Southern District of California
Press releases recorded for this federal judicial district.
San Diego Man Sentenced to 188 Months in Fentanyl Overdose DeathRead the Press Release
Assistant U. S. Attorney Larry Casper (619) 546-6734
NEWS RELEASE SUMMARY – April 12, 2021
SAN DIEGO – Jeffrey Alden Blair was sentenced today by U.S. District Judge Anthony J. Battaglia to 188-months in prison for supplying the fentanyl that led to the fatal overdose of 45-year old Derrick Hotchkiss, a long-time rugby player for the San Diego Old Aztecs Rugby Football Club. Through his plea agreement, Blair admitted that the fentanyl he dealt caused Hotchkiss’ death and that he knowingly sold in excess of 400 grams of fentanyl.
Upon arrest, Blair told law enforcement that he understood that fentanyl could cause death and was “no joke.” Blair was arrested in an open storage unit in which agents located more than 500 grams of fentanyl and other drugs and drug-related items.
“Recidivist drug dealers who supply this poison in our community while recognizing the potentially lethal consequences must be held accountable,” said Acting U.S. Attorney Randy S. Grossman. “We will continue to aggressively pursue fentanyl traffickers in overdose cases to ensure justice is fully served.”
“This defendant dealt in more than drugs. He dealt in death,” said Special Agent in Charge of the San Diego DEA John W. Callery. “This sentencing should serve as a warning to other death dealers that we will continue to investigate fentanyl overdose deaths and those dealers who knowingly provide these poisons in San Diego and Imperial County.”
Previously, defendant Christopher Emison was also sentenced in connection with Hotchkiss’ death to 168-months in custody. In a related case, defendant Andrew Gossai will be sentenced on April 26, 2021. According to the Government’s sentencing papers, Gossai sold the fatal dose of fentanyl to Blair who made the purchase for both Emison and himself. In turn, Emison sold the fatal dose to Hotchkiss shortly before his overdose death.
Acting U.S. Attorney Randy Grossman praised prosecutor Larry Casper as well as the agents from Narcotics Task Force Team 10, a multi-agency team housed by DEA that was created in July 2018 to address drug overdose deaths in San Diego, for their efforts on these cases.
For those who suffer from addiction, please know there is help. Call the Crisis line at 888-724-7240; it’s always open.
DEFENDANTS
Case Number 19cr3252-AJB
Jeffrey Alden Blair Age: 34 San Diego, California
Christopher Glenn Emison Age: 33 El Cajon, California
Case Number 19cr3253-AJB
Andrew Samuel Daniel Gossai Age: 33 San Diego, California
SUMMARY OF CHARGES
Andrew Samuel Daniel Gossai and Jeffrey Alden Blair:
Distribution of Fentanyl – Title 21 U.S.C. Section 841(a)(1) and (b)(1)(C)
Maximum Penalties – Mandatory minimum of ten years, and maximum of life in prison and $10 million fine.
Christopher Glenn Emison
Sentenced to 168-months on Distribution of Fentanyl – Title 21 U.S.C. Section 841(a)(1) and (b)(1)(C) with maximum penalties – mandatory minimum of five years and maximum of 40 years in prison and $5 million fine.
INVESTIGATING AGENCIES
Drug Enforcement Administration
Federal Bureau of Investigation
Department of Homeland Security
California Department of Healthcare Services
San Diego Police Department
(The above-listed agencies are represented on DEA NTF Team 10)
Brothers Sentenced for Smuggling Disaster that Resulted in Tragic Deaths of Three SistersRead the Press Release
NEWS RELEASE SUMMARY – April 2, 2021
SAN DIEGO – Two brothers from Chihuahua, Mexico, were sentenced in federal court today to 66 months in prison and a $500 special assessment for smuggling three sisters across treacherous terrain along the U.S.-Mexico border in an ill-fated trek that resulted in the tragic deaths of the young women - Juana Santos Arce (age 35), Margarita Santos Arce (age 32) and Paula Santos Arce (age 29) of Oaxaca, Mexico.
Cecilio and Ricardo Rios-Quinones pleaded guilty in August 2020 to Transportation of Aliens Resulting in Death, Bringing in Aliens for Financial Gain and Conspiracy.
Calling this one of the worst human smuggling scenarios she has seen in 15 years as a judge, U.S. District Judge Cathy Ann Bencivengo stated that “three women froze to death because defendants sought to benefit from their need to come here. It is tragic that someone wants to come here to work and dies, but it is more tragic that there are people who benefit from this, who treat them like cargo.”
Judge Bencivengo found it significant that when events turned horrific, defendants did not immediately seek help and turn around. She recognized the presence at the sentencing hearing of several agents who engaged in the rescue operation, noting that they put their own lives at risk only to find two women dead and one barely alive, and despite their best efforts they could not get off the mountain in time to save her.
“The smugglers with whom individuals entrust their lives care only about money and not safety,” said Acting U.S. Attorney Randy Grossman. “We pledge to fervently seek justice for victims following these calamities, but we cannot bring back those who were lost or end the suffering of grieving families. I implore others not to entrust their lives or the lives of their loved ones to these smugglers.” Grossman praised the efforts of Assistant U.S. Attorney Charlotte Kaiser, Homeland Security Investigations and U.S. Border Patrol in prosecuting this case as well as all the agents and first responders who worked tirelessly and at risk to themselves to locate and rescue the sisters.
“Human smugglers prey on the desperation of people hoping for a better life in the United States,” said Cardell T. Morant, special agent in charge of HSI San Diego. “This case exemplifies the ruthlessness of smugglers, and should serve as a warning to people considering putting their lives in their hands. HSI will continue to work tirelessly to hold unscrupulous smugglers accountable and bring them to justice.”
“We are pleased that justice was served and that these criminals will be placed behind bars,” stated United States Border Patrol San Diego Sector Chief Patrol Agent Aaron Heitke. “May this sentencing serve as a strong message to others contemplating smuggling that this activity will not be tolerated.”
According to the government’s sentencing memorandum, the women occasionally came to the U.S. for work. According to family members, Paula, the youngest of the three sisters, was married and had an 18-month-old daughter at the time of her death.
As part of their plea agreements, the defendants admitted that they conspired with others to serve as foot guides in order to smuggle individuals illegally into the United States, and that they were ill-prepared when they guided the three sisters through a remote, mountainous region during a snow storm.
According to the plea agreements, the defendants guided the three sisters across the border from Mexico through the boundary fence in a remote area within the Southern District of California. They encountered cold, windy and rainy weather. It then began to snow. They lacked proper clothing, shoes, shelter, and other food and equipment to remain or hike in this cold, remote, mountainous environment.
According to reports, agents from the Border Patrol, Search, Trauma and Rescue (BORSTAR) unit initiated a rescue operation due to a distress call in the Boulevard Border Patrol Station’s area of operation on February 10, 2020, at approximately 1:50 p.m. The call concerned five individuals who were lost and experiencing hypothermia. BORSTAR agents initially encountered the two defendants in a snowy area approximately 20.5 miles east of the Tecate, California port of entry, more than 12 miles north of the border. The defendants pointed agents to the direction of the three sisters. Agents subsequently found the three sisters lying on the ground on a ridge.
Two of the sisters were already dead. The third sister was responsive but suffering from severe hypothermia. She later died despite gallant efforts of members of BORSTAR, Border Patrol Agents from the Campo/Boulevard area and the City of San Diego Fire & Rescue Department, who placed their own lives at risk while trying to keep the distressed sister alive as temperatures dropped and winds accelerated. Autopsies confirmed the three sisters died due to environmental hypothermia.
DEFENDANTS Case Number 20cr0868-CAB
Cecilio Rios-Quinones Age: 38 Chihuahua, Mexico
Ricardo Rios-Quinones Age: 23 Chihuahua, Mexico
SUMMARY OF CHARGES
Transportation of Aliens Resulting in Death – Title 8, U.S.C., Section 1324(a)(1)(A)(i) and (B)(iv)
Maximum penalty: Life in prison or death and $250,000 fine.
Bringing in Aliens for Financial Gain – Title 8, U.S.C., Section 1324(a)(2)(B)(ii)
Maximum penalty: Three years mandatory minimum, 10 years maximum, and $250,000 fine.
Conspiracy – Title 18, U.S.C., Section 371
Maximum Penalty: Five years in prison and $250,000 fine.
AGENCIES
Homeland Security Investigations
U.S. Border Patrol, Intelligence Unit
San Diego Business Leader Gina Champion-Cain Sentenced to 15 Years for Massive Ponzi Scheme and Obstruction of JusticeRead the Press Release
Assistant U. S. Attorney Aaron P. Arnzen (619) 546-8384 and Andrew J. Galvin (619) 546-9721
NEWS RELEASE SUMMARY – March 31, 2021
SAN DIEGO – Gina Champion-Cain, a long-time San Diego business leader, restauranteur, and real estate magnate, was sentenced in federal court today to 15 years in prison for masterminding a massive, years-long Ponzi scheme and obstructing justice by hiding and destroying evidence from federal investigators.
When she pleaded guilty on July 22, 2020, Champion-Cain admitted that she raised more than $350 million from investors by promising to use their money to make loans to business owners who were attempting to acquire California liquor licenses. The investors were unaware, however, that Champion-Cain was not keeping her promise.
According to court records, Champion-Cain and her co-conspirators instead used funds from new investors to pay back others whose investments would soon be redeemed, and embezzled funds to support her other businesses and her lifestyle. Champion-Cain and her co-conspirators kept the scheme going by, among other things, fabricating documents, forging signatures, and telling investors lies through fake email accounts so that when investors attempted to double-check on their investments with third parties, they were often really communicating with the defendant or her employees.
In handing down the sentence, U.S. District Judge Larry Alan Burns told the defendant that her scheme demonstrated “tremendous callousness” and “extreme avarice” in committing a “monumental crime.”
“This is a fitting sentence for a defendant who caused significant harm to hundreds of victims,” said Acting U.S. Attorney Randy Grossman. “This Ponzi scheme cost investors hundreds of millions of dollars while the defendant lived in luxury. We will continue our aggressive efforts to prosecute those who swindle, deceive and bring financial devastation to victims.”
“For years, Gina Champion-Cain used her status in the community to lie, cheat, and steal more than a staggering $350 million dollars - all from investors who trusted her with their hard-earned money and, in many instances, their life's savings,” said FBI Special Agent in Charge Suzanne Turner. “While the victims have suffered significantly from the defendant's betrayal, we hope today's sentence will bring some closure as they see Champion-Cain being held accountable for the damage she has caused. Let this serve as a warning that the FBI is dedicated to protecting the community from criminals, like Champion-Cain, who commit investment fraud.”
Crispin Torres, the former Chief Financial Officer of one of Champion-Cain’s companies, was sentenced on March 23, 2021 to four years in prison for using funds received from investors to prop up Champion-Cain’s other businesses.
Throughout her scheme, Champion-Cain made agreed-upon payments to her investors so that they would continue to believe that the supposed investment program was legitimate, according to court filings. This, in turn, helped her perpetuate the scheme and recruit more victims. Champion-Cain also stole tens of millions of dollars of investor funds to keep her other businesses afloat and enrich herself. Because many of Champion-Cain’s restaurant and retail businesses were failing or had negative cash flow, they needed funds to meet expenses. Time after time, Champion-Cain and Torres worked together to steal millions of dollars of investor funds to cover the shortfall. Champion-Cain also spent millions of investor dollars to pay for her own salary, box seats at professional baseball and football games, credit card bills, automobiles, jewelry, and other personal luxuries.
Champion-Cain’s plea agreement also describes her efforts to obstruct federal investigations into the scheme. Beginning in July 2019, after learning of investigations being conducted by federal agencies, she instructed her employees to destroy emails; not produce electronic calendar, messaging, and trash files; alter accounting records to hide the fact that investor funds were used to pay her personal expenses; and shred paper records. Champion-Cain even attempted to solicit an investment of $150 million in the hopes that she could use the funds to hide her scheme. Despite her efforts, investigators were able to recover a significant volume of the evidence Champion-Cain attempted to destroy.
Grossman praised the lead prosecutors on the case, Assistant U.S. Attorneys Aaron Arnzen and Andrew Galvin, as well as investigators and attorneys from the Federal Bureau of Investigation and the Securities and Exchange Commission, for their excellent work on this case
DEFENDANTS
Case Number 20CR2115-LAB
Gina Champion-Cain Age: 57 San Diego, CA
Case Number 20CR2114-LAB
Crispin Torres Age: 53 National City, CA
SUMMARY OF CHARGES
Securities Fraud, Title 15, U.S.C. Sections 77q and 77x (Champion-Cain)
Obstruction of Justice, Title 18, U.S.C. Section 1505 (Champion-Cain)
Conspiracy, Title 18, U.S.C. Section 371 (Champion-Cain and Torres)
AGENCY
Federal Bureau of Investigation
Man Charged with Organizing Smuggling Event that Led to Deaths of 13 Mexican and Guatemalan NationalsRead the Press Release
Assistant U. S. Attorneys Timothy Coughlin (619) 546-6768, Victor White (619) 546-8439, Blair Perez (619) 546-7963, Shauna Prewitt (619) 546-7937, Patrick Swan (619) 546-8450
NEWS RELEASE SUMMARY – March 30, 2021
EL CENTRO – Jose Cruz Noguez of Mexicali, Mexico, was charged in federal court today with coordinating the March 2, 2021 smuggling event that led to the deaths of 13 Mexican and Guatemalan nationals in a crash of an overloaded vehicle near Holtville, California.
Cruz, a legal permanent resident of the United States who has spent time in San Jose, California, was taken into custody last night as he crossed into the U.S. from Mexico at the Calexico Port of Entry. He made his first appearance in federal court in El Centro today before U.S. Magistrate Judge Ruth Bermudez Montenegro.
Cruz was charged with Conspiracy to Bring Aliens to the United States Outside a Port of Entry Causing Serious Bodily Injury/Placing a Life in Jeopardy, and Bringing in Aliens Without Presentation for Financial Gain. Judge Montenegro ordered that Cruz remain in custody and scheduled a detention hearing for Monday, April 5, 2021 at 9 a.m.
“These smuggling networks seek maximum profit by moving as many people as possible across the border with zero regard for their safety and well-being,” said Acting U.S. Attorney Randy Grossman. “Cramming dozens of people into eight-passenger vehicles and driving recklessly to avoid detection shows an utter disregard for human life. We will find and prosecute smugglers who use these methods and cause such tragic and avoidable deaths.” Grossman commended Assistant U. S. Attorneys Timothy Coughlin, Victor White, Shauna Prewitt, Patrick Swan and Blair Perez and agents from Homeland Security Investigations and the U.S. Border Patrol, El Centro Sector Intelligence Unit, for their excellent work on this case.
“Homeland Security Investigations (HSI) remains steadfast in our commitment to pursue members of human smuggling networks such as the network that caused the tragic deaths in the March 2 smuggling incident,” said Cardell T. Morant, special agent in charge for HSI San Diego. “Our investigative efforts have led to the arrest of an individual who allegedly put those lives in danger, and this brings us another step closer to providing closure for the families. We will continue to work collaboratively with our law enforcement partners to bring the perpetrators of this heinous crime to justice.” HSI’s tip line in the Calexico area is (760) 335-5343.
“Thirteen individuals lost their lives on March 2nd due to unscrupulous human smugglers,” said El Centro Sector Border Patrol Chief Patrol Agent Gregory K. Bovino. “The U.S. Attorney’s Office, Homeland Security Investigations and the U.S. Border Patrol will stop at nothing to find, arrest, and prosecute smuggling organizations and this case is evidence of that.”
Cruz came to the attention of law enforcement when he was identified by another suspected smuggler who claimed to be an associate of Cruz. The associate was arrested at the Campo Border Patrol Station for an unrelated smuggling event on March 15, two weeks after the fatal crash. The associate pointed the finger at Cruz, telling authorities he had worked for Cruz in the past, and had been recruited by Cruz to be the driver of the ill-fated vehicle from that tragic day. Cruz had offered him $1,000 per passenger, but he declined, the complaint said.
According to the complaint, the events of March 2 unfolded like this:
At approximately 5:56 a.m., Border Patrol Agents from the El Centro Border Patrol Station received a report from the California Highway Patrol of more than a dozen individuals running away from a burning GMC Yukon SUV and into the desert in Holtville, California. Border Patrol Agents were asked to respond to this suspected human smuggling event. At approximately 6:10 a.m., Border Patrol Agents responded to the area and extinguished the fire. Border Patrol Agents also followed foot tracks into the desert and apprehended 19 individuals hiding in the surrounding brush.
Separately, at approximately 6:05 a.m., a Remote Video Surveillance System (RVSS) operator at the Calexico Border Patrol Station spotted multiple vehicles and approximately 20 individuals gathered in a remote area just south of the United States/Mexico border. He also noticed that the border fence in the area had been breached and an approximately 10-foot section of it had been removed and was laying on the ground in Mexico. Border Patrol Agents then reviewed video footage from the area and discovered that two vehicles had crossed through the fence at approximately 5:23 a.m.: the GMC Yukon SUV and a Ford Expedition.
At 7:05 a.m., Border Patrol Agents at the Calexico Border Patrol Station received a request from the Calexico Police Department to assist with a mass-casualty vehicle crash in Holtville, California. Border Patrol Agents responding to the crash identified one of the vehicles involved as the Ford Expedition that recently had breached the border fence. A total of 25 individuals had been in the Ford Expedition at the time of the crash. Subsequent inspection of the Ford Expedition revealed that all but the driver and front passenger seats had been removed, presumably to fit that large number of people.
Despite the best efforts of law enforcement and medical personnel, 12 individuals – including the suspected driver – died at the scene of the crash. Another individual died on the way to the hospital. The surviving 12 individuals were transported to various hospitals far and wide, including in San Diego. Many of the survivors were diagnosed with serious injuries.
According to the complaint, on March 26, 2021, the suspected smuggler who claimed to be an associate of Cruz participated in a secretly recorded conversation with Cruz. During the recorded call, Cruz confirmed his involvement in the March 2, 2021, event, including that his other associates cut the border fence; that the vehicles were fully loaded; and that he collected money for the event. Further, Cruz stated there were 60 “Pollos” – his term for customers – in the two vehicles and the driver was going to make $28,000.
The associate told authorities he had grown up in Mexicali, Mexico and had known Cruz for several years. He said that he illegally entered the United States six months ago and started working for Cruz, who he described as a coordinator. He said Cruz paid him to drive individuals who are in the United States illegally from El Centro, California to Los Angeles, California. He said Cruz required him to harbor an individual who was illegally in the United States at his home in El Centro, California. In addition, the associate said Cruz required that he scout areas near El Centro, California where Cruz had groups of people illegally enter the United States. According to the associate, Cruz oversees the transportation of individuals who are in the United States illegally to stash houses; collects smuggling payments from family members or sponsors; recruits drivers; and scouts for the presence of law enforcement.
The associate stated that two weeks prior to the March 2, 2021, smuggling event, Cruz attempted to recruit him to drive one of the smuggling vehicles north from Mexico into the United States through a section of the fence that Cruz said would be breached. Cruz told his associate there would be up to 20 people in the vehicle and that the associate would be paid $1,000 per person for the job. According to the complaint, Cruz also told the associate that Cruz would oversee the smuggling event and would arrange for the vehicles that crossed to go to a stash house in Holtville, California. The associate claimed he declined Cruz’s offer.
Federal officials wish to thank the Mexican and Guatemalan consulates for their assistance in notifying family members of those individuals who died in the crash and in identifying and contacting family members of those hospitalized as a result of this tragedy.
At the hearing, Cruz was advised of the charges pending against him. The matter was set for a preliminary hearing on April 13, 2021 at 9 a.m. and arraignment on April 27, 2021 at 9:00 a.m. before Judge Montenegro. The Court appointed Federal Defenders as defense counsel in this case.
DEFENDANT Case Number 21MJ8250
Jose Cruz Noguez Age 47 Mexicali, Mexico
SUMMARY OF CHARGES
Conspiracy to Bring Aliens to the United States Outside a Port of Entry Causing Serious Bodily Injury/Placing a Life in Jeopardy –Title 8, U.S.C., Secs. 1324(a)(1)(A)(i), (v)(I), and (B)(iii)
Maximum Penalty: Twenty years in prison.
Bringing in Aliens Without Presentation for Financial Gain – Title 8, U.S.C., Sec. 1324(a)(2)(B)(ii)
Maximum Penalty: For a first or second violation, not less than three years or more than 10 years in custody; for a third violation, not less than five years or more than 15 years of custody.
INVESTIGATING AGENCIES
Homeland Security Investigations
United States Border Patrol, El Centro Sector Intelligence Unit
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Menifee Resident Sentenced to 70 days Custody and Ordered to pay $20,000 for Smuggling PesticidesRead the Press Release
NEWS RELEASE SUMMARY – March 26, 2021
SAN DIEGO – Beatriz Santillan of Menifee, California, was sentenced to 70 days in prison today and ordered to pay $20,079 restitution, following her plea of guilty to the charge of smuggling involving illegal pesticides on March 26, 2020. The restitution order is to cover the cost of disposal of the pesticides.
In pleading guilty in July of 2020, Santillan admitted that she entered the United States at the Otay Mesa Port of Entry driving a Toyota Camry. Santillan twice advised the primary inspector she was not bringing anything from Mexico. The inspector, however, found 56 containers of illegal Mexican pesticides in the vehicle, including three liters of Qufuran, five liters of Bayfolan, two liters of Metaldane, two liters of Biomec, one container of Ridomil Gold, 16 containers of Fosfuro de Zinc and 27 containers of Rodentox.
According to sentencing documents, a subsequent search of Santillan’s phone revealed photographs and videos of marijuana plants, both outside and in greenhouses, beginning August 10, 2019, and ending two days before her stop at the border. Phone chats between Santillan and an associate disclosed discussions about caring for marijuana plants and the use of the pesticides for growing marijuana, and included photos of pesticides and marijuana plants. The sentencing documents also noted that receipts for the purchase of pesticides in Mexico on three separate occasions, a medical marijuana prescription for an associate, and records of the purchase of items used for growing plants were found in Santillan’s car, along with records of the transfer of over $4,000 in the three months before her stop at the border.
The pesticides imported by Santillan were labeled in Spanish and did not bear any EPA registration number, as required by law for pesticides intended for use in the United States. Pesticides with the active ingredients found in the Qufuran and Metaldane imported by Santillan are cancelled pesticides in the United States, and may not be legally imported, sold, or distributed in the United States. Pesticides with the active ingredients found in Biomec, Fosfuro de Zinc and Rodentox are restricted use pesticides and may be purchased and applied only by certified pesticide applicators. Santillan holds no such certificate. Moreover, the lawful importation of pesticides requires a Notice of Arrival to be provided to U.S. Customs, and Santillan provided no such Notice of Arrival for the pesticides in question.
According to the Environmental Protection Agency, the pesticides involved are acutely toxic. The active ingredient in Metaldane is methamidophos, which has been cancelled in the United States since 2009. Methamidophos is one of the most acutely toxic organophosphate pesticides, and is similar to a class of chemicals that were originally manufactured as chemical warfare nerve agents. Carbofuran, the active ingredient in Qufuran, is classified by the EPA as Toxicity Category I, the highest toxicity category, based upon its lethal potency from absorption by ingestion, contact with skin, and inhalation. Zinc phosphide, the active ingredient in Fosfuro de Zinc and Rodentox, is extremely toxic, and the ingestion of small amounts can cause death in animals and humans. Ingestion of 7 drops to 1 teaspoon of zinc phosphide would likely kill a 150-pound person. After it is ingested, the zinc phosphide reacts with acid in the stomach, producing phosphine gas, which blocks cells from making energy, killing the cells. Phosphine gas can also be produced in the stomach if zinc phosphide dust is inhaled and swallowed after clearing from the lungs. The use of these chemicals poses a danger to humans and wildlife that might come in contact with them, as well as cannabis users who ingest products treated with them. Moreover, these chemicals are known to have injured law enforcement officers engaged in the eradication of illegal marijuana cultivation sites in California.
"The illegal importation and use of cancelled and restricted pesticides, like the ones this defendant was smuggling into the United States, pose a serious health threat to anyone that comes into contact with them. They also threaten wildlife in the areas where they are being illegally used. The Department of Justice remains committed to working with Homeland Security Investigations and the Environmental Protection Agency to ensure that those who smuggle these dangerous chemicals into the United States are held accountable under the law for their crimes," said Jean E. Williams, Acting Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice.
"The highly toxic chemicals that the defendant smuggled across the border pose a significant danger to unknowing consumers, law enforcement, wildlife and the environment in California," said Acting United States Attorney Randy S. Grossman. "The illegal importation, distribution, and application of such dangerous chemicals will not be tolerated."
"Illegal pesticides contain very dangerous and toxic chemicals, and their use jeopardizes public safety, pollutes the environment, and puts people’s health at risk," said Cardell T. Morant, Special Agent in Charge of Homeland Security Investigations (HSI). "These unregistered substances can be very harmful, and HSI and our partners at the Environmental Protection Agency, California Department of Toxic Substances Control, Customs and Border Protection, and the U.S. Attorney’s Office are committed to working together to stop these deadly pesticides from entering the United States."
"The pesticides involved in this case pose serious public health and environmental dangers," said Special Agent in Charge Scot Adair of EPA’s Criminal Investigation Division in California. "The sentence in this case demonstrates that individuals who intentionally violate smuggling and environmental protection laws will be held responsible for their crimes."
Santillan was ordered to surrender to begin serving her sentence on June 16, 2021.
DEFENDANT Case Number 20cr2178-GPC
Beatriz Santillan Age: 29 Menifee, CA
SUMMARY OF CHARGES
Smuggling – Title 18, U.S.C., Section 545
Maximum penalty: 20 years’ imprisonment and $250,000 fine
AGENCY
Homeland Security Investigations; U.S. Environmental Protection Agency, Criminal Investigation Division
Postal Clerk Sentenced for Stealing from CustomersRead the Press Release
SAN DIEGO – U.S. Postal Service employee Esteban Sanchez was sentenced in federal court today to time served and ordered to pay $20,153.23 in restitution for stealing money orders from 21 post office customers.
Sanchez pleaded guilty on November 3, 2020 to Theft of Mail by Postal Employee. The stolen money was often needed to pay the customers’ rent and other essentials.
The defendant was a clerk at the Encanto, Southeastern and Andrew Jackson post offices in San Diego. Beginning in February 2019 and continuing through May 2019, Sanchez stole approximately 31 money orders from customers who purchased them from him at the Encanto and Southeastern Offices.
The customers put the money orders in envelopes and provided them to Sanchez for him to mail. Instead of mailing the money orders, Sanchez set them aside and after the customers left, he cashed the money orders and pocketed the money.
In April and May 2019, two customers filed complaints at the post office stations where Sanchez worked. The customers reported that the money orders that they’d purchased and mailed were never delivered to the intended recipients. Agents for the U.S. Postal Service, Office of Inspector General (USPS OIG) conducted an investigation and data analysis and determined that Sanchez cashed at least 31 money orders, from 21 different customers, totaling $20,153.23. Some of the thefts were captured on video surveillance from inside the Post Office.
All of the victims of Sanchez’s thefts have been reimbursed by the United States Postal Service.
"Customers trust the post office with important business, and we are going to keep it that way," said Acting U.S. Attorney Randy Grossman. "In the rare case where a postal employee is unworthy of that trust, we will step in and make it right." Grossman praised prosecutor Andrew Sherwood and U.S. Postal Service investigators for their excellent work on this case.
"The majority of Postal Service employees are hardworking and honest people. On the rare occasion that an employee betrays that trust, the U.S. Postal Service Office of Inspector General will aggressively pursue the actions and allegations of theft. I want to stress that we are committed to preserving the integrity of the U.S. Mail and U.S. Postal Service resources," said Special Agent in Charge Brian Washington, with the U.S. Postal Service Office of Inspector General.
To report fraud, waste, and misconduct to the U.S. Postal Service Office of Inspector General, please visit www.uspsoig.gov/hotline or send your complaint to ATTN: HOTLINE, USPS OIG, 1735 North Lynn Street, Arlington, VA 22209-2020.
DEFENDANT Criminal Case No. 21-CR-02453-GPC
Esteban Sanchez Age: 26 San Diego, CA
SUMMARY OF CHARGE
Theft of Mail by Postal Employee (Felony) – Title 18, U.S.C., Section 1709
Maximum penalty: Five years in prison; $250,000 fine
INVESTIGATING AGENCY
United States Postal Service, Office of Inspector General
Local Businessman Sentenced to 18 Months in Prison and Ordered to Pay $1.5 Million in Restitution for Bank Fraud and Tax EvasionRead the Press Release
Assistant U. S. Attorney Oleksandra Johnson (619) 546-9769
NEWS RELEASE SUMMARY – March 22, 2021
SAN DIEGO – A local business owner was sentenced in federal court today on charges of bank fraud and tax evasion. David Daughtrey, 60, of El Cajon, was sentenced by U.S. District Judge Larry A. Burns to 18 months in custody and ordered to pay restitution of $1,519,590.63.
In July 2020, Daughtrey pleaded guilty to one count of conspiracy to commit bank fraud and tax fraud, and one count of filing a false tax return. Daughtrey’s illegal conduct spanned for a decade, from 2006 until 2016. For several years, Daughtrey evaded income tax by under-reporting his income and orchestrated an illegal scheme to fraudulently obtain a mortgage for his $1.8 million residence using a third party. The total tax loss to the United States in this case was $1,053,989.63.
“The defendant abused our tax and banking systems for his own financial benefit, and the victims of that crime are ethical taxpayers and bank customers,” said Acting U.S. Attorney Randy Grossman. “Today’s sentence will hopefully remind others that there is a high price to pay for such deception.” Grossman thanked prosecutor Oleksandra Johnson and agents from the IRS and FBI for their excellent work on this case.
“While Mr. Daughtrey achieved business success, he failed in his obligations as an American by lying to our banks and cheating the government,” said Special Agent in Charge Ryan L. Korner, IRS Criminal Investigation. “Today’s sentencing shows that we will hold accountable those who deceive and exploit our people and financial institutions because of their greed.”
“The FBI and our partners at the IRS uncovered David Daughtrey's mortgage fraud and tax evasion scheme using our team's financial and fraud expertise,” said FBI Special Agent in Charge Suzanne Turner. “Today's sentencing serves as a warning to those who attempt to personally gain by deliberately cheating the government and the integrity of the banking system through financial fraud. Our team of fraud experts will bring justice in these white-collar cases.”
According to court documents, from July 2006 until April 2016, Daughtrey conspired with others to commit the crimes to which he pleaded guilty. As part of the bank fraud scheme, Daughtrey directed another individual to submit a mortgage application to a national bank to purchase a $1.8 million five-bedroom residence, and to falsely claim that the funds used as down payment belonged to, and the residence would be used by, the third party.
In reality, Daughtrey provided the funds and the home was intended to be Daughtrey’s primary residence. Daughtrey made monthly mortgage payments of approximately $8,000 for his residence but continued to represent to the bank that the third party owned the house. Daughtrey later submitted a false hardship letter on behalf of the third party in an effort to modify the terms of the loan on the home.
Over several years, Daughtrey conspired to commit tax evasion by filing tax returns listing substantially less income than Daughtrey actually earned. Daughtrey’s tax return for the year 2012, for example, omitted at least $498,612 in income. Daughtrey failed to report his total income in tax years 2013, 2014, and 2015, and did not file timely tax returns for subsequent years. Daughtrey agreed to pay $1,053,989.63 in restitution to the IRS, which includes the total tax loss plus penalties and interest.
DEFENDANTS Case Number 20cr2113-LAB
David Daughtrey Age: 60 El Cajon, CA
SUMMARY OF CHARGES
Conspiracy to Commit Bank Fraud and Tax Evasion, 18 U.S.C. § 371 (count 1); and
Making a False Tax Return, 26 U.S.C. § 7206(1) (count 2).
Maximum penalty:
Five years’ imprisonment and $250,000 fine (count 1)
Three years’ imprisonment and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest (count 2)
AGENCY
Federal Bureau of Investigation
Internal Revenue Service
IT Contractor Sentenced to Two Years for Deleting Carlsbad Company’s Microsoft User AccountsRead the Press Release
Assistant U. S. Attorney Alexandra F. Foster (619) 546-6735
NEWS RELEASE SUMMARY – March 22, 2021
SAN DIEGO – Deepanshu Kher was sentenced today in federal court to two years in prison for accessing the server of a Carlsbad Company and deleting over 1,200 over the company’s 1,500 Microsoft User Accounts.
According to court documents, Kher was employed by an information technology consulting firm from 2017 through May 2018. In 2017, the consulting firm was hired by the Carlsbad Company to assist with its migration to a Microsoft Office 365 (MS O365) environment. In response, the consulting firm sent its employee, Kher, to the company’s Carlsbad headquarters to assist with the migration.
The company was dissatisfied with Kher’s work and relayed their dissatisfaction to the consulting firm soon after Kher’s arrival. In January 2018, the consulting firm pulled Kher from the company’s headquarters. A few months later, on May 4, 2018, the firm fired Kher, and a month after that, in June 2018, Kher returned to Delhi, India.
On August 8, 2018, two months after his return to India, Kher hacked into the Carlsbad Company’s server and deleted over 1,200 of its 1,500 MS O365 user accounts. The attack affected the bulk of the company’s employees and completely shut down the company for two days. As the company’s Vice President of Information Technology (IT) explained, the impact was felt inside and outside the company. Employees’ accounts were deleted – they could not access their email, their contacts lists, their meeting calendars, their documents, corporate directories, video and audio conferences, and Virtual Teams environment necessary for them to perform their jobs. Outside the company, customers, vendors and consumers were unable to reach company employees (and the employees were unable to reach them). No one could inform these buyers what was going on or when the company would be operational again.
Unfortunately, even after those two days, the problems remained. Employees were not receiving meeting invites or cancellations, employees’ contacts lists could not be completely rebuilt, and affected employees could no longer access folders to which they previously had access. The Carlsbad Company repeatedly handled multitudes of IT problems for three months. The Vice President of IT closed by saying, “[i]n my 30-plus years as an IT professional, I have never been a part of a more difficult and trying work situation.”
In pronouncing the sentence, U.S. District Court Judge Marilyn L. Huff noted that Kher perpetrated a significant and sophisticated attack on the company, an attack which was planned and clearly intended as revenge. In addition to the two years in custody, Judge Huff sentenced Kher to three years’ supervised release and restitution to the Company of $567,084, the amount that the Company paid to fix the problems which Kher caused.
Kher, an Indian national, was arrested when he flew from India to the United States on January 11, 2021, unaware of the outstanding warrant for his arrest.
“This act of sabotage was destructive for this company,” said Acting U.S. Attorney Randy Grossman. “Fortunately, the defendant’s revenge was short-lived and justice has been delivered.” Grossman commended the excellent work of Assistant U.S. Attorney Alexandra F. Foster and the FBI agents on this case.
“The FBI was able to identify, arrest, and prosecute Deepanshu Kher, despite the fact that he committed this harmful hack while outside the United States. This case shows the commitment, expertise, and reach of the FBI in working cyber intrusion cases,” said Suzanne Turner, Special Agent in Charge of FBI's San Diego Field Office. “We encourage companies to develop a relationship with the FBI and local law enforcement prior to a cyber security incident and incorporate us into incident response plans. In this case, the victim company’s swift notification and cooperation with the FBI contributed greatly to the successful outcome. Living in a digital world, it is important to get ahead of the threats, be proactive and predictive in the way we approach cybersecurity.”
If victimized in a cyber security incident, the FBI encourages companies to immediately contact the FBI. Specialized cyber agents will work with companies to protect company information and the personal data of its customers. Please contact the FBI San Diego's cyber program by calling our field office at (858) 320-1800 or submitting tips at Internet Crime Complaint Center (IC3).
DEFENDANTS Case Number 19cr4643-H
Deepanshu Kher Age: 32 Delhi, India
SUMMARY OF CHARGE
Intentional Damage to a Protected Computer (18 U.S.C. § 1030(a)(5)(A) and (c)(4)(B)(i))
Maximum Penalty: Ten years in prison; $250,000 fine.
INVESTIGATING AGENCY
FBI
San Diego Law Enforcement Leaders Condemn Anti-Asian Hate CrimesRead the Press Release
Kelly Thornton (619) 546-9726
NEWS RELEASE SUMMARY – March 19, 2021
SAN DIEGO – Acting U.S. Attorney Randy Grossman, San Diego FBI Special Agent in Charge Suzanne Turner and San Diego County District Attorney Summer Stephan today condemned racism, xenophobia, and intolerance against Asian Americans and Pacific Islanders in the United States and urged members of the community to report hate-based crimes and incidents to law enforcement.
“Acts of hate have no place in our community,” Grossman said. “No one should be targeted because of who they are or where they are from. When someone is targeted because of their race or ethnicity, terror reverberates to every member of their community. We want to receive reports of activities motivated by hate so that we can address civil rights violations, as well as hate and bias incidents.”
“The FBI and our partners at the United States Attorney’s Office and the District Attorney’s Office simply won’t tolerate crimes spurred by hate and which are meant to intimidate and isolate the groups targeted,” said SAC Turner. “People of all races, ethnicity and national origins deserve to feel safe in their communities. If a crime is shown to be motivated by bias, it will be investigated by the FBI and the perpetrators held responsible for their actions.” SAC Turner emphasized, “Today, we are reminding the public to report information regarding any hate crime to the FBI.” Members of the public may report a potential hate crime to the Federal Bureau of Investigation at 1-800-CALL-FBI or online at www.tips.fbi.gov.
“Hate crimes are despicable and inexcusable, said Stephan. “Protecting our community from hate crimes is a priority for my office because hate erodes our right to equality and fairness, leaves a lasting impact on the victim and instills fear in the wider community. Hate won’t be tolerated, and I encourage the community to report both hate incidents and hate crimes.” Stephan said the San Diego County District Attorney's Office has seen a three-fold increase in hate crimes targeting Asian communities in San Diego County and is currently prosecuting several such criminal cases. The DA’s Office has established an online tool at SanDiegoDA.com where the public can directly report suspected hate crimes.
The U.S. Attorney’s Office and the Federal Bureau of Investigation review information and community reports about potential hate crimes for potential prosecution, and also provide assistance to local, state, and tribal law enforcement with investigations of hate crimes through their participation in the San Diego Regional Anti-Hate Crime Coalition. Local leaders, including Assistant U.S. Attorney and Civil Rights Enforcement Coordinator Christopher Tenorio and Deputy District Attorney and Lead Hate Crimes Prosecutor Leonard Trinh, will participate in a webinar hosted by Alliant International University ABC 10 News, San Diego, on March 23, 2021, titled “Unpacking Domestic Terrorism: Combating Hate & Targeted Violence Against the Asian-American Community.”
For information about this event, please see attached flyer.
The most recent statistics on hate crimes are available here 2019 Hate Crime Statistics from the FBI’s Uniform Crime Report.
Additional resources regarding hate crimes and bias incidents are here:
https://civilrights.justice.gov/#your-rights
https://www.fbi.gov/investigate/civil-rights/hate-crimes#FBI-Resources
Feds Seek Tips from Public to Identify Smugglers of 13 who Died in CrashRead the Press Release
Assistant U. S. Attorneys Tim Coughlin (619) 546- 6768, Victor White (619) 546-8439 and Blair Perez (619) 546-7963
NEWS RELEASE SUMMARY – March 17, 2021
SAN DIEGO – Federal officials are asking for the public’s help in identifying the smugglers whose actions led to the deaths of 13 Mexican and Guatemalan nationals in a crash of an overloaded vehicle on March 2 near Holtville, California.
The tip line number is (760) 335-5343.
U.S. Border Patrol was notified of the crash by the California Highway Patrol at about 6:30 a.m. on March 2. In a subsequent review of border surveillance camera footage, Border Patrol agents discovered that a 10-foot section of the border fence had been cut and at least two SUVs had driven northbound through the open section.
Border Patrol agents located one of the SUVs broken down on Interstate 8 near Holtville. Agents arrested 19 undocumented migrants located beside the disabled vehicle. Shortly thereafter, agents found the second SUV at the crash scene on Norrish Road at Highway 115, a remote stretch of road used mostly by farmers. Twelve people died at the crash site; one died later. Multiple individuals were airlifted to hospitals with significant injuries. A 23-year-old daughter died in her mother’s arms at the scene of the crash.
“This tragic case is a grim reminder that putting your faith and future in the hands of smugglers is a very dangerous gamble,” said U.S. Attorney Randy Grossman. “Smugglers are motivated by greed and care nothing for the people they put in harm’s way. We will aggressively prosecute smugglers who recklessly cause deaths.”
“Homeland Security Investigations is conducting a criminal investigation into the human smuggling networks that callously and repeatedly place human lives in danger, such as the events that resulted in death during the March 2nd smuggling incident,” said Cardell T. Morant, Special Agent in Charge for HSI in San Diego. “HSI is asking for the public’s help in bringing the people responsible for the activity that led to the tragedy on March 2nd to justice by providing any information to the HSI Calexico tipline at (760) 335-5343.”
Federal officials wish to thank the Mexican and Guatemalan consulates for their assistance in notifying family members of those individuals who died in the crash and in identifying and contacting family members of those hospitalized as a result of this tragedy.
Man Sentenced in Deaths of Three Smuggled Chinese MigrantsRead the Press Release
Assistant U. S. Attorney Michael G. Wheat (619) 546-8437
NEWS RELEASE SUMMARY – March 15, 2021
SAN DIEGO – Neil Edwin Valera, a U.S. citizen who resided in Tijuana, was sentenced in federal court today to five years in prison in connection with the deaths of three Chinese migrants, including a mother and her 15-year-old son, who were found in the trunk of Valera’s BMW two days after he crossed into the United States through the San Ysidro Port of Entry in the same car.
Valera, a truck driver from El Paso, Texas, pleaded guilty in February 2020 to Encouraging Aliens to Enter Resulting in Death and Bringing in Aliens without Presentation for Financial Gain.
At the sentencing hearing today, U.S. District Judge Anthony Battaglia said: “There’s an inherent danger with putting people in the trunks and compartments of cars. It’s not just a fairy tale that people will get hurt or die - it really does happen.”
On August 11, 2019, at 4:54 p.m., San Diego police received an emergency 911 call from a person reporting a foul odor and blood dripping from a suspicious vehicle with Texas license plates parked near the 2100 block of Jaime Avenue in San Diego.
San Diego police officers discovered a 1999 silver BMW with a Texas license plate. The officers lifted the trunk and found what initially appeared to be two deceased Asian females. Homicide detectives found an additional victim, an Asian male, pressed up against the rear wall of the trunk. A witness said the car was first noticed two days earlier and no one was seen coming or going.
Video recordings show the same car crossing into the United States from Mexico on August 9, 2019, at the San Ysidro port of entry at 3:14 p.m. According to the complaint, the driver was Valera, the registered owner of the vehicle. Valera used his Sentri card to enter into the U.S. After that day, Valera only crossed into the United States on foot, through pedestrian lanes at the San Ysidro Port of Entry.
“This smuggler showed a reckless disregard for the lives of his customers,” said Acting U.S. Attorney Randy Grossman. “This office will aggressively seek justice for victims who no longer have a voice.” Grossman thanked Assistant U.S. Attorney Michael Wheat and officials from the San Diego Police Department, Homeland Security Investigations and U.S. Customs and Border Protection, Office of Field Operations for their excellent work on this case.
DEFENDANT Case Number 3:19-cr-03865-AJB
Neil Edwin Valera Age: 52 Tijuana
SUMMARY OF CHARGES
Encouraging Aliens to Enter Resulting in Death – Title 8, U.S.C., Section 1324(a)(1)(A)(vi) and (B)(iv)
Maximum penalty: Life in prison or death and $250,000 fine
Bringing in Aliens without Presentation for Financial Gain – Title 8, U.S.C., Section 1324(a)(2)(B)(ii)
Maximum penalty: Mandatory minimum three years, up to 15 years in prison
AGENCY
San Diego Police Department
Homeland Security Investigations
U.S. Customs and Border Protection, Office of Field Operations
Sky Global Executive and Associate Indicted for Providing Encrypted Communication Devices to Help International Drug Traffickers Avoid Law EnforcementRead the Press Release
Assistant U.S. Attorneys Meghan E. Heesch (619) 546-9442 and Joshua C. Mellor (619) 546-9733
NEWS RELEASE SUMMARY – March 12, 2021
SAN DIEGO – A federal grand jury today returned an indictment against the Chief Executive Officer and an associate of the Canada-based firm Sky Global on charges that they knowingly and intentionally participated in a criminal enterprise that facilitated the transnational importation and distribution of narcotics through the sale and service of encrypted communications devices.
Jean-Francois Eap, Sky Global’s Chief Executive Officer, and Thomas Herdman, a former high-level distributor of Sky Global devices, are charged with a conspiracy to violate the federal Racketeer Influenced and Corrupt Organizations Act (RICO). Warrants were issued for their arrests today.
According to the indictment, Sky Global’s devices are specifically designed to prevent law enforcement from actively monitoring the communications between members of transnational criminal organizations involved in drug trafficking and money laundering. As part of its services, Sky Global guarantees that messages stored on its devices can and will be remotely deleted by the company if the device is seized by law enforcement or otherwise compromised.
The indictment alleges that Sky Global installs sophisticated encryption software in iPhone, Google Pixel, Blackberry, and Nokia handsets. Sky Global device users communicate with each other in a closed network, and Sky Global routes these communications through encrypted servers located in Canada and France.
There are at least 70,000 Sky Global devices in use worldwide, including in the United States. The indictment alleges that for more than a decade, Sky Global has generated hundreds of millions of dollars in profit by facilitating the criminal activity of transnational criminal organizations and protecting these organizations from law enforcement.
According to the indictment, Sky Global’s purpose was to create, maintain, and control a method of secure communication to facilitate the importation, exportation, and distribution of heroin, cocaine and methamphetamine into Australia, Asia, Europe, and North America, including the United States and Canada; to launder the proceeds of such drug trafficking conduct; and to obstruct investigations of drug trafficking and money laundering organizations by creating, maintaining, and controlling a system whereby Sky Global would remotely delete evidence of such activities.
The indictment alleges that Sky Global employees used digital currencies, including Bitcoin, to facilitate illegal transactions on the firm’s website, to protect its customers’ anonymity, and to facilitate the laundering of the customers’ ill-gotten gains. According to the indictment, Sky Global employees also set up and maintained shell companies to hide the proceeds generated by selling its encryption services and devices.
In 2018, the principals of another communications encryption company, Phantom Secure, were indicted in the Southern District of California for their roles in providing encrypted devices to criminal groups. Phantom Secure’s chief executive, Vincent Ramos, pleaded guilty and admitted that he and his co-conspirators facilitated the distribution of narcotics around the world by supplying encrypted communications devices designed to thwart law enforcement.
As alleged in today’s indictment, Sky Global instituted an “ask nothing/do nothing” approach toward its clients shortly after the takedown of Phantom Secure. This policy allowed for Sky Global to claim plausible deniability from the activities of their clients that they knew or had reason to know participated in illegal activities, including international drug trafficking.
“The indictment alleges that Sky Global generated hundreds of millions of dollars providing a service that allowed criminal networks around the world to hide their international drug trafficking activity from law enforcement,” said Acting U.S. Attorney Randy Grossman. “Companies who do this are perpetuating the deadliest drug epidemic in our nation’s history. This groundbreaking investigation should send a serious message to companies who think they can aid criminals in their unlawful activities. I want to thank the prosecutors on this case, Meghan Heesch and Joshua Mellor, as well as our federal law enforcement partners at the FBI, DEA, IRS and the U.S. Marshals Service, for their excellent work on this case.”
“The indictment of Sky Global’s CEO and main distributor is another major strike against transnational crime,” said Suzanne Turner, FBI Special Agent in Charge of the San Diego Field Office. “Eap and Herdman allegedly provided a service designed to allow criminals to evade law enforcement to traffic drugs and commit acts of violent crime without detection. Similar to our 2018 investigation of encrypted service provider Phantom Secure, the San Diego FBI targeted this Canadian company who also exploited encryption to go dark on law enforcement around the globe. With these highly impactful cases, we have shown that the FBI focuses on investigating international criminal organizations from the top so we can shut down entire illicit operations—and the associated technological infrastructure. Today, the FBI has removed what we allege to be another illicit secret communications network used by criminals in the US, Canada, and worldwide.” SAC Turner added, “I want to thank our partners at the Department of Justice, as well as our Canadian law enforcement partners, for their incredible work on this case.”
“DEA maintains an evolving global reach and combined with strong foreign law enforcement partnerships, is committed to searching out the most significant organized criminal groups facilitating sophisticated narcotics trafficking networks,” said DEA Los Angeles Field Division Special Agent in Charge Bill Bodner. “The joint effort to pursue these individuals who hide behind encrypted communication platforms shows that even the use of advanced technology will not enable suspects to conceal their criminal activities from law enforcement.”
“This case is another example of IRS-CI working closely with our international partners to follow the money and bring significant criminal activity to light,” said Special Agent in Charge Ryan Korner of the IRS-Criminal Investigation (IRS-CI) Los Angeles Field Office. “The indictment alleges that Sky Global’s network facilitated international crime across the world, but just as criminals know no borders, neither does federal law enforcement. The combined efforts of the Joint Chiefs of Global Tax Enforcement (J5) ensure that these types of illicit behavior are identified, tracked, and ultimately prosecuted on a global-scale.”
The international operation to seize Sky Global’s infrastructure involved cooperation and efforts by law enforcement authorities in the United States and Canada. In addition, on March 10, 2021, Europol announced that judicial and law enforcement authorities in Belgium, France and the Netherlands had wiretapped Sky Global’s servers and monitored hundreds of millions of messages by Sky Global’s users. The European investigation resulted in hundreds of arrests, the seizure of thousands of kilograms of cocaine and methamphetamine, hundreds of firearms, and millions of Euros.
“With technological advancement comes increased levels of criminal sophistication, but also new tools for police to combat crime,” says Assistant Commissioner Dwayne McDonald, BC RCMP Criminal Operations Officer for Federal, Investigative Services and Organized Crime. “The RCMP will continue to adopt new technologies and strategies to keep our communities safe. Collaboration with our international policing partners, such as in this case with the FBI and DEA, has become an integral part in the ever-evolving fight against organized crime.”
This case is the result of ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high-level members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.
DEFENDANTS 21-CR-822GPC
Jean-Francois Eap Vancouver, British Columbia, Canada aka “888888”
Thomas Herdman Vancouver, British Columbia, Canada
SUMMARY OF CHARGES
Count 1: Racketeering Conspiracy, in violation of Title 18, U.S.C., Section 1962(d). Maximum Penalty: Life in prison
Count 2: Conspiracy to Distribute Controlled Substances, in violation of Title 21, United States Code, Sections 841(a)(1) and 846, and Title 18, United States Code, Section 2. Maximum Penalty: Life in prison
AGENCIES
Federal Bureau of Investigation
Drug Enforcement Administration
Internal Revenue Service-Criminal Investigations
United States Marshals Service
Department of Justice, Office of International Affairs
Royal Canadian Mounted Police
International Assistance Group, Canadian Department of Justice
Organized Crime Drug Enforcement Task Force
*The charges and allegations contained in an indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Man Sentenced for Attempting to Board International Flight with a Loaded FirearmRead the Press Release
Assistant U.S. Attorney Jaclyn Stahl (619) 546-8456
NEWS RELEASE SUMMARY – March 12, 2021
SAN DIEGO – Elan Leroy Gwynn, a San Diego resident, was sentenced today to nine months in custody for attempting to board an international flight from San Diego International Airport to London with a loaded gun in his carry-on luggage.
According to admissions in his plea agreement, Gwynn proceeded through the Transportation Security Administration (TSA) security checkpoint on March 17, 2020. Gwynn placed his carry-on luggage on the conveyor belt for the X-ray machine, and TSA officers identified an object that appeared to be a loaded firearm.
Officers with the San Diego Harbor Police responded and discovered, loose in the bottom of Gwynn’s bag, a Glock 19 replica ghost gun with a fifteen-round magazine, loaded with eleven 9-millimeter rounds of ammunition. A ghost gun is a firearm made by an individual without a serial number or other identifying markings. Ghost guns are illegal under California law. Gwynn was also in possession of several grams of methamphetamine. The FBI responded and placed Gwynn under arrest.
U.S. District Judge Janice L. Sammartino also ordered Gwynn to pay a $5,000 fine and ordered forfeiture of the gun and ammunition seized in this case.
“Firearms have no place on airplanes and pose a serious threat to all aboard,” said Acting U.S. Attorney Randy Grossman. “If individuals engage in this type of dangerous behavior, the FBI and the U.S. Attorney’s Office will investigate and bring appropriate charges.” Grossman thanked Assistant U.S. Attorney Jaclyn Stahl as well as the FBI, San Diego Harbor Police and TSA for their excellent work on this case.
“The FBI's Joint Terrorism Task Force (JTTF) is available to respond immediately to investigate federal violations of law that threaten the safety of airline passengers,” said FBI Special Agent in Charge Suzanne Turner. “The safety of the flying public is a priority for the FBI.”
The FBI and U.S. Attorney’s Office will continue to dedicate resources to investigations related to national security and criminal activity at San Diego air, land, and sea ports. This case was investigated by the San Diego FBI and the U.S. Attorney's Office, with support from San Diego Harbor Police and the Transportation Security Administration. Other agencies supporting the FBI include, the Department of Homeland Security, U.S. Customs and Border Protection, the Federal Aviation Administration, and the San Diego Port Authority.
DEFENDANT Case No. 20-CR-1188-JLS
Elan Leroy Gwynn Age: 36 San Diego, California
SUMMARY OF CHARGES
Carrying a weapon or explosive on an aircraft, in violation of 49 U.S.C. § 46505.
Maximum Penalty: Ten years in prison; $250,000 fine.
INVESTIGATING AGENCIES
Federal Bureau of Investigation
San Diego Harbor Police
Transportation Security Administration
Former Sheriff’s Captain Sentenced to Prison for Illegal Gun Deals and CorruptionRead the Press Release
Assistant U. S. Attorneys Nicholas Pilchak (619) 546-9709 or Andrew Haden (619) 546-6961
NEWS RELEASE SUMMARY – March 12, 2021
SAN DIEGO – Former San Diego County Sheriff’s Captain Marco Garmo was sentenced to two years in prison today for years of unlawful firearms transactions and for an array of corrupt conduct relating to unlicensed marijuana dispensaries operating in his former jurisdiction.
In pronouncing sentence, U.S. District Judge Gonzalo Curiel said that Garmo’s conduct demonstrated arrogance reaching a level where Garmo was “almost becoming a mob boss of sorts” in picking winners and losers and dispensing unlawful favors to friends and family.
Garmo admitted in pleading guilty in September that he had acted as an unlicensed firearm dealer, buying almost 150 weapons and re-selling almost 100 over a period of roughly six years. A number of those transactions involved “straw purchases,” where Garmo acquired firearms for others by falsely claiming that they were for him. This was an important part of Garmo’s firearms dealing because California law limits the initial purchase of certain newer handguns to law enforcement officers only.
In his plea agreement, Garmo admitted that one of his goals in selling so many guns was profit, but another was to curry favor with prominent county residents whom he expected might support his planned run for Sheriff of San Diego County.
Garmo also acknowledged tipping off an illegal marijuana dispensary that he believed was about to be searched by Sheriff’s deputies, in order to give an advance warning to his cousin, who was one of the dispensary’s owners. The unlawful cannabis operation cleared its shelves of cash and valuable products the same night it received Garmo’s warning. And once the dispensary had reopened—after receiving the all-clear from Garmo the following morning—Garmo’s cousin sought his help again weeks later, after the premises was posted with an abatement notice. The warning would have required the dispensary to close its doors and cease its lucrative business, but Garmo forwarded it to an acquaintance employed at the county and asked “Can we push it back?” Garmo’s associate replied, “Yes you can.”
Court documents explain how Garmo also bent his public authority for his private gain by pitching a corrupt “consulting” arrangement to another property owner whose premises had been condemned for hosting a different unlicensed marijuana dispensary. While acting as the chief law enforcement officer in charge of eradicating such unlawful activity, Garmo suggested that the landlord hire Garmo’s co-defendant Waiel “Will” Anton along with Garmo’s associate at the County as outside “consultants” to reopen his property. According to his plea agreement and court filings, Garmo had secretly arranged with the County associate for Garmo to receive a 10 percent kickback on the fees. When the landlord declined the offer, Garmo told the County employee to have the County “piss on” him by way of retaliation.
“This investigation uncovered blatant and repetitive violations of the public trust by a senior law enforcement officer,” said Attorney for the United States Linda Frakes. “Garmo was sworn to uphold the law, but instead he abused his authority and the legal privileges he enjoyed as a police officer for his own personal benefit, and then lied to cover it up. The U.S. Attorney’s Office is committed to ensuring that no public official is above the law.”
Garmo’s unlawful conduct persisted despite repeated warnings and admonitions from his superiors, the ATF, and the San Diego County District Attorney’s Office, according to court filings. Garmo’s firearms dealing resulted in a prior disciplinary warning and his near prosecution by state authorities in 2017, but nevertheless continued with only minor alterations designed to avoid further scrutiny. Garmo’s efforts to avoid answering for his conduct continued even after he was confronted by FBI and ATF agents in February 2019, when he lied repeatedly during an interview. As he admitted in his plea agreement, Garmo lied to agents about tipping off marijuana dispensaries, conducting straw purchases, and receiving money from Anton as part of a separate kickback scheme.
In that enterprise, Anton had set up a different “consulting” venture in which he offered services to applicants for permits to carry a concealed weapon from the County. In exchange for substantial fees, Anton would help his applicants submit their paperwork and secure an appointment with the civilian County staff that processed them. As set out in Court records, Anton’s services included an eight-month reduction in the wait time for the initial appointment with the County—a service that Anton could provide because he had built an unusual relationship with County staff. In particular, the indictment alleges that Anton made an illegal cash payment to a County clerk who ensured favored treatment for his clients. Garmo admitted in his plea papers that his role in Anton’s scheme was to refer “consulting” clients to Anton in exchange for kickbacks of $100 apiece.
According to the indictment, Garmo was a Sheriff’s deputy for the San Diego County Sheriff’s Department for almost 27 years until September 20, 2019. In his plea, Garmo admitted that he was engaged in the unlawful acquisition, transfer, and sale of firearms during his entire tenure as the Captain of the Rancho San Diego Station.
In fact, one of Garmo’s firearms transactions involved a brazen sale inside the Captain’s Office of the Rancho San Diego Station on October 28, 2016. Garmo admitted that on that date, he and co-defendant Giovanni Tilotta (a licensed San Diego gun dealer) sold a Glock handgun, an AR-15 style rifle, and a Smith & Wesson handgun to local defense attorney Vikas Bajaj inside Garmo’s office. Garmo coordinated backdated paperwork to avoid the 10-day waiting period required by California law for handgun purchases, and Garmo supplied Bajaj with misappropriated San Diego Sheriff’s Department-issued ammunition. Garmo acknowledged that this sale violated California law, which requires firearms sales to be conducted at a handful of specific locations such as the dealer’s premises.
Bajaj entered his own guilty plea on December 9, 2020, to a misdemeanor charge of aiding and abetting Tilotta with the entry of false records during the unlawful October 28 sale. According to Bajaj’s plea agreement, he knew that the firearms transfer records were backdated and falsified, but signed the forms and went ahead with the transfer regardless. U.S. Magistrate Judge Jill L. Burkhardt sentenced Bajaj to one year of probation and ordered him to forfeit all four firearms involved in the transaction.
Garmo’s co-defendant and prominent San Diego jeweler Leo Hamel pleaded guilty in November 2019 to aiding and abetting Garmo’s unlicensed dealing. Hamel admitted working with Tilotta to create falsified records to make Garmo’s firearms straw purchases appear legitimate. Hamel also acknowledged that Garmo benefited from his arrangement with Hamel by securing Hamel’s future support for Garmo’s anticipated campaign for Sheriff of San Diego County. Former Sheriff’s Lieutenant Fred Magana pleaded guilty at the same time, acknowledging his role in the straw purchase of two handguns at Tilotta’s gun shop for Hamel.
The next hearing in the ongoing case against Anton and Tilotta is set for April 29, 2021 before Judge Curiel.
In total, approximately 297 firearms and 131,458 rounds of ammunition have been forfeited as part of this investigation. Garmo was also sentenced to pay a fine of $8,350.
Frakes praised the lead prosecutors on the case, Assistant U.S. Attorneys Nicholas Pilchak and Andrew Haden, as well as the talented and dedicated investigators from the ATF and FBI. Frakes added that the U.S. Attorney’s Office wishes to extend its sincerest gratitude to the San Diego County Sheriff’s Department for initiating this investigation, and for their assistance and support throughout its course.
“ATF’s mission of deterring illegal firearms trafficking and violent gun crime is best addressed through cooperative efforts with our partner law enforcement agencies,” said ATF Los Angeles Special Agent in Charge Monique Villegas. “This is an excellent example of working with multiple agencies to protect the public and increase public safety. ATF pledges an unwavering commitment to targeting, identifying and investigating trafficking schemes that divert firearms from lawful commerce into the illegal marketplace.”
FBI Special Agent in Charge Suzanne Turner said, “Former San Diego Sheriff's Department Captain Marco Garmo failed his department, his sworn oath, and the public trust. Today’s sentence demonstrates that no one is above the law – not even a high-ranking law enforcement official. This case demonstrates the FBI's commitment to investigating public corruption at all levels and highlights our dedication to preserving public confidence in law enforcement. SAC Turner further stated, “I want to commend the San Diego Sheriff's Department and the ATF for their partnership and commitment to fully investigating the corrupt actions by this former law enforcement officer.”
U.S. v. Garmo, et. al, 19-CR-4768-GPC
Defendants
Morad Marco Garmo, 52 years old
Leo Joseph Hamel, 62 years old
Giovanni Vincenzo Tilotta, 38 years old
Fred Magana, 42 years old
Waiel Yousif Anton, 35 years old
Summary of Charges
Title 18, U.S.C., Sec. 922(a)(1)(A) – Engaging in the Business of Dealing in Firearms Without a License
Maximum Penalty: Five years in prison
Investigating Agencies
Bureau of Alcohol Tobacco Firearms & Explosives (ATF)
Federal Bureau of Investigation (FBI)
*The charges and allegations contained in an indictment are merely accusations. The defendants are considered innocent unless and until proven guilty.
Former Bookkeeper Admits to Stealing from San Diego BusinessRead the Press Release
Assistant U. S. Attorneys Eric Olah (619) 546-7540 and Seth Askins (619) 546-6692
NEWS RELEASE SUMMARY – March 9, 2021
SAN DIEGO – Arthur Jason “AJ” Morales of Pahrump, Nevada pleaded guilty in federal court today to a wire fraud charge, admitting that while employed as a bookkeeper for a San Diego lighting company, he abused his access to the company’s checkbook and issued himself 28 unauthorized checks totaling more than $183,000.
In a hearing before U.S. Magistrate Judge Mitchell D. Dembin, Morales admitted he issued the checks—sometimes forging the signatures of company management on them—to his personal business, “AJ’s Tax & Bookkeeping Service,” and deposited them into his personal bank account. He then concealed the payments by manipulating the company’s accounting records to make it appear that each check was issued for a legitimate business expense to a third-party vendor. The company realized Morales’ fraudulent activity in March 2016 when it discovered a check in the amount of $16,274 that Morales had issued to his personal business and cashed.
"The impact of fraud on small businesses can be devastation," said Acting U.S. Attorney Randy Grossman. "This defendant abused his position of trust to enrich himself, and he has been held to account for his crime." Grossman praised prosecutors Eric Olah and Seth Askins and FBI agents for their excellent work on this case.
“Accountants stealing money from an employer's coffers is the ultimate violation of fiduciary trust and can be a violation of federal law,” said FBI Special Agent in Charge Suzanne Turner. “In this case, the FBI investigation revealed Arthur Morales fraudulently wired money to his personal bank account in regular increments over seven months, totaling approximately $183,408.02. Today's conviction shows the FBI's commitment to investigating financial crimes that affect San Diego businesses.”
Morales is scheduled to be sentenced on June 7, 2021 before U.S. District Judge Larry Burns.
DEFENDANT Case Number 20-CR-2348-LAB
Arthur Jason Morales Age: 42 Pahrump, Nevada
SUMMARY OF CHARGES
Wire Fraud – Title 18, U.S.C., Section 1343
Maximum penalty: Twenty years in prison and $250,000 fine, or twice the gain/loss, whichever is greater.
AGENCY
Federal Bureau of Investigation
Former Defense Contractor Executive Extradited from Thailand to United States to Face Charges for Participation in Massive Scheme to Defraud the U.S NavyRead the Press Release
Mark W. Pletcher (619) 546-9714 and Michelle L. Wasserman (619) 546-8431
NEWS RELEASE SUMMARY – March 8, 2021
SAN DIEGO, CA – Pornpun Settaphakorn, a former executive of foreign defense contractor Glenn Defense Marine Asia (GDMA) who oversaw the company’s Thailand office, appeared in federal court in San Diego today following her extradition last week from Thailand.
Settaphakorn, also known as “Yin,” was charged with participating in a conspiracy to submit fraudulent price quotes, claims and invoices to the U.S. Navy in an effort to steal millions of dollars as part of a years-long fraud scheme.
The indictment in this case, returned December 23, 2014, alleges that Settaphakorn, along with co-defendants Neil Peterson and Linda Raja, among others, submitted false claims of more than $5 million. In addition, according to the indictment, Settaphakorn worked to perpetuate and cover up the fraud by consistently misrepresenting to the U.S. Navy the cost of providing services to its ships in Asia, even going so far as to submit false price quotes from non-existent companies, on letterhead created from graphics cut and pasted from the Internet. Settaphakorn is charged with one count of conspiracy to defraud the United States with respect to claims; one count of conspiracy to commit wire fraud; and multiple counts of making false claims.
Like Settaphakorn, co-defendants Peterson and Raja, both of Singapore, worked as chief deputies for foreign defense contractor Leonard Glenn Francis to fill the coffers of their company, GDMA, at the expense of the U.S. Navy. Peterson served as GDMA’s Vice President for Global Operations, and Raja served as the company’s General Manager for Singapore, Australia, and the Pacific Isles. Peterson and Raja were extradited from Singapore in October 2016, and both have since pleaded guilty for their participation in the massive scheme to defraud the U.S Navy. In 2017, Peterson was sentenced to 70 months in prison, and Raja to 46 months in prison. Both were ordered to pay $34.8 million in restitution. Peterson and Raja have served their sentences and been returned to Singapore.
At today’s hearing, before U.S. Magistrate Judge Karen S. Crawford, Settaphakorn was detained pending trial. The next hearing in this matter is April 9, 2021, before U.S. District Court Judge Janis L. Sammartino.
"Whoever you are, whever you are in the world, and however long it takes, justice awaits those who imperil the U.S. Navy," said Randy S. Grossman, Acting U.S. Attorney for the Southern District of California. Grossman praised prosecutors Mark Pletcher and Michelle Wasserman and agents from DCIS and NCIS for their extraordinary work on this case.
"The extradition of Pornpun Settaphakorn from Thailand to the United States is a monumental step in the judicial process to hold Settaphakron accountable for her alleged involvement in the sprawling, years-long scheme to defraud the U.S. Navy and the American taxpayer that was orchestarted by the disgraced Department of Defense contractor Glenn Defense Marine Asia, Ltd. and its chief executive officer Leonard France," said Bryan D. Denny, Special Agent in Charge of the Defense Criminal Investigative Service (DCIS), Western Field Office. "This action is but one example of the comprehensive actions DCIS and its parnters will utilize to pursue justice for the Warfighter."
“Settaphakorn’s extradition from Thailand to the United States marks a significant legal victory for the U.S. criminal justice system and the U.S. Navy, as Settaphakorn deserves to be held fully accountable in U.S. federal court for her alleged role in GDMA’s years-long scheme to defraud the Navy,” said Special Agent in Charge Eric Maddox of the NCIS Economic Crimes Field Office. “NCIS and our law enforcement partners remain dedicated to rooting out corruption and fraud that threatens the integrity of the Navy.”
Acting U.S. Attorney Grossman specifically acknowledged the indispensable contributions to this case of the Department of Justice’s Office of International Affairs; U.S. Embassy in Bangkok, Thailand; the U.S. Marshals Service, and the authorities of the Kingdom of Thailand.
Anyone with information relating to fraud or corruption connected to the United States military should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
DEFENDANT Residence Case Number Age
Pornpun Settaphakorn (“Yin”) Bangkok, Thailand 14CR0623-JLS 41
SUMMARY OF CHARGES
Conspiracy to Defraud the United States With Respect To Claims, in violation of 18 U.S.C. § 286
Maximum Penalty: Ten years in prison and a $250,000 fine
False Claims, in violation of 18 U.S.C. § 287
Maximum Penalty: Five years in prison and a $250,000 fine
Conspiracy to Commit Wire Fraud, in violation of 18 U.S.C. §§ 1349 and 1343
Maximum Penalty: Twenty years in prison and a $250,000 fine
INVESTIGATING AGENCIES
Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency
Man Pleads Guilty to Reporting Fake Bomb Threats Against Federal BuildingRead the Press Release
Assistant U.S. Attorney Brian L. Hazen (619) 546-6695
NEWS RELEASE SUMMARY – March 8, 2021
SAN DIEGO – Manuel de Jesus Rodriguez-Hernandez pleaded guilty in federal court today to reporting fake bomb threats against the Imperial Regional Detention Facility in Calexico, California. The charge to which Rodriguez-Hernandez pleaded guilty carries a statutory maximum of five years in federal prison.
On January 13, 2021, Mr. Rodriguez-Hernandez was housed as a civil detainee at the Imperial Regional Detention Facility awaiting federal immigration proceedings. That afternoon, he called the U.S. Department of Homeland Security’s hotline and said that earlier in the day he had been speaking with his wife on the telephone when the line was interrupted by an unknown person who said there was a bomb at the Detention Facility that was going to explode.
Shortly after the Facility’s management was notified of the threat, security personnel activated emergency protocols, which included the deployment of the bomb squad from the Imperial County Sheriff’s Office. After hanging up with the hotline, Mr. Rodriguez-Hernandez separately approached a detention officer and told the same story—that a bomb was at the detention facility and it was going to explode. For the next several hours, authorities from the Detention Facility and the Sheriff’s Office’s bomb squad thoroughly searched the facility but no explosive devices were found.
When interviewed after the Detention Facility was cleared, Mr. Rodriguez-Hernandez ultimately admitted he fabricated the bomb threats so that federal authorities would initiate an investigation at the Detention Facility.
“This senseless hoax needlessly caused fear and disruption and jeopardized the sense of safety for inmates and employees of this facility,” said Acting U.S. Attorney Randy Grossman. Grossman praised federal prosecutor Brian L. Hazen and federal agents from Immigration and Customs Enforcement for their excellent work on this case.
DEFENDANT Criminal Case No. 21-CR-0339-W
Manuel de Jesus Rodriguez-Hernandez Age: 33
SUMMARY OF CHARGE
Conveying False Information and Hoaxes (Felony) – Title 18, U.S.C., Section 1038(a)(1)
Maximum penalty: Five years in prison; $250,000 fine
INVESTIGATING AGENCY
U.S. Immigration and Customs Enforcement
Drug Dealer Pleads Guilty to Distributing Fentanyl Resulting in Overdose DeathRead the Press Release
Assistant U. S. Attorneys Kareem A. Salem (619) 546-8904 and Larry Casper (619) 546-6734
NEWS RELEASE SUMMARY – March 4, 2021
SAN DIEGO – Arnold Ray Walters III of San Diego pleaded guilty today before U.S. Magistrate Judge Karen S. Crawford to distributing fentanyl that resulted in the overdose death of a 24-year-old male who resided in Poway on January 1, 2017. The charge to which Walters pleaded guilty carries a 20-year mandatory minimum sentence.
According to his plea agreement, Walters admitted that, on or about December 31, 2016, he knowingly provided a pressed-blue pill containing fentanyl to another individual and understood that it would, in turn, be provided to the victim. Walters also admitted he was aware of the potentially lethal impact of the fentanyl based on his knowledge of other individuals accidentally overdosing on fentanyl.
“We will continue to vigorously prosecute those selling deadly fentanyl for profit and who take lives and destroy families in the process,” said Acting U.S. Attorney Randy S. Grossman. “Fentanyl overdose deaths increased threefold in San Diego County from 2019 to 2020. Our office is working with law enforcement to pursue fentanyl suppliers and hold them accountable for the tragic results of their unlawful activities.”
Acting U.S. Attorney Grossman praised the San Diego County Sheriff’s Department, Homeland Security Investigations, and Assistant U.S. Attorneys Kareem Salem and Larry Casper for their efforts on this case. The U.S. Attorney’s Office also works closely on these matters with agents from Narcotics Task Force Team 10, a multi-agency team housed by DEA that was created in July 2018 to address drug overdose deaths in San Diego.
Sheriff Bill Gore said, “This case highlights the commitment of the San Diego County Sheriff's Department in following all available leads and working collaboratively with our justice partners to investigate and prosecute overdose deaths.”
Walters, who is also pending sentencing on an earlier guilty plea to federal firearms charges, is scheduled to be sentenced on both cases by U.S. District Judge Janis L. Sammartino on May 21, 2021 at 9 a.m.
For those who suffer from addiction, please know there is help. Call the Crisis line at 888-724-7240; it’s always open.
DEFENDANT Case Number 19-CR-4406-JLS
Arnold Ray Walters III Age: 33
SUMMARY OF CHARGES
Distribution of Fentanyl Resulting in Death – Title 21, U.S.C., Section 841(b)(1)(c)
Maximum penalty: Mandatory minimum 20 years in prison up to life
AGENCY
San Diego Sheriff’s Department
U.S. Homeland Security Investigations
Former Stockton Man Pleads Guilty to Unemployment Benefits Fraud and Identity TheftRead the Press Release
SACRAMENTO, Calif. — Robert Joseph Maher, 42, formerly of Stockton, pleaded guilty today to single counts of mail fraud and aggravated identify theft in connection with an unemployment insurance benefits fraud and identity theft scheme, Acting U.S. Attorney Phillip A. Talbert announced.
According to court documents, from at least November 2010 through February 2018, Maher participated in a scheme to defraud the State of California Employment Development Department (EDD) by filing fraudulent claims for unemployment insurance benefits. In furtherance of this scheme, Maher and his co-defendant, Michael Herron II, also of Stockton, created fictitious companies and fictitious employees by using the real identities of persons with and without their knowledge. They then filed claims with EDD, falsely stating that the employees had been laid-off or fired. The unemployment benefits were deposited onto debit cards that were mailed to addresses controlled by Maher, Herron, or their associates.
In one instance, Maher and Herron electronically filed an unemployment insurance claim in the name of an identity-theft victim. Maher knew that the victim was a real person because the claim listed the victim’s correct date of birth and social security number. The claim also listed Maher’s address in Stockton as the claimant’s address, which caused a bank to mail an EDD debit card in the victim’s name to Maher’s address. Maher and Herron then transferred the card’s benefits to Maher’s personal bank account. Maher and Herron also used the victim’s name to register another fictitious business entity that was used in the fraud scheme. In all, Maher and Herron filed at least 72 fraudulent claims for unemployment insurance benefits, seeking a total of $739,535 in fraudulent claims to EDD, of which EDD paid out approximately $609,335. As part of his plea agreement, Maher has agreed to pay full restitution to victims of his offenses.
This case is the product of an investigation by the U.S. Department of Labor - Office of Inspector General, the Federal Bureau of Investigation, and the California Employment Development Department’s Investigation Division. Special Assistant U.S. Attorney Robert J. Artuz is prosecuting the case.
On March 26, 2019, Herron pleaded guilty to similar counts of mail fraud and aggravated identity theft and, on June 25, 2019, was sentenced to six years and three months in prison.
Maher is scheduled to be sentenced by U.S. District Judge John A. Mendez on June 8. Maher faces a maximum statutory penalty of 20 years in prison and a $250,000 fine for the mail fraud count, and a mandatory two-year consecutive sentence and $250,000 fine for the aggravated identity theft count. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
Randy Grossman named Acting U.S. Attorney for the Southern District of CaliforniaRead the Press Release
For Further Information, Contact:
Kelly Thornton (619) 546-9726
NEWS RELEASE SUMMARY – March 1, 2021
SAN DIEGO - Randy Grossman, who has served as second-in-command at the U.S. Attorney’s Office, began his term as acting U.S. Attorney today.
Mr. Grossman stated, “I am honored to serve as the Acting United States Attorney. (Former U.S. Attorney) Bob Brewer’s steady leadership during these unprecedented times set a tremendous example. I look forward to continuing the office’s focus on civility and ethics as we fulfill our mission of ensuring public safety and the fair and impartial administration of justice.”
Mr. Grossman is an experienced prosecutor, private practice litigator and community leader. Mr. Grossman began his legal career as a Deputy District Attorney at the San Diego County District Attorney’s Office. During his eight years as a state prosecutor, he tried more than 70 cases to verdict including homicides and other crimes of violence. Mr. Grossman also worked in private practice as a partner at two international law firms. His practice areas included complex civil litigation, white collar criminal defense, corporate internal investigations and pro bono representation of refugees seeking asylum.
In March 2020, Mr. Grossman returned to public service as an Assistant United States Attorney for the Southern District of California where he served in the Border Enforcement Section and the Major Frauds/Public Corruption Section. He was selected to become First Assistant U.S. Attorney in September 2020. Mr. Grossman serves as a Trustee for California Western School of Law and he serves on a statewide civility task force associated with the California Lawyers Association and the State Bar of California.
U.S. Attorney Robert Brewer Stepping Down after Two Years as San Diego’s Chief Federal Law Enforcement OfficerRead the Press Release
Kelly Thornton (619) 546-9726
NEWS RELEASE SUMMARY – February 26, 2021
SAN DIEGO – U.S. Attorney Robert Brewer announced today that he has submitted his resignation to President Biden, effective at midnight on February 28, 2021, concluding more than two years in the position.
“Serving as U.S. Attorney has been the highlight of my 45-year legal career,” Mr. Brewer said. “I am humbled to have led the office’s remarkable public servants. Together we have made our community safer through perilous times. I have witnessed our attorneys and staff, alongside officers, agents, and first responders, work tirelessly to meet these unprecedented challenges. For your sacrifices and your courage, I am eternally grateful. In departing, I am confident that the office will continue its critical mission with the highest ethical standards, and I could not be more proud of the work we accomplished together.”
First Assistant U.S. Attorney Randy Grossman will become Acting U.S. Attorney immediately following the effective date of Brewer’s resignation.
Mr. Brewer continued, “Randy Grossman is an outstanding prosecutor and leader. In addition to his vast experience as a trial attorney, Randy’s judgment and collegiality will ensure a smooth transition for the office. I wish him and every member of the office the best of luck in the continued pursuit of justice.”
During Mr. Brewer’s tenure, the office hired a record 48 new assistant U.S. attorneys – almost one-third of the entire ranks of federal prosecutors in this district; strengthened relationships with law enforcement partners; and reorganized the criminal division, including the addition of the Violent Crime and Human Trafficking Section (VCHT). VCHT is tasked with leading collaborations between federal and local law enforcement in the investigation and prosecution of cases involving violent crimes, firearms and gang cases; sex trafficking and child exploitation; civil rights, and labor trafficking.
Brewer also continued the great work of two of the Southern District of California’s diversion programs, the Alternative to Prison Solutions (APS) Diversion Program and the Veteran’s Diversion Program (VDP). These programs offer select criminal defendants who plead guilty to felony charges an alternative to incarceration with an opportunity to have their case dismissed after 12 months in exchange for compliance with certain court requirements, such as obtaining employment, enrolling in education programs, and obtaining mental health and addiction treatment.
Mr. Brewer made combatting opioids a top priority and directed a strong response when the already-serious drug epidemic collided with the coronavirus pandemic, causing overdose deaths to spike in San Diego County. The U.S. Attorney’s Office pursued more than 20 defendants in connection with fentanyl- and heroin-related overdose death cases, bringing justice and a sense of closure to devastated family members.
Under Mr. Brewer’s leadership, attorneys in the office have prosecuted some of the most sophisticated and important cases in the nation, including:
- U.S. Representative Duncan Hunter was sentenced to 11 months in prison for stealing $250,000 in campaign funds to pay for his and his wife’s living and luxury expenses.
- Gina ChampionCain pleaded guilty to masterminding the longest Ponzi scheme in San Diego history with hundreds of victims throughout California and the nation and losses estimated as high as $400 million.
- Abdullahi Ahmed Abdullahi, a Canadian national, was successfully extradited to the United States and faces trial on federal conspiracy charges of providing material support to terrorists.
- U.S. Navy Captain David Haas and former U.S. Navy Chief Petty Officer Brooks Alonzo Parks pleaded guilty to conspiracy to commit bribery, representing the 22nd and 23rd defendants to have entered guilty pleas as part of the bribery and corruption scheme involving Glenn Defense Marine Asia and its leader, “Fat Leonard” Glenn Francis. The decadelong scandal involves scores of numerous U.S. Navy officials and officers, tens of millions of dollars in fraud, and millions of dollars in bribes. Eight more defendants await jury trial.
- Rabbi Ysiroel Goldstein, former Director of Chabad of Poway Synagogue, and five of his associates pleaded guilty to fraud charges, admitting they participated in a complex, yearslong, multi-million dollar tax-evasion scheme and other illegal financial transactions involving theft of public money.
- Former Honolulu Police Chief Louis Kealoha and his wife, former Honolulu prosecutor Katherine Kealoha, were sentenced to 84 months and 156 months in prison, respectively, for a wide range of criminal conduct, including framing their relative with a crime to conceal their own fraud. Additionally, the Kealohas’ coconspirators, former Honolulu police officers Derek Wayne Hahn and Minh-Hung “Bobby” Nguyen, received 42 months and 54 months, respectively, for their involvement in what has been called the largest case of corruption in Hawaii in decades.
- Dr. Jennings Ryan Staley, a licensed physician, was indicted for mail fraud and additional crimes arising from his business venture selling alleged COVID19 “treatment kits” and agreeing with a Chinese supplier to smuggle hydroxychloroquine powder in the U.S., including lying to U.S. Customs by mislabeling a shipment as “yam extract.”
Mr. Brewer, a decorated Vietnam War veteran, former prosecutor and prominent San Diego litigator for decades, was sworn in on January 16, 2019 as the United States Attorney for the Southern District of California. President Trump nominated Mr. Brewer to serve as U.S. Attorney for this district on June 25, 2018. The full Senate unanimously confirmed his appointment on January 2, 2019.
Prior to becoming U.S. attorney, Mr. Brewer, a native of Ithaca, New York, was an Of Counsel litigation attorney at Seltzer Caplan McMahon Vitek. He previously served as a Deputy District Attorney in Los Angeles County from 1975 to 1977, and as an Assistant U.S. Attorney in the Central District of California from 1977 to 1982, where he successfully prosecuted a variety of cases including espionage, bank robbery, murder for hire and aircraft hijacking. He also held various management positions, including Assistant Chief of the Criminal Division.
From 1982 through the present, Mr. Brewer was in private practice, including from 1991 to 2009 as a partner at McKenna Long & Aldridge LLP, and from 2009 to 2014 as a partner at Jones Day. Before attending law school, Mr. Brewer served in the United States Army as an Airborne Ranger Infantry Officer and received the Silver Star and two Bronze Stars for his combat service in the Vietnam War. Mr. Brewer has been a Fellow in the American College of Trial Lawyers since 1999. He received the Daniel T. Broderick Award from the San Diego County Bar Association in 2009 and the Distinguished Graduate Award from the University of San Diego School of Law in 2016. Mr. Brewer earned his B.A. from St. Lawrence University, and his J.D. from the University of San Diego School of Law.
San Diego Man Sentenced to Five Years in Prison for Three RobberiesRead the Press Release
Assistant U. S. Attorney Matthew Brehm (619) 546-8983
NEWS RELEASE SUMMARY – February 25, 2021
SAN DIEGO – Ryan W. Nelson of San Diego was sentenced in federal court yesterday to 60 months in prison for committing three robberies, including two bank robberies and the armed robbery of a shoe store.
During the sentencing hearing, U.S. District Judge Cynthia A. Bashant told the defendant: “I just can’t ignore what you did in this case. It was dangerous and it was scary.” Nelson was also ordered to pay $11,572 in restitution to the businesses he robbed.
“These robberies were a terrifying and unforgettable experience for the victims,” said U.S. Attorney Robert Brewer. “Hopefully this sentence will restore a sense of safety to the victims and the community.” Brewer praised prosecutor Matthew Brehm, FBI agents and officials with the San Diego, National City and La Mesa police departments for their excellent work on this case.
“The FBI’s Violent Crime Task Force is out on the street with our local partners every day working to keep San Diegans safe,” said Suzanne Turner, FBI Special Agent in Charge of the San Diego Field Office. “Violent crime investigations are a priority and our agents are dedicated to bringing justice for the victims and the communities affected by these robberies.”
Nelson entered his guilty plea in October of 2020, admitting that on July 29, 2019, at approximately 8:45 a.m., he entered the Shoe Palace, located within the Plaza Bonita Mall in National City, dressed as a construction worker with a safety vest, safety glasses, and a hard hat.
In his plea agreement, Nelson admitted he told a Shoe Palace clerk that he was working on construction in the store above Shoe Palace and needed to inspect an electrical breaker panel in a room in the back of the store. When Nelson returned to the front of the store, he approached a clerk, who was pregnant at the time, and pointed a black handgun at her. He demanded cash from the cash register, stating, “Give me all the money.” The clerk gave Nelson access to the cash register, and he took approximately $600 from the register and a nearby safe. After he took the cash, Nelson told the clerk, “Don’t call anyone or I will be back in five minutes!” He then fled the store, walked outside the mall, removed his construction worker disguise, retrieved a backpack hidden outside the mall, and changed his shirt.
Nelson also admitted that on August 15, 2019, at approximately 10:10 a.m., he entered the Vons Supermarket at 6155 El Cajon Boulevard, San Diego, and approached the teller window of the U.S. Bank branch located inside. Nelson pretended to talk on his cell phone but in fact gave the teller step-by-step verbal commands, demanding the teller to give him money by stating something similar to, “Grab a bag.
Start with the hundreds. Put all the money in the bag and give it to me, or I’m gonna shoot.” The teller complied with demands and provided Nelson with money from his teller drawer, totaling approximately $1,372. Prior to fleeing, Nelson told the victim teller, “Wait seven minutes, I’ve got someone in the store.” He then turned and exited the bank area, leaving out the east exit of the Vons Supermarket.
Nelson further admitted on August 23, 2019, at approximately 11:56 a.m., he entered the Vons Supermarket at 8011 University Avenue, La Mesa, California, and approached the teller window of the Wells Fargo branch located inside. Nelson pretended to talk on his cell phone but in fact demanded money from the three victim tellers by giving step-by-step verbal commands, stating something similar to, “Start with your 100s and put them in a bag, or I’ll start shooting.” The tellers complied with the demands and provided Nelson with a bag containing money from each of the teller’s drawers totaling approximately $9,600. He then left out of the Vons Supermarket’s main entrance.
Nelson also admitted that on August 29, 2019, FBI agents executed a federal search warrant at his residence and found a black bomber jacket, dark colored pants with white stripes down the sides, a navy blue-colored backpack, and a large black wristwatch, which were all items he was recorded wearing by surveillance cameras during, or just after, one of the bank robberies. FBI agents found a loaded, black .380 Smith and Wesson semi-automatic handgun in a drawer in Nelson’s room, which matched the description of the firearm he brandished during the Shoe Palace robbery. Agents also found $2,030 in cash on Nelson’s person, during his arrest.
This case is the result of the ongoing efforts of the Violent Crime and Human Trafficking (VCHT) Section. Formed in 2019 by U.S. Attorney Brewer, the VCHT is tasked with leading collaborations between federal and local law enforcement in the investigation and prosecution of cases involving violent crimes, firearms and gang cases; sex trafficking and child exploitation; civil rights, and labor trafficking. The VCHT Section oversees the Southern District of California Coordinators for Project Safe Neighborhoods, Human Trafficking, and Project Safe Childhood.
DEFENDANT Case Number 19cr3563-BAS
Ryan W. Nelson Age: 38 San Diego, California
SUMMARY OF CHARGES
Bank Robbery – Title 18, U.S.C., Section 2113(a)
Maximum penalty: Twenty years in prison and $250,000 fine
Hobbs Act Robbery – Title 18, U.S.C., Section 1951
Maximum penalty: Twenty years in prison and $250,000 fine
AGENCY
Federal Bureau of Investigations
San Diego Police Department
National City Police Department
La Mesa Police Department
U.S. Navy Concrete Contractor in Djibouti Admits Fraudulent Conduct and Will Pay More than $12.5 MillionRead the Press Release
Mark W. Pletcher (619) 546-9714 and Andrew J. Galvin (619) 546-9721
NEWS RELEASE SUMMARY – February 17, 2021
SAN DIEGO – Colas Djibouti, a contractor for the Department of the Navy at Camp Lemonnier and Chabelley Airfield, and the U.S. Embassy in Djibouti, admitted today that it faked testing results and submitted a series of false documents and false claims to the United States as part of a scheme to defraud the United States in the sale of substandard concrete used to construct U.S. Navy airfields in Djibouti.
Colas Djibouti, a French limited liability company, is a wholly owned subsidiary of Colas SA, a French civil engineering company. According to documents filed in court, as part of its contracts with the Department of the Navy, Colas Djibouti was required to certify that it supplied concrete with specific composition and characteristics. Notwithstanding these obligations, Colas Djibouti created fictitious testing results, made fraudulent representations regarding the concrete’s composition and characteristics, and knowingly provided concrete to the United States that did not comply with the specifications.
In one particularly egregious example, in response to a request for an analysis of the water used in the concrete mix, Colas Djibouti provided an analysis for a store-bought bottle of drinking water. As a result of this criminal conduct, Colas Djibouti ultimately supplied substandard concrete to the Department of Navy in Djibouti that could promote early cracking, surface defects, and corrosion of embedded steel, and thus significantly impair the concrete’s long-term durability.
In accordance with its agreement with the United States, Colas Djibouti will forfeit $8 million, pay another $2,042,002 to the Department of Navy in restitution, and pay a monetary penalty of $2.5 million.
“Wherever our Navy goes, we go,” said U.S. Attorney Robert Brewer in the Southern District of California. “We will continue to unwaveringly protect our American warfighters from fraud, graft and corruption as they protect us from enemies foreign and domestic.”
The case was investigated by the Defense Criminal Investigative Service, the Naval Criminal Investigative Service, and the Defense Contract Audit Agency. U.S. Attorney Brewer specifically commended the many agents and auditors who worked on this case in Djibouti and the United States, and Assistant U.S. Attorneys Mark Pletcher and Andrew Galvin, for their dedication and perseverance in the face of challenging circumstances.
“Our Sailors and Marines depend upon high quality products and services from our Department of the Navy contractors in order to meet the Department’s world-wide mission,” said acting Secretary of the Navy Thomas W. Harker. “This outcome demonstrates that the Department of the Navy will continue to insist that our contractors must meet our high standards. This global settlement demonstrates the strong cooperation between the Department of the Navy and the Department of Justice in preventing fraud, no matter where in the world it happens.”
The criminal case was investigated and prosecuted as part of the Africa Strike Force, an initiative by the Major Fraud and Public Corruption Section of the U.S. Attorney’s Office in San Diego, in conjunction with its law enforcement partners from the Defense Criminal Investigative Service, the Naval Criminal Investigative Service, among others. As the Department of Defense provides military and humanitarian aid throughout Africa to combat the rise of violent extremism from the likes of Boko Haram, Al Shabab and Al Qaeda in the Islamic Maghreb, Africa Strike Force was formed to serve an unmet need in protecting American interests from fraud and corruption. Africa Strike Force also recently announced charges against Micheline Pollock, a U.S. Army Corps of Engineers contractor who was indicted for defrauding the United States on military and humanitarian construction contracts throughout Africa.
Today’s criminal resolution, announced by the U.S. Attorney’s Office for the Southern District of California, was accompanied by the announcement by the Department of Justice, Civil Division, Commercial Litigation Branch of a simultaneous resolution of allegations of civil wrongdoing, under which Colas Djibouti will pay an additional $1,857,998.00.
“Government contractors that supply substandard materials to our armed forces not only cheat the American taxpayers but also impose added costs and burdens on the military,” said Acting Assistant Attorney General Brian M. Boynton for the Department of Justice’s Civil Division. “Today’s settlement demonstrates our commitment to ensure that those who do business with the government comply with their contractual obligations.”
“Aircraft taxiways are essential to military operations, and therefore require concrete that conforms to the high standards and specifications of the Department of Defense,” said Stanley A. Newell, Special Agent-in-Charge for the DCIS Transnational Operations Field Office. “The DCIS along with our investigative partners will vigorously root out illegal conduct like this that threatens U.S. military readiness and harms the integrity of the Department of Defense procurement system.”
"Protecting Navy interests is a top priority of the Naval Criminal Investigative Service. Anyone considering defrauding the Navy and U.S. taxpayers should know NCIS will aggressively pursue all such allegations, in concert with our law enforcement partners and the Department of Justice," said Todd Battaglia, Special Agent in Charge of the NCIS Europe and Africa Field Office.
DEFENDANT Corporate Location Case Number
Colas Djibouti Djibouti, Djibouti 21CR0280-WQH
SUMMARY OF CHARGES
Conspiracy to Commit Wire Fraud, in violation of 18 U.S.C. §§ 1349 and 1343
Maximum Penalty: Twice the pecuniary gain or twice the pecuniary loss, whichever is greater
INVESTIGATING AGENCIES
Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency
San Diego Man Pleads Guilty to Sex Trafficking of ChildrenRead the Press Release
Assistant U. S. Attorney Joseph Orabona (619) 546-7951
NEWS RELEASE SUMMARY – February 8, 2021
SAN DIEGO, CA – Jonathan Madison of San Diego pleaded guilty in federal court this morning to sex trafficking of children, admitting that he knowingly recruited, advertised, and solicited teenage girls and women to engage in commercial sex acts. Madison also admitted that he videotaped himself having sexual intercourse with an underage girl and later transmitted the video to her by cell phone.
In his plea, Madison acknowledged that he transported girls and women and provided them to customers for commercial sex acts, which took place in California and Colorado from November 2017 through April 2020.
Madison, aka “Jay Jay,” “Boobutt,” and “JT,” was arrested in April 2020 on sex trafficking charges and ordered detained without bond by the Court. A federal grand jury returned the first post-pandemic indictment in May 2020 against Madison charging him with sex trafficking of a minor. Today, Madison entered his guilty plea before U.S. Magistrate Judge Allison H. Goddard.
According to his plea agreement, between November 2017 and September 2018, while in the Southern District of California, Madison admitted he transported, provided, maintained and obtained a minor female (while she was 15 and 16 years old) for the purpose of her to engage in commercial sex acts in San Diego County. At this time, Madison knew the girl was under the age of 18.
Madison also admitted that in order to further his pimping activities, he caused online ads to be posted offering the girl for commercial sex. During this time, Madison transported her to meet with sex trafficking customers.
“This is a crime that affects young victims for the rest of their lives,” said U.S. Attorney Robert Brewer. “Our office will continue its collaborative work with our law enforcement partners to combat the abuse and exploitation of women and girls who are victims of sex trafficking.” Brewer praised prosecutor Joseph Orabona and members of the San Diego Human Trafficking Task Force for their excellent work on this case.
“There’s no place for human trafficking in California or anywhere,” said California Attorney General Xavier Becerra. “When our children are put at risk, we stand united to fight back. I applaud the efforts of the San Diego Human Trafficking Task Force and the U.S. Attorney’s Office for securing this conviction. At the California Department of Justice, we’ll continue to leverage our resources to stand up for the most vulnerable among us.”
“Today’s conviction is one more step in the journey to justice for the victims in this case,” said FBI Special Agent in Charge Suzanne Turner. “As law enforcement, we work tirelessly to stop criminals from preying on children and vulnerable victims in sex trafficking cases. The dedication and selfless devotion of FBI Agents protecting those most vulnerable in our communities has been and always will be unwavering and undeniable.”
A sentencing hearing is scheduled for May 3, 2021 at 9:00 a.m. before U.S. District Judge Cynthia A. Bashant. Madison has been in custody since his arrest in April 2020.
DEFENDANT Case Numbers: 20CR1228-BAS
Jonathan Madison Age: 29 San Diego, CA
SUMMARY OF CHARGES
Sex Trafficking of a Minor, in violation of Title 18, United States Code, Section 1591
Maximum Penalties: Ten-year mandatory minimum and a maximum of life in prison; mandatory Sex Offender Registration; a maximum term of supervised release of life; mandatory restitution to the victims.
INVESTIGATING AGENCIES
San Diego Human Trafficking Task Force, which consists of:
- Federal Bureau of Investigation
- California Department of Justice
- California Department of Corrections & Rehabilitation – Parole
- California Highway Patrol
- ICE/Homeland Security Investigations
- National City Police Department
- San Diego City Attorney’s Office
- San Diego County District Attorney’s Office
- San Diego County Probation Department
- San Diego County Sheriff’s Department
- San Diego Police Department
- The United States Attorney’s Office, Southern District of California
Escondido Man Admits to Tax Evasion Scheme with Former Chabad of Poway RabbiRead the Press Release
Assistant U. S. Attorneys Michelle L. Wasserman (619) 546-8431 and Oleksandra Johnson (619) 546-9769
NEWS RELEASE SUMMARY – February 2, 2021
SAN DIEGO – Stuart Weinstock of Escondido pleaded guilty in federal court today to filing a false tax return as part of a years’ long tax-evasion scheme with former Chabad of Poway Rabbi Yisroel Goldstein.
Until around 2018, Rabbi Goldstein was the director and head rabbi at Chabad of Poway, a tax-exempt religious organization. For approximately eight years, Weinstock made supposed “donations” to Chabad of Poway, and Rabbi Goldstein funneled approximately 75 percent of those “donations” back to Weinstock in cash, allowing Weinstock to evade more than $100,000 in taxes.
According to Weinstock’s plea agreement, between 2010 and 2018, Weinstock provided Rabbi Goldstein with at least approximately $872,815 in checks that fraudulently described the funds as “contributions,” “donations,” or “business expenses.” Weinstock gave these “donations” to Rabbi Goldstein monthly. Rabbi Goldstein then secretly returned 75 percent of the money, or approximately $654,611, to Weinstock. To do so, Rabbi Goldstein met with Weinstock in person at Weinstock’s home or business to pick up the checks and give cash back – less the rabbi’s 25 percent cut – to Weinstock in an envelope. Weinstock then falsely claimed on his tax returns that the full amount of his fraudulent donations were tax deductible donations or business expenses, thereby fraudulently reducing his taxes. Through this scheme, Weinstock avoided over $100,000 in taxes that he should have paid to the IRS.
In his plea agreement, Weinstock also admitted that in October 2018, one of Rabbi Goldstein’s acquaintances contacted Weinstock to tell him that Rabbi Goldstein had been arrested and that Rabbi Goldstein wanted to warn Weinstock not to accept any more envelopes. Weinstock understood this as a warning that the rabbi was cooperating with law enforcement and their future interactions could be recorded.
In July 2020, Rabbi Goldstein pleaded guilty to fraud charges, admitting that he participated in a complex, years-long, multi-million dollar tax-evasion scheme and other financial deceptions involving theft of public money. Rabbi Goldstein’s plea agreement outlined the tax evasion scheme with Weinstock.
So far, 10 people have pleaded guilty to crimes discovered in this investigation, including Weinstock and two others who have agreed to deferred prosecution agreements. Rabbi Goldstein has agreed to cooperate with the ongoing investigation. He is scheduled to be sentenced by U.S. District Judge Cynthia Bashant on April 26, 2021.
“This was a deceptive, carefully-planned scheme and the victims are honest taxpayers,” said U.S. Attorney Robert Brewer. “Those who cheat the system by exploiting the tax-exempt status of non-profits and religious organizations will be held to account for their illegal conduct.” Brewer praised prosecutors Michelle Wasserman and Oleksandra Johnson and FBI and IRS agents for their excellent work on this case.
“Mr. Weinstock admitted that he broke the law and cheated the United States out of over $100,000, and in so doing, he also cheated honest taxpayers who pay their fair share,” said Special Agent in Charge Ryan L. Korner. “Mr. Weinstock’s tax evasion scheme spanned eight years, exploiting charitable giving laws and abusing a tax-exempt religious organization. IRS Criminal Investigation will pursue all who defraud the U.S. Treasury and we are committed to working with our law enforcement partners to uphold the law and protect our Nation’s tax and financial systems.”
“This years-long fraud and tax evasion scheme brought to light by this investigation has resulted in ten guilty pleas, including defendant Stuart Weinstock and previously convicted Rabbi Yisroel Goldstein,” said Suzanne Turner, Special Agent in Charge of FBI's San Diego Field Office. “Dedicated FBI agents uncovered and worked diligently to piece together a complex financial scheme perpetrated by those who exploited a non-profit and religious organization to cheat a system designed to benefit those in need. As shown in this case, the FBI, working with our IRS and DOJ partners, will bring justice to those who commit fraud and cheat honest taxpayers.”
Stuart Weinstock is next scheduled to appear at a sentencing hearing on April 26, 2021 at 9 a.m. before Judge Bashant.
SUMMARY OF CHARGES Case Number 21CR0042-BAS
Stuart Weinstock Age: 64 Escondido, CA
Filing False Tax Return, in violation of Title 26, U.S.C. §7206(1)
Maximum Penalty: Three years in prison
PREVIOUSLY CHARGED DEFENDANTS AND SUMMARY OF CHARGES
Yisroel Goldstein, Case Number 20CR1916-BAS Age: 58 Poway
Conspiracy to Defraud the United States and Commit Wire Fraud, in violation of Title 18, USC 371
Maximum Penalty: Five years in prison
Alexander Avergoon, Case Number 19CR2955-BAS Age: 44 San Diego
Wire Fraud, in violation of Title 18, USC 1343
Maximum Penalty: Twenty years in prison
Aggravated Identity Theft, in violation of Title 18, USC 1028A
Maximum Penalty: Two years minimum consecutive term in prison
Money Laundering, in violation of Title 18, USC 1956(a)(1)(B)(i)
Maximum Penalty: Twenty years in prison
Bruce Baker, Case Number 20CR1912-BAS Age: 74 La Jolla
Conspiracy to Defraud the United States and file false tax returns, in violation of Title 18, USC 371
Maximum Penalty: Five years in prison
Bijan Moossazadeh, Case Number 20CR1893-BAS Age: 63 San Diego
Filing a False Tax Return, in violation of Title 26, USC 7206(1)
Maximum Penalty: Three years in prison
Yousef Shemirani, Case Number 20CR1895-BAS Age: 74 Poway
Filing a False Tax Return, in violation of Title 26, USC 7206(1)
Maximum Penalty: Three years in prison
Boris Shkoller, Case Number 20CR1913-BAS Age: 83 Del Mar
Filing a False Tax Return, in violation of Title 26, USC 7206(1)
Maximum Penalty: Three years in prison
Mendel Goldstein, Case Number 20CR2772-BAS Age: 63 Brooklyn, NY
Conspiracy to Defraud the United States and Commit Wire Fraud, in violation of Title 18, USC 371
Maximum Penalty: Five years in prison
Rotem Cooper, Case Number 20CR3968-BAS Age: 54 San Diego
Deferred Prosecution Agreement
Conspiracy to Commit Wire Fraud, in violation of Title 18, USC 371
Igor Shtilkind, Case Number 20CR3955-BAS Age: 55 San Diego
Deferred Prosecution Agreement
Conspiracy to Commit Wire Fraud, in violation of Title 18, USC 371
INVESTIGATING AGENCIES
Internal Revenue Service
Federal Bureau of Investigation
Federal Prosecutors Honored by DEA for Exemplary Work in Drug-Related CasesRead the Press Release
Kelly Thornton (619) 546-9726
NEWS RELEASE SUMMARY – January 29, 2020
SAN DIEGO – Several federal prosecutors have received awards from the San Diego Drug Enforcement Administration for exemplary service and dedication to the mission of the DEA in San Diego and Imperial counties.
The recipients – Brandon Kimura, Larry Casper, Kyle Martin, Victor White and Dylan Aste – were honored for working tirelessly, hand-in-hand with DEA agents, to disrupt the movement of large quantities of narcotics; to dismantle transnational drug trafficking organizations around the world; to target maritime-based narcotics trafficking operations; and to hold dealers responsible for overdose deaths and doctors and pharmacies accountable for overprescribing opioids.
Collectively their efforts resulted in numerous maritime seizures of huge shipments of illicit drugs; seizures of bulk currency shipments totaling millions of dollars; the arrests and indictments of members of the command and control structures of drug trafficking organizations; and the collection of significant civil settlement payments.
“It was an honor and a privilege to recognize these Assistant U.S. Attorneys along with U.S. Attorney Robert Brewer on behalf of the DEA San Diego Field Division for their hard work and dedication to the mission of the DEA,” said Special Agent in Charge John W. Callery. “Their relationships directly with the DEA have led to proven results through countless successful prosecutions and the dismantlement of drug trafficking organizations operating in Imperial and San Diego counties and beyond. These AUSAs’ steadfast and unwavering partnership directly with DEA agents and task force officers of the SDFD is to be commended and admired.”
“During a time when drug overdoses have spiked to unprecedented levels during the pandemic, the accomplishments of these outstanding prosecutors and their DEA partners are even more crucial and impressive,” said U.S. Attorney Robert Brewer. “I am so proud of their dedication and hard work protecting the people of San Diego and Imperial counties from the violence and destruction associated with illegal drugs. And I am so grateful to John Callery and the DEA for this great honor, and for our strong and successful relationship.”
From the DEA’s commendations:
Assistant U.S. Attorney Brandon Kimura has demonstrated his commitment to the DEA Imperial County District Office through his time, his service, and his mentorship. Throughout 2020, AUSA Kimura assisted the DEA and U.S. Postal Inspectors in the prosecution of multiple investigations targeting a network of couriers, shippers, and receivers of drug laden packages originating in Imperial County and destined for cities across the United States; resulting in multiple arrests and enforcement actions throughout the country. AUSA Kimura is a reliable and valuable resource for the DEA in Imperial County and provides effective guidance and constructive feedback for prosecutorial avenues which investigators can build upon. His close partnership with his case agents results in the development of overwhelming evidence to ensure swift and meaningful prosecutions.
Assistant U.S. Attorney Victor White has demonstrated his commitment to the DEA Imperial County District Office through his dedication, determination and his mentorship. White assisted with numerous DEA investigations in Imperial County involving the prosecution of domestic and foreign targets, including Mexico-based drug trafficking organization leaders who used international drug laden vessels and aircrafts, and United States-based couriers, distributors, transporters, and receivers of narcotic shipments travelling through Imperial County and destined for cities across the United States. His efforts resulted in multiple arrests and enforcement actions throughout the country.
Assistant U.S. Attorney Kyle Martin has demonstrated his commitment to the DEA Imperial County District Office through his consistent and direct communication with DEA special agents and task force officers in pursuing transnational drug trafficking organizations. Of note, AUSA Martin took part in cases targeting organizations operating in Guatemala, El Salvador, Mexico City, the United States, and Europe. These organizations were responsible for the shipment of large quantities of narcotics on land and in boats and shipping containers. AUSA Martin’s efforts resulted in numerous maritime seizures of multi-hundred kilogram shipments of cocaine, seizures of bulk currency shipments totaling over $2.8 million, and the arrest and indictment of members of the command and control structures of the drug trafficking organizations. AUSA Martin’s commitment and steadfast dedication to the DEA in developing comprehensive investigations targeting the highest echelons of transnational drug trafficking networks has led to proven results in continuing DEA’s mission and is to be admired and commended.
Assistant U.S. Attorney Larry Casper exemplifies dedication, determination, and commitment to the mission of the DEA Imperial County District Office. AUSA Casper routinely integrates himself with the DEA, providing outstanding on the spot legal and prosecutorial guidance and insight to special agents and task force officers resulting in the progression of their investigations and the disruption and dismantlement of drug trafficking organizations. AUSA Casper’s unparalleled commitment as the U.S. Attorney’s Office Opioid Coordinator directly corresponded to the charging of the DEA’s first fentanyl overdose case in Imperial County, in which the Government alleges that the distributed fentanyl resulted in the death of a local high school student in March of 2019. Furthermore, AUSA Casper is the lead prosecutor on an Organized Crime Drug Enforcement Task Force Operation that has disrupted a Mexicali, Baja California, Mexico drug trafficking organization that allegedly exploits juveniles as body couriers and has already resulted in more than twenty successful prosecutions. Casper’s dedication is expected to further dismantlement of the drug trafficking organization and prosecution of its leadership.
Assistant U.S. Attorney Dylan M. Aste has demonstrated his dedication and commitment to the mission of the Drug Enforcement Administration by always being available and responsive and by working hard to hold doctors and pharmacies accountable for their roles in the opioid crisis. AUSA Aste has a demanding position prosecuting civil diversion investigations and responds without complaint and provides whatever assistance or guidance necessary for the investigators and agents to ensure a successful prosecution. His most recent cases have resulted in large civil settlements with doctors and a pharmacy. His deliberate and thorough approach was the driving force in the success of these investigations.
U.S. Attorney Releases 2020 Annual ReportRead the Press Release
Kelly Thornton (619) 546-9726
NEWS RELEASE SUMMARY – January 28, 2021
SAN DIEGO – U.S. Attorney Robert Brewer has released the office’s 2020 Annual Report, which details its major cases and achievements during a year that posed unprecedented challenges to law enforcement and federal court operations in the district due to the pandemic.
“I am very proud of our significant enforcement, community outreach, and administrative accomplishments under difficult conditions,” Brewer said. “This 2020 Annual Report provides a window into a few of the many cases we worked on this year. While the report cannot possibly cover all the district’s significant cases, it effectively summarizes the great variety of work handled by this office, and illustrates the tremendous skills and experience our prosecutors and law enforcement professionals bring to bear on each and every case.”
During 2020, the Office met the challenges of the COVID-19 pandemic while trying more cases than any other U.S. Attorney’s office in the Ninth Circuit. The Criminal Division and Civil Division successfully pursued enforcement priorities that made a direct impact on the safety of the District and upheld the rule of law. With the dedicated assistance from our Administrative Division, the Office also hired a record number of Assistant United States Attorneys.
Targeting Violent Crime and Seeking an End to Human Trafficking
In 2020 alone, the Office’s Violent Crimes and Human Trafficking Section (“VCHT”)successfully prosecuted more than 100 criminal street gang defendants, obtained significant prison sentences on gang members from our region’s most violent criminal street gangs, and prosecuted several individual firearm cases.
VCHT also led in the national effort to end human trafficking and child exploitation. According to a May 26, 2020 report from the Human Trafficking Institute, the Office was #1 in the nation in 2019 for charging the most new trafficking defendants. We were #4 in the nation for active cases, and we charged the largest human trafficking case in 2019 – a forced labor case involving 12 defendants.
Recently, in August 2020, VCHT led investigations resulting in the arrest of Luigi Popescu of Romania for his role in leading a seven-year alien smuggling operation. Popescu is expected to plead guilty in January 2021. Also, in September 2020, defendant Joseph Price was sentenced to 15 years in prison after pleading guilty to sex trafficking a 15-year-old minor.
Dismantling Organized Crime
The Southern District of California is a hub of drug smuggling by the world’s most dangerous international drug cartels. During 2020, the Office led and pushed for several bold new initiatives to dismantle these criminal organizations. For example, in March, our federal law enforcement partners shut down a nearly half mile-long subterranean drug tunnel with reinforced walls, ventilation, lighting, and a rail system – and seized $30 million of fentanyl, methamphetamine, heroin, cocaine, and marijuana. In October, Sinaloa Cartel leader Jorge Valenzuela-Valenzuela was arrested in Massachusetts after he entered the United States using a fraudulent Mexican identity document. And in November 2020, agents arrested three individuals for trafficking huge quantities of illicit drugs for the Sinaloa Cartel in connection with the largest single seizure of cash, narcotics, and ammunition in this district’s history ($3.5 million in bulk U.S. currency, 685 kilograms of cocaine, 24 kilograms of fentanyl, and approximately 20,000 rounds of .50 caliber ammunition and hundreds of body armor vests).
Securing Our Border
The Border Enforcement Section (“BES”) was created in early 2019 to ensure that the Office devotes adequate resources to addressing crime at our six ports of entry. Creating a BES section has been particularly important during the past year because of the historic increase in drug smuggling along the border. For example, federal law enforcement agencies seized 83% more methamphetamine in June of 2020 compared to June 2019, and seized 410% more fentanyl in June 2020 compared to June 2019. Due to the dedicated efforts of BES attorneys and support staff, the Office has responded to this surge with a corresponding increase in successful prosecutions. In July 2020 alone, BES doubled its prosecution numbers and charged 322 cases involving the importation of controlled substances, compared to 157 cases in July 2019.
Diligent Prosecution of Several High-Profile Cases
The number and quality of the high-profile cases the Office has handled during 2020, including during the pandemic, are additional evidence of our commitment to excellence. The following are just a few examples:
- U.S. Representative Duncan Hunter was sentenced to 11 months in prison for stealing $250,000 in campaign funds to pay for his and his wife’s living and luxury expenses.
- Gina Champion-Cain pleaded guilty to masterminding the longest Ponzi scheme in San Diego history with hundreds of victims throughout California and the United States and losses estimated as high as $400 million.
- Abdullahi Ahmed Abdullahi, a Canadian national, was successfully extradited to the United States and faces trial on federal conspiracy charges of providing material support to terrorists.
- U.S. Navy Captain David Haas and former U.S. Navy Chief Petty Officer Brooks Alonzo Parks pleaded guilty to conspiracy to commit bribery, representing the 22nd and 23rd defendants to have entered guilty pleas as part of the bribery and corruption scheme involving Glenn Defense Marine Asia and its leader, “Fat Leonard” Glenn Francis. The decade-long scandal involves scores of numerous U.S. Navy officials and officers, tens of millions of dollars in fraud, and millions of dollars in bribes. Eight more defendants await jury trial.
- Rabbi Ysiroel Goldstein, former Director of Chabad of Poway Synagogue, and five of his associates pleaded guilty to fraud charges, admitting they participated in a complex, years-long, multi-million dollar tax-evasion scheme and other illegal financial transactions involving theft of public money.
- Former Honolulu Police Chief Louis Kealoha and his wife, former Honolulu prosecutor Katherine Kealoha, were sentenced to 84 months and 156 months in prison, respectively, for a wide range of criminal conduct, including framing their relative with a crime to conceal their own fraud. Additionally, the Kealohas’ co-conspirators, former Honolulu police officers Derek Wayne Hahn and Minh-Hung “Bobby” Nguyen, received 42 months and 54 months, respectively, for their involvement in what has been called the largest case of corruption in Hawaii in decades.
- Dr. Jennings Ryan Staley, a licensed physician, was indicted for mail fraud and additional crimes arising from his business venture selling alleged COVID-19 “treatment kits” and agreeing with a Chinese supplier to smuggle hydroxychloroquine powder in the U.S., including lying to U.S. Customs by mislabeling a shipment as “yam extract.”
Excellence in Civil Litigation
Our Civil Division includes 23 attorneys who represent the United States and its agencies and employees in affirmative and defensive civil litigation. Much of our civil work arises out of the federal government’s activities along the southwest border and the military’s strong presence in the district.
Despite the pandemic, in 2020 alone, the Civil Division recovered $46 million on affirmative cases involving allegations of healthcare fraud, defense contracting fraud, and opioid over-prescribing. Since March 2020, when the lockdown occurred, the Office took on more than 100 new defensive cases, including successfully defending over 25 TROs. The Civil Division also responded to dozens of individual prisoner habeas corpus petitions and defended significant class action cases.
Successful Diversion Programs
In 2020, the Office continued the great work of two of the Southern District of California’s diversion programs, the Alternative to Prison Solutions (APS) Diversion Program and the Veteran’s Diversion Program (VDP).
In 2020, APS celebrated its 10-year anniversary as a flagship collaborative effort between the U.S. Attorney’s Office, U.S. Pretrial Services Office, defense bar, and federal bench. This unique program offers select criminal defendants who plead guilty to felony charges an alternative to incarceration with an opportunity to have their case dismissed after 12 months in exchange for compliance with certain court requirements, such as obtaining employment, enrolling in education programs, and obtaining mental health and addiction treatment. When successful participants graduate from APS, their charges are dismissed and they re-enter society as productive citizens with their personal trajectories altered, often in remarkably inspiring ways. During 2020, we substantially added to the number of successful graduates from the program, resulting in a 92% success rate over the past two years.
The Office also expanded the important work of VDP, which is the collaborative effort of our office, Pretrial Services, U.S. Magistrates, defense counsel, and the Veterans Administration. The program’s game-changing element is the Veterans Treatment Court, admission to which requires a service-related injury. VDP provides veterans a second chance at a meaningful future. Even in the pandemic, the VDP team has continued its work seamlessly online, providing resources, encouragement, and oversight that is significantly improving the lives of veterans in our community.
Leading the Way through Community Outreach Initiatives
The U.S. Atorney’s Office also prioritized our community outreach programs focused on the prevention of violent crime, fentanyl abuse, tribal relations, hate crimes, and other enforcement priorities. For example, in February 2020, the U.S. Attorney joined five other U.S. Attorneys from the Southwest Border in a series of briefings and meetings with senior Mexican law enforcement government officials and embassy personnel regarding coordinated efforts to combat transnational crime and trafficking of arms and illicit drugs. Our community outreach team has devoted significant resources to raise fentanyl abuse awareness through press releases and press conferences. Also, the Office prioritized our work on tribal relations through several initiatives that were implemented by a designated tribal liaison AUSA. Finally, the Office led successful community meetings and education programs regarding hate crime prevention and civil rights issues. These programs, which are just a few examples, have strengthened our relationship with the community by fostering important dialogue between our district’s law enforcement agencies and the citizens we serve.
“Despite the pandemic, the U.S. Attorney’s Office remains open for business, and throughout the year we fulfilled our critical mission,” said Brewer. “As I reflect on this extraordinary year, I am so impressed that even under the most difficult circumstances, the public servants in this office and throughout the criminal justice system maintained safety and security by adopting creative operational responses. I applaud the lawyers and staff in this office and our partners: the officers, agents, and first responders who continue to meet any challenge regardless of the risks they face, each and every day.”
Russian Hacker Pleads Guilty to Administering a Website that Catered to CriminalsRead the Press Release
Assistant U. S. Attorney Alexandra F. Foster (619) 546-6735
NEWS RELEASE SUMMARY – January 21, 2021
SAN DIEGO – Kirill Victorovich Firsov, a Russian citizen, pleaded guilty in federal court today to a cybercrime, admitting that he was the administrator of a website that catered to cyber criminals by virtually selling items such as stolen credit card information, other personal information and services to be used for criminal activity.
According to the plea agreement, Firsov was well-compensated as the administrator of DEER.IO, an online platform which catered to cyber criminals. DEER.IO was a Russian-based platform that allowed criminals to set up cyber storefronts and sell illegal products or services. DEER.IO started operations as of at least October 2013, and, as of March 2020, had approximately 3,000 shops with sales exceeding $17 million.
DEER.IO offered a turnkey online storefront design and hosting platform, from which cybercriminals could advertise and sell their products, such as harvested credentials, hacked servers, and services, such as assistance performing a panoply of cyber hacking activities. As detailed above, a criminal could simply “sign up,” “configure wallets to receive funds,” “upload products,” and “get money.”
Once the criminal paid to set up their store on the DEER.IO platform, the site then guided the newly-minted shop owner through an automated set-up to upload the products and services on offer through the shop and configure crypto-currency wallets to collect payments for the purchased products and/or services. A cybercriminal who wanted to sell contraband or offer criminal services through DEER.IO could purchase a storefront directly from the DEER.IO website for 800 Rubles (approximately $12.50) per month. The monthly fee was payable by Bitcoin or a variety of online Russian payment methods such as WebMoney, a Russian based money transfer system similar to PayPal.
The shop owner had the option to purchase a storefront name linked to DEER.IO or one its subdomains, like DEER.ST, DEER.IS or DEER.EE (e.g., https://[SHOP NAME].deer.io, such as ONLYFB.DEER.IO, SHIKISHOP.DEER.IO and SELLACCSS.DEER.IS), or a custom name (e.g., https://[SHOP NAME], such as SQLBAZAR.SHOP and ISIS.RENTS.HOUSE), which directed the prospective buyer to the storefront infrastructure hosted on DEER.IO.
A cybercriminal who wanted to purchase from storefronts on the DEER.IO website could use a web browser to navigate to the DEER.IO domain, which contained a search function that allowed individuals to search a catalog for specific items or browse popular storefronts containing items to purchase. Any purchases were conducted using cryptocurrency, such as Bitcoin, or through Russian-based money transfer systems. For example, as reflected above, a cybercriminal could purchase stolen Uber accounts with associated credit card information from SHIKISHOP.DEER.IO. To make these purchases, the prospective buyer just needed to click on the cart on the right-hand side of the screen.
An initial scan through DEER.IO storefronts revealed thousands of compromised accounts posted for sale, including Personally Identifiable Information (PII) files containing full U.S. Social Security Numbers, dates of birth and victim addresses. Many of these victims were located in Europe and the United States, including victims in San Diego.
Firsov is set for sentencing before Judge Cynthia Bashant on April 12, 2021.
“This was one-stop shopping for criminals,” said U.S. Attorney Robert Brewer. “Cybercrime is one of the most pervasive threats facing our country. Data is being stolen and sold on the Dark Web every day, and we are devoting significant resources to combatting this serious problem.” Brewer commended the excellent work of Assistant U.S. Attorney Alexandra F. Foster and the FBI agents on this case.
“The internet allows cybercriminals and our adversaries to attack Americans in new and unexpected ways. Therefore, the FBI is constantly pivoting to staying ahead of the evolving nature of cyber threats,” said Suzanne Turner, Special Agent in Charge of FBI's San Diego Field Office. “The seizure of the DEER.IO website and conviction of Firsov is an example of the FBI cyber program’s investigative prowess and jurisdictional reach in order to identify, locate and bring to justice anyone who attempts to profit from harm to U.S. persons, businesses and infrastructure.”
If victimized in a cyber security incident, the FBI encourages companies to immediately contact the FBI. Specialized cyber agents will work with companies to protect company information and the personal data of its customers. Please contact the FBI San Diego's cyber program by calling our field office at (858) 320-1800 or submitting tips at Internet Crime Complaint Center (IC3).
DEFENDANT Case Number 20cr1182-BAS
Kirill Victorovich Firsov Age: 29 Moscow, Russia
SUMMARY OF CHARGE
Unauthorized Solicitation of Access Devices (18 U.S.C. § 1029(a)(6))
Maximum Penalty: Ten years in prison, $250,000 fine.
INVESTIGATING AGENCY
FBI
Cameraman Pleads Guilty in GirlsDoPorn Sex Trafficking ConspiracyRead the Press Release
Assistant U. S. Attorneys Joseph Green (619) 546-6955 and Alexandra F. Foster (619) 546-6735
NEWS RELEASE SUMMARY – January 21, 2021
SAN DIEGO – Cameraman Theodore Wilfred Gyi, aka Teddy, pleaded guilty today to conspiring with the operators of the adult websites GirlsDoPorn and GirlsDoToys to fraudulently coerce young women to appear in sex videos.
Gyi pleaded guilty before U.S. Magistrate Judge Jill L. Burkhardt to Conspiracy to Commit Sex Trafficking by Force, Fraud and Coercion, in violation of 18 U.S.C. § 371. Gyi, the second of six defendants to plead guilty, admitted that he worked from 2015 to 2017 as a camera operator for the GirlsDoPorn and GirlsDoToys adult websites, which were run by co-defendants Michael James Pratt and Matthew Isaac Wolfe.
Gyi admitted in his plea agreement that at the start of his employment he was instructed by Matthew Wolfe that, if any of the young female models asked, he should tell them that the videos would not be posted on the internet. Gyi admitted that over the course of his employment, he became aware that Matthew Wolfe and Michael Pratt were posting many of the sex videos that he filmed on GirlsDoPorn and GirlsDoToys, where they were publicly available to all willing purchasers. Nonetheless, Gyi continued to lie and personally assured the young women he filmed that the videos would not be posted publicly. To help convince them that the sex videos would not be posted on the internet, Gyi told some that he believed on-line pornography was “cheap.” Gyi also admitted that he was aware that Pratt, Wolfe, co-defendant Ruben Andre Garcia, and others were falsely assuring the women that if they agreed to appear in a video, the video would not be posted on the internet. Garcia pled guilty on December 17, 2020, to one count of Sex Trafficking by Force, Fraud and Coercion, and one count of Conspiracy to Sex Trafficking by Force, Fraud, and Coercion.
Gyi admitted that he filmed approximately 120 videos for GirlsDoPorn and GirlsDoToys.
“There is a high price to be paid by those who fraudulently exploit young women and forever alter their lives for profit,” said U.S. Attorney Robert Brewer. “Our prosecutors will leave no stone unturned in our effort to stop the tragedy of human trafficking and bring justice and restorative resources to its victims.” U.S. Attorney Brewer commended the excellent work of Assistant U.S. Attorneys Joseph Green and Alexandra F. Foster, as well as FBI agents and members of the San Diego Human Trafficking Task Force, for their continuing effort to investigate and prosecute this important case.
FBI Special Agent in Charge Suzanne Turner said, “Today’s plea underscores the FBI’s commitment to aggressively pursuing anyone who seeks to profit from the exploitation of young women. Theodore Gyi’s actions, in support of the GirlsDoPorn conspiracy, caused significant emotional pain and distress to the victims they targeted. This conviction is another step forward in the pursuit of justice for sex trafficking victims and the FBI’s role in holding perpetrators accountable for their crimes.”
Gyi is scheduled to be sentenced by U.S. District Judge Janis L. Sammartino on April 9, 2021 at 9 a.m. The next hearing in the ongoing case is January 22, 2021 at 2:00 p.m.
Any additional victims of the alleged crime are encouraged to call the San Diego FBI at 858-320-1800.
The FBI is offering a reward of up to $10,000 for information leading to the arrest of Michael James Pratt. Individuals with information about Pratt should contact their local FBI office or the nearest American Embassy or Consulate.
For further information, please see:
- Wanted Poster: https://www.fbi.gov/wanted/additional/michael-james-pratt
- Press Release: https://www.fbi.gov/contact-us/field-offices/sandiego/news/press-releases/fbi-seeks-public-assistance-in-locating-sex-trafficking-suspect
DEFENDANT Case Number 19cr4488-JLS
Theodore Wilfred Gyi Age: 42 Aliso Viejo, CA*
*Pleaded guilty to a Superseding Information charging Conspiracy to Commit Sex Trafficking by Force, Fraud and Coercion, in violation of 18 U.S.C. § 371.
Maximum Penalty: Five years in prison, $250,000 fine, a special assessment of $100.
CO-DEFENDANTS
Michael James Pratt Age: 36 Fugitive
Matthew Isaac Wolfe Age 37 San Diego, CA
Ruben Andre Garcia Age: 31 San Diego, CA**
**Pleaded guilty to Counts 1 and 7
Valorie Moser Age: 37 San Diego, CA
Amberlyn Dee Nored Age: 27 San Diego, CA
SUMMARY OF CHARGES
Count 1 (charging all defendants)
Conspiracy to Commit Sex Trafficking by Force, Fraud and Coercion, 18 U.S.C. § 1594(c)
Maximum Penalty: Life in prison, $250,000 fine, and a special assessment of $5,000 under 18 U.S.C. § 3014.
Count 2 (Pratt)
Production of Child Pornography, 18 U.S.C. § 2251(a) and (e)
Minimum penalty: Fifteen years in prison; Maximum penalty: 30 years in custody, $250,000 fine, and a special assessment of $5,000 under 18 U.S.C. § 3014.
Count 3 (Pratt)
Sex Trafficking of a Minor by Force, Fraud and Coercion, 18 U.S.C. § 1591(a)(1) and (2)
Minimum penalty: Fifteen years in prison; Maximum penalty: life in custody, $250,000 fine, and a special assessment of $5,000 under 18 U.S.C. § 3014.
Counts 4 (Pratt, Wolfe, Garcia), 5 (Pratt, Garcia), 6 (Pratt, Wolfe, Garcia), 7 (Pratt, Garcia, Gyi), 8 (Pratt, Garcia, Gyi)
Sex Trafficking by Force, Fraud and Coercion, 18 U.S.C. § 1591(a) and (b)(1)
Minimum penalty: Fifteen years in prison; Maximum penalty: life in custody, $250,000 fine, and a special assessment of $5,000 under 18 U.S.C. § 3014.
INVESTIGATING AGENCY
Federal Bureau of Investigation – San Diego Field Office
San Diego Human Trafficking Task Force
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
U.S. Attorney, District Attorney Warn Violence Won’t be Tolerated During Inauguration ProtestsRead the Press Release
Media Relations Director Kelly Thornton (619) 546-9726 or [email protected]
NEWS RELEASE SUMMARY – January 13, 2021
SAN DIEGO – U.S. Attorney Robert Brewer and San Diego County District Attorney Summer Stephan said today their offices will not tolerate violence during inauguration-related protests and will work closely with federal, state, and local partners to aggressively pursue those involved in criminal activity at such events in San Diego and Imperial counties.
“We are issuing the strongest warning possible to anyone who is planning violence in connection with the inauguration,” Brewer said. “If you repeat the despicable behavior we saw at the Capitol last week, and if you disrespect our great democracy by bringing harm to people or property in a display of hatred and rage, the consequences will be swift and strong. You will be found, and you will be charged. Don’t let that become part of your story.”
“I want to be clear that my office will prosecute those who break state laws when they choose violence, hate, assault or vandalism to harm our community—including attacks on fellow citizens and peace officers,” DA Stephan said. “I call on our community members to work hand in hand with law enforcement to keep our neighborhoods safe and to honor our democracy by reporting suspicious activity. If you see something, say something.”
Both U.S. Attorney Brewer and DA Stephan condemned the January 6 attack on the U.S. Capitol:
“Protesting is an inalienable right recognized by the U.S. Constitution; rioting is a crime,” DA Stephan said. “The insurrection that occurred in the U.S. Capitol last week was a despicable, anti-American attack on the democratic fabric of our nation. It’s a wakeup call that locally, we must work together to keep our community safe, including alerting law enforcement to the threat of violence.”
“The attack on Congress was a shameful and reprehensible affront to our democracy. Our Constitution protects the rights of free speech and assembly, but it does not protect mob violence, threats to harm public officials, assaults on law enforcement officers, or damage to government buildings,” said Brewer.
Anyone witnessing a crime in progress or immediate danger to the public should call 911. If you have witnessed unlawful violent actions, have any information about unlawful violent actions, or have information about the Capitol violence case, the FBI urges you to submit any information, photos, or videos that could be relevant at fbi.gov/USCapitol. You may also call 1-800-CALL-FBI (1-800-225-5324) to verbally report tips and/or information. If you do not have an attachment but have information to provide, you can also submit your information at tips.fbi.gov.
Restaurant Chain Manager Pleads Guilty to Employment Tax FraudRead the Press Release
The manager of the San Diego Home Cooking restaurant chain pleaded guilty today to employment tax fraud, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Robert S. Brewer Jr. for the Southern District of California.
According to court documents and statements made in court, Aleksandar Sreckovic was a manager for San Diego Home Cooking, a restaurant group with over 110 employees and five restaurants in the San Diego area, including Café 56 & Bar and Mission Valley Café & Bar in San Diego, Lake Murray Café in La Mesa, Lakeside Café in Lakeside, and Centre City Café in Escondido. Sreckovic had significant control over the finances of the company and had a duty to account for and pay over the employment taxes on behalf of the company’s employees to the IRS.
In November 2014, Sreckovic directed an outside payroll company to stop making employment-tax payments. From the last quarter of 2014 through 2017, Sreckovic did not file employment tax returns nor pay employment taxes for San Diego Home Cooking. In total, Sreckovic caused a tax loss of over $1.5 million. Instead of paying employment taxes, Sreckovic paid other creditors and his own personal expenses. Sreckovic has agreed to pay over $2.2 million in restitution, interest, and penalties to the IRS.
U.S. District Judge Cathy Ann Bencivengo scheduled sentencing for April 2, 2021. At sentencing, Sreckovic faces a maximum sentence of five years in prison. He also faces a period of supervised release and monetary penalties.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Brewer commended the special agents of IRS Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Andrew Galvin and Trial Attorney Matthew Hoffman, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the Division’s website.
U.S. Attorney Condemns Violence at U.S. CapitolRead the Press Release
Kelly Thornton (619) 546-9726
NEWS RELEASE SUMMARY – January 11, 2021
SAN DIEGO – U.S. Attorney Robert Brewer issued the following statement:
On January 6, 2021, a mob attacked the United States Capitol. This was a shameful and reprehensible affront to our democracy, and I condemn it in the strongest possible way. Our Constitution protects the rights of free speech and assembly, but it does not protect mob violence, threats to harm public officials, assaults on law enforcement officers, or damage to government buildings. Those who engage in these behaviors commit serious crimes, and our criminal justice system will hold them accountable.
We will work closely with our law enforcement partners, including the U.S. Attorney’s Office in the District of Columbia, to ensure that any individuals from San Diego or Imperial counties who were involved in criminal activity at the U.S. Capitol are brought to justice. If we determine that federal charges should be brought in this District, we will aggressively prosecute all such matters.
Anyone with information regarding the events of January 6 should contact the Federal Bureau of Investigation: https://tips.fbi.gov/digitalmedia/aad18481a3e8f02.
San Diego’s First Woman Federal Prosecutor HonoredRead the Press Release
Assistant U. S. Attorney Rebecca Church (619) 546-7721
NEWS RELEASE SUMMARY – January 8, 2021
SAN DIEGO - The U.S. Attorney’s Office for the Southern District of California is proud to honor the courageous life of Betty Marshall Graydon, the first woman Assistant U.S. Attorney in San Diego, by dedicating a conference room to her memory.
Ms. Graydon joined the U.S. Attorney’s Office in Los Angeles in 1938. She became the sole Assistant U.S. Attorney in San Diego in 1944, prosecuting criminal cases and defending the United States in civil suits until she was elevated to U.S. Commissioner in 1952.
“It is an honor to participate in this important event celebrating the life of Betty Marshall Graydon, a person of great significance to the history of the Southern District of California,” said U.S. Attorney Robert Brewer. “She had a brilliant and trailblazing career, and she represents the important role that women have played in the development and success of this office.” Brewer commended Assistant U.S. Attorney Rebecca Church for leading the effort to honor Ms. Graydon.
Graydon was known as a tenacious advocate who devoted her career to the pursuit of justice. Although she had an impactful life, her story has not been celebrated by this office until now. To learn more about Ms. Graydon’s trailblazing life, please watch conference room dedication tribute video available at https://youtu.be/_dT2UaYg4Xc. With this memorial, we hope that Ms. Graydon’s career will continue to inspire the dedicated public servants in this office, and the larger San Diego community, in the future.
The U.S. Attorney’s Office for the Southern District of California extends gratitude to the Hon. Cynthia Bashant, Hon. Barbara Major, Hon. Nita Stormes, Hon. Karen Crawford, Hon. Jill Burkhardt, and Yahariah Aristy, President of Lawyers Club, for contributing to the video, Ray Christensen for preparing the tribute, Elaine Lawrence, Executive Director of Lawyers Club, and Betty Boone, co-chair of Lawyers Club's History and Archives committee, for generously providing access to Lawyers Club’s research and resources regarding Ms. Graydon’s life and career, and to Federal Women’s Program, Special Emphasis Program Managers, AUSAs Rebecca Church, Katie McGrath, and Meghan Heesch.
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HEREGrocery Store and Manager Plead Guilty to Hiring Undocumented Workers; Court Imposes $500,000 in Fines and PenaltiesRead the Press Release
Assistant U. S. Attorney Stephen H. Wong (619) 546-9464 and Jennifer McCullough 546-8773
NEWS RELEASE SUMMARY – December 21, 2020
SAN DIEGO – Zion Market and its former general manager, Timothy Moon, pleaded guilty in federal court today to knowingly hiring undocumented employees who were not authorized to work in the United States.
U.S. Magistrate Judge Michael S. Berg ordered Zion Market to pay a $500,000 fine plus special penalty assessments of $25,050. The court also ordered Moon to pay a $5,000 fine plus an additional $5,000 in special penalty assessments.
In the court-filed plea agreement, Zion Market admitted that between 2011 and 2019, about half of the market’s 100-person work force was not authorized to work in the United States, and that it had employed undocumented aliens as early as 2003, through as recently as 2019. Zion acknowledged that it realized a pecuniary gain of at least $500,000 by employing illegal aliens. Moon, the market’s manager, knew that the illegal aliens could not legally work in the United States, but hired and continued to employ the aliens as part of a pattern and practice of employing unauthorized aliens. Upon learning of the investigation, Zion took steps to comply with federal immigration and labor laws.
Under federal law, employers are required to verify the identity and employment eligibility of all individuals they hire, and to document that information using the Employment Eligibility Verification Form I-9. Homeland Security Investigations continues to focus on the criminal prosecution of employers who knowingly break the law and will continue to audit employers’ immigration forms, such as the Form I-9 that verifies employees’ authorization to work in the United States. Homeland Security Investigations will also employ civil fines to encourage compliance with the law. Worksite enforcement investigators help combat worker exploitation, illegal wages, child labor, and other crimes collateral to worksite enforcement.
“Federal labor and immigration laws protect American workers by requiring employers to hire only U.S. citizens and aliens who are authorized to work in the country,” said U.S. Attorney Robert Brewer. “Zion Market ignored those laws for over a decade, and today Zion and its general manager paid a high price for that conduct. We will continue to vigorously enforce immigration laws where we find employers engaging in a pattern or practice of hiring unauthorized individuals in reckless disregard of the law.” Brewer praised prosecutor Stephen Wong and agents with Homeland Security Investigations for their excellent work on this case.
“Today’s sentencing is an example of HSI’s commitment to the investigation of employers who knowingly break the law to exploit workers and conduct other illegal practices,” said Cardell Morant, HSI Special Agent in Charge for San Diego. “These investigations hold employers accountable by eliminating unfair advantages for companies that hire an illegal workforce, protecting jobs for those who are legally employed.”
DEFENDANTS Case Number 20-mj-3948-MSB
Zion Market Inc., 7655 Clairemont Mesa, Inc.
Timothy Moon Age: 41 San Diego, CA
SUMMARY OF CHARGES
Continuing to Employ Unauthorized Aliens – Title 8, U.S.C., Section 1324a(a)(2) and 1324(f)(1), a misdemeanor
Maximum penalty for an individual: Six months in prison and $5,000 fine
Maximum Penalty for an organization: Fine of $10,000 or not more than twice the gross pecuniary gain realized from the offense, whichever is greater
AGENCY
Homeland Security Investigations (HSI)
Former California Unemployment Office Worker Charged in Scheme to Steal Hundreds of Thousands of Dollars in Pandemic Unemployment AidRead the Press Release
Assistant U. S. Attorney Stephen H. Wong (619) 546-9464
NEWS RELEASE SUMMARY – December 17, 2020
SAN DIEGO – A former contract employee with California’s Employment Development Department, which administers the state’s unemployment insurance program, was charged in federal court today with fraud and identity theft in connection with a scheme to steal hundreds of thousands of dollars in pandemic unemployment aid.
Nyika Gomez, 40, of San Diego, was arrested at her home yesterday and charged in a criminal complaint unsealed today. She made her first appearance in federal court at 2 p.m. today before U.S. Magistrate Judge Karen S. Crawford.
According to the complaint, Gomez conspired with her boyfriend, a prisoner serving a term of 94 years to life at California State Prison, Sacramento for murder, to submit fraudulent pandemic unemployment insurance claims for California state prisoners and out-of-state residents whose identifying information was stolen.
Gomez’s job at the Employment Development Department (EDD) involved assisting unemployed Californians to qualify for benefits. As alleged in the complaint, she used her training and expertise to defraud that very program in a scheme designed to generate hundreds of thousands of dollars in stolen benefits.
As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, Congress provided new unemployment benefits for those affected by the COVID-19 pandemic who would not otherwise qualify for unemployment insurance.
According to the criminal complaint, in July 2020, Gomez was employed by an EDD contractor as a Call Center Agent where she helped individuals process their unemployment insurance claims. In that position, Gomez received training in EDD’s procedures and regulations and she had access to confidential information regarding EDD’s unemployment insurance program.
The complaint said Gomez used that knowledge to submit fraudulent unemployment insurance claims using personal identifying information (PII) she acquired from California prisoners, with help from her inmate boyfriend. With his help, she was also able to purchase stolen PII from out-of-state residents, which she used to submit additional fraudulent unemployment claims.
Gomez arranged for the stolen benefits – paid out in the form of a debit card – to be mailed directly to her residence, or to the residence of someone working with her. Gomez returned some of the proceeds to the prison inmates by transferring money to their prison accounts.
In the statement of facts submitted for the criminal complaint, agents describe how they obtained video surveillance recordings of Gomez using the fraudulently obtained debit cards at bank ATM machines. For example, the photo below is a screen-capture from an ATM video taken on July 23, 2020. Gomez is withdrawing $1,000 on a debit card issued to a California prison inmate.
According to the complaint, the following video screen-captures depict the defendant while using EDD-issued debit cards she obtained through fraud:
Below is a screen-capture of Gomez withdrawing $1,000 from an ATM issued to a California Prison Inmate on July 23, 2020.
In this screen-capture from a drive through ATM taken on July 20, 2020, Gomez is withdrawing $500 from a debit card issued to a California prison inmate.
In this screen capture from a drive-through ATM taken on August 13, 2020, Gomez is withdrawing $300 from a debit card issued to a California prison inmate.
The charges are the product of an investigation jointly undertaken by the U.S. Department of Labor, Office of the Inspector General (DOL-OIG), the California Employment Development Department Office of Investigations (EDD OI), United States Postal Inspection Service (USPIS), and Homeland Security Investigations (HSI). Investigators initiated an investigation after noting several unemployment insurance benefit claims originating from Gomez’s own computer and using her own residence as the claimant’s address. Investigators also obtained consensually monitored recorded calls between Gomez and her boyfriend discussing the scheme and supplying Gomez with PII of prison inmates. A court-authorized search of Gomez residence also revealed that she possessed, and was using, two of the debit cards that were issued for claims by prison inmates.
“Pandemic unemployment insurance programs are a critical part of our safety net designed to support hardworking citizens who are suffering during this unprecedented time,” said U.S. Attorney Brewer. “Fraud related to COVID-19 is particularly disturbing as it exploits a national crisis for personal gain.”
Brewer praised prosecutor Stephen Wong and agents from U.S. Department of Labor, Office of the Inspector General Office of Investigations-Labor Racketeering & Fraud; California Employment Development Department Office of Investigations; California Department of Corrections and Rehabilitation-Investigative Services Unit; United States Postal Inspection Service and Homeland Security Investigations for their excellent work on this case.
If you think you are a victim of COVID-19 fraud, immediately report it the FBI (visit ic3.gov, tips.fbi.gov, or call 1-800-CALL-FBI or the San Diego FBI at 858-320-1800).
In addition, the public is urged to report suspected fraud schemes related to COVID-19 by calling the National Center for Disaster Fraud hotline (1-866-720-5721) or by e-mailing the NCDF at [email protected].
DEFENDANT Case Number 20-MJ-5356-KSC
Nyika Renada Gomez Age: 40 San Diego, CA
SUMMARY OF CHARGES
Counts 1 through 9: Title 18, United States Code, section 1343 (wire fraud)
Maximum penalty: Twenty years in prison; fine; penalty assessment
Counts 10 through 12: Title 18, United States Code, section 1028A; (aggravated identity theft)
Maximum penalty: Two-year mandatory-minimum in prison, consecutive to any prison term imposed for Counts 1 through 9.
AGENCY
U.S. Department of Labor, Office of the Inspector General (DOL-OIG) Office of Investigations-Labor Racketeering & Fraud
California Employment Development Department Office of Investigations (EDD OI)
California Department of Corrections and Rehabilitation-Investigative Services Unit (CDCR-ISU)
United States Postal Inspection Service (USPIS)
Homeland Security Investigations (HSI)
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Adult Film Performer Pleads Guilty in GirlsDoPorn Sex Trafficking ConspiracyRead the Press Release
Assistant U. S. Attorneys Joseph Green (619) 546-6955 and Alexandra F. Foster (619) 546-6735
NEWS RELEASE SUMMARY – December 17, 2020
SAN DIEGO – Adult film performer and producer Ruben Andre Garcia pleaded guilty in federal court today to sex trafficking charges, admitting that he conspired with the owners of the adult websites GirlsDoPorn and GirlsDoToys to fraudulently coerce young women to appear in sex videos.
Garcia pleaded guilty before U.S. Magistrate Judge Jill L. Burkhardt to Conspiracy to Commit Sex Trafficking by Force, Fraud and Coercion, and Sex Trafficking by Force, Fraud and Coercion. Garcia, the first of six defendants to plead guilty, admitted that he worked from 2013 to 2019 as a recruiter and adult film performer for GirlsDoPorn and GirlsDoToys adult websites, which were run by co-defendants Michael James Pratt and Matthew Isaac Wolfe. Both sites offered paid subscriptions and featured videos of young adult women appearing in their first pornographic video. The websites generated millions of dollars in revenue and the videos were viewed millions of times.
Garcia admitted in his plea agreement that in order to recruit victims to appear in the videos, he and his co-conspirators threatened, deceived and lied to them, promising that the videos would never be posted online, that “no one” would ever find out, and that the videos would never be released in the United States. In actuality, the co-conspirators were posting the videos on GirlsDoPorn, GirlsDoToys, and PornHub, one of the world’s most heavily-trafficked porn sites. Many of the victim videos were viewed millions of times.
Garcia also admitted that he recruited and paid other young women to act as “references” to falsely reassure reluctant victims that the videos would not be posted online and that there was “no way” anyone would find out. Garcia used young women as recruiters, because victims “were more likely to believe other young women.” The references were paid a fixed fee for every victim they attempted to recruit and additional compensation for victims who agreed to film a video.
Victims were recruited from throughout the United States and Canada. Once they arrived in San Diego, they were taken to local hotels or short term rental units where the videos were produced. The defendant and other co-conspirators continued to falsely assure the victims that the videos would not be posted online and that no one would find out. Garcia and other co-conspirators used aliases and companies with misleading names to ensure that the victims could not discover that they were behind GirlsDoPorn and GirlsDoToys.
Before the video shoots, Garcia offered victims marijuana or alcohol and some drank or smoked with Garcia before filming. When some victims changed their minds about going forward or finishing the video shoots, Garcia and other co-conspirators threatened to sue them, cancel their flights home, or post the footage that was already filmed online, which, unbeknownst to the victims, was going to happen anyway.
Garcia admitted that victims were also misled about how long the video shoots lasted. Most were told that the video production would take around 30 minutes, when they typically lasted for several hours. Garcia admitted that the sex was rough and caused many victims pain, and, in some cases bleeding. When victims asked to stop filming, Garcia and other co-conspirators told the victims that they had to keep going and finish the videos. Hotel room doors were often blocked by camera and recording equipment.
The GirlsDoPorn and GirlsDoToys websites generated millions of dollars in revenue from this scheme. For his part, Garcia was paid a commission for each victim that he recruited on top of an hourly wage for his time. Garcia will be ordered to pay restitution in an amount to be determined by the court at sentencing.
“This defendant was a key player in a despicable fraud that has devastated the victims,” said U.S. Attorney Robert Brewer. “We will continue to fight for justice for them, and to prevent others from becoming victims of these schemes.” Brewer commended the excellent work of Assistant U.S. Attorneys Joseph Green and Alexandra F. Foster, as well as FBI agents and members of the San Diego Human Trafficking Task Force, on a case that resulted in tremendous pain for the victims.
FBI Special Agent in Charge Suzanne Turner said, “The FBI is committed to investigating those who prey upon trusting women and girls, causing pain and humiliation for their own personal gain. Today’s guilty plea of Garcia is just a small victory in the ongoing battle with those who commit sex trafficking.”
Garcia is scheduled to be sentenced by U.S. District Judge Janis L. Sammartino on March 5, 2021 at 9 a.m. The next hearing in the ongoing case is January 22, 2021 at 2:00 p.m.
Any additional victims of the alleged crime are encouraged to call the San Diego FBI at 858-320-1800.
The FBI is offering a reward of up to $10,000 for information leading to the arrest of Michael James Pratt. Individuals with information about Pratt should contact their local FBI office or the nearest American Embassy or Consulate.
For further information, please see:
- Wanted Poster: https://www.fbi.gov/wanted/additional/michael-james-pratt
- Press Release: https://www.fbi.gov/contact-us/field-offices/sandiego/news/press-releases/fbi-seeks-public-assistance-in-locating-sex-trafficking-suspect
DEFENDANTS Case Number 19cr4488-JLS
Ruben Andre Garcia Age: 31 San Diego, CA
*Pleaded guilty to Counts 1 and 7
CO-DEFENDANTS
Michael James Pratt Age: 36 Fugitive
Matthew Isaac Wolfe Age 37 San Diego, CA
Theodore Wilfred Gyi Age: 42 Aliso Viejo, CA
Valorie Moser Age: 37 San Diego, CA
Amberlyn Dee Nored Age: 27 San Diego, CA
SUMMARY OF CHARGES
Count 1 (charging all defendants)
Conspiracy to Commit Sex Trafficking by Force, Fraud and Coercion, 18 U.S.C. § 1594(c)
Maximum Penalty: Life in prison, $250,000 fine, and a special assessment of $5,000 under 18 U.S.C. § 3014.
Count 2 (Pratt)
Production of Child Pornography, 18 U.S.C. § 2251(a) and (e)
Minimum penalty: Fifteen years in prison; Maximum penalty: 30 years in custody, $250,000 fine, and a special assessment of $5,000 under 18 U.S.C. § 3014.
Count 3 (Pratt)
Sex Trafficking of a Minor by Force, Fraud and Coercion, 18 U.S.C. § 1591(a)(1) and (2)
Minimum penalty: Fifteen years in prison; Maximum penalty: life in custody, $250,000 fine, and a special assessment of $5,000 under 18 U.S.C. § 3014.
Counts 4 (Pratt, Wolfe, Garcia), 5 (Pratt, Garcia), 6 (Pratt, Wolfe, Garcia), 7 (Pratt, Garcia, Gyi), 8 (Pratt, Garcia, Gyi)
Sex Trafficking by Force, Fraud and Coercion, 18 U.S.C. § 1591(a) and (b)(1)
Minimum penalty: Fifteen years in prison; Maximum penalty: life in custody, $250,000 fine, and a special assessment of $5,000 under 18 U.S.C. § 3014.
INVESTIGATING AGENCY
FBI
San Diego Human Trafficking Task Force
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Smuggler of Protected Sea Cucumbers Sentenced to Six Months in CustodyRead the Press Release
Assistant U. S. Attorney Melanie K. Pierson (619) 546-7976
NEWS RELEASE SUMMARY – December 14, 2020
SAN DIEGO – Tijuana resident John Jaimes Torres was sentenced in federal court today to six months in custody for smuggling protected sea cucumbers valued at more than $60,000 into the United States.
In November of 2019, Torres was discovered with 101 undeclared packages of sea cucumbers, totaling 145 kilograms, concealed in, under, and behind toolboxes in the bed of his truck. The sea cucumbers were of the species Isostichopus fuscus, which is protected under the Convention on International Trade in Endangered Species (CITES). In order to lawfully import these sea cucumbers, a CITES import/export permit and CITES certificate of origin was required, as well as an import/export license from the U.S. Fish and Wildlife Service, none of which Torres possessed.
As noted in court proceedings, in addition to the sea cucumbers, Torres possessed four cell phones. A search of these phones revealed evidence of prior smuggling events. For example, in July of 2019, Torres delivered more than 20 bags of sea cucumbers to a storage unit in the San Diego area. He sent a photo of the sea cucumbers in the storage unit to his client.
The search of the phones also indicated that Torres was an all-service smuggler, crossing food products, alcohol, medications and cigarettes in addition to the sea cucumbers, for profit. At the time he crossed the border, Torres was in possession of $1,600 in cash. In addition to the custodial sentence, Torres was also ordered to make restitution of $10,000 to the government of Mexico as compensation for the loss of its natural resources. Torres was ordered to self-surrender to begin serving his sentence on or before February 12, 2021.
“Scientists tell us that sea cucumbers play a critical role in keeping coral reef and other tropical ocean ecosystems healthy,” said U.S. Attorney Robert Brewer. “Unfortunately the black market for sea cucumbers is thriving, making these cases against smugglers even more important.” Brewer praised prosecutor Melanie Pierson and agents with U.S. Fish and Wildlife Service, Office of Law Enforcement and Homeland Security Investigations and Customs and Border Protection for their excellent work on this case.
“The unlawful commercialization of living marine faunae, such as CITES-protected sea cucumbers, not only harms the individual species, but it promotes the destruction of ocean ecosystems that other wildlife depend on for survival,” said special agent in charge Dan Crum. “Today's sentencing sends a message that our law enforcement agents and prosecutors will continue to investigate, prosecute and bring to justice any violators who illegally exploit wildlife for profit.”
“The illegal sea cucumber trade is a real problem, and illicit trafficking in protected species fuels crime and decimates protected wildlife populations,” said Cardell T. Morant, Special Agent in Charge of Homeland Security Investigations. “This arrest and conviction demonstrates our commitment to work with our law enforcement partners to protect threatened and endangered species and bring justice to the criminals that seek to profit from their exploitation.”
DEFENDANT Case Number 19cr4848-W
John Jaimes Torres Age: 52 Tijuana, Mexico
SUMMARY OF CHARGES
Count 1
Conspiracy – Title 18, U.S.C., Sec. 371
Maximum penalty: Five years in prison and $250,000 fine
Counts 2-5
Smuggling/Importation Contrary to Law – Title 18, U.S.C., Sec.545
Maximum Penalty: Twenty years in prison and $250,000 fine
AGENCY
U.S. Fish and Wildlife Service, Office of Law Enforcement
Homeland Security Investigations
Customs and Border Protection
Millions in Assets of Encrypted Telecommunications Criminal Enterprise Seized in Singapore and Repatriated to the United StatesRead the Press Release
Assistant U.S. Attorneys Joshua Mellor (619) 546-9733 and Mark W. Pletcher (619) 546-9714
NEWS RELEASE SUMMARY – December 14, 2020
SAN DIEGO – Four bank accounts containing $3,971,468.40 in illicit funds generated from Phantom Secure, an encrypted telecommunications network used by transnational organized criminal syndicates, were seized by authorities in Singapore and repatriated to the United States, the U.S. Attorney’s Office for the Southern District of California announced today.
Vincent Ramos, the chief executive of Canada-based Phantom Secure, and four of his associates were indicted by a federal grand jury in March 2018 on charges that they operated a criminal enterprise that facilitated the transnational importation and distribution of narcotics through the sale and service of encrypted telecommunications devices and services.
This was the first time the U.S. government targeted a company and its principals for conspiring with criminal organizations by providing them with the technological tools to evade law enforcement and obstruct justice while committing transnational drug trafficking.
According to court documents, Phantom Secure advertised its products as impervious to decryption, wiretapping or legal third-party records requests. Phantom Secure also guaranteed the destruction of evidence contained within a device if it was compromised, either by an informant or because it fell into the hands of law enforcement.
Starting in 2018, U.S. authorities, working closely with the Commercial Affairs Department (CAD) of the Singapore Police Force, identified and seized over $3.9 million in illicit funds linked to the sale of Phantom Secure devices. Those funds were seized in Singapore, forfeited as proceeds of criminal activity and have now been repatriated to the United States.
In October 2018, Ramos pleaded guilty to leading a criminal enterprise that facilitated the transnational importation and distribution of narcotics through the sale and service of encrypted communications devices. In his plea agreement, Ramos admitted that he and his co-conspirators facilitated the distribution of cocaine, heroin, and methamphetamine to locations around the world including in Australia, Canada, Europe, Mexico, Thailand and the United States by supplying narcotics traffickers with Phantom Secure encrypted communications devices designed to thwart law enforcement.
To keep the communications out of the reach of law enforcement, Ramos and others maintained Phantom Secure servers in Panama and Hong Kong, used virtual proxy servers to disguise the physical location of its servers, and remotely deleted or “wiped” devices seized by law enforcement. Ramos’ customers used his products to devastating and sometimes deadly effect, and Ramos used this to market his encryption services to criminals across the world. According to court documents, in response to a March 5, 2014 news article that reported investigations of a gangland murder were stymied because the suspects used Phantom Secure devices to coordinate the killing, Ramos wrote, “This is the best verification on what we have been saying all along – proven and effective for now over nine years. It is the highest level of authority confirming our effectiveness. It can’t get better than that.”
As part of his guilty plea, Ramos agreed to an $80 million forfeiture money judgment as well as the forfeiture of tens of millions of dollars in identified assets, ranging from bank accounts worldwide, to houses, to a Lamborghini, to cryptocurrency accounts, to gold coins. The money repatriated from Singapore was among the assets identified by investigators to be forfeited. Ramos was sentenced to 108 months in prison.
“Tremendous determination by this office and our investigative partners dismantled this criminal network,” said U.S. Attorney Robert Brewer. “As a result of this ground-breaking prosecution, the network has been shut down, its founder has been brought to justice, and its money is being identified and forfeited to help victims and witnesses of crime.” Brewer praised prosecutors Mark Pletcher and Joshua Mellor as well as agents from the Federal Bureau of Investigation, U.S. Drug Enforcement Administration, and U.S. Marshals Service for their excellent work on this case.
The Department of Justice specifically commends the efforts of our Singapore counterparts in identifying, freezing, and repatriating proceeds of this criminal enterprise. Investigators with the Commercial Affairs Department and representatives of the Attorney General’s Chamber worked relentlessly to ensure that these proceeds would not be used to promote further illegal activity.
The U.S. Attorney’s Office for the Southern District of California further notes the invaluable assistance of the Department of Justice’s Office of International Affairs.
“The repatriation of close to $4 million by our Singapore-based partners ensures that Vincent Ramos and the leaders of Phantom Secure will pay for their crimes,” stated FBI Special Agent in Charge Suzanne Turner. “The FBI’s unrelenting work to take down transnational criminal organizations like Phantom Secure and recoup their illegal financial gains is only possible through close working relationships with our global law enforcement partners.”
“This case demonstrates the U.S. Marshals’ firm commitment to tracing illicit funds and dismantling criminal enterprises worldwide,” said Assistant Director Timothy Virtue of the U.S. Marshals Asset Forfeiture Division. “We express our gratitude to our Singapore counterparts for their unflinching cooperation in clamping down on transnational organized criminal syndicates and money launderers.”
This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
AGENCIES
Federal Bureau of Investigation
Drug Enforcement Administration
U.S. Marshals Service
Singapore Police Force - Commercial Affairs Department
Singapore Attorney-General’s Chambers
Australian Federal Police
New South Wales Police (Australia)
New South Wales Crime Commission (Australia)
Australian Criminal Intelligence Commission
Royal Canadian Mounted Police
International Assistance Group, Department of Justice, Canada Department of Justice, Organized Crime Drug Enforcement Task Forces
Office of Enforcement Operations of the Department’s Criminal Division
Department of Justice’s Office of International Affairs
Doctor Pays $153,000 to Resolve Allegations of Overprescribing Opioids at his Escondido ClinicRead the Press Release
Assistant U.S. Attorney Dylan M. Aste (619) 546-7621
NEWS RELEASE SUMMARY – December 11, 2020
SAN DIEGO – Escondido pain clinic doctor Bradley Chesler, M.D., has paid the United States $153,000 to resolve allegations that he overprescribed opioids. Dr. Chesler is a board-certified physiatrist who operates a pain clinic in Escondido, California. This settlement stems from the United States’ investigation into whether Dr. Chesler illegally prescribed opioids to his patients in violation of the Controlled Substances Act.
Pursuant to the Controlled Substances Act, doctors may write prescriptions for opioids only for a legitimate medical purpose while acting in the usual course of their professional practice. Based on its investigation, the United States alleged that from January 1, 2014 to August 31, 2019, Dr. Chesler wrote opioid prescriptions that violated the Controlled Substances Act, which included prescriptions for fentanyl, hydromorphone, methadone, and oxycodone. The United States further alleged that Dr. Chesler prescribed opioids while he concurrently prescribed benzodiazepines, and he prescribed to some patients a combination of at least one opioid, one benzodiazepine, and one muscle relaxant. Drug abusers colloquially refer to the opioid, benzodiazepine, and muscle relaxant combination as the “Trinity” because of its rapid euphoric effects. These drug combinations are known to increase the risk of abuse, addiction, and overdose.
The investigation exemplifies the Department of Justice’s willingness to investigate doctors who may be overprescribing opioids while treating patients who suffer painful conditions. Health care providers treating patients who suffer from pain must still only prescribe opioids in accordance with recognized and accepted medical standards. Indeed, public health experts have long warned health care providers that overdose risk is elevated in patients receiving medically prescribed opioids, particularly those receiving high dosages. As such, it has been recommended that health care providers carefully track the potency of opioids prescribed to patients by noting the Morphine Milligram Equivalent (MME, also commonly referred to as Morphine Equivalent Dose or MED) of prescribed opioids. Among other things, tracking MMEs advances better practices for pain management by reinforcing the need for providers to consider alternatives to using high-dosage opioids to treat pain, and to appropriately justify decisions to use opioids at dosages that place patients at high risk of addiction, abuse, and overdose. Furthermore, prescribing high dosages increases the risk that patients will divert opioids to people who were not prescribed them.
Based on its investigation, the United States alleged that Dr. Chesler prescribed large quantities of opioids to his patients that reached high daily MME levels (sometimes even exceeding 180 MME). The United States further alleged that Dr. Chesler failed to properly address aberrant urine drug test results when prescribing opioids.
“Doctors have an important responsibility to properly treat their patients and not overprescribe opioids,” said U.S. Attorney Robert Brewer. “When doctors or other health care providers illegally prescribe opioids outside of the law, my office will pursue the appropriate legal remedy and protect our citizens. As we have consistently demonstrated, our prosecutors will continue to use all available tools to combat the serious opioid epidemic.” Brewer praised Assistant U.S. Attorney Dylan Aste and DEA agents for their excellent work on this case.
DEA Special Agent in Charge John Callery said, “Although 99 percent of medical professionals abide by DEA guidance and federal law, we will investigate those who put illicit profits before their oaths and bring them to justice.”
To report a tip directly to a DEA representative regarding medical personnel writing suspicious opioid prescriptions and pharmacies dispensing large amounts of opioids, call (571) 324-6499, or visit the DEA’s website (https://www.deadiversion.usdoj.gov/) and click on “Report Illicit Pharmaceutical Activities.”
Assistant U.S. Attorneys Dylan M. Aste of the U.S. Attorney’s Office for the Southern District of California handled this matter along with DEA investigators.
The claims resolved by this settlement are allegations only and there has been no determination of liability.
San Diego Man Admits to Robbing Bank Teller at KnifepointRead the Press Release
Assistant U. S. Attorney Megan Rossi (619) 546-9661
NEWS RELEASE SUMMARY – December 3, 2020
SAN DIEGO – Rafeek Omar Karamat of San Diego pleaded guilty in federal court today to bank robbery before U.S. Magistrate Judge Karen S. Crawford.
Karamat admitted that on September 30, 2020, at approximately 9:59 a.m., he entered the Navy Federal Credit Union in San Diego wearing a facecovering and approached a teller. Karamat walked around the corner of the teller’s desk, brandished a knife and demanded, “give me money,” and “give me what I came for.” The teller complied and provided Karamat with $2,500 in cash. Karamat then ran to a white Ford Ranger and sped away.
Karamat was arrested by La Mesa Police Officers shortly after fleeing the Navy Federal Credit Union. Karamat had the stolen money and a knife at the time of his arrest.
“Bank robberies are a terrifying experience for both customers and the tellers,” said U.S. Attorney Robert Brewer. “Thanks to the swift action of federal and local law enforcement agencies in this matter, this defenedant was quickly apprehended and justice has been achieved.” Brewer praised prosecutor Megan Rossi and the FBI for excellent work on this case.
“Robbing banks may sound old-fashioned in today's high-tech world, but it's a crime problem that continues to take a toll on financial institutions and communities across the nation,” said FBI Special Agent in Charge Suzanne Turner. “In San Diego, the FBI Violent Crimes Task Force is dedicated to working with our local partners to keep our communities safe from bank robbers and other violent criminals.” Brewer praised prosecutor Megan Rossi, the FBI and La Mesa Police Department for their excellent work on this case.
“Our community is a safer place thanks to the outstanding work of the responding officers and our partners at the FBI Violent Crimes Task Force and U.S. Attorney’s Office,” said Acting La Mesa Police Chief Ray Sweeney. “The collaboration between the La Mesa Police Department and our federal partners is a critical component to keep all of our citizens safe from violent crimes.”
This case is the result of the ongoing efforts of the Violent Crime and Human Trafficking (VCHT) Section. Formed in 2019 by U.S. Attorney Robert Brewer, the VCHT is tasked with leading collaborations between federal and local law enforcement in the investigation and prosecution of cases involving violent crimes, firearms and gang cases; sex trafficking and child exploitation; civil rights, and labor trafficking. The VCHT Section oversees the Southern District of California Coordinators for Project Safe Neighborhoods, Human Trafficking, and Project Safe Childhood.
Karamat is scheduled to be sentenced on February 22, 2021 at 9 a.m. before U.S. District Judge Anthony J. Battaglia.
DEFENDANT Case Number 20cr3392-AJB
Rafeek Omar Karamat Age: 35 San Diego, California
SUMMARY OF CHARGES
Bank Robbery – Title 18, U.S.C., Section 2113(a)
Maximum penalty: Twenty years in prison and $250,000 fine
AGENCY
Federal Bureau of Investigations
La Mesa Police Department
Doctor Selling COVID-19 “Cure” Charged with Lying to U.S. Customs, Stealing Employee’s IdentityRead the Press Release
Assistant U. S. Attorneys Nicholas Pilchak (619) 546-9709 and Jaclyn Stahl (619) 546-8456
NEWS RELEASE SUMMARY – December 3, 2020
SAN DIEGO – Dr. Jennings Ryan Staley, previously charged with one count of mail fraud, was indicted by a federal grand jury yesterday for additional crimes arising from his business venture selling COVID-19 “treatment kits,” which he advertised to one potential customer as a “miracle cure.” Staley is a licensed physician and the former operator of Skinny Beach Med Spas in and around San Diego.
According to the new charges, which became publicly available today, Staley agreed with a Chinese supplier to smuggle hydroxychloroquine powder into the U.S., lying to U.S. Customs by mislabeling a shipment as “yam extract.” Staley is also charged with stealing the name and identifying information of one of his employees in order to create and submit a bogus prescription for hydroxychloroquine on the employee’s behalf, in order to sell the drugs at a markup to his customers.
In late March and early April 2020, Staley marketed and sold his treatment kits to Skinny Beach customers. He described his product as a “concierge medicine experience,” which included hydroxychloroquine—an anti-malarial drug that Staley described to one potential customer as a “guaranteed” cure for COVID-19. Staley’s kits were priced as high as $3,995 for a family of four, while Staley himself paid roughly $1 per tablet of hydroxychloroquine. Staley’s marketing materials, per the indictment, stressed that recipients should “NOT BELIEVE THE REPORTS THAT HYDROXYCHLOROQUINE DOESN’T WORK!”
During a phone call with a prospective customer, in reality an undercover FBI agent, Staley repeatedly promised that the drugs he was selling would cure COVID-19. According to the charging document, Staley said hydroxychloroquine “cures the disease,” and that it was “incredible,” a “magic bullet,” and an “amazing weapon.” When the undercover agent asked if hydroxychloroquine and mefloquine—another anti-malarial that Staley described as “the Russian cure”—would effectively cure someone infected with COVID-19, Staley replied, “One hundred percent. One hundred percent.”
One week later, when interviewed by FBI agents, the indictment alleges that Staley falsely denied ever saying that the Skinny Beach treatment packages were a “one hundred percent effective cure.”
“People must be able to trust their doctors to offer honest medical advice instead of a fraudulent sales pitch, especially during a global pandemic,” said U.S. Attorney Robert Brewer. “Medical professionals who lie about their treatments to profit from a desperate, fearful public will face criminal charges and serious consequences like any other lawbreaker.” Brewer praised prosecutors Nicholas Pilchak and Jaclyn Stahl as well as agents from the FBI and U.S. Food and Drug Administration, Office of Criminal Investigations, for their excellent work on this case.
“The FBI has been vigilant in investigating anyone trying to capitalize on the COVID-19 crisis,” said FBI Special Agent in Charge Suzanne Turner. “It's clear that trust in our medical professionals is always important, but particularly so in current times. These additional charges emphasize the FBI's dedication to fully uncovering the extent of Dr. Staley's alleged fraudulent actions and our unwavering commitment to pursuing those who put personal greed before humanity.”
The charging document outlines multiple ways that Staley obtained the hydroxychloroquine pills he resold as part of his treatment kits, including soliciting them from his acquaintances and employees with preexisting hydroxychloroquine prescriptions, and writing prescriptions for immediate family members and acquaintances to get the drugs “by any means necessary.” He even had plans to make his own tablets of hydroxychloroquine, using the mislabeled powder he planned to smuggle in from Chinese suppliers he found online.
Staley wrote one sham prescription, according to the superseding indictment, for a Skinny Beach employee. Staley had also asked the employee for a few tablets from her own hydroxychloroquine prescription, supposedly for another Skinny Beach staff member who was sick. Instead of borrowing a few of the employee’s tablets to help a suffering colleague as he had promised, however, Staley turned around and wrote a bogus prescription using her name, date of birth, and prior home address. Staley then took the sham prescription to multiple pharmacies to try to obtain hydroxychloroquine in the employee’s name, including by pretending to be her during the online ordering process.
Staley also lied to agents about the employee whose identifying information he had stolen, falsely claiming that she had allowed him to use her pre-existing medical condition to get hydroxychloroquine tablets that he would re-sell at a significant profit.
“The FDA continues its steadfast efforts to identify, investigate, and bring to justice those who attempt to profit from the pandemic by offering American consumers so-called ‘miracle cures’ to treat COVID-19,” said Special Agent in Charge Lisa L. Malinowski, FDA Office of Criminal Investigations Los Angeles Field Office. “We will continue to work with our law enforcement partners to bring to justice those who place profits above the public health.”
The superseding indictment also charges Staley with an importation crime, based on his agreement with a Chinese supplier to lie to U.S. Customs about a shipment that Staley believed contained 12 kilograms of hydroxychloroquine powder. As alleged, when the supplier volunteered to “change the product name to export” in order to get the product through U.S. Customs by “replac[ing] hydroxychloroquine export with yam extract,” Staley replied “Excellent,” and then suggested the same mislabeling technique himself to another potential supplier.
Staley later bragged to the undercover agent just days later that he “got the last tank of . . . hydroxychloroquine smuggled out of China Sunday night at 1:00 a.m. in the morning” by “saying it was sweet potato extract.” In truth, but unbeknownst to Staley, the shipment contained only baking soda.
As set out in the indictment, Staley also sought to raise money for his lucrative COVID-19 venture by soliciting investments. He told one potential investor that, if she contributed a minimum of $25,000, he would promise to repay “triple [her] money in 90 days.”
Staley’s next court date is December 17, 2020 at 11 a.m. before U.S. District Judge Gonzalo P. Curiel.
If you think you are a victim of COVID-19 fraud, immediately report it to the FBI (visit ic3.gov, tips.fbi.gov, or call 1-800-CALL-FBI or the San Diego FBI at 858-320-1800; the public is also urged to report suspected fraud schemes related to COVID-19 by calling the National Center for Disaster Fraud (NCDF) hotline (1-866-720-5721) or by e-mailing the NCDF at [email protected].
DEFENDANT Case Number 20cr1227-GPC
Jennings Ryan Staley, M.D. Age: 44 Residence: San Diego, CA
SUMMARY OF CHARGES
Mail Fraud, in violation of Title 18, United States Code, Section 1341
Maximum Penalty: Twenty years in prison; fine; special assessment
Importation Contrary to Law, in violation of Title 18, United States Code, Section 545
Maximum Penalty: Twenty years in prison; fine; special assessment
False Statement, in violation of Title 18, United States Code, Section 1001
Maximum Penalty: Five years in prison; fine; special assessment
Aggravated Identity Theft, in violation of Title 18, United States Code, Section 1028A
Mandatory minimum two years in prison; fine; special assessment
AGENCIES
Federal Bureau of Investigation
U.S. Food and Drug Administration, Office of Criminal Investigations
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendant is considered innocent unless and until proven guilty.
Man Admits Role in Nationwide Card Fraud, Money Laundering SchemeRead the Press Release
Assistant U. S. Attorney Nicholas Pilchak (619) 546-9709
NEWS RELEASE SUMMARY – December 2, 2020
SAN DIEGO – A former Glendale resident pleaded guilty today to engaging in a long-running, nationwide fraud conspiracy that stole unwitting victims’ financial information by skimming it from ATMs and gas pumps in San Diego and across the country, and used the stolen information to make phony credit and debit cards. Seven men in total are charged with participating in that conspiracy, and in a related money laundering conspiracy, that netted over a million dollars in ill-gotten gains.
Defendant Arsen Minasyan entered a guilty plea today before U.S. Magistrate Judge Linda Lopez to participating in a conspiracy to launder the proceeds of fraud committed by unauthorized access devices: essentially, fake credit and debit cards used as part of the fraud scheme.
The indictment alleges that Minasyan and his co-defendants worked together to steal unwitting victims’ credit and debit card information by using skimming devices installed in common points of sale such as gas pumps and ATMs. With the stolen information in hand, the conspirators made a host of unauthorized cards that they then used to buy postal money orders and make withdrawals from victims’ accounts.
“This office will not tolerate those who prey upon unwitting victims innocently using the financial system for their everyday needs,” said U.S. Attorney Robert Brewer, “nor thieves’ criminal partners who launder their money. Both fraudsters and their money laundering accomplices will face justice.” Brewer praised prosecutor Nick Pilchak and U.S. Secret Service agents for their excellent work on this case.
“The fraudulent compromise of individuals’ financial security threatens our economic stability and security as a whole, and will not go undetected,” said San Diego Acting Special Agent in Charge of Secret Service Timothy Scott. “I commend the especially skilled investigators who worked tirelessly to detect these defendants and their criminal activity, despite their futile efforts to operate in the shadows.”
In his plea agreement, Minasyan admitted that he and another defendant had between them $13,380 in illicit cash and 68 phony cards on just a single day last summer during the conspiracy. Minasyan acknowledged that the entire scheme inflicted losses and attempted losses of at least $1.2 million on its victims, and that he personally participated in the scheme in Glendale, New York, Oklahoma, and Southern California.
According to the charges in the indictment, the conspiracy victimized individuals and their accounts across the country: in New York, Illinois, Missouri, Oklahoma, and at over a dozen post offices in Southern California, including throughout the San Diego area, where the perpetrators used stolen cards to buy hundreds of thousands of dollars of postal money orders, which they then laundered through the banks.
The money laundering charges detail how three defendants—the Simonyan brothers and their accomplice, Minasyan—laundered the criminal funds through shell bank accounts and structured withdrawals. For example, in one month alone, the Simonyan brothers allegedly withdrew $91,500 in cash from a single bank account in structured amounts under $10,000 to avoid the threshold for reporting the withdrawals to the authorities.
Minasyan is set to be sentenced February 24 at 9:30 a.m. by U.S. District Judge Michael M. Anello. The remaining defendants are next in court on January 13, 2021 before Judge Anello.
Anyone who believes that they may be a victim of this offense can visit the U.S. Department of Justice’s large case website for more information: www.justice.gov/largecases.
DEFENDANTS Age Case Number 20cr314-MMA
- Davit Simonyan 30 Residence: Glendale, California
- Vahram Simonyan 34 Residence: Glendale, California
- Arsen Minasyan 34 Residence: Western Region Detention Facility
- Gor Plavchyan 26 Residence: Winnetka, California
- Arsen Galstyan 40 Residence: Glendale, California
- Mukuch Mkrtchyan 32 Residence: Fair Oaks, California
- Smbat Shahinyan 41 Residence: Glendale, California
SUMMARY OF CHARGES
Conspiracy to Launder Monetary Instruments, in violation of Title 18, United States Code, Section 1956(h) (Defendants 1 through 3 only)
Maximum Penalty: Twenty years in prison; fine of $500,000 or twice the value of the property involved
Conspiracy to Possess Fifteen or More Unauthorized Access Devices, in violation of Title 18, United States Code, Sections 1029(b)(2), 1029(a)(3), and 1029(c)(1)(A)(i) (Defendants 1 and 3–7 only)
Maximum Penalty: Five years in prison; fine of $250,000 or twice the gross gain or loss
AGENCY
United States Secret Service
U.S. Postal Inspection Service
*The charges and allegations contained in an indictment are merely accusations. The defendants are considered innocent unless and until proven guilty
In “Staggering” Conspiracy, Former Police Chief, Prosecutor, and Police Officers Sentenced for Framing an Innocent Man with a CrimeRead the Press Release
Special Attorneys Michael Wheat (619) 546-8437, Joseph Orabona (619) 546-7951, Janaki Chopra (619) 546-8817, and Colin McDonald (619) 546-9144
NEWS RELEASE SUMMARY – December 2, 2020
HONOLULU, Hawaii – Former Honolulu Police Chief Louis Kealoha and his wife, former Honolulu prosecutor Katherine Kealoha, were sentenced in federal court this week to 84 months and 156 months in prison, respectively, for a range of criminal conduct, including framing their relative with a crime to conceal their own fraud. Additionally, the Kealohas’ co-conspirators, former Honolulu police officers Derek Wayne Hahn and Minh-Hung “Bobby” Nguyen, received 42 months and 54 months, respectively, for their involvement in the conspiracy.
Chief U.S. District Judge J. Michael Seabright of the District of Hawaii handed down the sentences, remarking that the conspiracy was “staggering in its breadth, its scope, and its audacity.” He stated further that “the impact on the community is clear: The conduct of the defendants has shaken the community and its trust in the Honolulu Police Department.”
The sentences mark the end of one of the largest public corruption cases in Hawaii history. In June 2019, after six weeks of trial and one day of deliberation, a federal jury in Honolulu convicted the Kealohas, Hahn, and Nguyen of conspiracy and attempted obstruction of justice pertaining to the false arrest and prosecution of Katherine’s uncle, Gerard Puana. The evidence at trial established that the conspirators used their considerable power, including commandeering the Honolulu Police Department’s elite Criminal Intelligence Unit (CIU), to frame Gerard with stealing the Kealohas’ mailbox. Hahn and Nguyen were both members of CIU, which acted directly at the behest of Louis Kealoha. The Kealohas’ motive for framing Gerard was to discredit and intimidate him after he accused Katherine of stealing money from him and his elderly mother—Katherine’s grandmother. The evidence at trial demonstrated that the Kealohas took and spent over $148,000 of the grandmother’s money in just a six-month period, with payments going towards expenses such as mortgage payments, Elton John concert tickets, Mercedes and Maserati car payments, a trip to Disneyland, and a $23,976 brunch tab at the Sheraton Waikiki to celebrate Louis Kealoha’s induction as Honolulu Police Chief in 2009.
Once Gerard started voicing claims of fraud, the Kealohas moved to silence him by falsely accusing him of a felony offense. To frame Gerard, the conspirators prepped the Kealohas’ mailbox to be “stolen,” selectively edited grainy surveillance video to conceal their preparatory acts, falsely identified Gerard as the culprit captured by the video, falsified police reports, withheld and destroyed evidence, and repeatedly lied about their activity to investigators, the federal grand jury, and the District Court for the District of Hawaii. This all occurred while Louis Kealoha was Honolulu’s Police Chief and while Katherine Kealoha was a high-ranking Honolulu prosecutor.
“This was a flagrant and stunning abuse of power that victimized an entire community by undermining public confidence in its leaders and the rule of law,” said U.S. Attorney Robert Brewer. “After years of manipulating the levers of justice to shroud their own crimes, justice has been delivered to these defendants.” Brewer praised FBI agents and Special Attorneys Michael Wheat, Joseph Orabona, Janaki Chopra, and Colin McDonald for achieving justice in this case after many years of tenacious investigation and skillful litigation.
“Our citizens entrust public servants with great powers and authorities. It is our responsibility to serve our community with integrity and authenticity – with truth and justice as our hallmark,” said Special Agent in Charge Eli S. Miranda. “The Kealohas betrayed this trust for their own selfish entitlements, using deception and breaking the same laws they swore to uphold. The FBI will enthusiastically continue to investigate any corrupt public official who willfully and maliciously abuse their office.”
In addition to their custodial sentences, Katherine Kealoha and Louis Kealoha were ordered to pay $454,984.78 and $237,698.56, respectively, in restitution to their victims, and ordered to forfeit property representing proceeds of fraud, including the Kealohas’ former home in Honolulu, a Rolex watch, and $228,746.79. Katherine Kealoha is already in custody; Louis Kealoha, Hahn, and Nguyen were ordered to self-surrender to the Bureau of Prisons on April 12, 2021.
DEFENDANTS
Louis M. Kealoha Age: 60 Honolulu, Hawaii
Katherine P. Kealoha Age: 50 Honolulu, Hawaii
Derek Wayne Hahn Age: 48 Honolulu, HawaiiMinh-Hung “Bobby” Nguyen Age: 46 Kaneohe, Hawaii
SUMMARY OF CONVICTIONS
Louis Kealoha
CR No. 17-00582-JMS-WRP
Conspiracy to Commit Offenses Against the United States – Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison, $250,000 fine
Obstruction of Official Proceeding – Title 18, U.S.C., Section 1512(c) (three counts)
Maximum penalty: Twenty years in prison, $250,000 fine
CR No. 18-00068-JMS-WRP
Bank Fraud, in violation of 18 U.S.C. § 1344
Maximum Penalty: Thirty years in prison, $1 million fine
Katherine Kealoha
CR No. 17-00582-JMS-WRP
Conspiracy to Commit Offenses Against the United States – Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison, $250,000 fine
Obstruction of Official Proceeding – Title 18, U.S.C., Section 1512(c) (three counts)
Maximum penalty: Twenty years in prison, $250,000 fine
CR No. 18-00068-JMS-WRP
Bank Fraud, in violation of 18 U.S.C. § 1344
Maximum Penalty: Thirty years in prison, $1 million fine
Aggravated Identity Theft, in violation of 18 U.S.C. § 1028A
Maximum Penalty: Mandatory term of imprisonment of two years, to be served consecutive to the sentence imposed for any underlying charge; fine of up to $250,000
CR No. 19-00015 JMS-WRP
Misprision of Felony, in violation of 18 U.S.C. § 4
Maximum Penalty: Three years in prison; fine of up to $250,000
Derek Wayne Hahn and Minh-Hung “Bobby” Nguyen
CR No. 17-00582-JMS-WRP
Conspiracy to Commit Offenses Against the United States – Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison, $250,000 fine
Obstruction of Official Proceeding – Title 18, U.S.C., Section 1512(c) (three counts)
Maximum penalty: Twenty years in prison, $250,000 fine
AGENCY
Federal Bureau of Investigation
Honolulu, Portland, and San Diego Divisions
Former Honolulu Police Officers Sentenced for Framing an Innocent Man with a CrimeRead the Press Release
Special Attorneys Michael Wheat (619) 546-8437, Joseph Orabona (619) 546-7951, Janaki Chopra (619) 546-8817, and Colin McDonald (619) 546-9144
NEWS RELEASE SUMMARY – December 1, 2020
HONOLULU, Hawaii – Two former Honolulu police officers, Derek Wayne Hahn and Minh-Hung “Bobby” Nguyen, were sentenced today for conspiring to obstruct justice by framing an innocent man with a crime he did not commit. Hahn and Nguyen were sentenced to 42 and 54 months in custody, respectively, by Chief U.S. District Judge J. Michael Seabright. Each will also be subject to two years of supervised release following their sentence.
In imposing the sentences, Judge Seabright remarked that the conspiracy was “staggering in its breadth, its scope, and its audacity.” He stated further that “the impact on the community is clear: the conduct of the defendants has shaken the community and its trust in the Honolulu Police Department.”
The sentences imposed today mark the end of one of the largest public corruption cases in Hawaii. In June 2019, after six weeks of trial and one day of deliberation, a federal jury in Honolulu convicted Hahn, Nguyen, and their two co-conspirators, former Honolulu prosecutor Katherine Kealoha and former Honolulu Chief of Police Louis Kealoha, of conspiracy and attempted obstruction of justice pertaining to the false arrest and prosecution of Katherine’s uncle, Gerard Puana. The evidence at trial established that the conspirators used their considerable power, including commandeering the Honolulu Police Department’s elite Criminal Intelligence Unit (CIU), to frame Gerard with stealing the Kealohas’ mailbox. The Kealohas’ motive for framing Gerard was to discredit and intimidate him after he accused Katherine of extensive fraud, of which Gerard and his elderly mother—Katherine’s grandmother—Florence Puana were victims. Hahn and Nguyen were both members of CIU, which acted directly at the behest of Louis.
As Lieutenant of CIU, Hahn—who also had a business relationship with Katherine—played an integral role in the conspiracy to frame, arrest, and prosecute Gerard Puana. As Judge Seabright said at sentencing, Hahn “had his fingerprints all over the efforts the Kealohas were making to frame Gerard Puana for a crime he did not commit.” To accomplish the frame job, Hahn directed 20-30 police officers to conduct 24-hour surveillance of Gerard and initiate unnecessary law enforcement database searches of Gerard, his residence, and vehicle. Hahn also directed a CIU officer to selectively edit the surveillance video of the alleged mailbox “theft,” write false reports about the surveillance video, and destroy the original evidence so that the conspirators’ criminal acts could not be uncovered. Judge Seabright commented that Hahn “wanted to make it look as clean as possible. As sterile as possible. As by the book as possible.”
For his part, Nguyen—who was related by marriage to the Kealohas at the time—manipulated Florence into providing information about Gerard that would later be used to frame him. Nguyen also participated in an illegal search of Gerard’s residence, falsely identified Gerard as the “thief” in the surveillance video of the frame job, generated false police reports about Gerard, and conducted surveillance of Gerard leading to Gerard’s false arrest. Doubling down on all of his criminal actions, Nguyen then repeatedly lied with “ease and arrogance,” as noted by Judge Seabright, to the Honolulu Ethics Commission, federal agents, and the federal grand jury about the conspirators’ scheme and his extensive involvement in it. “Bobby Nguyen was a willing participant in all this. Happy to help. Happy to set up Gerard. Happy to leave this trail of destruction,” Judge Seabright said today.
“These officers shattered the victims’ lives and dishonored the Honolulu Police Department, said U.S. Attorney Robert Brewer. “This community deserved so much better from these officers. Today’s sentences, which bring this chapter to a close, will aid in restoring faith in a system that ultimately delivered justice.” Brewer praised FBI agents and Special Attorneys Michael Wheat, Joseph Orabona, Janaki Chopra, and Colin McDonald for achieving justice in this case after many years of tenacious investigation and skillful litigation.
Yesterday, Katherine Kealoha and Louis Kealoha were sentenced to 13 years and seven years, respectively. At the conclusion of their sentencing hearings, Hahn and Nguyen were ordered to report to prison on April 12, 2021.
DEFENDANTS Case Number: CR 17-00582-JMS-WRP
Derek Wayne Hahn Age: 48 Honolulu, Hawaii
Minh-Hung “Bobby” Nguyen Age: 46 Kaneohe, Hawaii
SUMMARY OF CONVICTIONS
Conspiracy to Commit Offenses Against the United States – Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison, $250,000 fine
Obstruction of Official Proceeding – Title 18, U.S.C., Section 1512(c) (three counts)
Maximum penalty: Twenty years in prison, $250,000 fine
AGENCY
Federal Bureau of Investigation
Honolulu, Portland, and San Diego Divisions
Former Prosecutor and Police Chief Sentenced for Framing Their Relative with a Crime to Conceal Their Own FraudRead the Press Release
Special Attorneys Michael Wheat (619) 546-8437, Joseph Orabona (619) 546-7951, Janaki Chopra (619) 546-8817, and Colin McDonald (619) 546-9144
NEWS RELEASE SUMMARY – November 30, 2020
HONOLULU, Hawaii – Former prosecutor Katherine Kealoha and former police chief Louis Kealoha were sentenced during separate hearings in federal court today to 13 years and seven years in prison, respectively, following a number of convictions, including conspiring to frame a relative with a crime to conceal their own fraud.
Chief U.S. District Judge J. Michael Seabright of the District of Hawaii also ordered the Kealohas to pay $454,984.78 and $237,698.56, respectively, in restitution to their victims, and ordered forfeiture of property representing proceeds of fraud, including the Kealohas’ former home in Honolulu, a Rolex watch, and $228,746.79. Katherine Kealoha is already in custody; Louis Kealoha was ordered to report to prison on April 12, 2021.
Judge Seabright rebuked the Kealohas for their “grotesque deprivation of civil rights,” which “staggered the community in many ways” and had “truly shaken confidence in our governing institutions.” He further remarked that “the Kealohas used their power to nurture, feed, and conceal their corrupt activity.”
The sentences imposed today mark the end of a series of criminal cases against the Kealohas. In June 2019, after six weeks of trial and one day of deliberation, a federal jury in Honolulu convicted the Honolulu power couple and Honolulu police officers Derek Hahn and Minh-Hung “Bobby” Nguyen of conspiracy and attempted obstruction of justice pertaining to the false arrest and prosecution of Katherine’s uncle, Gerard Puana. The evidence at trial established that the Kealohas used their considerable power, including commandeering the Honolulu Police Department’s elite Criminal Intelligence Unit, to frame Gerard with stealing their mailbox. To accomplish this, the conspirators prepped the mailbox to be “stolen,” selectively edited grainy surveillance video to conceal their preparatory acts, falsely identified Gerard as the culprit captured by the video, falsified police reports, withheld and destroyed evidence, and repeatedly lied about their activity to investigators, the federal grand jury, and the District Court for the District of Hawaii.
The Kealohas’ motive for framing Gerard was to discredit and intimidate him after he accused Katherine Kealoha of fraud. Trial evidence established that Katherine stole over $200,000 from him and Katherine’s elderly grandmother, Florence Puana. Acting as her grandmother’s “attorney,” Katherine convinced Florence—who was 89 years old at the time—to place a reverse mortgage on Florence’s family home. Katherine promised Florence that she would pay off the reverse mortgage after using some of the proceeds to consolidate the Kealohas’ debt. Instead, unbeknownst to Florence, Katherine funneled the reverse mortgage proceeds into a bank account that Katherine controlled. And within seven months, the Kealohas drained the account dry—spending over $148,000 on various personal expenses, including mortgage payments, Elton John concert tickets, Mercedes and Maserati car payments, a trip to Disneyland, and a $23,976 brunch tab at the Sheraton Waikiki to celebrate Louis Kealoha’s induction as Honolulu Police Chief in 2009. In the meantime, Katherine made no payments on the reverse mortgage, allowed the balance to balloon out of control, and diverted mortgage statements away from Florence’s mailbox to keep Florence from finding out. Once Florence did find out—almost a year and a half later—she was forced to sell her family home.
After they learned of the missing money and ballooning mortgage, Florence and Gerard confronted Katherine Kealoha about her actions. Katherine responded indignantly, threatening in a letter to seek “the highest form of legal retribution against ANYONE and EVERYONE who has written or verbally uttered those LIES about me!” True to her word, after Florence and Gerard filed a civil lawsuit against her, Katherine attempted to have Florence declared legally incompetent, and Katherine and her co-conspirators had Gerard arrested for a crime he did not commit. At Gerard’s theft trial, Louis Kealoha testified falsely that Gerard was the person displayed taking the mailbox in the grainy surveillance video. “That’s what makes this case so shocking: this could not have succeeded but for you and your position,” Judge Seabright told Louis Kealoha.
“Today, after years of manipulating the levers of justice to shroud their own crimes, justice was delivered to two corrupt public officials,” said U.S. Attorney Robert Brewer. “This was a flagrant and stunning abuse of power that victimized an entire community by undermining public confidence in its leaders and the rule of law. If not for the initial dogged investigation by former First Assistant Federal Defender Alexander Silvert, who brought this matter to the attention of federal authorities, followed by incredible work by FBI agents and prosecutors Michael Wheat, Joseph Orabona, Janaki Chopra and Colin McDonald, the Kealohas would still be manipulating justice, not meeting it.”
“Our citizens entrust public servants with great powers and authorities. It is our responsibility to serve our community with integrity and authenticity – with truth and justice as our hallmark,” said Special Agent in Charge Eli S. Miranda. “The Kealohas betrayed this trust for their own selfish entitlements, using deception and breaking the same laws they swore to uphold. The FBI will enthusiastically continue to investigate any corrupt public official who willfully and maliciously abuse their office.”
Today’s sentences also accounted for separate crimes committed by the Kealohas. In October 2019, Katherine pleaded guilty to misprision of a felony after using her position of authority within the city prosecutor’s office to actively conceal the drug distribution activities of her brother, Rudolph B. Puana, an anesthesiologist in Hawaii. In her plea agreement, Katherine admitted she arranged to have herself assigned as the prosecutor overseeing the investigation of her brother’s co-conspirators and that she cultivated a close relationship with one co-conspirator—a defendant Katherine was then prosecuting—to reduce the likelihood that the individual would reveal Rudolph Puana’s role in the drug conspiracy. “I always got ur back, I love you and will protect you always!!!” read one private text message Katherine sent to the defendant she was prosecuting. “GO TEAM!!! Can’t wait for this s*** to be over,” read another, to which the defendant replied, “Ditto[.] Then we’re free[.]”
Finally, in October 2019, the Kealohas pleaded guilty to bank fraud. As part of their pleas, the Kealohas admitted that between January 1, 2009 and December 31, 2014, they spent more than $591,000 derived from stolen funds or loan proceeds obtained through fraud. Their bank fraud scheme included falsely claiming assets that belonged to others (including money belonging to children over whom Katherine had been appointed guardian), falsely inflating their monthly income, and falsely denying derogatory information on their credit. To legitimize their denial of poor credit, the Kealohas submitted a forged police report in loan applications that purported to document Katherine’s false claims of identity theft. The act of forging the police officer’s signature on the report was itself identity theft, for which Katherine pleaded guilty. Katherine further admitted using an alias “Alison Lee Wong” to facilitate the bank fraud. This alias also played a role in Gerard Puana’s claims of fraud. As evidence at trial established, in 2009, Katherine used the “Wong” alias to notarize and create a fraudulent trust in Gerard’s name. And in 2008, under the customer name “Kathryn Aloha,” Katherine ordered a notary seal for “Alison Lee Wong” from the American Association of Notaries and had it mailed to the State of Hawaii’s Office of Environmental Quality Control, where Katherine served as Director. As Judge Seabright stated today, Katherine “perverted justice over and over and over and over again.”
The Kealohas’ co-conspirators, Derek Wayne Hahn and Bobby Nguyen, are scheduled to be sentenced on December 1, 2020 for their involvement in framing Gerard Puana. Katherine Kealoha’s brother, Rudolph B. Puana, is currently facing drug distribution and firearm charges, and is scheduled for trial in April 2021.
DEFENDANTS
Katherine P. Kealoha Age: 50 Honolulu, Hawaii
Louis M. Kealoha Age: 60 Honolulu, Hawaii
SUMMARY OF CONVICTIONS
Katherine Kealoha
CR No. 17-00582-JMS-WRP
Conspiracy to Commit Offenses Against the United States – Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison, $250,000 fine
Obstruction of Official Proceeding – Title 18, U.S.C., Section 1512(c) (three counts)
Maximum penalty: Twenty years in prison, $250,000 fine
CR No. 18-00068-JMS-WRP
Bank Fraud, in violation of 18 U.S.C. § 1344
Maximum Penalty: Thirty years in prison, $1 million fine
Aggravated Identity Theft, in violation of 18 U.S.C. § 1028A
Maximum Penalty: Mandatory term of imprisonment of two years, to be served consecutive to the sentence imposed for any underlying charge; fine of up to $250,000
CR No. 19-00015 JMS-WRP
Misprision of Felony, in violation of 18 U.S.C. § 4
Maximum Penalty: Three years in prison; fine of up to $250,000;
Louis Kealoha
CR No. 17-00582-JMS-WRP
Conspiracy to Commit Offenses Against the United States – Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison, $250,000 fine
Obstruction of Official Proceeding – Title 18, U.S.C., Section 1512(c) (three counts)
Maximum penalty: Twenty years in prison, $250,000 fine
CR No. 18-00068-JMS-WRP
Bank Fraud, in violation of 18 U.S.C. § 1344
Maximum Penalty: Thirty years in prison, $1 million fine
AGENCY
Federal Bureau of Investigation
Honolulu, Portland, and San Diego Divisions
Agents Seize $3.5 Million in U.S. Currency and Massive Quantities of Cocaine, Fentanyl, and .50 Caliber Ammunition in Otay MesaRead the Press Release
Assistant U.S. Attorney Matthew J. Sutton (619) 546-8941
NEWS RELEASE SUMMARY - November 24, 2020
SAN DIEGO – Three Mexican nationals suspected of trafficking huge quantities of illicit drugs for the Sinaloa Cartel were charged in federal court today in connection with what is believed to be the largest single seizure of cash, narcotics and ammunition in this district.
Jesus Burgos Arias, Juan Alatorre Venegas, and Jose Yee Perez were arrested on November 20, 2020, as a result of a long-term joint investigation by the Drug Enforcement Administration, Homeland Security Investigations, the San Diego Sheriff’s Department, San Diego Police Department, and the U.S. Attorney’s Office for the Southern District of California, targeting associates of the Sinaloa Cartel.
In addition to the arrests, agents seized approximately $3.5 million in bulk U.S. currency, 685 kilograms of cocaine, 24 kilograms of fentanyl, and approximately 20,000 rounds of .50 caliber ammunition and hundreds of body armor vests at a truck yard in Otay Mesa.
The defendants were charged with a drug trafficking conspiracy in a complaint filed in federal court. They will be transferred from the San Diego Central Jail to federal custody and will be scheduled to make their initial appearance before U.S. Magistrate Judge Barbara L. Major this week.
“This historic seizure and prosecution is a clear indication of the success of our joint investigative efforts,” said U.S. Attorney Robert Brewer. “To eradicate this threat to San Diego and our partners in the Republic of Mexico, we will continue to aggressively attack the Sinaloa Cartel’s drug smuggling, money laundering, and arms smuggling operations – depriving them of their illegal merchandise, their profits, and a safe haven.” Brewer praised prosecutor Matthew J. Sutton and the federal and local agents and officers for their excellent work on this case.
“Thanks to the collaborative work with our state and federal law enforcement partners, we are able to announce this blow to the Mexican Cartels operating in San Diego,” said DEA Special Agent in Charge John W. Callery. “We are further encouraged that we were able to separate them from their dangerous .50 caliber ammunition and over $3 million in drug proceeds that they have gained through selling death here in our community and throughout the US.”
“This seizure is significant not just because of its size, but because it demonstrates the direct correlation between narcotics, illicit money, and guns that drives violence in our communities and destroys lives,” said Homeland Security Investigation (HSI) Special Agent in Charge Cardell T. Morant. “HSI will continue to work with our law enforcement partners and prosecutors to aggressively pursue the Sinaloa Cartel and other transnational criminal organizations.”
“The Sheriff's Department is committed in working with our justice partners throughout the region to combat the dangerous drugs and violence associated with narcotic trafficking,” said San Diego County Sheriff Bill Gore. “Sheriff's deputies see the destruction and damage that illegal drugs cause every day. We are proud of what this case has accomplished, and the continued work being done to hold these criminals accountable.”
This case is part of a five-year investigation led by the Southern District of California, that, in total, has resulted in charges against over 125 people and has had a significant impact on the worldwide operations of the Sinaloa Cartel. This investigation has also offered one of the most comprehensive views to date of the inner workings of one of the world’s most prolific, violent and powerful drug cartels. Cartel members and associates were targeted in this massive investigation involving multiple countries, numerous law enforcement agencies around the United States, a number of federal districts and over 250 court-authorized wiretaps in this district alone.
The investigation first began in late 2011 as an investigation of what was at first believed to be a small-scale drug distribution cell in National City and Chula Vista. It became evident that the drugs were being supplied by the Sinaloa Cartel, and the case evolved into a massive multi-national, multi-state probe that resulted in scores of arrests and seizures of 1,397 kilograms of methamphetamine, 2,214 kilograms of cocaine, 17.2 tons of marijuana, 95.84 kilograms of heroin, and $27,892,706 in narcotics proceeds.
This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
The United States is represented in court by Assistant U.S. Attorney Matthew J. Sutton.
The public is reminded that a complaint is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Defendant Information
Defendant Criminal Case No: 20-mj-5099-BLM
Defendant Number
Name
Age
Hometown
1
Jesus Burgos Arias
32
Chula Vista, California
2
Juan Alatorre Venegas
44
Tijuana, Mexico
3
Jose Yee Perez
54
Tijuana, Mexico
Summary Of Charges
Conspiracy to Possess with Intent to Distribute a Controlled Substance, in violation of Title 21 U.S.C. §§ 841(a)(1) and 846. Term of custody including a mandatory minimum 10 years and up to life imprisonment, $10 million fine.
AGENCIES
Drug Enforcement Administration
Homeland Security Investigations
San Diego County Sheriff’s Department
San Diego Police Department
Border Crime Suppression Team
San Diego County District Attorney’s Office
Customs and Border Protection, Office of Field Operations
Customs and Border Protection, Office of Border Patrol
United States Marshals Service
Internal Revenue Service - Criminal Investigation
Department of Justice, Organized Crime Drug Enforcement Task Forces
Department of Justice, Office of Enforcement Operations
Department of Justice, Office of International Affairs
Ponzi Schemer Who Bilked Investors out of Millions of Dollars is Sentenced to more than Six Years in PrisonRead the Press Release
NEWS RELEASE SUMMARY – November 20, 2020
SAN DIEGO – Jonny Ngo, the former president and chief executive officer of NL Technology, LLC, was sentenced in federal court today to 75 months in prison for operating a $65 million Ponzi scheme that caused investors to lose over $20 million. He was also ordered to pay $20,292,490.60 in restitution to the victims of his fraud.
According to court filings, Ngo induced his victims to invest funds in various short-term investment contracts by making false representations, including that: (a) Investor money would be used to fund wholesale purchase orders of smartphone screens and other electronic goods; (b) NL Technology was a regular supplier of smartphone screens to a number of buyers, including two buyers who each ordered approximately $2 million of product from NL Technology; (c) All wholesale orders funded by investor money was pre-purchased by NL Technology clients; and (d) The quality of the products and safety of investor funds used to purchase the products were guaranteed by a third-party escrow company.
In his plea agreement, Ngo admitted he created counterfeit invoices falsely indicating that NL Technology had substantial purchase orders from alleged wholesale companies. Ngo also provided false financial statements purportedly certified by an accountant showing NL Technology earned income from its wholesale business totaling $12.5 million in 2015 and $15.4 million in 2016. Moreover, Ngo admitted he fabricated bank statements or screenshots from bank statements held in the name of NL Technology with individual line items altered to appear as legitimate wholesale business transactions. Lastly, Ngo created false checks from wholesale companies allegedly doing business with NL Technology.
According to court documents, Ngo told investors that they could roll over their investments into future investment contracts with NL Technology, when in fact no such future investments were possible. Also, Ngo lulled investors about the continued viability of NL Technology through materially false representations, including that NL Technology had an outstanding purchase order from a smartphone repair company for approximately $300,000, when in fact, no such order existed.
Instead of investing the funds in the business, Ngo admitted that he converted investor funds to his own personal use and benefit by spending the money on a home, luxury cars and gambling. As a result of his investment fraud, Ngo caused more than $20 million in losses to investors in his Ponzi scheme.
During today’s sentencing hearing, U.S. District Judge Jeffrey T. Miller said that Ngo was “motivated by greed” to perpetrate a fraud that “was no mere mistake. This was calculated, broad in nature, deep in planning, and deadly in execution.” Judge Miller further noted that the victims “suffered a substantial loss and have had financial ruin, dreams dashed, fruits of a lifetime of labor dissipated, emotional distress, shame, shock, embarrassment, and emotional damage to last a lifetime.”
“Defendant Ngo preyed on his victims, cheated many of them out of their life savings, and caused a devastating impact on their personal and financial health,” said U.S. Attorney Robert Brewer. “Defendant Ngo destroyed the finances of many innocent and hardworking people. Today’s sentence sends a clear message to financial predators: The United States Attorney’s Office and our federal law enforcement partners will work tirelessly and relentlessly to unravel your fraud and bring you to justice.” Brewer praised prosecutor Joseph Orabona and agents with the Federal Bureau of Investigation and United States Postal Inspection Service for their outstanding work on this case.
FBI Special Agent in Charge Suzanne Turner said, “Ngo swindled and conned innocent investors out of their hard-earned money to support his lavish lifestyle. The false representations about wholesale purchase orders worth millions and supporting phony business records were all lies. Ngo's actions serve as an example of the unconscionable greed that fuels these all too common fraud cases. The FBI is committed to investigating those who prey upon trusting individuals for their own personal gain. We ask anyone who has information related to investor fraud submit a tip at https://tips.fbi.gov/.”
“Today’s sentencing sends a clear message to scammers who prey upon the public,” stated Postal Inspector in Charge Melisa Llosa. “The Postal Inspection Service has zero tolerance for those who use the nation’s mail system to commit fraud. Postal Inspectors will aggressively investigate these cases with our law enforcement partners to bring the scammers to justice.”
DEFENDANT Case Number: 19CR1391-JM
Jonny Ngo Age: 34 San Diego, CA
SUMMARY OF THE CHARGE
Title 18, United States Code, Section 1341 – Mail Fraud
Maximum Penalties: Twenty years in prison, $250,000 fine, three years of supervised release
AGENCIES
Federal Bureau of Investigation
United States Postal Inspection Service
Sinaloa Cartel Drug Trafficker Extradited from ItalyRead the Press Release
NEWS RELEASE SUMMARY – November 19, 2020
SAN DIEGO – Ramon Santoyo-Cristobal, aka Dr. Wagner, a former Mexican Federal Police officer and alleged Sinaloa Cartel drug trafficker, was extradited to the United States from Italy yesterday.
On August 19, 2016, a federal grand jury sitting in the Southern District of California returned an indictment charging Santoyo-Cristobal with participating in a long-running worldwide conspiracy to traffic substantial quantities of methamphetamine, cocaine, and heroin from Mexico into the United States, as well as laundering millions of dollars in drug proceeds.
A fugitive for almost three years, Santoyo-Cristobal was apprehended by Italian authorities in August 2019 while visiting Rome. Santoyo-Cristobal contested extradition in the Italian courts, but in July 2020, the Supreme Court of Cassation rejected his arguments, and the following month the Ministry of Justice authorized his extradition to the United States. He arrived in San Diego on November 18, 2020, and made his initial appearance today before U.S. Magistrate Judge Andrew Schopler. He is scheduled for a detention hearing before Judge Schopler on November 24, 2020 at 10:30 a.m.
“This extradition ruling by the Italian courts demonstrates that those who violate U.S. laws and seek to evade justice will find no place to hide,” said U.S. Attorney Robert Brewer. “The Department of Justice appreciates the cooperation of the Italian authorities in this matter. With the assistance of our law enforcement colleagues at home and around the world, we will aggressively pursue every avenue available in bringing drug traffickers to justice.” Brewer praised prosecutor Matthew J. Sutton and DEA agents for their excellent work on this case.
“DEA and our law enforcement partners will continue to use all available resources to bring drug traffickers to justice,” said DEA Special Agent in Charge John W. Callery. “This extradition should serve as a warning to other members of the Sinaloa Cartel: we will find you no matter where in the world you try to hide and we will bring you back to the United States for prosecution.”
The U.S. Attorney’s Office for the Southern District of California and the Drug Enforcement Administration led the United States’ extradition effort. The Justice Department extends its gratitude to the Italian Ministry of Justice, and prosecutorial and law enforcement authorities for making the extradition possible. The Criminal Division’s Office of International Affairs provided significant assistance in securing the defendant’s extradition from Italy. The U.S. Marshals Service assisted in bringing the defendant back to the United States.
This case is part of a five-year investigation led by the Southern District of California, that, in total, has resulted in charges against over 125 people and has had a significant impact on the worldwide operations of the Sinaloa Cartel. This investigation has also offered one of the most comprehensive views to date of the inner workings of one of the world’s most prolific, violent and powerful drug cartels. Cartel members and associates were targeted in this massive investigation involving multiple countries, numerous law enforcement agencies around the United States, a number of federal districts and over 250 court-authorized wiretaps in this district alone.
This prosecution is also part of an Organized Crime Drug Enforcement Task Forces (OCDETF) Strike Force Initiative, which provides for the establishment of permanent multi-agency task force teams that work side-by-side in the same location. This co-located model enables agents from different agencies to collaborate on intelligence-driven, multi-jurisdictional operations to disrupt and dismantle the most significant drug traffickers, money launderers, gangs, and transnational criminal organizations.
The United States is represented in court by Assistant U.S. Attorney Matthew J. Sutton.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Defendant Information
Defendant Number: 4 Criminal Case No: 16-cr-1896-DMS
Name: Ramon Santoyo-Cristobal, aka Dr. Wagner
Age: 44
Hometown: Mexico City, Mexico
Summary Of Charges
Conspiracy to Distribute Controlled Substances for Purpose of Unlawful Importation, in violation of Title 21 U.S.C. §§ 959, 960 and 963. Term of custody including a mandatory minimum 10 years and up to life imprisonment, $10 million fine.
Conspiracy to Import Controlled Substances, in violation of Title 21 U.S.C. §§ 952, 960 and 963. Term of custody including a mandatory minimum 10 years and up to life imprisonment, $10 million fine.
Conspiracy to Launder Monetary Instruments, in violation of Title 18 U.S.C. 1956(h). Term of custody up to 20 years in prison, a fine of $500,000 or twice the value of the monetary instrument or funds involved.
AGENCIES
Drug Enforcement Administration
Customs and Border Protection, Office of Field Operations Customs and Border Protection, Office of Border Patrol United States Marshals Service
Internal Revenue Service
Department of Justice, Organized Crime Drug Enforcement Task Forces Department of Justice, Office of Enforcement Operations
Department of Justice, Office of International Affairs
Federal Jury Convicts Man for Pointing Laser at San Diego Police HelicopterRead the Press Release
Assistant U. S. Attorneys John Parmley (619) 546-7957 and Jonathan Shapiro (619) 546-8225
NEWS RELEASE SUMMARY – November 19, 2020
SAN DIEGO – Rudy Alvarez of Lemon Grove was convicted by a federal jury late yesterday for knowingly aiming the beam of a laser pointer at a San Diego Police helicopter as the aircraft flew over a protest in the wake of George Floyd’s death in Minneapolis.
After a two-day trial, the jury deliberated for 2.5 hours before rendering its verdict. Alvarez is scheduled to be sentenced on February 22 at 9 a.m. before Chief U.S. District Judge Larry Burns.
“This is a very important verdict,” said U.S. Attorney Robert Brewer. “This kind of crime could have a disastrous impact if a pilot’s sight is compromised. We support the Constitutional rights of free speech and assembly, but the rule of law must be respected. It’s there for a reason – to protect the public and law enforcement from danger.” Brewer praised prosecutors John Parmley and Jonathan Shapiro as well as San Diego police officers and detectives and agents from the FBI for their diligence in seeking justice.
“The guilty verdict returned in this case is a reminder that using a laser pointer as a weapon against aircraft is a federal crime and offenders will face justice,” said FBI Special Agent in Charge Suzanne Turner. “The FBI will continue to protect the public and pilots from the dangerous actions of those intentionally using lasers pointers to cause harm.”
The incident occurred at a large demonstration that passed through the area of 500 University Avenue in San Diego on June 4 at 8:30 p.m. Two officers from the San Diego Police Department’s Air Support Unit were monitoring the crowd in a marked San Diego Police Department helicopter. The officers reported that one of the demonstrators in the crowd was shining a laser at their aircraft that threatened their ability to safely operate the helicopter.
The San Diego police officers were able to locate the man who pointed the laser at the helicopter multiple times over the course of an hour as he marched with the protestors in downtown San Diego.
DEFENDANT Case Number 20cr1809
Rudy Alvarez Age: 25 Lemon Grove
SUMMARY OF CHARGES
Aiming a Laser Pointer at an Aircraft – Title 18, United States Code, Section 39A
Maximum penalty: Five years in prison, $250,000 fine
AGENCIES
San Diego Police Department
Federal Bureau of Investigation
Attorney General William P. Barr Honors Department of Justice Employees and Others for the 68th Annual Attorney General’s Awards; Two San Diego Prosecutors Receive RecognitionRead the Press Release
Assistant U. S. Attorney Cindy Cipriani (619) 546-9408
NEWS RELEASE SUMMARY – November 13, 2020
SAN DIEGO – Attorney General William P. Barr has announced the recipients for the 68th Annual Attorney General’s Awards, recognizing Department of Justice employees and partners for extraordinary contributions to the enforcement of our nation’s laws.
Of the 267 recipients, 240 DOJ employees received awards while 27 non-department individuals are also being honored for their work. This year, due to coronavirus restrictions, Attorney General Barr is honoring recipients virtually.
“I am honored to recognize the recipients of this year’s Attorney General’s Awards, whose tireless work and steadfast dedication have proven critical to enforcing the rule of law and protecting all Americans,” said Attorney General William P. Barr. “Those honored have demonstrated exceptional efforts and made tremendous personal sacrifices throughout their time working at the Department of Justice, and for that, I am truly thankful.”
In San Diego, David Leshner and Todd W. Robinson were awarded the John Marshall Award in the Trial of Litigation category. The John Marshall Awards are the highest DOJ awards offered to attorneys, recognizing extraordinary contributions and excellence in specialized areas of legal performance. Thirteen awards in nine categories are being presented this year.
Leshner and Robinson were recognized for successfully trying and convicting multiple defendants who murdered U.S. Border Patrol Agent Brian Terry. Over a 10-year period, Leshner and Robinson doggedly and successfully sought justice for the family of Agent Terry, who was murdered in 2010 by an armed group of illegal alien bandits. Due to the staggered extradition of the defendants responsible for the murder of Agent Terry, Leshner and Robinson successfully conducted two lengthy and high-stakes trials, obtaining convictions and life sentences for those responsible for Agent Terry’s death.
“These are two of the finest lawyers in our district, a fact that is demonstrated by their high level leadership positions in this office,” said U.S. Attorney Robert Brewer. “David Leshner currently serves as our Criminal Division Chief, and Todd Robinson was a highly regarded Senior Litigation Counsel before the Senate confirmed him as a U.S. District Court judge on September 16, 2020. Their work on this case exemplifies the best of what DOJ stands for: honor, integrity, professionalism, skill and the wholehearted dedication to seeking justice for a fallen law enforcement officer.”
For a list of all recipients, please see https://www.justice.gov/opa/pr/attorney-general-william-p-barr-honors-department-justice-employees-and-others-68th-annual.