Northern District of California
Press releases recorded for this federal judicial district.
Discovery Bay Resident Receives Twenty Six-Month Sentence for Committing Bank FraudRead the Press Release
OAKLAND – Brittany Lebon was sentenced today to 26 months in prison, and ordered to pay $364,698.86 in restitution for embezzling from her employer and committing bank fraud, announced United States Attorney Melinda Haag and U.S. Secret Service Special Agent in Charge Andrew Adelmann.
Lebon pleaded guilty on June 18, 2014, to five counts of bank fraud. According to the plea agreement, Lebon admitted that, while employed as a bookkeeper at a paving business owned by her family, she embezzled funds and defrauded financial institutions into crediting the stolen funds to her personal accounts. Specifically, beginning in March 2009, and continuing through August 2011, Lebon created and printed one-hundred and two unauthorized checks, totaling $364,698.86. On seventy-three of those checks, Lebon forged the signature of her supervisor (who was her uncle); on the remaining twenty-nine checks she fraudulently obtained her uncle’s signature by representing to him that she would direct the payments to a union trust fund. Lebon caused ninety-six checks to be deposited into her personal accounts at three different financial institutions. Lebon made the remaining six checks, totaling $3,449.13, payable to a utility company, to pay for her personal utility bills.
Lebon, 30, of Discovery Bay, was indicted by a federal grand jury on Oct. 25, 2012. She was charged with ten counts of bank fraud, and two counts of aggravated identity theft. Upon her sentencing, the government moved to dismiss the seven counts to which Lebon did not enter a plea.
The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, United States District Court Judge, following Lebon’s guilty plea on five counts of bank fraud in violation of 18 U.S.C. § 1344. Judge Gonzalez Rogers also sentenced the defendant to a 5-year period of supervised release, and ordered her to pay $500.00 in special assessment. The defendant will begin serving the sentence on Oct. 1, 2014.
Thomas E. Stevens is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Patti Lau. The prosecution is the result of an investigation by the United States Secret Service.
(Lebon indictment )
Quebec Resident Indicted in Multi-Million Dollar Telemarketing SchemeRead the Press Release
SAN FRANCISCO - A federal Indictment charging Nicolaos Menis with mail fraud, conspiracy to commit mail fraud, and conspiracy to commit money laundering was unsealed yesterday in federal court, announced United States Attorney Melinda Haag, U.S. Postal Inspection Service Inspector in Charge Rafael E. Nunez, and Internal Revenue Service, Criminal Investigation Special Agent in Charge José M. Martinez.
Menis, 42, of Dollard-des-Ormeaux, Quebec, Canada, was indicted by a federal grand jury in San Francisco on August 7, 2014. According to the Indictment, Menis executed a scheme to defraud in which he sent, or caused others to send, invoices to small businesses, churches, cities, and others indicating that they owed payment for a service variously described as “business listing optimization,” “business profile optimization,” and “online business listing optimization,” when such services were never ordered. The invoices instructed the small businesses to send payment – usually around $500 – to a street address that, according to the Indictment, was a UPS or similar mailbox rented by one of the companies involved in the scheme. The Indictment alleges that Menis caused others to call, or receive calls from, small businesses regarding the fraudulent invoices and falsely state that the small businesses had ordered “business listing optimization” or similar services and owed the amount on the invoice. According to the Indictment, between in or about May 2009 and in or about June 2014, Menis and others collected approximately $3.6 million from more than 4,000 victims and transferred the money from bank accounts in the United States held by entities involved in the scheme to bank accounts in Canada.
Menis was arrested after entering the United States on August 11, 2014. He made his initial appearance in federal court in Orlando, Florida, on August 12, 2014, and was ordered detained and removed to the Northern District of California. He is scheduled to appear in federal court in San Francisco, Calif., at a date and time to be determined.
The Indictment alleges four counts of mail fraud, one count of conspiracy to commit mail fraud, and one count of conspiracy to commit money laundering. The maximum statutory penalty for each count of mail fraud and conspiracy to commit mail fraud, in violation of 18 U.S.C. §§ 1341 and 1349, is 20 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss from the offense, plus restitution. The maximum statutory penalty for conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h), is 20 years’ imprisonment and a fine of $500,000 or twice the value of the funds involved in the transaction. 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
An indictment merely alleges that crimes have been committed. All defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Robert S. Leach is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Bridget Kilkenny and Mary Mallory. The prosecution is the result of an investigation by the United States Postal Inspection Service in San Francisco and Albany, New York; IRS – Criminal Investigation; and the U.S. Department of Homeland Security, Homeland Security Investigations in Rouses Point, New York.
(Menis indictment)
Placement Agent Charged with Bribery in CalPERS Corruption ConspiracyRead the Press Release
SAN FRANCISCO – A federal grand jury earlier today indicted Alfred J. Villalobos, of Reno, Nev., on charges of conspiracy to commit corruption offenses and to defraud the United States, engaging in a scheme to conceal material facts from the United States, and conspiracy to commit mail fraud and wire fraud, announced U.S. Attorney Melinda Haag, U.S. Postal Inspection Service, Inspector in Charge Rafael E. Nunez, FBI Special Agent in Charge David J. Johnson, and U.S. Secret Service Special Agent in Charge Andrew Adelmann.
This indictment adds corruption allegations to, and supersedes, an earlier indictment returned in March 2013.
According to the superseding indictment, Villalobos conspired with Fred Buenrostro, the former Chief Executive Officer (“CEO”) of the California Public Employee Retirement System (“CalPERS”) in connection with a $3 billion investment by CalPERS into funds managed by Apollo Global Management (“Apollo”), a private equity firm based in New York City. Villalobos, through his financial services firm, ARVCO Capital Research LLC (“ARVCO”), acted as the placement agent through which Apollo secured the investments by CalPERS.
The superseding indictment alleges that no later than 2005, Villalobos began giving Buenrostro secret benefits for the purpose of influencing and rewarding him in the exercise of his powers and duties as CEO concerning CalPERS’ financial transactions, investment operations, and internal deliberations, for the benefit of Villalobos. The benefits from Villalobos included payments of approximately $250,000, as well as gifts, domestic and international travel, meals, entertainment, payment for Buenrostro’s wedding, and his subsequent employment at ARVCO after he left CalPERS in May of 2008. In exchange, Buenrostro provided Villalobos with access to CalPERS’ confidential information relating to investments and other proprietary matters and attempted to influence the CalPERS investment staff and CalPERS Board, as directed by Villalobos.
In 2007, Apollo told ARVCO that it required signed Investor Disclosure letters from CalPERS prior to paying ARVCO any fees for its efforts in securing CalPERS’ investments into Apollo-managed funds. After CalPERS’ legal and investment offices declined to sign the first Investor Disclosure letter documenting ARVCO’s relationship with Apollo, Villalobos and Buenrostro conspired to create a series of fraudulent Investor Disclosure letters that were transmitted to Apollo. Apollo paid ARVCO a total of approximately $14 million dollars in fees after receiving the fraudulent letters.
The superseding indictment further alleges that when civil and later criminal investigations were opened into the operations of ARVCO and its role as a placement agent in connection with CalPERS’ investments in Apollo-managed funds, Villalobos and Buenrostro agreed on a false version of facts and subsequently made misrepresentations to, and concealed information from, the SEC, the USPIS, and the FBI, about their financial relationship and the authenticity of the Investor Disclosure letters.
On July 11, 2014, Buenrostro was charged by superseding information with a single count of conspiracy in violation of Title 18, United States Code, Section 371, and pleaded guilty before the Honorable Charles Breyer, United States District Court Judge, to that charge in an agreement with the government that included his promise to cooperate in future investigations. Both defendants are currently released on bond. The arraignment for Villalobos on the superseding indictment is not yet scheduled. However, a status hearing is scheduled before Judge Breyer for Aug. 8, 2014, at 9:00 a.m.
The maximum statutory penalty for conspiracy to defraud the United States, and for a scheme to conceal material facts from the United States, is five years of imprisonment, $250,000 fine or twice the amount of gain or loss, whichever is greater, three years of supervised release, and a $100 special assessment. The maximum statutory penalty for conspiracy to commit mail fraud and wire fraud is 20 years imprisonment, $250,000 fine or twice the amount of gain or loss, whichever is greater, three years of supervised release, and a $100 special assessment. Restitution may also be ordered as to each of the three counts. 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.
Timothy J. Lucey and Philip A. Guentert are the Assistant United States Attorneys who are prosecuting the case with the assistance of Laurie Worthen and Beth Margen. The prosecution is the result of an investigation by the U.S. Postal Inspection Service and the FBI, with substantial assistance from the Los Angeles Regional Office of the SEC as well as the U.S. Secret Service.
Please note, an Indictment contains only allegations and, as with all defendants, Alfred J. Villalobos must be presumed innocent unless and until proven guilty.
(Villalobos superseding indictment )
Former Hedge Fund Manager Sentenced to Fourteen Months in PrisonRead the Press Release
SAN FRANCISCO – Yesterday afternoon former hedge fund manager Lawrence R. (Larry) Goldfarb was sentenced to 14 months in prison for wire fraud, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Goldfarb, 55, previously of San Anselmo, Calif., was the managing partner of Baystar Capital II, L.P., a private investment fund. The fund primarily made short-term investments, but it also invested in various illiquid, more difficult-to-value investments referred to as “side pockets.” In approximately 2003, Baystar II made an $8.4 million side pocket investment in Island Fund LLC. Over the next several years, that investment returned more than $16 million. Without consulting or informing the investors in Baystar II, however, Goldfarb used a substantial amount of those funds to invest in other entities, including some in which he had an economic interest. When investors asked whether Island Fund had made distributions, Goldfarb intentionally failed to disclose that distributions had been made and that Goldfarb had used and reinvested the distributions, and he falsely told investors that they were not yet eligible for distributions. According to court documents, Goldfarb’s scheme to defraud investors caused losses of approximately $6 million.
In March 2011, Goldfarb entered into a Deferred Prosecution Agreement (DPA) with the United States Attorney’s Office and a Consent Judgment with the Securities and Exchange Commission. In those documents, Goldfarb promised to pay restitution and disgorgement of approximately $12 million pursuant to a payment schedule. After making some of the payments, Goldfarb failed to make the agreed payments. The Court determined that instead of paying the agreed upon restitution and disgorgement, Goldfarb spent hundreds of thousands of dollars on various personal indulgences, including Golden State Warriors season tickets, private air travel, and vacations. The Court concluded that Goldfarb had breached the DPA, denied defendant’s motion to dismiss the criminal charge against him, and allowed this prosecution to proceed. On April 16, 2014, Goldfarb pleaded guilty to the one count of wire fraud in the Information that had been filed against him in March 2011 in connection with the DPA.
The sentence was handed down by The Honorable William Alsup, United States District Court Judge, following a Goldfarb’s guilty plea to wire fraud, in violation of Title 18, United States Code, Section 1343. Judge Alsup also sentenced the defendant to a three-year period of supervised release to follow his prison sentence. Judge Alsup ordered the defendant to begin serving his prison sentence on Nov. 5, 2014.
Robert Leach and Doug Sprague are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Rawaty Yim. The prosecution is the result of an investigation by the FBI, with substantial assistance from the San Francisco Regional Office of the Securities and Exchange Commission.
(Goldfarb information )
Laguna Niguel Man Receives Fifteen-Month Prison Term for Defrauding eBayRead the Press Release
SAN JOSE – Brian Andrew Dunning was sentenced today to serve fifteen months in prison for receiving between $200,000 and $400,000 in fraudulent commissions from eBay, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Dunning pleaded guilty on April 15, 2013, to a Superseding Information charging him with wire fraud. In pleading guilty, Dunning admitted that, between approximately May 2006 and June 2007, he engaged in a scheme to defraud eBay through so-called “cookie stuffing.” According to the plea agreement, commissions paid to Dunning’s company, Kessler’s Flying Circus (KFC), which Dunning owned jointly with his brother, totaled approximately $5.2 million during that period from eBay’s domestic Affiliate Program. The parties stipulated for sentence purposes that between $200,000 and $400,000 of those commissions were the result of the fraudulent scheme.
According to the plea agreement, in approximately April 2005, Dunning and his brother formed KFC, through which they participated in the eBay Affiliate Program. The Affiliate Program was a means by which eBay worked with KFC and other affiliates to drive Internet traffic to eBay’s websites. Under the program, an affiliate was supposed to send visitors to eBay’s website by displaying an eBay advertisement, or link, on the affiliate’s website. If a visitor clicked on the eBay link or ad, he or she was redirected to eBay’s website. If that user subsequently conducted a “revenue action” on eBay’s website within a designated period of time, eBay paid the affiliate a commission for the referral.
Dunning admitted that he carried out his scheme by providing free applications at two of his websites that users could download and use on their own websites: ProfileMaps.info, which showed the physical location of visitors to a MySpace profile, and WhoLinked.com, which showed who was linking to the user’s website or blog. Both applications contained code Dunning had written which operated so that, when a user visited a website that had installed the application, the code would cause the user’s browser to receive a cookie with KFC’s ID number, even though the user did not click on an eBay ad or link, did not see any content from eBay’s website, and did not realize that his or her browser had been re directed to eBay’s tracking server. As a result, KFC would be paid if that user subsequently conducted an eBay revenue action within a certain period of time.
Dunning, 48, of Laguna Niguel, Calif., operates Skeptoid Media [skeptoid.org], a charitable organization, and also writes and produces the podcast “Skeptoid: Critical Analysis of Pop Phenomena.” Dunning was originally indicted by a federal Grand Jury on June 24, 2010, and charged with five counts of wire fraud, in violation of Title 18, United States Code, Section 1343. Under the plea agreement, Dunning pleaded guilty to a superseding information, filed on April 15, 2013, that alleged a separate violation of the same statute. In his plea agreement, Dunning admitted that he received payments for revenue actions for which he was not entitled to be compensated, but reserved the right to dispute how much of those payments were attributable to the cookie stuffing scheme. The parties later agreed to a stipulated loss figure.
The sentence was handed down by the Honorable Edward J. Davila, United States District Court Judge. Judge Davila also sentenced the defendant to a three-year period of supervised release following his release from custody. No restitution was imposed based on a separate, undisclosed civil settlement between Dunning and eBay. The defendant was ordered to surrender on or before Sept. 2, 2014.
David R. Callaway and Kyle F. Waldinger are the Assistant U.S. Attorneys who prosecuted the case with the assistance of Elise Etter and Rawaty Yim. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
(Dunning superseding information )
Mexican National Sentenced to Fourteen Years in Prison for Methamphetamine TraffickingRead the Press Release
SAN JOSE – Jose Corona-Mata was sentenced yesterday to 14 years in prison for conspiracy to possess with intent to distribute and to distribute methamphetamine, announced United States Attorney Melinda Haag and Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick.
Corona-Mata previously pleaded guilty pursuant to a plea agreement on April 9, 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), and one count of illegal entry into the United States following deportation, in violation of 8 U.S.C. § 1326. According to the plea agreement, Corona-Mata admitted that, between May and November of 2012, he conspired with others to distribute methamphetamine in Northern California. When law enforcement officers executed a search warrant at his residence in San Jose, Calif., on Nov. 30, 2012, they found $92,574 and pay/owe sheets indicative of drug trafficking. Methamphetamine seized elsewhere as evidence of the conspiracy in this case was 97-99% pure.
Corona-Mata also admitted that he had previously been deported from the United States to Mexico five times between 2003 and 2011, and that he had previously been convicted of a felony drug trafficking offense in 2010.
Corona-Mata, 32, of Michoacàn, Mexico, was indicted by a federal grand jury on Feb. 28, 2013, for conspiring to distribute methamphetamine, and for illegal entry into the United States following deportation.
The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Court Judge. In addition to the 14-year sentence for the drug conspiracy, Judge Koh also sentenced Corona-Mata to a concurrent 46-month prison sentence for the violation of 8 U.S.C. § 1326, and a 5 year period of supervised release. The defendant has been in federal custody since Nov. 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.
(Corona-Mata second superseding indictment )
Berkeley Psychologist Sentenced to More Than Two Years in Prison for Tax Evasion and Theft of Government PropertyRead the Press Release
OAKLAND – Hugh Leslie Baras, was sentenced today to thirty months in prison and ordered to pay restitution of $593,513 to the Internal Revenue Service and the Social Security Administration for tax evasion and theft of government property, United States Attorney Melinda Haag, and Internal Revenue Service, Criminal Investigation Special Agent in Charge José M. Martinez announced.
On Feb. 3, 2014, Baras, 70, a Berkeley psychologist, was convicted by a jury of five counts of tax evasion, in violation of Title 26, U.S.C. § 7201, and one count of theft of government property, in violation of Title 18, U.S.C. § 641. The evidence presented during the seven-day trial, showed that Baras, who formerly worked as a psychologist at Kaiser Permanente, and as an Adjunct Clinical Assistant Professor in the Department of Psychiatry and Behavioral Sciences at Stanford University School of Medicine, started a solo, private practice in Palo Alto, Calif., in late 2002. At his private practice, Baras provided clinical psychotherapy services to clients. During the years 2005 through 2009, Baras’s private practice generated over $1,000,000 of income. Although he filed timely federal income tax returns for each of these years, Baras omitted all of the income produced by his private practice from those returns. In addition, although he was self-employed and earning substantial income, Baras continued to collect Disability Insurance Benefits from the Social Security Administration. Between 2006 and 2009, Baras received Disability Insurance Benefits payments to which he was not entitled totaling $80,615. Also during this period, Baras sold nearly $600,000 worth of gold and silver coins to a coin-broker in Oakland. These sales created capital gains which Baras also failed to report on his tax returns.
The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, United States District Court Judge, in Oakland. Judge Gonzalez Rogers also sentenced Baras to a three-year period of supervised release, ordered him to forfeit $80,615, and to pay a fine of $7,500. Baras was ordered to self-surrender for service of his sentence on Sept. 29, 2014.
Michael G. Pitman is the Assistant United States Attorney prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation, and the United States Social Security Administration, Office of Inspector General.
(Baras superseding indictment )
Attorney General Holder Announces Plans for Federal Law Enforcement Personnel to Begin Carrying NaloxoneRead the Press Release
WASHINGTON — In a new memorandum released Friday, Attorney General Eric Holder urged federal law enforcement agencies to identify, train and equip personnel who may interact with a victim of a heroin overdose with the drug naloxone. This latest step by the Attorney General will pave the way for certain federal agents -- such as emergency medical personnel -- to begin carrying the potentially life-saving drug known for effectively restoring breathing to a victim in the midst of a heroin or opioid overdose.
According to the most recent study, 110 Americans on average die from drug overdoses every day, outnumbering even deaths from gunshot wounds or motor vehicle crashes. More than half of these drug overdose deaths involve opioids such as heroin and prescription pain relievers. Between 2006 and 2010, heroin overdose deaths dramatically increased by 45 percent.
“The shocking increase in overdose deaths illustrates that addiction to heroin and other opioids, including some prescription painkillers, represents nothing less than a public health crisis,” said Attorney General Holder. “I am confident that expanding the availability of naloxone has the potential to save the lives, families and futures of countless people across the nation.”
The Justice Department wants federal law enforcement agencies, as well as their state and local partners, to review their policies and procedures to determine whether personnel in those agencies should be equipped and trained to recognize and respond to opioid overdose by various methods, including the use of naloxone. Seventeen states and the District of Columbia have amended their laws to increase access to naloxone, resulting in over 10,000 overdose reversals since 2001.
"The heroin and prescription painkiller epidemic knows no boundaries--anyone can be affected, and we have already lost far too many lives,” said Acting Director of the Office of National Drug Control Policy Michael Botticelli. “We have moved aggressively against this epidemic and we know that the actions of law enforcement officers at the scene of an overdose can mean the difference between life and death. Attorney General Holder's leadership in this arena will help prevent future overdose deaths and we look forward to working closely with his office and other partners to get naloxone to law enforcement professionals across the nation."
As the department continues to address escalating and rapidly-evolving challenges that lead to opioid abuse and drug trafficking, the Attorney General cautioned members of Congress to protect critical enforcement tools like Immediate Suspension Orders (ISOs). A recently passed House bill would “severely undermine” a critical component of our efforts to prevent communities and families from falling prey to dangerous drugs.
The Attorney General announced the new memorandum at a day-long conference on law enforcement and naloxone convened by the Justice Department’s Bureau of Justice Assistance in partnership with the Drug Enforcement Administration, the Office of Community Oriented Policing Services and the Office of National Drug Control Policy. Today’s announcement follows up on the Attorney General’s call to action in March, when he urged local law enforcement authorities, who are often the first to respond to possible overdoses, to routinely carry naloxone.
The Attorney General’s full remarks to the law enforcement conference, as prepared for delivery appear below:
“Thank you, Mary Lou Leary, for those kind words – and thank you all for being here today. I’d particularly like to thank Director Denise O’Donnell, Deputy Director Kristen Mahoney, and their colleagues from the Bureau of Justice Assistance – as well as Acting Director of the Office of National Drug Control Policy Michael Botticelli, Administrator Michele Leonhart, Deputy Assistant Administrator Joe Rannazzisi, and the dedicated men and women of the Drug Enforcement Administration – for bringing us together this morning. And I want to recognize all of the distinguished panelists – representing fields ranging from law enforcement, to public policy, to public health and drug treatment – who have taken the time to lend their voices to this important discussion. Every day, you stand on the front lines of our fight to confront an urgent – and growing – threat to our nation and its citizens. And we’re proud to count you as colleagues and partners.
“As the leaders in this room know all too well, in the five years between 2006 and 2010, this country witnessed a dramatic, 45-percent increase in heroin-related deaths. And 110 people die every day from overdoses, primarily driven by prescription drugs. The shocking increase in overdose deaths illustrates that addiction to heroin and other opioids, including some prescription painkillers, represents nothing less than a public health crisis. It’s also a public safety crisis. And every day, this crisis touches – and devastates – the lives of Americans from every state, in every region, and from every background and walk of life.
“That’s why this Administration, and this Department of Justice in particular, have taken aggressive steps to fight back at every point of intervention – and with every tool at our disposal. In recent years, we have worked to prevent opioid diversion and abuse by targeting the illegal supply chain, by disrupting pill mills, and by thwarting doctor-shopping attempts by drug users and distributors. We have developed innovative public health programs to educate the public, to monitor the problem, and to rigorously enforce applicable federal laws. And we have stepped up our investigatory efforts – opening more than 4,500 heroin-related investigations since 2011 and increasing the amount of heroin seized along America’s southwest border by 320 percent between 2008 and 2013.
“From our rigorous scrutiny of new pharmacy applications to prevent illicit storefront drug trafficking – to our sponsorship of “Drug Take Back” events that provide opportunities for safe and responsible prescription drug disposal – with your help and expert guidance, the department has pursued a comprehensive strategy to keep pharmaceutical controlled substances from falling into the hands of non-medical users. We can all be proud of the steps forward we’ve taken, and the considerable results we’ve achieved, over the last few years alone. But we continue to face escalating and rapidly-evolving challenges in our efforts to prevent opioid abuse and intercept illicit drugs.
“These challenges illustrate the need to preserve important law enforcement tools like Immediate Suspension Orders, which allow DEA to immediately shut down irresponsible distributors, pharmacies, and rogue pain clinics that flood the market with pills prescribed by unethical or irresponsible doctors. These Immediate Suspension Orders, or ISOs, are used to take action in instances where irresponsible behavior places the public at risk - and do so without interrupting the legitimate flow of prescription drugs or preventing patients from receiving necessary medications.
“Particularly now – at a time when our nation is facing a heroin and prescription drug abuse crisis – law enforcement tools like ISOs could not be more important. And if Congress were to take them away, or weaken our ability to use them successfully, it would severely undermine a critical component of our efforts to prevent communities and families from falling prey to dangerous drugs.
“Of course, I recognize – as you do – that we cannot prevent every individual instance of heroin or prescription painkiller abuse. And that is why, beyond these efforts, we must also take additional steps to ensure that we can respond quickly and effectively in the event of acute heroin- or prescription drug-related emergencies that are encountered in the field.
“In March, I urged local law enforcement authorities, who are often the first to respond to possible overdoses, to routinely carry naloxone – a drug that’s extremely effective at restoring breathing to a victim in the midst of a heroin or other opioid overdose. At that time, seventeen states and the District of Columbia had amended their laws to increase access to naloxone, resulting in over 10,000 overdose reversals since 2001. During one of my regular meetings with the leaders of national law enforcement organizations – many of whom I see here today – they identified the need for technical assistance so that jurisdictions with an interest in equipping officers and first responders may do so effectively. Today’s meeting fulfills that request. The result of this convening will be a set of guidelines to assist law enforcement and public health providers who wish to be equipped and trained in the use of this potentially life-saving remedy.
“In addition, this morning, I can announce that, for the first time ever, I have issued a memorandum urging federal law enforcement agencies – including the DEA, the ATF, the FBI and the U.S. Marshals Service – to review their policies and procedures to determine whether personnel within their agencies should be equipped and trained to recognize and respond to opioid overdose, including with the use of naloxone. In the coming days, I expect each of these critical agencies to determine whether and which members of their teams should be trained to use and carry naloxone in the performance of their duties.
“Although, like you, I recognize that there are numerous challenges involved in naloxone implementation – from acquisition and replenishment, to training, medical oversight and liability issues – I am confident that expanding the availability of this tool has the potential to save the lives, families, and futures of countless people across the nation. I am certain that the leaders in this room – together with our colleagues and counterparts far beyond it – possess the knowledge, the skill, and the determination to forge workable solutions to these pressing concerns. The ultimate goal of today’s conference is to harness your insights, to channel your expertise, and to mine your collective experience in order to make real and lasting progress on behalf of those who are in desperate need of our assistance. Through extensive collaboration and shared wisdom, we can overcome persistent challenges and set a new course for the future.
“So long as I have the privilege of serving as Attorney General, I am determined to keep working with you – and with leaders and stakeholders from around the country – to help break new ground, to develop new solutions, and to forge new paths to the safer, brighter, and more just futures that all Americans deserve. I want to thank each of you, once again, for your commitment to this initiative; for your devotion to this cause; and for your partnership in the considerable work that lies before us. I look forward to all that we must, and surely will, accomplish together in the months and years to come. And I wish you all a most productive conference.”
Bay Area Prescription Drug Abuse Summit
VIDEO: Beyond the Headlines: Prescription Drug Abuse - ABC7 News
PG&E Charged with Obstruction of the Investigation of the National Transportation Safety Board and Additional Violations of the Natural Gas Pipeline Safety ActRead the Press Release
SAN FRANCISCO – A federal grand jury for the Northern District of California returned a superseding indictment charging Pacific Gas and Electric Company (PG&E) with obstruction of the investigation of the National Transportation Safety Board (“NTSB”), as well as additional violations of the Natural Gas Pipeline Safety Act of 1968 (PSA), announced U.S. Attorney Melinda Haag, California Attorney General Kamala D. Harris, San Mateo County District Attorney Stephen M. Wagstaffe, U.S. Department of Transportation Office of Inspector General Special Agent in Charge William Swallow, and FBI Special Agent in Charge David J. Johnson.
The superseding indictment alleges that PG&E obstructed the NTSB’s investigation that began immediately after the deadly San Bruno explosion. According to the superseding indictment, during the course of the NTSB’s investigation, PG&E provided a version of a policy outlining the way in which PG&E addressed manufacturing threats on its pipelines. PG&E later withdrew that policy claiming it was produced in error, and was an unapproved draft. In fact, PG&E was operating under the so-called unapproved draft from 2009 through April 5, 2011. The consequence of this practice was that PG&E did not prioritize as high-risk, and properly assess, many of its oldest natural gas pipelines, which ran through urban and residential areas.Additionally, the superseding indictment charges PG&E with 27 counts of knowingly and willfully violating the PSA. These charges stem from PG&E’s record keeping and pipeline “integrity management” practices. The superseding indictment alleges that PG&E failed to address recordkeeping deficiencies concerning its larger natural gas pipelines knowing that their records were inaccurate or incomplete. The superseding indictment also alleges that PG&E failed to identify threats to its larger natural gas pipelines and that PG&E did not take appropriate actions to investigate the seriousness of threats to pipelines when they were identified. Finally, the superseding indictment alleges that PG&E failed to adequately reprioritize and assess threatened pipelines after the pipelines were over pressurized as required by the PSA and its regulations.
PG&E is charged with one count of obstruction of an agency proceeding in violation of 18 U.S.C. §1505, and 27 separate counts of violations of the PSA. The maximum statutory penalty for each count is a $500,000 fine or a fine based on the twice the gross gain PG&E made as a result of the violations, or twice the losses suffered by the victims. The superseding indictment alleges that PG&E derived gross gains of $281 million, and victims suffered losses of approximately $565 million. PG&E is next scheduled to appear on August 18, 2014 before the Honorable Thelton E. Henderson, United States District Judge.
Kim A. Berger and Hallie M. Hoffman are the Assistant U.S. Attorneys who are prosecuting the case, with the assistance of Alycee Lane and Pat Mahoney, along with Deputy Attorneys General Brett Morris and Deborah Halberstadt from the California Attorney General’s Office. The prosecution is the result of an investigation conducted by the San Mateo County District Attorney’s Office, the United States Department of Transportation Office of Inspector General, the FBI, the Pipeline and Hazardous Material Safety Administration, and the city of San Bruno Police Department.Please note, an indictment contains only allegations and, as with all defendants, PG&E must be presumed innocent unless and until proven guilty.
(PG&E superseding indictment )
Historic Clean Water Act Settlement Will Prevent Millions of Gallons of Sewage Discharges into San Francisco BayRead the Press Release
SAN FRANCISCO – The U.S. Environmental Protection Agency today announced a Clean Water Act settlement requiring the East Bay Municipal Utility District (EBMUD) and seven East Bay communities to conduct extensive system repairs aimed at eliminating millions of gallons of sewage discharges into San Francisco Bay. Under today’s agreement, EBMUD and the communities will assess and upgrade their 1,500 mile-long sewer system infrastructure over a 21-year period. The work is expected to cost approximately $1.5 billion. The entities will pay civil penalties of $1.5 million for past sewage discharges that violated federal environmental law.
Since 2009, EPA, state and local regulators and environmental groups have worked to reduce sewage discharges from East Bay communities. During that period, interim actions required EBMUD and the East Bay communities to improve their sewer maintenance practices and gather information to identify priorities for investment.
The San Francisco Bay covers 1,600 square miles and is the largest Pacific estuary in the Americas, a host for millions of migratory birds and a hub of commerce and recreation for more than 7 million Bay Area residents. Unfortunately, the bay is under threat from many sources of pollution, including crumbling wastewater infrastructure that allows sewage to escape from the system. During rainstorms, in particular, older sewer systems can be overwhelmed, releasing rivers of sewage before fully treated.
In addition to polluting waterways, raw and partially treated sewage can spread disease-causing organisms, metals, and nutrients that threaten public health. Sewage can also deplete oxygen in the bay, threatening fish, seals and other wildlife.
“For many years, the health of San Francisco Bay has been imperiled by ongoing pollution, including enormous discharges of raw and partially treated sewage from communities in the East Bay,” said Jared Blumenfeld, EPA’s Regional Administrator for the Pacific Southwest. “Many of these discharges are the result of aging, deteriorated sewer infrastructure that will be fixed under the EPA order.”
Today’s settlement is the result of a Clean Water Act enforcement action brought by the EPA, U.S. Department of Justice, State Water Resources Control Board, San Francisco Bay Regional Water Board, San Francisco Baykeeper and Our Children’s Earth Foundation.
“This settlement will result in major reductions of sewage discharges into the San Francisco Bay,” said W. Benjamin Fisherow, Chief of Environmental Enforcement in the Justice Department’s Environment and Natural Resources Division. “These improvements will help reach our goal of eliminating pollution in the neighborhoods in these cities and in the bay so that citizens may rest assured that they reside in a safe, clean environment.”
The seven East Bay communities in the EBMUD settlement are:
- City of Alameda
- City of Albany
- City of Berkeley
- City of Emeryville
- City of Oakland
- City of Piedmont
- Stege Sanitary District (serving El Cerrito, Kensington, and a portion of Richmond)
“The public has been required to repair their own sewer laterals for over two years now, so it is past time that the local agencies aggressively repair their sewer systems,” said Bruce Wolfe, Executive Officer of the San Francisco Bay Regional Water Board. “This settlement spells out how the agencies will work with the public over the next 21 years to do just that and protect the bay.”
“Baykeeper will be watching the progress of these repairs closely to ensure that pollution of San Francisco Bay is reduced and eventually eliminated, and we will take action if the repairs fall short,” said Baykeeper Executive Director Deb Self.
On an annual basis, hundreds of millions of gallons of raw and partially treated sewage are discharged directly to San Francisco Bay. Also, as much as 600,000 gallons of raw sewage from community sewer systems is first discharged onto streets and other public areas—through outlets such as manhole covers—before it drains to the bay.
As part of the agreement, EBMUD and the seven communities will:
- repair and rehabilitate old and cracked sewer pipes;
- regularly clean and inspect sewer pipes to prevent overflows of raw sewage;
- identify and eliminate illegal sewer connections;
- continue to enforce private sewer lateral ordinances; and
- ensure proactive renewal of existing sanitary sewer infrastructure.
EBMUD will also immediately begin work to offset the environmental harm caused by the sewage discharges, which are expected to continue until these sewer upgrades are completed, by capturing and treating urban runoff and contaminated water that currently flows to the bay untreated during dry weather.
Keeping raw sewage and contaminated storm water out of the waters of the United States is one of EPA’s National Enforcement Initiatives. The proposed settlement is subject to a 30-day public comment period and final court approval. Read the settlement at: www.usdoj.gov/enrd/Consent_Decrees.html
Learn more about EPA’s national wastewater enforcement initiative at: http://go.usa.gov/5pak
EPA is working to restore San Francisco Bay, learn more at: http://www2.epa.gov/sfbay-delta
Justice Department Obtains $80,000 Settlement in Housing Discrimination Lawsuit Against California LandlordRead the Press Release
WASHINGTON – The Justice Department today announced an agreement with the owners and operators of Woodland Garden Apartments in Fremont, California, to settle allegations of discrimination against families with children. Under the consent order, which must still be approved by the U.S. District Court for the Northern District of California, the defendants are required to pay $77,500 to the victims of their discrimination and an additional $2,500 to the government as a civil penalty. The settlement resolves a complaint filed by the department on Oct. 25, 2013.
The lawsuit alleged that the apartment complex maintained rules that discriminated against families with children in violation of the Fair Housing Act. Specifically, the lawsuit challenged a rule that prohibited children from playing outside in the common grassy areas of the complex and provided that families would be evicted if they violated this rule. The lawsuit also alleged that the actions of the defendants constituted a pattern or practice of discrimination.
The lawsuit arose as a result of complaints filed with the U.S. Department of Housing and Urban Development (HUD) by five families who lived at Woodland Garden Apartments and by Project Sentinel, a fair housing organization operating in Northern California. After an investigation of the complaints, HUD issued a charge of discrimination and the complainants were referred to the department.
“Federal law guarantees families with children the right to equal access to housing, including full access to their homes’ amenities and facilities,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “Settlements such as this one help ensure that all families can enjoy that right.”
“An apartment complex may not impose conditions on families with children that they do not impose on other residents,” said HUD’s Assistant Secretary for Fair Housing and Equal Opportunity Gustavo Velasquez. “HUD and DOJ remain committed to enforcing fair housing laws that ensure all people share the same rights to use and enjoy their homes.”
In addition to monetary payments, the consent order requires defendants to implement a nondiscrimination policy, establish new enforcement procedures for rule violations and undergo training on the Fair Housing Act.
Fighting illegal housing discrimination is a top priority of the department. The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.
More information about the Civil Rights Division and the laws it enforces is available at the division's website. Persons who believe they have experienced or witnessed unlawful housing discrimination may call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact HUD at 1-800-669-9777. More information about the Fair Housing Act can also be found at the department website or the HUD website.
Former School Teacher Sentenced to More Than Eight Years in Prison on Child Pornography ChargesRead the Press Release
OAKLAND – Russell Patrick Pfiester was sentenced yesterday to 97 months in prison for receipt of child pornography, announced United States Attorney Melinda Haag and Nick Annan, Acting Special Agent in Charge for U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in San Francisco.
Pfiester pleaded guilty on Feb. 6, 2014, to receipt of child pornography. According to the plea agreement, Pfiester admitted to receiving at least 100 videos through the Internet using a peer-to-peer file sharing network. The videos showed children, including prepubescent children, engaged in sexually explicit conduct, with some videos depicting sadomasochistic conduct.
Pfiester, 44, formerly of Fremont, Calif., was indicted by a federal grand jury on May 9, 2013. He was charged with receiving and possessing child pornography.
The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, United States District Court Judge, in Oakland. In rejecting Pfiester’s request for a lower sentence, Judge Gonzalez Rogers stressed the need to protect the public and noted, among other things, Pfiester’s previous employment as a school teacher. Judge Gonzalez Rogers also sentenced the defendant to a 10-year period of supervised release, during which time, Pfiester will be prohibited from being near any location where children are likely to gather. The defendant has been in custody since his Feb. 6, 2014, guilty plea.
Andrew Huang is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Vanessa Quant. The prosecution is the result of an investigation by HSI.
(Pfiester indictment )
Southern California Man Sentenced to 15 Years for Methamphetamine and Gun CrimesRead the Press Release
OAKLAND – Timathe Richard Soto was sentenced yesterday to 15 years in prison for possession with intent to distribute methamphetamine, possession of a firearm in furtherance of a drug trafficking crime, and being a felon in possession of a firearm and ammunition, announced United States Attorney Melinda Haag and Nick Annan, Acting Special Agent in Charge for U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in San Francisco.
Soto pleaded guilty on May 7, 2014, to violation of 21 U.S.C. § 841(a)(1) and (b)(1)(A)(viii); 18 U.S.C. § 924(c)(1)(A)(i); and 18 U.S.C. § 922(g)(1). According to the plea agreement, Soto admitted that on March 1, 2013, he was pulled over off of I-580 in Oakland, and during a search of the vehicle, California Highway Patrol Officers discovered about three-quarters of a pound of methamphetamine and a Springfield Armory XD 9mm pistol, loaded with 9mm ammunition. Soto had been traveling from Orange County to Ukiah with the intent to distribute the methamphetamine to individuals in Ukiah in exchange for marijuana. Soto possessed the firearm and ammunition in order to protect the drugs and drug proceeds. Soto had previously been convicted of several crimes punishable by imprisonment for a term exceeding one year and was on Post-Release Community Supervision after having been released from state prison in 2012 for assault with a deadly weapon. Soto is a career offender under the federal Sentencing Guidelines, having previously committed more than two controlled substance offenses and crimes of violence.
Soto, age 51, of Orange County, was indicted by a federal grand jury on April 18, 2013.
The sentence was handed down by the Honorable Phyllis J. Hamilton, United States District Court Judge, following a guilty plea to all three counts in the Indictment. Judge Hamilton also sentenced the defendant to a five year period of supervised release. The defendant has been in continuous custody since his arrest.
The prosecution is the result of an investigation by the U.S. Department of Homeland Security, Homeland Security Investigations, and California Highway Patrol.
(Soto indictment )
Former 32 Year FBI Employee and His Wife Plead Guilty to Bank FraudRead the Press Release
SAN FRANCISCO – A former 32 year FBI employee and his wife pleaded guilty in federal court this afternoon to Bank Fraud, United States Attorney Melinda Haag announced.
Charles and Jeannette Espinel (the Espinels) both admitted in their separate plea agreements that, beginning in 2006 and continuing through 2010, the two of them defrauded First California Bank and Wells Fargo Bank in connection with mortgage loans they obtained to purchase a $750,000 rental property in Daly City, Calif. and a $600,000 rental property in San Bruno, Calif. The Espinels admitted that they purchased these rental properties by jointly submitting to banks in June 2006 and April 2007 fraudulent mortgage loan applications in which they knowingly overstated their incomes and falsely claimed that it was their intention to occupy the rental properties as their primary residence. The Espinels also admitted that they subsequently obtained favorable modifications to these loans through fraud, including submitting false Individual Income Tax Returns which they had altered. The Espinels both admitted in their plea agreements that the total loss from their bank fraud was over $83,000.
Charles Espinel in his plea agreement further admitted that from May 1979 until February 2012, he worked as a Support Services Technician in the San Francisco Division of the Federal Bureau of Investigation (FBI). Espinel’s professional responsibilities as a FBI Support Services Technician included records and file management technical support, telecommunications and investigative automation support, office management support, and operations security support. As an FBI employee with Top Secret clearance as well as access to sensitive information, Espinel was required annually to file a security financial disclosure form (SFDF) disclosing certain financial information (including listing all assets and liabilities). Espinel knew that his FBI supervisors and the FBI Security Division/Internal Security Section would review the financial information on his SFDFs to assess whether he had personal financial problems that might threaten his continued suitability for a Top Secret security clearance. Espinel admitted that he knew that lying on his SFDFs about his bank accounts and owned real estate would be significant issues of concern for FBI management. Espinel admitted in his plea agreement that in 2007, 2008, 2009, and 2010, he knowingly submitted to the Security Division/Internal Security Section of the FBI SFDFs in which he made several false statements and material omissions. Espinel admitted that he knowingly failed to disclose on those SFDFs his wife’s income, and failed to disclose the real estate properties he owned or the rental income he was receiving from those properties.
Charles Espinel, 61, and Jeannette Espinel, 58, of Daly City, were charged in a Criminal Information on June 3, 2014, with one count of Bank Fraud, in violation of 18 United States Code Section 1344. The maximum statutory penalty for Bank Fraud is 30 years imprisonment and $1,000,000 fine. The Espinels’ sentencing is scheduled for Nov. 12, 2014, before the Honorable Charles R. Breyer, United States District Court Judge, in San Francisco.
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 United States Department of Justice Office of the Inspector General.
(Espinel information )
21 Year Fugitive Pleads Guilty for Failing to Appear for 1993 Court AppearanceRead the Press Release
SAN FRANCISCO – Francisco R. Legaspi pleaded guilty to failing to appear for his sentencing on Jan. 28, 1993, U.S. Attorney Melinda Haag and IRS-CI Special Agent in Charge José M. Martinez, announced.
According to the plea, Legaspi was indicted on August 19, 1992, on three counts of aiding and assisting in the presentation of false tax returns. He was released from custody with the condition that he appear in court for all hearings. He pleaded guilty on November 5, 1992, to one count of preparing a false tax return. Legaspi’s attorney told him that his sentencing was set for Jan. 28, 1993. On Jan. 27, 1993, IRS employees went to Legaspi’s business to collect unpaid withholding payroll taxes. During the visit an IRS employee and Legaspi discussed the fact that he was scheduled to appear in court the next day for his criminal case. The next day, Jan. 28, 1993, Legaspi intentionally did not appear for sentencing and fled to Mexico and later to Canada to avoid prison time for his tax crime.
Legaspi, 61, of London, Ontario, Canada, formerly of Daly City, was located in Canada in 2012, after the U.S. Department of State’s Bureau of Diplomatic Security researched social media websites and found Legaspi’s Facebook page. The Royal Canadian Mounted Police used the information to apprehend Legaspi. Thereafter, he was extradited from Canada to the United States with the assistance of the U.S. Department of Justice’s Office of International Affairs.
On July 1, 2014, Legaspi made his initial appearance in federal court in San Francisco for failing to appear for his Jan. 28, 1993, sentencing. Legaspi is scheduled to be sentenced on both charges on Oct. 2, 2014, before the Honorable William H. Orrick, United States District Court Judge in San Francisco.
The maximum penalty for aiding and assisting in the filing of false tax returns, in violation of Title 26 U.S.C. § 7206(2), is three years in prison and a fine of $250,000. The maximum penalty for failure to appear, in violation of Title 18 U.S.C. § 3146, is two years in prison and a fine of $250,000.
Assistant U.S. Attorney Thomas Moore is prosecuting the case with the assistance of Edward Solis. The prosecution is the result of an investigation by the IRS, Criminal Investigation with assistance from the Royal Canadian Mounted Police; United States Department of State, Bureau of Diplomatic Security; and United States Department of Justice, Office of International Affairs.
(Legaspi indictment )
Walter Liew Sentenced to Fifteen Years in Prison for Economic EspionageRead the Press Release
SAN FRANCISCO – Yesterday, Walter Lian-Heen Liew (aka Liu Yuanxuan) was sentenced to serve 15 years in prison, forfeit $27.8 million in illegal profits, and pay $511,667.82 in restitution for what the sentencing judge described as a “white collar crime spree” that included violations of the Economic Espionage Act, tax evasion, bankruptcy fraud, and obstruction of justice, announced U.S. Attorney Melinda Haag; John P. Carlin, Assistant Attorney General for National Security at the Department of Justice; David Johnson, Special Agent in Charge of the Federal Bureau of Investigation (FBI), San Francisco Division; and Jose Martinez, Special Agent in Charge of the Oakland Field Office, Internal Revenue Service (IRS), Criminal Investigation.
Liew was convicted on March 6, 2014, after a two month jury trial before the Honorable Jeffery S. White, U.S. District Court Judge, on each of the twenty counts with which he was charged. The jury found that Liew, his company, USA Performance Technology, Inc. (USAPTI), and Robert Maegerle conspired to steal trade secrets from E.I. du Pont de Nemours & Company regarding their chloride-route titanium dioxide production technology and sold those secrets for large sums of money to state-owned companies of the People’s Republic of China (PRC). The purpose of their conspiracy was to help those companies develop large-scale chloride-route titanium dioxide production capabilities in the PRC, including a planned 100,000-ton titanium dioxide factory in Chongqing. This case marks the first federal jury conviction on charges brought under the Economic Espionage Act of 1996.
The jury also found that Liew, USAPTI, and Maegerle obstructed justice during the course of their conspiracy. The jury found that Liew filed false tax returns for USAPTI and Performance Group, a predecessor company to USAPTI, and made false statements and oaths in bankruptcy proceedings for Performance Group.
Liew, 56, of Walnut Creek, Calif., originally was indicted in August 2011 and the grand jury subsequently returned two superseding indictments. Liew was convicted of conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, attempted economic espionage, attempted theft of trade secrets, possession of trade secrets, conveying trade secrets, conspiracy to obstruct justice, witness tampering, conspiracy to tamper with evidence, false statements, filing false tax returns, false statements in bankruptcy proceedings, and false oath in bankruptcy proceedings. Liew was an owner and president of USAPTI, a company headquartered in Oakland, Calif., that offered consulting services. USAPTI was found guilty of conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, attempted economic espionage, attempted theft of trade secrets, possession of trade secrets, conveying trade secrets, and conspiracy to obstruct justice.
Evidence at trial showed that in the early 1990s, Liew met with the government of the PRC and was informed that the PRC had prioritized the development of chloride-route titanium dioxide (TiO2) technology. TiO2 is a commercially valuable white pigment with numerous uses, including coloring paint, plastics, and paper. DuPont’s TiO2 chloride-route process also produces titanium tetrachloride, a material with military and aerospace uses. Liew was aware that DuPont had developed industry leading TiO2 technology over many years of research and development and assembled a team of former DuPont employees, including Robert Maegerle, to assist him in his efforts to convey DuPont's TiO2 technology to entities in the PRC. Liew executed contracts with state-owned entities of the PRC for chloride-route TiO2 projects that relied on the transfer of illegally obtained DuPont technology. Liew, Maegerle, and USAPTI obtained and sold DuPont’s TiO2 trade secrets to the Pangang Group companies for more than $20 million.
The jury found Liew, Maegerle, and USAPTI guilty of obstructing justice by causing an answer to be filed in a federal civil lawsuit in which they falsely claimed that no information from DuPont’s Kuan Yin plant was used in the USAPTI designs for the development of TiO2 manufacturing facilities. Liew was also found guilty of witness tampering for his efforts to influence a co-defendant’s testimony in the civil lawsuit. The jury also convicted Liew of conspiring with his wife, Christina Liew, to mislead the FBI by corruptly concealing records, documents, and other objects during the FBI’s investigation into their criminal activity.
Liew was also convicted of filing a false income tax return for his company, Performance Group, for calendar years 2006, 2007, and 2008 and for USAPTI in 2009 and 2010. The jury also found Liew guilty of making false statements and a false oath in connection with filing for bankruptcy for Performance Group in 2009.
Liew, as co-owner of USAPTI, entered into contracts worth nearly $28 million to convey TiO2 trade secret technology to Pangang Group companies. The Liews received millions of dollars of proceeds from these contracts. The proceeds were wired through the United States, Singapore, and ultimately back into several bank accounts in the PRC in the names of relatives of Christina Liew.
The sentence was handed down by the Honorable Jeffrey S. White, U.S. District Court Judge. The Court stated during the sentencing hearing that the 15 year sentence was intended, in part, to send a message that the theft and sale of trade secrets for the benefit of a foreign government is a serious crime that threatens our national economic security. In addition to the prison term, the Court ordered Liew to forfeit $27.8 million, and to pay $511,667.82 in restitution to DuPont and victims of his bankruptcy fraud and a $2,000 special assessment ($100 for each of the twenty counts of conviction).
The case was prosecuted by attorneys from the Special Prosecution Unit of the U.S. Attorney’s and the U.S. Department of Justice National Security Division. The FBI and the IRS Criminal Investigation Division were responsible for the investigation.
(Liew second superseding indictment )
Japanese Citizen Sentenced to More Than Four Years Imprisonment for Bank Fraud SchemeRead the Press Release
OAKLAND – Yasuhiro Watanabe was sentenced today to fifty-one months in prison, and ordered to pay $556,744.40 in restitution for conspiracy to commit bank fraud, announced U.S. Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Watanabe pleaded guilty on March 21, 2014, to conspiracy to commit bank fraud. According to the plea agreement, Watanabe admitted that, between 2009 and early September 2013, he engaged in a scheme to defraud Compass Bank and Bank of America. The scheme involved multiple participants, and victimized bank branches in the Northern District of California, Nevada, and Arizona, among other places. Approximately once a month, Watanabe recruited individuals in Japan to travel with him to the United States for the purpose of opening bank accounts at Compass Bank and Bank of America. Once the accounts were opened, Watanabe funded the accounts by causing a $1,000 - $2,000 wire transfer to be made from bank accounts in Japan, to the newly-opened accounts held in the names of Watanabe’s coconspirators. Watanabe typically paid his coconspirators’ travel costs, and a fee of approximately $1,000, for their role in the scheme. Watanabe directed his coconspirators to obtain debit cards for the accounts and give them to Watanabe. He then used the cards in Japan to purchase goods valued in amounts in excess of the funds on deposit. Watanabe then sold those goods for cash. Watanabe’s fraud scheme caused combined losses to Compass Bank and Bank of America of $556,744.40.
Watanabe, 39, of Japan, was initially charged by complaint on Oct. 25, 2013. On Feb. 11, 2014, he was charged by Information with one count of conspiracy to commit bank fraud in violation of 18 United States Code, Section 1349. Under the plea agreement, Watanabe pleaded guilty to that sole count.
Watanabe has been in federal custody since his arrest at Seattle – Tacoma International Airport on Oct. 27, 2013.
The sentence was handed down by the Honorable Jon S. Tigar, United States District Court Judge, following the defendant’s guilty plea on one count in violation of 18 United States Code Section 1349. Judge Tigar also sentenced the defendant to a three year period of supervised release, in the event that Watanabe is not deported following his release from incarceration. The defendant will begin serving the sentence immediately.
Thomas E. Stevens is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kathleen Turner. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
(Watanabe information )
Former CalPERS CEO Pleads Guilty to Corruption ConspiracyRead the Press Release
SAN FRANCISCO – Fred Buenrostro pleaded guilty today to conspiracy to commit corruption and fraud charges stemming from a conspiracy to trade official acts for cash and benefits, announced U.S. Attorney Melinda Haag, U.S. Postal Inspection Service, Inspector in Charge Rafael E. Nunez, FBI Special Agent in Charge David J. Johnson, and U.S. Secret Service Special Agent in Charge Andrew Adelmann.
Buenrostro is the former Chief Executive Officer (CEO) of the California Public Employee Retirement System (CalPERS). In pleading guilty, Buenrostro admitted to conspiring with Alfred J. Villalobos, founder and operator of ARVCO Capital Research LLC (ARVCO). Buenrostro acknowledged in court today that he understood that Villalobos operated ARVCO as a placement agent that solicited investments by public pension funds into private equity funds. Buenrostro also admitted that he understood that ARVCO was typically paid an agreed-upon fee based on the percentage of the total dollar amount invested by the public pension fund.
In pleading guilty, Buenrostro admitted that he began receiving secret benefits from Villalobos no later than 2005 for the purpose of influencing him in the exercise of his powers and duties as CalPERS CEO. Buenrostro admitted Villalobos provided him approximately $250,000, as well as gifts, domestic and international travel, meals, entertainment, payment for Buenrostro’s wedding, and his subsequent employment at ARVCO after he left CalPERS in May of 2008. In exchange, Buenrostro admitted that he attempted to influence the CalPERS investment staff and Board to the benefit of Villalobos and his current and prospective clients, and provided Villalobos with access to CalPERS’ confidential information relating to investments, internal deliberations, and other proprietary matters.
As part of the conspiracy, Buenrostro admitted that he and Villalobos created fraudulent documents in order to secure fees for ARVCO from Apollo Global Management (Apollo), a private equity firm based in New York City. Villalobos, through ARVCO, was the placement agent through which Apollo secured $3 billion in investments by CalPERS. In 2007, Apollo informed ARVCO that it required signed Investor Disclosure letters from CalPERS prior to paying ARVCO any fees for its efforts in securing CalPERS' investments into Apollo-managed funds, citing, among other reasons, Apollo's obligations under the securities laws.
Buenrostro admitted that after CalPERS' legal and investment offices declined to sign the first Investor Disclosure letter documenting ARVCO's relationship with Apollo, Villalobos and Buenrostro conspired to create a series of fraudulent Investor Disclosure letters that were transmitted to Apollo. Apollo paid ARVCO a total of approximately $14 million dollars in fees after receiving the fraudulent letters.
When civil and later criminal investigations were opened into the operations of ARVCO and its role as a placement agent in connection with CalPERS' investments in Apollo-managed funds, Buenrostro admitted that he and Villalobos agreed on a false version of facts and subsequently made misrepresentations to, and concealed information from, the SEC, the USPIS, and the FBI, about their financial relationship and the authenticity of the Investor Disclosure letters in order to defeat and obstruct the lawful functions of those federal agencies.
Buenrostro was charged by superseding information with a single count of conspiracy, in violation of Title 18, United States Code, Section 371, and pleaded guilty before the Honorable Charles Breyer, United States District Court Judge, to that charge in an agreement with the government that included his promise to cooperate in future investigations. Villalobos is charged in a related Indictment, also before Judge Breyer, and previously entered a plea of not guilty to all charges. Both defendants are currently released on bond.
Buenrostro is scheduled for sentencing on Jan. 7, 2015, at 10:00 a.m., before Judge Breyer. The maximum statutory penalty for conspiracy to commit offenses against the United States is five years of imprisonment, $250,000 fine or twice the amount of gain or loss, whichever is greater, three years of supervised release, and a $100 special assessment. Restitution may also be ordered. However, any sentence following conviction will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The court set a status hearing for Villalobos to take place on Friday, Aug. 8, 2014 at 9:00 a.m., before Judge Breyer in San Francisco.
Timothy J. Lucey and Philip A. Guentert are the Assistant United States Attorneys who are prosecuting the case with the assistance of Laurie Worthen and Beth Margen. The prosecution is the result of an investigation by the USPIS and the FBI, with substantial assistance from the Los Angeles Regional Office of the SEC as well as the U.S. Secret Service.
Please note, an Indictment contains only allegations and, as with all defendants, Alfred J. Villalobos must be presumed innocent unless and until proven guilty.
(Buenrostro superseding indictment )
(Buenrostro plea agreement )
Two East Bay Residents Indicted for $3 Million Investment FraudRead the Press Release
SAN FRANCISCO – A federal Indictment charging Jason George Rivera, Jr. and Marc Christopher Harmon with eight counts of conspiracy and wire fraud, was unsealed yesterday in federal court, announced U.S. Attorney Melinda Haag, FBI Special Agent in Charge David J. Johnson and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez. Rivera was also charged with two counts of tax evasion.
Rivera, 35, and Harmon, 41, were indicted by a federal grand jury on July 3, 2014. According to the Indictment, Rivera and Harmon offered investors the opportunity to invest in an entity known as Executive Members Management Group (“EMMG”). Through EMMG, Rivera and Harmon allegedly promised investors that their money would be used to fund efforts to purchase or trade collateralized mortgage obligations (“CMOs”), fund short-term loans to banks, or invest in other ways. Rivera also allegedly solicited loans from an investor, promising as collateral for the loans vehicles he either did not own or that he owned but then sold, and fraudulently obtained control of a CMO from other investors. The Indictment alleges that, based upon these and other representations, investors and lenders directed over $3 million to the EMMG bank account. However, Rivera and Harmon did not make the investments that they had promised, and instead diverted the majority of this money for use on personal expenses and on paying back prior investors. The Indictment further alleges that, in the tax years 2008 and 2009, Rivera evaded paying income taxes on the investor money he used for personal expenses.
Rivera and Harmon were arrested and made their initial appearances in federal court yesterday in San Francisco. Bail was set at $150,000 and both defendants were released. Rivera and Harmon’s next court appearance is in San Francisco on July 11, 2014, at 9:30 a.m., before the Honorable Maria-Elena James, United States Magistrate Court Judge, for appointment of counsel.
The maximum statutory penalty for each count of wire fraud and conspiracy, in violation of Title 18, United States Code, Sections 1343 and 1349, respectively, is 20 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss from the offense, plus restitution. The statutory penalty for each count of tax evasion, in violation of Title 26, United States Code, Section 7201, is five years’ imprisonment and a fine of $250,000 or twice the gross gain or loss from the offense. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Benjamin Kingsley is the Assistant U.S. Attorney who is prosecuting the case, with the assistance of Bridget Kilkenny. The prosecution is the result of a joint investigation by the FBI, the IRS – Criminal Investigation and the Securities and Exchange Commission.
Please note, an Indictment contains only allegations and, as with all defendants, Jason George Rivera, Jr. and Marc Christopher Harmon, must be presumed innocent unless and until proven guilty.
(Rivera and Harmon indictment )
Owner of Castro Valley Pizzeria Charged with Tax FraudRead the Press Release
OAKLAND – Frank Eugene Gemignani, III, was charged by a grand jury on June 19, 2014, with 11 counts of failure to pay employment taxes and one count of filing a false tax return, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the Indictment, from about 1991 through 2012, Gemignani operated Pyzano’s Pizzeria in Castro Valley. As the sole proprietor, Gemignani exercised control over every aspect of Pyzano’s business affairs, including approving payments by the company and controlling its bank accounts. Gemignani was also responsible for collecting, accounting for, and paying to the IRS, payroll taxes withheld from his employees’ paychecks.
According to the Indictment, from April 1, 2008 through Dec. 31, 2010 Gemignani deducted and collected approximately $185,249 in federal income taxes and Federal Insurance Contributions Act taxes (FICA) from Pyzano’s employees’ wages, but failed to pay these taxes to the IRS. Gemignani is also charged with filing a false U.S. Individual Income tax return for 2007.
Gemignani made his initial appearance before the Honorable Donna M. Ryu, United States Magistrate Court Judge, on July 8, 2014, and his Indictment was unsealed at that time.
An Indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. The maximum penalty for each count of failure to pay over employment taxes, in violation of Title 26, U.S.C § 7202, is five years in prison, and a fine of $250,000. The maximum penalty for filing a false tax return, in violation of Title 26, U.S.C § 7206(1), is three years in prison, and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant 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.
(Gemignani indictment )
Chief Executive Officer of Monterey Investment Company Sentenced to Nine Years in Prison for FraudRead the Press Release
SAN JOSE – Barbra Alexander was sentenced today to nine years in prison and ordered to pay $6,306,770.96 in restitution following a trial in which she was convicted for her role in an investment fraud, announced U.S. Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Alexander was convicted by a jury after a three week trial, on Feb. 26, 2014. She was found guilty for conspiracy to commit mail and wire fraud, mail fraud, wire fraud, and securities fraud. During the trial, evidence showed that Alexander recruited investors into her company, APS Funding, Inc. Alexander promised to invest their money in short-term, high-interest loans, also known as “hard money lending,” for business and real estate development purposes. Instead of investing their money as promised, Alexander used investors’ money to fund her pet projects, such as her syndicated radio show, Moneydots, and to line her own pockets, including paying for her home remodel. In total, during the course of the fraud between 2006 and 2009, Alexander received over $7 million from investors.
Alexander, 66, of Monterey, Calif., along with her two partners at APS Funding, Inc., Michael Swanson, 62, of Seaside, Calif., and Beth Pina, 47, of Fairfield, Idaho, were indicted by a federal grand jury on Oct. 7, 2010. Swanson was convicted after a three week trial on Sept. 3, 2010, for conspiracy to commit mail and wire fraud, mail fraud, wire fraud, and securities fraud by a jury. On May 14, 2014, Swanson was sentenced to 37 months imprisonment, $2,838,100.36 in restitution, a $2,800 Special Assessment, and 3 years of supervised release. Swanson surrendered for service of his sentence on June 27, 2014. Pina pleaded guilty on Dec. 17, 2012 to conspiracy to commit mail and wire fraud. On May 14, 2014, Pina was sentenced to 3 years of Probation, including 12 months of electronic monitoring, and 200 hours of community service. Pina was also ordered to pay a $100 Special Assessment, and restitution in the amount of $625,287.40.
These sentences were handed down by the Honorable Lucy H. Koh, United States District Court Judge, in San Jose. Alexander will begin serving her sentence on Aug. 22, 2014.
Jeff Schenk, Amber Rosen, and Dan Kaleba are the Assistant U.S. Attorneys who prosecuted these cases with the assistance of Nina Burney. The prosecution is the result of an investigation by the Federal Bureau of Investigation, Securities and Exchange Commission, and the Monterey County District Attorney’s Office.
(Alexander indictment )
Lookout in Armed Bank Robbery Sentenced to More Than 7 Years in PrisonRead the Press Release
OAKLAND – Kevin Tyrone Buford was sentenced today to 90 months in prison for planning and participating in the March 1, 2013 takeover style armed bank robbery of the Mechanics Bank on Pinole Valley Road, in Pinole, Calif., announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Buford pleaded guilty on Jan. 22, 2014, without entering into a plea agreement with the government. During the plea hearing, Buford admitted that on March 1, 2013, he served as the lookout during the robbery, communicating by cell phone with the gunman, Gary Casdell Fite II, and the getaway driver, Regina Dean, who stole more than $3,000 from the bank. Buford also admitted that he cased the bank on Feb. 26, 2013, three days before the robbery.
Buford, 27, of Vallejo, Calif., was indicted by a federal grand jury on Aug. 29, 2013, for aiding and abetting armed bank robbery, in violation of 18 U.S.C. § 2113(a) and (d). Buford was not arrested immediately following the robbery. He was identified and charged after additional investigation by the FBI, including a tip by alert bank employees who remembered a man entering the bank and behaving suspiciously just days before the robbery. The FBI obtained Buford’s cell phone records, which placed him within the vicinity of the bank during the robbery and casing, and revealed frequent communications between the three-person robbery crew leading up to the bank robbery. Buford’s casing of the bank was also captured by video surveillance.
The sentence was handed down by the Honorable Phyllis J. Hamilton, United States District Court Judge. Judge Hamilton also sentenced Buford to a 5-year period of supervised release. Gunman Fite was sentenced to 10 years in prison on Sept. 4, 2013. Getaway driver Dean was sentenced to 5 years in prison on Aug. 21, 2013.
Brian C. Lewis is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Janice Pagsanjan. The prosecution is the result of an investigation by the FBI.
(Buford indictment )
Boston Man Charged in Twitter HackRead the Press Release
SAN JOSE – Cameron Lacroix was charged today in San Jose with hacking Zendesk, a San Francisco company that provides helpdesk support to numerous companies, including Twitter, announced U.S. Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
According to the criminal information, Lacroix, 25, of New Bedford, Mass., hacked into Zendesk’s website in February 2013 and disabled a security feature designed to limit who can view information pertaining to Zendesk’s customers. The information charges that Lacroix exported approximately one million Twitter support tickets to computers outside of Zendesk’s network and that he used that information to compromise and deface the Twitter feeds for two companies. The information further alleges that Zendesk and Twitter incurred combined losses of over $200,000 responding to the attacks.
Lacroix is expected to make his first appearance on Aug. 8, 2014, in the District of Massachusetts, where he is also facing federal charges in No. 14-CR-10162-MLW. Lacroix is out of custody in the Boston case, having been released on a $50,000 personal recognizance bond.
An information merely alleges that crimes have been committed; all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of the offense charged in the information, a violation of 18 U.S.C. §§ 1030(a)(5)(A) and (c)(4)(B), the defendant would face a maximum sentence of 10 years, and a fine of $250,000, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
David R. Callaway is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Elise Etter and Lakisha Holliman. The prosecution is the result of an investigation by the FBI.
(Lacroix information )
21 Year Fugitive Former Daly City Resident Found Through Facebook Makes Court AppearanceRead the Press Release
SAN FRANCISCO – Francisco R. Legaspi made his initial appearance in federal court yesterday morning for failing to appear for his sentencing on Jan. 28, 1993, U.S. Attorney Melinda Haag and IRS-CI Special Agent in Charge José M. Martinez, announced.
According to court documents, Legaspi, 61, of London, Ontario, Canada, formerly of Daly City, was indicted on Aug. 19, 1992 on three counts of aiding and filing false quarterly employment tax returns for Mission Childcare Consortium in violation of 26 U.S.C.§ 7206(2). He pleaded guilty on Nov. 9, 1992 to one count of the Indictment. Legaspi was scheduled to be sentenced on Jan. 28, 1993, but failed to appear in court. A bench warrant was issued for his arrest for his failure to appear. On Feb. 24, 1993, an Indictment was returned against him charging him with failure to appear in violation of 18 U.S.C. § 3146.
Legaspi was located in Canada in 2012, after the Bureau of Diplomatic Security researched social media websites and found Legaspi’s Facebook page. The Royal Canadian Mounted Police used the information to apprehend Legaspi. Thereafter, he was extradited from Canada to the United States with the assistance of the U.S. Justice Department’s Office of International Affairs.
On July 1, 2014, Legaspi entered a not guilty plea to the Indictment charging him with failure to appear. Legaspi’s next court appearance is scheduled for July 8, 2014, before the Honorable Richard Seeborg, United States District Court Judge in San Francisco.
The maximum penalty for aiding and assisting in the filing of false tax returns, in violation of Title 26 U.S.C. § 7206(2), is three years in prison and a fine of $250,000. The maximum penalty for failure to appear, in violation of Title 18 U.S.C. § 3146, is two years in prison and a fine of $250,000.
Assistant U.S. Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the IRS, Criminal Investigation with assistance from the Bureau of Diplomatic Security and the Royal Canadian Mounted Police and United States Department of Justice, Office of International Affairs.
(Legaspi indictment 92-0394 )
(Legaspi indictment 93-0096 )
Former Millbrae Resident Sentenced to 18 Months in PrisonRead the Press Release
SAN FRANCISCO – Angelo Degenhardt was sentenced yesterday to 18 months in prison and ordered to pay $55,600 in restitution for posting fraudulent auctions for automobiles on eBay, announced United States Attorney Melinda Haag and U.S. Secret Service Special Agent in Charge Andrew Adelmann.
Degenhardt pleaded guilty to an Indictment charging him with 12 counts of wire fraud. According to the plea agreement, Degenhardt admitted to taking control of an eBay account in September 2012 that had previously been used by his wife. He thereafter posted auctions on eBay for various vehicles, including for two Hummers and a Ferrari. Three eBay users submitted winning bids for those automobiles and sent payment to Degenhardt at a PayPal account that he controlled, as well as to his Citibank account. Degenhardt thereafter immediately removed the funds from his PayPal account by transferring them to another Citibank account he controlled, to his wife and children, and to his landlord for payment of rent. Once the buyers realized that the auctions had been fraudulent, they complained to eBay and/or its subsidiary PayPal, which refunded their payments in the total amount of $55,600.
Degenhardt, 57, formerly of Millbrae, was indicted by a federal grand jury on Oct. 15, 2013. He was charged with 12 counts of wire fraud. Degenhardt is currently serving a two-year sentence imposed by the U.S. District Court in the District of Utah for a violation of his supervised release in a case pending there. The 18-month sentence, imposed today, will be served consecutively to the sentence Degenhardt received in Utah.
The sentence was handed down by the Honorable Thelton E. Henderson, United States District Court Judge in San Francisco, following a guilty plea on 12 counts of wire fraud, in violation of 18 U.S.C. § 1343. Judge Henderson also sentenced the defendant to a three-year period of supervised release and ordered him to pay restitution to PayPal in the amount of $55,600.
Kyle F. Waldinger is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rawaty Yim. The prosecution is the result of an investigation by the U.S. Secret Service.
(Degenhardt indictment )
Petaluma Couple Indicted for Conspiracy to Defraud the United StatesRead the Press Release
SAN FRANCISCO – Yesterday, a federal grand jury indicted Lara A. Karakasevic, AKA Lara Castle, and James C. Castle, AKA Chis Castle, with Conspiracy to Defraud the United States, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the Indictment, Karakasevic, 44, and her spouse, Castle, 49, both individually and doing business as TTF Consulting, LLC, are alleged to have prepared six false and fraudulent Forms 1099-OID that were used to file five false and fraudulent tax returns seeking refunds ranging from $83,948 to $537,884. Karakasevic was also indicted for filing a false 2005 Amended U.S. Individual Income Tax Return.
An Indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of five years prison time, 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.
Cynthia Stier is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Ed Solis and IRS Special Agent James Quinn. The prosecution is the result of a four year investigation by the IRS.
(Karakasevic indictment )
California Operators of MYREDBOOK.COM Website Arrested for Facilitating Prostitution and Money LaunderingRead the Press Release
SAN FRANCISCO – Eric Omuro, of Mountain View, Calif., also known as “Red,” was arrested today following his Indictment by a federal grand jury on charges involving the use of the mail and the Internet to facilitate prostitution, and multiple counts of money laundering. Annemarie Lanoce, 40, of Rocklin, Calif., was also indicted and arrested today for use of the mail and the Internet to facilitate prostitution, announced 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 Field Office, and Special Agent in Charge José M. Martinez of the San Francisco Office of the Internal Revenue Service, Criminal Investigation.
As part of today’s operation, the FBI seized the domain names sfredbook.com and myredbook.com, which were allegedly operated by Omuro, with Lanoce’s assistance, to facilitate prostitution in the San Francisco Bay Area and throughout the West Coast region of the United States.
According to information available on the publically accessible website as of the date of its seizure by the FBI, myredbook.com purported to provide “Escort, Massage, and Strip Club Reviews.” Instead, however, the website hosted advertisements for prostitutes, complete with explicit photos, lewd physical descriptions, menus of sexual services, hourly and nightly rates, and customer reviews of the prostitutes’ services. The website used acronyms for numerous sex acts, which were defined in graphic detail in the website’s “Terms and Acronyms” section. Although the website could be accessed for free, myredbook.com advertised fees for premier placement of prostitution advertisements and for “VIP Memberships,” which purportedly allowed customers access to “private forums” and heightened capabilities to search reviews of the prostitution services.
Omuro, 53, who allegedly used numerous aliases, also engaged in money transfers to move myredbook.com revenue into bank accounts which he controlled. According to the Indictment, Omuro engaged in more than twenty monetary transactions to launder the profits derived from the facilitation of prostitution. The Indictment seeks the forfeiture of more than $5 million in property and money derived from the facilitation of prostitution, as well as the Internet domain names myredbook.com and sfredbook.com.
The charges in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
This case was investigated by the FBI’s San Francisco Field Office, the IRS, and the Oakland Police Department. The case is being prosecuted by Assistant United States Attorneys Elise Becker and Patricia Kenney of the Northern District of California, and Trial Attorney Keith Becker of the Criminal Division’s Child Exploitation and Obscenity Section. The Criminal Division’s Office of International Affairs provided assistance to the prosecution.(Omuro indictment )
Pittsburg Resident Charged in Tax Fraud SchemeRead the Press Release
OAKLAND – Charles S. Moore, was charged with 17 counts of aiding and assisting in the preparation and filing of false tax returns, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the Indictment filed on Jan. 14, 2014, and unsealed today, between Feb. 5, 2011 and May 1, 2011, Moore willfully prepared and presented to the IRS, 17 tax returns, Forms 1040 EZ, for various taxpayers for the tax years 2007, 2008, 2009 and 2010. The tax returns were false and fraudulent with respect to the wages reported on each of the tax returns.
Moore, of Pittsburg, was arrested yesterday and made his initial appearance this morning before the Honorable Kandis A. Westmore, United States Magistrate Court Judge. Moore’s next court appearance is on July 18, 2014, at 9:30 a.m., before the Honorable Jon S. Tigar, District Court Judge in Oakland.
The maximum penalty for aiding and assisting in the preparation of false tax returns, in violation of Title 26, U.S.C § 7206(2) is three years in prison and a fine of $250,000.
Assistant U.S. Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the IRS, Criminal Investigation.
(Moore indictment )
Two San Jose Residents and A Miami Woman Indicted for Defrauding Blue Shield of CaliforniaRead the Press Release
SAN JOSE – A federal grand jury indicted Skylar Ariel Phoenix a/k/a “Karin Marie West,” Lissa Michele Phoenix a/k/a “Lisa Beckwith,” and Dana Ann Wilkey yesterday with conspiracy to commit wire fraud, wire fraud and aiding and abetting, and false statements to government agents, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David Johnson.
According to the Indictment, Skylar Phoenix, 50, of San Jose, was employed by Blue Shield of Calif. as the manager in the marketing department from approximately June 2003 through September 2011. Lissa Phoenix, 51, of San Jose, is Skylar Phoenix’s registered domestic partner. Dana Wilkey, 41, of Miami, Fla., was the president of Adwil Agency, Inc. with its principle place of business in Beverly Hills, Calif. Adwil Agency served as a vendor for Blue Shield.
In the first scheme alleged in the Indictment, defendants Skylar Phoenix and Lissa Phoenix are alleged to have engaged in an illegal scheme to defraud Blue Shield by creating false employee records and time cards for work allegedly performed by Lissa Phoenix, when in truth no such work was performed. In order to perpetrate this scheme, these defendants presented Lissa Phoenix as “Lisa Beckwith, d/b/a Adwil Communication,” with an address corresponding to the home address of one of Lissa Phoenix’s close family members. Furthermore, the defendants made false “production invoices” from Adwil Communications, to the attention of Skylar Phoenix at Blue Shield, which purported to document and describe actual work being done by Adwil Communications for the benefit of Blue Shield and requesting payment to “L.M. Beckwith.” Skylar Phoenix, in her capacity as manager of the Blue Shield Marketing Department authorized the payment to “L.M. Beckwith,” when in fact no legitimate work was provided to Blue Shield by Lissa Phoenix as described on these invoices. Between September 2004 and March 2011, Skylar Phoenix approved payments to Lissa Phoenix under this scheme of nearly $500,000 for work which was never provided to Blue Shield.
In the second scheme alleged in the Indictment, Dana Wilkey, with the participation and assistance of Skylar Phoenix, entered into a fraudulent marketing contract between Blue Shield and Adwil Agency, Inc., which included the regular payment of undisclosed kickbacks from Wilkey to Skylar Phoenix, Lissa Phoenix, and Rodeo Pink, a shell corporation held by and for the benefit of Skylar Phoenix. Between in or about February 2006 through at least February 2012, Dana Wilkey, through Adwil Agency accounts, paid directly to Lissa Phoenix, Skylar Phoenix, and Rodeo Pink, approximately 87 checks totaling approximately $360,000 in illegal and undisclosed kickbacks related to Adwil Agency’s business with Blue Shield.
Skylar Phoenix and Lissa Phoenix are also charged with lying to the FBI about these described activities in September 2013.
Skylar Phoenix and Lissa Phoenix were arrested this morning at their home in San Jose and made their initial appearance in federal court in San Jose this afternoon. Dana Wilkey was arrested by the FBI in Miami, Fla. and made her initial appearance in federal court in Miami earlier in the day. All three defendants were released on bond set in the amount of $250,000 each. Skylar Phoenix and Lissa Phoenix are next scheduled appearance on June 24, 2014, at 1:30 p.m. for a further bond hearing before the Honorable Howard R. Lloyd, United States Magistrate Court Judge in San Jose.
An Indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of the wire fraud and conspiracy counts, the defendants face a maximum sentence of 20 years imprisonment on each count, and a fine of $250,000 or twice the gross gain or loss, whichever is greater, plus restitution to the victim if appropriate, and supervised release of up to 5 years for each violation of 18 U.S.C. § 1349, Conspiracy to Commit Wire Fraud, and 18 U.S.C. 1343, Wire Fraud. In addition, Skylar Phoenix and Lissa Phoenix are also charged with making false statements to government agents. If convicted of those counts, each face a maximum sentence of 5 years imprisonment on each count, a fine of $250,000, and supervised release of up to 3 years for each violation of 18 U.S.C. § 1001, False Statement to a Government Agent. 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.
Amie D. Rooney is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Tracey Andersen. The prosecution is the result of an investigation by the FBI.
(Phoenix indictment )
Three Defendants Sentenced to Prison in $3.2M Medicare Fraud SchemeRead the Press Release
SAN FRANCISCO – Patrick Adebowale Sogbein, his wife, Adebola Adefunke Adebimpe, and Eduardo Abad were sentenced yesterday to prison terms of 144 months, 51 months, and 12 months and 1 day, respectively, for conspiracy to commit health care fraud and health care fraud, announced United States Attorney Melinda Haag; David Johnson, Special Agent in Charge of the FBI in San Francisco; and Glenn R. Ferry, the Special Agent in Charge for the Los Angeles Regional Office of Inspector General of the Department of Health and Human Services.
The sentences for Sogbein and Abad also included their convictions for conspiracy to pay and receive kickbacks involving the Medicare program.
Evidence at trial showed that, beginning in approximately December 2006, Sogbein, the owner of Debs Medical Distributors, a Van Nuys, Calif., durable medical equipment company, worked with Edna Calaustro, a San Francisco physician, and street level recruiters, including Abad and Mele Saavedra, to locate Medicare beneficiaries and write bogus prescriptions for expensive power wheelchairs for the beneficiaries. In 2008, after Sogbein had increasing difficulties with Medicare scrutinizing the claims that he submitted, Sogbein and his wife, Adebimpe, began submitting claims through a separate company in Adebimpe’s name, Dignity Medical Supply, a Santa Clarita, Calif., durable medical equipment company. The evidence showed that Sogbein and Edna Calaustro worked with Abad, Saavedra, and others to identify Medicare beneficiaries. Abad and Saavedra recruited beneficiaries at locations in the Tenderloin and South of Market neighborhoods in San Francisco, including a fast food restaurant at the Powell Street cable car turnaround and a Tenderloin neighborhood senior center. After identifying beneficiaries, Calaustro, with Abad or Saavedra, went to the beneficiaries’ homes with a portable copy machine, copied their Medicare cards, and conducted sham examinations to obtain background information for the required Medicare paperwork. Calaustro gave the fraudulent paperwork and bogus prescriptions to Sogbein and Adebimpe. Sogbein and Adebimpe, in turn, created additional fraudulent paperwork in the names of their respective companies and submitted the claims to Medicare. Sogbein paid Calaustro a $100 kickback for each power wheelchair prescription. Sogbein paid Abad and Saavedra $100 and $50 kickback, respectively, for each beneficiary they identified. This scheme continued through July 2011.
From December 2006 through July 2011, Sogbein and Adebimpe were paid more than $1.6 million for over 400 fraudulent power wheelchair claims submitted to Medicare using the bogus prescriptions written by Calaustro, for beneficiaries identified by Saavedra and Abad.
Prior to trial, co-defendants Edna Calaustro and Mele Saavedra, both of San Francisco, pleaded guilty to conspiracy to commit health care fraud, conspiracy to receive kickbacks involving the Medicare program, and health care fraud. Calaustro and Saavedra are scheduled to be sentenced on Aug. 26, 2014.
Sogbein, 61, Adebimpe, 47, both of Santa Clarita, Calif., Abad, 68, Calaustro, 71, and Saavedra, 49, of San Francisco, Calif., were indicted by a federal grand jury on Jan. 26, 2012, for conspiracy to commit health care fraud, in violation of 18 U.S.C. § 1349 and health care fraud, in violation of 18 U.S.C. § 1343. On Sept. 19, 2013, a grand jury returned a superseding indictment adding charges against Sogbein, Calaustro, Abad, and Saavedra for conspiracy to pay and receive kickbacks involving the Medicare program, in violation of 18 U.S.C. § 371. Sogbein was remanded into custody following his conviction at trial. Adebimpe, Abad, Calaustro, and Saavedra remain out of custody.
The sentences were handed down today by the Honorable Jeffrey S. White, United States District Court Judge, following their convictions at trial. Judge White also sentenced the defendants to three-year terms of supervised release and ordered payment of restitution and forfeiture. Sogbein and Adebimpe were ordered to pay restitution of $1,577,426 and $1,019,937, respectively, to Medicare and were also ordered to forfeit $1,577,426 and $1,019,937, respectively, to the United States. Abad was ordered to pay restitution of $100,000 to Medicare and was ordered to forfeit the same amount. Defendants Adebimpe and Abad were ordered to begin serving their prison sentences on Aug. 19, 2014.
Denise Marie Barton and Randy Luskey are the Assistant U.S. Attorneys who are prosecuting the case with the help of Assistant U.S. Attorney David Countryman, Beth Margen, and Bridget Kilkenny. The prosecution is the result of an investigation by the FBI in San Francisco and DHHS OIG in Los Angeles.
(Sogbein superseding indictment )
San Francisco Tax Attorney Sentenced to Prison for Failing to Report IncomeRead the Press Release
SAN FRANCISCO – James P. Kleier was sentenced today to serve 12-months in custody for his failure to file tax returns for 2008-2010, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to his plea agreement, Kleier, a practicing tax attorney and partner at Preston, Gates, & Ellis, LLP, from 1999 through 2005, and associate at Reed Smith, LLP, from 2005 through 2010, failed to report any income he earned from 1999 through 2010. According to court documents, for 2008, 2009, and 2010 Kleier earned $624,923, $476,088, and $200,734, respectively. He was ordered to pay past-due taxes to the government in the total amount of $650,993 for 2003, 2008, 2009, and 2010.
“Our tax system is vital to this country and our communities. The defendant, a tax attorney, knew that he was required to file tax returns and pay taxes. This office will continue to work with the IRS to ensure that each person pays his or her fair share,” stated U.S. Attorney Melinda Haag.
Special Agent-in-Charge José M. Martinez said, “The prosecution of individuals who brazenly attempt to avoid their tax filing and payment obligations and prevent the IRS from performing its mission is necessary to maintaining public confidence in our tax system.”
Kleier, of San Francisco, 58, was charged on May 1, 2013, with three counts of failure to file income tax returns. He admitted to failing to file tax returns for several years and pleaded guilty to one count. The sentence was imposed by the Honorable Laurel Beeler, United States Magistrate Court Judge, in San Francisco. Kleier was ordered to self-surrender in September 2014 to start serving his sentence.
Assistant U.S. Attorney Thomas Newman is prosecuting this case. The prosecution is the result of an investigation by the IRS, Criminal Investigation.
(Kleier information )
San Francisco Resident Indicted for Possession of an Improvised Explosive DeviceRead the Press Release
SAN FRANCISCO – A federal grand jury in San Francisco indicted Ryan Kelly Chamberlain II yesterday with possession of an unregistered destructive device, and possession of a firearm with the manufacturer’s serial number removed, announced U.S. Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson, Bureau of Alcohol, Tobacco, Firearms, and Explosives Special Agent in Charge Joseph M. Riehl, and Tatum King, Acting Special Agent in Charge for U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in San Francisco.
The two-count Indictment alleges that Chamberlain, 42, of San Francisco, possessed a destructive device that was not registered to him in the National Firearms Registration and Transfer Record, and a handgun with an obliterated serial number that had been shipped and transported in interstate commerce. According to an affidavit filed by an agent of the FBI in connection with a criminal complaint filed previously in the same matter, the destructive device was an improvised explosive device complete with a power source, wire conductors, switching mechanism, shrapnel, and a remote controlled detonation system.
Chamberlain was the subject of a recent manhunt which resulted in his arrest near Crissy Field in San Francisco, Calif., on June 2, 2014. Chamberlain came to the attention of authorities during an investigation of his alleged activities on the “Deep Web.”
Chamberlain made his initial appearance in federal court in San Francisco on June 3, 2014, and is scheduled to appear for a detention hearing on Monday, June 16, 2014, at 9:30 a.m., before the Honorable Nathanael Cousins, United States Magistrate Court Judge.
An Indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of 10 years in prison, followed by a 3-year period of supervised release, and $10,000 fine, for a violation of 26 U.S.C. § 5861(d), and a maximum sentence of 5 years in prison, followed by a 3-year period of supervised release, and $250,000 fine, for a violation of 18 U.S.C. § 922(k). 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.
Philip J. Kearney is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Patricia Mahoney. The prosecution is the result of an investigation by the FBI, ATF, and ICE HSI.
(Chamberlain II indictment )
Richmond Man Sentenced to 27 Months in Prison for Defrauding Relatives Out of $244,000Read the Press Release
SAN FRANCISCO – On June 11, 2014, Marvin Solis was sentenced to 27 months in prison and ordered to pay restitution for an investment fraud scheme he perpetrated against his relatives, announced U.S. Attorney Melinda Haag, Office of the Special Inspector General for the Troubled Asset Relief Program, Special Agent in Charge Scott O'Briant, and FBI Special Agent in Charge David J. Johnson.
Solis, 30, of Richmond, Calif., pleaded guilty on Jan. 29, 2014. According to the plea agreement, Solis admitted to defrauding his then-wife’s family members out of approximately $244,000. The fraud, which stretched from September 2008 through March 2009, involved three parts. First, Solis solicited approximately $207,000 from several relatives of his wife, telling them that he would invest the money in real estate. Contrary to his promises, Solis spent the money that he received from them, and lost it making risky commodities trades. He never invested their money in real estate. Second, he encouraged his victims to open credit card accounts to fund renovations of the properties he had promised to purchase for them. Instead, he ran up approximately $10,000 in charges on these credit cards. Third, he used the personal information of one of his victims, without the victim’s knowledge, to open a credit card account in the name of Solis’s company, and then charged approximately $26,600 on the card, again without authorization.
Solis, was indicted by a federal grand jury on Sept. 5, 2013, on two counts of wire fraud, in violation of 18 U.S.C. § 1343. He pleaded guilty to both of these counts.
The sentence was handed down by the Honorable Edward M. Chen, U.S. District Court Judge. Judge Chen also sentenced the defendant to a three year period of supervised release and restitution. The defendant will begin serving the sentence on Aug. 11, 2014.
Benjamin Kingsley is the Assistant U.S. Attorney who is prosecuting the case, with the assistance of Mary Mallory and Rawaty Yim. The prosecution is the result of an investigation by SIGTARP and the FBI.
(Solis indictment )
Napa Doctor Sentenced to Federal Prison for Tax FraudRead the Press Release
SAN FRANCISCO – Ali Vaziri was sentenced yesterday to one year and one day in prison and ordered to pay a $10,000 fine and $116,703 in restitution for tax fraud, announced U.S. Attorney Melinda Haag, Federal Bureau of Investigation Special Agent in Charge David J. Johnson, IRS Criminal Investigation Special Agent in Charge José M. Martinez, and Department of Health and Human Services Office of Inspector General Special Agent in Charge Ivan Negroni.
Vaziri pleaded guilty on Feb. 3, 2014, to four felony counts of willfully subscribing a false income tax return, in violation of 26 U.S.C. § 7206(1). According to the Plea Agreement, Vaziri admitted to knowingly submitting false tax returns from 2005 through 2008, causing losses to the IRS and proportionate gains to him in excess of $100,000. Specifically, in his 2005 tax return, the defendant significantly and falsely inflated his business expenses, causing a tax loss of $14,535. In his 2006 return, the defendant again substantially and falsely inflated his business expenses, causing a tax loss of $60,620. In his 2007 tax return, Vaziri once again substantially and falsely inflated his business expenses, causing a tax loss of $27,476. Finally, in his 2008 tax return, the defendant again substantially and falsely inflated his business expenses, causing a tax loss of $14,072. Vaziri further admitted that he was responsible for additional interest and penalties related to those tax losses and had a total due to the IRS of at least $268,568.91.
Vaziri, 49, of Napa, Calif., was charged in a superseding Indictment by a federal grand jury on June 28, 2012.
The sentence was handed down by the Honorable Charles R. Breyer, United States District Court Judge, following a guilty plea to four counts in violation of 26 U.S.C. § 7206(1). Judge Breyer also sentenced the defendant to a one year period of supervised release, which included six months of time in a Residential Reentry Center. The defendant will begin serving his sentence on or before Aug. 15, 2014.
Robert David Rees is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rawaty Yim. The prosecution is the result of an investigation by the FBI, IRS-CI, and HHS-OIG.
(Vaziri superseding indictment )
Florida Man Pleads Guilty to $433,000 FraudRead the Press Release
SAN FRANCISCO – Leigh Farrington Fiske pleaded guilty in federal court on June 11, 2014, to wire fraud, announced U.S. Attorney Melinda Haag, Special Office of the Special Inspector General for the Troubled Asset Relief Program, Special Agent in Charge Scott O'Briant, and FBI Special Agent in Charge David J. Johnson.
In pleading guilty, Fiske, 50, of Tampa, Fla., admitted that he and his partner, Michael Ramdat, operated a business referred to as “Corporate Funding Solutions.” The purported purpose of this business was to obtain credit lines for customers in exchange for a fee. Fiske’s role was to solicit customers, which he generally did over the Internet and by word of mouth. In reality, neither Fiske nor Ramdat ever intended to provide any services to their customers. Instead, they accepted approximately $433,000 from approximately 30 victims and never helped any of these victims obtain credit. Fiske admitted that he kept $102,000 of these payments for himself, and that he passed the remainder on to Ramdat.
Fiske and Ramdat were charged in a Superseding Indictment on Nov. 21, 2013. Fiske pleaded guilty to five counts of wire fraud, in violation of 18 U.S.C. § 1343. Ramdat pleaded guilty in February 2014, to five counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of conspiracy, in violation of 18 U.S.C. § 1349.
Fiske is scheduled for sentencing on Sept. 17, 2014, at 2:30 p.m., before the Honorable Edward M. Chen, United States District Court Judge, in San Francisco. The maximum statutory penalty for violating 18 U.S.C. § 1343 is twenty years in prison, three years of supervised release, and a $250,000 million fine, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Benjamin Kingsley is the Assistant U.S. Attorney who is prosecuting the case, with the assistance of Mary Mallory and Rawaty Yim. The prosecution is the result of an investigation by SIGTARP and the FBI.
(Fiske and Ramdat superseding indictment )
Law Firm Paralegal Sentenced to Prison in Mail Fraud and Tax Evasion SchemeRead the Press Release
OAKLAND – Ana Lissa Reyes was sentenced today to 27 months in prison and ordered to pay $327,795 in restitution to victims of her mail fraud scheme, and $67,448 in restitution to the Internal Revenue Service for tax evasion, announced United States Attorney Melinda Haag, along with Special Agents in Charge David Johnson of the Federal Bureau of Investigation and Jose M. Martinez of the Internal Revenue Service, Criminal Investigation.
Reyes pleaded guilty on April 17, 2014, to mail fraud and tax evasion. According to the plea agreement, Reyes worked as a secretary, office manager, and paralegal for a Bay Area law firm. Reyes admitted that from about 2006 through June 2011, she, without authorization, settled claims without the knowledge of the law firm or its clients, and stole the settlement proceeds. Reyes admitted to engaging clients without the law firm’s knowledge and to stealing their retainer fee payments.
Reyes also admitted that, in carrying out the scheme to defraud, she created a bogus company, “Lincoln Litigation,” to correspond with clients, and to defraud them into believing that their cases were ongoing. She admitted to embezzling a total of $327,795.05 from the law firm and its clients.
Reyes also admitted to under-reporting her income for the calendar years 2006 through 2011. For each of those tax years, Reyes admitted that she knew her joint taxable income was substantially in excess of the amount stated on the return, resulting in additional tax due and owing to the United States.
Reyes, 42, of San Lorenzo, was charged in an information on January 25, 2013, and waived indictment on January 31, 2013. She was charged with five counts of mail fraud, in violation of 18 U.S.C. § 1341, and six counts of tax evasion, in violation of 26 U.S.C. § 7201.
The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, U.S. District Court Judge, following a guilty plea on one count of 18 U.S.C. § 1341, and to one count of 26 U.S.C. § 7201. Judge Gonzalez Rogers also sentenced Reyes to a three-year period of supervised release. Reyes will begin serving the sentence on August 11, 2014.
Wade Rhyne is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Janice Pagsanjan and Patty Lau. The prosecution is the result of a year-long investigation by the Federal Bureau of Investigation and IRS, Criminal Investigation.
Former Symantec Marketing Director Indicted on Embezzlement ChargesRead the Press Release
SAN JOSE –Lena “Mickey” Jacobs Coombs was indicted yesterday afternoon on wire fraud and money laundering charges alleging that she embezzled money from her former employer, Symantec Corporation, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
According to the indictment, Coombs was employed by Symantec as a Director of Marketing and worked at Symantec’s Lyndon, Utah facility near Salt Lake City. Between January 2010 and May 2012, Coombs allegedly used various methods to embezzle a total of over $1.34 million from Symantec. Coombs spent these embezzled Symantec funds on various personal expenses such as payments on automobiles, vacations, personal home remodeling, concerts, and childcare expenses. Coombs allegedly charged personal and other unauthorized expenses on the Symantec American Express Cards and then knowingly submitted fraudulent expense reports to disguise these charges as legitimate business expenses. Coombs also allegedly submitted fraudulent invoices falsely claiming that a shell company she had created had done marketing work for Symantec. Coombs then allegedly diverted the payments on those fraudulent invoices for her personal use.
Coombs, 47, of Highland, Utah, is scheduled to make her initial appearance pursuant to a summons in federal court in San Jose before the Honorable Paul Grewal, United States Magistrate Judge, on July 11, 2014, at 8:30 a.m.
The maximum statutory penalty for wire fraud, in violation of 18 U.S.C. § 1343, is twenty years in prison, and a fine of $250,000, plus restitution. The maximum statutory penalty for money laundering, in violation of 18 U.S.C. § 1957, is ten years in prison and a fine of $250,000, plus restitution.
Any sentence following conviction would, however, be determined by the court only after considering the Federal Sentencing Guidelines, which take into account a number of factors, and would be imposed in the discretion of the Court. An Indictment contains only allegations against a defendant and, as with all defendants, Coombs must be presumed innocent unless and until convicted.
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 FBI.
San Francisco Man Indicted for FraudRead the Press Release
SAN FRANCISCO – Yesterday a grand jury indicted Luke D. Brugnara on charges of mail fraud, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
According to court documents, Brugnara, 50, of San Francisco, allegedly agreed to purchase several works of art for a combined total of approximately $11,000,000. The art was shipped to Brugnara from New York, however, after he took possession of the art, he refused to pay for it or to return it. Law enforcement authorities obtained a search warrant for Brugnara’s home and seized four of the five crates of art that had been shipped to Brugnara. The fifth crate, which contained a work of art worth at least hundreds of thousands of dollars, remains missing.
According to the Indictment, Brugnara represented he would pay millions of dollars for these works of art, however, the Indictment alleges that Brugnara had almost no income, no assets, no means to pay for the art, and a substantially negative net worth.
After a Criminal Complaint was filed against him, Brugnara was arrested on May 28, 2014, in San Francisco. He made his initial appearance in federal court in San Francisco that morning. Brugnara remains in custody. Brugnara’s next court appearance is scheduled for Monday, June 9, 2014, at 9:30 a.m. before the Honorable Laurel Beeler, United States Magistrate Court Judge.
In 2010, Brugnara was convicted of several other federal crimes, including filing false tax returns, making false statements, and violating the Endangered Species Act. As a result, he was sentenced to 30 months in prison. He was still on supervised release from some of those convictions when he allegedly committed the fraud offense for which he was indicted yesterday.
The maximum statutory penalty for mail fraud, in violation of Title 18, United States Code, Section 1341, is 20 years in prison, a fine of $250,000, forfeiture, and restitution. 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.
Doug Sprague is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rawaty Yim. The prosecution is the result of a one-month investigation by the Federal Bureau of Investigation.
Please note that an Indictment contains only allegations against an individual and, as with all defendants, Luke D. Brugnara must be presumed innocent unless and until proven guilty.
(Brugnara indictment )
Oakland Man Sentenced to Four Years in Prison for Selling Historic Gold Jewelry Box Stolen from Oakland MuseumRead the Press Release
OAKLAND, Calif. – Andre Taray Franklin was sentenced yesterday to four years in prison for knowingly receiving and then selling an historic gold jewelry box stolen from the Oakland Museum of California, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Franklin pleaded guilty on March 7, 2014. According to the plea agreement, Franklin admitted that, in early 2013, in exchange for money, he gave a jewelry box that he knew had been stolen from the Oakland Museum of California, located at 1000 Oak Street in Oakland, Calif., to another individual.
The jewelry box was stolen from the Oakland Museum on January 7, 2013. The jewelry box was made of California gold and adorned with gold veined quartz, and had been made between 1869 and 1878. The box was recovered by the Oakland Police Department on March 6, 2013, from a business in Oakland and from the individual to whom Franklin sold the jewelry box.
“This prosecution, conviction, and sentence send a strong message that the U.S. Attorney’s Office values greatly, and will fight to protect, the museums and cultural institutions in Oakland and the Bay Area that maintain and display historic items for the public to enjoy,” states U.S. Attorney Melinda Haag.
Franklin, 46, of Oakland, was indicted by a federal grand jury on May 23, 2013, for theft of major artwork and unlawful concealment and disposition of stolen major artwork, in violation of 18 U.S.C. §§ 668(b)(1) and (b)(2).
The sentence was handed down by The Honorable Jeffrey S. White, United States District Court Judge. Judge White also sentenced the defendant to a 3-year period of supervised release.
Assistant U.S. Attorney Brian C. Lewis prosecuted this case with the assistance of Legal Assistant Janice Pagsanjan. This prosecution is the result of an investigation by Oakland Police Department and the FBI.
(Franklin criminal complaint )
(Franklin indictment )
Pleasant Hill Woman Pleads Guilty in Identity Theft Tax SchemeRead the Press Release
OAKLAND – Sherry L Hender pleaded guilty today to theft of government property 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 and court documents, beginning in August 2011, Hender assisted in preparing hundreds of false income tax returns, claiming fraudulent tax credits and fraudulent tax refunds. In order to conduct her tax scheme, Hender created an identification information form, “ID-DOC”, which was used to prepare the fraudulent income tax returns. This form contained questions about personal identification, including name, date of birth, Social Security number, income, number of dependents, expenses, and occupation. In January 2012, Hender opened a business bank account in the name of She-File Tax Assistance for Household Employees (She-File bank account), which was used to receive tax refunds. Between Jan. 18, 2012 and Feb. 21, 2012, Hender prepared and submitted what she believed to be fraudulent income tax returns directing the IRS to send the refunds to her “She-File bank account”. On Feb. 7, 2012 and Feb. 24, 2012, Hender told IRS Special Agents that she knew the tax refund money was obtained fraudulently and agreed to return it to the IRS. She did not return the money to the IRS, instead she withdrew the funds and spent it on personal items and illegal drugs. Hender obtained $51,629 in fraudulent refunds.
Hender, 50, of Pleasant Hill, was charged on May 21, 2013, with thirteen counts of theft of government property and one count of aggravated identity theft. She pleaded guilty to one count of theft of government property and to the aggravated identity theft count.
Hender’s sentencing hearing is scheduled for Sept. 9, 2014, at 1:00 p.m., before the Honorable Jeffrey S. White, United States District Court Judge, in Oakland. The maximum statutory penalty for each count of theft of government property, in violation of Title 18, U.S.C § 641, is 10 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.
Assistant US Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
(Hender unsealed indictment )
Two Southern California Men Sentenced to Prison for Fraud and Aggravated Identity TheftRead the Press Release
SAN FRANCISCO – Ngoc Duong a/k/a Danny Duong and Hong Lee Wong a/k/a William Wong were sentenced on Friday, May 30, 2014, to 30 and 28 months in prison, respectively, for wire fraud and aggravated identity theft, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Duong and Wong were convicted on Feb. 11, 2014, after an 11 day jury trial. The jury found that Duong, a partner in Incom Trading Corporation, Inc., and Wong, a principal in Powell Trading, Inc. and Powell Commodity, Inc., defrauded three companies: Cheery Way, Inc., of Brisbane, Calif. and two Chinese companies, Zheijang Metals and Materials and Zheijang Concentrating. Duong and Wong falsely claimed to have an agreement with the City of New Orleans for the rights to scrap metal from a Six Flags amusement park damaged by Hurricane Katrina. The jury found that as part of the fraud Duong and Wong sent emails to the defrauded companies in which they falsely represented that the project was delayed and attached false documents to those emails in which they fraudulently used the names and email addresses of City of New Orleans officials. Duong was convicted of eight counts of wire fraud and four counts of aggravated identity theft. Wong was convicted of one count of wire fraud and one count of aggravated identity theft.
Duong, 61, of Fountain Valley, Calif., and Wong, 46, of Torrance, Calif., were indicted by a federal grand jury on July 19, 2012, for conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, wire fraud, in violation of 18 U.S.C. § 1343, and aggravated identity theft, in violation of 18 U.S.C. § 1028A. Duong was arrested on July 26, 2012, at the Houston International Airport. Wong was arrested on July 27, 2012, at his Torrance residence. Both initially appeared in federal court in San Francisco on Aug. 6, 2012, and were released on bail.
The sentences were handed down by the Honorable Susan Illston, United States District Court Judge. Judge Illston also sentenced the defendants to a 3-year period of supervised release and ordered them jointly forfeiture $106,500. A hearing to determine restitution has been set for July 18, 2014. Both defendants remain out of custody and will begin serving their prison sentences on Aug. 8, 2014.
Denise Marie Barton is the Assistant U.S. Attorney who is prosecuting the case with the assistance of AUSA David Countryman, Muffy Mallory, and Bridget Kilkenny. The prosecution is the result of an investigation by the FBI.
(Duong and Wong indictment )
CFO Accused of Embezzling over $500,000 from Non-Profit EmployerRead the Press Release
SAN FRANCISCO – On May 29, 2014, a federal grand jury in San Francisco indicted Robert Bradley Strahan, a/k/a Robin Bradley, a/k/a Kaola Bradley for wire fraud and mail fraud, announced United States Attorney Melinda Haag, FBI Special Agent in Charge David J. Johnson, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the Indictment, Strahan, 51, of San Francisco, allegedly embezzled in excess of $520,000 from the non-profit trade association he worked for in San Francisco. The Indictment also alleges that between December 2009 through April 2014, he carried out the scheme by, among other means, (1) writing, signing, endorsing, and cashing checks made payable to “Strahan” and “Cash” from the company’s bank accounts; and (b) using the company’s credit cards to make unauthorized purchases for his personal use. To perpetrate and to conceal his scheme to defraud, Strahan allegedly made false entries in the company’s accounting systems and sent falsified financial statements to the company’s board of directors.
Strahan was arrested in San Francisco on May 30, 2014, and made his initial appearance in federal court on the same day. Strahan is currently being held in custody pending a detention hearing scheduled for June 4, 2014, at 9:30 a.m. in a courtroom to be determined. Strahan will appear before the Honorable Thelton E. Henderson, United States District Court Judge, for arraignment on July 7, 2014, at 2:30 p.m.
The maximum statutory penalty for each count of wire fraud, in violation of 18 U.S.C § 1343, is 20 years imprisonment and a fine of $250,000. The maximum statutory penalty for each count of mail fraud, in violation of 18 U.S.C § 1341, is 20 years imprisonment 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.
Hallie Hoffman is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service.
Please note, an indictment contains only allegations against a person and, as with all defendants, Robert Bradley Strahan must be presumed innocent unless and until proven guilty.
(Strahan indictment )
Antioch Resident Pleads Guilty to Conspiring to File False ClaimsRead the Press Release
OAKLAND – Jessika Green pleaded guilty on May 30, 2014, to conspiring to file false claims, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the plea agreement, beginning in January 2011, Green assisted in filing several tax returns with the IRS that were false and fraudulent. Green admitted that the tax returns were false because the filings included fictitious Forms W-2 that inflated the purported filers’ wages. The filings included a tax return filed in Green’s name which falsely reported her earnings from a staffing agency. In other instances, Green admitted to filing the false tax returns without ever showing the fraudulent tax return to the purported filer. As part of her plea, Green admitted that she filed false tax returns asking for at least $154,823, all of which she was not entitled to receive, and agreed to pay restitution in the amount of $92,191, equaling the amount of returns sent to her.
Green was charged with Khyber Law who pleaded guilty to conspiring to file false claims on April 4, 2014.
Green, 33, of Antioch, was charged in a superseding indictment on Dec. 17, 2013, with conspiracy to file false claims, wire fraud, filing false claims and aggravated identity theft. Green, is scheduled to be sentenced before the Honorable Jon S. Tigar United States District Court Judge on October 10, 2014, in Oakland.
Law pleaded guilty to conspiracy to file false claims and agreed to pay restitution related to this offense. Law is scheduled to be sentenced for his role in this offense on Aug. 22, 2014, before Judge Tigar as well.
The maximum statutory penalty for each count of conspiracy to file false claim, in violation of 18 U.S.C § 286, is ten years in prison, and a fine of $250,000.
Assistant U.S. Attorney Thomas Newman is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
(Law indictment )
New Jersey Man Sentenced to Ten Years in Prison for Sexual Coercion of A Minor over the InternetRead the Press Release
OAKLAND – Alex Gonzalez was sentenced yesterday to 10 years in prison, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
According to court documents and information presented at court, Gonzalez convinced a fifteen year old freshman from a Bay Area high school to take several explicit nude photographs of herself, and to send them to Gonzalez using an online picture-sharing application. After the victim informed Gonzalez that she no longer wished to communicate with him, Gonzalez began a campaign to punish the victim by posting her nude photographs online. Gonzalez first posted the victim’s pictures on iMGSRC.ru, a free photo-sharing website hosted in Russia, and included the victim’s name, age, and phone number with the photographs. Gonzalez then created a fake Facebook account, “friended” many of the victim’s Facebook friends, and posted the nude photographs of the victim on his Facebook wall, “tagging” the victim in each of the pictures. Finally, Gonzalez posted the images on xHamster.com, a free-access pornography website. The FBI executed a search warrant at Gonzalez’s home and uncovered a laptop computer containing more than 2,500 images and 130 videos depicting minors engaging in sexually explicit conduct.
Gonzalez, 22, pleaded guilty on Nov. 6, 2013 to distribution of child pornography, in violation of 18 U.S.C. § 2252(a)(2), and possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B). The sentence was handed down by the Honorable Phyllis Hamilton, United States District Court Judge. Judge Hamilton also sentenced the defendant to a fifteen year period of supervised release. The defendant was immediately remanded into custody.
The case was prosecuted by Assistant U.S. Attorneys Randy Luskey and Rodney Villazor of the Northern District of California and was investigated by the Federal Bureau of Investigation.
(Gonzalez indictment )
Joint Law Enforcement Operation Arrested Six Indivduals on Drug Charges in the East Bay, One in FresnoRead the Press Release
OAKLAND – An eleven-count federal Indictment charging nine people with participation in a conspiracy to manufacture and distribute Xanax pills and other drugs was returned by the Grand Jury on May 22, 2014, and unsealed today in federal court, announced United States Attorney Melinda Haag, Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick, Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez, U.S. Postal Inspection Service, Inspector in Charge Rafael E. Nunez, U.S. Food and Drug Administration Office of Criminal Investigations, Special Agent In Charge Lisa Malinowski, and Tatum King, Acting Special Agent in Charge for U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in San Francisco.
The Defendants and the charges are set forth below:
Defendant
Offenses Charged
Jeremy Donagal, 35,
aka “Xanax King” aka “XK”Counts One and Two:
21 U.S.C. § 846 – Conspiracy to Manufacture, Distribute, and Possess with Intent to Distribute a Controlled Substance
Counts Three, Four, and Five:
21 U.S.C. § 841(a)(1) – Manufacture, Distribution, and Possession with Intent to Distribute a Controlled Substance
Count Six:
21 U.S.C. § 331(i)(3) – Sale of Counterfeit Drugs
Count Seven:
18 U.S.C. § 1956(a)(2)(A) – International Money Laundering
Count Eight:
18 U.S.C. § 1956(a)(2)(B)(ii) – International Money Laundering
Counts Nine, Ten, and Eleven:
31 U.S.C. § 5324(a)(3) – StructuringLaurence Lindberg, 42
Count One:
21 U.S.C. § 846 – Conspiracy to Manufacture, Distribute, and Possess with Intent to Distribute a Controlled Substance
Count Three:
21 U.S.C. § 841(a)(1) – Manufacture, Distribution, and Possession with Intent to Distribute a Controlled SubstanceAlicia Mitts, 30
31 U.S.C. § 5324(a)(3) – Structuring
Thomas Elliott, 39
Count One:
21 U.S.C. § 846 – Conspiracy to Manufacture, Distribute, and Possess with Intent to Distribute a Controlled Substance
Count Three:
21 U.S.C. § 841(a)(1) – Manufacture, Distribution, and Possession with Intent to Distribute a Controlled SubstanceMichael Tomada, 42
Count One:
21 U.S.C. § 846 – Conspiracy to Manufacture, Distribute, and Possess with Intent to Distribute a Controlled Substance
Count Three:
21 U.S.C. § 841(a)(1) – Manufacture, Distribution, and Possession with Intent to Distribute a Controlled SubstanceChristopher Neely
Count Two:
21 U.S.C. § 846 – Conspiracy to Manufacture, Distribute, and Possess with Intent to Distribute a Controlled Substance
Count Five:
21 U.S.C. § 841(a)(1) – Manufacture, Distribution, and Possession with Intent to Distribute a Controlled Substance
Count Eight:
18 U.S.C. § 1956(a)(2)(A) – International Money LaunderingKenneth Koskiniemi, 37
Count Four:
21 U.S.C. § 841(a)(1) – Manufacture, Distribution, and Possession with Intent to Distribute a Controlled SubstanceDuston Kirk, 38
Count One:
21 U.S.C. § 846 – Conspiracy to Manufacture, Distribute, and Possess with Intent to Distribute a Controlled Substance
Count Three:
21 U.S.C. § 841(a)(1) – Manufacture, Distribution, and Possession with Intent to Distribute a Controlled Substance
Count Eight:
18 U.S.C. § 1956(a)(2)(B)(ii) – International Money Laundering
Counts Nine, Ten, and Eleven:
31 U.S.C. § 5324(a)(3) – StructuringMichael Gonzalez, 41
Count One:
21 U.S.C. § 846 – Conspiracy to Manufacture, Distribute, and Possess with Intent to Distribute a Controlled Substance
Count Three:
21 U.S.C. § 841(a)(1) – Manufacture, Distribution, and Possession with Intent to Distribute a Controlled SubstanceAccording to the Indictment, Donagal, a/k/a “Xanax King,” of Martinez, Calif., is alleged to have manufactured, distributed, and possessed with intent to distribute counterfeit alprazolam (Xanax) pills and other drugs. The Xanax pills at issue were manufactured to resemble alprazolam pills made by Pfizer, Inc., including stamping the Pfizer “Xanax” trademark on the pills. Donagal is also charged with two counts of international money laundering related to wire transfers of cash to China, both to promote the drug operation and to avoid the reporting requirements associated with such wires. Finally, Donagal is charged with structuring those wires in a way to avoid the $3,000 reporting requirement for such transactions, such as by arranging for multiple wires of below $3,000 to be sent to China from different Western Union locations in the Bay Area, all on the same day.
Lindberg, Kirk, Gonzalez, Elliott, Tomada, and Neely are charged with aiding Donagal in that enterprise.
Donagal, Lindberg, Mitts, Elliott, Tomada, and Neely were arrested yesterday in a joint law enforcement operation that took place in Martinez, Concord, Pleasant Hill, San Pablo, Pinole, Pacheco, Oakley, and Pittsburg, Calif. One additional defendant, Koskiniemi, was arrested in Fresno. Defendant Kirk is still at large, and Gonzalez is in state custody on another charge. The defendants in federal custody made their initial appearance in federal court in Oakland this morning, with the exception of Koskiniemi, who appeared in federal court in Fresno yesterday afternoon. Donagal, Lindberg, Mitts, Elliott, Tomada, and Neely were arraigned before the Honorable Donna M. Ryu, United States Magistrate Court Judge. Defendants Donagal, Lindberg, Elliott, Tomada, and Neely are currently in custody at North County Jail in Oakland, while Mitts was released on a bond in the amount of $50,000.
Donagal’s next scheduled appearance is at 9:30 a.m. on June 5, 2014, for a detention hearing before the Honorable Kandis A. Westmore, United States Magistrate Judge. Mitts, Tomada, and Neely will appear before Judge Ryu tomorrow at 9:30 a.m. for identification of counsel. Elliott will appear before Judge Westmore on June 2, 2014, for identification of counsel, and Lindberg will appear before Judge Westmore on June 3, 2014, for a detention hearing.
An Indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of 20 years in prison and a fine of $1,000,000 on the drug charges, 20 years in prison and a $500,000 fine for the money laundering charges, and 10 years in prison and a $500,000 fine on the structuring charges. 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.
Kevin Barry and Katie Medearis are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Assistant U.S. Attorney David Countryman of the Asset Forfeiture Unit. The prosecution is the result of an investigation by the DEA, assisted by IRS Criminal Investigations, the U.S. Postal Inspection Service, the U.S. Food and Drug Administration Office of Criminal Investigations, U.S. Customs and Border Protection, Homeland Security Investigations, the Concord Police Department, the Martinez Police Department, the Pittsburg Police Department, the Contra Costa County Sheriff’s Office, the South San Francisco Police Department, the Oakland Police Department, the Oakland School Police Department, the Livermore Police Department, the Walnut Creek Police Department, the San Ramon Police Department, and the Pleasant Hill 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 the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
(Donagal et al indictment )
Hollister Resident Pleads Guilty to Wire Fraud Stemming from an Employee Embezzlement SchemeRead the Press Release
SAN JOSE – Briana Irene Roy pleaded guilty in federal court in San Jose today to wire fraud stemming from an employee embezzlement scheme, announced United States Attorney Melinda Haag.
In pleading guilty, Roy admitted that she had been employed in the marketing division of a local engineering company based in San Jose, Calif. She also admitted that she devised and implemented a scheme whereby she used a company credit card issued in the name of one of the company’s executives on approximately 80 separate occasions between March 2010 and February 2013. Using the company’s credit card, Roy made charges to her personal PayPal account for her personal benefit, and attempted to conceal these activities by generating fake invoices and receipts for products and services in the name of another San Jose business. Through this fraudulent scheme, Roy admitted that she attempted to gain funds to which she was not entitled in the amount of $247,387.45.
Roy, 38, of Hollister, Calif., was charged on Dec. 13, 2013, with one count of wire fraud, in violation of Title 18 United States Code Section, 1343. Under the plea agreement, Roy pleaded guilty to the single count and agreed to pay restitution for the full amount of the loss. Roy is currently released on bond. Bail was set previously at $50,000.
Roy’s sentencing hearing is scheduled for Oct. 23, 2014, at 10:00 a.m., before the Honorable D. Lowell Jensen, Senior United States District Court Judge, in San Jose. The maximum statutory penalty for the single count in violation of 18 U.S.C. § 1343 is 20 years in prison and a fine of $250,000 or twice the gross gain or loss, plus restitution in the agreed upon amount of $197,240.95. 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.
Amie Rooney is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Tracey Andersen. The prosecution is the result of an investigation by the United States Secret Service.
(Roy information )
Former Federal Agent Sentenced to Prison for Making False StatementsRead the Press Release
SAN FRANCISCO – James Contreras was sentenced today to 12 months in prison, and ordered to pay a $10,000 fine for making false statements to the government, announced United States Attorney Melinda Haag and United States Department of Justice Inspector General Michael E. Horowitz.
Contreras pleaded guilty on Feb. 26, 2014 in the United States District Court for the Western District of Washington in Seattle to one count of making material false statements to the government. According to the plea agreement, Contreras stated that while he was employed with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) and assigned the position of Group Supervisor, he was responsible for disbursing and accounting for money in a cash fund used for investigative expenses, including making payments to confidential informants. In pleading guilty to one of the thirty false statement counts in the indictment, Contreras admitted that he wrote what purported to be the signature of an agent under his supervision on forms requesting and documenting use of money from the cash fund. Contreras also admitted that he signed a payment receipt falsely showing that the agent used the money to make a payment to an informant, although Contreras knew that the agent did not make the payment. Contreras admitted that he then submitted the forms for supervisory approval knowing that they contained falsified signatures and information.
Contreras, 52, of Ravensdale, Wash., was indicted by a federal grand jury in Seattle on Nov. 21, 2013. He was charged with thirty counts of making material false statements on sets of documents purporting to document expenditures from the cash fund over which he had custody and control, and with one count of embezzlement of public money in excess of $1,000.
As part of the plea agreement, Contreras agreed that the total funds disbursed from the cash fund in connection with the charges in the Indictment was $19,700.
Seattle Field Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives Special Agent in Charge Douglas R. Dawson, stated, “Jim Contreras’s actions should not reflect poorly on the men and women of the ATF who perform their jobs with honesty and integrity every day. Their tireless efforts to protect our communities, regularly in the face of great danger, is what we all should recognize and appreciate.”
The sentence was handed down by the Honorable Marsha J. Pechman, Senior United States District Court Judge, Western District of Seattle, following Contreras’s guilty plea to Count Nineteen of the indictment, charging making a material false statement to the government, in violation of Title 18, United States Code, Section 1001(a)(3). Judge Pechman also sentenced the defendant to a three-year period of supervised release. The defendant will be permitted to self-surrender for service of sentence. He will be notified of the date by the court.
Susan Badger of the U.S. Attorney’s Office for the Northern District of California is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rosario Calderon. The prosecution is the result of an investigation by the United States Department of Justice Office of Inspector General, Investigations Division and the ATF Office of Professional Responsibility and Security Operations.
(Contreras indictment )
Modesto Man Sentenced to 10 Years in Prison for Conspiracy to Distribute MethamphetamineRead the Press Release
SAN JOSE – Juan Figueroa Garcia was sentenced today to 10 years in prison for conspiracy to possess with intent to distribute and to distribute methamphetamine, announced United States Attorney Melinda Haag and Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick.
Garcia pleaded guilty on Feb. 12, 2014. According to the plea agreement, Garcia admitted that, between May of 2012, and Nov. 30, 2012, he conspired with others to distribute methamphetamine in the Northern District of California. Garcia also admitted that he stored drugs and drug proceeds at his residence in Modesto, Calif. When law enforcement officers executed a search warrant at Garcia’s residence on Nov. 30, 2012, agents found approximately 8.7 kilograms of methamphetamine in his home, and a methamphetamine conversion laboratory in his garage. Laboratory tests of the methamphetamine seized from Garcia’s home revealed that it was 99.8% pure.
Garcia, 36, of Modesto, was indicted by a federal grand jury on Feb. 28, 2013.
The sentence was handed down by the Honorable Lucy H. Koh, United States District Court Judge, following Garcia’s guilty plea to Count One of the Second Superseding Indictment, charging him with conspiracy to possess with intent to distribute and to distribute methamphetamine, in violation of 21 U.S.C. § 841(a)(1). Judge Koh also sentenced the defendant to a 5 year period of supervised release. The defendant has been in federal custody since Jan. 8, 2013.
Richard Cheng and Chinhayi Cadet are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Yanira Osorio. 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.
(Figueroa Garcia second superseding indictment )
Sex Offender Sentenced to More Than 17 Years in Prison for Distributing Child PornographyRead the Press Release
OAKLAND – Terry Howell was sentenced yesterday to 210 months in prison for distribution of child pornography, 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) in San Francisco.
Howell pleaded guilty on Feb. 10, 2014, to distributing child pornography to a person in another state, using his e-mail account. According to the plea agreement, Howell also admitted that he received child pornography images and videos through his email account on five occasions. Howell admitted that his cellular telephone, at the time he was arrested, contained over 80 videos and over 550 images depicting minors engaging in sexually explicit conduct, including minors being subjected to sadistic conduct.
Court documents indicate that Howell was trading child pornography materials with another man who had two prior convictions for child pornography offenses, and that Howell’s email messages contained graphic descriptions of his desire to commit extreme violence against a child. At the time Howell committed the child pornography offenses charged in this case, he had prior convictions for sexual offenses against a child.
“This case should serve as a stern warning to those who mistakenly believe cyberspace affords them anonymity and they can use the Internet to sexually exploit children with impunity,” said Tatum King, acting special agent in charge for U.S. Immigration and Customs Enforcement ICE Homeland Security Investigations HSI. “Online predators should be on notice that ICE Homeland Security Investigations will do everything in its power and use every tool at its disposal to track them down and ensure that they are brought to justice.”
The sentence was handed down by the Honorable Claudia Wilken, Chief United States District Court Judge, following a guilty plea to a violation of distribution of child pornography, in violation of 18 U.S.C. 2252(a)(2). Judge Wilken also sentenced Howell to a ten year period of supervised release. Special conditions of Howell’s supervised release include: sex offender-specific treatment; registration with the state sex offender registration agency; suspicionless search of Howell’s residence and property; and no contact with any child under the age of 18. The defendant has remained in custody since his arrest on Sept. 13, 2013, and will begin serving the sentence immediately.
Christina McCall is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Vanessa Quant and Noble Hughes. The prosecution is the result of an investigation by ICE HSI.
(Howell indictment )
Law School Admission Council Agrees to Systemic Reforms and $7.73 Million Payment to Settle Justice Department’s Nationwide Disability Discrimination LawsuitRead the Press Release
SAN FRANCISCO – The Justice Department filed a joint motion today for entry of a landmark consent decree to resolve allegations that the Law School Admission Council (LSAC) engaged in widespread and systemic discrimination in violation of the Americans with Disabilities Act (ADA). Under the proposed consent decree, LSAC will pay $7.73 million in penalties and damages to compensate over 6,000 individuals nationwide who applied for testing accommodations on the Law School Admission Test (LSAT) over the past five years. The decree also requires comprehensive reforms to LSAC’s policies and ends its practice of “flagging,” or annotating, LSAT score reports for test takers with disabilities who receive extended time as an accommodation. These reforms will impact tens of thousands of test takers with disabilities for years to come.
The United States intervened in DFEH v. LSAC Inc., which was originally brought on behalf of California test takers in the U.S. District Court for the Northern District of California. The United States’ intervention expanded the case to ensure comprehensive and nationwide relief under Title III of the ADA for individuals with disabilities who request testing accommodations for the LSAT – a required examination for anyone seeking admission to an American Bar Association approved law school in the United States. The allegations in the complaint detail LSAC’s routine denial of testing accommodation requests, even in cases where applicants have a permanent physical disability or submitted thorough supporting documentation from qualified professionals and demonstrated a history of testing accommodations since childhood. Without the necessary accommodations, test takers with disabilities are denied an equal opportunity to demonstrate their aptitude and achievement level. The lawsuit further alleged that LSAC engages in discrimination prohibited by the ADA through its practice of flagging the LSAT score reports of individuals who received extended time as a testing accommodation, thereby identifying to law schools that the test taker is a person with a disability.
“This landmark agreement compels systemic reforms to LSAC’s treatment of test takers with disabilities and brings an end to LSAC’s stigmatizing practice of flagging the score reports of individuals with disabilities who require certain testing accommodations,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “If entered by the court, this decree will impact tens of thousands of Americans with disabilities, opening doors to higher education that have been unjustly closed to them for far too long. We congratulate LSAC for signing this agreement, which will compensate victims of past discrimination and provide a model for the provision of testing accommodations to test takers with disabilities on standardized examinations.”
“The participation of the U.S. Attorney’s Office in this important litigation sends a strong message that no discrimination of any kind will be tolerated in this district,” said U.S. Attorney Melinda Haag for the Northern District of California. “We are fully committed to ensuring equal access to all opportunities society has to offer, including education.”
Under the consent decree, LSAC has agreed to:
- put a permanent end to the practice of flagging the LSAT score reports of individuals with disabilities who take the LSAT with the common testing accommodation of extended time;
- pay $7.73 million to be allocated for a civil penalty, compensation to individuals named in the United States’ and other plaintiffs’ complaints, and a nationwide victims’ compensation fund;
- streamline its evaluation of requests for testing accommodations by automatically granting most testing accommodations that a candidate can show s/he has previously received for a standardized exam related to post-secondary admissions (such as the SAT, ACT or GED, among others); and
- implement additional best practices for reviewing and evaluating testing accommodation requests as recommended by a panel of experts (to be created by the parties).
Individuals who applied for testing accommodations from LSAC between Jan. 1, 2009, and May 20, 2014 may be eligible to receive a monetary award from a nationwide victims’ compensation fund. The claims administrator for the fund has not yet been determined; this information will be posted on LSAC’s website following entry of the consent decree by the court. Questions about the victims’ compensation fund should be directed to the claims administrator.
For more information or for a copy of the consent decree, please visit the ADA website. Those interested in finding out more about the ADA may also call the Justice Department’s toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TDD).
Assistant U.S. Attorney Melanie Proctor prosecuted the case, with the assistance of Tiffani Chiu and Jonathan Birch. The U.S. Attorney’s Office partnered with attorneys from the Disability Rights Section of the Civil Rights Division in the U.S. Department of Justice to achieve this landmark settlement.
(LSAC joint motion )
(LSAC consent decree )