Northern District of California
Press releases recorded for this federal judicial district.
Oregon Man Sentenced to Ninety-Seven Months for Child PornographyRead the Press Release
SAN JOSE – John William Harrison was sentenced yesterday to more than 8 years in prison for possession of child pornography, announced United States Attorney Melinda Haag and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Clark E. Settles.
Harrison pleaded guilty on July 24, 2013, to one count of possession of child pornography, in violation of Title 18, United States Code, Section 2252. According to the plea agreement, Harrison admitted to engaging in multiple on-line conversations from his home in Portland, Ore., with a person he believed was the father of a seven-year old girl living in San Jose, Calif. The person posing as a father was really a special agent with the Department of Homeland Security working in an undercover capacity. During these conversations Harrison indicated he had over 600 still images and at least 75 videos of children engaged in sexually explicit conduct. Harrison also admitted that at least one of the videos contained footage of a child being subjected to sadomasochistic behavior and that most of the images found on his computer involved pre-pubescent minors under the age of 12. Finally, he admitted that he sent all of these digital files to the undercover agent in San Jose using both his Yahoo email account and the U.S. Mail.
Harrison, 45, of Portland, was arrested pursuant to a felony complaint on May 8, 2013, and arraigned in front of a United States Magistrate Judge in Portland on May 9, 2013. He was charged initially with distribution of child pornography. After making his first appearance in San Jose on May 23, 2013, Harrison agreed to waive indictment by a grand jury and was charged by Information with possession and distribution of child pornography on June 7, 2013.
The sentence was handed down by the Honorable Lucy H. Koh, United States District Court Judge, following the guilty plea. Judge Koh also sentenced the defendant to a 5-year period of supervised release. Harrison will also be required to register as a sex offender. The defendant was in custody at the time of sentencing and began serving his sentence immediately.
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 U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), in conjunction with the Silicon Valley Internet Crimes Against Children SAFE Task Force.
(Harrison information )
Two Individuals and Company Found Guilty of Conspiracy to Sell Trade Secrets to Chinese CompaniesRead the Press Release
SAN FRANCISCO – A federal jury in San Francisco has found two individuals and one company guilty of economic espionage, theft of trade secrets, bankruptcy fraud, tax evasion, and obstruction of justice for their roles in a long-running effort to obtain U.S. trade secrets for the benefit of companies controlled by the government of the People’s Republic of China (PRC), announced U.S. Attorney Melinda Haag; John P. Carlin, Acting 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.
The jury found that Walter Lian-Heen Liew (aka Liu Yuanxuan), 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 PRC. The purpose of their conspiracy was to help those companies develop large-scale chloride-route titanium dioxide production capability 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.
“Fighting economic espionage and trade secret theft is one of the top priorities of this Office and we will aggressively pursue anyone, anywhere who attempts to steal valuable information from the United States,” said U.S. Attorney Melinda Haag. “As today’s verdict demonstrates, foreign governments threaten our economic and national security by engaging in aggressive and determined efforts to steal U.S. intellectual property. I commend the efforts of the women and men of the FBI and the IRS in protecting America’s businesses and our national security.”
Acting Assistant Attorney General John Carlin said: “The theft of America’s trade secrets for the benefit of a foreign government poses a substantial threat to our economic and national security. Today’s verdict clearly demonstrates that we take this threat seriously. This case shows that we will not hesitate to pursue and prosecute those who steal from American businesses.”
“The battle against economic espionage has become one of the FBI’s main fronts in its efforts to protect U.S. national security in the 21st century,” said Special Agent in Charge David Johnson.
"This is a case about lying, cheating, and stealing," said José M. Martínez, Special Agent in Charge, IRS Criminal Investigation. "The defendants stole secrets, lied to the bankruptcy court and cheated the IRS and creditors. In today's economic environment, it's more important than ever that the American people feel confident that everyone is playing by the rules and paying their fair share."
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. The guilty verdicts followed a seven-week jury trial before the Honorable Jeffery S. White, U.S. District Court Judge.
Liew, 56, of Walnut Creek, Calif., 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 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 secret to the Pangang Group companies for more than $20 million.
Robert Maegerle, 78, of Harbeson, Del., was found guilty of conspiracy to commit theft of trade secrets, attempted theft of trade secrets, conveying trade secrets, and conspiracy to obstruct justice. Evidence at trial showed that Maegerle was employed by DuPont as an engineer from 1956 to 1991 where he had developed detailed knowledge of DuPont's TiO2 technology and expertise in building TiO2 production lines. He also had access to DuPont TiO2 trade secrets, including specific information regarding DuPont’s TiO2 facility at Kuan Yin, Taiwan. He provided these trade secrets to Liew and USAPTI in furtherance of their contracts with state-owned companies of the PRC for chloride-route TiO2 projects.
The jury also 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 in excess of $20 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.
DuPont is a company based in Wilmington, Del., that manufactures a wide variety of products, including TiO2. DuPont invented the chloride-route process for manufacturing TiO2 in the late-1940s and since then has invested heavily in research and development to improve that production process. The global titanium dioxide market has been valued at roughly $12 billion per year, and DuPont has the largest share of that market.
The chloride-route process is cleaner, more efficient, and produces a higher-quality product than the sulfate-route process prevalent in the PRC. The object of the defendants’ conspiracy was to convey DuPont’s secret chloride-route technology to the PRC companies for the purpose of building modern TiO2 production facilities in the PRC without investing in time-consuming, costly research and development.
The second superseding indictment also charges, Liew’s wife, Christina Hong Qiao Liew (aka Qiao Hong), with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, attempted theft of trade secrets, possession of trade secrets, witness tampering, conspiracy to tamper with evidence, and false statements. The charges against Ms. Liew were severed from those against Walter Liew, Maegerle, and USAPTI. Ms. Liew will appear before the Honorable Jeffery S. White on Thursday, March 6, 2014, in San Francisco to set the date for her trial.
Tze Chao (aka Zhao Zhi), a former DuPont employee who was also charged in the second superseding indictment, pleaded guilty to conspiracy to commit economic espionage on March 1, 2012.
Hou Shengdong, the Vice Director of the Chloride Process TiO2 Project Department for the Pangang Group, was also charged in the second superseding indictment with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, and attempted economic espionage. He is currently a fugitive.
Charges of conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, and attempted economic espionage are also pending against the four PRC state-owned companies charged in the second superseding indictment.
The sentencing hearings for Liew, Maegerle, and USAPTI are scheduled for June 10, 2014, before Judge White in Oakland, Calif. Liew was remanded to the custody of the U.S. Marshals pending sentencing. Maegerle remains out of custody on conditions of release. The maximum statutory penalties for each of the counts are listed below. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The case is being prosecuted by the Special Prosecutions and National Security Unit of the U.S. Attorney’s Office in San Francisco, the Counterespionage Section of the National Security Division of the U.S. Department of Justice in Washington, D.C., the FBI, Palo Alto Resident Agency, and Oakland Field Office, IRS Criminal Investigation.
For more information about the case and the remaining defendants: www.justice.gov/opa/pr/2012/February/12-nsd-180.html
The maximum statutory penalties for each of the counts of conviction are as follows:
- Count One, conspiracy to commit economic espionage, in violation of 18 U.S.C. § 1831(a)(5): 15 years imprisonment, $500,000 fine, and restitution. The fine for an organizational defendant is not more than the greatest of $10,000,000 or twice the pecuniary gain or loss.
- Count Two, conspiracy to commit theft of trade secrets, in violation of 18 U.S.C. § 1832(a)(5): 10 years imprisonment, $250,000 fine or twice the gross gain or loss, and restitution. The fine for an organizational defendant is not more than the greatest of $5,000,000 or twice the pecuniary gain or loss.
- Count Three, attempted economic espionage, in violation of 18 U.S.C. § 1831(a)(2) & (4): 15 years imprisonment, $500,000 fine, and restitution. The fine for an organizational defendant is not more than the greatest of $10,000,000 or twice the pecuniary gain or loss.
- Count Four, attempted economic espionage, in violation of 18 U.S.C. § 1831(a)(3) & (4): 15 years imprisonment, $500,000 fine, and restitution. The fine for an organizational defendant is not more than the greatest of $10,000,000 or twice the pecuniary gain or loss.
- Count Five, attempted theft of trade secrets:, in violation of 18 U.S.C. § 1831(a)(2) & (4): 10 years imprisonment, $250,000 fine or twice the gross gain or loss, and restitution. The fine for an organizational defendant is not more than the greatest of $5,000,000 or twice the pecuniary gain or loss.
- Counts Six and Seven, possession of trade secrets: in violation of 18 U.S.C. § 1832(a)(3): 10 years imprisonment, $250,000 fine or twice the gross gain or loss, and restitution. The fine for an organizational defendant is not more than the greatest of $5,000,000 or twice the pecuniary gain or loss.
- Count Eight, conveying trade secrets, in violation of 18 U.S.C. § 1832(a)(2): 10 years imprisonment, $250,000 fine or twice the gross gain or loss, and restitution. The fine for an organizational defendant is not more than the greatest of $5,000,000 or twice the pecuniary gain or loss.
- Count Nine, possession of trade secrets, in violation of 18 U.S.C. § 1832(a)(3): 10 years imprisonment, $250,000 fine or twice the gross gain or loss, and restitution. The fine for an organizational defendant is not more than the greatest of $5,000,000 or twice the pecuniary gain or loss.
- Count Ten, conspiracy to tamper with witnesses and evidence: in violation of 18 U.S.C. § 1512(k): 20 years imprisonment, $250,000 fine or twice the gross gain or loss, and restitution.
- Counts Eleven and Twelve, witness tampering: in violation of 18 U.S.C. § 1512(b)(1): 20 years imprisonment, $250,000 fine or twice the gross gain or loss, and restitution.
- Count Thirteen, conspiracy to tamper with evidence: in violation of 18 U.S.C. § 1512(k): 20 years imprisonment, $250,000 fine or twice the gross gain or loss, and restitution.
- Count Fourteen, false statements in a matter within the jurisdiction of the executive branch: in violation of 18 U.S.C. §§ 1001(a)(2) & 2: 5 years imprisonment, $250,000 fine, and restitution.
- Counts Fifteen through Nineteen, filing false tax returns in violation of 26 U.S.C. § 7206(1): 3 years imprisonment and a $100,000 fine.
- Counts Twenty and Twenty-One, false statements in bankruptcy proceedings in violation of 18 U.S.C. § 152(3): 5 years imprisonment, $250,000 fine or twice the gross gain or loss.
- Count Twenty-Two, false oath in a bankruptcy proceeding in violation of 18 U.S.C. § 152(2): 5 years of imprisonment, $250,000 fine or twice the gross gain or loss.
(Liew second superseding indictment )
Three Men Plead Guilty to Causing Serious Environmental Damage by Cultivating Marijuana on an Ecological ReserveRead the Press Release
SAN FRANCISCO – Chou Vang, Vang Pao Yang, and Pao Vang of Eureka, Calif. pleaded guilty in federal court in San Francisco yesterday to willfully injuring federal property stemming from a marijuana grow the three men cultivated on protected federal lands, United States Attorney Melinda Haag announced.
In pleading guilty, C. Vang, 52, Yang, 63, and P. Vang, 45, admitted to trespassing on the King Range National Conservation Area in the summer of 2012 where they cultivated and manufactured marijuana. In doing so, the defendants admitted that they caused serious damage to the environment. The defendants caused environmental damage by clearing away trees and vegetation, which created siltation and erosion issues, heavily using fertilizers, and failing to properly dispose of trash. The defendants’ actions affected the surrounding watershed and ecosystem including habitat for four federally listed threatened species.
The King Range National Conservation Area is often referred to as the “crown jewel” of land protected by the U.S. Bureau of Land Management and is part of a larger system of national conservation areas, monuments, and reserves protecting nationally-significant landscapes throughout the western United States. Protection of this land stemmed from the 1970 King Range Act which was a multi-year effort to conserve one of the most remote, undeveloped, and primitive coastlines in the continental United States. This area is one of the few, and is the largest coastal wilderness area in the contiguous 48 states and is characterized by an abrupt mountain range rising 4,000 feet directly out of the Pacific Ocean, creating a dramatic landscape of forest, pristine watersheds, and various naturally functioning ecosystems. The area provides habitat for four federally listed threatened species: Chinook salmon, Coho salmon, steelhead, and the northern spotted owl. Visitors come from around the world to experience the unique coastal wilderness qualities. This case highlights the significant environmental problems arising from the illegal cultivation of marijuana on federally-protected lands.
“The environmental harm associated with these illegal grows is wreaking havoc on these pristine ecological resources that the federal government is charged with protecting for the public,” said U.S. Attorney Melinda Haag. “We will continue to prosecute those who use our public lands in Northern California to illegally cultivate marijuana at the expense of the environment.”
All three of the defendants were arrested on September 20, 2012, in the King Range National Conservation Area and made their initial appearance in federal court in Eureka on September 24. The defendants were charged with one count of manufacturing marijuana, in violation of 22 U.S.C. § 841(a)(1) & (1)(B)(iv), and one count of willful injury to federal property, in violation of 18 U.S.C. § 1361. Under the plea agreement, the defendants pleaded guilty to willful injury to federal property.
All three of the defendants are scheduled for sentencing on July 23, 2014, at 10:00 a.m. before the Honorable Charles R. Breyer, United States District Court Judge, in San Francisco. The maximum statutory penalty for violating 18 U.S.C. § 1361 is ten years in prison and a $250,000 fine, plus restitution, which the parties agree is $31,000. 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.
Stacey Geis is the Assistant U.S. Attorney who is prosecuting the case. The prosecution is the result of an investigation by the U.S. Bureau of Land Management into large-scale marijuana cultivation on public lands.
(Vang & Yang indictment )
The United States Sues Sprint Communications, Inc. to Recover Overpayments for Wiretap Charges Under False Claims ActRead the Press Release
SAN FRANCISCO – The United States filed a civil complaint against Sprint Communications, Inc., formerly Sprint Nextel Corporation, under the False Claims Act, 31 U.S.C. §§ 3729-3733, announced United States Attorney Melinda Haag and the U.S. Department of Justice Office of Inspector General, Special Agent in Charge M. Elise Chawaga. The complaint seeks treble damages and civil penalties in connection with Sprint’s claims for reimbursement of the expenses it incurred in complying with court orders authorizing wiretaps, pen registers, and trap devices.
Like other telecommunications carriers, Sprint is authorized by statute to bill law enforcement agencies for the reasonable expenses it incurs in providing facilities or assistance to accomplish a court-ordered wiretap, pen register, or trap device. In 1994, Congress passed the Communications Assistance in Law Enforcement Act (“CALEA”), which required telecommunications carriers to upgrade their equipment, facilities, or services to ensure they were capable of enabling the government, pursuant to a court order, to intercept and deliver communications and call-identifying information. In 2006, the Federal Communications Commission ruled that carriers were prohibited passing on the costs of its CALEA upgrades to law enforcement agencies in its intercept bills. From 2007 to 2010, in violation of the FCC’s ruling, Sprint included in its intercept charges the hidden costs of financing its CALEA upgrades.
The complaint alleges that Sprint unlawfully inflated its charges by approximately 58%, causing federal law enforcement agencies to pay over $21 million in unallowable costs from January 1, 2007 to July 31, 2010.
“As alleged, Sprint overbilled law enforcement agencies for carrying out court-ordered intercepts, causing a significant loss to the government’s limited resources,” U.S. Attorney Melinda Haag said. “This office will use all available tools to protect the public fisc, and we will continue to hold those who present false claims to the government accountable.”
Steven J. Saltiel is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Legal Assistant Kathy Terry. The prosecution is the result of an investigation by the Department of Justice Office of Inspector General.
The claims asserted against Sprint are allegations only, and there has been no determination of liability.
(Sprint complaint )
Oakland Resident Charged in Identity Theft SchemeRead the Press Release
OAKLAND – Robert Thomas Doyle made his initial appearance today in federal court on charges of mail fraud, wire fraud, and aggravated identity theft, announced United States Attorney Melinda Haag and IRS-CI Special Agent in Charge José M. Martinez.
According to the indictment, from about January 15, 2013, to March 28, 2013, Doyle, of Oakland, knowingly and intentionally devised a scheme to obtain money by false and fraudulent pretenses by preparing and filing false federal income tax returns with the IRS. The tax returns contained materially false representations, including filing status, dependents, income, and credits.
As part of the scheme, Doyle allegedly obtained the identification of individual taxpayers through illegal means or by agreement. He recorded the names and personal identifying information used in the scheme on spreadsheets and electronically filed false federal income tax returns using those identities. He also requested refunds from the IRS to which the taxpayers listed on the tax returns were not entitled. According to the indictment, Doyle also requested that the IRS transmit the fraudulent refunds in a manner that ensured he would be able to exercise control over the refunds.
Doyle is charged with filing eight tax returns claiming refunds totaling $29,364. He made his initial appearance this morning before the Honorable Kandis A Westmore, United States Magistrate Judge in Oakland and was released on a 50K bond. Doyle is scheduled to appear next on March 6, 2014, at 9:30 a.m. in front of Judge Westmore.
The maximum statutory penalty for each count of mail fraud and wire fraud, in violation of Title 18, U.S.C § 1341 and 1343, is 20 years in prison and a fine of $250,000. The maximum penalty for aggravated identity theft, in violation of Title 18, U.S.C § 1028A, is two years in prison, consecutive to the underlying felony and a fine of $250,000.
Assistant US Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Please note that a criminal complaint contains only allegations against an individual and, as with all defendants, Robert Thomas Doyle, must be presumed innocent unless and until proven guilty.
(Doyle indictment )
San Jose Man Sentenced to 15 Years for Attempting to Bomb Bank in OaklandRead the Press Release
OAKLAND – Matthew Aaron Llaneza was sentenced today to 15 years in prison, followed by supervised release for the rest of his life, for attempting to detonate a vehicle-borne explosive device at a bank in Oakland, announced Melinda Haag, United States Attorney for the Northern District of California; John P. Carlin, Acting Assistant Attorney General for National Security at the Department of Justice; and David J. Johnson, Federal Bureau of Investigation (FBI) Special Agent in Charge, San Francisco Field Office.
Llaneza, 28, of San Jose, Calif. pleaded guilty on October 10, 2013, to the sole count in an indictment returned by a federal grand jury on March 7, 2013, charging him with attempted use of a weapon of mass destruction against property used in an activity that affects interstate or foreign commerce, in violation of 18 U.S.C. § 2332a(a)(2)(B).
According to the plea agreement, Llaneza admitted to knowingly attempting to detonate a vehicle-borne explosive device, or car bomb, at the Bank of America branch at 303 Hegenberger Road in Oakland, Calif., with the goal of destroying the bank building. He constructed the car bomb with a man he believed to be connected with the Taliban and the mujahidin in Afghanistan. Unbeknownst to Llaneza, this man was an undercover agent with the FBI and the car bomb he helped to construct and attempted to detonate had been rendered inert by agents of the FBI.
The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, United States District Court Judge, following a guilty plea to one count of attempted use of a weapon of mass destruction against property used in an activity that affects interstate or foreign commerce, in violation of 18 U.S.C. § 2332a(a)(2)(B).
This case is being prosecuted by the Special Prosecutions and National Security Unit of the United States Attorney’s Office for the Northern District of California. The prosecution is the result of an investigation by FBI’s San Jose Resident Agency, with the assistance of the FBI San Francisco Joint Terrorism Task Force, the California Highway Patrol, the San Jose Police Department, the Oakland Police Department, the Hayward Police Department, and the Union City Police Department.
(Llaneza indictment )
San Francisco Man Sentenced to 2 Years in Prison for Assaulting A Security Guard at the Oakland Federal CourthouseRead the Press Release
OAKLAND – Antonio Chavez was sentenced yesterday to 2 years in prison for assaulting a security guard protecting the federal courthouse in Oakland, announced United States Attorney Melinda Haag, FBI Special Agent in Charge David J. Johnson and Mario A. Canton, Regional Director at the Department of Homeland Security.
“The U.S. Attorney’s Office takes the safety of the personnel who protect federal employees and federal property very seriously. Our prosecution of this case, and the resulting sentence, demonstrate our commitment to holding accountable those who endanger the people who keep us safe,” said United States Attorney Melinda Haag.
“The Federal Protective Service takes full satisfaction with the outcome of this case in that there is a strong, clear message being sent emphasizing that we will investigate and prosecute to the fullest extent of the law those individuals who assault the law enforcement and security staff protecting our facilities.” said Regional Director Mario A. Canton.
On November 18, 2013, after a four-day trial, a jury convicted Chavez of assaulting a person assisting a federal officer, in violation of 18 U.S.C. § 111(a) and (b). Evidence at trial showed that on December 8, 2012, at about 3 a.m., private security guards noticed on surveillance video a group of six or seven individuals vandalizing the guard house next to the federal building in Oakland, Calif., on the corner of 12th Street and Jefferson Street. One of the guards went to the guard house to investigate the vandalism. The group largely dispersed as the guard approached, but two individuals remained when the guard arrived. As the guard continued his investigation, one of the individuals attempted to grab the guard’s flashlight and a struggled ensued. During that struggle, Chavez attacked the guard with an electric stun gun, striking him in the neck and chest and knocking him to the ground. Chavez later brandished and activated the stun gun while threatening the security guard with it. Chavez was ultimately apprehended later that night by the Oakland Police Department. At trial, Chavez testified that he acted in defense of another person. The jury rejected this claim with its guilty verdict.
Chavez, 21, of San Francisco, was indicted by a federal grand jury on February 21, 2013. Chavez was remanded into custody following his conviction at trial. The sentence was handed down by the Honorable Phyllis J. Hamilton, United States District Court Judge in Oakland. Judge Hamilton also sentenced the defendant to a 3-year period of supervised release.
Assistant U.S. Attorney Brian C. Lewis and Special Assistant U.S. Attorney Manish Kumar prosecuted this case with the assistance of Janice Pagsanjan and Noble Hughes. This prosecution is the result of an investigation by the Federal Protective Service, the Oakland Police Department, and the Federal Bureau of Investigation.
(Chavez indictment )
Five San Francisco Police Officers and A Former Officer Indicted for Civil Rights and Other Federal Law ViolationsRead the Press Release
SAN FRANCISCO – A federal grand jury in San Francisco indicted three San Francisco Police Department (SFPD) officers, each formerly assigned to the Southern Station, with conspiracy against civil rights and deprivation of rights under color of law. Two of the officers were also charged with falsification of records. Separately, a federal grand jury indicted three men, two SFPD officers and a former SFPD police officer, all formerly assigned to the Mission Station, with conspiracies to distribute controlled substances, against civil rights, and to commit theft concerning federally-funded programs. One SFPD officer was also charged with extortion.
“Southern Station Defendants”
- Officer Arshad Razzak, 41, of San Francisco;
- Officer Richard Yick, 37, of San Francisco; and
- Officer Raul Eric Elias, 44, of San Mateo.
According to the indictment, the Southern Station Defendants are alleged to have conspired to injure, oppress, threaten and intimidate occupants of single room occupancy hotel rooms by entering hotel rooms without legal justification. Defendants Razzak and Yick are also alleged to have falsified a payment slip to an informant, and each of them is also separately alleged to have falsified police reports to conceal their unlawful activities.
The maximum statutory penalties are as follows:
- Count 1: Civil rights conspiracy, 18 U.S.C. § 241 – 10 years/$250,000;
All Southern Station Defendants - Count 2: Deprivation of rights under color of law, 18 U.S.C. § 242 – 1 year/$250,000;
Defendants Razzak and Yick - Count 3: Deprivation of rights under color of law, 18 U.S.C. § 242 – 1 year/$250,000;
All Southern Station Defendants - Count 4: Falsification of records, 18 U.S.C. § 1519 – 20 years/$250,000;
Defendants Razzak and Yick - Count 5: Falsification of records, 18 U.S.C. § 1519 – 20 years/$250,000;
Defendant Razzak - Count 6: Falsification of records, 18 U.S.C. § 1519 – 20 years/$250,000;
Defendant Yick
“Mission Station Defendants”
- Sergeant Ian Furminger, 47, of Pleasant Hill;
- Officer Edmond Robles, 46, of Danville; and
- Reynaldo Vargas, 45, of Palm Desert, California.
According to the indictment, the Mission Station Defendants are alleged to have engaged in multiple criminal conspiracies, namely, to distribute controlled substances; to steal money and other valuable items, such as computers, electronic devices, and gift cards, from suspects; and to steal money, drugs and other valuable items that were seized on behalf of the City of San Francisco. Defendant Furminger is also alleged to have extorted property from an individual.
The maximum statutory penalties are as follows:
- Count 1: Drug conspiracy, 21 U.S.C. § 846 – 20 years/$1,000,000;
All Mission Station Defendants - Count 2: Drug distribution, 21 U.S.C. § 841(a) – 20 years/$1,000,000;
All Mission Station Defendants - Count 3: Civil rights conspiracy, 18 U.S.C. § 241 – 10 years/$250,000;
All Mission Station Defendants - Count 4: Federal program theft conspiracy, 18 U.S.C. § 371 – 5 years/$250,000;
All Mission Station Defendants - Count 5: Federal program theft, 18 U.S.C. § 666(a)(1)(A) – 10 years/$250,000;
All Mission Station Defendants - Count 6: Extortion under official right, 18 U.S.C. § 1951 – 20 years/$250,000;
Defendant Furminger
Any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The federal investigation began shortly after San Francisco District Attorney George Gascõn referred the matter to federal authorities citing a conflict of interest. In March 2011, San Francisco Public Defender Jeff Adachi had released hotel surveillance videos from a hotel in the Tenderloin neighborhood of several SFPD plainclothes officers entering hotel rooms that, according to Mr. Adachi, were inconsistent with police reports and sworn police testimony. Mr. Gascõn was the SFPD Chief of Police at the time of the police officers’ conduct. Federal authorities, in partnership with SFPD Internal Affairs Criminal Division, launched investigations into select SFPD officers’ conduct in the Mission and Southern Districts culminating in two separate indictments.
Defendants Razzak and Yick of the Southern Station Defendants and all three Mission Station Defendants were each issued a federal summons and will make their initial appearances on Friday, February 28, 2014 at 9:30 a.m. before the Honorable Elizabeth D. Laporte, United Sates Magistrate Court Judge in federal court in San Francisco. Defendant Vargas will appear before Judge Laporte at 2:00 p.m. today.
This case is being prosecuted by Assistant U.S. Attorneys in the Special Prosecutions and National Security Unit of the United States Attorney’s Office.
Please note, an indictment contains only allegations and, as with all defendants, the defendants in this case must be presumed innocent unless and until proven guilty.
(SFPD Southern indictment )
(SFPD Mission indictment )
Two San Jose Men Indicted and Held for Sex Trafficking of ChildrenRead the Press Release
SAN JOSE – A federal grand jury in San Jose indicted Justin Everett Crutchfield and Demontae Terrell Toliver, on January 29, 2014, with sex trafficking of children and sexual exploitation of children, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
According to the indictment, Crutchfield and Toliver, ages 27 and 23, respectively, both of San Jose, Calif., are alleged to have engaged in sex trafficking of children between June 16, 2013, and June 22, 2013, recruiting and coercing two girls, ages 15 and 17, to engage in commercial sex acts on the streets of San Jose for the financial benefit of the men. Both men are further charged with the production of child pornography, taking pictures of both girls engaged in sexually explicit conduct. At the time of his arrest, Crutchfield was employed as a Peer Health Counselor with the Santa Clara County Department of Mental Health, a fact which he freely shared with the victims when he provided them with his business card.
Crutchfield was arrested by San Jose Police in June 2013, and was initially charged by the County of Santa Clara. Toliver was arrested pursuant to an outstanding warrant from the State of California on February 8, 2014. Both men were turned over to federal authorities on February 11, 2014, and made their initial appearances in federal court in San Jose that same day. Toliver had a continued bail hearing today before the Honorable Howard G. Lloyd, United States Magistrate Court Judge and was ordered to be detained pending trial. Crutchfield is also currently being held without bail. The defendants’ next scheduled appearance is at 9:00 a.m. on April 17, 2014, before the Honorable D. Lowell Jensen, United States District Court Judge.
If convicted, the defendants face a maximum sentence of life in prison, a mandatory minimum 15 years in prison, and a fine of $250,000, for each violation of 18 U.S.C. § 1591, and a maximum sentence of 30 years in prison, a mandatory minimum 15 years in prison, and a fine of $250,000 for each violation of 18 U.S.C. § 2251(a). 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.
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 a joint investigation by the San Jose Police Department Human Trafficking Task Force and the Federal Bureau of Investigation.
Please note that a criminal complaint contains only allegations against an individual and, as with all defendants, Justin Everett Crutchfield and Demontae Terrell Toliver, must be presumed innocent unless and until proven guilty.
Anyone who suspects instances of human trafficking are encouraged to call the FBI or the Human Trafficking Hotline at 1-888-373-7888. Anonymous calls are welcome.
In addition, suspected child sexual exploitation or missing children may be reported to the National Center for Missing & Exploited Children, via its toll-free 24-hour hotline, 1-800-843-5678.
(Crutchfield indictment )
Jury Convicts Santa Rosa Man of Armed Robbery of the Garda Armored Car WarehouseRead the Press Release
SAN FRANCISCO – Today, a federal jury convicted Monico Dominguez of one count of robbery, one count of attempted robbery, two counts of conspiring to commit robbery, two counts of possession of a firearm in furtherance of a crime of violence, three counts of money laundering, and one count of structuring, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
The jury found that on August 11, 2011, Dominguez committed an armed robbery of the Garda Cash Logistics warehouse in Santa Rosa, Calif., that he laundered and structured the substantial cash proceeds from that robbery, and that he attempted to commit a second robbery at that same facility on August 6, 2012. The guilty verdict followed a two week jury trial before the Honorable Edward M. Chen, United States District Court Judge.
Evidence at trial showed that on August 11, 2011, Dominguez and an accomplice dove under the closing garage door of the Garda warehouse as an armored car was returning from the night shift, that Dominguez held up the guards with an AK-47 assault rifle before tying them up and entering the vault. Dominguez stuffed just over $909,000 in cash into a duffel bag before fleeing the scene. Dominguez got away with this heist for approximately one year, during which he opened new bank accounts, made substantial cash deposits, and purchased multiple Harley Davidson motorcycles, cars, and expensive construction equipment. The evidence at trial showed that on August 6, 2012, Dominguez set in motion a plan to steal an armored car from the Garda warehouse, but the robbery was foiled before it could happen with the assistance of a confidential informant who had reported Dominguez’s plan to the Federal Bureau of Investigation and Santa Rosa Police Department.
Dominguez, of Santa Rosa, was indicted by a federal grand jury on November 29, 2012. Dominguez will remain in custody pending sentencing. Dominguez’s sentencing hearing is scheduled for May 14, 2014, before Judge Chen, in San Francisco.
The maximum statutory penalties for robbery, attempted robbery, and conspiring to commit a robbery, in violation of 18 U.S.C. § 1951(a), are a prison term of 20 years, a fine of $250,000, and 3 years of supervised release.
The maximum statutory penalties for possessing a firearm in furtherance of a robbery, in violation of 18 U.S.C. § 924(c), are a prison term of life, a fine of $250,000, and 5 years of supervised release.
The maximum statutory penalties for money laundering, in violation of 18 U.S.C. § 1957, are a prison term of 10 years, a fine of $250,000, and 3 years of supervised release.
The maximum statutory penalties for structuring, in violation of 31 U.S.C. § 5324, are a prison term of five years, a fine of $500,000, and 3 years of supervised release.
However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorneys Randy Luskey and Ben Tolkoff prosecuted this case with the assistance of Daniel Charlier-Smith and Christine Tian. This prosecution is the result of a joint investigation by the Federal Bureau of Investigation and the Santa Rosa Police Department.
(Dominguez superseding indictment )
Former CEO of Technology Start-Up Charged in Investment SchemeRead the Press Release
SAN FRANCISCO – Jonathan Edward (“Jon”) Mills, the former Chief Executive Officer of a San Francisco-based technology company, has been charged with wire fraud, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
An affidavit filed by FBI Special Agent Brian Weber alleges that Mills, 30, of San Francisco, falsely represented that Motionloft, Inc., a company he founded and served as its CEO, was going to be acquired by Cisco, Inc., and that Cisco already had paid a good faith deposit of millions of dollars toward that acquisition. According to court documents, one victim invested $210,000 relying on Mills’ claims that this victim would obtain shares in Motionloft in return and huge profits when the acquisition closed. Mills allegedly made these false representations just days before Motionloft’s stockholders terminated him as CEO on or about December 1, 2013. According to court documents, representatives of Cisco and Motionloft’s largest investor have both stated there was no possible acquisition of Motionloft by Cisco. Furthermore, court documents reflect that Motionloft’s largest investor has been contacted by several victims of Mills, and that Mills has claimed he is trying to pay back those victims.
Mills was arrested yesterday in San Francisco, and he made his initial appearance in federal court in San Francisco this morning. Mills is in custody, at least until his next scheduled court appearance, tomorrow, February 21, 2014, at 9:30 a.m. before the Honorable Maria-Elena James, United States Magistrate Court Judge in San Francisco.
The maximum statutory penalty for wire fraud, in violation of Title 18, United States Code, Section 1343, is 20 years in prison, a fine of $250,000, plus 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.
Authorities believe there are several additional victims of Mills’ alleged fraud. Anyone with information about Mills should contact the FBI in San Francisco at 415-553-7400.
Doug Sprague is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rayneisha Booth. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Please note that a criminal complaint contains only allegations against an individual and, as with all defendants, Jonathan Edward (“Jon”) Mills must be presumed innocent unless and until proven guilty.
(Mills criminal complaint )
Five NDCA Assistant United States Attorneys Among Fifty Seven Recipients of the California Lawyer Attorneys of the Year AwardRead the Press Release
SAN FRANCISCO – San Francisco Office, Assistant United States Attorneys Hartley M.K. West, Philip J. Kearney, John H. Hemann, Susan E. Badger, and Stacey P. Geis, have been chosen among 57 attorneys around the state to receive the 18th Annual California Lawyer Attorneys of the Year Award. The honored attorneys include prosecutors, public-interest lawyers, and attorneys from regional and international law firms. The recipients of the CLAY Awards will be featured in the March 2014 issue of California Lawyer.
“Federal prosecutors work hard every day to keep the public safe. We are proud of the accomplishments of these Assistant United States Attorneys and congratulate them and all the other honorees for this well-deserved award,” said United States Attorney, Melinda Haag.
Regarding the CNET/Butler cases for which AUSAs West, Kearney, Hemann and Badger were honored, Ms. Haag said: “Color of law civil rights cases are difficult to investigate and prove, but AUSAs take their responsibility for enforcing our civil rights laws seriously. These four AUSAs all worked extraordinarily hard to see that justice was done, and to send the message that we cannot tolerate corrupt law enforcement officers who bring dishonor to the badge and cavalierly violate the rights of people they are sworn to defend and protect.”
Regarding the Wal-Mart case for which Ms. Geis was honored (along with Central District of California AUSA Joseph O. Johns), Ms. Haag added: “The Wal-Mart case resolution provided the seed money for the creation of the San Francisco Bay Estuary Conservation Fund that will fund Bay Area environmental projects going forward. Wal-Mart’s guilty plea shows Ms. Geis’ dedication to bringing one of the largest retailers in the United States to justice for failing to comply with regulations designed to ensure the proper handling, storage, and disposal of hazardous materials and waste.”
The Assistant United States Attorneys and their achievements are briefly described below.
Hartley M.K. West, Philip J. Kearney, John H. Hemann, and Susan E. Badger, U.S. Attorney’s Office, San Francisco
Category: Criminal LawThis team of federal prosecutors brought dozens of civil rights and corruption charges against the Central Contra Costa Narcotics Enforcement Team and four police officers which resulted in several convictions.
This team of federal prosecutors brought dozens of civil rights and corruption charges against the Central Contra Costa Narcotics Enforcement Team and four police officers which resulted in several convictions. This included the prosecutions of former CNET Commander Norman Wielsch and private investigator Christopher Butler for civil rights and narcotics conspiracies, narcotics distribution, extortion, and robbery; former Richmond Police Officers Danny Harris, Jr. and Raymond Thomas, Jr. on firearms and obstruction of justice charges in connection with running a private security business on the side; former San Ramon Police Officer Louis Lombardi for stealing money and property during searches that he performed as a law enforcement officer; and former Contra Costa County Deputy Sheriff Stephen Tanabe for honest services fraud and extortion for arranging “stings” against men involved in child custody disputes in exchange for cocaine and a firearm provided by private investigator Butler. As a result of these prosecutions, these corrupt law enforcement officers sustained felony convictions, lost their jobs, and are serving sentences imposed by the Court.
Stacey P. Geis, U.S. Attorney’s Office, San Francisco
Joseph O. Johns, U.S. Attorney’s Office, Los Angeles
Category: Environmental LawJohns and Geis successfully prosecuted Walmart Stores Inc. for illegally handling and disposing of hazardous waste throughout the country, resulting in the company pleading guilty to violating the Clean Water Act and paying more than more than $81 million, with $20 million used to fund various community service projects, including opening a $6 million Retail Compliance Assistance Center that will help retail stores across the nation learn how to properly handle hazardous waste and $4.5 million to go to the newly-created San Francisco Bay Estuary Conservation Fund that will fund Bay Area environmental projects. According to documents filed in U.S. District Court in San Francisco, from a date unknown until January 2006, Wal-Mart did not have a program in place and failed to train its employees on proper hazardous waste management and disposal practices at the store level. As a result, hazardous wastes were either discarded improperly at the store level – including being put into municipal trash bins or, if a liquid, poured into the local sewer system – or they were improperly transported without proper safety documentation to one of six product return centers located throughout the United States.
“Dirty DUI” Cop Sentenced to Fifteen Months for Extortion and Honest Services FraudRead the Press Release
SAN FRANCISCO – Stephen Tanabe, a former Deputy with the Contra Costa County Sheriff’s Office, was sentenced to fifteen months’ imprisonment in federal prison today, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
A federal jury convicted Tanabe on September 3, 2013, on two counts of extortion under color of official right, in violation of 18 U.S.C. § 1951; three counts of wire fraud on a deprivation of honest services theory, in violation of 18 U.S.C. §§ 1343 and 1346; and one count of conspiracy to commit honest services fraud, in violation of 18 U.S.C. § 1349. Tanabe was acquitted on one extortion count.
According to evidence presented at trial, Tanabe conspired to and did engage in a scheme to take bribes in exchange for his services as a Deputy Sheriff, thereby depriving the people of Contra Costa County of their right to his honest services. Specifically, the evidence showed that Christopher Butler, a former Antioch Police Officer turned private investigator, was hired by wives and ex-wives engaged in divorce and child custody proceedings to arrange “stings” against their spouses, whom they told Butler had a propensity to drive under the influence of alcohol. Butler used “decoys” to entice the sting targets to bars in downtown Danville, where Tanabe was assigned to patrol. The decoys would encourage the men to drink and then drive while intoxicated.
For one sting, Tanabe joined Butler in a bar while off-duty, watching two attractive young women working for Butler drink with a sting target. Evidence showed that, in exchange for a promise of cocaine, Tanabe notified an on-duty Deputy that the sting target was about to drive away, having been lured by the prospect of a hot tub with the two women. For two other stings, the evidence showed that Tanabe, then on-duty, waited outside the Vine Bar in Danville and then arrested the targets. He received a Glock handgun in exchange for his participation in these sting operations.
The sentence imposed by the Honorable Charles R. Breyer, Senior United States District Court Judge, also included 240 hours of community service, a three year period of supervised release, as well as forfeiture of the Glock handgun he obtained in connection with two of the arrests. The Court ordered Tanabe to surrender to the United States Marshals Service to serve his term of imprisonment on April 15, 2014.
“This sentence reflects the serious nature of Stephen Tanabe’s criminal conduct – taking bribes in exchange for setting up unsuspecting citizens and abusing the public’s trust in law enforcement,” said United States Attorney, Melinda Haag.
“This sentencing is symbolic of the unwavering commitment of the FBI through our partnership with the U.S. Attorney’s Office in preserving the public’s trust in those who serve in a law enforcement capacity,” said Johnson. “No one is above the law and all are accountable for their actions.”
Tanabe, 50, was originally indicted on December 15, 2011. The Superseding Information on which he was tried was filed on June 12, 2013.
Hartley M. K. West and Philip J. Kearney are the Assistant U.S. Attorneys who prosecuted the case with the assistance of Alycee Lane. The prosecution is the result of a lengthy investigation by the FBI with the invaluable assistance of the Contra Costa County District Attorney’s Office.
(Tanabe superseding information )
Three Defendants Plead Guilty in Federal Student Aid Fraud SchemeRead the Press Release
OAKLAND – Kyle Edward Moore, Cortio Detrice Wade, and Marcel Devon Bridges pleaded guilty on February 14, 2014, in federal court in Oakland to conspiracy to commit financial aid fraud and wire fraud, United States Attorney Melinda Haag announced.
In pleading guilty, Moore, Wade, and Bridges admitted to conspiring to obtain federal student aid funds offered under the Title IV Federal Student Assistance Program. Moore and his co-defendants obtained the aid by preparing and transmitting fraudulent Free Applications for Federal Student Aid (FAFSAs) to the U.S. Department of Education.
In carrying out the fraud scheme, Moore and his co-defendants recruited third-parties to serve as “straw students” and then assisted the straw students in preparing, signing, and transmitting fraudulent FAFSAs knowing that many of the straw students were not eligible to obtain Title IV funds because, among other things, the straw students had not obtained high school diplomas or a recognized equivalent and had no intention of attending school or using the funds for educational purposes. After receiving the student loan funds, Moore and his co-defendants would share the fraudulently obtained funds among themselves and sometimes with the straw students.
Moore, Wade, and Bridges admitted to defrauding the Department of Education in the amounts of $771,268, $136,088, and $114,734, respectively.
Moore, Wade, and Bridges were indicted by a federal Grand Jury on August 15, 2013. They were charged with conspiracy to commit financial aid fraud in violation of 18 U.S.C. § 371, and with multiple counts of wire fraud in violation of 18 U.S.C. § 1343. Pursuant to their plea agreements, Moore pleaded guilty to two counts of conspiracy and one count of wire fraud; Bridges pleaded guilty to one count of conspiracy and one count of wire fraud; and Wade pleaded guilty to one count of conspiracy and four counts of wire fraud.
Moore, Wade, and Bridges were released on bonds.
Moore and Bridges have a sentencing hearing scheduled for August 22, 2014. Wade has a sentencing hearing scheduled for September 19, 2014. Both sentencing hearings will be held before the Honorable Jon S. Tigar, United States District Court Judge, in Oakland. The maximum statutory penalty for each count of conspiracy to commit financial aid fraud in violation of 18 U.S.C. § 371 is five years in prison, a fine of $250,000 or twice the gross gain or loss, whichever is greater, and restitution. The maximum penalty for each count of wire fraud in violation of 18 U.S.C. § 1343 is twenty years in prison, a fine of $250,000 or twice the gross gain or loss, whichever is greater, and restitution. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
AUSA Wade M. 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 an investigation by the U.S. Department of Education, Office of the Inspector General, the Federal Bureau of Investigation, and the U.S. Department of Housing and Urban Development, Office of the Inspector General.
(Moore indictment )
Texas Oil Executive Indicted on Scheme to Commit Wire and Mail FraudRead the Press Release
SAN JOSE – A federal grand jury in San Jose returned a sixteen count superseding indictment charging a Texas-based oil executive with undertaking a scheme to commit wire and mail fraud, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
According to the indictment, which was unsealed earlier today, Dwayne Kent Singleton, 51, a resident of Texas, is named as the sole defendant in eight counts of mail fraud and eight counts of wire fraud between approximately 2008 and 2009.
According to the superseding indictment, Singleton was one of the founders and senior executives of a business known Santana Energy Services, LLC (“Santana”), which has its administrative offices in Santa Clara, California, and whose primary focus was re-entry drilling of existing oil wells that had been abandoned by larger oil concerns but had potential oil reserves. Singleton resided in Texas and assumed the role of site operations manager for the oil drilling sites. Among his duties, Singleton also submitted Santana's contractor and vendor payment requests via telephone or e-mail to Santana’s offices in California. Relying on these requests, Santana’s executives in California signed the checks drawn on its business account in Santa Clara. The signed vendor checks were then sent via Federal Express to Singleton in Texas.
Beginning in early 2008, according to the superseding indictment, Singleton began requesting payments from Santana for work purportedly performed or equipment/infrastructure furnished by vendors at Santana’s drill sites in Texas. Singleton, either directly or through his assistant in Texas, emailed Santana’s offices in Santa Clara, requesting that payments be made payable to certain entities. Typically, the e-mails were cryptic and appeared to be requesting payments to be made payable to vendors. Based on Santana’s understanding that the payments were being made to third-party vendors for work performed on Santana’s drilling sites, Santana’s employees in Santa Clara would prepare and execute checks drawn on a Santana-controlled business account at a bank in Santa Clara. Santana then transmitted those checks via Federal Express mailings to Singleton’s offices in Texas.
According to the allegations, Singleton did not, in fact, use the checks provided by Santana to pay the third-party vendors that he had identified in e-mails to Santana’s Santa Clara offices. Instead, the checks were made payable to companies that Singleton himself had created and controlled, and the checks were deposited into bank accounts Singleton alone controlled.
According to the superseding indictment, many of these accounts were in the name of shell companies with names similar to – and only slightly different from – genuine contractors and vendors who had actually been retained to perform services for the benefit of Santana. These shell companies had no employees, vouchers, credit or expenses associated with Santana. The money deposited into these accounts was not used for Santana expenses, as Singleton had represented in his e-mails and other communications with Santana. Instead, it was transferred or spent by Singleton for unauthorized, personal matters.
As a result of this scheme, Singleton eventually diverted well over $1,000,000 in corporate funds for purposes unauthorized by and unrelated to Santana, including his mortgage, a private jet, and his hunting ranch in North Texas.
After first appearing in federal court in Texas earlier this month and ordered to travel to San Jose, the defendant made his initial appearance in federal court in San Jose earlier today before the Honorable Howard R. Lloyd, United States Magistrate Court Judge, who unsealed the indictment. Singleton is currently out on bond. His next scheduled appearance is on March 11, 2014, at 1:30 p.m., in San Jose before the Honorable Howard R. Lloyd for review of terms of bond and for status and further setting on April 2, 2014, at 9:30 a.m., before the Honorable Lucy H. Koh, United States District Court Judge in San Jose.
The maximum statutory penalty for each count of the indictment is twenty years imprisonment, a fine of $250,000 or twice the amount of gain or loss, whichever is greater, and restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Timothy J. Lucey is the Assistant United States Attorney who is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
Please note, an Indictment contains only allegations against an individual and, as with all defendants, Dwayne Kent Singleton must be presumed innocent unless and until proven guilty.
(Singleton superseding indictment )
San Francisco Attorney Pleads Guilty to Failing to Report More Than $1.3 Million of IncomeRead the Press Release
SAN FRANCISCO – James P. Kleier pled guilty yesterday to two counts of failing to file income tax returns, United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez announced.
According to his plea agreement, Kleier is a practicing tax attorney focusing on federal and state tax controversies. From 1999 through 2005, Kleier was a partner at Preston, Gates, & Ellis, LLP. From 2005 through 2010, Kleier worked at Reed Smith, LLP. During those years from 1999 through and including 2010, Kleier failed to report any income he earned.
According to court documents, for 2008, 2009, and 2010 Kleier earned $624,923, $476,088, and $200,734, respectively. He was required by law to file an income tax return with the IRS and did willfully fail to do so. Kleier has agreed 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, funding programs and services like roads, water, education, and agriculture, accessed and needed by millions of people every day. The defendant, a tax attorney, should and did know that he is 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, was charged on May 1, 2013, with three counts of failure to file income tax returns. He pleaded guilty to one count. As part of the plea, Kleier will be sentenced to 12 months in prison and pay restitution in the amount of $650,993. Sentencing is scheduled for May 29, 2014, before the Honorable Laurel Beeler, United States Magistrate Court Judge, in San Francisco.
The maximum statutory penalty for each count failure to file a tax return, in violation of 26 U.S.C. § 7203, is one year imprisonment and a fine of $100,000. 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 Thomas Newman is prosecuting this case. The prosecution is the result of an investigation the Internal Revenue Service, Criminal Investigation.
(Kleier information )
Pleasant Hill Woman Charged in Tax Refund Theft SchemeRead the Press Release
OAKLAND – Sherry L Hender made her initial appearance today in federal court on charges of theft of government property and aggravated identity theft, United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez announced.
According to the indictment filed on May 21, 2013, and unsealed today, from about January 18, 2012 to February 21, 2012, Hender, of Pleasant Hill, knowingly and willfully stole federal tax refunds to which she was not entitled. For the 2011 tax year, Hender received 13 tax refunds totaling $42,989. Hender also unlawfully used the name and Social Security number of another individual to obtain that tax refund.
Hender’s next court appearance is on March 7, 2014, before the Honorable Jeffrey S. White, United State District Court Judge in San Francisco.
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 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 Internal Revenue Service, Criminal Investigation.
(Hender indictment )
Owner of San Francisco Construction Company Sentenced to Jail for Tax FraudRead the Press Release
SAN FRANCISCO, Calif. – Brian Kenny was sentenced yesterday to six months in prison and six months of home confinement and ordered to pay $199,493.83 in restitution for aiding and assisting in the preparation and presentation of a false U.S. Income Tax Return, announced United States Attorney Melinda Haag and IRS Criminal Investigation Special Agent in Jose M. Martinez.
Kenny pleaded guilty on November 5, 2013. According to court records, on or about February 17, 2005, Kenny incorporated his business, SF Bay Construction, Inc. (SFBC). SFBC filed tax returns reporting business gross receipts but paid no corporate income tax. Rather, Kenny reported SFBC’s income on his personal income tax return and paid the tax as SFBC’s sole shareholder. Kenny, however, evaded the full payment of his individual income taxes by underreporting SFBC’s business gross receipts. According to his plea agreement, Kenny failed to report $470,225.77 in business gross receipts during the 2006 tax year. Kenny admitted that he knew the amount of business gross receipts reported on SFBC’s tax return was material to the calculation of income tax owed on his personal income tax return.
Pursuant to the terms of his Plea Agreement, Kenny signed civil closing agreements with the IRS for his income tax liability and SFBC’s employment tax liability. Kenny has paid the full amount of his restitution.
Kenny, of San Francisco, was charged on July 25, 2013, with six counts of assisting in the filing of false tax returns. He pleaded guilty to one count.
Cynthia Stier is the Assistant United States Attorney who is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Oakland Man Sentenced to over Five Years in Prison for Robbing Five Banks and Attempting to Rob Two Banks in the East BayRead the Press Release
OAKLAND – Amanuel Moreno was sentenced yesterday to 70 months in prison for bank robbery and attempted bank robbery, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
In pleading guilty, Moreno admitted to robbing or attempting to rob the following banks:
Date
Bank
Location
Amount Stolen
06/29/2012
Bank of the West
24299 Southland Drive, Hayward
$25
12/06/2012
Bank of the West
4900 Telegraph Avenue, Oakland
$506
12/06/2012
Chase Bank
2270 Otis Drive, Alameda
Attempt
12/13/2012
Wells Fargo Bank
950 South Holland Drive, Hayward
$1,541
12/18/2012
Chase Bank
32101 Union Landing, Union City
Attempt
12/18/2012
U.S. Bank
1585 East 14th Street, San Leandro
$724
01/16/2013
Bank of the West
4900 Telegraph Avenue, Oakland
$3,321
In his robberies and attempted robberies, Moreno entered the banks and passed the victim tellers threatening notes demanding money. The notes informed the tellers that Moreno had a gun, and in the last three incidents Moreno threatened to shoot the tellers.
Moreno, 21, of Oakland, was arrested on January 25, 2013, by local law enforcement and remained in local custody pursuant to a probation violation. He has been in federal custody since July 5, 2013. The superseding indictment charging Moreno with five counts of bank robbery and two counts of attempted bank robbery was filed on August 1, 2013. Moreno pleaded guilty to all seven counts on October 23, 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, Hayward Police Department, Oakland Police Department, Alameda Police Department, Union City Police Department, and San Leandro Police Department.
(Moreno superseding indictment )
Concord Man Pleads Guilty to Possession of Child PornographyRead the Press Release
OAKLAND – Scott Alan Seidlitz pleaded guilty in federal court in Oakland today to possessing child pornography, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
In pleading guilty, Seidlitz admitted that starting in 2010, he copied child pornography images from another person’s email account over the Internet using his laptop computer and stored them on his external hard drive. Seidlitz admitted to possessing more than 4,000 images of child pornography, including images depicting bondage and bestiality.
Seidlitz, 29, of Concord, was arrested on August 30, 2013, by local law enforcement on separate charges. Seidlitz was charged by federal complaint on September 1, 2013. He made his initial appearance in federal custody on September 4, 2013, and has since remained in federal custody. Seidlitz was indicted on September 12, 2013.
Seidlitz’s sentencing hearing is scheduled for April 29, 2014, before the Honorable Jeffrey S. White, United States District Court Judge in Oakland. The maximum statutory penalty for possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B) and (b)(2), is a maximum term of 10 years in prison, a fine of $250,000, a minimum of 5 years of supervised release and a maximum of a life term of supervised release. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
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 and the Concord Police Department.
(Seidlitz indictment )
Berkeley Psychologist Convicted of Theft of Government Property and Tax EvasionRead the Press Release
OAKLAND – Yesterday a federal jury convicted Hugh Leslie Baras, a psychologist and Berkeley resident, on five counts of tax evasion and one count of theft of government property, United States Attorney Melinda Haag, and Internal Revenue Service, Criminal Investigation Special Agent in Charge José M. . Martinez announced.
The evidence presented during the seven-day trial before the honorable Yvonne Gonzalez Rogers, United States District Court Judge, 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, the Baras provided clinical psychotherapy services to clients. During the years 2005 through 2009, the defendant’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 totaling $80,615.80 to which he was not entitled.
Baras’ sentencing hearing is scheduled for May 22, 2014, at 2:00 p.m., before Judge Gonzalez Rogers in Oakland. The maximum statutory penalty for each count of tax evasion, in violation of Title 26, U.S.C § 7201 is five years in prison and a fine of $250,000. The maximum statutory penalty for each count of theft of government property, in violation of Title 18, U.S.C § 641 is ten years in prison and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
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 )
San Ramon Divorce Attorney Sentenced to 24 Months in Prison for Unlawfully Intercepting Telephone Conversations and Tax EvasionRead the Press Release
SAN FRANCISCO – Mary Nolan, a divorce and family law attorney in San Ramon, Calif., was sentenced to 24 months in prison for unlawful interception of telephone communications and tax evasion, 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.
Nolan, 61, pleaded guilty on September 27, 2013, to five felony counts – one count of unlawful interception of communications and four counts of tax evasion. In pleading guilty to the charges, Nolan admitted causing her staff to illegally intercept telephone conversations by accessing a listening device that private investigator Christopher Butler had installed in a victim’s vehicle, willfully evading more than $400,000 in federal taxes between 2005 and 2009, and obstructing justice by submitting false contracts to the IRS during an audit.
The sentence was handed down by the Honorable Charles R. Breyer, Senior United States District Court Judge. Judge Breyer also included a three year period of supervised release, 240 hours community service, as well as $468,918.01 in restitution, $500.00 special assessment, and Nolan’s resignation of her bar license. The Court ordered Nolan to surrender to the United States Marshals Service to serve her term of imprisonment no later than March 6, 2014. At the time of sentencing, she had already paid the restitution and resigned her bar license.
Butler, who pleaded guilty to unlawful interception and several other offenses on May 4, 2012, admitted having installed approximately seventy-five to one hundred unlawful listening devices at the request of clients or their attorneys, including the listening device in Nolan’s victim’s vehicle in August 2007. Butler was sentenced to 60 months’ imprisonment on this charge, to be served concurrently with the 96-month sentence on his other counts of conviction.
“The defendant’s conduct was reprehensible and a dishonor to those who practice law with the utmost commitment and integrity. The sentence sends a strong message and confirms that the United States Attorney’s Office will prosecute those who abuse the public trust to the fullest extent of the law,” stated U.S. Attorney Melinda Haag.
“Attorneys and those trusted with the confidence of others are expected to uphold the law and pursue justice with integrity,” said FBI Special Agent in Charge David J. Johnson of the San Francisco Field Office. “The FBI will continue to partner with the U.S. Attorney’s Office to expel those who abuse their professional licenses and take advantage of the criminal justice system.”
“This sentence should send a clear message that no one is above the law,” said IRS-Criminal Investigation Special Agent in Charge José M. Martinez. “Ms. Nolan misused her position for personal gain while cheating the government out of hundreds of thousands of dollars. Those who intentionally evade taxes should know they will not go undetected and will be held accountable.”
Nolan was indicted on September 6, 2012, by a federal grand jury charging her with tax evasion for the years 2005 through 2009, in violation of 26 U.S.C. § 7201; unlawful interception of communication, in violation of 18 U.S.C. § 2511(1)(a) and (4)(a); and conspiracy to unlawfully intercept communications, in violation of 18 U.S.C. § 371.
Hartley M. K. West is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Alycee Lane. The prosecution is the result of a lengthy investigation by the FBI, the Internal Revenue Service – Criminal Investigation, and the Contra Costa County District Attorney’s Office.
(Nolan indictment )
San Francisco Man Sentenced to 40 Months in Prison for FraudRead the Press Release
SAN FRANCISCO – Blessed Marvelous Herve (aka Herve Rodrigue Ndandou, aka Blessed Roll Herve) was sentenced today to 40 months in federal prison after pleading guilty to defrauding two victims out of more than $1.6 million over the course several years, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Herve pleaded guilty to wire fraud on September 6, 2013. According to the Plea Agreement, Herve admitted to executing a scheme to defraud two victims out of approximately $1.6 million through a series of false statements and promises. Among other false statements, Herve falsely stated that his father was a foreign dignitary and a multibillionaire, and that the United States government had seized millions of dollars belonging to Herve. Herve claimed that he needed money from his victims to prevail in a secret federal case to gain access to these funds, which he would then use to repay his victims.
Herve, 41, of San Francisco, was arrested on April 24, 2013, after a Criminal Complaint was filed against him. He was indicted by a federal grand jury on May 7, 2013. The Indictment charged Herve with one count of wire fraud, in violation of Title 18, United States Code, Section 1343.
The sentence was handed down by the Honorable Charles R. Breyer, United States District Court Judge. Judge Breyer also sentenced the defendant to a three-year period of supervised release following his prison term and ordered him to pay $1,605,926 in restitution to the victims of his fraudulent scheme. Herve has been in custody since his arrest on April 24, 2013.
Hallie Hoffman and Doug Sprague are the Assistant United States Attorneys who are prosecuting the case with the assistance of Muffy Mallory, Rayneisha Booth, and Rawaty Yim. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
(Herve Indictment)
Oakland Woman Pleaded Guilty for Bringing Illegal Wildlife into the United StatesRead the Press Release
OAKLAND – Patty Chen pleaded guilty in federal court on Friday, January 17, 2014, to False Statement and Lacey Act violations for her involvement in illegally bringing wildlife into the United States from Ecuador, United States Attorney Melinda Haag announced.
In pleading guilty, Chen admitted to bringing wildlife products including shark fins, shark fin noodles, sea horses, dried conch, dried fish and eel maw, valued at $29,760 from Ecuador into the United States. Chen admitted that on each occasion that she illegally brought wildlife into the United States, she falsified the United States Customs Service Declaration by falsely stating that she was not transporting wildlife products into the United States.
Chen, 67 of Oakland, was indicted by a federal Grand Jury on July 25, 2013, in the Southern District of Florida, with two counts of violating the Lacey Act, in violation of 16 U.S.C. § 3372(d)(1), and two counts of violating the False Statement Statute, in violation of 18 U.S.C. § 1001(a)(3). The case was transferred to the Northern District of California on November 22, 2013. Chen pleaded guilty to all counts.
Chen’s sentencing is scheduled for May 9, 2014, before the Honorable Jon S. Tigar, United States District Court Judge in Oakland. The maximum statutory penalty for each count of the Lacey Act, 16 U.S.C. § 3372(d)(1) is 5 years imprisonment, 3 years supervised release, a fine of $250,000, plus restitution; for each count of the False Statement Statute, 18 U.S.C. § 1001(a)(3), is 5 years imprisonment, three years supervised, a $250,000 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.
Maureen Bessette and Thomas Watts-FitzGerald are the Assistant U.S. Attorneys prosecuting the case with the assistance of Janice Pagsanjan. The prosecution is the result of an investigation by the National Oceanic Atmospheric Administration, Office for Law Enforcement, assisted by Homeland Security Investigations.
(Chen Indictment)
Los Gatos Man Sentenced to Two Years for Conspiracy to Commit Mail and Wire Fraud, and Conspiracy to Commit Bank FraudRead the Press Release
SAN JOSE – David Foley, the former chief technology officer of Santa Clara, California video game developer Global VR, and former owner of NexTune Corporation, d/b/a UltraCade Technologies, was sentenced today to two years in prison and ordered to pay a $5,000 fine for engaging in a conspiracy to commit mail and wire fraud, and conspiracy to commit bank fraud, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Foley, 48, of Los Gatos, pleaded guilty on January 6, 2012 to one count of conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. § 1349, as charged in a superseding indictment filed on January 9, 2009, and one count of conspiracy to commit bank fraud, in violation of 18 U.S.C. § 1349, as charged in an indictment filed on August 18, 2011. The charges contained in the separate indictments were consolidated for the guilty pleas.
In his plea agreement, Foley admitted that he manufactured thumb drives, known as “game packs,” containing video gaming software that could be loaded onto arcade video game machines made for the home market. Foley illegally produced the products from his home while working as the chief technology officer of Global VR, which had previously acquired all rights to produce and sell games under the UltraCade name. After producing the game packs, Foley sold the products to a co-defendant located in Milford, Conn., and agreed to sell the game packs to the public using packaging and advertisements that falsely represented the goods to have been genuinely manufactured by UltraCade. Foley thereafter received payment for the illegally manufactured game packs by mail and wire.
Foley further admitted that he defrauded Countrywide Home Loans (now owned and operated by Bank of America) of mortgage and home equity line of credit loans in the amounts of $2,624,475 and $374,925. He did this by falsely claiming that he was still employed at Global VR. Foley had been fired from his job by the time the loan applications were submitted. Foley admitted that he instructed a co-defendant to contact Countrywide Home Loans to falsely confirm his continued employment after his employment had been terminated and prior to receiving the funds.
The sentence was handed down by the Honorable Edward J. Davila, United States District Court Judge in San Jose. Judge Davila also sentenced the defendant to a three-year period of supervised release. The defendant will begin serving the sentence on March 27, 2013.
Hanley Chew, Susan Knight, and Richard C. Cheng are the Assistant United States Attorneys who prosecuted the case with the assistance of Laurie Worthen and Tracey Andersen. The prosecution was the result of an investigation by the Federal Bureau of Investigation.
(Foley Indictment 11-0054)
(Foley Indictment 09-00670)
(Foley Superseding Indictment 09-00670)
Alleged Fraudster Apprehended in Puerto VallartaRead the Press Release
SAN FRANCISCO – Martin Christopher Edwards of Napa, Calif., was apprehended on January 15, 2014, in Mexico and deported to the United States to face federal charges, 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.
FBI agents in the United States and Guadalajara, Mexico, coordinated with Mexican Immigration Officials to locate Edwards in Puerto Vallarta, Mexico. Edwards was found near the Hacienda Escondida Private Villas.
Edwards, 48, was indicted by a federal grand jury on May 30, 2013. The Indictment charged Edwards with twenty-three counts of mail fraud, wire fraud, and money laundering. Edwards was scheduled to make his initial appearance in federal court in San Francisco on June 17, 2013; however, he had failed to appear. Federal agents later learned that Edwards had absconded to Mexico.
According to the Indictment, Edwards allegedly created a fictitious entity, Dufrane Compliance Trust, that purported to provide tax compliance services to his former employer, The Wine Tasting Network, a 1-800 Flowers’ subsidiary. In his role as Vice President and General Manager, Edwards allegedly directed the Wine Tasting Network to make multiple payments to Dufrane Compliance Trust between May 2010 and approximately October 2012, totaling approximately $900,000. Edwards allegedly deposited these funds into an account he controlled and withdrew them for his own personal use, including the purchase of a BMW which has since been seized by law enforcement authorities.
Edwards is currently in custody and is scheduled to appear in district court on January 22, 2014, before the Honorable William H. Alsup, United States District Court Judge in San Francisco.
The maximum statutory penalty for each count of mail fraud and wire fraud in violation of Title 18, United States Code, Sections 1341 and 1343, respectively, is 20 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense, plus restitution. The maximum statutory penalty for each count of money laundering, in violation of Title 18, United States Code, Section 1957, is 10 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense, 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.
Katherine B. Dowling and Arvon Perteet are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Rawaty Yim. This prosecution is the result of an investigation by the Federal Bureau of Investigation, Department of State, and Internal Revenue Service Criminal Investigation.
Please note, an indictment contains only allegations against an individual and, as with all defendants, Martin Christopher Edwards must be presumed innocent unless and until proven guilty.
(Edwards Indictment)
San Francisco Antique Dealers Indicted for Conspiracy and Scheme to Commit Mail and Wire FraudRead the Press Release
SAN JOSE – A federal grand jury in San Jose returned a twelve count indictment charging two antique dealers with conspiracy to commit mail fraud and wire fraud, mail fraud, and wire fraud relating to a multi-million dollar investment scheme, announced United States Attorney Melinda Haag, Federal Bureau of Investigation Special Agent in Charge David J. Johnson, and United States Postal Inspection Service Acting Inspector In Charge Rafael Nunez.
According to the indictment, Anthony Barreiro, 64, and Ernest Ray Parker, also known as Ray Parker Gaylord, 50, both residents of San Francisco and Dallas, founded and operated a business known at various times as ARTLoan Financial, LLC, ARTLoan Financial Services, Inc., and ARTLoan Financial Service, LLC (“ARTLoan”). Barreiro, who represented himself as ARTLoan’s Chairman and CEO, and Gaylord, who represented himself as its President, operated ARTLoan as a specialty finance company, whereby investors were invited to entrust funds to ARTLoan for the sole, stated purpose of providing lending capital to borrowers seeking to finance the acquisition of high-value art work. ARTLoan promised its investors regular interest payments over the term of each loan. As further security, Barreiro and Gaylord promised investors that ARTLoan would retain possession of a borrower’s artwork as collateral against the loan and, in the event of default, the tendered artwork would be forfeited to ARTLoan for the benefit of the investors.
The Indictment alleges that based on these promises, Barreiro and Gaylord obtained from investors a total of approximately $3.4 million dollars. By June 2010, as a result of their fraudulent scheme, the defendants allegedly had made approximately $1.8 million in “Ponzi” payments intended to lull investors while diverting approximately $1.5 million dollars to their own personal benefit.
According to the indictment, Barreiro and Gaylord explained to investors that ARTLoan was a licensed pawn broker that owned valuable pieces of artwork worth millions of dollars. Barreiro and Gaylord further advised investors that ARTLoan helped collectors finance the purchase of valuable pieces of artwork, many of which were purchased through public auctions, and in the process, allowed ARTLoan to cultivate business relationships with high-profile auction houses, such as Sotheby’s and Christie’s, among others. Barreiro and Gaylord allegedly explained that ARTLoan’s financing options would help collectors finance up to 50% of the value of the piece while requiring the collectors to transfer ownership of the subject artwork to ARTLoan as collateral until the conclusion of the debt obligation. Alternatively, if a collector already owned outright a particular piece of artwork, ARTLoan would provide the collector with financing of up to 50% of the appraised value of that particular piece of artwork while requiring the collector to transfer ownership of the subject artwork to ARTLoan as collateral until the conclusion of the debt obligation.
Barreiro and Gaylord allegedly explained to investors that an investment took the form of a loan agreement with ARTLoan. Barreiro and Gaylord memorialized the investments in documents that they provided to investors at the time of the investors’ initial and subsequent investments in ARTLoan. These documents provided, among other things, that the investor would deposit with ARTLoan a specific investment amount and that ARTLoan would pay the investor a certain regular rate of interest. Thereafter, Barreiro and Gaylord mailed periodic account statements to the investors reflecting principal and accrued interest, and, on certain occasions, a check payable to the investor purporting to represent an interest payment. The defendants also transmitted, via mail, electronic mail, and hand delivery, updates to investors about the business operations of ARTLoan generally.
The defendants allegedly represented to investors, among other things, that the funds deposited with ARTLoan would be used only as lending capital and would not be used to fund the business operations of ARTLoan. Instead, defendants advised investors that the monies generated from the loans to third-party collectors provided ARTLoan with sufficient capital for operations, including but not limited to salaries for Barreiro and Gaylord.
The Indictment alleges that through written and oral communications, Barreiro and Gaylord created the false and misleading appearance that ARTLoan was successfully engaging in debt financing agreements with third-party borrowers, generating regular monthly interest payments and increasing the overall value of each investor’s funds with ARTLoan. In truth, according to the Indictment, ARTLoan had not entered into any debt financing agreements, the monies obtained from investors had not been utilized to fund such debt financing agreements, ARTLoan had not secured artwork as collateral in connection with such debt financing agreements, and, the monies provided to investors as purported “interest payments” were, in fact, “Ponzi” payments designed to lull current investors as well as induce other potential investors to enter into loan agreements with ARTLoan.
Both defendants made their initial appearances on Friday, January 10, 2014, in federal court in Dallas, Texas. They made their initial appearance in federal court in San Jose, Calif., today in front of The Honorable Paul S. Grewal, United States Magistrate Judge. The defendants are currently out of custody on bond. Both defendants are scheduled to appear next on February 11, 2014 at 1:30 p.m. in front of The Honorable Howard R. Lloyd, United States Magistrate Court Judge for id of counsel and on February 12, 2014 at 9:00 a.m. in front of The Honorable Lucy H. Koh, United States District Court Judge in San Jose for status and setting.
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 statutory penalty of twenty years imprisonment, a fine of $250,000 or twice the amount of gain or loss, whichever is greater, and restitution if appropriate, for each count of the indictment. 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 is the Assistant United States Attorney who is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of a multi-year joint investigation by the Federal Bureau of Investigation and the United States Postal Inspection Service.
(Barreiro and Parker indictment)
Pittsburg Mother and Son Sentenced to Prison for Conspiring to File False Claims, Second Son Pleads Guilty to Impeding the IRS InvestigationRead the Press Release
OAKLAND – Yesterday, Tonya Gilard was sentenced to 37 months in prison and her son, Tierre Crummie, was sentenced to 15 months in prison and ordered to pay restitution in the amount of $688,687 for conspiring to file false tax returns. Kingsley Murdoch, who is also Gilard’s son, pleaded guilty to obstructing the IRS investigation, United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez announced.
According to Gilard’s and Crummie’s plea agreements, in January 2009, Gilard and Crummie assisted in filing false federal income tax returns with the IRS. Gilard obtained the personal identifying information of others, including Crummie, which she used to file false federal income tax returns. Gilard and Crummie also filed tax returns in their own names that falsely claimed entitlement to the first-time homebuyer’s credit.
In furtherance of the conspiracy, Crummie provided Gilard with individuals’ bank account information and e-mail addresses, while another person provided names to use on the false tax returns. On April 30, 2009, a search warrant was executed at the defendants’ residence. IRS agents uncovered $69,800 during the search, and found notebooks with names and personal identifying information of others. The evidence obtained during the course of the investigation also showed that Gilard filed the false returns from various locations, recruited others to join the scheme, and received the payments into bank accounts she controlled.
In total, 91 false federal income tax returns were filed as part of this scheme, claiming $688,687 in false refunds.
According to Murdoch’s plea agreement, in November 2009, he was interviewed by IRS Special Agents regarding tax returns filed with the IRS that listed his bank account to receive tax refunds. During the interview, he told the IRS Agents that he provided his bank account information and e-mail address to a person named “Spoogie.” Murdoch further stated that he provided names to “Spoogie” to include on tax returns that were filed with the IRS. He also said that he did not know Tonya Gilard or Tierre Crummie. In December 2009, he testified before the Grand Jury and provided false testimony in order to impede the investigation related to Gilard’s conduct according to his plea agreement.
Gilard, 45, and Crummie, 25, both of Pittsburg, Calif., were indicted on August 8, 2012, and charged with one count of conspiracy to file false claims. They pleaded guilty on May 9, 2013, to the sole count in the indictment.
Murdoch, 27, of Pittsburg, Calif., was charged on August 8, 2012, with Perjury and Obstruction of Justice. He pleaded guilty to one count of Obstruction of Justice. Murdoch’s sentencing is scheduled for May 8, 2014. The maximum statutory penalty for Obstruction of Justice, in violation of 18 U.S.C §1503(a), is 10 years in prison and a $250,000 fine.
Thomas Newman is the Assistant U.S. Attorney who is prosecuting this case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
(Gilard Indictment)
(Murdoch Indictment)
Pleasanton Woman Sentenced to 27 Months in Prison for Filing False Claim with the IRSRead the Press Release
OAKLAND – Denise LaShawn Reed, also known as Brooke Nicholson, Lauren Roberts, Denise Berry, Savana Jones, and Neyce Roberts, was sentenced yesterday to 27 months for her role in a false tax refund scheme, announced United States Attorney Melinda Haag and Internal Revenue Service-Criminal Investigation Special Agent in Charge José M. Martinez.
Reed pleaded guilty on September 5, 2013. According to the plea agreement, from January 2009 through February 2010, Reed filed 14 false and fraudulent federal income tax returns with the IRS. These claims were all filed as Forms 1040, U.S. Individual Income Tax Returns. The total amount of the false claims was $94,700. The claims listed on the returns were all fictitious, with the exception of the taxpayers’ identity. As part of the scheme, some of the returns reported that the taxpayer earned income as part of a business they operated when Reed knew the taxpayer did not own or operate a business. The 14 false tax returns fraudulently reported a refund was due. Reed admitted to receiving tax refunds for 13 of the false claims.
According to court documents, Reed electronically filed tax returns using others’ identities to defraud the United States into paying money in fraudulent tax refunds. The refunds were deposited into bank accounts or debit cards controlled by Reed. Reed then used the funds to pay personal expenses.
Reed, 45, of Pleasanton, California was charged on December 18, 2012, with 14 counts of filing false claims. She pleaded guilty to one count.
The sentence was handed down by the Honorable Yvonne Rogers Gonzalez, U.S. District Court Judge. In addition to 27 months in prison, Judge Gonzalez sentenced the defendant to a 3-year period of supervised release. In an attempt to obtain a lenient sentence, Reed provided false information to the Court in the form of a forged letter on Stanford Hospital letterhead stating that she was being treated for breast cancer, which was not true. As a result, at sentencing Judge Gonzalez found that Reed obstructed justice and increased her sentence accordingly. The defendant is in custody serving her sentence.
Cynthia Stier is the Assistant United States Attorney who is prosecuting the. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
Former Yurok Tribe Forestry Director Sentenced to 37 Months for EmbezzlementRead the Press Release
SAN FRANCISCO – Roland Leroy Raymond was sentenced today to three years in prison, and ordered to pay $852,000 in restitution for embezzling approximately $850,000 from the Yurok Indian Tribe of Northern California, announced United States Attorney Melinda Haag, Federal Bureau of Investigation Special Agent in Charge David J. Johnson, and Department of Interior Office of Inspector General, Western Investigations Office, Special Agent in Charge Jack Rohmer.
Raymond, the Tribe’s former Forestry Director, pleaded guilty on May 22, 2013, to having carried out a scheme to embezzle approximately $850,000 in funds the United States Department of Interior’s Bureau of Indian Affairs had authorized for specific environmental uses under the Endangered Species Act. In his plea agreement, Raymond admitted conspiring with at least one person at Mad River Biologists (“MRB”), a local biological consulting firm based in Eureka, to steal the money. (MRB’s owner and founder has been charged separately in a case that remains pending. CR 13-683 WHA)
According to the plea agreement, from approximately 2007 through the end of 2010, Raymond abused his position of trust within the Tribe by procuring false invoices from MRB for environmental work MRB never performed. MRB submitted the invoices to the Tribe and Raymond approved them for payment. MRB funneled most of the money it received as a result of the fraudulent invoices back to Raymond, who spent the cash on gambling and drugs.
Raymond, 51, of Eureka, California, was charged by an Information filed on January 11, 2013. The Information alleged a single count of Conspiracy to Commit Embezzlement and Theft from an Indian Tribal Organization, in violation of Title 18, United States Code, Sections 371 and 1163.
Today’s sentencing followed two prior sentencing hearings. In the first, held on November 19, 2013, the court heard victim-impact statements from five members of the Yurok Tribal Council, including the Chairman and Executive Director. On December 23, 2013, the court took testimony to address allegations that Raymond had attempted to mislead the court regarding his treatment at the Santa Rita Jail facility.
The sentence was handed down by The Honorable William Alsup, United States District Court Judge, following Raymond’s guilty plea to the charge contained in the Information. Judge Alsup also sentenced the defendant to a three-year period of supervised release following his release from custody, as well as ordering him to pay restitution in the amount of $852,000. The defendant, who was already in federal custody, will begin serving his sentence immediately.
The prosecution is the result of an investigation begun by the Del Norte County District Attorney and continued by the Department of Interior Office of Inspector General and the Federal Bureau of Investigation. Following the sentencing, U.S. Attorney Haag expressed her appreciation for the excellent work done by the Del Norte County District Attorney’s Office, the FBI, and the DOI OIG. Special Assistant United States Attorney Casey O’Neill and Assistant United States Attorney David Callaway prosecuted the case with the assistance of legal assistants Elise Etter and Rawaty Yim.
Two Men Plead Guilty to Armed Robbery of Citibank in AlamedaRead the Press Release
OAKLAND, Calif. – Calvin Earl Odom, Jr. and Craig Goatley pleaded guilty in federal court in Oakland yesterday to armed bank robbery, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
In pleading guilty, Odom and Goatley admitted to committing the armed robbery of the Citibank located at 1526 Webster Street in Alameda, Calif. According to the plea agreements, Odom entered the bank first, pretending to be a customer and interacting with a bank employee in the customer area. Goatley entered the bank next and stood in the teller line. When Goatley was called forward by the next available teller, he brandished what appeared to be a handgun, but was actually a pellet gun, and demanded money. The frightened teller tossed money from her drawer at Goatley. Goatley also took money from the neighboring teller. While Goatley was robbing the tellers, Odom pulled out what appeared to be black handgun, but was actually a pellet gun, and told the bank employee with whom he had been interacting that this was a robbery and not to move. When Goatley was finished robbing the victim tellers, Goatley and Odom fled the bank, stealing $8,869.
Odom, 25, of Berkeley, and Goatley, 27, of Oakland were arrested on August 14, 2013, by local law enforcement for separate charges and remained in local custody related to those charges. Odom and Goatley were indicted on October 10, 2013.
Odom’s and Goatley’s sentencing hearings are scheduled for April 10, 2014, before U.S. District Judge Yvonne Gonzalez Rogers. The maximum statutory penalty for armed bank robbery, in violation of 18 U.S.C. § 2113(a) and (d), is 25 years in prison. 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.
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 Alameda Police Department and the FBI.
Santa Clara Business Owners Indicted for Tax and Loan FraudRead the Press Release
SAN JOSE, Calif. – Fidencio Moreno, Arturo Moreno, and Elena Moreno were charged, yesterday, in a superseding indictment with one count of conspiracy to defraud the United States, eleven counts of filing a false tax return, one count of conspiracy to commit wire fraud and bank fraud, and seven counts of making false statements on a loan application, announced United States Attorney Melinda Haag, Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.
According to the superseding indictment, defendants Arturo and Fidencio Moreno were each fifty-percent owners of Quality Assurance Travel, a charter bus company with an office in Santa Clara, Calif. Between 2005 and 2010, the superseding indictment charges that the defendants conspired to defraud the United States by impeding the ability of the Internal Revenue Service (IRS) to ascertain, assess, and collect income taxes. The defendants are alleged to have withheld cash business receipts from deposits into the company’s bank accounts, falsified the company’s financial books and records, and filed false and fraudulent tax returns. The defendants tracked the withheld cash in a cash journal separate from the company’s books and records, and did not disclose the cash journal to their tax return preparer.
All three defendants are also charged with a separate conspiracy to commit wire fraud and bank fraud. According to the superseding indictment, from at least 2005 through 2013, Fidencio, Arturo and Elena Moreno conspired to commit bank fraud and wire fraud. The scheme involved submitting loan applications and supporting documentation that made false and fraudulent statements regarding the loan applicant’s income, assets and the intended use of property that was the subject of the loan. In all, five different properties are identified as having been part of the scheme, which resulted in the approval of loans totaling more than $3,328,600. Using these loans, the defendants purchased or refinanced several different homes in the San Jose area. Fidencio and Elena are also charged with individually and jointly making a false statement on a loan application. Based on the bank fraud and wire fraud scheme, as well as the loan fraud counts, the government is seeking forfeiture of various pieces of real property that were derived from the false loan applications and a money judgment of $3,328,600.
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 5 years imprisonment and a fine of $250,000 for conspiring to defraud the United States; up to 3 years imprisonment and a fine of $250,000 for each false return count; and a maximum term of imprisonment of 30 years and a fine of $1,000,000 for conspiracy to commit bank fraud and wire fraud and for each false loan statement count. If convicted, they could also be ordered to pay restitution to the IRS and any financial institutions that they defrauded.
This case was investigated by IRS-Criminal Investigation. Trial Attorneys Katherine L. Wong and Todd P. Kostyshak of the Justice Department’s Tax Division, along with Assistant U.S. Attorney Thomas Moore are prosecuting the case, with the assistance of Kathy Tat and Saundra Burgess.
Northern District of California U.S. Attorney’S Office Collects over 394 Million Dollars in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2013Read the Press Release
San Francisco – United States Attorney Melinda Haag announced today that the Northern District of California collected $394,282,021.52 in criminal and civil actions in Fiscal Year 2013 – the second highest amount of money collected by a U.S. Attorney’s Office in the country. Of this amount, $382,346,662.83 was collected in criminal actions and $11,935,358.69 was collected in civil actions.
Additionally, the Northern District of California worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $185,079,434.25 in cases pursued jointly with these offices. Of this amount, $3,851.92 was collected in criminal actions and $185,075,582.33 was collected in civil actions.
Attorney General Eric Holder announced on Thursday that the Justice Department collected approximately $8.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2013.
The more than $8 billion in collections in FY 2013 represents nearly three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“The department’s enforcement actions help to not only ensure justice is served, but also deliver a valuable return to the American people,” said Attorney General Holder. “It is critical that Congress provide the resources necessary to match the department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.”
“Long after defendants are sentenced, this office’s financial litigation team works exhaustively to ensure debts are paid to the government and victims,” said United States Attorney Melinda Haag. “The extraordinary results of this hard work are evident in the hundreds of millions of dollars collected by this office last year alone.”
This past May, the District of Northern California recovered $40,000,375 in criminal fines in the Wal-Mart Stores Inc. case, CR-0333-001 JCS, in addition to $20 million for environmental projects, with $4.5 million to be spent in the Bay Area. This case related to Wal-Mart violation of the Clean Water Act by illegally handling and disposing of hazardous materials at its retail stores across the United States. The Bentonville, Ark.-based company also pleaded guilty in Kansas City, Mo., to violating the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) by failing to properly handle pesticides that had been returned by customers at its stores across the country. As a result of the three criminal cases brought by the Justice Department, as well as a related civil case filed by the U.S. Environmental Protection Agency (EPA), Wal-Mart paid approximately $81.6 million for its unlawful conduct. Coupled with previous actions brought by the states of California and Missouri for the same conduct, Wal-Mart ultimately paid a combined total of more than $110 million to resolve cases alleging violations of federal and state environmental laws.
The U.S. Attorneys’ Offices, along with the Department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the Department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Members of Western Addition “CDP” Gang Charged with Racketeering Conspiracy, Murder, Attempted Murder, Assault with A Dangerous Weapon, Pimping, and Related ChargesRead the Press Release
SAN FRANCISCO – A seventeen-count federal superseding indictment charging nine members of the “Central Divis Playas,” a/k/a “CDP” gang, and one associate, was returned by the Grand Jury on January 9, 2014, in federal court, announced United States Attorney Melinda Haag. The ten defendants, all of San Francisco, listed below, are already in state or federal custody:
- ALFONZO WILLIAMS, a/k/a “Fonz,” a/k/a “Relly,”
- ANTONIO GILTON, JR., a/k/a “TG,”
- BARRY GILTON, a/k/a “Prell,”
- LUPE MERCADO,
- ADRIAN GORDON, a/k/a “Tit,”
- REGINALD ELMORE, a/k/a “Fat Reg,”
- CHARLES HEARD, a/k/a “Cheese,”
- ESAU FERDINAND, a/k/a “Sauce,”
- PAUL ROBESON, a/k/a “P World,” and
- MONZELL HARDING. JR.
According to the Superseding Indictment, CDP is a violent street gang based in the Western Addition neighborhood of San Francisco. Nine defendants, all except Mercado, are charged with a racketeering conspiracy, related to the conduct of the affairs of CDP through the crimes of murder, attempted murder, robbery, narcotics trafficking, pimping, pimping of minors, and extortion. Williams, Antonio Gilton, Barry Gilton, and Mercado are charged with the June 4, 2012, murder of Calvin Sneed in San Francisco, in aid of racketeering and associated firearms charges. Mercado is charged with accessory after the fact to murder. Defendants Elmore and Heard are charged with the August 14, 2008, double murder in aid of racketeering of Andre Helton and Isaiah Turner in San Francisco and related firearms offenses. Adrian Gordon is charged with attempted murder in aid of racketeering and assault with a dangerous weapon in aid of racketeering and discharge of a firearm in furtherance of those offenses. Esau Ferdinand is charged with attempted murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, maiming in aid of racketeering, and discharge of a firearm in furtherance of those crimes of violence. Each defendant faces a maximum term of imprisonment of life, and Elmore and Heard could face a death sentence, following consideration of the case by the U.S. Attorney General.
The prosecution is the result of joint investigation by the Federal Bureau of Investigation; San Francisco Police Department’s Gang Task Force, Homicide Detail, Robbery Detail, Special Victims Unit, and the Northern, Park, and Bayview Stations; San Francisco District Attorney’s Office; and the San Pablo Police Department.
Please note, an indictment contains only allegations against a person and, as with all defendants, these defendants must be presumed innocent unless and until proven guilty.
(Williams et al superseding indictment)
Two Founders of S3 Partners Convicted in $21 Million Investment Fraud SchemeRead the Press Release
SAN JOSE – Yesterday a federal jury convicted two of the founders of S3 Partners on investment fraud related charges, United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson announced.
Evidence at trial showed that from 2006 to 2009, Melvin Russell “Rusty” Shields, 44, of Granite Falls, N. Car., Michael Sims, 59, of Gilroy, Calif., and the third S3 Partner founder, Sam Stafford, 57, of Campbell, Calif. (who pleaded guilty prior to trial) defrauded individual investors in the Northern District of California and elsewhere in connection with various real estate development projects. The three defendants conducted their business as “S3 Partners” out of a variety of locations including San Jose and Campbell; Hickory, N. Car.; and Valrico, Flor.
Shields, Sims, and Stafford engaged in investment fraud targeting elderly investors, encouraging them to cash out their individual retirement accounts (IRAs) and wire the proceeds to the S3 Partners for the purchase of shares in an S3 Partners-controlled company or to invest in other S3 projects. The defendants falsely represented to investors that they would receive predictable high rates returns (as high as 12-15% per year), with minimal to no risk of investing, and that investor money would go to a particular project. Shields and Stafford fraudulently obtained millions of dollars from banks by submitting forged and fraudulent invoices and loan closing documents. Shields, Sims, and Stafford collectively obtained more than $21 million from investors and banks and converted a substantial portion of those funds for their personal benefit, their personal business ventures, and other unauthorized purposes. Their conduct resulted in a near-total loss to investors.
The jury convicted Shields on 32 of the 39 counts in the superseding indictment, including finding him guilty of conspiracy to commit wire and bank fraud, 14 counts of wire fraud, 7 counts of bank fraud, 7 counts of making a false statement to a bank, and 3 counts of securities fraud. The jury acquitted Shields as to the remaining counts in the superseding indictment. The jury convicted Sims of 2 counts of wire fraud and acquitted him on the remaining counts in the superseding indictment. Stafford, pleaded guilty on October 17, 2013, to having conspired with Shields and Sims to commit wire, mail, and bank fraud.
Shields and Sims are scheduled to be sentenced on April 14, 2013, before the Honorable Ronald M. Whyte, United States District Court Judge, in San Jose. Stafford’s sentencing is scheduled for March 17, 2014 at 9:00 a.m. before the Honorable Ronald M. Whyte in San Jose. Shields, Sims, and Stafford have been out of custody on home electronic monitoring since their May 2012 arrest.
The maximum statutory penalty for conspiracy to commit wire and bank fraud, bank fraud, and making a false statement to a bank, in violation of Title 18, United States Code, Sections 1349, 1341 and 1014, is 30 years in prison and a fine of $1,000,000, plus restitution. The maximum statutory penalty for wire fraud, in violation of Title 18, United States Code, Section 1343, is 20 years in prison and a fine of $250,000, plus restitution. The maximum statutory penalty for each count of Title 15, United States Code, Sections 78j(b) and 78ff; and 17 C.F.R. Section 240.10b-5-securities fraud, is 20 years in prison and a fine of $5 million, 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.
Assistant U.S. Attorney Joseph Fazioli and Assistant U.S. Attorney Timothy Lucey prosecuted the case with the assistance of Paralegal Specialist Lakisha Holliman and Legal Assistant Laurie Worthen. This prosecution is the result of an investigation by the Federal Bureau of Investigation.
(S3 superseding indictment )
Sem City Gang Members Charged with Racketeering Conspiracy, Attempted Murder, Assault with A Deadly Weapon, and MaimingRead the Press Release
OAKLAND - A nine-count federal indictment charging four members of the Sem City gang was returned by the Grand Jury yesterday and unsealed today in federal court, announced United States Attorney Melinda Haag.
All four defendants, listed below, are in state custody and will be transferred into federal custody:
- PURVIS LAMAR ELLIS, A/K/A “BOT,”
- DEANTE TERRANCE KINCAID, a/k/a “Tay-Tay,”
- DAMIEN EDWARD MCDANIEL, a/k/a “Famous,” “Lil’ Dame,” and
- JOSEPH PENNYMON, a/k/a “Junkie.”
All four defendants, Oakland residents, are charged with a racketeering conspiracy, attempted murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, maiming in aid of racketeering, and discharge of a firearm in furtherance of those crimes of violence. Three of the four defendants are also charged with a second count of assault with a dangerous weapon in aid of racketeering and discharge of a firearm in furtherance of the same. Each defendant faces a maximum term of imprisonment of life.
According to the Indictment, Sem City is a violent street gang based in the Seminary neighborhood of East Oakland. Members of Sem City engaged in criminal activity, including attempted murder, assault, robbery, narcotics distribution, pimping of minors, illegal firearms possession, and credit card fraud. Additionally, members of Sem City are expected to engage in acts of violence to protect the name, reputation, and status of the gang.
The prosecution is the result of an investigation by the Federal Bureau of Investigation, Oakland Police Department, and Alameda County District Attorney’s Office.
Please note, an indictment contains only allegations against an individual and, as with all defendants, Purvis Lamar Ellis, Deante Terrance Kincaid, Damien Edward McDaniel, and Joseph Pennymon must be presumed innocent unless and until proven guilty.
(Sem City indictment )
Sacramento Resident Sentenced for Role in Tax SchemeRead the Press Release
SAN FRANCISCO – Cynrithia Gary was sentenced on December 18, 2013, to 18 months in prison and ordered to pay restitution of $180,452 for conspiring to file false tax returns, United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez announced.
According to the plea agreement, beginning in June 2008, Gary helped obtain tax refunds based on false tax returns that were filed with the IRS. As part of the scheme, Gary recruited others to provide their personal identifying information for use on the false tax returns. Gary knew the returns were false because the person whose name appeared on the tax returns did not supply the information used to support the refund.
On the false tax returns, Gary listed bank accounts that were used to receive the fraudulent tax refunds. When the fraudulent tax refund was issued, the money would be withdrawn by the account holder, who would split the proceeds with Gary.
Gary 41, of Sacramento, was indicted on July 12, 2012. She was charged with one count of conspiracy to file false claims and pleaded guilty to the charge.
Gary also pleaded guilty to filing a false 2007 tax return in her own name on August 7, 2008. Gary admitted the return was false because it indicated that she received Social Security benefits in an amount that she knew was inflated. The return also falsely stated that she had Form 1099 withholdings and that she was employed as a childcare provider.
The sentence was handed down by the Honorable Charles R. Breyer, United States District Court Judge.
Thomas Newman is the Assistant U.S. Attorney who is prosecuting. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
(Gary indictment )
Santa Rosa Man Sentenced to Forty Years for the Production, Advertisement, Distribution, and Possession of Child PornographyRead the Press Release
SAN FRANCISCO – Dylan Josh Zara was sentenced yesterday to 40 years in prison for the production, advertisement, distribution, and possession of child pornography, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
Zara pleaded guilty on June 12, 2013, to two counts of production of child pornography, one count of advertisement of child pornography, two counts of distribution of child pornography, and one count of possession of child pornography. Zara admitted to using two child victims, both under the age of seven, to produce child pornography, which he advertised and distributed.
Zara, 31, of Santa Rosa, was indicted by a federal grand jury on November 3, 2011. He was charged with the production, advertisement, distribution, and possession of child pornography.
The sentence was handed down by The Honorable Susan Illston, United States District Court Judge, following a guilty plea on six counts in violation of 18 U.S.C. §§ 2251(a), 2241(d), 2252(a)(2) and 2252(a)(4)(B). Judge Illston also sentenced the defendant to a lifetime period of supervised release. The defendant has been in custody since his arrest.
Laura Vartain Horn is the Assistant U.S. Attorney who is prosecuting the case. The prosecution is the result of an investigation by the Federal Bureau of Investigation, with the assistance of the National Center for Missing and Exploited Children.
(Zara indictment )
Santa Cruz Man Sentenced to 140 Months in Prison for Drug TraffickingRead the Press Release
SAN JOSE – Rudy Martinez was sentenced on December 16, 2013, to 140 months in prison, for trafficking in methamphetamine, heroin, and cocaine in Santa Cruz County, United States Attorney Melinda Haag announced.
Martinez pleaded guilty on August 26, 2013, to possession of heroin and methamphetamine with intent to distribute these drugs. According to the plea agreement, Martinez admitted to possessing over 244 grams of heroin, 32 grams of methamphetamine, and 152 grams of cocaine. At the time of his arrest, he had over $12,000 in his possession, which was proceeds of his criminal activity. Martinez further admitted at sentencing that he was acting as a “middleman” for others actively distributing these drugs in the City of Santa Cruz and elsewhere.
Martinez, 40, of Santa Cruz, was indicted by a federal grand jury on October 24, 2012. He was charged with possessing significant quantities of methamphetamine, heroin, and cocaine with the intent to distribute those drugs to others. Because the drugs were located at his home directly across from a Santa Cruz city park, he was also charged with possessing those drugs with intent to distribute them within 1,000 feet of a playground.
The investigation began after Martinez was allegedly involved in a violent street altercation which took place in the Beach Flats neighborhood of Santa Cruz on July 4, 2012. Police searched Martinez’s home on July 19, 2012, and discovered the methamphetamine, heroin, and cocaine, together with scales and packaging materials. Martinez was arrested by Santa Cruz police that day.
The sentence was handed down by The Honorable Edward J. Davila, United States District Court Judge. Judge Davila also sentenced the defendant to a 5-year period of supervised release, and ordered him to forfeit $12,715 to the United States. The defendant, who has been in custody since his guilty plea in August, will begin serving the sentence immediately.
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 Department of Homeland Security and the Santa Cruz City Police Department.
(Martinez indictment )
Owner of Monterey Wine Cellar Pleaded Guilty to Tax EvasionRead the Press Release
SAN JOSE – Brenda Jo Kibbee pleaded guilty in federal court in San Jose, California, yesterday to one count of failing to pay an excise tax on wine with an intent to defraud the United States, United States Attorney Melinda Haag announced.
Kibbee, 43, of Salinas, California, was indicted on September 26, 2012, with 11 counts of failing to pay an excise tax on wine. As alleged in the plea agreement, Kibbee owned and operated Monterey Wine Services, a bonded wine cellar located in Monterey County, California. For each of the reporting periods between August 1, 2008, and December 31, 2008, Monterey Wine Services had taxable removals of wine from its bonded wine cellar, which resulted in a wine excise tax due and owing to the Alcohol and Tobacco Tax and Trade Bureau (TTB). Kibbee failed to pay the excise tax due to TTB with intent to defraud the United States. Per the terms of the plea agreement, the parties agree that the tax loss resulting from Kibbee’s misconduct is at least $877,126.94.
Kibbee’s sentencing hearing is scheduled for April 17, 2014, before The Honorable D. Lowell Jensen, United States District Court Judge, in San Jose. The maximum statutory penalty for each count, in violation of 26 U.S.C, § 5661(a), is five years and a fine of $250,000 or 2 times the gross gain or loss, plus restitution of $877,126.94. 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.
Matthew J. Kluge, Trial Attorney with the United States Department of Justice, and Thomas Moore, Assistant United States Attorney for the Northern District of California, are prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
(Kibbee indictment )
Former Vice President of Wells Fargo Advisors and Morgan Stanley & Co. Sentenced to 20 Months in PrisonRead the Press Release
SAN FRANCISCO – Adorean Boleancu was sentenced yesterday to 20 months in prison and ordered to pay $360,199.25 in restitution for a wire fraud offense, United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson announced.
Boleancu pleaded guilty on September 13, 2013, to one count of wire fraud. According to the plea agreement, Boleancu admitted to executing a fraud scheme by writing more than $1.8 million in checks on accounts of an elderly, widowed client for his personal benefit.
Boleancu, 47, of Napa, Calif., was Vice President, Senior Financial Consultant in the Wealth Management Group of Wells Fargo Advisors, LLC and, before that, a Vice President, Financial Advisor with Morgan Stanley & Co., Inc. In pleading guilty, Boleancu admitted to signing the victim’s name to checks drawn on the victim’s brokerage account and home equity lines of credit without the victim’s knowledge or authorization. The checks were payable to Boleancu’s family members, his girlfriend, another female acquaintance, cash, and financial companies where Boleancu had credit card accounts.
Boleancu was indicted by a federal grand jury on July 9, 2013. He was charged with 14 counts of bank fraud, in violation of 18 U.S.C. § 1344; 4 counts of wire fraud, in violation of 18 U.S.C. § 1343; 5 counts of money laundering, in violation of 18 U.S.C. § 1957; and 4 counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A.
The sentence was handed down by the Honorable Richard Seeborg, United States District Court Judge, in San Francisco. Judge Seeborg also sentenced the defendant to a three-year period of supervised release, and ordered him to refrain from working in the financial industry. The defendant will begin serving his prison sentence on February 4, 2014.
Robert S. Leach and Kyle F. Waldinger are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Rayneisha Booth and Mary Mallory. The prosecution is the result of an investigation by the Federal Bureau of Investigation.
(Boleancu indictment )
Three People Arrested for Crack Dealing Outside Boys & Girls Club in OaklandRead the Press Release
OAKLAND – Three people were indicted on December 10, 2013, by a federal grand jury on charges of drug trafficking within 1,000 feet of McClymonds High School in Oakland, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
The three individuals are:
- Alton Lerand Hirsch
- Charles Edward Moss, Jr.
- Nolan Ronald Jones
The defendants are each charged in separate indictments alleging that they dealt cocaine base in the form of “crack” within 1,000 feet of McClymonds High School, in violation of 21 U.S.C. § 841(a)(1) and 860(a).
This investigation targeted the corner of Mead Ave., Market Street, and 24th Street in Oakland, which is right outside of the Boys & Girls Club of Oakland, and within 1,000 feet of McClymonds High School. This corner has nevertheless been a known open-air crack market in Oakland. The cases are part of an ongoing relationship between the U.S. Attorney’s Office, Drug Enforcement Agency, the Federal Bureau of Investigation, the Oakland Police Department, and the Oakland community.
“This area is one frequented by the children of Oakland,” commented United States Attorney Melinda Haag. “Those children deserve the same chance as children who live in other neighborhoods around the Bay Area: the chance to go to and from school and the Boys & Girls Club without having to navigate through crack deals on the way. That is why I have directed my office to work with the DEA, FBI and the Oakland Police Department to aggressively prosecute drug trafficking in areas around Oakland schools.”
These cases follow on the heels of similar charges targeting crack dealing within school zones in the Tenderloin area of San Francisco. Ms. Haag also previously targeted other crack dealing in Oakland that took place within school zones, such as the area of Sycamore Street, near West Street, in Oakland. Those defendants are currently serving their sentences in prison.
Haag stressed that more charges could be on the way. “Everyone who treats Oakland as an open-air drug market should be on notice: law enforcement is paying attention. You won’t know when the next arrests will be, or which schools or street corners we’ll focus on next, but if you’re caught you will face significant time in federal custody.”
The three defendants were arraigned in federal court in Oakland. They are currently in the custody of the United States Marshal.
The maximum statutory penalty for violating the federal drug-free school zone statute is 40 years in prison, with a minimum mandatory one year in jail, at least six years and up to life on supervised release, and a maximum fine of up to $2,000,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
This prosecution is the result of an investigation by the FBI and the Oakland Police Department.
Please note, an indictment contains only allegations against an individual and, as with all defendants, Alton Hirsch, Charles Moss, and Nolan Jones must be presumed innocent unless and until proven guilty.
(Mead Ave indictments )
Oakland Resident Convicted of Trafficking A Minor for Purposes of ProstitutionRead the Press Release
SAN FRANCISCO – Yesterday afternoon a federal jury convicted Roderick Harold Bolds of one charge of Sex Trafficking of Children and another charge of Transportation of a Minor for Purposes of Prostitution, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.
The jury found that beginning on or about July 3, 2011, and continuing through July 11, 2011, Bolds recruited a minor from Reno, Nevada, to Oakland, California. Bolds knew or ignored the fact that the minor was not 18 years of age and would be caused to engage in a commercial sex act. The guilty verdict followed a jury trial before the Honorable Charles R. Breyer, United States District Court Judge.
Evidence at trial showed that Bolds, of Oakland, California, met the victim in Reno, Nevada, when she was fifteen years old and convinced her to come to Oakland, where he intended that she engage in prostitution. From July 4, 2011, to July 11, 2011, Bolds prostituted the victim on the streets of San Francisco and Oakland and placed an advertisement for her services online. The victim was arrested in the Mission District of San Francisco on prostitution-related charges by the San Francisco Police Department, who referred the case to the Federal Bureau of Investigation.
Bolds was indicted by a federal grand jury on September 27, 2011. He was charged with one count of Sex Trafficking of Children, in violation of 18 U.S.C. § 1591(a)(1), and one count of Transportation of a Minor for Purpose of Prostitution, 18 U.S.C. § 2423(a). He has been in prison since his arrest. Bold’s sentencing hearing is set for April 16, 2013, at 2:00 p.m. before Judge Charles R. Breyer in San Francisco. Each of the counts for which Bolds was convicted carries a statutory mandatory minimum penalty of ten years in prison. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Kevin J. Barry and Laura Vartain Horn are the Assistant United States Attorneys prosecuting the case with the assistance of Alycee Lane and Jacquelyn Lovrin. The prosecution is the result of an investigation of the FBI with assistance from the San Francisco and Oakland Police Departments.
(Bolds indictment )
Former Bay Area Resident Sentenced to Nearly Three Years for Her Participation in Tax SchemeRead the Press Release
SAN FRANCISCO – Charmetra Urssery was sentenced on December 11, 2013, to 34 months in prison, and ordered to pay restitution of $196,766 for conspiring to file false tax returns, United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez announced.
According to the plea agreement, beginning in June 2008, Urssery helped obtain tax refunds based on false tax returns that were filed with the IRS. As part of the scheme, Urssery spoke with others who then provided their personal information for use in the false returns. She knew the returns were false because the person whose name appeared on the returns often did not supply the information used to support the refund. Urssery also allowed her bank account to be used to receive fraudulent tax refunds, and spoke with others who then provided their bank account information to be used to receive fraudulent refunds. When Urssery withdrew the fraudulently obtained money from her bank account she would split the proceeds with other individuals involved in the scheme. Similarly, when the fraudulent refund was issued to another account holder they would also split the proceeds with others. In her plea, Urssery additionally admitted that she obstructed the investigation of this matter.
The sentence was handed down by the Honorable Charles R. Breyer, United States District Court Judge. Urssery was ordered to self-surrender on February 14, 2014.
Urssery, 36, was indicted on July 12, 2012. She was charged with one count of conspiracy to file false claims and pleaded guilty to the charge.
Thomas Newman is the Assistant U.S. Attorney who is prosecuting. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
(Urssery indictment )
Members of the Varrio South Park Gang Charged with Racketeering Conspiracy, Attempted Murder, Robbery, and Narcotics TraffickingRead the Press Release
SAN FRANCISCO – A seventeen-count federal indictment charging eight members and associates of the Varrio South Park (“VSP”) gang was returned by the Grand Jury on December 10, 2013 and unsealed today in federal court, announced United States Attorney Melinda Haag.
Three defendants were arrested last night during a joint law enforcement operation in Sonoma County, California. Four additional defendants were already in state custody and have been transferred to federal custody to face charges. One defendant is being sought. The defendants in custody were arraigned before The Honorable Maria-Elena James, United States Chief Magistrate Judge this morning.
Of the eight defendants named in the indictment, seven — David Martinez; Edmund Deneiliom; Ruben Quiroz; Cesar Castellanos; Lucio Mendoza; Samuel Tewolde; and Kalin Carell — are charged with racketeering conspiracy, conspiracy to commit murder in aid of racketeering, and conspiracy to commit assault with a dangerous weapon in aid of racketeering, arising from their participation in the VSP gang. These seven defendants are also charged with using firearms in furtherance of crimes of violence. According to the indictment, VSP is a racketeering enterprise and its members and associates agreed to conduct the affairs of the enterprise through, among other crimes, narcotics trafficking, witness intimidation, robbery, and murder.
Two of the defendants – David Martinez and Ruben Quiroz – are also charged with conspiracy to commit a robbery affecting interstate commerce and a robbery affecting interstate commerce arising from an August 19, 2013, robbery and high-speed car chase during which Martinez fired shots at the victim’s vehicle.
Two other defendants – Samuel Tewolde and Cesar Castellanos – are each charged with separate counts of attempted murder in aid of racketeering. The attempted murder charge against Tewolde arises from an incident on September 5, 2013, in the parking lot of a restaurant in downtown Santa Rosa, where Tewolde fired shots at an individual whom he believed to have “snitched” against other members of VSP. Casetellanos’s attempted murder charge arises from an incident on October 9, 2012, where he shot and wounded a fellow gang member whom Castellanos believed to have challenged his status and authority within the gang. Castellanos is also charged with one count of witness tampering for threatening to kill a woman to prevent her ex-boyfriend from testifying against Tewolde.
Defendants David Martinez and Edmund Deneiliom are also charged with trafficking methamphetamine and marijuana. Defendant Edmund Deneiliom and Andrew Hill-Piccola are also charged with being felons in possession of firearms.
The maximum possible punishments faced by each defendant are as follows:
- David Martinez, a/k/a “Oso,” a/k/a “Fat Boy,” a/k/a “Big Homie” – Life
- Edmund Deneiliom, a/k/a “EZ” – Life
- Ruben Quiroz – Life
- Cesar Castellanos, a/k/a “Cheese” – Life
- Lucio Mendoza, a/k/a “Juce” – Life
- Samuel Tewolde – Life
- Kalin Carell – Life
- Andrew Hill-Piccola – 10 years
Any sentence following conviction would be imposed by the court only after consideration of the United States Sentencing Guidelines and the federal statute governing the imposition of sentence, 18 U.S.C. § 3553(a).
Assistant U.S. Attorney Randy Luskey and Special Assistant U.S. Attorney Marc Price Wolf are prosecuting these cases with the assistance of Kevin Costello and Daniel Charlier-Smith. This prosecution is the result of an investigation by the Federal Bureau of Investigation, the California Highway Patrol, the Santa Rosa Police Department, the Sonoma County District Attorney’s Office, the Sonoma County Sherriff’s Office, and the California Department of Corrections and Rehabilitation.
Please note, an indictment contains only allegations against an individual and, as with all defendants, the defendants in this case must be presumed innocent unless and until proven guilty.
(Varrio South Park indictment )
17-Year Fugitives Voluntarily Surrender and Plead Guilty to Bank FraudRead the Press Release
SAN JOSE – Zahid and Riffat Ali, who have been wanted by federal authorities on bank fraud charges since 1996, surrendered to agents of the FBI at San Francisco International Airport yesterday when their flight from Pakistan arrived. This morning, they pleaded guilty in federal court in San Jose to bank fraud, United States Attorney Melinda Haag announced.
The Alis, husband and wife, were indicted by a federal grand jury in 1996 for bank fraud in violation of 18 U.S.C. § 1344. Before they could be arrested, they departed for their native Pakistan. Efforts to extradite them failed. Recently, in a deal worked out with prosecutors ahead of time, they agreed to voluntarily return.
According to the indictment, the Alis defrauded Home Savings of America of $438,866 by submitting a loan application that contained false statements, and by submitting false back up documents in support of the application. They submitted the application in the name of a third party, or “straw borrower”, to a relative, Mujeebullah Mujahid Khan, who was a loan officer at Home Savings. Khan pleaded guilty to bank fraud in 1997.
Today, the Alis pleaded guilty to bank fraud in front of The Honorable Lucy H. Koh, United States District Court Judge in San Jose. Both defendants were released after they each posted $50,000 bail.
In pleading guilty, both defendants admitted that during the summer of 1994 they owned a residence located at 1560 Bird Avenue in San Jose, California. Between approximately July 2, 1994, and September 9, 1994, they convinced a younger man who was living with them rent free to apply for a loan to purchase the 1560 Bird Avenue house from them. They admitted that they knew that his income and assets would not qualify him for a loan if the loan application had contained a truthful explanation of his circumstances. So they filled out a draft of the loan application that contained several falsehoods, including the following:
- They falsely claimed that Mr. Bhatt was earning $13,000 per month.
- They falsely claimed that he was employed by a company named Reffko, a company created by Mr.Ali.
- They also falsely claimed that Mr. Bhatt had $85,000 worth of stock.
Finally, in order to corroborate the Mr. Bhatt’s alleged income, they deposited $60,000 to $80,000 of their own funds into his bank account, and falsely confirmed his employment and income when Home Savings called to verify his employment at Reffko.
The sentencing hearing is scheduled for March 26, 2014, before The Honorable Lucy H. Koh, United States District Court Judge, in San Jose. The maximum statutory penalty for bank fraud, in violation of 18 U.S.C. § 1344, is 30 years in prison, and a fine of $1 million, plus restitution. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Gary G. Fry is the Assistant U.S. Attorney who is prosecuting this case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the by the Federal Bureau of Investigation.
(Ali indictment )
U.S. Attorney Tackles Drug Dealing Around Schools in TenderloinRead the Press Release
SAN FRANCISCO – Ten individuals have been indicted by a federal grand jury on charges of drug trafficking within 1,000 feet of schools in San Francisco’s Tenderloin District, United States Attorney Melinda Haag and DEA Special Agent in Charge Jay Fitzpatrick, announced.
The ten individuals are:
- Alfred Craney, United States v. Craney, CR-13-0752-CRB
- Ivan Speed, United States v. Speed, CR-13-0753-EMC
- Latoya Jackson, United States v. Jackson, CR-13-0754-THE
- Angela Jones, United States v. Jones, CR-13-0755-RS
- Saquita Nash, United States v. Nash, CR-13-00757-THE
- Mellina Williams, United States v. Williams, CR-13-00758-WHO
- Shaneka Clay, United States v. Clay, CR-13-00759-RS
- Cassie Roberts, United States v. Roberts, CR-13-00760-CRB
- Jamesha Harris, United States v. Harris, CR-13-00761-CRB
- Lori Spiller, United States v. Spiller, CR-13-00768-WHO
According to the charging documents, the defendants are each charged in separate, one-count indictments alleging that they dealt cocaine base in the form of “crack” cocaine within 1,000 feet of elementary schools in the Tenderloin, in violation of 21 U.S.C. § 841(a)(1) and 860.
According to Haag, the cases are part of an ongoing relationship between her office, the U.S. Drug Enforcement Administration, the San Francisco Police Department, and the Tenderloin community. “There are thousands of children who live and go to school in the Tenderloin District,” commented United States Attorney Melinda Haag. “Those children deserve the same chance as children who live in other neighborhoods around San Francisco: the chance to go to and from school without having to navigate through crack deals on the way. That is why I have directed my office to work with the DEA and the San Francisco Police Department to aggressively prosecute drug trafficking in areas around Tenderloin schools.”
Haag stressed that more charges could be on the way. “Everyone who treats the Tenderloin as an open-air drug market should be on notice: law enforcement is paying attention. You won’t know when the next arrests will be, or which schools or street corners we’ll focus on next, but if you’re caught you will face significant time in federal custody.”
“DEA is committed to making San Francisco a safe place for the children and families who live here, and the citizens who work in or visit this great city. We are pleased to have partnered with the San Francisco Police Department and the US Attorney’s Office to bring Federal charges against these defendants. We hope these arrests send a clear message that we won’t tolerate drug trafficking in any of our neighborhoods,” said Jay Fitzpatrick, DEA Special Agent in Charge.
The ten defendants who have been indicted so far have all been arrested and arraigned in federal court in San Francisco, with the exception of Craney, who, according to prosecutors, is currently in state custody on unrelated charges.
The maximum statutory penalty for violating the federal drug-free school zone statute is 40 years in prison, with a minimum mandatory one year in jail, at least six years and up to life on supervised release, and a maximum fine of up to $2,000,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
The prosecutions are the result of multiple investigations by the San Francisco Police Department, the San Francisco Field Division of the U.S. Drug Enforcement Administration and the United States Attorney’s Office for the Northern District of California.
Please note, an indictment contains only allegations against an individual and, as in all cases, the defendants listed above must be presumed innocent unless and until proven guilty.
Thirteen Defendants Plead Guilty for December 2010 Cyber-Attack Against PayPalRead the Press Release
SAN JOSE – Thirteen defendants pleaded guilty in federal court in San Jose yesterday to charges related to their involvement in the cyber-attack of PayPal’s website as part of the group “Anonymous,” United States Attorney Melinda Haag announced. One of the defendants also pleaded guilty to the charges arising from a separate cyber-attack on the website of Santa Cruz County.
In pleading guilty, the defendants admitted to carrying out a Distributed Denial of Service (DDoS) cyber-attack against PayPal in December 2010.
These DDoS attacks were facilitated by software tools designed to damage a computer network’s ability to function by flooding it with useless commands and information, thus, denying service to legitimate users. A group calling itself “Anonymous” claimed responsibility for the attacks, saying they conducted the attacks in protest of the companies’ and organizations’ actions. The attacks were facilitated by the software tools “Anonymous” made available for free download on the Internet. The victims included major U.S. companies across several industries.
According to the plea agreements and statements made in court, in late November 2010, WikiLeaks released a large amount of classified United States State Department cables on its website. Citing violations of the PayPal terms of service, and in response to WikiLeaks’ release of the classified cables, PayPal suspended WikiLeaks’ accounts such that WikiLeaks could no longer receive donations via PayPal. WikiLeaks’ website declared that PayPal’s action “tried to economically strangle WikiLeaks.”
The plea agreements further state that, in retribution for PayPal’s termination of WikiLeaks’ donation account, Anonymous coordinated and executed DDoS attacks against PayPal’s computer. Anonymous referred to these co-ordinated attacks on PayPal as “Operation Avenge Assange.”
The following defendants pleaded guilty:
- CHRISTOPHER WAYNE COOPER, dob 10/21/87, aka “Anthrophobic,” Elberta, Alabama
- JOSHUA JOHN COVELLI, dob 1/10/85, aka “Absolem, and, “Toxic,” Fairborn, Ohio
- KEITH WILSON DOWNEY, dob 11/7/84, Jacksonville, Florida
- MERCEDES RENEE HAEFER, dob 6/21/91, aka “No,” and “MMMM,” Las Vegas, Nevada
- DONALD HUSBAND, dob 8/14/81, aka “Ananon,” Fairfield, California
- VINCENT CHARLES KERSHAW, dob 2/23/84, aka “Trivette,” “Triv,” and “Reaper,” Fort Collins, Colorado
- ETHAN MILES, dob 9/1/77, Flagstaff, Arizona
- JAMES C. MURPHY, dob 11/15/74, Baldwin Park, California
- DREW ALAN PHILLIPS, dob 4/15/85, aka “Drew010,” Santa Rosa, California
- . JEFFREY PUGLISI, dob 2/19/83, aka “Jeffer,” “Jefferp,” and “Ji,” Clinton Township, Michigan
- DANIEL SULLIVAN, dob 6/29/89, Camarillo, California
- TRACY ANN VALENZUELA, dob 2/11/69, Napa, California
- CHRISTOPHER QUANG VO, dob 5/16/89, Attleboro, Massachusetts
With the exception of Valenzuela, Phillips and Miles, each of the defendants pleaded guilty to one count of Conspiracy, in violation of 18 USC 1030(b)(Felony), and one count of Intentional Damage to a Protected Computer, in violation of 18 USC 1030(a)(5)(A)(Misd.). Defendant Valenzuela pleaded guilty to one count of Reckless Damage to a Protected Computer, in violation of 18 USC 1030(a)(5)(A)(Misd.). Defendants Phillips and Miles were permitted to plead guilty to one count each of Intentional Damage to a Protected Computer, in violation of 18 USC 1030(a)(5)(A)(Misd.) only.
The terms of the plea agreements allow that unless a defendant violates any of the terms of the plea agreement or fails to accept responsibility, at the time of sentencing, the defendant may make an unopposed motion to withdraw his/her guilty plea to Count One, Conspiracy to Commit Intentional Damage to a Protected Computer in violation of 18 U.S.C. 1030(b) and the government will dismiss Count One, leaving only the misdemeanor count of violating of 18 U.S.C. 1030(a)(5)(A) to be entered as a final judgment against the defendant.
Defendant Joshua John Covelli also pleaded guilty to executing a DDoS attack (with another defendant, presently a fugitive) against the Santa Cruz County web server, admitting that it was in retaliation for a statute enacted by the City of Santa Cruz. The City of Santa Cruz enacted Section 6.36.010 of its Municipal Code, entitled “Camping Prohibited,” which contained restrictions and definitions on camping within Santa Cruz City. In response to the enforcement of Section 6.36.010, protesters occupied the Santa Cruz County Courthouse premises from approximately July 4, 2011 to October 2, 2011. Law enforcement officers from Santa Cruz County disbanded the protest and several protesters were charged with misdemeanors crimes in Santa Cruz County.
According to Covelli’s plea agreement and statements in court, in retribution for Santa Cruz City’s enforcement of Section 6.36.010 of the Municipal Code, and Santa Cruz County’s disbandment of the protest, Covelli and others, calling themselves the “People’s Liberation Front’” or “PLF,” and claiming to be associated with the “Anonymous” group, co-ordinated and executed an attack against Santa Cruz County’s computer servers. The PLF referred to these coordinated attacks on Santa Cruz County as “Operation Peace Camp 2010.”
The defendants are currently released on bond.
The sentencing hearings for twelve of the defendants are scheduled for December 4, 2014 at 10:00 a.m. before the Honorable D. Lowell Jensen, United States District Court Judge, in San Jose. Tracy Valenzuela’s sentencing hearing is scheduled for November 20, 2014 at 10:00 a.m. before Judge Jensen as well. The maximum statutory penalty for each count in violation of 18 United States Code, Section 1030(b) – Conspiracy (Felony), is 5 years imprisonment and a $250,000 fine; for each count in violation of 18 United States Code, Section 1030(a)(5)(A) – Intentional Damage to a Protected Computer (Felony), is 10 years imprisonment and a $250,000 fine; for each count in violation of 18 United States Code, Sections 1030(a)(5)(A) & (c)(4)(G)(i) – Intentional Damage to a Protected Computer (Misd.) is 1 year in prison and a $100,000 fine, and for each count in violation of 18 United States Code, Sections 1030(a)(5)(A) & (c)(4)(G)(i) – Reckless Damage to a Protected Computer (Misd.) is 1 year in prison and a $100,000 fine.
However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Matt Parrella and Hanley Chew are the Assistant U.S. Attorneys who prosecuted the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the Federal Bureau of Investigation, along with cooperation from PayPal. Authorities in the Netherlands, Germany and France have also taken their own investigative and enforcement actions.
The National Cyber-Forensics and Training Alliance, a public-private partnership whose mission to identify, mitigate, and neutralize cyber-crime, also provided assistance.
(Anonymous superseding indictment )
Cupertino Couple Indicted in Multi-Million Dollar Scheme to Export Stolen Luxury Cars to AsiaRead the Press Release
SAN JOSE – A federal indictment was unsealed today charging Yujen Chen and Maria Chen, husband and wife, with twenty-four felony violations, including wire fraud, international money laundering, exportation of stolen vehicles, and identity theft, arising out of their ownership of 888 Auto Corporation, announced United States Attorney Melinda Haag.
According to the indictment, Yujen Chen, 58, and Maria Chen, 56, of Cupertino, are alleged to have used their automotive business to fraudulently lease luxury vehicles, including vehicles from Porsche, Mercedes-Benz, Audi, BMW, and Toyota, and then to export those vehicles abroad. As part of the scheme, the Chens recruited friends and associates to serve as straw lessees, and sometimes paid them $500 to lease cars on their behalf. Subsequently, the Chens took custody of the cars, and promised the straw lessees they would make the car payments. Instead, the Chens exported the cars, and never paid off the lease obligations. The Chens also used without permission the identities of others to lease cars.
The Chens acted as vehicle brokers, and received money from people to purchase vehicles on their behalf. However, instead of paying the dealers the money received from the purchasers the Chens allegedly used the identities of these purchasers, without authorization, to lease or finance the vehicles, and kept the money for themselves.
The amount of money from the fraud exceeds approximately $3.3 million.
Yujen and Maria Chen were arrested on December 4, 2013. They made their initial appearance in federal court in San Jose today, and were released from custody to home confinement. The defendants next scheduled appearance is on December 10, 2013at 8:30am for further bail review before The Honorable Paul S. Grewal, United States Magistrate Judge.
The maximum statutory penalty for each count of wire fraud, and conspiracy to commit wire fraud, in violation of 18 U.S.C. §§ 1343 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 each count of international money laundering, in violation of 18 U.S.C. § 1956(a)(2)(A) is 20 years’ imprisonment and a fine of $500,000 or twice the value of the monetary instrument or funds involved. The maximum penalty for each count of exportation of stolen vehicles, in violation of 18 U.S.C. § 553(a)(1), is 10 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss, plus restitution. The maximum penalty for each count of identity theft, in violation of 18 U.S.C. § 1027(a)(7), is 15 years’ imprisonment and a fine of $250,000 or twice the gross gain or loss, plus restitution. The maximum penalty for each count of aggravated identity theft, in violation of 18 U.S.C. § 1028A, is twenty-four months imprisonment consecutive to any other sentence of imprisonment imposed. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Daniel Kaleba is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Nina Burney and Elise Etter. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigative Division; the California Department of Motor Vehicles; the Federal Bureau of Investigation; the United States Customs and Border Protection; and the California Highway Patrol.
Please note, an indictment contains only allegations against a person and, as with all defendants, Yujen Chen and Maria Chen must be presumed innocent unless and until proven guilty.
(Chen indictment )
Three Defendants Convicted in $3.2M Medicare Fraud SchemeRead the Press Release
SAN FRANCISCO Patrick Adebowale Sogbein, his wife, Adebola Adefunke Adebimpe, and Eduardo Abad were convicted today by a federal jury, following a 13-day trial, of Conspiracy to Commit Health Care Fraud and Health Care Fraud, announced United States Attorney Melinda Haag; David Johnson, Special Agent in Charge of the Federal Bureau of Investigation 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. Sogbein and Abad were also convicted of Conspiracy to Pay and Receive Kickbacks involving the Medicare Program,
The jury found that from December 2006 through July 2011, Sogbein and Adebimpe, through two Los Angeles area durable medical equipment companies, submitted over $3.2 million in fraudulent claims to Medicare for power wheelchairs and power wheelchair accessories based on bogus prescriptions for Medicare beneficiaries who had been identified by Abad and other street-level recruiters. The jury also found that Sogbein paid and Abad received cash kickbacks in exchange for referral of the Medicare beneficiaries. Sogbein and Adebimpe were paid more than $1.6 million by Medicare.
Prior to trial, on September 30, 2013 and October 21, 2013, respectively, co-defendants Edna Calaustro and Mele Saavedra, both of San Francisco, pled guilty to Conspiracy to Commit Health Care Fraud, Conspiracy to Receive Kickbacks involving the Medicare Program, and Health Care Fraud.
Sogbein and Adebimpe were remanded into custody today following conviction. Abad, Calaustro, and Saavedra remain out of custody.
The evidence at trial showed that in approximately December 2006, Sogbein, the owner of Debs Medical Distributors, a Van Nuys durable medical equipment company, began working with Calaustro, a physician, to obtain bogus prescriptions for power wheelchairs. In 2008, after Sogbein had increasing difficulties with Medicare scrutinizing the claims that he submitted, Sogbein and Adebimpe began submitting claims through a separate company in Adebimpe’s name, Dignity Medical Supply, a Santa Clarita durable medical equipment company. Sogbein and Calaustro worked with Abad, Saavedra, and others to identify Medicare beneficiaries. The evidence showed that 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 $100 for each power wheelchair prescription. Sogbein paid Abad and Saavedra $100 and $50, respectively, for each beneficiary they identified. Over the five-year period, Sogbein and Adebimpe billed Medicare for over 400 power wheelchairs using the bogus prescriptions written by Calaustro.
“Health Care Fraud is particularly pernicious because it not only defrauds the government but it inhibits Medicare’s ability to help those in need. The verdict today reaffirms this office’s commitment to prosecuting those who intentionally engage in schemes to defraud Medicare,” said United States Attorney Melinda Haag.
“The result of this case represents the FBI’s commitment to aggressively identify and investigate health care fraud crimes,” said FBI Special Agent in Charge David J. Johnson. “Our outstanding partnership with HHS-OIG nationwide allowed us to successfully work with their office in Los Angeles in order to bring down this egregious health care fraud scheme operating throughout California.”
A sentencing hearing for Sogbein, Adebimpe, and Abad is scheduled for March 20, 2013 at 2:00 p.m. before Judge Jeffrey S. White. The maximum statutory penalties for each count of Conspiracy to Engage in Health Care Fraud, in violation of Title 18, United States Code, Section 1349, and Health Care Fraud, in violation of Title 18, United States Code, Section 1347, are 10 years imprisonment and a fine of $250,000, or twice the amount gained in the course of the fraud, whichever is greater, plus restitution. The maximum statutory penalty for Conspiracy to Pay and Receive Kickbacks involving the Medicare program, in violation of Title 18, United States Code, Section 371, is 5 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.
Denise Marie Barton and Randy Luskey are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Assistant U.S. Attorney David Countryman, Paralegal Specialist Beth Margen, and Legal Assistant Bridget Kilkenny. The prosecution is the result of ten-month investigation by the Federal Bureau of Investigation in San Francisco and Office of Inspector General, Department of Health and Human Services in Los Angeles.