratitude to the prosecutors in this case, the FBI, and the investigators with the police departments in South San Francisco and Daly City, all of whom worked tirelessly in collaboration with HSI to bring this outcome about.”
“The South San Francisco Police Department is very pleased with today’s sentencing of Victor Flores,” said Chief of Police Jeff Azzoparti. “Our ultimate goal as a police department is to provide a safe community for our residents to live in. Flores is an extremely violent criminal and today’s sentence removes Flores from our streets and brings us closer to a safer community. Our thoughts are with the victim’s families, and while today’s sentence will not bring back their loved ones, hopefully it helps bring closure to the case knowing justice has been served. The South San Francisco Police Department is determined to rid our community of violent gang members and we will continue to utilize any and all resources available to us to meet that end. We would like to thank the Department of Homeland Security and the United States Attorney’s Office for their steadfast contributions in this case, which ultimately brought it to a successful resolution.”
“The conviction of Victor Flores for murder, and for his attempted murder of three Department of Homeland Security agents represents a significant victory for the rule of law and for the agents and officers who put their lives on the line every day to enforce those laws,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The severity of the sentencing demonstrates that our court system will not tolerate violent behavior towards law enforcement agents and those who engage daily in the pursuit of justice.”
Assistant United States Attorneys Acadia L. Senese, Stephen Meyer, and Benjamin Tolkoff are prosecuting this case, with the assistance of paralegal Kevin Costello and legal technician Daniel Charlier-Smith. The sentence imposed on Flores is the culmination of a lengthy investigation initiated by the South San Francisco and Daly City Police Departments more than four years ago. In 2011, Homeland Security Investigations joined the investigation and the Federal Bureau of Investigations investigated the attempted murder of the Homeland Security Investigations agents. In all, more than 19 defendants were charged and convicted in crimes related to the 500 Block/C Street Gang activity.
Pittsburg Residents Charged with Using Stolen Identities to File False Tax ReturnsRead the Press Release
OAKLAND –A federal grand jury indicted Michael Johnson and Nicole Berry with conspiracy to file false claims, filing false claims, theft of public money, wire fraud, aggravated identity theft, and effecting fraudulent transactions with access devices, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the indictment, between February 2012 and May 2012, Johnson and Berry, both from Pittsburg, California, conspired to defraud the IRS by filing or helping others file false claims with the IRS requesting refunds in the names of others. As part of the scheme, the defendants and their co-conspirators obtained income tax returns, names, and identities of individual taxpayers from client tax files that were stolen during a 2011 burglary of a tax preparation business whose initials are CTS. Johnson and Berry prepared or assisted others in preparing fraudulent 2011 federal income tax returns in the names of CTS’ clients by copying certain information reported on the income tax returns stolen from CTS, including names and social security numbers. The defendants electronically filed or assisted in filing false federal income tax returns with the IRS using the identities stolen from CTS. Additionally, as part of the scheme, Johnson and Berry, and their co-conspirators requested that the IRS transmit the fraudulent refunds to accounts linked to prepaid debit cards.
Johnson was arrested on April 21, 2015, and made his initial appearance in federal court in Oakland on April 22, 2015. He was released on a $100,000 unsecured bond. His next scheduled appearance is on May 11, 2015, before the Honorable Haywood S. Gilliam, Jr., U.S. District Judge. Berry is currently in custody in Placer County on unrelated charges.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face the following maximum sentences: 5 years in prison and a $250,000 fine for each count of filing false claims, in violation of 18 U.S.C. § 287; 10 years in prison and a fine of $250,000 for conspiracy to file false claims, in violation of 18 U.S.C. § 286, and for each count of theft of public money, in violation of 18 U.S.C. § 641; 15 years in prison and a fine of $250,000 for each count of effecting fraudulent transactions with access device, in violation of 18 U.S.C. § 1029(a)(5); 20 years in prison and a $250,000 fine for each count of wire fraud, in violation of 18 U.S.C. § 1343; and 2 years in prison, consecutive to underlying felony, and a fine of $250,000 for aggravated identity theft, in violation of 18 U.S.C. § 1028A. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Thomas Newman and Jose A. Olivera are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation, with the assistance of the Antioch and Pittsburg Police Departments.
Former Symantec Marketing Director Sentenced to Three Year Prison Term on Embezzlement ChargesRead the Press Release
SAN JOSE – Lena “Mickey” Jacobs Coombs was sentenced yesterday to 36 months in prison on wire fraud charges related to her embezzlement of money from her former employer, Symantec, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Coombs, 48, of Highland, Utah, pleaded guilty on December 16, 2014, to one count of wire fraud. From January 2010 through April 2012, she was employed by Symantec as a Director of Marketing and worked at Symantec’s Lindon, Utah facility outside of Salt Lake City. Coombs admitted in her plea agreement that between January 2010 and May 2012, she used various methods to embezzle a total of over $1.137 million from Symantec. For example, Coombs charged personal and other unauthorized expenses on Symantec American Express Cards and then knowingly submitted fraudulent expense reports to disguise these charges as legitimate business expenses. Coombs also submitted fraudulent invoices falsely claiming that a shell company she had created had done marketing work for Symantec. Coombs then diverted the payments on those fraudulent invoices for her personal use. Coombs further admitted that she spent these embezzled Symantec funds on various personal expenses such as such as trips to Hawaii and the 2012 Super Bowl in Indianapolis, concerts, a home remodel, automobile payments, and a personal nanny. Coombs was indicted by a federal grand jury on June 11, 2014, on wire fraud and money laundering charges in violation of 18 U.S.C. § 1343 and 18 U.S.C. § 1957(a).
The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge, following a guilty plea of one count of wire fraud. Judge Koh also sentenced Coombs to serve a three-year period of supervised release and ordered her to pay restitution in the amount of $915,412.71. Judge Koh ordered Coombs to self-surrender by July 6, 2015, at which time the defendant will begin serving her sentence.
Assistant U.S. Attorney Joseph Fazioli is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Former Walnut Creek Investor Sentenced to over Four Years Imprisonment in Real Estate Fraud SchemeRead the Press Release
OAKLAND – Benny Chetcuti, Jr. was sentenced yesterday to 51 months in prison, and ordered to pay $21,823,526.10 in restitution, as well as forfeit $3,968,995 in proceeds obtained from a multi-year real estate investment fraud scheme, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Mr. Chetcuti, 60, of Walnut Creek, California, pleaded guilty on October 21, 2014, to two counts of wire fraud. According to the plea agreement, Mr. Chetcuti admitted that between 2007 and 2010, he defrauded private investors who loaned him money under the belief that their loans were backed by equity in real property. In fact, Mr. Chetcuti misrepresented aspects of many of the loans including how much equity was available to secure the loans, the amounts and seniority of loans already tied to the properties, and how the loans were used. He also misled investors about whether their loans were recorded through deeds of trust.
Mr. Chetcuti, was indicted by a federal grand jury on March 27, 2014. According to the indictment, Mr. Chetcuti operated a real estate investment firm, Chetcuti & Associates, since 1998. Chetcuti & Associates was in the business of purchasing and flipping homes for resale after renovation and was funded in large part by loans from private individuals. To carry out his scheme, Mr. Chetcuti used a variety of tactics to misrepresent the equity that supposedly backed his loans. Among the tactics he used were forging deed recordings, forging letters supposedly written by institutional lenders and title company officers, and directing others to impersonate escrow officers. The indictment charged Mr. Chetcuti with two counts of wire fraud in violation of 18 U.S.C. § 1343.
The sentence was handed down by the Honorable Jeffrey S. White, U.S. District Judge. The Court found that Mr. Chetcuti’s fraudulent scheme caused more than $3.9 million in losses, attributable to 21 victims. In addition, the Court ordered Mr. Chetcuti to pay more than $21.8 million in restitution for the losses his real estate investment business caused. The Court also sentenced the defendant to a three-year period of supervised release and explicitly barred him from participating in any real estate, banking, or lending-related activities. The defendant was ordered to self-surrender to federal authorities on June 4, 2015, at which time he will begin serving the sentence.
Assistant U.S. Attorney Andrew S. Huang is prosecuting the case with the assistance of Vanessa Quant and Yvette Baird. The prosecution is the result of a multi-year investigation by the Federal Bureau of Investigation. The U.S. Department of Labor, Employee Benefits Security Administration also assisted with the investigation.
Bay Area Psychologist Sentenced to Four Months in Prison for Submitting Falsified Billing Records to Federal Workers’ Compensation ProgramRead the Press Release
SAN FRANCISCO – Helena Weil was sentenced today to four months in prison and ordered to pay restitution of $496,101 related to her submission of billings to the federal Office of Workers’ Compensation Programs (OWCP), announced United States Attorney Melinda Haag and United States Postal Service-Office of Inspector General Special Agent in Charge Eileen Neff.
Weil, 64, of Kensington, California, pleaded guilty on July 2, 2014, to one count of 18 U.S.C. § 1519, which prohibits alteration or falsification of records. Weil was a psychologist licensed to practice by the State of California and maintained a practice in the San Francisco Bay Area. Weil treated numerous U.S. Postal Service and other U.S. Government employee-patients for which she was compensated through the OWCP, which administers Federal Employee Compensation Act programs. Weil was required to submit bills truthfully setting forth (a) the Current Procedural Terminology (“CPT”) codes corresponding to the services she provided to the patients, (b) the names of the U.S. Postal Service and other U.S. Government employees for whom she was providing services; and (c) the date of those services.
Weil admitted that on various dates between approximately March 2006 and December 2009, she submitted bills to the OWCP related to in-person services she supposedly provided to patients while she either was away from California or was in training. In all, Weil admitted that she submitted over 1,100 such billings for payment to the OWCP for dates on which she was traveling out of the state or was in training. The amount of these billings exceeded $175,000. Weil was charged in an information filed on May 23, 2014, and she formally waived indictment on May 29, 2014. The information charged her with one count of alteration or falsification of records in violation of 18 U.S.C. § 1519.
In addition to agreeing to pay restitution for the $175,174 in billings at issue in the information, Weil also agreed under the terms of the plea agreement to pay civil restitution to the United States for (1) $136,529 in billings she made to the OWCP on various other dates in 2008 and 2009 on which she did not provide in-person psychological services and (2) $184,398 in billings to the OWCP in which she improperly billed CPT codes.
The four-month prison sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge. Judge Breyer also sentenced the defendant to a three-year period of supervised release. The court ordered that the first six months of Weil’s supervised release will be served in home detention. The defendant was ordered to begin serving the sentence on July 24, 2015.
Assistant U.S. Attorney Kyle F. Waldinger is prosecuting the case with the assistance of Jessica Meegan. The prosecution is the result of an investigation by the United States Postal Service-Office of Inspector General.
San Jose Priest Charged with Bank Fraud and Tax EvasionRead the Press Release
SAN FRANCISCO – A federal grand jury in San Francisco indicted Hien Minh Nguyen on bank fraud and tax evasion charges, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez. The indictment filed in the federal district court was unsealed today.
From 1994 to present, Nguyen, 55, was employed as a priest by the Diocese of San Jose. As an employee with the Diocese, Nguyen held various positions including Director of the Vietnamese Catholic Center (VCC), also known as Trung Tam Cong Giao (TTCG), and Vicar for Vietnamese Ministry. According to the indictment, from 2005 through 2011, Nguyen also had sole signature authority on the VCC bank account maintained at Bank of America.
During church services from 2005 through 2008, Nguyen requested that parishioners make donations to the VCC. Parishioners wrote checks payable to the VCC or TTCG and gave those checks to Nguyen. As part of the bank fraud scheme, Nguyen caused the checks to be deposited into his personal bank account at Wells Fargo Bank. The indictment alleges Nguyen endorsed the checks with his signature under the false pretense or misrepresentation that his employer authorized him to make such endorsements and deposits.
The indictment further alleges that Nguyen also willfully attempted to evade income taxes for the years 2008, 2009, 2010 and 2011 by underreporting his taxable income by $337,516, $376,500, $335,456, and $93,012, respectively. This resulted in additional tax due of $349,952.00. In the indictment, Nguyen is charged with fourteen counts of bank fraud, in violation of 18 U.S.C. § 1344(2); and four counts of tax evasion, in violation of 26 U.S.C. § 7201.
Nguyen was arrested in Ft. Lauderdale, Florida on Saturday morning, April 18, 2015. He made his initial appearance this morning in federal court in Ft. Lauderdale, Florida. His next court appearance is scheduled for April 21, 2015, at 3:00 p.m. before the U.S. Magistrate Judge Lurana S. Snow in federal court in Ft. Lauderdale, Florida.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum statutory sentence of thirty years in prison and a fine of $1,000,000 for each count of bank fraud, in violation of 18 U.S.C. § 1344; and five years in prison and a fine of $250,000 for each count of tax evasion, in violation of 26 U.S.C. § 7201. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Owner of Castro Valley Pizzeria Pleads Guilty to Failing to Pay Employment TaxesRead the Press Release
OAKLAND, Calif. – Frank Eugene Gemignani III pleaded guilty to failing to pay over employment taxes today, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
Gemignani, 46, of Concord, operated Pyzano’s Pizzeria in Castro Valley from 1991 through 2012. As the sole proprietor, Gemignani exercised control over Pyzano’s business affairs, including signing and filing Pyzano’s tax returns and paying to the IRS payroll taxes withheld from Pyzano’s employees’ paychecks. According to the plea agreement, Gemignani admitted that from April 1, 2008, through December 31, 2010, he deducted and collected approximately $184,267 in federal income taxes and Federal Insurance Contributions Act taxes (FICA) from Pyzano’s employees’ wages, but then failed to pass these taxes on to the IRS. Additionally, Gemignani failed to pay at least $63,333 of FICA and Federal Unemployment Tax Act taxes Pyzano’s owed for 2009 and 2010. Also, for 2007, Gemignani claimed a credit for amounts withheld from his Pyzano’s paychecks on his U.S. Individual Income Tax Return, Form 1040, even though he knew he had never paid those withholdings over to the IRS.
Gemignani was charged by Indictment on June 19, 2014, with 11 counts of failure to pay over employment taxes and one count of filing a false tax return. Gemignani pleaded guilty to one count failure to pay over employment taxes, in violation of Title 26, U.S.C § 7202. Gemignani’s sentencing hearing is scheduled for September 15, 2015, at 1:00 p.m., before the Honorable Jeffrey S. White, United States District Judge, in Oakland. The maximum statutory penalty for each count of failure to pay over employment taxes, in violation of 26 U.S.C § 7202 is five years in prison, and a fine of $250,000.
Assistant U.S. Attorney Michael G. Pitman is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Antioch Residents Sentenced to Prison in Tax Fraud SchemeRead the Press Release
OAKLAND – Khyber Law and Jessika Green each were sentenced to one year and a day 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.
Law, 26, of Antioch, pleaded guilty on April 4, 2014, to conspiracy to file false claims in connection with numerous tax-related filings. Green, 33, also of Antioch, pleaded guilty on May 30, 2014, to the same charge. According to their plea agreements, beginning in January 2011, Law and Green assisted in filing several tax returns with the IRS that were false and fraudulent. The defendants admitted that the tax returns were false because the filings included fictitious Forms W-2 that inflated the purported filers’ wages. In some instances, the filings included tax returns filed in Law’s or Green’s name which falsely reported their earnings from a staffing agency. In other instances, the defendants admitted to filing the false tax returns without ever showing the fraudulent tax return to the purported filer.
Law and Green were charged along with a third defendant, Starkisha Benson, in a twenty-four count superseding indictment on Dec. 17, 2013. Law, Green and Benson all were charged with wire fraud, conspiracy to file false claims, filing false claims, effecting fraudulent transactions with an access device, theft of public money, and aggravated identity theft. Law and Green each pleaded guilty to conspiracy to file false claims, in violation of 18 U.S.C. § 286. Benson pleaded guilty to the same charge on October 3, 2014, and was sentenced on January 9, 2015, to 30 months in prison. All three defendants were sentenced to a three year period of supervised release and each was ordered to pay restitution in the amount of $98,927.
The charges against these defendants were the result of an investigation initiated by the Berkeley Police Department. On April 7, 2011, during a search of a vehicle, the Berkeley Police Department uncovered a notebook with Law’s name on the cover. The notebook contained the identity profiles of eleven individuals including their names, dates of birth, numbers of bank accounts, bank routing numbers, email addresses, and passwords. Eight of these identity profiles were used to file false federal income tax returns.
The sentence was handed down by the Honorable Jon S. Tigar, United States District Judge. Special Assistant U.S. Attorney Kate Patchen and Assistant U.S. Attorney Thomas Newman are prosecuting the case. The prosecution is the result of an investigation by the Berkeley Police Department and IRS Criminal Investigation.
Former Chief Financial Officer of San Francisco Company Sentenced to 70 Months in PrisonRead the Press Release
SAN FRANCISCO– Henry Lo was sentenced today to 70 months in prison for committing wire fraud and mail fraud, announced United States Attorney Melinda Haag, Federal Bureau of Investigation Special Agent in Charge David J. Johnson and United States Postal Inspection Service Inspector in Charge Rafael Nuñez.
Lo, 51 of San Francisco, pleaded guilty on November 20, 2014, to two counts of wire fraud and one count of mail fraud. According to the plea agreement, Lo admitted he held the position of Chief Financial Officer (CFO) (and other positions) at a company in San Francisco known as AbsolutelyNew, Inc. (ANI). Lo admitted that during the period January 2008 to February 2012 he (1) used ANI funds to make payments of $239,052.76 to his personal American Express account; (2) caused ANI funds totaling $564,310.54 to be paid to a PayPal account that he controlled; (3) used ANI funds to purchase more than $1.35 million in cashier’s checks, which he either deposited into his personal brokerage account at Charles Schwab & Co. (Schwab) or used to pay down his personal line of credit at Wells Fargo Bank; and (4) used a debit card connected to ANI’s bank account at Bank of America to make purchases for numerous personal items totaling at least $30,329.50.
In addition, Lo admitted he engaged in a separate scheme to defraud a person identified in the Indictment and Plea Agreement as “A.W.” Specifically, Lo admitted he induced A.W. to write him checks made payable to Schwab, which Lo purported would then be wired to the IRS on A.W.’s behalf to pay A.W.’s tax obligations. Instead, Lo deposited checks from A.W. totaling more than $125,000 into his own wife’s Schwab brokerage account, and then forged and mailed confirmation statements to A.W. that purported to be from Schwab.
Lo was indicted by a federal grand jury on August 19, 2014. He was charged with wire fraud, access device fraud, and mail fraud.
The sentence was handed down by the Honorable William H. Orrick, U.S. District Judge, following a guilty plea on two counts in violation of 18 U.S.C. § 1343 (wire fraud) and one count in violation of 18 U.S.C. § 1341 (mail fraud). Judge Orrick also sentenced the defendant to a three-year period of supervised release, a fine of $10,000, restitution of $2,232,894.39, and a forfeiture money judgment in an equivalent amount. The defendant had previously been remanded into custody by Magistrate Judge Maria-Elena James and will begin serving the sentence immediately.
Assistant U.S. Attorneys Kyle F. Waldinger and David Countryman are prosecuting the case with the assistance of Jessica Meegan, Mary Mallory, Allen Williams, and Carolyn Jusay. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the U.S. Postal Inspection Service.
Sprint Communications, Inc. Agrees to Pay $15.5 Million to Resolve Allegations of Overcharging Law Enforcement Agencies for Court-Ordered WiretapsRead the Press Release
SAN FRANCISCO – Sprint Communications, Inc., formerly Sprint Nextel Corporation, has agreed to pay the government $15.5 million to resolve allegations it defrauded federal law enforcement agencies when recovering its costs of carrying out court-ordered wiretaps, pen registers, and trap devices, announced United States Attorney Melinda Haag and the U.S. Department of Justice Office of Inspector General (“OIG”), Special Agent in Charge M. Elise Chawaga.
A joint investigation by the U.S. Attorney’s Office and the OIG revealed that from 2007 to 2010, Sprint improperly included in its intercept charges the costs of making certain upgrades to its system. Like other telecommunications carriers, Sprint is authorized by statute to bill law enforcement agencies for the reasonable expenses it incurs in providing facilities or assistance to accomplish a court-ordered wiretap, pen register, or trap device. In 1994, Congress passed the Communications Assistance in Law Enforcement Act (“CALEA”), which required telecommunications carriers to upgrade their equipment, facilities, or services to ensure they were capable of enabling the government, pursuant to a court order, to intercept and deliver communications and call-identifying information. In 2006, the Federal Communications Commission ruled that carriers were prohibited from passing on the costs of their CALEA upgrades to law enforcement agencies in their intercept bills. The investigation by OIG and the U.S. Attorney’s Office revealed that from 2007 to 2010, in violation of the FCC’s ruling, Sprint nevertheless included in its intercept charges the hidden costs of financing its CALEA upgrades. In the settlement agreement, Sprint agreed to pay $15.5 million to resolve the allegations in the complaint but did not admit to any wrongdoing or liability.
Assistant U.S. Attorneys Steven J. Saltiel and Kimberly Friday handled the matter on behalf of the U.S. Attorney’s Office. The settlement with Sprint Communications, Inc. was the result of a coordinated effort by the United States Attorney’s Office, and the OIG.
Novato Woman Charged with Filing False Tax ReturnsRead the Press Release
SAN FRANCISCO – A federal grand jury indicted Marina Zuk with three 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 2008 to 2010, Zuk, of Novato, California, owned and operated a landscaping and yard maintenance business named Growing Works. She also was the sole signatory on a bank account in her deceased grandmother’s name after the death of her grandmother in 2006. Zuk underreported the gross receipts from Growing Works and interest income from the bank account in her grandmother’s name on her 2008, 2009, and 2010 individual federal income tax returns (Forms 1040). Specifically, Zuk reported that Growing Works received gross receipts of $166,808 for 2008; $146,279 for 2009; and $105,618 for 2010. During these years, Zuk also did not report any interest income for the bank account in her grandmother’s name. According to the indictment, Zuk knew when she submitted the tax returns that the company received gross receipts in addition to the amounts stated and that the bank account earned interest income during that period.
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 or twice the gain or loss resulting from 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 only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney José A. Olivera is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Former CEO of Local University Pleads Guilty to Submitting False Documents to Department of Homeland SecurityRead the Press Release
SAN JOSE- Jerry Wang, the Chief Executive Officer of Herguan University in Sunnyvale, California, pleaded guilty today in federal court to submitting false documents to the Department of Homeland Security (DHS), announced United States Attorney Melinda Haag and Tatum King, acting special agent in charge for U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).
Jerry Wang, 34 of Santa Clara, was indicted July 24, 2012, on 15 charges arising out of a visa fraud scheme in connection with Herguan University. The superseding indictment filed October 30, 2014, alleges that, starting in July 2007, Wang and others caused Herguan to submit fraudulent documents to the DHS Student and Visitor Exchange Program (SEVP) in support of a petition to admit foreign students. Wang was charged with conspiracy to commit visa fraud, in violation of 18 U.S.C. § 371; aiding and abetting visa fraud, in violation of 18 U.S.C. §§ 1546; aiding and abetting unauthorized access of a government computer, in violation of 18 U.S.C. § 1030(a); use of false documents, in violation of 18 U.S.C. § 1001(a)(3); and aggravated identity theft, in violation of 18 U.S.C. § 1028A.
Today, Wang pleaded guilty to one false document count, specifically submitting a fraudulent Academic Warning Letter to DHS, in violation of 18 U.S.C. § 1001(a)(3). In so doing, he admitted participating in the scheme to commit visa fraud, and that the scheme involved more than 100 immigration-related documents known as “Forms I-20.” Wang further admitted aiding and abetting the unauthorized access of a DHS computer database.
As part of his plea, Wang agreed to be sentenced to a term of imprisonment between three months and two years, as well as to forfeit $700,000, representing fraud proceeds and the value of property used to facilitate his crimes.
Wang’s sentencing hearing is scheduled for September 14, 2015 at 1:30 p.m. before the Honorable Edward J. Davila, U.S. District Judge, in San Jose. 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 Hartley M. K. West and Maia T. Perez are prosecuting the case with the assistance of Helen Yee, Natachiana Williams, Rosario Calderon, and Trina Khadoo. The prosecution is the result of an investigation by Document and Benefit Fraud Task Force (DBFTF) overseen by HSI. The DBFTF is a multi-agency task force that coordinates investigations related to fraud schemes involving immigration documents and benefits.
Former Commander of the Pacific Grove Police Department Sentenced to 30 Months Imprisonment for Charges Stemming from Abuse of His PositionRead the Press Release
SAN JOSE- John Nyunt was sentenced today to 30 months in prison, and ordered to pay a $5,000 fine and over $10,000 in restitution for charges filed against him in connection with his position as Commander of the Pacific Grove Police Department (“PGPD”), announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Nyunt, 51, from Pacific Grove, pleaded guilty on May 13, 2014, to extortion and wire fraud. He also pleaded guilty on December 16, 2014, to possession of stolen firearms. The case involves Nyunt’s abuse of his position with the police department and his attempts to profit illegally from his position of authority.
In the May 13, 2014, plea agreement, Nyunt admitted he lied to a person who approached the PGPD to report having been a victim of electronic surveillance and stalking. Rather than investigate the alleged crime, Nyunt admitted telling the person she would have to hire a private investigator of his choosing. The individual ultimately paid $10,000 to Nyunt and the investigator for assistance, including promised security services, that never materialized. Pursuant to the plea agreement, Nyunt pleaded guilty to one count of extortion, in violation of 18 U.S.C. § 1951, and one count of wire fraud, in violation of 18 U.S.C. § 1343.
In the December 16, 2014, plea agreement, Nyunt admitted to employing a scheme by which he would profit from his illegal possession and sale of numerous stolen assault rifles, shotguns, and semi-automatic pistols. Aside from being the Commander of the PGPD, Nyunt also was an instructor at the former police academy at the Monterey Peninsula College (“MPC”). Nyunt knew the MPC was willing to donate numerous firearms to PGPD. He convinced the college he would accept the firearms on behalf of PGPD. Specifically, knowing that the PGPD did not want the firearms, Nyunt nevertheless signed a memorandum of understanding with the MPC that falsely stated he was accepting the firearms on PGPD’s behalf. Nyunt was not authorized to execute the agreement and was not authorized to accept the firearms. Then, over the course of about three years, Nyunt arranged to have most or all of the guns sold. Pursuant to the plea agreement, Nyunt pleaded guilty to possession of stolen firearms, in violation of 18 U.S.C. § 922(j).
In addition to these federal charges, on April 24, 2014, Nyunt pleaded guilty in state court to one count of dissuading a person from reporting a crime by threats of violence, one count of being an accessory after the fact to theft and burglary, and one count of being an accomplice to the burglary of a business. All three of these state offenses are felonies and Nyunt received a sentence of three years imprisonment.
Nyunt’s federal sentence was handed down by The Honorable Beth Labson Freeman, U.S. District Judge. Nyunt’s 30 month sentence will run concurrently with the remaining portion of his state court sentence. Judge Freeman also imposed a fine of $5000, restitution of $9000 to one of Nyunt’s victims, and $1,867.95 to the Pacific Grove Police Department.
Assistant U.S. Attorney Philip A. Guentert is prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the Federal Bureau of Investigation, as well as investigators from the Monterey County District Attorney’s Office.
Hayward Man Sentenced to Three and A Half Year Term in Tax Fraud SchemeRead the Press Release
OAKLAND – Guadalupe Nieves, Jr. was sentenced today to 42 months in prison and ordered to pay restitution of $444,687 for his role 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.
Nieves, 53, of Hayward, pleaded guilty to wire fraud, in violation of 18 U.S.C. § 1343, on October 16, 2014. According to the plea agreement, Nieves admitted that he had a history of problems with substance abuse. To obtain the funds necessary to support his drug problem, Nieves intentionally devised a scheme to defraud the United States by filing false tax returns claiming tax refund payments for 2010, 2011 and 2012. Nieves obtained personal information from homeless and low income persons to submit fraudulent tax returns and fraudulently obtain tax credits and refunds.
Nieves further admitted using an identification information form, ID-Doc, to obtain detailed personal information of actual persons. Once completed, the ID-Doc gave Nieves access to the names, dates of birth, social security numbers, incomes, number of dependents, expenses and type of work of numerous persons. Nieves convinced people to complete the ID-Doc by telling them they were being screened for eligibility for an Obama Administration-sponsored stimulus program. He told the persons they could qualify for a refund even if they did not work at all during the year. Nieves admitted he intentionally sought out homeless and low-income persons to complete the ID-Doc, recruiting from various drug rehabilitation centers located throughout the San Francisco Bay Area, such as Hayward Fellowship and the East Oakland Recovery Center. Nieves also recruited persons while they were waiting in a food line outside of St. Vincent DePaul Church, located in Oakland. Nieves provided the completed ID-Docs to others for the purpose of preparing and electronically filing false federal individual income tax returns and claiming fraudulent tax credits and refunds.
In addition to improperly obtaining the information of real persons, Nieves also admitted adding false information to the forms. During the time Nieves recruited people for the tax refund scheme, Nieves was a manager at a halfway house, located in San Leandro. The halfway house address was listed as the primary residence address on the false tax returns prepared, even for taxpayers who never had lived there.
In the plea agreement, Nieves also admitted he opened a joint bank account with his partner for the sole purpose of receiving fraudulent tax refunds. Once the refunds were received in the mail or in the bank account, Nieves notified the people for whom the fraudulent forms were submitted and instructed them where to meet with him. He met a number of people in a Starbucks parking lot where he and his partner set up a table to pass out a portion of their fraudulently-obtained refund. Nieves also paid a person, with proceeds from fraudulent tax refunds, to provide security while he and his partner distributed the money in the Starbucks parking lot.
The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, United States District Judge. In addition to the 42-month term of imprisonment, Judge Gonzalez Rogers also sentenced Nieves to a three-year term of supervised release and ordered him to pay a $100 special assessment. Nieves also was ordered to pay restitution in the amount of $444,687. Nieves is in federal custody and has begun serving his sentence.
Assistant U.S. Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Former CEO of Technology Start-Up Sentenced to 24 Months for Wire Fraud SchemeRead the Press Release
SAN FRANCISCO – Jonathan Edward Mills, the former Chief Executive Officer of a San Francisco-based technology company, was sentenced to 24 months’ imprisonment yesterday, and ordered to pay $572,039 in restitution for his involvement in a wire fraud scheme, announced U.S. Attorney Melinda Haag, and FBI Special Agent in Charge David J. Johnson.
Mills, 30, pleaded guilty on October 7, 2014, to two counts of wire fraud, in violation of Title 18, United States Code, § 1343. According to the plea agreement, Mills founded Motionloft, Inc., a technology company, and served as its CEO until he was fired in December 2013. In the plea agreement, Mills also admits he falsely told several individuals that Motionloft was going to be acquired by a well-known Silicon Valley multinational corporation, and that their investment in Motionloft would reap massive profits after the acquisition. Mills made these false representations knowing he had no authority to sell a stake in Motionloft, and knowing no acquisition was in the works. When the fictitious acquisition failed to materialize, Mills made another series of misrepresentations, including claiming there was a delay caused by the government shutdown and by the financial institutions. Mills then spent a substantial amount of the monies his victim-investors gave him for his personal enjoyment, including renting a private jet, a penthouse suite, and lavish vacations.
The sentence was handed down by the Honorable Richard Seeborg, United States District Judge. Judge Seeborg also sentenced Mills to a three-year term of supervised release, and remanded him into custody at the time of sentencing.
Assistant U.S. Attorney Kim A. Berger prosecuted the case with the assistance of Bridget Kilkenny. This prosecution is the result of an investigation by the Federal Bureau of Investigation.
International Shipping Company Pleads Guilty to Smuggling Endangered Sea Turtle ShellsRead the Press Release
SAN FRANCISCO, Calif.- London-based Hedley’s Humpers, Ltd., pleaded guilty in federal court in San Francisco today to smuggling two sea turtle shells into the United States in violation of the Endangered Species Act, announced United States Attorney Melinda Haag and U.S. Department of Commerce, National Oceanic and Atmospheric Administration Special Agent in Charge William Giles.
In pleading guilty, the corporate defendant admitted to fraudulently importing from Europe the shells, as well as other protected wildlife articles. The company further admitted it facilitated the concealment and transportation of the sea turtle shells to the United States. The shells were from the species Green Sea Turtle (Chelonia mydas) that are listed in Appendix I of the Convention on International Trade in Endangered Species of Wild Fauna and Flora and are therefore are not permitted to be transported into the United States. The species of Green Sea Turtle also were identified as an endangered species under the Endangered Species Act. Notwithstanding the laws protecting the turtles and prohibiting transportation of the shells into the United States, Hedley’s Humpers imported the turtles’ shells from Europe and facilitated their concealment and transportation to the Northern District of California. Among the acts in which Hedley’s Humpers engaged was to falsely describe the sea turtle shells on an invoice as “2 mottled oval sculptures” and enclose the shells in a package labeled “1x armchair.” Heldey’s Humpers also admitted it smuggled other protected wildlife items in previous years, with a total market value of more than $70,000.
Hedley’s Humpers was indicted by a federal grand jury on July 15, 2014. On August 5, 2014, the grand jury issued a superseding indictment charging Hedley’s Jumpers with four counts of violating smuggling laws: one count of smuggling and aiding and abetting smuggling, in violation of 18 U.S.C. § 545; two counts of conspiracy to traffic and smuggle wildlife, in violation of 18 U.S.C. § 371; and one count of wildlife trafficking in violation of 16 U.S.C. §§ 3372(d) and 2273(d). Pursuant to today’s agreement, Hedley’s Humpers pleaded guilty to one count of smuggling in violation of 18 U.S.C. § 545.
Pursuant to the plea agreement, Hedley’s Humpers agreed to a three-year period of probation, a $75,000 fine, $25,000 in community service payments, and a $400 mandatory special assessment, although those sentencing provisions will have to be approved by the federal court. Sentencing is scheduled for July 7, 2015, at 2:00 p.m. before the Honorable William H. Alsup, U.S. District Judge, in San Francisco. 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 Hartley M.K. West is prosecuting the case with the assistance of Rosario Calderon. The prosecution is the result of an investigation by the U.S. Department of Commerce, National Oceanic and Atmospheric Administration, and the U.S. Homeland Security Investigations Border Enforcement Security Task Force.
Former eBAY Manager Sentenced to 30 Months for Stealing More Than $200,000 in IRS RefundsRead the Press Release
SAN JOSE, Calif. – Sanjeev Bais was sentenced to 30 months imprisonment and ordered to pay restitution of $247,541 for theft of government property, United States Attorney Melinda Haag and Special Agent in Charge José M. Martinez announced.
Bais, 41, of San Jose, pleaded guilty on December 8, 2014. According to the plea agreement, between February 2009 and April 2010, Bais and his partner stole $224,792 in IRS refunds by filing false tax returns. Bais, an eBay, Inc. manager at that time, had an email list consisting of employees of San Jose based technology companies. Using that email list, Bais sent an email soliciting tax return preparation services by a Certified Public Accountant named “Raj Malhotra.”
Bais admitted that while operating under the alias “Raj Malhotra,” he asked these victims for personal information, including copies of their driver’s licenses, Forms W-2, Forms 1099 and 1098, and other tax related documents. He also instructed these people to pay for the tax returns by submitting payments to his PayPal account. Bais and his partner prepared tax returns showing false Schedule C business losses, false “Other” losses, and false Schedule A items. Additionally, instead of sending the victims copies of the tax returns filed with the IRS, Bais and his partner sent fake copies that accurately reflected the individual tax liability of the victims. Bais and his partner submitted the tax returns to the IRS using Intuit, Turbo Tax, and by submitting paper tax returns. To further conceal his crimes, Bais and his partner deposited cash into the victims’ real bank accounts in amounts that matched the refunds shown on the fake tax returns that he sent to them. Bais used the fraudulently obtained money to pay his mortgage on a property in Belmont and provided $27,000 to his partner to deposit into an account with the State Bank of India.
The sentence was handed down by the Honorable Edward J. Davila, following a guilty plea on 14 counts of theft of government property in violation of 18 U.S.C. § 641. Judge Davila also sentenced the defendant to a one year period of supervised release. The defendant was ordered to surrender on June 8, 2015.
Assistant U.S. Attorney Thomas Moore is prosecuting this case. The prosecution is the result of an investigation the IRS, Criminal Investigation.
Former Top GSA Official Pleads Guilty to Filing False ClaimsRead the Press Release
SAN FRANCISCO- Jeffrey Neely, the former Acting Regional Administrator of the U.S. General Services Administration (GSA), pleaded guilty in federal court in San Francisco today to making a false claim to the United States, announced United States Attorney Melinda Haag and GSA Office of Inspector General, Acting Special Agent in Charge Theresa Quellhorst.
In pleading guilty, Neely, 59, of Gardnerville, NV, admitted to submitting a claim for reimbursement for, and causing GSA to pay, a claim for lodging expenses at a Las Vegas-area casino, which he knew was not incurred for official business.
In 2010, Neely was the Regional Commissioner for the Public Buildings Service for the Pacific Rim Region for the U.S. General Services Administration. The region 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. Neely also was Acting Regional Administrator, making him the top official in the region for GSA. According to the plea agreement, Neely submitted to GSA a claim to be reimbursed for lodging expenses at M Resort Spa Casino Las Vegas which he knew was not incurred for official business. He also admitted he submitted and caused GSA to pay additional false claims during his tenure, that he improperly failed to claim annual leave on certain dates, and that these acts resulted in losses to GSA exceeding $5,000. He also agreed that these acts constitute an abuse of his position of trust with GSA, and that he obstructed justice during GSA’s investigation of his offenses by submitting a false document and falsely certifying it as true.
On September 25, 2014, a federal grand jury indicted Neely and charged him with three counts of making false claims, in violation of under 18 U.S.C. § 287; and two counts of making false statements and using false documents, in violation of 18 U.S.C. § 1001. Pursuant to the plea agreement, Neely pleaded guilty to one count of making a false claim to the United States, in violation of 18 U.S.C. § 287. He also agreed to pay $8,000 in restitution.
Neely remains out of custody pending his sentencing hearing, which is scheduled for June 30, 2015, at 2:30 p.m., before the Honorable Richard Seeborg, U.S. District Judge, in San Francisco. The maximum statutory penalty for a violation of 18 U.S.C. § 287 is a five year term of imprisonment, a fine of $250,000 (or twice the gross gain or loss resulting from the violation) plus restitution. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Hartley M.K. West is prosecuting the case with the assistance of Rosario Calderon. The prosecution is the result of an investigation by the GSA’s OIG.
Former Federal Agents Charged with Bitcoin Money Laundering and Wire FraudRead the Press Release
SAN FRANCISCO – Two former federal agents have been charged with wire fraud, money laundering and related offenses for stealing digital currency during their investigation of the Silk Road, an underground black market that allowed users to conduct illegal transactions over the Internet. The charges are contained in a federal criminal complaint issued on March 25, 2015, in the Northern District of California and unsealed today.
U.S. Attorney Melinda Haag of the Northern District of California, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge David J. Johnson of the FBI’s San Francisco Division, Special Agent in Charge José M. Martinez of the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Northern District of California, Special Agent in Charge Michael P. Tompkins of the Justice Department’s Office of the Inspector General Washington 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. made the announcement.
Carl M. Force, 46, of Baltimore, was a Special Agent with the Drug Enforcement Administration (DEA), and Shaun W. Bridges, 32, of Laurel, Maryland, was a Special Agent with the U.S. Secret Service (USSS). Both were assigned to the Baltimore Silk Road Task Force, which investigated illegal activity in the Silk Road marketplace. Force served as an undercover agent and was tasked with establishing communications with a target of the investigation, Ross Ulbricht, aka “Dread Pirate Roberts.” Force is charged with wire fraud, theft of government property, money laundering and conflict of interest. Bridges is charged with wire fraud and money laundering.
According to the complaint, Force was a DEA agent assigned to investigate the Silk Road marketplace. During the investigation, Force engaged in certain authorized undercover operations by, among other things, communicating online with “Dread Pirate Roberts” (Ulbricht), the target of his investigation. The complaint alleges, however, that Force then, without authority, developed additional online personas and engaged in a broad range of illegal activities calculated to bring him personal financial gain. In doing so, the complaint alleges, Force used fake online personas, and engaged in complex Bitcoin transactions to steal from the government and the target of the investigation. Specifically, Force allegedly solicited and received digital currency as part of the investigation, but failed to report his receipt of the funds, and instead transferred the currency to his personal account. In one such transaction, Force allegedly sold information about the government’s investigation to the target of the investigation. The complaint also alleges that Force invested in and worked for a digital currency exchange company while still working for the DEA, and that he directed the company to freeze a customer’s account with no legal basis to do so, then transferred the customer’s funds to his personal account. Further, Force allegedly sent an unauthorized Justice Department subpoena to a online payment service directing that it unfreeze his personal account.
Bridges allegedly diverted to his personal account over $800,000 in digital currency that he gained control of during the Silk Road investigation. The complaint alleges that Bridges placed the assets into an account at Mt. Gox, the now-defunct digital currency exchange in Japan. He then allegedly wired funds into one of his personal investment accounts in the United States mere days before he sought a $2.1 million seizure warrant for Mt. Gox’s accounts.
Bridges self-surrendered today and will appear before Magistrate Judge Maria-Elena James of the Northern District of California at 9:30 a.m. PST this morning. Force was arrested on Friday, March 27, 2015, in Baltimore and will appear before Magistrate Judge Timothy J. Sullivan of the District of Maryland at 2:30 p.m. EST today.
The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
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. 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 Treasury Department’s Financial Crimes Enforcement Network also provided assistance with the investigation of this case.
East Bay Finance Manager Charged in Wire Fraud and Tax Evasion SchemeRead the Press Release
OAKLAND – A federal grand jury in Oakland indicted Scott Thomas Hatanaka yesterday with wire fraud and tax evasion announced United States Attorney Melinda Haag; Federal Bureau of Investigation, Special Agent in Charge David Johnson; and Internal Revenue Service Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the indictment, Hatanaka, is alleged to have carried out a scheme to embezzle money from his employer, Foster Wheeler Martinez, Inc. (“FWM”). FWM operated a natural gas combined cycle cogeneration facility which produced electrical power using a natural gas turbine while simultaneously converting excess heat into additional electrical power. The indictment alleges that while working as FWM’s finance manager, Hatanaka drafted company checks made payable to himself and to his personal credit card company. In order to conceal his thefts, Hatanaka forged signatures on the checks and entered false ledger entries into the company’s accounting system, among other things.
Hatanaka is scheduled to make his initial appearance in federal court in Oakland on April 8, 2015 at 9:30 a.m. before U.S. Magistrate Judge Donna M. Ryu. Hatanaka’s next scheduled appearance will be set before the Honorable Jeffery S. White, U.S. District Court Judge.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the maximum statutory penalty for each count of wire fraud in violation of 18 U.S.C § 1343 is 20 years in prison and a fine of $250,000. The maximum statutory penalty for each count of tax evasion in violation of 26 U.S.C § 7201 is 6 years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C § 3553.
Wade M. Rhyne is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Janice Pagsanjan and Noble Hughes. The prosecution is the result of a year-long investigation by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation.
Former United Commercial Bank Chief Credit Officer Convicted of Securities and Other Corporate Fraud After TrialRead the Press Release
The Fraud Caused the Ninth Largest Bank Failure with Estimated Losses in Excess Of $677 Million
A jury convicted Ebrahim Shabudin yesterday of seven felony counts of conspiracy, securities fraud and other corporate fraud offenses stemming from the failure of United Commercial Bank (UCB), announced U.S. Attorney Melinda Haag of the Northern District of California, Acting Inspector General Fred W. Gibson Jr. of the Federal Deposit Insurance Corporation’s Office of the Inspector General, Special Inspector General Christy Romero of the Troubled Asset Relief Program, Inspector General Mark Bialek of the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau’s Office of the Inspector General and Special Agent in Charge David J. Johnson of the FBI’s San Francisco Division.
Shabudin, 66, of Moraga, California, was the Chief Operating Officer and Chief Credit Officer at UCB in 2008 and 2009. Shabudin was the second most senior officer in executive management at UCB after former Chief Executive Officer Thomas Shiu-Kit (Tommy) Wu.
On Nov. 6, 2009, UCB was taken over by the Federal Deposit Insurance Corporation (FDIC). With over $10.9 billion in assets, UCB’s failure was the ninth largest failure since 2007 of a bank insured by the FDIC’s Deposit Insurance Fund, according to the FDIC. In 2013, FDIC estimated that total losses for UCB would exceed $1.1 billion. Through 2014, however, with the recovery of the U.S. economy, FDIC now estimates the loss to the Deposit Insurance Fund to be approximately $677 million. On Nov. 14, 2008, the Troubled Asset Relief Program (TARP) provided approximately $298 million in federal funds to UCB during the financial crisis.
Late yesterday, a jury found Shabudin guilty of conspiring with others within the bank to falsify key bank records as part of a scheme to conceal millions of dollars in losses and falsely inflate the bank’s financial statements. Among the records falsified were those filed with the U.S. Securities and Exchange Commission (SEC) and FDIC related to the third and fourth quarters of 2008 describing UCB’s so-called Allowance for Loan Losses. Also falsified were documents relating to UCB’s quarterly and year-end earnings per share as announced by the bank to the investing public. The guilty verdict followed a six-week jury trial before U.S. District Judge Jeffrey S. White of the Northern District of California.
“UCB is one of the largest criminal prosecutions brought by the U.S. Department of Justice of wrongdoing by bank officers arising out of the 2008 financial crisis,” said U.S. Attorney Haag. “With actual losses exceeding a half a billion dollars, the prosecution of Shabudin and other senior officers at UCB is one of the most significant financial fraud cases in the history of the Northern District of California. I am proud of the collaboration with our law enforcement partners at FDIC-OIG, SIGTARP, Federal Reserve Board and CFPB-OIG and the FBI, without whom the successful prosecution of this complex and challenging case would not have been possible.”
“The FDIC Office of Inspector General (OIG) is pleased to have joined the U.S. Attorney’s Office and our law enforcement colleagues in investigating the fraud that led to the conviction of Mr. Shabudin on all seven counts,” said Acting Inspector General Gibson. “It is particularly troubling to the FDIC-OIG when bank insiders violate the public trust and engage in activities that cause losses to the Deposit Insurance Fund—in this case, a $677 million loss to the DIF. We are committed in our efforts to maintain integrity in our nation’s banks and to ensure safe and sound operations in our financial institutions throughout the country. I commend the dedication and persistent efforts of all those involved in bringing this case to justice.”
“The federal jury’s decision to convict Ebrahim Shabudin marks the third criminal conviction of a United Commercial Bank officer,” said Special Inspector General Romero. “After receiving TARP in November 2008, UCB failed about a year later, leaving $298 million in losses on taxpayers’ TARP investment in the bank. SIGTARP is on watch, protecting American taxpayers, and we thank Melinda Haag and her exceptional team of prosecutors for standing united with SIGTARP in the fight against bailout-related crime.”
“Bank executives engaged in fraud to deceive regulators and the public must be brought to justice for their actions,” said Inspector General Bialek. “I commend our agents and their federal law enforcement partners for their hard work and persistence, which ultimately led to this conviction.”
“The FBI, Special Inspectors General for Troubled Asset Relief Program, Federal Deposit Insurance Corporation, and Federal Reserve Board recognize the importance of prosecuting those who defrauded the U.S. people after the 2008 financial crisis, and will continue to pursue and prosecute like-minded perpetrators,” said Special Agent in Charge Johnson.
The jury convicted Shabudin yesterday of one count of Conspiracy to Commit Securities Fraud, one count of Securities Fraud, one count of Falsifying Corporate Books and Records, one count of False Statements to Accountants, one count of Circumventing Internal Accounting Controls, one count of Conspiracy to Commit False Bank Entries, Reports, and Transactions and one count of False Bank Entries, Reports and Transactions.
In all, Shabudin faces a total overall maximum term of 145 years of imprisonment, up to $16,750,700 in fines and assessments and up to 27 years of supervised release. Shabudin’s actual term of imprisonment, fines and assessments and term of supervised release will be imposed by the court at a sentencing hearing currently set for June 30, 2015, after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence.
On Dec. 9, 2014, UCB’s Chief Financial Officer, Craig S. On, pleaded guilty to one count of Conspiracy to Make a Materially False and Misleading Statement to an Accountant.
On Oct. 7, 2014, the bank’s Senior Vice President, Thomas Yu, pleaded guilty to charges of conspiracy to commit false bank entries, reports and transactions related to his preparation of false and misleading reports.
The prosecution is the result of a five year investigation by the FDIC-OIG, SIGTARP, the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau Office of Inspector General and the FBI. The case is being prosecuted by Assistant U.S. Attorneys Adam A. Reeves and Robert David Rees of the Northern District of California, with the assistance of Denise Oki, Phillip Villanueva, Bridget Kilkenny and Trina Khadoo.
Former United Commercial Bank Chief Credit Officer Convicted of Securities and Other Corporate Fraud After TrialRead the Press Release
OAKLAND – A jury convicted Ebrahim Shabudin yesterday of seven felony counts of conspiracy, securities fraud, and other corporate fraud offenses stemming from the failure of United Commercial Bank, announced U.S. Attorney Melinda Haag; Federal Deposit Insurance Corporation, Office of the Inspector General, Acting Inspector General Fred W. Gibson, Jr.; Special Inspector General for the Troubled Asset Relief Program Christy Romero; Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau, Office of the Inspector General, Inspector General Mark Bialek; and FBI Special Agent in Charge David J. Johnson.
Shabudin, 66, of Moraga, Calif., was the Chief Operating Officer and Chief Credit Officer at United Commercial Bank (“UCB”) in 2008 and 2009. Shabudin was the second most senior officer in executive management at UCB after former Chief Executive Officer Thomas Shiu-Kit (“Tommy”) Wu.
On November 6, 2009, UCB was taken over by the Federal Deposit Insurance Corporation (“FDIC”). With over $10.9 billion in assets, UCB’s failure was the ninth largest failure since 2007 of a bank insured by the FDIC’s Deposit Insurance Fund, according to the FDIC. In 2013, FDIC estimated that total losses for UCB would exceed $1.1 billion. Through 2014, however, with the recovery of the United States economy, FDIC now estimates the loss to the Deposit Insurance Fund to be approximately $677 million. On November 14, 2008, the Troubled Asset Relief Program (“TARP”) provided approximately $298 million in federal funds to UCB during the financial crisis.
Late yesterday, a jury found Shabudin guilty of conspiring with others within the bank to falsify key bank records as part of a scheme to conceal millions of dollars in losses and falsely inflate the bank’s financial statements. Among the records falsified were those filed with the United States Securities and Exchange Commission (“SEC”) and FDIC related to the third and fourth quarters of 2008 describing UCB’s so-called Allowance for Loan Losses. Also falsified were documents relating to UCB’s quarterly and year-end earnings per share as announced by the bank to the investing public. The guilty verdict followed a six-week jury trial before the Honorable Jeffrey S. White, U.S. District Judge.
“UCB is one of the largest criminal prosecutions brought by the United States Department of Justice of wrongdoing by bank officers arising out of the 2008 financial crisis,” U.S. Attorney Melinda Haag stated. “With actual losses exceeding a half a billion dollars, the prosecution of Shabudin and other senior officers at UCB is one of the most significant financial fraud cases in the history of the Northern District of California. I am proud of the collaboration with our law enforcement partners at FDIC-OIG, SIGTARP, Federal Reserve Board, and CFPB-OIG and the FBI, without whom the successful prosecution of this complex and challenging case would not have been possible.”
Fred W. Gibson, Jr., FDIC Acting Inspector General, stated that “the FDIC Office of Inspector General (OIG) is pleased to have joined the U.S. Attorney’s Office and our law enforcement colleagues in investigating the fraud that led to the conviction of Mr. Shabudin on all seven counts. It is particularly troubling to the FDIC-OIG when bank insiders violate the public trust and engage in activities that cause losses to the Deposit Insurance Fund—in this case, a $677 million loss to the DIF. We are committed in our efforts to maintain integrity in our nation’s banks and to ensure safe and sound operations in our financial institutions throughout the country. I commend the dedication and persistent efforts of all those involved in bringing this case to justice.”
“The federal jury’s decision to convict Ebrahim Shabudin marks the third criminal conviction of a United Commercial Bank officer,” said Christy Romero, Special Inspector General for TARP. “After receiving TARP in November 2008, UCB failed about a year later, leaving $298 million in losses on taxpayers’ TARP investment in the bank. SIGTARP is on watch, protecting American taxpayers, and we thank Melinda Haag and her exceptional team of prosecutors for standing united with SIGTARP in the fight against bailout-related crime.”
“Bank executives engaged in fraud to deceive regulators and the public must be brought to justice for their actions,” said Mark Bialek, Inspector General of the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau. “I commend our agents and their federal law enforcement partners for their hard work and persistence, which ultimately led to this conviction.”
FBI Special Agent in Charge David J. Johnson added, “The FBI, Special Inspectors General for Troubled Asset Relief Program, Federal Deposit Insurance Corporation, and Federal Reserve Board recognize the importance of prosecuting those who defrauded the U.S. people after the 2008 financial crisis, and will continue to pursue and prosecute like-minded perpetrators.”
The jury convicted Shabudin of the following seven crimes yesterday by their verdict:
- Count One: Conspiracy to Commit Securities Fraud, in violation of 18 U.S.C. § 1349, with a maximum penalty of 25 years of imprisonment, a $250,000 fine, a 5 year term of supervised release, and a $100 special assessment.
- Count Two: Securities Fraud, in violation of 18 U.S.C. § 1348, with a maximum penalty of 25 years of imprisonment, a $250,000 fine, a 5 year term of supervised release, and a $100 special assessment.
- Count Three: Falsifying Corporate Books and Records, in violation of 15 U.S.C. §§ 78m(b)(2)(A), 78m(b)(5), and 78ff, and 17 C.F.R. § 240.13b2-1, with a maximum penalty of 20 years of imprisonment, a $5,000,000 fine, a 3 year term of supervised release, and a $100 special assessment.
- Count Four: False Statements to Accountants, in violation of 15 U.S.C. § 78ff, and 17 C.F.R. § 13b2-2, with a maximum penalty of 20 years of imprisonment, a $5,000,000 fine, a 3 year term of supervised release, and a $100 special assessment.
- Count Five: Circumventing Internal Accounting Controls, in violation of 15 U.S.C. §§ 78m(b)(2)(B) and 78ff, with a maximum penalty of 20 years or imprisonment, a $5,000,000 fine, a 3 year term of supervised release, and a $100 special assessment.
- Count Six: Conspiracy to Commit False Bank Entries, Reports, and Transactions, in violation of 18 U.S.C. § 371, with a maximum penalty of 5 years of imprisonment, a $250,000 fine, a 3 year term of supervised release, and a $100 special assessment.
- Court Seven: False Bank Entries, Reports, and Transactions, in violation of 18 U.S.C. § 1005, with a maximum penalty of 30 years of imprisonment, a $1,000,000 fine, a 5 year term of supervised release, and a $100 special assessment.
In all, Shabudin faces a total overall maximum term of 145 years of imprisonment, up to $16,750,700 in fines and assessments, and up to 27 years of supervised release. Shabudin’s actual term of imprisonment, fines and assessments, and term of supervised release will be imposed by the court at a sentencing hearing currently set for June 30, 2015, after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
On December 9, 2014, UCB’s Chief Financial Officer, Craig S. On, pleaded guilty to one count of Conspiracy to Make a Materially False and Misleading Statement to an Accountant.
On October 7, 2014, the bank’s Senior Vice President, Thomas Yu, pleaded guilty to charges of conspiracy to commit false bank entries, reports, and transactions related to his preparation of false and misleading reports.
Assistant U.S. Attorneys Adam A. Reeves and Robert David Rees are prosecuting the case with the assistance of Denise Oki, Phillip Villanueva, Bridget Kilkenny and Trina Khadoo. The prosecution is the result of a five year investigation by the FDIC-OIG, SIGTARP, the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau Office of Inspector General, and the FBI.
“Gold Club” Owner Among Those Indicted for Using Business to Operate Elaborate Money Laundering SchemeRead the Press Release
SAN FRANCISCO – Seven persons -- Vladimir Handl, Michael Rose, Peter Scalise, David Gaither, Richard Leyland, Edwin Hetherton, and Paul Fink -- were arrested after being charged with racketeering, money-laundering, and drug trafficking related crimes, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
According to an indictment that was unsealed yesterday, Handl and Rose were businessmen in Myrtle Beach, South Carolina, whose interests included restaurants, nightclubs, and strip clubs in several states. Handl operated and controlled businesses such as VIP Group, LLC, International VH, LLC, and Heat Lounge, LLC, while Rose operated and controlled defendant PML Clubs, Inc., along with Explosive Clubs, Inc., Nightclub and Restaurant Services, LLC, Legacy Entertainment, East Coast Restaurant & Nightclubs, and Micro Management Group, LLC. Rose, through PML Clubs, Inc., operated several strip clubs in South Carolina, Delaware, and New Hampshire under the name “The Gold Club.” Rose, through PML Clubs, Inc., also licensed the use of the name “The Gold Club” to franchisees throughout the United States.
According to the indictment, Handl and Rose, along with their associates, Peter Scalise, and David Gaither, conspired to conduct the affairs of an enterprise through a pattern of racketeering involving money laundering, bank fraud, and drug trafficking. Between 2011 through the present, the defendants knowingly accepted more than $2.3 million that they believed either had been fraudulently diverted from a bankruptcy court proceeding or constituted proceeds from drug trafficking, and then laundered the money through their businesses, including Rose’s Gold Clubs. The indictment further alleges that as part of their laundering scheme, the defendants created fraudulent invoices, contracts, and other business records to make it appear that the money they received and “cleaned” was for legitimate business transactions. The defendants also sought to acquire cocaine to sell.
Handl, Rose, Scalise, Gaither, and PML Clubs, Inc., are all charged with racketeering conspiracy, in violation of 18 U.S.C. § 1962(d), while Handl, Rose, Scalise, and PML Clubs, Inc., are also charged with substantive racketeering, in violation of 18 U.S.C. § 1962(c). In addition, Handl, Rose, Scalise, and PML Clubs, Inc., are charged with conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h). Furthermore, Handl and Scalise are each charged with 118 counts of substantive money laundering, in violation of 18 U.S.C. § 1956(a)(3), while Rose and PML Clubs, Inc., are each charged with 105 counts of substantive money laundering.
Richard Leyland and Edwin Hetherton, in turn, are charged with a money laundering conspiracy of their own. In addition to the conspiracy change, Leyland is charged with four counts of substantive money laundering and Hetherton is changed with three counts of substantive money laundering. Both Leyland and Hetherton also are charged with theft of United States property.
Handl and Paul Fink are also charged with conspiring to possess cocaine with intent to distribute, in violation of 21 U.S.C. § 846.
All seven defendants were taken into custody today in arrests coordinated throughout the country. Rose and Scalise were arrested in the vicinity of Myrtle Beach, South Carolina. Handl and Gaither were arrested in the vicinity of Florence, South Carolina. Fink was arrested in the vicinity of Chico, California; Hetherton was arrested in the vicinity of Sacramento, California; and Leyland was arrested in the vicinity of Fort Washington, Pennsylvania. They all are expected eventually to make appearances in San Francisco in connection with the indictment filed in the federal district court in the Northern District of California.
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 corporate defendant PML Clubs, Inc., could face a maximum fine of $250,000 for each of the two racketeering-related counts, and $500,000 for each count of the 106 money laundering-related counts. Additional special assessments may apply.
The individual defendants face a maximum 20-year term of imprisonment for each racketeering-related count and each money laundering-related count. Further, the individual defendants face a maximum 10-year term of imprisonment for each theft of United States property count, and a maximum 20-year term of imprisonment for the conspiracy to possess cocaine with intent to distribute. Each defendant’s maximum terms of imprisonment are as follows:
- Handl: 2,440 years’ imprisonment
- Rose: 2,160 years’ imprisonment
- Scalise: 2,420 years’ imprisonment
- Gaither: 40 years’ imprisonment
- Leyland: 110 years’ imprisonment
- Hetherton: 90 years’ imprisonment
- Fink: 20 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.
Assistant United States Attorneys David Countryman and W.S. Wilson Leung are prosecuting the case with the assistance of Lance Libatique and Carolyn Jusay. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
San Francisco Man and Company Indicted for Smuggling Sophisticated Electrical Components to Russian FederationRead the Press Release
SAN FRANCISCO – Russian émigré Pavel Semenovich Flider was arrested yesterday on charges that he and corporate co-defendant Trident International Corporation, LLC, illegally smuggled sophisticated electrical components out of the United States, and used laundered funds to promote the scheme announced United States Attorney Melinda Haag, U.S. Department of Commerce Acting Special Agent in Charge Joseph Whitehead, U.S. Homeland Security Investigations Acting Special Agent in Charge Tatum King, Federal Bureau of Investigation Special Agent in Charge David Johnson, and U.S. Customs and Border Protection Director of Field Operations Brian Humphrey. A federal grand jury in San Francisco indicted Flider and Trident on March 5, 2015 with Smuggling Goods, Conspiracy to Commit International Money Laundering, and Money Laundering. The indictment was unsealed today in federal court.
According to the indictment, Flider, 65, of San Rafael, California, a Russian national and naturalized citizen of the United States, served as the co-owner and operator of Trident in San Francisco. He is alleged to have procured electronic components from U.S. companies and smuggled them to Russia using transshipment points in Estonia and Finland, in violation of U.S. export law. In furtherance of the crime, Flider and Trident are alleged to have knowingly submitted false and misleading export information on Shipper’s Export Declarations, an official document submitted to the Department of Homeland Security in connection with export shipments from the U.S. Funds used to purchase these electronic components came, at least in part, from transfers received from foreign banks.
Many of the components alleged to have been wrongly smuggled into Russia were controlled dual-use programmable computer chips capable of operating in austere environments making them useful in both civilian and military applications. Wire transfers that allegedly promoted the conspiracy totaled more than 60 million dollars, and were received in San Francisco from banks located in a variety of countries including the Czech Republic, Estonia, Latvia, Cyprus, and Hong Kong. Flider has been charged with fifteen counts of smuggling of goods in violation of 18 U.S.C. § § 554(a), one count of conspiracy to commit international money laundering in violation of 18 U.S.C. § 1956(h) and ten counts of substantive money laundering in violation of 18 U.S.C. § 1956(a)(2)(A). Trident has been charged with the smuggling and money laundering charges. The indictment also seeks forfeiture of Flider’s and Trident’s real and personal property connected to the alleged crimes, including proceeds traceable to the alleged laundering violations.
Flider was arrested in San Rafael, California on March 18, 2015, and made his initial appearance in federal court in San Francisco this morning before the Honorable Maria-Elena James, U.S. Magistrate Judge. Flider currently is being held in federal custody pending a formal detention hearing on Monday, March 23, 2015 before Magistrate Judge James.
An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Flider could face a maximum 20-year term of imprisonment for each money laundering-related count, and a maximum 10-year sentence for each count of smuggling. Additional periods of supervised release, fines, and special assessments also could be imposed. Trident faces a maximum fine of $500,000 for each money laundering count (or a fine of twice the value of the property used in the transaction) and a maximum fine of $ 250,000 for each of the smuggling counts. As with Flider, upon conviction Trident could be subject to additional fines and assessments. Any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Philip Kearney and Arvon J. Perteet are prosecuting the case with the assistance of Jacqueline Lovrin and Helen Yee. The prosecution is the result of an investigation by the U.S. Department of Commerce, Homeland Security Investigations, U.S. Customs and Border Protection, and the Federal Bureau of Investigation.
Former Campbell Resident Sentenced to A Three-Year Prison Term for Participation in Fraudulent Investment SchemeRead the Press Release
SAN JOSE – A founder of the S3 Partners was sentenced March 17, 2015 to 36 months on investment fraud charges, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Sam Stafford, 59, formerly a resident of Campbell, CA now living in Temecula, CA., pleaded guilty on Oct. 17, 2013, to Conspiracy to Commit Wire Fraud, Mail Fraud, and Bank Fraud, in violation of 18 U.S.C. § 1349. Stafford admitted in his plea agreement that from 2006 to 2009, he and his co-defendants Melvin Russell “Rusty” Shields and Michael Sims conspired to defraud individual investors and banks in connection with various real estate development projects. The three defendants used the name “S3 Partners” and conducted business out of a variety of locations including San Jose, CA; Campbell, CA; Hickory, NC; and Valrico, FL.
Shields, Sims, and Stafford collectively obtained more than $21 million from individual investors and banks. Ultimately, all the S3 Partners’ real estate development projects failed and, as a result of the defendants’ illegal conduct, many of the investors sustained a near total loss of their investments.
Stafford admitted in his plea agreement that he, Shields and Sims knowingly created and maintained the false appearance that both private individual investor and bank funds were being used for sound, secured real estate development projects that offered high rates of return. Nevertheless, Stafford admitted in his plea agreement that he, Shields, and Sims did not use the majority of S3 investment monies on the specific real estate projects promised to investors. Instead, they diverted substantial portions of investor monies to other projects, company overhead and other unauthorized uses, including to their personal use. Stafford also admitted in his plea agreement that in many instances he knowingly obtained substantial funds from banks as a result of forged or fraudulent documents. Further, Stafford admitted he knowingly submitted to banks invoices falsely claiming capital improvements on certain S3 Partners projects. Stafford admitted in his plea agreement that his offense conduct harmed more than 10 victims and caused an actual loss to investors and banks of more than $2,500,000.
U.S. District Judge Ronald M. Whyte imposed the 36 month prison term on March 17, 2015 and ordered Stafford to self-surrender by Apr. 21, 2015. Stafford has been out of custody on home electronic monitoring since his May 2012 arrest. In addition to the prison term, Stafford also likely will be ordered to pay some amount of restitution to his victims.
Judge Whyte stated that within 90 days he will issue an order regarding the amount of restitution Stafford will have to pay.
A jury previously convicted Shields and Sims on investment fraud charges on Dec. 23, 2013 following a seven week trial. Judge Whyte on Nov, 17, 2014, previously sentenced Shields to 78 months in prison and Sims to 30 months in prison.
Assistant U.S. Attorneys Joseph Fazioli and Timothy Lucey prosecuted the case with the assistance of Lakisha Holliman and Laurie Worthen. This prosecution is the result of an investigation by the FBI.
Bay Area Woman Sentenced to Prison for Real Estate Loan Fraud SchemeRead the Press Release
SAN FRANCISCO – Joyce Esther De Armero was sentenced yesterday to twelve months and one day in prison, and ordered to pay restitution for mail fraud, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
De Armero, 37, of San Jose, pleaded guilty on December 4, 2014, to mail fraud. According to the plea agreement, De Armero admitted that she devised a scheme to defraud investors by convincing them to invest in high-interest real estate loans between July 2008 and January 2010. She told the investors that she would invest their money in real estate loans with guaranteed returns. De Armero never made the investments and instead used the funds for her own personal expenses. She also used some of the funds from later investments to pay what she claimed were returns on earlier investments, and thereby perpetuated her fraud scheme. Altogether, she obtained no less than $180,000 from her victims. On October 31, 2013, De Armero was indicted by a federal grand jury; she was charged with mail fraud in connection with her real estate loan investment fraud scheme.
The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge, following a guilty plea on one count charging a violation of 18 U.S.C. § 1341. Judge Breyer also sentenced the defendant to a three year period of supervised release. The defendant will begin serving the sentence on May 29, 2015.
Assistant United States Attorneys Robert Rees, Philip Kopczynski, and Acadia Senese are prosecuting the case with the assistance of Beth Margen and Trina Khadoo. The prosecution is the result of a referral from the United States Trustee’s Office of the Northern District of California and an investigation by the San Mateo County District Attorney’s Office and the Federal Bureau of Investigation.
Martinez Resident Sentenced to 66 Months for Possession of Child PornographyRead the Press Release
OAKLAND – Louis Cortez pleaded guilty and was sentenced late yesterday to five and a half years in prison for possession of child pornography, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
Cortez pleaded guilty to possessing images and videos of child pornography in violation of 18 U.S.C. § 2252(a)(4). He admitted to obtaining the images and videos by using a private peer to peer file sharing software. The images and videos depicted minor and prepubescent children engaging in sexually explicit conduct.
Cortez, 68, of Martinez, California, was indicted by a federal grand jury on April 17, 2014. He was charged with a single count of possession of child pornography.
Cortez was discovered when an FBI agent acting undercover obtained images and videos of child pornography from Cortez through the peer to peer file sharing software Cortez used. Agents then traced the transmission of that material to Cortez’s residence and located hundreds of images and videos stored in various media devices in his home.
The sentence was handed down by The Honorable Yvonne Gonzalez Rogers, U.S. District Judge, following Cortez’s guilty plea. Judge Gonzalez Rogers also sentenced Cortez to an eight year period of supervised release and a variety of conditions he must meet upon his release, including not accessing the Internet without the prior approval of his probation officer, not frequenting or loitering within 100 feet of any location where children are likely to gather, and registering as a sex offender. Cortez was immediately remanded into custody following the sentence being imposed.
Assistant U.S. Attorney Thomas R. Green is prosecuting the case with the assistance of Jeanne Carstensen and Janice Pagsanjan. The prosecution is the result of an investigation by the FBI.
Hayward Tax Return Preparer Pleads Guilty to Preparing False Tax ReturnsRead the Press Release
OAKLAND – Runnveer Singh pleaded guilty today to aiding and assisting in the filing of a false tax return, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
In pleading guilty, Singh, 53, of Hayward, admitted he has prepared tax returns for approximately six years from 2008 through 2013. He obtained clients from the local Fijian community and prepared thousands of tax returns during that period. Singh prepared tax returns for the tax years 2009 through 2011 that claimed both false and ineligible deductions and credits including unreimbursed employee expenses, charitable deductions, Schedule C expenses, education credits and personal property tax deductions. By including both false and ineligible items on his clients’ tax returns, Singh caused at least $130,435 in inflated tax refunds to be issued.
On November 14, 2012, during the execution of a search warrant at his home, Singh admitted to IRS Special Agents that he knowingly prepared false tax returns in order to obtain returning customers. Then, after the search warrant was executed, Singh instructed one of his clients to submit both false and ineligible information to an IRS Revenue Agent during the audit of the client’s 2010 income tax return. Singh admitted he did so in an attempt to justify both false and ineligible business expenses on his client’s 2010 tax return.
Singh was charged in an indictment filed on March 25, 2014 with 24 counts of aiding and assisting in filing false tax returns, in violation of Title 26, U.S.C § 7206(2). He pleaded guilty to one count. Singh’s sentencing is scheduled for July 31, 2015 before the Honorable Jon S. Tigar, United States District Judge in San Francisco. The maximum penalty for one count of assisting in filing tax returns in violation of Title 26, U.S.C § 7206(2) is three years in prison and a fine of $250,000.
Assistant US Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Escape from San Francisco Federal Building Results in Additional Charges Against Alleged Art FraudsterRead the Press Release
SAN FRANCISCO – Yesterday a grand jury returned a superseding indictment against Luke D. Brugnara, adding charges that he escaped from custody and violated a court order governing a furlough established by the district 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, 50, previously had been charged with mail and wire fraud, in addition to false declarations before a court, in connection with his alleged agreement to purchase several works of art for a combined total of approximately $11,000,000. The new indictment re-alleges those charges, and adds that on February 5, 2015, Brugnara violated the terms of a court order when he escaped from his lawyer’s custody at 450 Golden Gate Avenue in San Francisco, California. A federal court order furloughed Brugnara to the custody of his lawyer in the federal building for the purpose of preparing for trial. After absconding, Brugnara remained a fugitive for six days until he was apprehended in Los Gatos, California, on February 11, 2015. He has remained in custody since.
Brugnara was apprehended as a result of a cooperative effort by the United States Marshals Service and the Federal Bureau of Investigation. His next court appearance is scheduled for Tuesday, March 17, at 2:00 p.m. before United States District Judge William Alsup.
Please note that an indictment contains only allegations and, as with all defendants, Brugnara must be presumed innocent unless and until proven guilty. 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 Benjamin Kingsley and Robin Harris are prosecuting the case with the assistance of Jessica Meegan, Trina Khadoo, and Mary Mallory. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the United States Marshals Service.
Oakland Norteño Associate Possessing Firearms and Cocaine Near School Sentenced to More than 7 Years in PrisonRead the Press Release
OAKLAND - Cristian Quintero-Felix was sentenced yesterday to 87 months in prison, for possession with intent to distribute cocaine within 1000 feet of St. Elizabeth’s High School, possession of firearms in furtherance of a drug trafficking crime, and felon in possession of firearms, announced United States Attorney Melinda Haag and Tatum King, Acting Special Agent in Charge for U.S. Immigration and Custom Enforcement, Homeland Security Investigations San Francisco.
On April 10, 2014, a federal grand jury returned a Superseding Indictment charging Quintero-Felix, a 25 year-old resident of Oakland and Alameda, for being a felon in possession of firearms, in violation of 18 U.S.C. 922(g)(1), possession with intent to distribute cocaine within 1000 feet of a school, in violation of 21 U.S.C. §§ 841(a)(1) and 860, and possession of firearms in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c). On September 14, 2014, Quintero-Felix pleaded guilty to being a felon in possession of firearms, but demanded a trial with respect to the other charges.
After a two week jury trial, Quintero-Felix was convicted on November 14, 2014, of possession with intent to distribute cocaine within 1000 feet of St. Elizabeth’s High School and possession of firearms in furtherance of a drug trafficking crime. During the trial, evidence showed that the defendant was directly across the street from St. Elizabeth’s High School carrying a backpack with two loaded firearms-- one with one round already in the chamber-- as well as numerous pre-packaged baggies of cocaine for sale and packaging paraphernalia.
The sentence was handed down by the Honorable Phyllis J. Hamilton, U.S. District Court Chief Judge. Chief Judge Hamilton also sentenced the defendant to a six year period of supervised release. Due to Quintero-Felix’ association with Norteños, the sentence handed down by Chief Judge Hamilton included a provision the he may not associate with Norteño gang members or any other gang members during the period of his supervised release. The defendant will begin serving his sentence immediately.
Cynthia Frey and Joseph Alioto, Jr., are the Assistant U.S. Attorneys who prosecuted the case with the assistance of Kurt Kosek and Ponly Tu. The prosecution is the result of the efforts and investigation by the Department of Homeland Security and the Oakland Police Department. This case is the result of efforts by the United States Attorney’s Office, the Homeland Security Investigations, and Oakland Police Department as part of efforts to get guns off the streets of Oakland and to keep school zones safe.
Audiologist Sentenced to Two Years in Prison for Tax Fraud Ordered to Pay over $1 Million in RestitutionRead the Press Release
SAN FRANCISCO – Michael Ryan Trythall was sentenced today to twenty-four months in prison for tax evasion, and ordered to pay restitution of $1,006,035, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
Trythall, a 37 year-old resident of Los Angeles, pleaded guilty in November 2014 to tax evasion. According to the plea agreement, Trythall, a professional audiologist, embezzled more than $750,000 between 2009 and 2012 from his then-employer, a San Francisco audiology practice. During that period, Trythall performed bookkeeping services for his employer and had access to the business’s financial records. He was authorized to print business checks for others to sign, but he was not authorized to issue or sign checks on his own. Nevertheless, Trythall issued business checks payable to himself, forged the signature of authorized signers, and deposited the checks into his personal bank accounts. Trythall used the money he embezzled to pay for vacations and to shop at luxury retailers.
Trythall concealed his embezzlement by omitting payments to himself from the business’s books, making false entries into the business’s books, and failing to disclose his embezzlement, even when confronted by others. Also, Trythall did not pay income taxes on any of the money he embezzled resulting in tax due and owing of over $230,000 for calendar years 2009 through 2011.
Trythall was charged by Information on September 25, 2014, with three counts of tax evasion. He pleaded guilty to one count.
The sentence was handed down by the Honorable Edward M. Chen, United States District Judge, in San Francisco. In addition to the twenty-four month sentence, Trythall also was sentenced to a one-year period of supervised release and ordered to pay restitution of $1,006,035 ($756,577 of which is to be paid to his former employer and the remaining $249,458 to the Internal Revenue Service). In addition, Trythall agreed he owed $173,496 in civil fraud penalties to the Internal Revenue Service.
Assistant U.S. Attorney Michael G. Pitman is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Two San Francisco International Airport Security Screeners Charged in Bribery and Drug Smuggling SchemeRead the Press Release
SAN FRANCISCO – Two San Francisco International Airport security screeners were among the three individuals arrested and arraigned today on charges of bribery and drug smuggling, announced United States Attorney Melinda Haag, Federal Bureau of Investigation Special Agent in Charge David Johnson, Drug Enforcement Administration Acting Special Agent in Charge Bruce Balzano, and Transportation Security Administration Office of Inspection Special Agent in Charge Regan Fong. A federal complaint charging the three individuals with drug smuggling and bribery-related charges was unsealed this morning.
According to the complaint, Claudio Rene Sunux, 30, of San Francisco, and Amanda Lopez, 27, of South San Francisco, were security screeners contracted with the Transportation Security Administration. In exchange for an offer of money from Anibal Giovanni Ramirez, 28, of San Francisco, Sunux and Lopez agreed to allow pounds of methamphetamine to be smuggled in carry-on luggage through the security checkpoint at SFO. Ramirez, Sunux, and Lopez coordinated the operation, in part, through messages on Facebook.
All three defendants, Sunux, Lopez, and Ramirez, are charged with conspiracy to distribute and possess with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 846 and 841. In this case, violation of the statute carries a mandatory minimum of ten years and can result in a life sentence and a maximum fine of $10 million. The security screeners, Sunux and Lopez, also are charged with agreement to receive a bribe by a public official, in violation of 18 U.S.C. § 201(b)(2), while Ramirez is charged with offering to bribe a public official, in violation of 18 U.S.C. § 201(b)(1). For these offenses, the maximum term of imprisonment is 15 years, and the maximum fine is $250,000 or three times the monetary equivalent of the thing of value. Conviction for the bribery-related charges also may result in disqualification from holding any office of honor, trust, or profit in the United States.
A complaint contains only allegations. Sunux, Lopez, and Ramirez, as with all defendants, must be presumed innocent unless and until proven guilty. In addition, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Sunux and Lopez are scheduled to appear Monday, March 9, 2015 before U.S. Magistrate Judge Maria-Elena James for identification of counsel. Ramirez is scheduled to appear before Magistrate Judge James on Wednesday March 11, 2015 for a detention hearing. All three defendants currently are in federal custody.
Adam Wright and Jeffrey Shih are the Assistant U.S. Attorneys prosecuting the case, with the assistance of Rawaty Yim and Yanira Osorio. The investigation of Sunux, Lopez, and Ramirez has involved officers and agents from the Federal Bureau of Investigation, the Drug Enforcement Administration, the Transportation Security Administration Office of Inspection, and the Oakland Police Department. This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
Michigan Man Pleads Guilty to Making Telephone Bomb Threats to San Benito High SchoolRead the Press Release
SAN JOSE -- Jason Keith Smith pleaded guilty yesterday to charges related to multiple telephone bomb threats he made to San Benito High School, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Change David J. Johnson.
In pleading guilty, Smith, 30, of Lincoln Park, Michigan, admitted that in November 2012 he began sending threatening internet messages to a student at San Benito High School in Holllister, 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, defendant placed a call to San Benito High School claiming to be a police detective, stating that the student, to whom he had sent threatening messages, was in trouble with the law and requesting that she contact him. The defendant 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 that 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 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 bomb threats.
Smith was charged in an indictment filed in San Jose federal district court in February 19, 2014, with Interstate Communications (Threat) in violation of 18 U.S.C. § 875(c). Smith has been in federal custody since October 6, 2014. After Smith’s guilty plea, U.S. District Judge Lucy H. Koh set the matter for sentencing on June 3, 2015 at 9:30 a.m. in San Jose. The maximum statutory penalty for Interstate Communications (Threat) is 5 years prison, a $250,000 fine, and 3 years of supervised release.
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 Legal Assistant 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.
Santa Rosa Tax Return Preparer Sentenced to 18 Months for Tax Fraud and Failing to Report Foreign Bank Accounts Omitting More than $587,000 of IncomeRead the Press Release
SAN FRANCISCO – Efrain Arturo Jovel was sentenced today to 18 months in prison for filing false tax returns and failing to report his financial interest in foreign bank accounts, U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation Special Agent in Charge José M. Martinez, announced.
Jovel pleaded guilty on October 21, 2014, to willfully failing to report his financial interest in several foreign bank accounts, in violation of 31 U.S.C. §§ 5314 and 5322(a), and to knowingly signing his false 2009 and 2010 federal income tax returns. According to the plea agreement, Jovel owned and operated a tax return preparation business for over 30 years, first out of his home, then out of offices on Guerneville Road, both in Santa Rosa, Calif. On average, Jovel prepared approximately 1,800 tax returns per year. Jovel admitted that for the tax years 2009 and 2010, he filed personal U.S. Individual Income tax returns that were false in that he did not disclose his foreign bank accounts at Banco HSBC Salvadoreno, S.A. and Banco Reformador, S.A. In addition, Jovel did not disclose interest income of $35,104 earned in 2009 and 2010 on the funds held in these foreign bank accounts. Jovel additionally admitted that he willfully underreported gross receipts from his tax preparation service of $244,120 and $307,846, respectively. This resulted in a tax loss of $175,023. Jovel further agreed to pay a penalty of $287,896 prior to sentencing.
Jovel, 64, of Santa Rosa, was charged on September 9, 2014, with one count of willfully violating foreign bank account reporting requirements and two counts of subscribing to false tax returns.
The sentence was handed down by the Honorable Richard Seeborg, U.S. District Court Judge. In addition to the 18-month sentence, Jovel was also sentenced to a three-year period of supervised release, ordered to pay restitution of $175,023 and a $10,000 fine.
Assistant U.S. Attorney Colin Sampson is prosecuting the case. The prosecution is the result of an investigation by the IRS - Criminal Investigation.
San Jose Man Sentenced to 14 Years in Prison for Methamphetamine TraffickingRead the Press Release
SAN JOSE – Omar Gonzalez was sentenced today to 174 months in prison for conspiracy to possess with intent to distribute and to distribute methamphetamine, announced United States Attorney Melinda Haag and Drug Enforcement Administration Acting Special Agent in Charge Bruce Balzano.
Gonzalez previously pleaded guilty pursuant to a plea agreement on August 20, 2014 to one count of conspiracy to possess with intent to distribute and to distribute methamphetamine, in violation of 21 U.S.C. § 841(a)(1). According to the plea agreement, Gonzalez admitted that, between May and November of 2012, he conspired with other individuals to distribute methamphetamine in Northern California. When law enforcement officers executed a search warrant at his residence in San Jose, California, on November 30, 2012, they found 2.9 kilograms of methamphetamine that was approximately 99.7% pure.
Gonzalez, 31, of San Jose, Calif., was indicted by a federal grand jury on February 28, 2013, for conspiring to distribute methamphetamine.
The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Court Judge, following a guilty plea on one count in violation of 21 U.S.C. § 841(a)(1). Judge Koh also sentenced Gonzalez to a 5 year period of supervised release. The defendant has been in federal custody since November 30, 2012.
Richard Cheng and Chinhayi Cadet are the Assistant U.S. Attorneys who are prosecuting the case. 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.
Humboldt County Marijuana Farmer Found Guilty of Murdering Immigrant Worker on His FarmRead the Press Release
SAN FRANCISCO – This morning, a federal jury found Mikal X. Wilde guilty of six felonies including 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), 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.
Evidence at trial showed that Wilde, 33, of Kneeland, Calif., 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 the 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, with the final shot 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. The jury found the defendant guilty of a premeditated first degree murder, in addition to the other charges listed above.
Wilde is scheduled to be sentenced on June 3, 2015, by the Honorable Edward M. Chen, U.S. District Judge. The defendant faces a possible sentence of a mandatory minimum 55 years up to two terms of life in prison, a $1.5 million fine, and five years of supervised release. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.The case 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.
“Co Co Boys” Gang Member from Antioch Sentenced to over Sixteen Years in Federal Prison for Drug TraffickingRead the Press Release
OAKLAND – Alan Daniel Wilson, also known as “Al Pill,” was sentenced today to 200 months in prison for possession with intent to distribute methamphetamine, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
Wilson pleaded guilty on October 2, 2014, to possessing methamphetamine with intent to distribute in violation of Title 21, United States Code, Section 841(a)(1). According to the plea agreement, Wilson admitted to possessing 616.4 grams of methamphetamine for sale as well as $14,969 in drug trafficking proceeds at the time of his arrest on October 23, 2013. According to the government’s sentencing memorandum, Wilson, a member of the Co Co Boys gang, was a parolee-at-large when he was arrested by the Antioch Police Department. Wilson was arrested following a high-speed chase through residential streets in Antioch. Wilson qualified as a “Career Offender” under federal sentencing guidelines due to his multiple prior drug trafficking convictions.
Wilson, 39, of Antioch, was indicted by a federal grand jury on December 19, 2013, for possession with intent to distribute methamphetamine.
The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, U.S. District Judge, following a guilty plea on one count in violation of Title 21, United States Code, Section 841(a)(1). Judge Gonzalez Rogers also sentenced the defendant to a five-year period of supervised release and ordered Wilson to forfeit the $14,969 in drug trafficking proceeds in his possession at the time of his arrest as well as his Chevrolet pick-up truck. Wilson has been in custody since his arrest in October 2013 and will begin serving the sentence immediately.
Assistant U.S. Attorney Garth Hire is prosecuting the case with the assistance of Melissa Dorton. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Antioch Police Department.
Operator of O.I.D. Process Sentenced to 41 Months in Prison for $228 Million Fraudulent Tax Refund SchemeRead the Press Release
SAN FRANCISCO, Calif. – Mark R. Maness was sentenced today to 41 months in prison and ordered to pay restitution to the Internal Revenue Service in the amount of $1,176,668 for conspiring to submit false claims against the United States, United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez, announced.
On November 18, 2014, Maness, 65, of Spartanburg, South Carolina, pleaded guilty to one count of conspiracy to submit false claims. According to the plea agreement, Maness and a partner operated a business named O.I.D. Process. Through the business, Maness and his partner aided and assisted in the preparation and presentation to the IRS of fraudulent U.S. Individual Income Tax Returns; in the returns, Maness claimed fraudulent Original Issue Discount interest income and federal tax withholdings, resulting in claims for fraudulent federal income tax refunds.
O.I.D. Process clients filed approximately 200 returns requesting fraudulent refunds totaling approximately $228 million.
Maness and his partner charged clients a non-refundable registration fee to join the organization and a 20% “refund acquisition fee” for any refund check issued by the IRS. They also operated a website and conducted weekly conference calls with clients to offer advice and guidance on how to complete fraudulent tax returns. Clients were required to change their mailing addresses with the IRS to the address of an attorney in San Francisco, California, who was working with Maness and his partner, so that they could ensure receipt of their 20% refund acquisition fee.
The sentence was handed down by the Honorable Susan Illston, United States District Judge. District Judge Illston also sentenced the defendant to an 18-month period of supervised release.
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.
Sacramento Woman Sentenced to 4 Years Imprisonment for Stealing over $600,000 from Concord CompanyRead the Press Release
OAKLAND – Consuelo “Connie” Puente was sentenced today to 4 years imprisonment and ordered to pay restitution in the amount of $779,854.53 for wire fraud and aggravated identity theft, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge José M. Martinez.
Puente pleaded guilty on December 4, 2014. According to court documents, from May 19, 2008 to June 18, 2013, Puente was employed by a company in Concord, Calif. In January 2009, Puente was assigned to the payroll department and was the only employee responsible for handing payroll for her employer. Puente admitted she devised a scheme to defraud her employer from June 2009 through June 2013 by receiving wages paid in the names of former employees. Pursuant to her scheme, Puente obtained from the company’s personnel files personal identifying information of three former employees. She changed their status to current employees so that her employer would pay wages in their names. Puente listed her own bank account information as the bank account to receive the wages.
As a result, between 2009 and 2013, her employer erroneously transferred net wages of $543,545.08 into Puente’s bank accounts. The company also paid to the IRS withholdings of $84,362.45 for a total of $627,907.53 in gross wages. To account for the wages paid in the names of the former employees, Puente prepared IRS Forms W-2 for each of the former employees. Puente also admitted that she filed false tax returns for 2009 through 2013 that omitted the $543,545.08 she stole from the company, resulting in $151,987 in tax liabilities.
Puente, 44, of Sacramento, was indicted on March 18, 2014, and charged with three counts of wire fraud and three counts of aggravated identity theft. She pleaded guilty to one count of each.
The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, United States District Court Judge. Judge Rogers also sentenced the defendant to a three year period of supervised release and restitution. The defendant who is in custody will begin serving the sentence immediately.
Assistant US Attorneys Jose A. Olivera and Thomas Moore are prosecuting the case. The prosecution is the result of an investigation by the IRS, Criminal Investigation and the Concord Police Department.
MS-13 Member Extradited from Mexico on Murder, Gang ChargesRead the Press Release
SAN FRANCISCO – Defendant Jaime Balam (a/k/a “Tweety”) appeared in U.S. District Court in San Francisco today following his extradition from Mexico on a variety of gang-related charges, including racketeering conspiracy and racketeering murder, announced United States Attorney Melinda Haag and Tatum King, Acting Special Agent in Charge for U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI) San Francisco.
According to court records, a federal grand jury in San Francisco indicted Jaime Balam on August 21, 2012. As alleged in the indictment, Balam, 26, a native and citizen of Mexico, was a member of La Mara Salvatrucha, or “MS-13,” a transnational criminal gang operating in various Central American countries and in numerous states across the United States. The defendant is alleged to have been a member of MS-13 who conspired to engage in the conduct of the affairs of MS-13 through a pattern of racketeering activity that included murder, attempted murder, and other acts of violence. The indictment also charges the defendant with the February 19, 2009, gang-related racketeering murder of a victim in Daly City, as well as three attempted racketeering murders arising from the same incident, and firearms-related offenses.
According to the indictment, MS-13 was a Sureño or “Southern” street gang, whose members generally were born outside the United States, claimed Southern California as their base, and acknowledged the primacy of the Mexican Mafia prison gang. The principal rivals of MS-13 in the San Francisco Bay Area were members of the area’s various Norteño or “Northern” gangs, whose members generally were born in the United States, claimed Northern California as their base, and acknowledged the primacy of the Nuestra Familia prison gang. According to the indictment, one of the principal rules of MS-13 is that its members must “hunt” – that is, attack and kill – Norteños and other rivals whenever possible. The indictment specifically alleges that all three defendants conspired to kill actual and suspected members of other gangs.
The 2012 indictment and the 2015 extradition of Balam stem from the government’s efforts, commenced in approximately 2005, to investigate and prosecute members of the MS-13 transnational gang operating in the Bay Area. Balam was arrested on October 21, 2013, in Mexico, and was subsequently ordered extradited to the United States on February 10, 2015.
“This successful extradition culminates years of outstanding investigative work by our federal law enforcement partners with Homeland Security Investigations, and illustrates the lengths to which we will go to pursue justice for victims,” stated United States Attorney Melinda Haag.
“As this case makes clear, we will not allow our borders to be barriers to bringing accused violent criminals to justice,” said Acting Special Agent in Charge Tatum King. “In addition to the tireless efforts by HSI special agents in the Bay Area and Mexico City, we also owe a tremendous debt to authorities in Mexico, whose cooperation was vital to assuring this defendant’s return. HSI will continue to work closely with its law enforcement counterparts in Mexico to assure the safety of law-abiding citizens in both nations.”
Balam is charged with the following crimes, which carry the corresponding maximum terms of imprisonment:
- Racketeering conspiracy in violation of 18 U.S.C. § 1962(d) – life in prison and a $250,000 fine;
- Conspiracy to commit murder in aid of racketeering activity in violation of 18 U.S.C. ' 1959(a)(5) – ten years in prison and a $250,000 fine;
- Conspiracy to commit assault with a dangerous weapon in aid of racketeering activity in violation of 18 U.S.C. § 1959(a)(6) – three years in prison and a $250,000 fine;
- Murder in aid of racketeering activity in violation of 18 U.S.C. ' 1959(a)(1) – life imprisonment, and a $250,000 fine;
- Attempted murder in aid of racketeering activity in violation of 18 U.S.C. § 1959(a)(5) (three counts) – 10 years in prison and a $250,000 fine;
- Carrying and using a firearm during and in relation to a crime of violence, in violation of 18 U.S.C. ' 924(c)(1)(A) – is a mandatory consecutive prison term of five years to life in prison (or seven years to life in prison if the firearm is brandished; or ten years to life in prison if the firearm is discharged), and a $250,000 fine;
- Causing death in the commission of a violation of 18 U.S.C. ' 924(c) – if the death constitutes murder as defined in 18 U.S.C. ' 1111, in violation of 18 U.S.C. § 924(j) – life in prison and a $250,000 fine;
- Being an alien unlawfully in possession of a firearm or ammunition in violation of 18 U.S.C. § 922(g)(5) – ten years in prison and a fine of $250,000.
However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. ' 3553. Please note, an indictment contains only allegations and, as with all defendants, Balam must be presumed innocent unless and until proven guilty.
Balam appeared before the Honorable Joseph C. Spero, United States Magistrate Judge, and was ordered detained pending further proceedings in front of Judge Spero tomorrow morning at 9:30 am. The case is assigned to the Honorable William H. Alsup, U.S. District Judge. The defendant was ordered to appear before Judge Alsup on March 3, 2015, at 2:00 p.m. for status conference.
Andrew M. Scoble is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Legal Tech Ponly Tu. The prosecution is the result of more than seven years’ investigation by Homeland Security Investigations, the San Francisco Police Department, and the Daly City Police Department.
Petaluma Slaughterhouse Owner Pleads Guilty to Conspiring to Distribute Adulterated MeatRead the Press Release
SAN FRANCISCO – Jesse “Babe” Amaral, Jr., owner of the now-defunct Petaluma slaughterhouse Rancho Feeding Corporation, pleaded guilty on February 18, 2015 to conspiracy to distribute adulterated, misbranded, and uninspected meat, announced United States Attorney Melinda Haag and Lori Chan, Special Agent in Charge of the U.S. Department of Agriculture (USDA), Office of Inspector General, Investigations, Western Region.
In pleading guilty, Amaral, 77, admitted that from 2012 through January 10, 2014, he knowingly and with intent to defraud directed Rancho employees to process for human consumption cattle that had been condemned by the USDA veterinarian; to circumvent inspection procedures for certain cattle exhibiting symptoms of cancer eye; and to process these cancer eye cattle for human consumption without full inspection. Amaral further admitted knowingly causing Rancho to submit fraudulent cattle invoices to farmers between at least 2012 and January 2014.
Amaral was indicted on August 14, 2014, along with Rancho employees Eugene Corda, 66, and Felix Cabrera, 56. All were charged with fraudulent distribution of adulterated, misbranded, and uninspected meat, in violation of the Federal Meat Inspection Act (FMIA), 21 U.S.C. §§ 610(c) & 676(a); conspiracy to commit the same, in violation of 18 U.S.C. § 371; and mail fraud conspiracy in furtherance of the same scheme, in violation of 18 U.S.C. § 1349. Amaral was also charged with mail fraud, in violation of 18 U.S.C. § 1341, and mail fraud conspiracy, in violation of 18 U.S.C. § 1349, in a separate scheme to defraud farmers by means of false invoicing.
Arising out of the same scheme, Robert Singleton, 78, owner of Petaluma-based Rancho Veal Corporation, was charged by Information on August 18, 2014, with one count of fraudulently distributing adulterated, misbranded, and uninspected meat in violation of the FMIA.
Singleton pleaded guilty to the Information on August 22, 2014. In so doing, he admitted knowingly participating in a scheme by which Rancho employees were instructed to carve “USDA Condemned” stamps out of cattle carcasses, to conceal from USDA inspection cows showing signs of cancer eye by switching the diseased heads with healthy heads, and to process the adulterated and uninspected carcasses for human consumption. He also admitted participating in the scheme to fraudulently invoice farmers.
Cabrera, Rancho’s “kill floor” supervisor, pleaded guilty to conspiracy to fraudulently distribute adulterated, misbranded, and uninspected meat on November 26, 2014. Corda, Rancho’s yardman, pleaded guilty on October 10, 2014, to fraudulently distributing adulterated, misbranded, and uninspected meat as well as aiding and abetting such distribution in violation of the FMIA.
Amaral’s sentencing hearing is scheduled for July 1, 2015, before U.S. District Judge Charles R. Breyer. A status hearing is scheduled for Singleton, Cabrera, and Corda on August 12, 2015, also before Judge Charles R. Breyer.
The maximum statutory penalties for conspiracy to distribute adulterated meat are 5 years’ imprisonment, 3 years’ supervised release, a $250,000 fine, and a $100 special assessment. The maximum statutory penalties for fraudulent distribution of adulterated meat are 3 years’ imprisonment, 1 year supervised release, a $10,000 fine, and a $100 special assessment. The maximum statutory penalties for mail fraud and mail fraud conspiracy are 20 years’ imprisonment, 3 years’ supervised release, a $250,000 fine, and a $100 special assessment. Notwithstanding these statutory maximums, any sentence imposed by the court following conviction would take into consideration the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
Hartley M.K. West is the Assistant U.S. Attorney who is prosecuting this case with the assistance of Rosario Calderon. The prosecution is the result of an investigation by agents of the USDA’s Office of Inspector General, Investigations and USDA’s Food Safety Inspection Service, Office of Investigation, Enforcement and Audit, Compliance and Investigations.
Former Wells Fargo Bank Manager Pleads Guilty to Fraud and TheftRead the Press Release
SAN JOSE – Sharon Lynn Shaw pleaded guilty in federal court yesterday to bank fraud and theft by bank officer, announced United States Attorney Melinda Haag and U.S. Secret Service Acting Special Agent in Charge Charles Marino.
In pleading guilty, Shaw, 67, of San Jose, Calif., admitted that from 2001 through 2012 that she engaged in a scheme to defraud Wells Fargo Bank while serving as a manager at that bank. Shaw admitted that she used the names, Social Security numbers, and other personal information belonging to her parents, without their knowledge or authorization, to create false and fraudulent business loan applications which she submitted to her employer Wells Fargo Bank; and a checking account in the name of her parent to receive those loan proceeds. Shaw admitted that she used her position as a bank manager to submit fraudulent applications to Wells Fargo Bank, to approve the loans, and to conceal their fraudulent nature. Shaw admitted that she was advanced credit based on those fraudulent loans and then converted the proceeds for her own personal use (including paying off the mortgage on her house) without Wells Fargo’s knowledge or authorization. Shaw also admitted that she embezzled from Wells Fargo bank a $12,800 line of credit advance in January 2010 as well as a $20,000 line of credit advance in February 2010.
Shaw was charged in an indictment filed in San Jose federal district court on May 21, 2014. There is no plea agreement in the case. Shaw pleaded guilty to all six counts in the indictment.
After Shaw’s guilty plea, U.S. District Court Judge Beth Labson Freeman set this matter for a sentencing hearing on May 19, 2015 at 9 a.m. The maximum statutory penalty for bank fraud, in violation of Title 18, United States Code, Section 1344, and Theft by Bank Officer, in violation of Title 18, United States Code, Section 656, is 30 years in prison, a $1,000,000 fine, and five years of supervised release.
Assistant U.S. Attorneys Joseph Fazioli and Philip Guentert are prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the U.S. Secret Service.
Former Oakland Accountant Pleads Guilty to Identity Theft Tax Fraud SchemeRead the Press Release
OAKLAND – Robert Thomas Doyle pleaded guilty in federal court on February 13, 2015, to wire 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 plea agreement, during 2011, 2012, and 2013 Doyle, 64, of Oakland, implemented an identity theft and tax fraud scheme in which he caused the filing of a number of tax returns claiming fraudulent refunds. As part of his scheme, Doyle, created false businesses and claimed false income and expenses for his clients in order to maximize the Earned Income Tax Credit to obtain a larger refund. Doyle did not ask his clients about any income earned or current or past employment history. Doyle also used the names and Social Security numbers of former clients to prepare and file false tax returns without these victims' knowledge or consent. On many of the tax returns, Doyle directed the refunds to be mailed to addresses where he could retrieve them or have the refunds direct deposited into bank accounts that he controlled. Doyle kept a portion of the refund as his fee.
Doyle was a Certified Public Accountant until 1987. On February 20, 2014, he was charged in a sixteen count indictment with mail fraud, wire fraud, and aggravated identity theft. Doyle pleaded guilty to one count of wire fraud and one count of aggravated identity theft. He is scheduled to be sentenced on June 19, 2015, before the Honorable Jon S. Tigar, United States District Judge, in Oakland.
The maximum statutory penalty for each count of wire fraud, in violation of Title 18, U.S.C § 1341 and 1343, is 20 years in prison and a fine of $250,000. The maximum penalty for aggravated identity theft, in violation of Title 18, U.S.C § 1028A, is two years in prison, consecutive to the underlying felony and a fine of $250,000.
Assistant US Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Law Enforcement Tackles Drug Sales Near Schools in San FranciscoRead the Press Release
SAN FRANCISCO – U.S. Attorney Melinda Haag, Drug Enforcement Agency, Acting Special Agent in Charge Bruce Balzano, and San Francisco Police Chief Greg Suhr announced that 19 people have been indicted by a federal grand jury on charges of drug trafficking near schools and playgrounds in San Francisco. The indictments and arrests resulted from a continued partnership between the U.S. Attorney’s Office, the DEA, and the San Francisco Police Department in a program called Operation Safe Schools.
This iteration of Operation Safe Schools focused on the Tenderloin neighborhood and portions of the South of Market neighborhood, two areas notorious for drug dealing in San Francisco. In announcing the charges, U.S. Attorney Melinda Haag stressed the significance of protecting school zones. “The goal of Operation Safe Schools is to use the law enforcement tools available to us to make neighborhoods like the Tenderloin safe, and to ensure that children who live and go to school in these neighborhoods are not exposed to crime and drug dealing,” said U.S. Attorney Haag. “We intend to continue with this initiative and others like it until the children in our community are no longer exposed to these dangerous situations.”
According to Acting Special Agent in Charge Bruce Balzano, the DEA will continue to partner with other law enforcement agencies to protect children and schools from drug trafficking. “These partnerships are important because they allow us to better protect our communities. The Safe Schools program delivers an important message to drug dealers who do business in the Northern District of California: We will not tolerate drug trafficking in school zones or anywhere else,” said Acting SAC Balzano.
"I wish to thank the US Attorney's Office and DEA for their continued partnership with the San Francisco Police Department and their commitment to Operation Safe Schools,” said San Francisco Police Chief Suhr. “Together, we are making a difference in the lives of all residents in the Tenderloin area by preventing drug dealers from preying on young children near the schools they attend on a daily basis. Every child deserves an education and should not ever have to navigate drug dealers to get to school."
Over the past nine days, the following defendants have been arrested and brought before U.S. Magistrate Judges to answer charges:
- Sholanda Adams Case No. CR-15-0070 VC
- Crystal Anthony Case No. CR-15-0005 SI
- William Brown Case No. CR-15-0069 TEH
- Latonya Carey Case No. CR-15-0004 MMC
- Jahnai Carter Case No. CR-14-0642 MMC
- Tiffany Cross Case No. CR-15-0059 CRB
- Holbert Lee Case No. CR-15-0056 EMC
- Aaron Mathews Case No. CR-15-0049 WHA
- Vernon Hill, AKA Kali Muhammed Case No. CR-15-0068 CRB
- Mathew Mumphrey Case No. CR-14-0643 RS
- Andre Patterson Case No. CR-14-0642 MMC
- Ashley Pharr Case No. CR-15-0007 CRB
- Darell Powell Case No. CR-15-0006 WHA
- Tiana Reddic Case No. CR-15-0052 WHA
- Nijah Reed Case No. CR-15-0050 RS
- Darlene Rouse Case No. CR-15-0027 VC
- Irisha Smith Case No. CR-14-0641 WHA
- Ebony Wallace Case No. CR-15-0061 CRB
- Lakeysha White Case No. CR-15-0029 EMC
According to the charging documents, the defendants are each charged with the distribution of prohibited drugs on or within 1,000 feet of a school or playground, in violation of 21 U.S.C. §§ 841(a)(1) and 860. The defendants are charged with distributing various controlled substances, including “crack” cocaine, heroin, methamphetamine, and oxycodone, as specified in the individual indictments.
The maximum statutory penalty for violating the drug-free school zone statute is 40 years in prison, with a mandatory minimum sentence of one year in jail, at least six years and up to life on supervised release, and a maximum fine of up to $2,000,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Sarah Hawkins and Lloyd Farnham are the Assistant U.S. Attorneys prosecuting these cases. The prosecutions are the result of multiple investigations by the San Francisco Police Department, the San Francisco Field Division of the U.S. Drug Enforcement Administration (DEA) and the United States Attorney’s Office for the Northern District of California.
Please note, an indictment contains only allegations and, as in all cases, the defendants listed above must be presumed innocent unless and until proven guilty.
Private Investigators Indicted in E-Mail Hacking SchemeRead the Press Release
SAN JOSE – Nathan Moser, Peter Siragusa, AKA Bobby Russo, Carlo Pacileo, Trent Williams, and Sumit Gupta, AKA Sumit Vishnoi, were charged with crimes related to a conspiracy to access the e-mail accounts, Skype accounts, and computers of people opposing Moser’s and Siragua’s clients’ in civil lawsuits, announced United States Attorney Melinda Haag and Federal Bureau of Investigation Special Agent in Charge David J. Johnson.
A federal grand jury indicted Moser, 41, of Menlo Park, Calif.; Siragusa, 59, of Novato, Calif.; Pacileo, 44, of El Segundo, Calif.; Williams, 24, of Martinez, Calif.; and Gupta, 26, of Jabalapur, India, on January 15, 2015, charging them with one count of Conspiracy, in violation of 18 U.S.C. § 1030(b), six counts of Accessing a Protected Computer and Obtaining Information, in violation of 18 U.S.C. § 1030(a)(2)(C), and two counts of Interception of Electronic Communications, in violation of 18 U.S.C. § 2511(1)(a). The indictment was unsealed in court in San Jose, Calif., yesterday.
According to the Indictment, Moser was a private investigator and owner of Moser and Associates in Menlo Park. Siragusa was also a private investigator and owner of Siragusa Investigations in Novato. Although Moser and Siragusa operated separate businesses, they often assisted in each other’s investigations. The Indictment further alleges that Williams and Gupta were computer hackers hired by Moser and Siragusa to access the e-mail accounts, Skype accounts, and protected computers of individuals without authorization. Pacileo was the director of security for ViSalus, a network marketing company based in Los Angeles and one of Moser’s clients.
The Indictment alleges that the object of the defendants’ conspiracy was to obtain information that would assist Moser’s and Siragusa’s clients, including Pacileo, in the clients’ lawsuits. According to the indictment, once retained by a client, Moser and Siragusa would hire Williams and Gupta, among others, to hack into the victims’ e-mail accounts, Skype accounts, and protected computers. In addition to that conduct, the defendants allegedly installed and used a keylogger—a tool that intercepts and logs the particular keys struck on a keyboard in a covert manner so that the person using the keyboard is unaware that his or her actions are being monitored—to obtain information that would assist Moser’s and Siragusa’s clients.
According to the Indictment, Ocean Avenue, a network marketing company based in South Jordan, Utah, was a competitor of ViSalus that had hired several former ViSalus employees. As a result, ViSalus initiated a civil lawsuit against Ocean Avenue employees. Pacileo hired Moser to investigate Ocean Avenue. Moser allegedly enlisted Siragusa to assist with the investigation, and together they hired hackers to illegally obtain information to assist in the lawsuit.
Moser, Siragusa, and Williams made their initial appearances in San Jose yesterday before the Honorable Paul S. Grewal, U.S. Magistrate Judge. Moser was released on a $100,000 bond, with his wife signing as surety and custodian. Moser’s next hearing is scheduled for identification of counsel today before Judge Grewal. Siragusa was released pending the filing of a $100,000 secured bond on or before February 20, 2015. His next hearing is scheduled for February 23, 2015, at 1:30 p.m. before the Honorable Edward J. Davila, U.S. District Judge, in San Jose. Williams, who remains in custody, has a detention hearing scheduled for February 13, 2015, at 1:30 p.m., before Judge Grewal.
Pacileo made his initial appearance in Los Angeles before the Honorable Ralph Zarefsky, U.S. Magistrate Judge, and was released pending the filing of a $25,000 secured bond on or before February 13, 2015. His next hearing is scheduled for February 23, 2015 before Judge Davila.
An arrest warrant has been issued by the court for Gupta, who is believed to be in India. FBI Agents in San Jose are working with the FBI office in New Delhi, India, to secure Gupta’s prosecution.
The maximum statutory penalty for a violation of 18 U.S.C. § 1030(b) is 5 years custody, 3 years supervised release, and a fine of $250,000. The maximum statutory penalty for each violation of 18 U.S.C. § 1030(a)(2)(C) is 10 years custody, 3 years supervised release, and a fine of $250,000. The maximum statutory penalty for each violation of 18 U.S.C. § 2511(1)(a) is 5 years custody, 3 years supervised release, and a fine of $250,000. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Matt Parrella and Michelle Kane are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the FBI.
Saratoga Couple Indicted for Tax and Mortgage FraudRead the Press Release
SAN JOSE – Meili Lin, AKA Ally Lin, and Jyh-Chau Horng, AKA Henry Horng, were arraigned today on charges of tax and mortgage fraud, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation Special Agent in Charge José M. Martinez
A federal grand jury in San Jose indicted Lin and Horng on two counts of filing false tax returns, in violation of 26 U.S.C. § 7206(1), on January 28, 2015. Horng was also charged with one count of making false statements to a government agency, in violation of 18 U.S.C. § 1001(a)(2), and two counts of making false statements to a federally insured institution, in violation of 18 U.S.C. § 1014. Lin was also separately charged with one count of making false statements to a federally insured institution, in violation of 18 U.S.C. § 1014.
According to the Indictment, Lin and Horng, then a married couple residing in Saratoga, Calif., filed joint federal income tax returns for 2006 and 2007 which underreported their income, and which failed to disclose Lin’s interest in foreign financial accounts in 2006. The Indictment alleges that Horng subsequently made several materially false statements to an IRS Revenue Agent regarding the couple’s income and Lin’s foreign accounts, among other things. The Indictment further alleges that Lin and Horng both submitted mortgage applications to federally insured lenders that contained materially false information.
Lin and Horng were arrested and made their initial appearances in federal court today in San Jose before the Honorable Paul S. Grewal, U.S. Magistrate Judge. Lin and Horng are next scheduled to appear before Judge Grewal on February 13, 2015 at 1:30 pm.
The maximum statutory penalty for each count of filing a false tax return, in violation of 26 U.S.C. § 7206(1), is three years in prison and a $250,000 fine. The maximum statutory penalty for making false statements to a government agency. in violation of 18 U.S.C. § 1001(a)(2), is five years in prison and a $250,000 fine. The maximum statutory penalty for each count of making false statements to a federally insured institution, in violation of 18 U.S.C. § 1014, is thirty years in prison and a $1,000,000 fine. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Michael G. Pitman is the Assistant U.S. Attorney who is prosecuting the case. The prosecution is the result of an investigation by the IRS, Criminal Investigation.
Please note, an indictment contains only allegations against an individual and, as with all defendants, Lin and Horng must be presumed innocent unless and until proven guilty.
Salinas Man Sentenced to 181 Month in Prison for Drug Trafficking and Firearm OffensesRead the Press Release
SAN JOSE – Hector David Lopez-Banuelos was sentenced yesterday to 181 months in prison, announced United States Attorney Melinda Haag and U.S. Immigration and Customs Enforcement, Homeland Security Investigations Acting Special Agent in Charge Tatum King.
Lopez-Banuelos, 35, of Salinas, Calif., was convicted by a jury on August 27, 2014, of possession of cocaine with intent to distribute, possession of methamphetamine with intent to distribute, being a felon in possession of a firearm, and possessing a firearm in furtherance of a drug trafficking offense.
Evidence at trial showed that Lopez-Banuelos possessed 814.5 grams of cocaine, 464.7 grams of actual methamphetamine, and a loaded Smith and Wesson 9mm semi-automatic pistol. Law enforcement officers discovered the drugs and weapon during the execution of a state probation search on Lopez-Banuelos’s residence. During the search, officers found a digital scale, a cutting agent, and notebooks containing entries consistent with drug trafficking activity. Officers also found 50 rounds of ammunition hidden behind a false outlet box in the wall. In addition, officers found a bulletproof vest in the residence.
Lopez-Banuelos was indicted by a federal grand jury on September 18, 2013. The sentence was handed down by the Honorable Edward J. Davila, U.S. District Court Judge, following the jury’s return of guilty verdicts on two counts of 21 U.S.C. Section 841, one count of 18 U.S.C. Section 922(g), and one count of 18 U.S.C. Section 924(c). Judge Davila also sentenced the defendant to a five-year period of supervised release. The defendant, who had been in custody, was remanded to the Bureau of Prisons to commence service of his sentence.
The prosecution is the result of an investigation by the Immigration and Customs Enforcement – HSI, the Monterey County Peninsula Regional Violence and Narcotics Team, the Seaside Police Department, and the Monterey County Probation Department.