Southern District of California
Press releases recorded for this federal judicial district.
Defendant Sentenced to 100 Months in Federal Prison for Smuggling MethamphetamineRead the Press Release
NEWS RELEASE SUMMARY – September 1, 2020
SAN DIEGO – Oscar Luna-Aquino was sentenced in federal court yesterday to 100 months in prison for importing methamphetamine into the United States. A jury found Luna-Aquino guilty after a two-day trial in February 2020.
At trial, the Government’s evidence established that Luna-Aquino drove a car into the United States at the San Ysidro, California, Port of Entry on October 16, 2019. An inspection of the vehicle revealed 95 pounds of 99% pure methamphetamine concealed under the windshield and in the front fenders, rear quarter panels, and spare tire. The wholesale value of the methamphetamine was at least $80,000. The Government also presented evidence from Luna-Aquino’s cell phone showing that he not only knew of the drugs in his car on October 16, but also that he had successfully smuggled narcotics into the United States on three prior occasions
When handing down the sentence, U.S. District Court Judge Larry A. Burns emphasized the large amount of methamphetamine, the prior smuggling incidents, and the danger of methamphetamine and the personal destruction the drug causes.
“The extremely potent meth smuggled from Mexico contributes to more deaths in San Diego County than opioids. And many deaths result from poly-drug use, most of which involve meth as a significant aggravating factor,” said U.S. Attorney Robert Brewer. “The sentence set forth today recognizes the severe harm meth inflicts on our community.” U.S. Attorney Brewer commended Assistant U.S. Attorneys Eric Olah and Seth Askins, as well as Homeland Security Investigations and Customs & Border Protection for their work on this case.
DEFENDANT Criminal Case No. 3:20-CR-439-LAB
Oscar Luna-Aquino Age: 34 Residence: Mexico
SUMMARY OF CHARGE
21 U.S.C. §§ 952/960
Maximum Penalties: life imprisonment; $10,000,000 fine.
INVESTIGATING AGENCIES
Homeland Security Investigations
Customs and Border Protection
U.S. DOJ’s Office on Violence Against Women Awards Center for Community Solutions $800,000 to Assist San Diego Domestic Violence VictimsRead the Press Release
NEWS RELEASE SUMMARY – August 31, 2020
SAN DIEGO – U.S. Attorney Robert Brewer announced today that the U.S. Department of Justice Office on Violence Against Women (OVW) has awarded $800,000 in grant funding to the Center for Community Solutions (CCS), which has three San Diego locations (in Mission Bay, Escondido and El Cajon) that provide legal services to survivors of sexual assault, stalking, domestic violence and dating violence.
“Addressing the many needs of women who are threatened by or subjected to violence is a top priority for the Department of Justice,” said U.S. Attorney Robert Brewer. “This award will help to ensure that all victims are able to access the assistance and support they need to seek the recourse and protection afforded by our legal system.”
The Legal Assistance for Victims Grant (LAV) Program, which is authorized by 34 U.S.C. § 20121, is designed to increase the availability of civil and criminal legal assistance programs for adult and youth victims of domestic violence, dating violence, sexual assault, and stalking who are seeking relief in legal matters relating to or arising out of that abuse or violence, at minimum or no cost to the victims. Eligible applicants are private nonprofit entities, Indian tribal governments and tribal organizations, territorial organizations, and publicly funded organizations not acting in a governmental capacity, such as law schools.
The $800,000 award to CCS will fund provision of comprehensive bilingual legal services to survivors of sexual assault, stalking, domestic violence, and dating violence. Funding from this award will enable the collaborative to support additional attorneys, provide legal assistance in nine areas of law, and serve additional clients. Founded in 1969, CCS served more than 17,000 adults and children last year to heal and prevent relationship and sexual violence. CCS operates the only rape crisis center in the city of San Diego along with a countywide 24-hour bilingual crisis helpline. The nonprofit agency also provides emergency domestic violence shelters, hospital and court accompaniment, as well as legal and counseling services for those affected by domestic violence, sexual assault and stalking. Individuals in need of help can reach CCS through its 24-hour, confidential hotline: 1-888-385-4657. In addition to providing services, CCS collaborates with community partners to offer prevention programs that promote healthy relationships and peaceful communities.
OVW currently administers 19 grant programs authorized by the Violence Against Women Act (VAWA) of 1994 and subsequent legislation. These grant programs are designed to develop the nation’s capacity to reduce domestic violence, dating violence, sexual assault, and stalking by strengthening services to victims and holding offenders accountable.
San Diego Man Sentenced to more than 11 years in Federal Prison for Child Pornography OffensesRead the Press Release
RELEASE SUMMARY – August 28, 2020
SAN DIEGO - Christopher Duane Wade was sentenced in federal court today to more than 11 years in federal prison for distribution of child pornography. Wade first came to the attention of law enforcement in April of 2019, when he communicated with an undercover agent from Homeland Security Investigations (HSI), posing as a 13-year-old girl on an encrypted chat application. After more than a week of sexually explicit chats with the apparent 13-year-old girl, Wade arranged a meeting. When Wade showed up for the meeting, he was met by HSI special agents. Agents seized Wade’s cellular phone and found it contained child pornography, including depictions of the abuse of very young children. Wade’s cell phone also contained chat discussions between Wade and other individuals, where Wade sent others files of child pornography.
In the sentencing proceedings, the Government argued that Wade, who pled guilty to child pornography charges, engaged in egregious conduct that distinguished him from other child pornography offenders. The prosecutor pointed to conversations located on Wade’s cell phone that encouraged others to sexually abuse minors to whom they had access, and to document such abuse for purposes of distributing it to others. Wade had also engaged in sexually explicit chats with two other undercover agents posing as minors prior to his arrest.
Following his release from federal prison, the Court imposed a 10-year term of supervised release, during which time Wade will be required to comply with special conditions, including conditions prohibiting him from having contact with minors.
“One of our most important roles as prosecutors is to protect our nation’s vulnerable children,” said U.S. Attorney Robert Brewer. “In addition to personally engaging in despicable conduct, this defendant worked to recruit others to follow in his footsteps. The sentence set forth today makes our community safer and recognizes the severe harm child pornography inflicts on its victims.” U.S. Attorney Brewer commended Assistant U.S. Attorney Janet Cabral and the agents at Homeland Security Investigations for their work on this case.
This case is the result of the ongoing efforts of the Violent Crime and Human Trafficking (VCHT) Section of the U.S. Attorney’s Office. 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 Childhood, Project Safe Neighborhoods, and Human Trafficking.
DEFENDANT Criminal Case No. 19cr2285-DMS
Christopher Duane Wade Age: 41 San Diego, CA
SUMMARY OF CHARGE
Title 18, United States Code, Section 2252(a)(2), Distribution of Images of Minors Engaged in Sexually Explicit Conduct
Maximum penalties: 5-20 years in prison
INVESTIGATING AGENCIES
Homeland Security Investigations
Men Admit to Smuggling Disaster that Resulted in Tragic Deaths of Three SistersRead the Press Release
Assistant U. S. Attorney Charlotte E. Kaiser (619) 546-7282
NEWS RELEASE SUMMARY – August 25, 2020
SAN DIEGO – Two brothers from Chihuahua, Mexico, pleaded guilty in federal court today, admitting that they smuggled three sisters across the U.S.-Mexico border in an ill-fated trek across treacherous terrain that resulted in the tragic deaths of the young women. One of the victims was the mother of a young child.
Cecilio and Ricardo Rios-Quinones pleaded guilty to Transportation of Aliens Resulting in Death, Bringing in Aliens for Financial Gain and Conspiracy. The brothers are scheduled to be sentenced on November 13, 2020 at 9 a.m. before U.S. District Judge Cathy Ann Bencivengo. The defendants also agreed to provide restitution to the sisters’ families.
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 - Juana Santos Arce, Margarita Santos Arce and Paula Santos Arce of Oaxaca, Mexico - through a remote, mountainous region during a snow storm. The youngest sister was the mother of a young child.
According to the plea agreements, the defendants guided the three sisters - ages 35, 32 and 29 respectively - 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 the plea agreements, 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 undocumented aliens who were lost and experiencing hypothermia. BORSTAR agents initially encountered the two defendants in the snow in an area approximately 20.5 miles east of the Tecate, California port of entry and approximately 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 near a large boulder on a ridge.
Two of the women were already dead; one was responsive but suffering severely from hypothermia. She later died despite gallant efforts of members of BORSTAR, Border Patrol Agents from the Campo/Boulevard area and ASTREA, the aviation unit from the San Diego Sheriff’s Department, who placed their own lives at risk while trying to keep the distressed woman alive as temperatures dropped and winds accelerated. Autopsies confirmed the three sisters died due to environmental hypothermia.
“These three young women lost their lives in horrible circumstances, despite the heroic efforts of many who tried to save them,” said U.S. Attorney Robert Brewer. “This is a tragedy that never should have happened. Unfortunately, migrant deaths are not uncommon because selfish smugglers don’t hesitate to place vulnerable victims in grave danger to make money. We will deliver justice to these callous smugglers who value their pay day over human lives.” Brewer commended the hard work of prosecutor Charlotte Kaiser and federal agents from Homeland Security Investigations to achieve justice in this case, and the heroism of many Border Patrol agents and Sheriff’s deputies in this heartbreaking case.
“Human smugglers are driven by greed, prey on the desperate, and demonstrate a blatant disregard for human life, as demonstrated by this senseless tragedy,” said Homeland Security Investigations (HSI) Special Agent in Charge Cardell T. Morant. “HSI and our partners remain committed to pursuing and convicting the criminal networks that exploit migrants for profit and undermine our nation’s immigration laws.”
“Justice has been served with these guilty pleas. Unfortunately, the families of those lost in this tragedy will never be whole. These young woman suffered and died at the hands of smugglers who never saw them as people, but only as commodities that could be exploited,” said San Diego Sector Chief Patrol Agent Aaron Heitke. “Border Patrol agents frequently risk their own lives to save others. The actions exhibited in this event represent the highest values of the Border Patrol.”
DEFENDANT Case Number 20cr0868-CAB
Cecilio Rios-Quinones Age: 37 Chihuahua, Mexico
Ricardo Rios-Quinones Age: 22 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 in prison, 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
Margaret Hunter Sentenced to Eight Month’s Punitive Home Detention; Judge Recognizes her Substantial Assistance in Obtaining Husband’s Guilty PleaRead the Press Release
Assistant U.S. Attorneys Emily W. Allen (619) 546-9738; W. Mark Conover (619) 546-6763; and Phillip L.B. Halpern (619) 546-6964
NEWS RELEASE SUMMARY – August 24, 2020
SAN DIEGO – Because of her quick admission of guilt and her substantial assistance in the corruption case against her husband, Margaret E. Hunter was sentenced in federal court today to eight months of punitive home detention to be served as part of three years of probation.
The sentencing of Hunter, wife of former Congressman Duncan D. Hunter, concludes the long-running scandal in which the couple used almost $250,000 in campaign funds as their personal bank account and spent lavishly for items as inconsequential as fast food, movie tickets and sneakers; as trivial as video games, Lego sets and Playdoh; as mundane as groceries, dog food, and utilities; and as self-indulgent as luxury hotels, overseas vacations, and plane tickets for themselves, their family members, and their pet rabbits, Eggburt and Cadbury.
U.S. District Judge Thomas Whelan noted Margaret Hunter’s “remarkable cooperation” in handing down the unusual sentence. For the home detention portion of the sentence, he restricted all movement outside the home except for employment, education, religious services, mental health and substance abuse counseling, and court proceedings. He banned her from seeking employment with fiduciary responsibility.
“Margaret Hunter promptly accepted responsibility for her role in this campaign finance fraud,” said Assistant U.S. Attorney David Leshner, chief of the Criminal Division at the U.S. Attorney’s Office. “Her sentence reflects her lesser culpability relative to her husband, the important part she played in securing her husband’s guilty plea, and her role in reinforcing the bedrock principle underlying our democracy that the politicians who write our laws do not stand above them.” Leshner praised prosecutors Phil Halpern, Emily Allen and Mark Conover as well as the Federal Bureau of Investigation for their tireless pursuit of justice in this case.
“Public corruption is a mission priority for the FBI,” said Omer Meisel, Acting Special Agent in Charge of the FBI San Diego Field Office. “We are dedicated to focusing our efforts, resources and expertise to these complex and sensitive investigations because public officials who use their position for private gain undermine the integrity of government and erode the public’s trust in the very framework of our democracy. Today's sentencing marks the end of a four-year FBI investigation which resulted in felony convictions of former Congressman Duncan Hunter and his wife, Margaret Hunter, for lying and stealing from Hunters’ constituents and undermining the public's trust.”
In recommending punitive home detention, federal prosecutors contrasted Margaret Hunter’s case with that of her husband – who received an 11-month custodial sentence. They noted that rather than admit guilt and resign his seat in April 2016 when his conduct was originally questioned, Duncan Hunter initially sought to deny the misconduct, and then to blame his wife for his own misdeeds. After the latter tactic garnered almost universal condemnation, Duncan Hunter then began his relentless and unceasing attacks on the justice system in general, and the Department of Justice and the FBI in particular.
By contrast, government prosecutors noted that Margaret Hunter admitted her guilt early, quickly entered a guilty plea, and cooperated with the United States in its investigation into her husband’s criminal conduct. According to the government’s sentencing memo, in doing so, she “did much to establish that the rule of law triumphed over dangerous tropes that the Department of Justice was falsely targeting political figures.”
The sentencing recommendation also accounted for the fact that Margaret Hunter’s substantial cooperation came at a great cost to herself and her family. The prosecution observed that her decision to cooperate against her husband (the father of her three children) was a wrenching and difficult one, which effectively pitted herself against the rest of the extended Hunter family. The personal cost of this decision resulted in severe psychological and emotional consequences, including a fractured marriage, intense public scrutiny, and the arduous of task of rebuilding her life as a single mother in a hostile family environment.
Finally, the United States remarked in its sentencing memo that the individual most responsible for the instant offense was undeniably Duncan Hunter. Although Margaret Hunter admitted that she played an active and very substantial role in the theft of campaign funds, she did so only with the concurrence, encouragement, and support of the then-Congressman. Apart from Duncan Hunter’s own theft of campaign funds, it remains uncontested that—time and time again, over many years—he placed his wife in a position to steal campaign funds with full knowledge that she would use those funds to support a lifestyle that their family otherwise could not afford. As early as December 2009, he directed his campaign treasurer to get his wife a campaign credit card, even though at the time she had absolutely no official role with the campaign. And, after receiving multiple warnings from multiple sources that his wife was stealing campaign funds, Hunter allowed her illegal conduct to escalate.
DEFENDANT Case Number 18cr3677-W
Margaret E. Hunter Age: 45 La Mesa, CA
SUMMARY OF CHARGE
Conspiracy to Steal Campaign Funds – Title 18, U.S.C., Sec. 371
Maximum Penalty: Five years in prison and $250,000 fine
AGENCY
Federal Bureau of Investigation
Former Navy Warehouse Manager Who Stole $2.5 Million Worth of Goods from the U.S. Navy Sentenced to Two YearsRead the Press Release
Assistant U. S. Attorney Michelle L. Wasserman (619) 546-8431
NEWS RELEASE SUMMARY – August 24, 2020
SAN DIEGO – Herbert Gutierrez, former warehouse manager at the U.S. Navy Military Sealift Command Warehouse in San Diego and 20-year veteran of the U.S. Navy, was sentenced in federal court today to 24 months in custody for stealing more than $2.5 million worth of goods from the Navy warehouse where he worked. Gutierrez was also ordered to forfeit $57,656.69 and pay $2,536,293.63 in restitution to the United States Navy.
Sentencing documents reflect that Gutierrez began stealing from the warehouse for his own personal gain a few months after he started working there. For approximately nine months, between July 2018 and April 2019, Gutierrez advertised items from the warehouse for sale online, including through such websites as eBay, and then allowed private individuals into the MSC warehouse yard during work hours and after hours to take the government property, load it onto trucks, and haul it away.
In February 2019, Gutierrez permitted a utility truck and a tractor-trailer to enter the MSC warehouse after hours and drive away with more than $1 million in stolen copper nickel tubing.
That same month, Gutierrez sold numerous Caterpillar parts from the warehouse to a company he found online. Once again, Gutierrez allowed a private freight company to enter the MSC warehouse yard and load the items, which filled four pallets. He created fraudulent government paperwork to conceal his criminal activity.
In April 2019, Gutierrez again allowed two individuals to enter the MSC warehouse in broad daylight, and he loaded up their vehicle with stolen government property, accepting thousands of dollars in cash in exchange. The two men were – unbeknownst to Gutierrez – undercover agents. At the time, Gutierrez told the undercover agents that “I’m looking at volume. I’m not looking at making a million-dollar profit, I’m looking at volume. I’m trying to keep this stuff going, that’s how I get paid.”
Gutierrez was paid for the stolen goods in cash and via PayPal. Gutierrez admitted in his plea agreement that the total aggregate value of the items that he stole from the United States and resold for personal profit was $2,536,293.63.
“This defendant was running a massive and brazen scheme that fleeced the Navy of millions of dollars,” said U.S. Attorney Robert Brewer. “This conduct was outrageous and illegal, and he is now appropriately going to prison for it. The excellent work of prosecutor Michelle Wasserman and NCIS agents brought justice for the Navy and taxpayers.”
“NCIS exposed Mr. Guiterrez's scheme to steal and sell government property,” said NCIS Southwest Field Office Special Agent in Charge Garrett Waugh. “This result highlights how critically important it is for our military personnel and family members to remain vigilant and always report suspected fraud. It also represents an outstanding effort by Special Agents assigned to the NCIS Southwest Field Office to bring a criminal to justice for threatening Navy readiness and wasting taxpayer money.”
DEFENDANT Case Number 19CR4552-W
Herbert Gutierrez Age: 54 San Diego, CA
SUMMARY OF CHARGES
Theft of Government Property – Title 18, U.S.C., Section 641
Maximum penalty: Ten years in prison and $250,000 fine
AGENCY
Naval Criminal Investigative Service
Man Accused of Threatening the San Diego Pride Parade Sentenced to 70 Months for Armed Bank RobberiesRead the Press Release
Assistant U. S. Attorney Mario J. Peia (619) 546-9706
NEWS RELEASE SUMMARY – August 17, 2020
SAN DIEGO – A man who allegedly threatened to “kill all the gays and children” at the San Diego Pride parade was sentenced to 70 months in prison today after pleading guilty to one count of bank robbery and two counts of armed bank robbery.
According to a federal complaint, Andre Lafayette Holmes robbed US Bank on Campo Road in Spring Valley on November 4, 2016; Mission Federal Credit Union in San Diego on June 14, 2018, and California Bank and Trust on Fifth Avenue, also in San Diego, on June 28, 2019. In the first crime he claimed to have a gun; in the second and third robberies he pointed a pistol at tellers, the complaint said.
FBI agents identified Holmes as the armed bank robber in three unsolved cases following threats he made to the San Diego Pride Parade organizers on July 10, 2019. In the first of two late-morning phone calls to pride organizers’ main line, a caller stated: “I think I’m going to have to kill all the gays and the children.” He then repeated, “I’m going to have to kill the f------ and children.” The employee asked, “Sir, what’s your name?” The caller replied: “I don’t like them” and “I hate the f------.” He then hung up. About four minutes later, he called back. “F--- Donald Trump. I hate Hillary. I hate f---. I’m going to shoot up the Pride event.” The male caller repeated the same statement approximately four times.
On July 11, San Diego Police Department investigators identified the phone number as belonging to Holmes. They determined that Holmes drives a 2009 Toyota minivan registered in his name. They located Holmes near Miramar College and conducted a traffic stop. He was in possession of the phone from which the threats were made, the complaint said.
During subsequent searches of Holmes residence and vehicle, investigators discovered evidence of the armed bank robberies, including a gray semi-automatic pistol, a rubber “old man” style mask, a large bag of cash and clothing believed worn by the bank robber, among other things. They also found a Big Gulp 7-Eleven mug consistent with the one used during two of the robberies.
In the first robbery, the complaint alleges that Holmes used a demand note which said: “We have guns! I will personally shoot anyone you alert! Don’t make me jump over the counter and kill innocent people. Big bills only and I’ll calmly leave. Money now!!!!” On the back of the note, it said: “I’m sorry, good man on hard times. Sincerely, Bank Robber.”
In the second robbery at Mission Federal Credit Union, Holmes pulled a semi-automatic pistol from his pocket and pointed it at a teller and demanded money, the complaint said. He then proceeded to demand money from a second teller.
In the third robbery, Holmes again had a light-colored semiautomatic pistol and verbally demanded money.
Holmes is presently charged in the San Diego County Superior Court for the threats made to the San Diego Pride Parade.
“This dangerous defendant was apprehended because of excellent investigation by the FBI and terrific work by prosecutor Mario Peia,” said U.S. Attorney Robert Brewer. “Mr. Holmes terrorized bank employees and put their lives at risk, and for that he goes where he deserves to go- prison.”
“The FBI is committed to investigating, prosecuting, and incarcerating dangerous violent criminals who threaten the safety and security of our community,” said Omer Meisel, Acting Special Agent in Charge of FBI's San Diego Field Office. “Mr. Jones is a dangerous criminal who utilized a firearm in the commission of his crimes and today a violent criminal was brought to justice.”
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 S. Brewer Jr., 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 19cr3018-LAB
Andre Lafayette Holmes Age: 31 San Diego, California
SUMMARY OF CHARGES
Bank Robbery – Title 18, U.S.C., Section 2113(a)
Maximum penalty: Twenty years
Armed Bank Robbery – Title 18, U.S.C., Section 2113(a) & (d)
Maximum penalty: Twenty five years
Brandishing a Firearm in Commission of Crime of Violence – Title 18, U.S.C., Section 924(c)
Maximum penalty: Life in prison; Consecutive mandatory minimum: Seven years
AGENCY
Federal Bureau of Investigation
San Diego Police Department
Suspected International Alien Smuggler Extradited to the United States from RomaniaRead the Press Release
RELEASE SUMMARY – August 17, 2020
SAN DIEGO – Luigi Cristinel Popescu of Cernatesti, Romania, was extradited to the United States over the weekend and made his first appearance in federal court today to face charges that he is the leader of an international alien smuggling network responsible for smuggling thousands of Romanians into the United States.
Popescu was arrested in Bucharest, Romania by Romanian law enforcement officials on August 14, 2020 at the request of the United States and was extradited to the United States on Saturday. At today’s hearing, Popescu was arraigned on a Superseding Indictment and ordered detained as a flight risk, by Magistrate Judge Jill Burkhardt. Popescu’s next court appearance is scheduled for September 23, 2020, before U.S. District Court Judge Cynthia Bashant for motion hearing and trial setting.
Popescu was indicted by a federal grand jury in late 2019. He is charged in a Superseding Indictment with one count of Conspiracy to Bring-in Illegal Aliens for Financial Gain, five counts of Bringing in Aliens for Financial Gain and Aiding and Abetting.
According to the Superseding Indictment, Popescu was the leader of an international alien smuggling organization for almost seven years and has been responsible for smuggling Romanian Nationals into the United States at both its northern and southern borders. Homeland Security agents learned from interviews with Romanian Nationals smuggled by Popescu, both those arrested and those who turned themselves into U.S. Border Patrol, that he facilitated the smuggling of aliens from Romania to the U.S. through Europe, Central America, Mexico and Canada, generally charging $10,000 to $25,000 for individuals and families.
The investigation revealed that Popescu worked with numerous co-conspirators in Romania, Spain, Guatemala and Mexico to facilitate the smuggling arrangements of thousands of Romanians. According to the investigation, Popescu utilized WhatsApp and FaceTime to remain in contact with aliens being smuggled, providing instructions and contacts along the way, including the name and number for smugglers in route to the United States. These co-conspirators would arrange for passage in route to the U.S. border. Popescu would send a picture of the Romanian aliens to co-conspirators and instructed the aliens that smugglers on their route would be waiting for them and would have their picture. Popescu used an ever-changing cadre of associates, guides, stash house operators and drivers to facilitate the organization’s criminal activities. In the final stage of crossing illegal aliens coming through Mexico into the United States, the Popescu network made use of various stash houses near the San Ysidro and Calexico, Ports of Entry.
“Putting your faith, hope and future in the hands of smugglers is extremely dangerous,” said U.S. Attorney Robert Brewer. “My office will aggressively prosecute transnational criminal organizations that smuggle others into the United States for financial gain.” Brewer praised Homeland Security Investigations, the U.S. Border Patrol and prosecutor Timothy D. Coughlin for their excellent work on the case.
“Transnational criminal organizations engaged in human smuggling endanger the security of the United States,” said Homeland Security Investigations (HSI) Special Agent in Charge Cardell T. Morant. “Through close collaboration with our partners from U.S. Customs and Border Protection, the U.S. Attorney’s Office, and the government of Romania, this arrest signifies another victory in our fight to disrupt and dismantle organizations facilitating illegal entry into this country.”
“As a global organization, HSI collaborates with our foreign partners to identify, locate and investigate individuals who seek to exploit U.S. laws,” said HSI Regional Attaché Katie Bay, “We will continue to work to ensure that they face justice both at home and abroad.”
“On behalf of the U.S. Border Patrol, I want to express our appreciation for the countless hours expended by the men and women of law enforcement who were involved in bringing Popescu to justice”, San Diego Sector Border Patrol Chief Patrol Agent Aaron Heitke. “His case is the latest and one of many that has helped us to dismantle and degrade Transnational Criminal Organizations around the world.”
This case is the result of ongoing efforts by Homeland Security Investigations and the United States Border Patrol to target active Transnational Criminal Organizations, such as the Popescu network involved in alien smuggling along the U.S./Mexican border in the Southern District of California.
Homeland Security Investigations (HSI) Special Agent in Charge Cardell T. Morant stated, “Transnational criminal organizations engaged in human smuggling endanger the security of the United States. Through close collaboration with our partners from U.S. Customs and Border Protection, the U.S. Attorney’s Office, and the government of Romania, this arrest signifies another victory in our fight to disrupt and dismantle organizations facilitating illegal entry into this country.”
HSI Calexico Special Agents worked closely with Attaché offices in Mexico, Guatemala, Spain, Austria, and with foreign law enforcement agencies in a concerted effort to disrupt and dismantle the Popescu alien smuggling organization. The U.S. Department of State’s Diplomatic Security Service (DSS) provided substantial assistance during the investigation.
The Justice Department’s Office of International Affairs handled the extradition.
DEFENDANT Case Number 18cr5174-BAS
Luigi Cristinel Popescu Age: 52 Cernatesti, Romania
SUMMARY OF CHARGES
Count 1 – Conspiracy: to Bring-in Illegal Aliens for Financial Gain – Title 8, U.S.C., Section 1324(a) (1)
(A) (i), (a) (1) (A) (v) (I) and (a) (1) (B) (i).
Maximum penalty: Ten years’ imprisonment and $250,000 fine
Counts 2-6 - Bringing in Aliens for Financial Gain: - Title 8, U.S.C., Section 1324(a)(2)(B)(ii) and Title 18, U.S.C., Section 2 - Aiding and Abetting.
Maximum penalty: Each count carries a mandatory minimum term of imprisonment of three (3) years and a maximum of ten (10) years for the first or second violation. Any additional violations carry a mandatory minimum term of imprisonment of five (5) years and a maximum of fifteen (15) years.
AGENCY
Homeland Security Investigations
United States Border Patrol, Calexico, California 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.
Drug Dealer Receives 12 year Sentence for Fentanyl Overdose DeathRead the Press Release
NEWS RELEASE SUMMARY – August 5, 2020
SAN DIEGO – Federal District Court Judge Gonzalo P. Curiel today sentenced defendant Michael Steen to 148 months in prison for supplying the fentanyl that led to a 33-year-old Ramona woman’s fatal overdose on July 9, 2018.
On March 4, 2020, Steen pleaded guilty to Conspiracy to Distribute Fentanyl, and admitted he sold more than 500 grams of what he knew to be fentanyl in 2018.
“The current fentanyl threat requires an “all in” response by law enforcement. My office is collaborating with partners at every level to seize fentanyl at the border, build cases against cartels and street distributors, and pursue death charges against dealers of this deadly poison,” said U.S. Attorney Robert Brewer. “If you are selling fentanyl, beware: as today’s sentence reflects, you will be held fully accountable for the death and destruction you selfishly cause.”
“One of the DEA’s goals is to put people responsible for drug deaths in federal prison,” said DEA Special Agent in Charge John W. Callery. “Today’s sentence of Michael Steen to over 12 years in federal prison is testament to the hard work DEA and our outstanding law enforcement partners put into this investigation to ensure our goal was accomplished. We will continue to aggressively pursue those who deal drugs and cause death in our community.”
“The Sheriff's Department will continue to conduct thorough and collaborative fentanyl death investigations, ensuring traffickers and dealers are held accountable for a crime that costs lives and negatively impacts the community as a whole,” said Sheriff’s Narcotic and Gang Division Captain Dan Brislin.
The United States Attorney’s Office is working closely with the San Diego County District Attorney’s Office, the San Diego County Sheriff’s Office, the Drug Enforcement Administration and our other federal, state and local law enforcement partners to investigate and prosecute cases targeting those who supply drugs in fatal overdose cases.
U.S. Attorney Brewer praised prosecutor David Finn as well as the San Diego County Sheriff’s Department and DEA agents for their hard work on the case.
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 19-CR-0869-GPC
Michael Steen Age: 27
SUMMARY OF CHARGES
Conspiracy to Distribute Fentanyl – Title 21, U.S.C., Section 841(a)(1) Maximum penalty: Mandatory minimum 10 years in prison up to life
AGENCY
San Diego Sheriff’s Office
U.S. Drug Enforcement Administration, Narcotics Task Force
VP of Genetics Company Pleads Guilty to Paying Physicians Sham Clinical Research Fees as Part of $21 Million Medicare Fraud SchemeRead the Press Release
NEWS RELEASE SUMMARY – August 4, 2020
SAN DIEGO – Donald Joseph Matthews, the former Vice President of Market Development for Proove Biosciences. Inc., pleaded guilty in federal court today to conspiring to pay physicians kickbacks to order genetic tests for Medicare beneficiaries in violation of the Anti-Kickback Statute.
According to Matthews’ plea agreement, Proove paid doctors at least $3.5 million to induce them to order Proove’s DNA tests—which the company claimed could determine a patient’s risk of abusing certain prescription narcotics. Proove billed approximately $45 million to the Medicare program for the tests, in violation of Medicare’s prohibition against kickbacks, and Proove received approximately $21 million in unlawful payments. Proove concealed the true nature of the kickbacks by falsely characterizing the payments as compensation for participating in a clinical research program sponsored by Proove. In furtherance of the scheme, Proove placed its own employees in doctors’ offices. The Proove employees collected a cheek swab and completed most of the paperwork associated with the “clinical research” program. Without the financial compensation, Matthews admitted that most doctors were not interested in ordering Proove’s tests for their patients.
The compensation Proove paid to doctors was directly tied to the volume of tests that a doctor ordered and whether a doctor continued to order more tests from Proove over time. When doctors were not paid, they threatened to “pull the plug” and stop ordering Proove’s genetic tests. When the doctors complained about delayed payments, a Proove executive demanded that the doctors increase their testing volume.
“Kickbacks corrupt the medical judgment of physicians, generate unnecessary tests and treatments, increase health care costs, and create unfair competition,” said U.S. Attorney Robert Brewer. “Our office will aggressively move to terminate these illegal schemes and prosecute those who engage in them.” Brewer commended the excellent work of Assistant U.S. Attorneys Joseph S. Green and Andrew J. Galvin, who investigated this important case.
“Our nation’s healthcare system cannot tolerate kickbacks to physicians while criminals line their pockets with taxpayer-funded healthcare dollars, particularly in light of our nation’s current struggles with the COVID-19 pandemic,” said Acting Special Agent in Charge Omer Meisel, San Diego Division of the Federal Bureau of Investigation. “The FBI will pursue those criminals who corrupt the health care system rather than support legitimate, necessary testing and treatment for patients.”
“When health care executives offer kickbacks to physicians to boost profits, they compromise medical decision making and undermine public trust in our nation’s health care system,” said Timothy B. DeFrancesca, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “This investigation illustrates our ongoing efforts to investigate such kickback schemes and to protect patients who rely on federal health care programs.”
Matthews pleaded guilty today before U.S. Magistrate Judge Karen S. Crawford. His sentencing is scheduled for October 26, 2020 at 9:00 a.m. before U.S. District Judge William Q. Hayes.
Vigilance in ensuring that fraud and kickbacks do not usurp the legitimate practice of medicine is more important than ever. If you are aware of any fraud or kickbacks, including COVID-19 fraud, please call the FBI hotline at 1-800-CALL-FBI.
DEFENDANTS Case Number 20CR1933-WQH
Donald Joseph Matthew Age: 50 Naples, FL
SUMMARY OF CHARGES
Conspiracy to Pay Kickbacks in Connection with a Federal Healthcare Program – Title 18, U.S.C., Section 371, Title 42, United States Code, Sections 1320a-7b(b)(1)(B) and (b)(2)(B).
Maximum penalty: 5 years’ imprisonment and $250,000 fine
AGENCY
Federal Bureau of Investigation
Office of Inspector General, Department of Health and Human Services
North County Lifeline Awarded $500,000 to Assist Victims of Human Trafficking in San DiegoRead the Press Release
NEWS RELEASE SUMMARY – August 4, 2020
SAN DIEGO – Today, Attorney General William P. Barr and Advisor to the President Ivanka Trump announced that the Office for Victims of Crime (OVC), a component of the Department of Justice’s Office of Justice Programs (OJP), has awarded $35,104,338 in grant funding to provide safe, stable housing and appropriate services to victims of human trafficking. U.S. Attorney Robert Brewer revealed that San Diego’s North County Lifeline, Inc. was selected as one of 73 grant awardees in 34 states. The organization will receive $500,000 in grant funds to provide six to 24 months of transitional or short-term housing assistance for trafficking victims, including rental, utilities or related expenses, such as security deposits and relocation costs. The grants will also provide funding for support needed to help victims locate permanent housing, secure employment, as well as occupational training and counseling. This is the largest federal investment of its kind.
“Eradicating the horrific crime of human trafficking and helping its victims are top priorities for the Department of Justice,” said U.S. Attorney Robert Brewer. “We are working relentlessly to bring human traffickers to justice and to deliver critical aid to trafficking survivors, who often have nowhere to go once they are freed from trafficking. We cannot allow the trauma of trafficking to give way to new dangers caused by homelessness, which often leads to re-victimization by predators. These funds will provide San Diego victims the shelter and support they need to turn the corner and begin a new life.”
North County Lifeline, Inc., a 24 hour on-call victim services organization, works in collaboration with San Diego Human Trafficking Task Force to ensure that every victim of human trafficking is provided with individualized resources and services. Lifeline’s transitional housing program utilizes a Housing First model, which ensures that factors that often preclude trafficking victims from qualifying for long-term housing programs (substance use/abuse, untreated mental health issues, prior criminal record) are not an issue. According to the DOJ award, this type of unrestricted housing for trafficking victims, in addition to being in short supply in San Diego, is considered most conducive to providing trafficking victims with the safety and stability they need to shift out of a crisis mindset and begin working toward self-sufficiency. Lifeline plans to serve approximately 75 trafficking victims over the project period. In addition to housing, clients may elect to participate in supportive services including, but not limited to, ongoing case management, medical and dental care, (limited) legal assistance, literacy/GED/education assistance, LGBTQ services, substance abuse treatment, trauma counseling, life skills training, and employment and financial coaching.
The grant funds announced today will support multiple forms of short-term housing assistance, including helping survivors make rent payments, cover utility bills or security deposits, or pay moving expenses. The grants are the first-ever federal program dedicated exclusively to providing housing for survivors of human trafficking. It represents part of approximately 100 million dollars in total grants that the Department of Justice anticipates awarding this year to combat human trafficking.
“In addition to the considerable financial support announced today, the Department of Justice and this office will continue to use the full force of our law enforcement resources to investigate, prosecute, and punish the people behind the cruel crime of human trafficking,” Brewer added.
Alleged Leader of Maritime Alien Smuggling Ring ArrestedRead the Press Release
Assistant U.S. Attorney Matthew J. Sutton (619) 546-8941
NEWS RELEASE SUMMARY - July 31, 2020
SAN DIEGO – The alleged leader of a prolific maritime alien smuggling ring, Guillermo Barba, was arraigned on an indictment charging him with alien smuggling offenses yesterday in federal court before U.S. Magistrate Judge Andrew G. Schopler.
Barba is scheduled for a detention hearing before U.S. Magistrate Judge William V. Gallo on August 4, 2020 at 2:00 p.m.
According to the indictment and other publicly available court documents, Barba was a leader of an alien smuggling organization based out of Baja California, Mexico and San Diego, California, which used panga boats, pleasure crafts, and multiple load vehicles to facilitate its sophisticated maritime smuggling operation. This organization is believed to responsible for at least 25 alien smuggling events dating back to November 2017.
This case is the result of ongoing efforts by Homeland Security Investigations - Marine Task Force (MTF) to dismantle active transnational criminal organizations involved in alien smuggling along the U.S.-Mexico border in the Southern District of California. During the last year, MTF and its interagency partners have apprehended approximately 300 illegal aliens off the coast of San Diego. The MTF was also aided in this investigation by the HSI Tijuana Attaché Office
“In addition to undermining this nation’s border security, smuggling on the ocean is extremely dangerous for the individuals being smuggled,” said U.S. Attorney Robert Brewer. “Barba’s arrest and the dismantling of this alien smuggling group is the product of outstanding federal and international law enforcement cooperation that resulted in this successful arrest.”
“Maritime smuggling puts lives at risk and is extremely dangerous. Smugglers often use unsafe boats to enter the U.S. illegally,” said San Diego Sector Border Patrol Chief Patrol Agent Aaron Heitke. “A unified effort has brought this alleged criminal enterprise to an end and it is only through continued cooperation that other transnational criminal organizations can be effectively targeted and dismantled.”
“Homeland Security Investigations (HSI) remains steadfast in our commitment to vigorously pursuing members of transnational criminal networks that exploit and endanger the people they smuggle into our country,” said Cardell T. Morant, Special Agent in Charge of HSI San Diego. “We will continue to work collaboratively with our domestic and international partners to identify, investigate, and prosecute the leaders of these dangerous smuggling networks.”
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 Criminal Case No: 19-cr-4531-JLS
Name
Age
Hometown
Guillermo Barba
29
San Diego, CA
SUMMARY OF CHARGES
Conspiracy to Bring in Illegal Aliens for Financial Gain
Conspiracy to Transport Illegal Aliens for Financial Gain
Maximum Penalties: A term of custody including a mandatory minimum of three years in custody and up to 10 years in custody
AGENCIES
Homeland Security Investigations - Marine Task Force
United States Border Patrol, Imperial Beach Station
United States Border Patrol, San Clemente Station
Customs and Border Protection, Office of Air and Marine
Customs and Border Protection, Office of Field Operations
U.S. Coast Guard
U.S. Coast Guard Investigative Service
San Diego Harbor Police
Homeland Security Investigations – Tijuana
San Diego ReCoM - Regional Coordinating Mechanism.
(ReCoM is comprised of the U.S. Coast Guard, CBP’s Office of Air and Marine, Office of Field Operations, U.S. Border Patrol, Immigration and Customs Enforcement Homeland Security Investigations and state and local law enforcement partners operating in the Southern California. The ReCoM utilizes the fusion of intelligence, planning and operations to target the threat of transnational crime along the coastal border)
Woman Sentenced to 18 Months in Prison for Assaulting Customs and Border Protection OfficerRead the Press Release
Assistant U. S. Attorney Michael A. Deshong (619) 546-9290
NEWS RELEASE SUMMARY – July 27, 2020
SAN DIEGO – Barbara Ross was sentenced in federal court today to 18 months in prison for assaulting a Customs and Border Protection Officer at the San Ysidro Port of Entry on August 2, 2019.
Ross, 39, was convicted by a federal jury following a two-day trial in January. According to evidence presented at trial, Ross attempted to enter the United States through a vehicle lane with her husband and two minor children in her car. When Customs and Border Protection Officer Robert Barragan attempted to ask Ross standard questions regarding her international travel, Ross became aggressive and threatening.
Ross screamed profanities at Officer Barragan and refused to answer questions. Officer Barragan referred her to a secondary inspection lot where other officers could speak with Ross without causing delays in the vehicle lane. As Ross’s husband drove their car to the secondary inspection lot, Ross continued to scream profanities. Upon arriving in the lot, Ross jumped out of the car and when Customs and Border Protection Officer Moises Perez contacted her, Ross repeatedly slapped at Officer Perez with enough force that she broke the skin on his hand and drew blood.
At sentencing today, the Court heard about Ross’s history of aggressive behavior towards law enforcement going back to 2003. The Court also heard about multiple prior incidents at the San Ysidro Port of Entry, including an incident in August 2018 where Ross refused to obey an officer’s orders, which caused officers to have to deploy a “stop stick” in order to stop her car.
“Our courageous federal officers put their lives on the line every day to protect our country, and when they are attacked, we will respond appropriately,” said U.S. Attorney Robert Brewer. “This defendant assaulted multiple officers without provocation. That kind of violence is unacceptable. We are committed to vigorously prosecuting these cases.” Brewer commended the work of prosecutor Michael Deshong and agents from HSI and CBP for their excellent work.
“Homeland Security Investigations (HSI) is committed to investigating and bringing to justice any assault against a law enforcement officer, specifically our federal partners within the Department of Homeland Security,” said Cardell Morant, Special Agent in Charge for HSI in San Diego. “The message is very simple, if you become violent with a federal law enforcement officer performing their duties, you can expect swift and severe charges in federal court.”
“CBP officers serve their country with honor, vigilance and professionalism, and as part of their national security duties they face significant risks. We are extremely appreciative of the diligent work of U.S. Homeland Security Investigations (HSI) special agents and the U.S. Attorney’s Office Southern District of California in bringing this case to justice,” said Pete Flores, CBP Director of Field Operations in San Diego.
DEFENDANTS Case Number 19cr3350-W
Barbara L. Ross Age: 39 San Diego, CA
SUMMARY OF CHARGES
Assault on a Federal Officer with Physical Contact, in violation of Title 18, United States Code, Section 111(a)(1)
Maximum Penalty: Eight years in prison
AGENCIES
United States Customs and Border Protection
Homeland Security Investigations
San Diego Laboratory Admits Fraudulent TRICARE Billing; Agrees to Pay $49 MillionRead the Press Release
Assistant U. S. Attorneys Valerie Chu and Paul Starita (619) 546-6750/7701
NEWS RELEASE SUMMARY – July 23, 2020
SAN DIEGO - San Diego-based clinical laboratory Progenity, Inc. admitted today that it submitted fraudulent bills to TRICARE, the Department of Defense health care benefit program that covers military service members and their dependents, and to the Federal Health Care Employee Benefits Program (FEHBP), for clinical tests that it knew were not covered or properly payable by either program.
In addition, Progenity, formerly known as Ascendant MDx, Inc., and previously headquartered in Carlsbad, California, admitted that it offered improper incentives to patients and doctors to use its laboratory services. To account for its fraud, Progenity has agreed to pay a total of $49 million in civil settlements in federal courts in the Southern District of California (SDCA) and the Southern District of New York (SDNY), as well as to multiple states.
Progenity offered noninvasive prenatal testing (“NIPT”) to pregnant women. NIPT refers to a category of genetic tests that screen for fetal chromosomal abnormalities, through analysis of fetal DNA present in a pregnant woman’s blood. This form of genetic testing, however, did not have FDA approval and was considered by TRICARE as a “laboratory-developed test.” As a result, TRICARE did not cover NIPT tests for its beneficiaries. Therefore, in order to get reimbursed by TRICARE, between April 1, 2013 and April 30, 2016, Progenity falsely and fraudulently used a medical billing code that TRICARE covered, but that Progenity knew did not accurately reflect that the NIPT test.
The U.S. Attorney’s Office for SDCA launched both a criminal probe into Progenity’s fraudulent billing practices and a civil investigation of the false claims Progenity had submitted to TRICARE and the FEHBP. Separately, SDNY initiated its own investigation into misconduct by Progenity relating to the improper incentives provided to patients and doctors to use its laboratory services. SDNY also coordinated with multiple state Attorneys General to investigate Progenity’s miscoding of NIPT to Medicaid programs in New York and several other states.
Progenity’s settlement agreement requires the company to pay $16.4 million to settle the SDCA civil matter, $19,449,316 to settle the SDNY civil matter, and $13,150,684 to settle the state civil allegations. The civil settlements were based on an ability-to-pay, payment-over-time basis, following an analysis of financial condition submissions made by Progenity. In light of Progenity’s remedial efforts, cooperation with the investigation, and payment of restitution to TRICARE and the FEHBP, the criminal investigation was resolved via a non-prosecution agreement, requiring that Progenity admit its misconduct and be subject to additional terms and conditions for up to a 24-month period.
U.S. Attorney Robert Brewer said, “San Diego is known for cutting-edge research and innovation, particularly in the biomedical sciences, that advances fields and improves people’s lives. But in the quest for advancement and profit, companies must still engage in honest and straightforward dealing, and provide the information that allows federal programs to determine whether to pay for new technologies.” Brewer commended the work of the attorneys from the criminal and civil divisions of the office and agents from the FBI and DCIS, who successfully conducted these parallel proceedings and brought to bear the full range of enforcement options to address Progenity’s misconduct.
“Fraudulent billing practices undermines the confidence in our healthcare system and in this case, cheated the TRICARE program serving the men, women and families of our military,” said Omer Meisel, Acting FBI Special Agent in Charge of the San Diego Field Office. “The FBI is committed to working with our partners and the public to stop fraud and ensure that healthcare dollars are used appropriately.”
“The settlement is a significant victory for the American public in that it returns ill-gotten proceeds to the U.S. Government and restores confidence in our healthcare system, including the U.S. military's TRICARE program,” said Bryan D. Denny, Special Agent in Charge of the Defense Criminal Investigative Service, Western Field Office. “As in this case, any unprincipled actions by healthcare providers that tarnish and possibly corrupt the integrity of the TRICARE program will be reviewed and vigorously investigated by DCIS and its law enforcement partners.”
“Fraudulent billing is a theft from the FEHBP and the American taxpayer,” said Norbert E. Vint, Deputy Inspector General Performing the Duties of the Inspector General, Office of Personnel Management OIG. “I congratulate our investigators and law enforcement partners on this successful outcome. The OPM OIG will always work hard to investigate suspected fraud and abuse of the FEHBP.”
“Protecting and providing top quality health care to service members, veterans and their families is our primary mission at TRICARE,” said Lt. Gen. Ronald Place, USA, director, Defense Health Agency. “We thank the investigators who uncovered this fraudulent billing by a company trying to profit from taking advantage of our men and women on the front lines. We will continue to work with law enforcement and other state and federal agencies to ensure health care providers are held accountable for participating in any fraudulent practices.”
This case was handled by Assistant U.S. Attorneys Valerie Chu, Paul Starita, and Beth Clukey on behalf of the Southern District of California.
DEFENDANT
Progenity, Inc.
San Diego, CA
AGENCIES
Federal Bureau of Investigation
Defense Criminal Investigative Services
San Diego Business Leader Pleads Guilty to Masterminding a $400 Million Ponzi SchemeRead the Press Release
Assistant U. S. Attorneys Aaron P. Arnzen (619) 546-8384
and Andrew J. Galvin (619) 546-9721SAN DIEGO – Gina Champion-Cain, a long-time San Diego business leader, restauranteur and real estate magnate, pleaded guilty in federal court today, admitting that she committed securities fraud by masterminding a massive, years-long Ponzi scheme with hundreds of victims throughout California and the United States.
Champion-Cain also admitted that she lied and forged documents to hide her scheme, obstructed justice by attempting to destroy evidence in the course of an investigation by the U.S. Securities and Exchange Commission, and conspired with employees of her own company and the local branch of a national title company to both commit the fraud and cover it up. The fraud was committed through her companies American National Investments, Inc., and ANI Development, LLC.
Crispin Torres, the former Chief Financial Officer of American National Investments, also pleaded guilty today to conspiring in the scheme by using funds received from investors to prop up Champion-Cain’s other businesses, some of which were failing.
“This is by far the largest Ponzi scheme discovered in this district,” said U.S. Attorney Robert Brewer. “Gina Champion-Cain constructed and maintained a house of cards that has come crashing down around her and all her victims. The scheme deprived many investors of their retirement savings, and cost at least one investor tens of millions of dollars and forced him into bankruptcy. And now it will cost the defendant her freedom. We will continue our aggressive efforts to root out corporate fraud and hold greedy criminals accountable.”
Brewer commended the great work of prosecutors Aaron Arnzen and Andrew Galvin as well as FBI agents and the Securities and Exchange Commission for unraveling this complicated, document-intensive fraud.
“This federal investigation revealed a $400 million-dollar fraudulent investment scheme by Gina Champion-Cain, a purported San Diego business magnate who was trusted by hundreds of investors,” said Acting FBI Special Agent in Charge Omer Meisel. “The FBI is committed to investigating those who engage in criminal conduct that corrupts the financial markets and defrauds the public. Furthermore, fraudsters will not escape justice by covering up or destroying evidence of their own wrongdoing. Obstructing a federal investigation is a serious criminal violation that the FBI will vigorously pursue and prosecute.”
As Champion-Cain admitted in her plea agreement, she raised money from investors by promising to use their money to make loans to business owners who were attempting to acquire California liquor licenses. Since 2012, Champion-Cain drew in approximately $400 million from investors based on promises that she would use their money to fund those loans, the investors’ money would be safe in an escrow holding account, and the invested funds would and could only be returned to the specific investor who deposited the funds or his/her intermediary.
Champion-Cain admitted today that these promises were all false. She never used the funds to make liquor license loans. Instead, she and her co-conspirators simply used investor funds to pay back other (usually earlier) investors, and embezzled funds to support Champion-Cain’s unrelated businesses and her lifestyle. For example, Champion-Cain admitted that she used at least $60 million in investor funds to meet payroll and other expenses incurred by several businesses she owned, including the Patio restaurant chain, vacation rentals, a juice bar, and the now-defunct Mission Beach surf-themed clothing store Luv Surf Boutique. She also spent investor funds to pay herself over $2 million in cumulative salary since 2012, and spent over $640,000 for box seats at San Diego Padres games, over $200,000 for box seats at San Diego Charges games, at least $745,000 to pay off her credit card bills, and hundreds of thousands of dollars for automobiles, jewelry, and similar personal luxuries.
The plea agreement also details how Champion-Cain and her co-conspirators succeeded in defrauding investors by hiding the truth. They fabricated documents, forged signatures, and told investors lies through fake email accounts so that when investors attempted to double-check on their investments with people they thought were independent third parties, the investors were often really communicating with Champion-Cain or her employees. For example, Champion-Cain emailed an escrow company employee when investors tried to ask questions: “I told them NEVER to call and bother you ladies,” and “if they call asking about escrow agreements and alcohol licenses, blah, blah, blah … just say ‘SURE WHATEVER NOW SHOW ME THE MONEY … HAHAHAHA.’” The cover-up continued even after Champion-Cain and her co-conspirators learned of a government investigation into her scheme—in response to which they attempted to destroy evidence they knew was incriminating, including stacks of documents, emails, video surveillance footage, and accounting records.
Crispin Torres, who also pleaded guilty today, had been an accountant at American National Investments for years. As Chief Financial Officer, Torres knew that Champion-Cain’s other businesses were strapped for cash, and requested that Champion-Cain transfer at least $60 million of investor funds from escrow accounts so that Champion-Cain could keep these businesses afloat. Torres also established a bank account under a name that was similar to the national escrow company’s name, and knew that Champion-Cain tricked certain investors into depositing their funds into this account believing the money would be safe. When those deposits arrived, Torres, at Champion-Cain’s instruction, fabricated receipts from the escrow company to send to investors. The purpose was clear – to convince investors that a reliable national escrow company administered their funds. In fact, the escrow company had no connection with this particular bank account. Champion-Cain and Torres had unfettered access to these investor funds and simply stole the money to further the Ponzi scheme.
Champion-Cain and Torres are scheduled to appear for sentencing before U.S. District Judge Anthony Battaglia on October 13 at 9 a.m.
CLICK HERE - Slides presented at press conference
CLICK HERE - Champion-Cain Plea Agreement
CLICK HERE - Torres Plea AgreementDEFENDANTS
Gina Champion-Cain Case Number 20CR2115 Age: 55 San Diego, CA
Crispin Torres Case Number 20CR2114 Age: 53 National City, CA
SUMMARY OF CHARGES
Securities Fraud, Title 15, U.S.C. Sections 77q and 77x (Champion-Cain)
Maximum Penalty: Five years in prison
Obstruction of Justice, Title 18, U.S.C. Section 1505 (Champion-Cain)
Maximum Penalty: Five years in prison
Conspiracy, Title 18, U.S.C. Section 371 (Champion-Cain and Torres)
Maximum Penalty: Five years in prison
AGENCY
Federal Bureau of Investigation
Local Businessman Pleads Guilty to Bank Fraud and Tax Evasion ChargesRead the Press Release
Assistant U. S. Attorney Oleksandra Johnson (619) 546-9769
NEWS RELEASE SUMMARY – July 22, 2020
SAN DIEGO – A local business owner pleaded guilty in federal court today to bank fraud and tax evasion charges, admitting that over the course of several years he evaded taxes by failing to report $498,612 of income to the IRS, and also orchestrated an illegal scheme to fraudulently obtain a mortgage for his $1.8 million residence using a third party.
As part of his plea agreement, David Daughtrey also agreed to pay over $1 million in restitution to the Internal Revenue Service. He is scheduled to be sentenced on November 16, 2020, before U.S. District Judge Larry A. Burns.
“People who cheat on their taxes are cheating all other law-abiding tax payers,” said U.S. Attorney Robert Brewer. “Mr. Daughtrey blatantly disregarded his tax obligations for years. The defendant not only abused the tax system for his own financial benefit, but conspired to commit bank fraud in order to maintain this lifestyle.” Brewer commended the excellent work of prosecutor Oleksandra Johnson and FBI and IRS agents.
“The FBI is dedicated to ensuring that white collar crimes are uncovered and prosecuted,” stated FBI Acting Special Agent in Charge Omer Meisel. “Today, David Daughtrey has admitted to mortgage fraud and tax evasion. This case illustrates that the FBI will continue to investigate those individuals that engage in fraudulent financial schemes that cause harm to our banking industry and defraud the government of tax revenue.”
“Our Nation’s tax system funds critical infrastructures and vital programs, including supporting our citizens and small businesses during the ongoing pandemic,” Ryan L. Korner, Special Agent in Charge, IRS Criminal Investigation. “Honest Americans’ compliance with the tax laws is imperative. Rather than pay his fair share, David Daughtrey chose to live lavishly, while intentionally failing to report his true income and evading the payment of over $400,000 in taxes. Today’s guilty plea demonstrates that the IRS will diligently continue our important enforcement efforts despite the ongoing challenges posed by Covid-19. We will work alongside our law enforcement partners in a collective effort to enforce the law and ensure the public trust.”
Daughtrey admitted that from July 2006 until April 2016, he conspired with others to commit bank fraud and tax evasion. As part of the bank fraud scheme, Daughtrey directed another individual to submit a mortgage application to Wells Fargo to purchase a $1.8 million five-bedroom residence, and to falsely claim that the funds used as down payment belonged to the third party 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 get the bank to modify the terms of the loan on the home. As part of the plea agreement, Daughtrey admitted he was the true owner of the residence at all relevant times, and promised to make a good faith effort to transfer the legal ownership of the home into his own name.
Daughtrey also admitted as part his plea that over several years, he and his spouse (who is not charged in the case) 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 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. According to the plea agreement, the resulting tax loss to the IRS for the years 2012-2014 was $456,536. Daughtrey agreed to pay $1,016,457.91 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
San Diego Man Who Smuggled Methamphetamine in Stuffed Animals and Amassed Counterfeit Credit Cards Sentenced to 15 YearsRead the Press Release
Assistant U. S. Attorney Michelle L. Wasserman (619) 546-8431
NEWS RELEASE SUMMARY – July 16, 2020
SAN DIEGO – Daniel Wayne Gorman, a resident of San Diego, was sentenced to 15 years in custody on Monday as a result of mailing over two kilograms of pure methamphetamine to Guam and possessing over 500 counterfeit credit cards.
According to Gorman’s plea agreement, on July 1, 2016, Gorman placed four packages, each containing a stuffed animal filled with methamphetamine, in the mail from the Jamul, CA Post Office. According to court documents, Gorman used an alias “Daniel German” to mail the packages, which were intercepted in Barrigada, Guam. In total the four packages contained 2.077 kilograms of actual methamphetamine.
Gorman was also sentenced on separate charges of credit card fraud. As laid out in the United States’ sentencing memorandum, on March 29, 2018 officers searched Gorman’s residence and found significant evidence of identity theft and credit card fraud, including over 500 counterfeit credit cards, multiple fake Florida driver’s licenses bearing the defendant’s photograph but the personal identifying information of others, white plastic cards, magnetic strip readers, a card embosser, a tipping foil machine, and holograms. Many of the credit cards in Gorman’s possession bore the names of real individuals who were not Gorman.
“We aren’t going to allow the U.S. Mail to become a smuggling service for drug traffickers,” said U.S. Attorney Robert Brewer. “This case is the result of excellent work by Assistant U.S. Attorney Michelle Wasserman and agents from the U.S. Secret Service and U.S. Postal Inspection Service and the San Diego County Sheriff’s Department.”
“Today’s sentencing is a reminder that financial crimes against the American people will not go unpunished,” said James Anderson, Special Agent in Charge of the Secret Service San Diego Field Office. “This case illustrates the strong partnership between the Secret Service, San Diego Police Department, the San Diego Sheriff’s Department, the Drug Enforcement Administration, the U.S. Postal Service and the U.S. Attorney’s Office.”
“For his role in distributing controlled substances, Daniel Gorman misused the U.S. Mail and is now paying a steep price,” said Patricia Armstrong, Inspector in Charge of the U.S. Postal Inspection Service, Los Angeles Division. “By working closely with our law enforcement partners to dismantle operations like this, we can help stop drugs and associated violence from reaching the American public.”
As a result of Gorman’s significant criminal activity, U.S. District Judge John A. Houston sentenced him to 120 months custody as to the methamphetamine trafficking and 60 months, consecutive, as to the possession of counterfeit credit cards, for a total of 180 months or 15 years.
DEFENDANT Case Number 18CR4083-JAH
Daniel Wayne Gorman Age: 33 San Diego, CA
SUMMARY OF CHARGES
Distribution of Methamphetamine – Title 21, U.S.C., Section 841(a)(1)
Maximum penalty: Life imprisonment and $10 million fine
Possession of Counterfeit Access Devices – Title 18, U.S.C. Section 1029(a)(3)
Maximum penalty: Ten years’ imprisonment and a $250,000 fine
AGENCIES
United States Secret Service
United States Postal Inspection Service
San Diego County Sheriff
Former Director of Chabad of Poway and Several Co Defendants Plead Guilty to Multi Million-Dollar Tax Evasion and FraudRead the Press Release
For Further Information, Contact:
Assistant U. S. Attorneys Emily W. Allen (619) 546-9738,
Andrew Young (619) 546-7981, and Oleksandra Johnson (619) 546-9769SAN DIEGO – Rabbi Yisroel Goldstein, former director at Chabad of Poway, and five of his associates pleaded guilty in federal court today and Monday to fraud charges, admitting that they participated in a complex, years-long, multi-million dollar tax-evasion scheme and other financial deceptions involving theft of public money.
According to his plea agreement, while Rabbi Goldstein was director of the Poway synagogue, he received at least $6.2 million in phony contributions to the Chabad and affiliated charities and secretly refunded up to 90 percent of the donations to the “donors.” After Rabbi Goldstein provided these donors with fake receipts, they illegally claimed huge tax deductions for these nonexistent donations, and the rabbi kept about 10 percent – more than half a million dollars over the course of the fraud - for himself. Tax losses to the IRS were more than $1.5 million. At least 20 taxpayers were involved in this and related tax-evasion schemes.
This case was under investigation for more than two years before Rabbi Goldstein was shot and wounded during the April 27, 2019 attack on worshippers at the Chabad. In that case, federal civil rights and hate crimes charges are pending against John T. Earnest of Rancho Peñasquitos.
The rabbi was aware of the investigation at the time of the shooting. FBI and IRS agents had searched his home in October of 2018, and he began cooperating with the investigation shortly after that time.
According to his plea agreement, Rabbi Goldstein has agreed to cooperate with ongoing investigations of uncharged co-conspirators and to forfeit $1 million in proceeds and pay restitution of $2.5 million.
“This case has brought us all a great deal of anguish because of the attack on Chabad of Poway,” said U.S. Attorney Robert Brewer. “But whatever a defendant’s dire personal circumstances, or stature in the community, we will always seek justice, first and foremost. We cannot, and will not, sweep serious criminal conduct under the rug. We cannot look the other way because a perpetrator of crime has suddenly become a victim of crime.”
“This case shows the FBI’s dedication to untangling the web of fraud in a complex, multi-million dollar charitable donation scheme that violated the trust of the Chabad of Poway and defrauded the United States government," said FBI San Diego Acting Special Agent-in-Charge Omer Meisel. “The FBI is committed to holding those accountable who use their position and stature in the community as a disguise to commit fraud. All the defendants in this case, including Rabbi Yisroel Goldstein, have admitted their guilt in these fraudulent schemes and will no longer be able to use deceit and lies to cheat those who were intended to receive charitable funds and taxpayer dollars.”
“The Chabad of Poway, which has served its community for decades, was used by Rabbi Yisroel Goldstein and the five co-defendants to evade over $1.5 million in taxes over the last 8 years,” said Ryan L. Korner, Special Agent in Charge of the IRS’s Criminal Investigation Division. “The Chabad was further victimized in April 2019 when a shooter attacked its worshippers, and we recognize the pain that terrible event has caused for the Chabad, Rabbi Goldstein, and the community. Ultimately, the financial fraud schemes uncovered during this multi-year, multi-defendant investigation were egregious and IRS Criminal Investigation has a responsibility to bring to justice those who exploit and manipulate non-profit and religious organizations in order to benefit themselves. The IRS is responsible for protecting honest taxpayers and serving the public by ensuring the integrity of our tax system, which funds our nation’s critical infrastructures and vital programs, including supporting our citizens and small businesses during the ongoing pandemic. The hard work of our Special Agents will not stop despite the ongoing challenges posed by Covid-19. We will continue to work alongside our law enforcement partners, and this week’s six guilty pleas demonstrate our collective efforts to continue to enforce the law and ensure the public trust.”
Five others who participated in the scheme with Rabbi Goldstein also entered guilty pleas in federal court this week, admitting that they knowingly participated by concealing their donations through the Chabad and making false deductions on their tax forms, or by recruiting new taxpayers to participate in the scheme. One taxpayer, defendant Bruce Baker, admitted that he began participating in this scheme with Rabbi Goldstein in the 1980s, and made millions of dollars in fictitious donations over the years.
Rabbi Goldstein admitted today that in one instance in late 2017, he attempted to disguise the source of more than $1.1 million in fraudulent donations by purchasing gold coins worth approximately $1 million. He then delivered the gold to the phony donor.
CLICK HERE - Press Presentation Graphics
There were many schemes within the broader tax-fraud and kickback scheme, dating back to 2010 or earlier and continuing through 2018.
Rabbi Goldstein admitted he defrauded three different Fortune 500 companies by tricking them into matching supposed charitable donations of their employees. Working with the employees, Rabbi Goldstein fabricated fake receipts and then secretly returned their fake “donations.” This allowed the employees to claim tax deductions for the completely fabricated donations, and allowed Rabbi Goldstein to collect the companies’ matching funds—including some that matched double their employees’ donations. Rabbi Goldstein helped to orchestrate this scheme with at least six taxpayer-employees and two other associates who helped recruit new donors or conceal the true recipient of the funds. In total, Rabbi Goldstein defrauded the companies out of at least $134,000, and helped the taxpayer-employees to claim nearly as much in fictitious tax-deductible charitable contributions to the IRS.
Rabbi Goldstein admitted that he also helped an individual conceal more than $700,000 in income by allowing the individual to use Chabad bank accounts to deposit his income, thereby hiding it from the IRS. As his cut, Rabbi Goldstein kept 10 percent of this individual’s income—more than $70,000.
Separate and apart from the tax evasion scheme, Rabbi Goldstein and defendant Alexander Avergoon, who also pleaded guilty today, used false information and fabricated invoices and other records to pretend to be eligible for emergency funds, grants or donations, and private loans. These frauds on the Federal Emergency Management Agency (FEMA), the California Governor’s Office of Emergency Services (Cal OES), and private foundations resulted in losses to these programs of at least $875,000. Rabbi Goldstein and Avergoon have agreed to pay restitution to recoup these losses and reimburse these programs.
The rabbi also admitted in his plea agreement that he defrauded San Diego County courts by falsely certifying that co-conspirators and associates had performed volunteer work at the Chabad or its affiliated entities, so that those associates could submit fake reports to the courts that they had fulfilled sentencing requirements for criminal offenses showing dozens or even hundreds of community service hours. Finally, Rabbi Goldstein admitted that, along with Avergoon, he fraudulently obtained loans from banks and mortgage lending businesses by submitting false information in loan applications that they verified for one another.
“Sadly, the facts of this case show a willful, devious effort to deceive on the part of a trusted community leader,” Brewer said. “Evading taxes causes harm not just to the government, but also to one’s fellow citizens, who are forced to bear a heavier burden. Members of the Chabad of Poway are also victims of this crime, for those fake donations certainly did not benefit their congregation.
“There is no doubt that Rabbi Goldstein was the victim of a heinous hate crime that terrorized him and Chabad congregants,” Brewer said. “This is a mitigating factor, but this is no excuse. We acknowledge the rabbi’s cooperation and his community leadership in the wake of the shooting. But this illegal conduct had been going on for many years, and it cannot be ignored.”
U.S. Magistrate Judge Karen S. Crawford presided over today’s arraignment and guilty plea. Rabbi Goldstein is next scheduled to appear at a sentencing hearing on October 19, 2020 at 9 a.m. before U.S. District Judge Cynthia Bashant.
The five related guilty pleas involve a series of fraud and tax evasion schemes by Rabbi Goldstein’s co‑defendants:
1. Defendant Alexander Avergoon
Avergoon admitted that from 2010 to 2015, he recruited at least nine taxpayers who made more than $275,000 in fraudulent “donations” to the Chabad, then used Avergoon as a conduit to secretly return 90 percent of the money to the purported “donors.” He also admitted that he joined Rabbi Goldstein in the grant fraud scam in which they obtained hundreds of thousands of dollars in misappropriated grant funds.
As part of the government benefits fraud scheme, Avergoon used shell companies, including “Imagination Construction Company,” to create fictitious and backdated invoices for services like carpet installation, repairs to the Chabad of Poway’s HVAC system, and replacing damaged books and other supplies—even though Avergoon had never performed these services. In some cases, Avergoon would give Goldstein several fake bids from different shell companies, so that Rabbi Goldstein could trick the grant program administrators into believing he had complied with their competitive bidding requirements. Avergoon and Goldstein pretended that the government grant funds would be used for facilities upgrades, security systems, and community programs. But in reality, the money often went straight to Goldstein’s and Avergoon’s pockets; other times they used portions of it to pay contractors who had in fact charged much lower prices than reflected on Avergoon’s phony paperwork.
Apart from his fraudulent partnership with Rabbi Goldstein, Avergoon also admitted to participating in separate real estate Ponzi schemes from 2010 to 2016, in which he cheated retirement investors out of a total of $12 million. Avergoon was a San Diego-based real estate agent, and he used his industry knowledge and reputation to target trusting victims who would invest in what they thought was the purchase of rental property. Avergoon promised monthly dividends that would be paid from rental income. He created written investment materials like prospectus and projected income and expenses calculations, designed to give investors the false impression that their money would be safely tucked away in passive-income retirement investments. But in truth, instead of using investors’ money to buy rental properties as he promised, Avergoon spent the money himself and just pretended that he had purchased the apartment buildings and office space he advertised. In true Ponzi fashion, for a time, Avergoon made the promised dividend payments—but rather than using rent income, he funded those payments using new investor money.
Avergoon deceived more than a dozen unwitting investors, and convinced them to part with at least $5 million. When an investor would ask to cash out, he encouraged them to re-invest, and at one point he pretended to “roll over” their retirement investments to purchase a multi-million dollar commercial building. In reality, he bought that building with a loan, not with investor money, and again diverted their money to his own personal use. He created fake partnership agreements, false purchase documents and deeds, and other fictitious records, and forged the signatures of his investors to conceal the fraud—then laundered the proceeds in order to disguise the true source and ownership of the money.
Avergoon did not stop there. He convinced investors to part with another $5 million or more by pretending to use their money to fund short-term, low-risk loans supposedly secured by the borrowers’ high-end San Diego homes. But in reality, there were no “borrowers”—Avergoon used his real estate connections to identify homes he could pose as collateral, and he simply doctored up fake loan agreements and forged the borrowers’ signatures. In some cases, the individuals he claimed were the borrowers did not even own the homes that were purportedly used as collateral. Avergoon made fake loan agreements, Deeds of Trust, mortgage Notes, and other official-looking documents, and he even created fake notary stamps and San Diego County Recorder’s Office markings to make the paperwork appear legitimate. Once again, Avergoon used new investor money to make occasional payments to his victims, to make it appear that the “loans” were performing. But in truth, he diverted the money to his own use and the “investments” were worthless.
Avergoon was indicted in August 2019 and apprehended in Latvia. He was extradited to the United States in November 2019 and has remained in custody since his extradition and initial appearance in federal court in San Diego. U.S. Magistrate Judge Barbara L. Major presided over his change of plea hearing today. Avergoon is next scheduled to appear at a sentencing hearing on October 19, 2020 at 9 a.m. before U.S. District Judge Cynthia Bashant.
2. Defendant Bruce Baker
Bruce Baker pleaded guilty to conspiring with Rabbi Goldstein to defraud the IRS and file false tax returns beginning as early as the mid-1980s. For three decades, Baker admitted that he used fabricated records from Goldstein to fraudulently reduce his tax liabilities by pretending he was eligible for tax deductions for millions of dollars in nonexistent “gifts to charity” he reportedly made to the Chabad. In reality, Goldstein secretly returned 90 percent of Baker’s donations, and kept a 10 percent fee.
This part of the scheme was especially complex and intricate. Rather than simply paying cash or returning Baker’s money in direct payments, Goldstein would pay Baker’s creditors, make large purchases on his behalf, give money to Baker’s relatives, or pay off bills on behalf of his family. To disguise the repayments, Rabbi Goldstein delivered the money in clandestine ways by, for example, paying:
- around $200,000 to Baker’s business partner to buy the partner’s share of their business assets on Baker’s behalf;
- more than $420,000 in tuition and fees for Baker’s son to attend dental school and a post-doctoral residency in dentistry;
- at least $90,000 to a construction company for Baker’s benefit, another $200,000 directly to a building contractor working for Baker and $129,000 to a home builder, and more than $300,000 to Baker’s account at a construction and building supply company; and
- $200,000 from the proceeds of the sale of Goldstein’s property paid directly to Baker’s son.
Over the years, Baker admitted that he “donated” at least $2.6 million to Chabad of Poway, with at least $2.4 million secretly funneled back from Goldstein to Baker. In total, Baker’s and Goldstein’s scheme cost the IRS around $644,000 in tax losses.
Separate from his dealings with Rabbi Goldstein, Baker also admitted that he engaged in a similar tax evasion scheme with the director of a separate religious congregation and community organization in San Diego. In 2006, that individual offered Baker and his family an arrangement where they would pretend to make an “in-kind” donation to the religious organization of an ancient Iranian Torah—although no such Torah existed and the “in-kind” donation was a hoax. This other director provided Baker with a fraudulent appraisal that valued the Torah at $1.2 million. Baker and his family used the fake paperwork to claim exorbitant tax deductions, and gave the co-conspirator a 10 percent fee—or $120,000—in return. On top of that, the director charged Baker $20,000 for the fake appraisal.
U.S. Magistrate Judge Karen S. Crawford presided over Baker’s arraignment and guilty plea on July 13, 2020. Baker is scheduled for sentencing on October 19, 2020, at 9 a.m. before U.S. District Judge Cynthia Bashant. He has agreed to make full restitution to the IRS including all unpaid taxes, penalties, and interest.
3. Defendant Bijan Moossazadeh
Bijan Moossazadeh began participating in the tax evasion scheme with Rabbi Goldstein as early as 2012. As he admitted in his plea agreement, between 2012 and 2018 he pretended to “donate” a total of around $290,000 to Chabad of Poway. But instead of using the money for charitable purposes, Goldstein secretly funneled back 90 percent of the funds to Moossazadeh. Even so, Goldstein generated fraudulent donation receipt letters for Moossazadeh, so he could fraudulently verify that the money was indeed a “gift to charity.” Moossazadeh fraudulently reduced his tax liability—or intended to, before he learned of this investigation in 2018—by more than $91,500.
Goldstein concealed his repayments by giving Moossazadeh large cash payments that would be difficult to trace. And he communicated in code when he had cash available, referring to his cash supplies as “challah” and his supplier as “the baker.” In 2016, for example, Goldstein texted Moossazadeh to tell him he had cash: “I got a call from the Baker today he’s preparing for Friday how many Chalah do you need?” Moossazadeh answered, “22”—by which he meant, $22,000. The next day, Goldstein followed up: “Good morning[.] The baker came in earlier and has today 22 challa ready for pickup[.] Let me know what time?” Moossazadeh met Rabbi Goldstein at the Chabad on March 16, 2016, where he delivered a $22,000 check made payable to the Chabad (with “Contribution” written in the memo line), and in exchange Goldstein gave him $20,000 in cash (keeping the remaining $2,000). Goldstein also gave Moossazadeh a fraudulent donation receipt thanking Defendant for his “generous tax deductible donation.”
They followed a similar pattern in 2018, when Goldstein again used coded text messages to alert Moossazadeh that he did not have cash ready and available: “Just got a call the baker is not baking challah this Friday-will be back next Friday and have the full order.” A week later, Goldstein followed up: “Cook just finished . [] Come and pickup[.]” Moossazadeh admitted in his plea agreement that he met Goldstein at the Chabad the next day and delivered a check for $33,000, made payable to the Chabad (again with “Contribution” written in the memo line). In exchange, Goldstein gave Moossazadeh $30,000 in cash (keeping the remaining $3,000), along with another fraudulent donation receipt.
In August 2018—just at the time that court documents show Goldstein had offered to launder cash proceeds for an individual who he only later discovered was an undercover federal agent--—Rabbi Goldstein let Moossazadeh know he had more cash available. He texted Moossazadeh: “I have a new baker who can bake many more challah almost unlimited[.] Let Joe [SHEMIRANI] know that a new baker came to town and to let me know how many challah to bake ? Can do as many as you need .. unlimited[.]” But just a few months later in October 2018, Moossazadeh learned that Rabbi Goldstein was under investigation. He did not attempt to deduct any of his 2018 purported donations to the Chabad.
U.S. Magistrate Judge Karen S. Crawford presided over Moossazadeh’s arraignment and guilty plea on July 13, 2020. He is scheduled for sentencing on October 19, 2020, at 9 a.m. before U.S. District Judge Cynthia Bashant. He has agreed to make full restitution to the IRS including all unpaid taxes, penalties (including a 75 percent fraud penalty), and interest.
4. Defendant Yousef Shemirani
Yousef Shemirani admitted in his plea agreement that he participated in the tax scheme from 2011 to 2016, and in total he pretended to “donate” $137,650 to Rabbi Goldstein and the Chabad of Poway. In return, Goldstein secretly funneled approximately 90 percent of the “donations” back to Shemirani, keeping 10 percent (around $13,765). Shemirani’s participation in the scheme resulted in a tax loss to the IRS of more than $39,000.
As with Moossazadeh, Rabbi Goldstein used coded language to discuss the scheme with Shemirani, and he concealed his return of the “donations” by returning Shemirani’s payments in large amounts of cash. As Shemirani admitted in his plea agreement, Goldstein texted him in June 2015 to alert him that he would have cash available: “The baker will be back in July and will have all the Chalah you need :)” In July 2015, he followed up: “I just got a call from the Baker he may be in this Friday do you still need Chalah?” A year later, Goldstein continued the disguise, alerting Shemirani: “The Baker came today and actually be a nice amount of fresh Chalah – you can come by today and pick it up.”
Shemirani heard from Rabbi Goldstein again on October 20, 2018, when Goldstein appeared unannounced at Shemirani’s door. As Shemirani admitted, Goldstein warned that he was under investigation and that his home and office had been searched by federal agents. He alerted Shemirani that the next time they saw each other, Goldstein might be “wearing a wire.” Shemirani understood this was a warning, and he took steps to amend his fraudulent tax returns in response.
Shemirani was arraigned and entered a guilty plea on July 13, 2020, before U.S. Magistrate Judge Karen S. Crawford. His sentencing is scheduled on October 19, 2020, at 9 a.m. before U.S. District Judge Cynthia Bashant. He has agreed to make full restitution to the IRS including all unpaid taxes, penalties (including a 75 percent fraud penalty), and interest.
5. Defendant Boris Shkoller
Boris Shkoller admitted that from 2015 to 2016, he “donated” $122,000 to Chabad of Poway and secretly received 90 percent—or $109,800—back from Goldstein. Shkoller used Alexander Avergoon as a conduit to make the payments and receive the kickbacks. Avergoon also passed along fraudulent and backdated donation receipt letters that fraudulently verified Shkoller’s “generous tax deductible donation[s].” Shkoller admitted that he filed fraudulent tax returns for both years, resulting in tax losses to the IRS of more than $36,000.
Shkoller was arraigned and pleaded guilty today before U.S. Magistrate Judge Karen S. Crawford. His sentencing is scheduled on October 19, 2020 at 9 a.m. before U.S. District Judge Cynthia Bashant. He has agreed to pay $53,772 in restitution to the IRS for his tax underpayment, penalties, and interest.
U.S. Attorney Brewer commended the excellent work of prosecutors Emily Allen, Andrew Young and Oleksandra Johnson as well as case agents from the FBI and IRS.
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 prisonAlexander Avergoon, Case Number 19CR2955-BAS Age: 44 San Diego
Wire Fraud, in violation of Title 18, USC 1343
Maximum Penalty: Twenty years in prisonAggravated Identity Theft, in violation of Title 18, USC 1028A
Maximum Penalty: Two years minimum consecutive term in prisonMoney Laundering, in violation of Title 18, USC 1956(a)(1)(B)(i)
Maximum Penalty: Twenty years in prisonBruce 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 prisonBijan 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 prisonYousef 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 prisonBoris 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 prisonINVESTIGATING AGENCIES: Federal Bureau of Investigation, Internal Revenue Service
CLICK HERE - Avergoon Indictment CLICK HERE -Goldstein Plea Agreement CLICK HERE - Avergoon Plea Agreement CLICK HERE - Shkoller Plea Agreement CLICK HERE - Goldstein Information CLICK HERE - Baker Information CLICK HERE - Moossazadeh Information CLICK HERE - Shemirani Information CLICK HERE - Shkoller Information
San Diego Doctor Sentenced to Prison for Fraud Against TRICARERead the Press Release
Assistant U. S. Attorney Valerie H. Chu, (619) 546-6750
SAN DIEGO – Dr. Marco Antonio Chavez was sentenced to 21 months in custody and ordered to pay restitution of $783,764.37 for defrauding TRICARE, the health care benefits program for military service members and their dependents.
According to court documents, Chavez was a physician licensed by the State of California Medical Board. Chavez provided psychiatry services, including therapy and prescription medications for children and adults diagnosed with ADHD and depression, for San Diego patients whose health care was covered by TRICARE. Chavez defrauded TRICARE by using the personal information of these patients to create and submit false and fraudulent claims for nonexistent appointments when he did not actually treat those patients. And he routinely selected the billing code for the highest-level (and highest-reimbursement) patient visit for these fabricated appointments, to maximize the fraudulent reimbursements he received from TRICARE. He swindled more than $783,000 from the taxpayer-funded health care program, and used these ill-gotten gains to buy himself luxuries including a red 2016 Jaguar and thousands of dollars’ worth of David Yurman jewelry.
Beginning in April 2013, Chavez became a network provider for TRICARE under contract with United Health Care Military & Veterans, West. That August, Chavez became eligible to submit claims directly to TRICARE through XPressClaim (“XPC”), a web-based system. Chavez used that access to help his scheme to defraud TRICARE, using his unique personal security key code to avoid review by other billing staff. He then caused the payments to be electronically transferred into an account that was in his name, which he controlled.
For example, Patient A was taken by his/her mother to see Chavez on just three occasions: December 2, 2013, December 16, 2013, and January 13, 2014. Records indicate that Chavez billed and was paid by TRICARE for 80 dates of service for Patient A, including for 21 dates before Patient A’s initial visit on December 2, 2013. On each of the three dates that correspond to dates when Patient A actually saw Chavez, the claim was submitted to TRICARE via the billing system used by administrative staff in Chavez’s clinic. But for the remaining 77 dates of service billed to TRICARE for Patient A, in which the patient did not actually see Chavez, the XPC code was used—indicating it was Chavez himself who submitted those fraudulent claims directly.
Similarly, Patient B was taken by his/her father to see Chavez on five occasions between May 2014 and August 2014. Records indicate that Chavez billed and was paid by TRICARE for 76 dates of service for Patient B. Each of the remaining 71 dates of service billed to TRICARE for Patient B, when the patient did not actually see Chavez, contained the XPC code, again indicating they were submitted by Chavez directly using XPressClaim.
Chavez tried to deflect attention and avoid detection of his fraudulent billing through a variety of deceptive means. For example, he notified patients that they might see entries on their Explanation of Benefit (“EOB”) forms from TRICARE that they would not recognize. This was an attempt to prevent patients from complaining to TRICARE and drawing attention to the false bills. In reality, Chavez knew that the reason the patients would not recognize the entries on their EOBs was because they had not actually occurred – Chavez had simply made them up.
When the TRICARE contractor conducted an audit and requested certain of Chavez’s patient files, Chavez falsely claimed that he had already sent the files, when he knew those files did not exist and could not have been sent. Chavez also misrepresented that a member of the office staff had stolen his TRICARE checks and deposited them without his permission.
Over the course of his scheme, Chavez submitted approximately $928,800 in false and fraudulent claims to TRICARE via XPC, and was paid $783,764.37 on those claims by TRICARE.
Separately, records of the State of California reflect that Chavez’s medical license was suspended in May 2018, upon the finding of an administrative judge that Chavez had treated patients while under the influence of a narcotic or alcohol.
The United States argued in its sentencing papers that Chavez exploited his privileged position as a physician, and his access to patients’ data, to commit his crime. Patients went to Chavez seeking psychiatric treatment for a variety of issues, and trusted him with some of the most troubling and sensitive aspects of their lives. Unbeknownst to them, Chavez saw the patients as his own personal piggy bank: billing opportunities to feed his lifestyle. What is more, Chavez took advantage of TRICARE—a program built upon reliance and trust. Chavez, as a medical provider, easily submitted claims under his name for services he claimed he provided, and got federal funds paid directly into his bank account.
“Through flagrant fraudulent billing, Dr. Chavez stole a quarter of a million dollars from TRICARE and spent it on luxury items, including a Jaguar and designer jewelry. But neither the citizens of this district nor the Department of Justice will stand for defrauding the government,” said U.S. Attorney Robert Brewer. “Anyone who uses TRICARE as a path to unjust enrichment will pay a heavy price, as we are 100 percent committed to protecting vital government health programs for our military and veterans.”
“Dr. Marco Chavez stole more than $780,000 from the TRICARE program which serves our veterans, military members and their families. This deliberate targeting of a healthcare program which solely aids our military troops and their families is appalling,” said Acting FBI Special Agent in Charge Omer Meisel. “When medical professionals violate their oath to honest patient care for personal greed, it significantly damages the trust required within our health care system. In order to protect the integrity of the healthcare system and government programs like TRICARE that serve our military members, the FBI is committed to rooting out fraud within the healthcare industry. We urge anyone with information about suspected healthcare fraud to contact their local FBI Field Office.”
“Dr. Chavez’ conduct is a particularly egregious example of fraud against the TRICARE program in that his greed clearly took priority over his patients’ trust and well-being,” said Bryan D. Denny, Special Agent in Charge of the Defense Criminal Investigative Service, Western Field Office. “The doctor's sentencing should serve notice to other unscrupulous healthcare providers that any unprincipled actions that corrupt the integrity of the TRICARE program and ultimately degrade the quality of health care provided to military service members and their families will be vigorously investigated by DCIS and its law enforcement partners.”
U.S. Attorney Brewer commended Assistant U.S. Attorney Valerie Chu and the FBI and DCIS agents for their exemplary work on this case.
DEFENDANT Case Number 18cr2930-L
Marco Antonio Chavez Age: 40 Brownsville, Texas
SUMMARY OF CHARGES
Health Care Fraud – Title 18, U.S.C., Section 1347
Maximum penalty: Ten years in prison and $250,000 fine
AGENCY
Federal Bureau of Investigation
Defense Criminal Investigative Service
CEO of San Diego Startup Bilked over $1,500,000 from His CompanyRead the Press Release
NEWS RELEASE SUMMARY – July 8, 2020
SAN DIEGO – Jeffrey Fildey, founder and former CEO of San Diego startup GoFormz Inc. pleaded guilty today to stealing more than $1,500,000 from his own company for his personal benefit. According to public records, GoFormz Inc., founded in 2012, is a San Diego company that provides online mobile forms and reporting products.
According to Fildey’s plea agreement, beginning on or before September 30, 2015 and continuing through August 12, 2017, Fildey used various methods to defraud GoFormz. His deceptive ways included obtaining loans, supposedly on the company’s behalf, but then taking the funds for himself, putting personal expenditures on the GoFormz credit cards which the company then paid for, obtaining cash advances for himself on GoFormz credit cards, and simply stealing money directly from the company’s bank account.
As just one example, on September 1, 2016, Fildey obtained a business loan for GoFormz by misrepresenting the purpose of the loan. The loan was approved and on September 7, 2016, $146,250 was wired to GoFormz’s bank account. That same date, Fildey wired the entire amount to his personal bank account. Fildey used the funds for personal expenses while GoFormz made payments on the loan. Fildey took out a total of three unauthorized loans on behalf of GoFormz and each time transferred the funds to his personal bank account shortly after the loan funds were transferred to GoFormz. In addition to the loans, Fildey withdrew over $700,000 in cash from the GoFormz bank account for his personal use, and made over $2,600 in unauthorized purchases on the GoFormz corporate credit card.
“Defendant abused a position of trust to brazenly steal company assets, treating GoFormz Inc. as his own private slush fund,” said U.S. Attorney Robert S. Brewer. “Thanks to the dedicated work of our law enforcement partners at the FBI, he will be held fully accountable for his fraudulent misdeeds.”
“The FBI identified and disrupted this fraud perpetrated by Jeffrey Fildey," said Acting Special Agent in Charge Omer Meisel. “The FBI is committed to identifying and preventing fraud schemes that harm our financial and business sectors.”
Fildey admitted in his plea agreement that as a result of his fraud, GoFormz lost $1,544,147. Fildey is next scheduled to appear before U.S. District Court Judge Larry Burns for sentencing on November 9, 2020.
U.S. Attorney Brewer commended AUSA Michelle Wasserman for her work prosecuting this matter.
DEFENDANT Case Number 20cr1917-LAB
Jeffrey Fildey Age: 56 Las Vegas, NV
SUMMARY OF CHARGES
Wire Fraud – Title 18, U.S.C., Section 1343
Maximum penalty: 20 years’ imprisonment and $250,000 fine or twice the gross gain or loss from the offense, whichever is greater
AGENCY
Federal Bureau of Investigation
Department of Justice Awards $2.2 Million for Innovative Community Policing ProjectsRead the Press Release
NEWS RELEASE SUMMARY – July 7, 2020
SAN DIEGO – The Department of Justice today announced $2.2 million in grant funding to law enforcement agencies and stakeholders through the Department’s Office of Community Oriented Policing Services (COPS Office) Community Policing Development (CPD) Microgrants Program. COPS Office Director Phil Keith announced 29 awards with award amounts ranging from $15,090 to $100,000.
In the Southern District of California, the Chula Vista Police Department was chosen to receive a $97,500 grant to support its human trafficking program. The agency is the only local law enforcement department in California to receive a CPD Microgrant award.
“Additional funds to respond to the threat of human trafficking are particularly important now,” said U.S. Attorney Robert Brewer. “The coronavirus pandemic has young people spending countless hours on their phones, and unfortunately this renders them prey for human traffickers who exploit social media.”
“The CPD Microgrants Program is a critical resource to advance innovative community policing projects across the country,” said Director Keith. “These strategic investments from the COPS Office pay huge dividends to state and local law enforcement agencies and the communities that they serve.”
CPD Microgrants Program funds are used to develop the capacity of local, state, and tribal law enforcement agencies to implement community policing strategies. Applicants were invited to propose demonstration or pilot projects to be implemented in their agency that offer creative ideas to advance crime fighting, community engagement, problem solving, or organizational changes to support community policing in one of the following areas:
- Human Trafficking
- Meeting Rural Law Enforcement Challenges
- Officer Safety and Wellness
- Recruitment, Hiring, and Retention
- School Safety
- Staffing and Allocation Studies
- Victim-Centered Approaches
- Violent Crime
- Youth Engagement
Funding through this program is available for the first time since 2018, following the successful removal of a nationwide injunction. These awards are being announced at a critical time for our country, when community policing strategies are very much needed to improve police and community relations.
The complete list of awards can be found here https://cops.usdoj.gov/pdf/2020AwardDocs/cpdmicrogrants/Award_List.pdf. To learn more about CPD Microgrants, please visit https://cops.usdoj.gov/cpdmicrogrants. For additional information about the COPS Office, please visit www.cops.usdoj.gov.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Three Defendants Plead Guilty in $65 Million Health Care Fraud; Additional Charges Brought Against Alleged RingleadersRead the Press Release
Assistant U. S. Attorney Mark Pletcher (619) 546-9714
NEWS RELEASE SUMMARY – June 23, 2020
SAN DIEGO – Three former U.S. service members pleaded guilty in federal court today, admitting their roles in a fraud scheme that bilked the military healthcare program known as TRICARE out of more than $65 million.
Kyle Adams, Daniel Castro and Jeremy Syto are scheduled to be sentenced September 11, 2020 before U.S. District Court Judge Janis L. Sammartino.
At the same time, the alleged ringleaders of this scheme were charged with additional crimes. Jimmy and Ashley Collins, a civilian married couple living in Cleveland, Tennessee, were originally charged in January 2018. They were charged on June 9, 2020 with additional crimes related to their operation of the scheme that cheated the health care program that covers United States military service members, retirees, and their dependents.
As Adams, Castro, and Syto admitted today, the defendants illegally recruited TRICARE patients to receive extraordinarily expensive and largely unnecessary prescription compounded drugs—which cost TRICARE an average of more than $14,500 per medication per month. They induced the patients to sign up by offering monthly payments to participate in a bogus “medical evaluation,” when, in fact, no medical evaluation was taking place.
“The military is very important to San Diego, and the U.S. Attorney’s Office and its law enforcement partners will ensure that military dollars are legally spent on necessary goods and services for military personnel,” said U.S. Attorney Robert Brewer. “Fraudsters, scammers, charlatans and thieves beware, there is no free passage through San Diego.”
“The theft of military health care dollars directly harms our Warfighters and will not be tolerated,” said Michael Mentavlos, Special Agent in Charge, Southwest Field Office, Defense Criminal Investigative Service. “Today’s guilty pleas demonstrate that DCIS, in partnership with NCIS, IRS, and the FBI, will aggressively pursue those who pillage DOD resources.”
“NCIS and our law enforcement partners began to uncover this multimillion dollar scheme to defraud the military thanks to a tip from a single service member,” said NCIS Marine Corps West Field Office Special Agent in Charge Amy Murphy. “These results highlight how critically important it is for our military personnel and family members to remain vigilant and always report suspected fraud. NCIS is grateful to the Defense Criminal Investigative Service, the Internal Revenue Service, and the FBI for their exceptional efforts during this extensive investigation.”
Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient requires a particular dosage or application or is allergic to a dye or other ingredient.
Adams, Castro, and Syto admitted today that between October 2014 and July 2015, they worked as recruiters for Jimmy and Ashley Collins. At the Collins’ direction, the defendants recruited TRICARE beneficiaries by promising to pay them to evaluate the medications as part of an ongoing medical study, when in reality, no study was taking place. Once a recruiter convinced a TRICARE beneficiary to sign up to receive the compounded medications, the straw beneficiary’s information was sent to Choice MD, a Tennessee medical clinic co-owned and operated by Jimmy and Ashley Collins. Doctors and medical professionals employed by the Collinses at Choice MD, including Dr. Susan Vergot, Dr. Carl Lindblad, and Candace Craven, then wrote prescriptions for the TRICARE beneficiaries, despite never conducting a medical review or examination of the patients in person. Once signed by the doctors, these prescriptions were not given to the straw beneficiaries, but sent directly to The Medicine Shoppe, a pharmacy in Bountiful, Utah, which filled the prescriptions and received massive reimbursement from TRICARE.
Between December 2014 and May 9, 2015 – the day that TRICARE stopped reimbursing for compounded medications – the doctors working for the Collinses at Choice MD authorized 4,442 prescriptions and billed TRICARE $65,679,512.00 for these prescriptions.
The owners of The Medicine Shoppe then paid kickbacks to the Collinses based on a percentage of the TRICARE reimbursement paid for the prescriptions referred by the Collinses’ recruiter network. Between February and July 2015, these kickback payments to the Collinses totaled at least $45.7 million dollars. The Collinses, in turn, paid kickbacks to the recruiters working as part of their network, including Adams, Castro, and Syto, among others.
The Superseding Indictment also includes a lengthy list of forfeitable funds, property, and items purchased by the Collinses and others with the proceeds of the scheme, all of which has been previously seized or restrained by the United States. Included among these items is an 82-foot yacht, multiple luxury vehicles, including two Aston-Martins, dozens of pieces of farm equipment and tractor-trailer trucks, and three pieces of Tennessee real estate.
In addition to today’s guilty pleas from Adams, Castro, and Syto, both Dr. Vergot and Dr. Lindblad as well as Candace Craven, a nurse practitioner at Choice MD, have previously pleaded guilty for their roles in the conspiracy to commit healthcare fraud. CFK, Inc., the corporate owner of the Medicine Shoppe, has also pleaded guilty and paid a fine as part of this investigation.
Josh Morgan, another patient recruiter and former Marine from San Diego, pleaded guilty in March 2018 for his role in recruiting TRICARE beneficiaries to fraudulently receive these prescriptions, as did another former Marine, Bradley White, who admitted in July 2019 that he recruited patients who billed TRICARE over $7.6 million, for which he was paid over $195,000.
The next court date for defendants Jimmy and Ashley Collins is July 2, 2020.
DEFENDANTS
Case Number 18CR0432
Jimmy D. Collins Age: 56 Cleveland, TN
Ashley Collins Age: 33 Cleveland, TN
Kyle Adams Age: 33 Victoria, TX
Daniel Castro Age: 32 Oak Lawn, IL
Jeremy Syto Age: 26 Chula Vista, CA
SUMMARY OF CHARGES
Count 1:
Conspiracy to Commit Health Care Fraud – Title 18, U.S.C §§ 1349, 1347
Maximum Penalty: Ten years’ in prison and fine of higher of $250,000 or twice loss amount
Counts 2:
Conspiracy to Pay and Receive Illegal Remunerations
Conspiracy to Defraud the United States
Maximum Penalty: Five years in prison and fine of higher of $250,000 or twice loss amount
Counts 3-7:
Receipt of Illegal Remunerations – Title 42 U.S.C. § 1320(a)-7b(b)(1)
Maximum Penalty (per count): Five years in prison; $250,000 fine
Counts 8-13:
Payment of Illegal Remunerations -- Title 42 U.S.C. § 1320(a)-7b(b)(2)(A)
Maximum Penalty (per count): Five years in prison; $250,000 fine
AGENCY
Defense Criminal Investigative Service
Naval Criminal Investigative Service
IRS Criminal Investigation Division, Gulfport, MS
Federal Bureau of Investigation - Jackson, MS Field Office
*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’s Office Works to Raise Awareness Prevent and Stop Elder Fraud on World Elder Abuse Awareness DayRead the Press Release
NEWS RELEASE SUMMARY – June 15, 2020
SAN DIEGO – Today, U.S. Attorney Robert S. Brewer, Jr. joined Attorney General William P. Barr and the entire Department of Justice in observing the 15th Annual World Elder Abuse Awareness Day. The Department echoes voices around the world condemning elder abuse, neglect and exploitation.
The COVID-19 pandemic has created unprecedented challenges for our country and the world, but among those most severely affected by the threat of the novel virus are our senior citizens. During this time when seniors are most vulnerable and isolated from their families and loved ones by social distancing and quarantine restrictions, bad actors have immediately exploited this international tragedy to prey on the elderly through a whole host of scam and fraud schemes. As the world takes this day to remember the elderly during these uncertain times, the Department of Justice remains relentlessly committed, through its department-wide Elder Justice Initiative, to prevent and prosecute fraud on America’s seniors.
The Department is aggressively prosecuting fraudsters exploiting the Covid-19 pandemic and targeting seniors offering them fake testing kits and fraudulent claims of assistance in obtaining stimulus and Paycheck Protection Program Funds.
“On this day dedicated to recognizing our seniors, the Department of Justice sends a strong message that we are continuing our ongoing fight to keep seniors safe from elder abuse and exploitation. Our district’s federal prosecutors recently joined AARP in holding a virtual town hall for seniors, to ensure that they are not defrauded of their hard-earned and sometimes limited resources on false claims of non-existent COVID-19 cures,” said U.S. Attorney Robert S. Brewer. “With AARP’s collaboration, we successfully directed more than 4,500 listeners to best practices and available resources.”
Attorney General Barr has declared “Prevention and Disruption of Transnational Elder Fraud” to be an Agency Priority Goal, making it one of the Department’s four top priorities. The Southern District of California has brought federal charges targeting elder fraud, including the successful prosecution of Samuel Davalos Jr., who was sentenced in November 2019 to 18 months in prison after admitting to embezzling $117,305 from vulnerable older account holders at the Point Loma Credit Union where he worked as a teller. Davalos, 28, pleaded guilty last year to one count of bank fraud, acknowledging that from July 2017 to March 2019, he used his account access to defraud the credit union and its members by processing unauthorized withdrawals from members’ accounts, even creating unauthorized checks and other instruments paid to himself and his accomplices. Significantly, Davalos admitted that he purposely selected older members of the credit union as his victims because he believed they were less likely to notice the stolen funds.
The Department is conducting significant outreach to ensure that seniors recognize and report fraud and have prioritized the resulting investigations. Major strides have already been made to that end, including:
• National Elder Fraud Hotline: 833-FRAUD-11
Earlier this year Attorney General Barr launched a National Elder Fraud Hotline. Staffed by experienced case managers who provide personalized support to callers, the hotline serves to assist elders and caretakers who believe they have been a victim of fraud by reporting and providing appropriate services.
• Transnational Elder Fraud Strike Force: Established in June 2019 to combat foreign elder fraud schemes, the Strike Force is composed of the Department’s Consumer Protection Branch and six U.S. Attorneys’ Offices along with FBI special agents, Postal Inspectors, and numerous other law enforcement personnel. Since its inception, prosecutors in Strike Force districts brought cases against more than 140 defendants.
• Annual Elder Justice Sweep: In March of this year, the Attorney General announced the largest coordinated sweep of elder fraud cases in department history. The Department, together with every U.S. Attorney’s office, charged more than 400 defendants who collectively caused over $1 billion in loss through fraud schemes that largely affected seniors.
• Money Mule Initiative: Since October 2018, the Department and its law enforcement partners began a concentrated effort across the country and around the world to disrupt, investigate, and prosecute money mule activity used to facilitate fraud schemes, especially those victimizing senior citizens. In 2019 actions were taken to halt the conduct of more than 600 domestic money mules, exceeding a similar effort against approximately 400 mules in the previous year. (Money mules are individuals who assist fraud schemes by receiving money from victims, many of them elderly, and forwarding proceeds to foreign-based perpetrators. While the fraud schemes vary greatly, they include imposters who call would-be victims claiming to represent some official entity such as the IRS or even a personal acquaintance such as the would-be victim’s grandchild. Scams are also conducted via email, with scammers trying to lure would-be victims to provide personal information, perhaps by claiming they have won prizes. In all cases, the end goal is to bilk unsuspecting victims of money.)
• Holding foreign-based perpetrators and those that flee the United States accountable: Transnational criminal organizations are targeting our elder population in schemes including mass mailing fraud, grandparent scams, romance scams, lottery and sweepstakes scams, IRS and Social Security Administration imposter scams, and technical-support scams.
For more information on enforcement actions, training and resources, research, and victim services, please visit www.justice.gov/elderjustice.
Bank Robber Who Fled on Lime Electric Scooter Sentenced to 57 MonthsRead the Press Release
NEWS RELEASE SUMMARY – June 15, 2020
SAN DIEGO – Mario Daniel Haro, a United States Citizen who resided in Rosarito, Mexico, was sentenced in federal court today to 57 months in prison and ordered to pay restitution for robbing a Chula Vista bank in 2019.
Haro pleaded guilty on February 3, 2020, admitting that he robbed a San Diego bank by presenting a demand note that threatened the teller. He fled the crime scene on a Lime electric scooter. This was Haro’s second federal conviction for bank robbery. In 2008, Haro was also convicted of robbing a Chula Vista bank in case number 08CR0649-BTM.
“Unfortunately this defendant failed to take advantage of his second chance and committed an additional violent crime,” said U.S. Attorney Robert Brewer. “As this case demonstrates, individuals who reoffend will be investigated, arrested and convicted and usually the sentence will be longer. Hopefully this time the defendant learned a lesson.”
In his plea agreement, Haro admitted that, on October 14, 2019, at approximately 3:00 p.m., he entered the Chase Bank at 2121 Olympic Parkway in Chula Vista, California, and approached a teller window. Haro told the teller he had a gun and presented the teller with a demand note, which read: “I have a GUN! Give me all money. NO INK Packages.” The teller fearing for her life, her co-workers, and the banks patrons’ safety, complied with the demands and provided Haro with approximately $1,000 in cash. After receiving the cash from the victim teller, Haro exited the bank and then fled the scene.
“The FBI's Violent Crimes Task Force (VCTF), which joins law enforcement personnel and resources, works to swiftly solve cases to prevent series bank robberies like this one,” commented Acting FBI Special Agent in Charge Omer Meisel. “The safety of the San Diego community is a priority for the FBI VCTF.”
Brewer commended the prosecutor in this case, AUSA Matthew Brehm, the Chula Vista Police Department and the FBI for their diligent work in this investigation. The Chula Vista Police Department’s spokesperson recognized “the collaboration and cooperation with the Federal Bureau of Investigation, United States Attorney’s Office and the Violent Crime and Human Trafficking (VCHT) Taskforce that led to the identification, arrest and successful prosecution of bank robbery suspect Mario Haro. The joint efforts by all involved have made for a safer community in Chula Vista and the San Diego region.”
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.
DEFENDANT Case Number 19cr4747-W
Mario Daniel Haro Age: 32 Rosarito, Baja California, Mexico
SUMMARY OF CHARGES
Bank Robbery – Title 18, U.S.C., Section 2113(a)
Maximum penalty: 20 years’ imprisonment and $250,000 fine
AGENCY
Federal Bureau of Investigation
Chula Vista Police Department
Defense Contractor SAIC Pays $5.98 Million to Settle False Claims Act InvestigationRead the Press Release
NEWS RELEASE SUMMARY – June 15, 2020
SAN DIEGO – Science Applications International Corporation (SAIC), a major defense contractor headquartered in Reston, Virginia, has paid $5,982,865 to resolve allegations that it violated the federal False Claims Act. The settlement arises out of a contract for SAIC to provide information technology support to the U.S. Army.
The United States Attorney’s Office for the Southern District of California and the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU), with assistance from the Air Force Office of Special Investigations, began its investigation after SAIC self-disclosed certain time charging and contract administration irregularities associated with a U.S. Army contract. The contract in question was awarded to SAIC by U.S. Army Aviation and Missile Command Expedited Professional & Engineering Support Services (AMCOM EXPRESS). Specifically, SAIC was awarded a particular task order (the contract) for “Soldier Protection Lab Systems Engineering, Development, and Modeling Support.” Portions of the contract were performed in San Diego County, in part, for the benefit and training of Marines at Camp Pendleton.
The United States contended that SAIC employees misused administrative leave by working on contract requirements for a certain project before funding was available and then later clearing those charges by adding extra billing hours that were not worked to a separate project. The United States also contended that SAIC employees were provided charge codes for their hours to be recorded to projects with available funding, while they continued to work on tasks that were not funded. Once the new funding arrived, the employees working on a project that provided the original funding would then charge their hours to the new project. The United States contended that SAIC knowingly submitted to the government false claims for payment for the mischarging on these projects.
“As always, we are committed to doing our part in preserving the integrity of the government contracting process and protecting the tax payer,” said Robert Brewer, Jr., United States Attorney for the Southern District of California. He further noted that, “while it is encouraging to see a Fortune 500 corporation accept responsibility for its wrongdoing, we remain vigilant in our efforts to stem the tide of fraud, waste, and abuse that impacts our military.” On behalf of the Department of Justice, U.S. Attorney Brewer expressed gratitude to Assistant U.S. Attorneys Joseph Purcell and Paul Starita and the team of dedicated federal agents whose diligent work on this case led to the instant settlement. The U.S. Army Criminal Investigation Command’s MPFU was the lead investigative agency working with the Affirmative Civil Enforcement Section of the United States Attorney’s Office to bring this matter to a swift resolution. “We commend SAIC for coming forward with the contract discrepancies and working with law enforcement on this settlement,” said Frank Robey, Director of the U.S. Army Criminal Investigation Command’s MPFU. “The MPFU and our law enforcement partners, remain diligent in our efforts to ensure that those who disregard the law will be held accountable for their actions.”
This matter was investigated by Assistant U.S. Attorneys Joseph Purcell and Paul Starita and auditing personnel of the Affirmative Civil Enforcement Unit of the U.S. Attorney’s Office, in coordination with Special Agents of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit, Air Force Office of Special Investigations, and auditing personnel of the Defense Contract Audit Agency.
Chinese National Sentenced to Three Years for Attempting to Send an Export-Controlled Radio to ChinaRead the Press Release
NEWS RELEASE SUMMARY – June 12, 2020
San Diego – Qingshan Li, a national of the People’s Republic of China, was sentenced in U.S. District Court today to three years in federal custody for attempting to send to China an export-controlled radio, which is designated as a defense article due to its certification by the National Security Agency for Top Secret wire and data communications.
At sentencing, Assistant U.S. Attorney Alexandra Foster noted that for weeks preceding his arrest, Li was communicating with a man identified by the Government as “AB.” Li wanted to buy specific U.S. military equipment from AB, including the Harris Falcon III AN/PRC 152A radio (the Radio). Li had previously purchased U.S. military equipment from AB. Li flew into San Diego from China on a tourist visa on June 28, 2019, with a return ticket for July 7, 2019. The next day, Li drove his rental car to AB’s storage unit in San Diego and purchased the Radio, along with other military radios, antennas, additional military equipment and a map of North Island Naval Air Station. Li informed AB that Li planned to take the Radio to Tijuana, Mexico, and ship it to China from Tijuana in light of the lack of export-control rules in Mexico. Li agreed to pay AB 50,000 renminbi (approximately $7,200) for the Radio. Li gave AB a $600 cash down payment toward the purchase price of the Radio at the storage locker, with the promise of paying AB the remaining $6,600 at a later date.
AUSA Foster pointed out that this Radio was not a cheap make-believe radio meant for costume play. It was designated a defense article on the United States Munitions List and subject to ITAR (International Trafficking in Arms Regulations, Title 22, Code of Federal Regulations, Parts 120 et seq.). A license from the Department of State, Directorate of Defense Trade Controls, is required to export the Radio from the United States. AUSA Foster emphasized that the Radio is designated export-controlled for a reason: it is certified by the National Security Agency for Top Secret wire and data communications. Any breach in these communications could mean deadly results for U.S. Navy SEALS and other U.S. Military personnel using this equipment in the field.
The record demonstrates that soon after law enforcement agents stopped Li with the Radio and other military equipment in his bag, they interviewed him. At that time, Li stated that he knew the Radio was export controlled, and he knew that it was illegal for the Radio to be transported to China. Li stated that he purchased the Radio with the intent to ship it to China, knowing he was violating United States law.
At the sentencing, U.S. District Court Judge Cathy Ann Bencivengo noted that there was nothing mistaken about this crime. Li intended to buy this Radio and get it to China. In doing so, he was endangering the lives of U.S. Military servicemembers. Judge Bencivengo noted that Li would be deported after he served his sentence and lose his visa, which would reduce the threat to the United States going forward. Accordingly, Judge Bencivengo sentenced Li to 36 months.
“The exportation of sensitive U.S. defense technology risks the lives of American military personnel and imperils our nation’s overall security,” said U.S. Attorney Robert Brewer. “Mr. Li’s sentence demonstrates this office’s ongoing commitment to holding fully accountable those who cavalierly violate our export control laws.” U.S. Attorney Brewer specifically commended “AUSA Alexandra Foster and the stellar team of federal agents who diligently pursued justice in this case.”
“Our military technology and communication equipment is at the core of maintaining the safety of our US military personnel and the security of our nation," said Omer Meisel, FBI Acting Special Agent in Charge of the San Diego Field Office. “The FBI is committed to working with our military and national security partners, including NCIS, to stop individuals, like the defendant in this case, from engaging in the theft of information and sensitive technology for a foreign government or at the direction of an agent of a foreign government. Our country's national security is the highest priority, and the FBI will do everything in our power to protect it.”
“Mr. Li’s criminal attempt to obtain sensitive military communications technology and provide it to China posed a serious threat to the U.S. military’s warfighting capability,” said NCIS Southwest Field Office Special Agent in Charge Garrett Waugh. “The sentencing should serve as a warning that NCIS and our partner law enforcement agencies will always fully investigate and bring to justice nefarious actors like Mr. Li who seek to diminish the U.S. military’s strategic edge. We credit this investigative success to the outstanding collaboration among NCIS and our partner law enforcement agencies with support from the Naval Special Warfare Command.”
This matter was investigated and prosecuted by Assistant U.S. Attorney Alexandra Foster, in coordination with the National Security Division of the Department of Justice, the FBI and NCIS.
DEFENDANT Case Number: 19CR2564-CAB
Qingshan LI Age: 34
SUMMARY OF CHARGE
Unauthorized Solicitation of Access Devices, 18 USC Sec. 371, Conspiracy to Attempt to Export Defense Articles Without a License.
Maximum Penalty: Five years in prison, three years’ supervised release, $250,000 fine, restitution.
AGENCIES
Federal Bureau of Investigation
Naval Criminal Investigative Service
DOJ National Security Division
Former Calexico City Officials Admit to Accepting BribesRead the Press Release
NEWS RELEASE SUMMARY – June 11, 2020
SAN DIEGO – Former Calexico City Councilman David Romero and Bruno Suarez-Soto, a former commissioner on the city’s Economic Development and Financial Advisory Commission, pleaded guilty in federal court today to corruption charges, admitting that they accepted cash bribes in exchange for promises of official action by the city.
The defendants entered their pleas before U.S. Magistrate Judge Bernard G. Skomal, who set sentencing for September 4, 2020 before District Judge Cathy Ann Bencivengo. Romero and Suarez-Soto were allowed to remain free on $10,000 personal appearance bonds secured by their own signatures.
According to their plea agreements, Romero and Soto accepted $35,000 in cash bribes from an undercover FBI agent who they believed represented investors seeking to open a cannabis dispensary in Calexico. In return, Romero and Soto guaranteed the rapid issuance of a city permit for the dispensary, and to revoke or hinder other applicants if necessary to ensure that the bribe payer’s application was successful. Both men admitted they had taken bribes from others in the past. Referring to this $35,000 payment, they told the undercover agent, “This isn’t our first rodeo.”
In addition to being a councilman, Romero served as Calexico’s Mayor Pro Tem, meaning he was set to become Mayor in July 2020. Soto recently resigned from the City commission responsible for promoting business and community growth and coordinating with prospective developers to help them invest in the City of Calexico. Romero resigned his position with the City of Calexico as part of his plea agreement, effective Monday, June 8.
“David Romero was about to become the highest-ranking public official in the city of Calexico, but he and his partner-in-crime sold their power and influence to the highest bidder in a secret pay-to-play scheme,” said U.S. Attorney Robert Brewer. “They are the ones who will pay now.”
“The corruption, lies, and greed of Romero and Suarez-Soto were uncovered by FBI Agents working in our Imperial Valley Office,” said Omer Meisel, Acting FBI Special Agent in Charge of the San Diego Division and Imperial County Resident Agency. “The community in Imperial Valley has a right to leaders who put the public's interest first and serve the community honorably. The FBI is committed to investigating those who violate their position of trust.”
According to their plea agreements, during a December 19, 2019 meeting at a restaurant in Calexico with the undercover FBI agent, Romero and Soto agreed to fast-track the agent’s purported application for a cannabis dispensary permit and guaranteed its rapid issuance in exchange for a $35,000 bribe. The defendants also offered to delay permit applications by competitors.
Toward the conclusion of the December 19, 2019 meeting, when the undercover agent asked if Romero and Soto might later ask for more than the $35,000 payment, Romero assured him that they would not, per court filings. “This is done. Set and sealed,” Romero said. Romero explained that he and Soto would require the money to be paid up front, however, because they had done similar work for other people, and those people had not paid the agreed-upon fee after the favors had been rendered. Romero and Soto agreed to accept payment of the $35,000 from the agent in two installments, however: half up front, and half “when it’s a for sure thing.”
At this meeting the undercover agent asked whether the payment of $35,000 would “get us in front of the line” of applicants. Soto answered, “Hell yeah,” according to court records. Romero added that he “didn’t want to say it in front of everybody, but it will.”
On January 9, 2020, Romero and Soto attended a second meeting with the undercover agent at a restaurant in El Centro, California. During the meeting, according to court filings, Romero reminded the undercover agent how difficult it was to work with the City of Calexico, and how fortunate it was that the agent was working with Romero. Soto later added that in return for the bribe, Romero would cut through “so much bullshit [red] tape that exists” with the City.
During a discussion of the approval process for the permit application referenced in court records, Romero explained that the people who have to approve the undercover agent’s license were “my best friends at the entire City Hall.” When asked if the “best friends” had already signed off on the plan, Romero responded “Fuck, yeah!” and laughed.
According to admissions in the plea agreements and documents filed in court, at the conclusion of the January 9, 2020 meeting, in the parking lot outside the restaurant, with Romero looking on, the undercover agent handed Soto $17,500 in cash and explained that he divided the first installment of the bribe into two envelopes: one with $8,800 and another with $8,700. The agent asked whether “we’re good,” and Romero responded, “Trust me” and added, “In my line of business, I can’t fuck up. Which means he [Soto] can’t fuck up.”
The defendants accepted the second installment, $17,500 in cash, during a third meeting on January 30 in a parking lot outside a restaurant in El Centro, per the plea agreements. Both men also admitted to creating a shell corporation to launder the proceeds of their bribery scheme.
The charges filed in the case also allege that both men lied to the FBI when interviewed by agents at the conclusion of the January 30 meeting. Romero falsely denied being part of any agreement with the undercover agent, and denied that anyone had made any “guarantees” to the agent. Similarly, Soto falsely denied making any “guarantees” to the undercover agent and denied receiving any prior payments from the agent.
U.S. Attorney Brewer praised Assistant U.S. Attorney Nicholas Pilchak, DOJ Public Integrity Section trial attorney Joshua Rothstein and FBI agents for working hard to achieve justice in this matter.
The case against Romero and Suarez-Soto is a public corruption investigation being conducted by the FBI and the U.S. Attorney’s Office. Any member of the public who has information related to this or any other public corruption matter in Imperial County or San Diego is encouraged to provide information to the FBI’s email tip line at tips.fbi.gov or to contact their local FBI Field Office. In Imperial County, the FBI can be reached 24 hours a day at 858-320-1800 or 1-877-NO-BRIBE (662-7423).
DEFENDANTS Case Number 20cr1215
Calexico City Councilman David Romero Age: 36 Residence: Calexico, CA
Calexico City Commissioner Bruno Suarez-Soto Age: 28 Residence: Calexico, CA
SUMMARY OF CHARGES
Conspiracy to Commit Federal Program Bribery, in violation of Title 18, United States Code, Sections
371 and 666 (a) (1) (B)
Maximum Penalty: Five years in prison; $250,000 fine.
AGENCY
Federal Bureau of Investigation
Operators of California Charity Plead Guilty to Mail Fraud Conspiracy and Tax EvasionRead the Press Release
A California couple pleaded guilty yesterday to conspiring to commit mail fraud and tax evasion, 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, married couple Geraldine Hill and Clayton Hill operated On Your Feet (OYF), also known as Family Resource Center, a tax-exempt charitable organization whose stated mission was to provide assistance to low income families and individuals in need. From 2011 through 2016, the Hills fraudulently obtained more than $1.35 million in donated clothing and other items by falsely representing to the donors that the items would be given to needy recipients. In fact, the Hills made charitable donations of only about $13,000, sold the remaining donated items, and used the proceeds to financially enrich themselves and others. To conceal their conduct from the Internal Revenue Service (IRS), the Hills filed false charitable tax returns for OYF and false personal tax returns that did not report the income they received from their scheme.
“The Hills not only evaded their taxes, but they did so by abusing their company’s tax-exempt charitable status and thereby cheated not only the public fisc but the donors and intended beneficiaries of the donations,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman. “As the guilty pleas make clear, this conduct will not go unpunished.”
“I am committed to using the resources of the U.S. Attorney’s Office in the Southern District of California to aggressively pursue fraudsters and tax cheats,” said U.S. Attorney Robert S. Brewer Jr. for the Southern District of California. “The conduct by Geraldine and Clayton Hill is particularly offensive because they used the benefits afforded by the 501(c)(3) status of their charity to defraud donors and conceal their profits. By abusing the generosity of companies and individuals who put their faith in the promises made by the Hills, the defendants threatened to undermine the trust and integrity underpinning charitable giving.”
“Geraldine Hill and Clayton Hill exploited the public trust and charitable giving by using their charity to solicit over $16 million in goods from hardworking businesses and falsely promising to donate those goods to assist low income families and individuals in need,” said Ryan L. Korner, Special Agent in Charge of the IRS Criminal Investigation Division. “Instead, the Hills resold the goods and profited over $1.34 million which they spent on vehicles, vacations, and entertainment, as well as personal expenses for their family members. The Hills concealed their fraud by filing false tax returns on behalf of the charity and failing to report their illicit income to the IRS. Their guilty pleas evidence the hard work of IRS Criminal Investigation Special Agents to bring to justice those that defraud businesses in the name of charity, and who benefit themselves instead of serving those most in need.”
“While fraud is always wrong, the theft of charitable donations that were to be used to help San Diego’s low income families is particularly disheartening,” said Acting FBI Special Agent in Charge Omer Meisel. “This type of fraud and deceit for personal gain simply cannot be tolerated. The FBI is committed to ensuring that white collar predators don’t prevent those less fortunate from receiving all the benefits that generous donors provide to seemingly legitimate non-profit organizations.”
U.S. District Judge Dana M. Sabraw scheduled the sentencing for Aug. 28, 2020. At sentencing, the Hills face a maximum sentence of five years in prison for each mail fraud conspiracy and tax evasion. The Hills also face a period of supervised release, restitution, and monetary penalties.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Brewer commended special agents of the IRS-Criminal Investigation Division and the FBI, who conducted the investigation, and Trial Attorney Valerie Preiss of the Tax Division and Assistant U.S. Attorney Rebecca Kanter, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the Division’s website.
Man Charged with Pointing Laser at Police HelicopterRead the Press Release
Assistant U. S. Attorney John Parmley (619) 546-7957
NEWS RELEASE SUMMARY – June 10, 2020
SAN DIEGO – Rudy Alvarez of Lemon Grove was charged in federal court today with knowingly aiming the beam of a laser pointer at a San Diego Police helicopter as the aircraft flew over protests in the wake of George Floyd’s death in Minneapolis.
According to a federal complaint, the incident occurred at a large demonstration that passed through the area of 500 University Avenue in Hillcrest on June 6 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 impeded their ability to safely operate the helicopter.
“Aiming a laser pointer at or near an aircraft could cause distraction or blindness to a pilot and the consequences could be devastating,” said U.S. Attorney Robert Brewer. “We support the Constitutional rights of free speech and assembly, but it is our duty to protect the public and law enforcement from danger.”
“The use of laser pointers upon law enforcement aircraft threatened the safety of the police officers protecting lawful protestors and created a potentially dangerous incident,” said FBI San Diego Acting Special Agent in Charge Omer Meisel. “The FBI is focused on identifying and investigating individuals who commit crimes that threaten the safety of our community and will continue to work with our local partners to pursue federal prosecutions.”
Alvarez was arraigned in federal court today. U.S. Magistrate Judge Daniel E. Butcher set bond at $5,000. The next hearing is scheduled for June 23 at 9 a.m. before Judge Butcher.
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.
Based on a description of the man pointing the laser, San Diego police detectives located and later identified Rudy Alvarez in the crowd of demonstrators in the vicinity of 600 G Street at approximately 9:45 p.m. One detective noted that Alvarez was wearing the same clothing as described by the officers in the helicopter. Alvarez was arrested without incident.
After his arrest, detectives found a high-powered gray metal laser pointer in Alvarez’s front left pant pocket.
DEFENDANT Case Number 20MJ2212
Rudy Alvarez Age: 24 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
AGENCY
San Diego Police Department
Federal Bureau of Investigation
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Two-Time Bank Robber Sentenced to 41 MonthsRead the Press Release
Assistant U. S. Attorney Matthew Brehm (619) 546-8983
NEWS RELEASE SUMMARY – June 8, 2020
SAN DIEGO – Timothy Huss of El Cajon was sentenced in federal court today to 41 months in prison and ordered to pay restitution for robbing two San Diego banks in 2019.
Huss pleaded guilty on November 19, 2019, admitting that he robbed the banks by presenting demand notes that threatened the tellers. He was apprehended by police officers after he fled the second robbery.
“Bank robberies are terrifying and dangerous experiences for tellers and customers,” said U.S. Attorney Robert Brewer. “Thanks to the hard work of prosecutor Matt Brehm and our law enforcement partners, we achieved justice in this case.”
In his plea agreement, Huss admitted that, on September 14, 2019, at approximately 9:46 a.m., he entered the Chase Bank branch at 3490 College Avenue in San Diego, approached the teller window and presented the teller with a demand note, which requested money and threatened the teller. The teller complied with Huss’ demands and provided him with approximately $4,410. He made his getaway on foot.
Huss also admitted that, on September 20, 2019, at approximately 3:13 p.m., he entered the Well Fargo branch at 1350 Fashion Valley Road in San Diego and approached the teller window. Huss provided the teller with a demand note which read, “Keep Actin (sic) Normal. Put the cash in a bag no die (sic) or GPS or Im coming back.” The teller passed $520 in U.S. currency and $40 in bait bills to Huss, including a GPS tracker pack with a specific serial number. Huss took the bills and bait bills, placed them in a laptop bag, took the demand note and fled the bank on foot.
“The successful conclusion of this case was due to coordinated and ongoing teamwork between the SDPD Robbery Unit, the FBI, and the Violent Crime and Human Trafficking Section,” said San Diego Police Lt. Julie Epperson. “Collaboration with our law enforcement partners creates a stronger defense against criminals who prey on the public.”
FBI San Diego Acting Special Agent-in-Charge Omer Meisel commented, “The FBI will continue to work with our law enforcement partners to keep the San Diego community safe from those whose criminal behavior threatens the well-being and security of our citizens.”
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.
DEFENDANT Case Number 19cr4038-W
Timothy Huss Age: 30 El Cajon, CA
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 Investigation
San Diego Police Department
Sea Cucumber Smuggler Sentenced to Eight Months JailRead the Press Release
Assistant U. S. Attorney Melanie K. Pierson (619) 546-7976
NEWS RELEASE SUMMARY – June 9, 2020
SAN DIEGO –Claudia Castillo of Tijuana was sentenced in federal court today to eight months in custody for smuggling endangered sea cucumber into the United States from Mexico. U.S. District Judge Jeffrey T. Miller handed down the sentence and also ordered Castillo to pay $12,000 restitution to the government of Mexico.
Castillo previously pleaded guilty to Conspiring to Import Merchandise Contrary to Law, in violation of Title 18, United States Code, Section 371 and 545.
At the time of her guilty plea, Castillo admitted that between January 19, 2018 and September 4, 2019, she conspired with others to smuggle and illegally import sea cucumbers of the species Isostichopus fuscus into the United States from Mexico. Castillo obtained bags containing approximately 2 kg of the sea cucumbers from others in Mexico and would either smuggle the packages into the United States herself, or deliver the packages to others she recruited in order to be smuggled into the United States. Castillo directed the individuals she recruited to deliver the sea cucumbers to a self-storage unit near the border in San Ysidro, California, where the sea cucumber could be accessed by others for further transportation and sale
Castillo had the individuals she recruited provide her with photographs of the sea cucumbers within the self-storage unit as proof of delivery, and when delivery was confirmed, she would pay them $7 for each bag that was delivered. Castillo herself was stopped at the border with six bags of undeclared sea cucumbers hidden in her vehicle in May of 2018.
The sea cucumbers involved were identified as Isostichopus fuscus, a species listed on Appendix III of the Convention on International Trade in Endangered Species (CITES). In order to import a CITES species into the United States, the importer must comply with CITES and its implementing regulations, pursuant to Section 1538(c)(1) of Title 16 of the United States Code. Sections 23.13 and 23.27 of Title 50 of the Code of Federal Regulations prohibits the importation of species listed under Appendix II and III, without a CITES certificate of origin and a CITES export permit from the originating country.
Castillo knew that neither she nor her assistants possessed the necessary CITES documents for the sea cucumber. In order to import a commercial quantity of sea cucumber into the United States, a license from the U.S. Fish and Wildlife Service (FWS) is required, pursuant to Section 1538(d)(1) of Title 16 of the United States Code. Neither Castillo nor her associates possessed such a license. The fair market value of the sea cucumbers illegally imported as a part of this conspiracy was between $40,000 and $95,000.
Judge Miller required payment of restitution to the government of Mexico of $12,000 for the loss of their natural resources, based on the defendant’s ability to pay.
“Illegal trafficking in fish and wildlife is big business,” said U.S. Attorney Robert Brewer. “We are committed to working with our law enforcement partners to protect endangered wildlife.” Brewer thanked prosecutor Melanie Pierson and U.S. Fish and Wildlife agents for their hard work on this case.
“Illegal wildlife trafficking is a serious crime that impacts species around the world including important marine species that are critical to the ocean ecosystems,” said Dan Crum, Special Agent in Charge of the U.S. Fish and Wildlife Service Office of Law Enforcement. “The U.S. Fish and Wildlife Service is committed to impeding this illicit trade coming through our borders, and hope that today's sentencing will send a message to others who choose to ignore the law.”
DEFENDANT Case Number 19cr4039-JM
Claudia Castillo Age: 49 Tijuana, Mexico
SUMMARY OF CHARGES
Conspiracy – Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison and $250,000 fine
AGENCY
U.S. Fish and Wildlife Service, Office of Law Enforcement; National Oceanic and Atmospheric Administration (NOAA), Office of Law Enforcement
San Diego Man Sentenced to 85 Years in Prison for 10 Armed RobberiesRead the Press Release
Assistant U. S. Attorneys Matthew Brehm (619) 546-8983 and Shital Thakkar (619) 546-8785
NEWS RELEASE SUMMARY – June 8, 2020
SAN DIEGO – Juan Marquis Holiday of San Diego was sentenced in federal court today to 85 years in prison after a federal jury found him guilty of robbing and attempting to rob 10 local businesses by brandishing a firearm during the robberies and, on five occasions, discharging a firearm.
During the sentencing hearing, U.S. District Judge Anthony J. Battaglia noted that Holiday’s crimes were “violent and aggressive” and “caused fear in the hearts of victims.” He added: “The community should not and will not tolerate this type of physical violence and misbehavior.”
During trial, more than 12 victims testified that they were threatened with a firearm during the robberies, which occurred in January and April of 2017. Some of those victims also described having shots fired past their heads, being pistol whipped, kicked and beaten.
“This defendant committed 10 armed robberies in less than five months,” said U.S. Attorney Robert Brewer. “The many victims of these robberies will forever live with the emotional scars of being threatened with a firearm. We are gratified that today’s sentence recognizes the pain and suffering this defendant inflicted on our community.” Brewer thanked prosecutor Matt Brehm as well as our law enforcement partners for their hard work on this case.
“The violence, intimidation, and fear imposed by Mr. Holiday was stopped when he was arrested by our law enforcement team, but today the victims of this terrifying crime spree can begin to heal knowing that justice has been delivered,” said Omer Meisel, Acting Special Agent-in-Charge of the San Diego Field Office. “The FBI will continue to work with our law enforcement partners to ensure violent crime is stopped and follow through until justice is reached.”
Holiday’s co-defendant, Don Wayne Jones III, pleaded guilty in 2018 and was sentenced to 30 years and one day in custody.
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, labor trafficking and alien smuggling. The VCHT Section oversees the Southern District of California Coordinators for Project Safe Neighborhoods, Human Trafficking, and Project Safe Childhood.
DEFENDANT Case Number 17cr1370-AJB
Juan Marquis Holiday Age: 27 San Diego, CA
SUMMARY OF CHARGES
Interference with Commerce by Threats or Violence – Title 18, U.S.C., Section 1951(a)
Maximum penalty: Twenty years in prison and $250,000 fine
Attempted Interference with Commerce by Threats or Violence – Title 18, U.S.C., Section 1951(a)
Maximum penalty: Twenty years in prison and $250,000 fine
Brandishing a Firearm During and in Relation to a Crime of Violence –
Title 18, U.S.C., Section 924(c)
Maximum penalty: Life in prison; a mandatory minimum seven years in prison; and $250,000 fine
Discharging a Firearm During and in Relation to a Crime of Violence –
Title 18, U.S.C., Section 924(c)
Maximum penalty: Life in prison; a mandatory minimum 10 years in prison; and $250,000 fine
AGENCIES
Federal Bureau of Investigation
San Diego Police Department
San Diego Sheriff’s Department
La Mesa Police Department
VICTIM BUSINESSES
Robbery No.
Date
Victim
Address
1
1/5/2017
Arco Gas Station
3724 Del Sol Blvd, San Diego, CA
2
1/11/2017
Parry Liquor
4707 Federal Blvd., San Diego, CA
3
1/11/2017
Par Liquor
5055 Federal Blvd., San Diego, CA
4
1/11/2017
Greene Cat Liquor
5102 Imperial Avenue, San Diego, CA
5
4/6/2017
Market at the Ranch
10299 Scripps Trail, San Diego, CA
6
4/19/2017
7-Eleven
9365 Jamacha Blvd., Spring Valley, CA
7
4/20/2017
Eastridge Liquor
7705 University Ave. La Mesa, CA
8
4/20/2017
Apollo Market
2327 Reo Drive, San Diego, CA
9
4/20/2017
G&M Market
8903 Jamacha Road, Spring Valley, CA
10
4/22/2017
Victoria’s Mexican Grill
1912 Coronado Ave., San Diego, CA
Man Charged with Possessing Molotov Cocktails at La Mesa ProtestRead the Press Release
Assistant U. S. Attorney Andrew Haden (619) 546-6961
NEWS RELEASE SUMMARY – June 9, 2020
SAN DIEGO – Zachary Alexander Karas of San Diego was charged with possessing incendiary devices known as Molotov cocktails at a protest that began on May 30th in La Mesa.
According to a complaint, Karas and his girlfriend, Kali Braj Jonkuet, were sitting on the pavement at the corner of Allison Avenue and Spring Street, in front of trolley tracks, as part of the protest in La Mesa.
At the time of the protest, several fires had been set that damaged buildings and property. Officers gave orders to the crowd, including Karas, to disperse for an unlawful assembly. Karas was arrested after he failed to leave his position. After his arrest, officers discovered that Karas possessed two glass bottles with wicks that contained gasoline. Karas also had fireworks in his possession at the time of his arrest.
A special agent with the ATF inspected the Molotov cocktails and found them to be functioning incendiary devices.
“The Constitution strongly protects the First Amendment right of all to speak out and peacefully protest,” said U.S. Attorney Robert Brewer. “My office is committed to protecting that First Amendment right. Violence, however, by a relatively small number of opportunists who sought to wreak havoc, destroy property, and threaten the safety of peaceful protestors will not be tolerated.”
“ATF partners with its local, state and federal partners to work together to arrest dangerous individuals who pose the greatest threat to public safety,” said ATF Special Agent in Charge of Los Angeles Field Division Monique Villegas. “These partnerships are true force multipliers that enable law enforcement to identify, investigate and seek prosecution against individuals who act out violently within our communities.”
“The San Diego community has the right to be safe from violence and criminal activity while engaging in lawful protests,” said FBI Acting Special Agent in Charge Omer Meisel. “The possession of an incendiary device threatened the safety of the community. The FBI will continue to work closely with our state, local and federal law enforcement partners and prosecutors to protect our citizen’s right to engage in lawful protest from those individuals engaged in violence and criminal activity.”
This Karas 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 S. Brewer, Jr., 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, labor trafficking and alien smuggling. The VCHT Section oversees the Southern District of California Coordinators for Project Safe Neighborhoods, Human Trafficking, and Project Safe Childhood.
DEFENDANT Case Number 20mj2186
Zachary Alexander Karas Age: 28 San Diego, CA
SUMMARY OF CHARGES
Possession of an Unregistered Destructive Device – Title 26, U.S.C., Section 5861
Maximum penalty: 10 years’ imprisonment and $250,000 fine
AGENCIES
Bureau of Alcohol, Tobacco, Firearms and Explosives
Federal Bureau of Investigation
La Mesa Police Department
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Charity Founders Plead Guilty to Using Non-Profit to Defraud Donors and Illegally Evade TaxesRead the Press Release
Assistant U.S. Attorney Rebecca S. Kanter (619) 546-7304
NEWS RELEASE SUMMARY – June 9, 2020
SAN DIEGO – A husband and wife pleaded guilty today in federal court to using a charity to defraud donors and to evade taxes.
Geraldine and Clayton Hill appeared before U.S. Magistrate Judge Linda Lopez to admit that they used On Your Feet, Inc. (“OYF”), a.k.a. Family Resource Center (“FRC”), a 501(c)(3) tax-exempt non-profit organization that operated in Spring Valley, California, to defraud donors and the Internal Revenue Service (“IRS”). FRC/OYF claimed to provide “assistance to low income families and individuals in need to better their living conditions and quality of life.” According to documents filed in court today, beginning at least as early as March 2009, the Hills conspired to fraudulently obtain charitable donations of clothing and other items from multiple companies by falsely promising and certifying that they would not to sell the merchandise for profit.
The Hills admitted today to violating those promises by knowingly reselling donated merchandise and using the proceeds from the sale of donated items to financially support themselves, their family members and other associates. Forever 21, Feed the Children, Brooks and Goods360 were among the defrauded companies. The Hills tricked these companies such as Forever 21, Feed the Children, Brooks and Goods360 into donating millions of dollars of goods to OYC/FRC through their fraud. Based on the false representations, Feed the Children and Forever 21 – just two of the Hills multiple victims – donated over $16 million in goods between 2010 and 2017.
The Hills admitted today that between 2011 and 2016, they personally received proceeds from the fraud totaling over $1.3 million and paid no income taxes.
In soliciting donations from Forever 21, the Hills falsely claimed in their marketing materials that “[t]he merchandise is never sold by On Your Feet Incorporated . . . Every individual receiving a donation is required to register and sign a form saying none of the merchandise will be resold.” The Hills also falsely represented to Forever 21 that the “[m]ajority of the [OYF/FRC] personnel are volunteer members and are all required to sign a consent form stating that merchandise may not be taken or sold.” In an email on May 20, 2015, to Forever 21, Geraldine Hill falsely claimed that the “routine for processing donated items” included “cutting [the] inside label in half” and “defacing [the] inside label with permanent marker,” and further claimed that “we’ve never had a problem with any donations we have received that companies have been so kind to donate.”
In fact, Geraldine Hill knew at the time she sent that email to Forever 21 that the statement was false because at least as early as May 30, 2012, Goods360 had alerted Geraldine Hill that Disney no longer wanted their donations to go to OYF/FRC because the donated goods were appearing at local flea markets and being sold. For example, in June 2015, Forever 21 donated to OYF/FRC approximately 161 pallets of clothing, which was valued by Forever 21 at $2.9 million (cost)/$5.6 million (retail). Immediately upon receiving the pallets from Forever 21, the Hills sold donated goods to an operator of for-profit discount retailers. In September 2016, the Hills solicited additional donations from Forever 21 by promising to use them for a “Christmas Giveaway,” causing Forever 21 to donate another 16 pallets of clothing on October 27, 2016, which the Hills acknowledged in a letter to Forever 21 that the donated goods had a retail value of $314,371. Immediately upon receiving the pallets from Forever 21 in October 2016, the Hills sold the donated goods to the same for-profit discount retailer.
Instead of paying income taxes, the Hills spent nearly $380,000 of the fraudulent proceeds on personal expenses including luxury retail purchases, vacations, entertainment, and vehicles, in addition to spending more than $322,000 in cash.
In order to conceal their income from the IRS and obstruct the IRS’s ability to monitor the charity’s tax-exempt status, the Hills filed false charitable tax returns. The charity’s tax returns falsely claimed that OYF received less than $25,000 in gross receipts in tax year 2009, and less than $50,000 in tax years 2011-2015. As a result of the Hills’ fraudulent concealment of their income, they caused an estimated U.S. individual income tax loss for 2013-2014 of $50,933.
Although the Hills had no legitimate payroll through OYF, they falsified pay stubs purporting to show salaries paid and taxes withheld in order to advance other fraudulent schemes. For example, they falsified pay stubs claiming that defendant Clayton Hill earned over $100,000 salary (even though OYF had never issued paystubs or W2s, and Hill was not claiming income in any tax filing) and used the false pay stubs for a rental application to rent a home that cost $6,000 per month.
U.S. Attorney Robert Brewer expressed his appreciation to Assistant U.S. Attorney Rebecca Kanter, Principal Deputy Assistant Attorney General Richard E. Zuckerman and Trial Attorney Valerie Preiss of the Justice Department’s Tax Division for supporting this prosecution.
“I am committed to using the resources of the U.S. Attorney’s Office in the Southern District of California to aggressively pursue fraudsters and tax cheats,” said Brewer. “The conduct by Geraldine and Clayton Hill is particularly offensive because they used the benefits afforded by the 501(c)(3) status of their charity to defraud donors and conceal their profits. By abusing the generosity of companies and individuals who put their faith in the promises made by the Hills, the Defendants threatened to undermine the trust and integrity underpinning charitable giving.”
“Geraldine Hill and Clayton Hill exploited the public trust and charitable giving by using their charity to solicit over $16 million in goods from hardworking businesses and falsely promising to donate those goods to assist low income families and individuals in need,” said Ryan L. Korner, Special Agent in Charge of the IRS Criminal Investigation division. “Instead, the Hills resold the goods and profited over $1.34 million which they spent on vehicles, vacations, and entertainment, as well as personal expenses for their family members. The Hills concealed their fraud by filing false tax returns on behalf of the charity and failing to report their illicit income to the IRS. Their guilty pleas are evidence of the hard work of IRS Criminal Investigation Special Agents to bring to justice those that defraud businesses in the name of charity, and who benefit themselves instead of serving those most in need.”
“While fraud is always wrong, the theft of charitable donations that were to be used to help San Diego’s low income families is particularly disheartening,” said Acting FBI Special Agent in Charge Omer Meisel. “This type of fraud and deceit for personal gain simply cannot be tolerated. The FBI is committed to ensuring that white collar predators don’t prevent those less fortunate from receiving all the benefits that generous donors provide to seemingly legitimate non-profit organizations.”
Sentencing is scheduled for August 28, 2020 before U.S. District Judge Dana M. Sabraw. At sentencing, the Hills face a maximum sentence of five years in prison for each mail fraud conspiracy and tax evasion charge. The Hills also face a period of supervised release, restitution, and monetary penalties.
DEFENDANTS Case Number 20CR0783-DMS
Geraldine Hill Age: 59 Bonita, CA
Clayton Hill Age: 58 Bonita, CA
SUMMARY OF CHARGES
Conspiracy to Commit Mail Fraud – Title 18, U.S.C., Section 371
Maximum penalty: Five years’ imprisonment and $250,000 fine
Tax Evasion – Title 26, U.S.C., Section 7201
Maximum penalty: Five years’ imprisonment and $250,000 fine
AGENCIES
Internal Revenue Service Criminal Investigations
Federal Bureau of Investigation
Department of Justice Awards $1 million to Bolster Law Enforcement Staffing in the Southern District of CaliforniaRead the Press Release
NEWS RELEASE SUMMARY – June 3, 2020
SAN DIEGO – The U.S. Department of Justice yesterday awarded nearly $400 Million for law enforcement hiring to advance community policing, through the Department’s Office of Community Oriented Policing Services (COPS Office) COPS Hiring Program (CHP). The Attorney General announced funding awards to 596 law enforcement agencies across the nation, which allows those agencies to hire 2,732 additional full-time law enforcement professionals.
In the Southern District of California, Chula Vista Police Department will receive $750,000 to fund six officers and the City of Brawley and the La Jolla Band of Indians will each receive $125,000 to fund one officer. “The Department of Justice is committed to providing the police chiefs and sheriffs of our great nation with needed resources, tools, and support. This funding will bolster their ranks and contribute to expanding community policing efforts nationwide,” said Attorney General William P. Barr. “A law enforcement agency’s most valuable assets are the men and women who put their lives on the line every day in the name of protecting and serving their communities.”
“Particularly in light of this district’s proximity to the Southwest Border, it is imperative that local police agencies receive the resources they need to maintain safe and secure neighborhoods,” said U.S. Attorney Robert Brewer. “I am pleased that DOJ officials recognized the importance of shoring up staffing in our region by funding eight officers to address critical needs in three area communities.”
The COPS Hiring Program is a competitive award program intended to reduce crime and advance public safety through community policing by providing direct funding for the hiring of career law enforcement officers. In addition to providing financial support for hiring, CHP provides funding to state, local, and tribal law enforcement to enhance local community policing strategies and tactics. In a changing economic climate, CHP funding helps law enforcement agencies maintain sufficient sworn personnel levels to promote safe communities. Funding through this program had been on hold since the spring of 2018 due to a nationwide injunction that was lifted earlier this year.
CHP applicants were required to identify a specific crime and disorder problem focus area and explain how the funding will be used to implement community policing approaches to that problem focus area. Forty-three percent of the awards announced will focus on violent crime, while the remainder of the awards will focus on a variety of issues including school-based policing to fund school resource officer positions, building trust and respect, and opioid education, prevention, and intervention. The COPS Office received nearly 1,100 applications requesting more than 4,000 law enforcement positions.
Statement of U.S. Attorney Robert Brewer on George Floyd’s Death and DOJ’s Commitment to the First Amendment and Public SafetyRead the Press Release
Assistant U.S. Attorney Chris Tenorio (619) 909-7556
SAN DIEGO – Last week on Memorial Day, in Minneapolis, MN, George Floyd’s life was taken violently and without justification by law enforcement. His death awakened echoes of recent and historic racism, inequality, and excessive force that has disproportionately affected African-Americans in our country. While this tragic event and subsequent violence over several days affects us all, I appreciate that many of our neighbors are in particular pain and feel vulnerable simply because of the color of their skin.
Having proudly taken an oath to uphold our Constitution, I am always mindful that the laws must be enforced without prejudice or favor: For the benefit and protection of all, regardless of the identity of the perpetrator. The Constitution protects against unreasonable force under color of law. As law enforcement leaders, we must hold everyone—including those who wear the uniform—to the same standard under the law. The obligation to do so is self-evident, but it bears emphasizing that the equal commitment to the law is the only way to protect both victims of police violence and those men and women in uniform who serve our communities with honor.
Wearing a police uniform is one of the hardest jobs in society. We are all indebted to the self-sacrifice and commitment to our communities by those who protect us. But everyone in law enforcement—prosecutors and peace officers—can, and must, do better. The United States Attorney’s Office remains steadfast in its commitment to assisting our law enforcement partners to adopt and employ best policing practices and most effectively and fairly protect all members of our communities.
At the same time, we are equally committed to our long-standing involvement with civic, faith, and other community organizations to combat hate and help our communities chart a better path forward. We will continue our collaboration with the San Diego Regional Hate Crime Coalition to coordinate community outreach, open dialogue, and the prevention of hate incidents and discrimination. With our local and state partners, we will continue to zealously investigate and prosecute hate crimes that cause far-reaching damage to entire communities.
The Constitution strongly protects the First Amendment right of all to speak out and peacefully protest. The violence by a relatively small number of opportunists who have sought to wreak havoc, destroy property, and threaten the safety of peaceful protestors and law enforcement alike, clearly detract from our ability to heal from the wounds of Mr. Floyd’s death and to seek that better path forward. One of the great defining features of this country is our adherence to the rule of law. We do not have to choose between our obligation to enforce the law and our personal outrage. Nor are we required to leave behind our own feelings of empathy and sadness in enforcing the law against those who seek to break it, while facilitating peaceful protest, another hallmark of American democracy.
We are fortunate to be a part of a strong, resilient and collaborative San Diego community. I have been in constant contact over the last four days with our federal, state, and local law enforcement partners to support and coordinate our collective response to acts of violence as we protect peaceful protestors and our communities. The cooperation and collaboration among our first responders has been impressive, and their intent to work with our community and address their concerns is clear. Together, while condemning the underlying problems that led to Mr. Floyd’s senseless death and the violence in the aftermath, we are taking a strong stand and affirming our enduring commitment to the equal protection and justice for all.
City Officials Charged with Accepting BribesRead the Press Release
A Calexico City, California councilman and mayor pro tem, along with a commissioner on the city’s Economic Development and Financial Advisory Commission, were charged in federal court today with accepting cash bribes in exchange for promises of official action by the city.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Robert S. Brewer Jr., and Acting Special Agent in Charge Omer Meisel of the FBI’s San Diego Field Office made the announcement.
According to a charging document, David Romero 36, and Bruno Suarez Soto, 28, both of Calexico, California, accepted $35,000 in cash bribes from an undercover FBI agent who they believed represented investors seeking to open a cannabis dispensary in Calexico. In return, Romero and Soto “guaranteed” the rapid issuance of a city permit for the dispensary, and to revoke or hinder other applicants if necessary to ensure that the bribe payer’s application was successful. Moreover, both men admitted they had taken bribes from others in the past, according to the charging document.
In addition to being a councilman, Romero serves as Calexico’s mayor pro tem, meaning he was set to become mayor in July 2020. Soto was recently appointed to the city commission responsible for promoting business and community growth and coordinating with prospective developers to help them invest in the city of Calexico.
The charges allege that during a Dec. 19, 2019, meeting at a restaurant in Calexico with the undercover FBI agent, Romero and Soto agreed to fast-track the agent’s purported application for a cannabis dispensary permit and guaranteed its rapid issuance in exchange for a $35,000 bribe. The defendants also offered to delay permit applications by competitors, court records said.
The charging document further alleges that toward the conclusion of the Dec. 19, 2019 meeting, when the undercover agent asked if Romero and Soto might later ask for more than the $35,000 payment, Romero assured him that they would not. “This is done. Set and sealed,” Romero allegedly said. Romero explained that he and Soto would require the money to be paid up front, however, because they had done similar work for other people, and those people had not paid the agreed-upon fee after the favors had been rendered. Soto later added, “This isn’t our first rodeo.” Romero and Soto agreed to accept payment of the $35,000 from the agent in two installments, however: half up front, and half “when it’s a for sure thing.”
According to court filings, at this meeting the undercover agent asked whether the payment of $35,000 would “get us in front of the line” of applicants. Soto answered, “Hell yeah.” Romero added that he “didn’t want to say it in front of everybody, but it will.”
On Jan. 9, 2020, Romero and Soto attended a second meeting with the undercover agent at a restaurant in El Centro, California. During the meeting, according to court records, Romero reminded the undercover agent how difficult it was to work with the city of Calexico, and how fortunate it was that the agent was working with Romero. Soto later added that in return for the bribe, Romero would cut through “so much [expletive] [red] tape that exists” with the city.
During a discussion of the approval process for the permit application referenced in court records, Romero explained that the people who have to approve the undercover agent’s license were “my best friends at the entire City Hall.” When asked if the “best friends” had already signed off on the plan, Romero responded “[expletive], yeah!” and laughed.
Court filings reveal that at the conclusion of the Jan. 9, 2020 meeting, in the parking lot outside the restaurant, with Romero looking on, the undercover agent handed Soto $17,500 in cash and explained that he divided the first installment of the bribe into two envelopes: one with $8,800 and another with $8,700. The agent asked whether “we’re good,” and Romero responded, “Trust me” and added, “In my line of business, I can’t [expletive] up. Which means he [Soto] can’t [expletive] up.”
According to the charging documents, the defendants allegedly accepted the second installment, $17,500 in cash, during a third meeting on January 30 in a parking lot outside a restaurant in El Centro. Court documents further allege both men also admitted to creating a shell corporation to launder the proceeds of their bribery scheme.
The charging document also alleges that both men lied to the FBI when interviewed by agents at the conclusion of the January 30 meeting. According to court filings, Romero falsely denied being part of any agreement with the undercover agent, and denied that anyone had made any “guarantees” to the agent. Similarly, Soto falsely denied making any “guarantees” to the undercover agent and denied receiving any prior payments from the agent.
The FBI investigated the case. Trial Attorney Joshua Rothstein of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Nicholas Pilchak are prosecuting the case.
A federal charge is merely an accusation. A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Calexico City Officials Charged with CorruptionRead the Press Release
Assistant U. S. Attorney Nicholas Pilchak (619) 546-9709
NEWS RELEASE SUMMARY – May 21, 2020
EL CENTRO – Calexico City Councilman and Mayor Pro Tem David Romero, along with Bruno Suarez-Soto, a commissioner on the city’s Economic Development and Financial Advisory Commission, were charged in federal court today with accepting cash bribes in exchange for promises of official action by the city.
The defendants were arraigned today via video teleconference before U.S. Magistrate Judge Bernard G. Skomal. They were released on $10,000 personal appearance bonds secured by their own signatures. The next court date is July 2, 2020 at 10:30 a.m. before U.S. District Judge Cathy Ann Bencivengo.
According to a charging document, Romero and Soto accepted $35,000 in cash bribes from an undercover FBI agent who they believed represented investors seeking to open a cannabis dispensary in Calexico. In return, Romero and Soto “guaranteed” the rapid issuance of a city permit for the dispensary, and to revoke or hinder other applicants if necessary to ensure that the bribe payer’s application was successful. Moreover, both men admitted they had taken bribes from others in the past, according to the charging document. Referring to this $35,000 payment, it is alleged they told the undercover agent, “This isn’t our first rodeo.”
In addition to being a Councilman, Romero serves as Calexico’s Mayor Pro Tem, meaning he was set to become Mayor in July 2020. Soto was recently appointed to the City commission responsible for promoting business and community growth and coordinating with prospective developers to help them invest in the City of Calexico.
“Public officials must act with honesty and integrity when doing the public’s business,” said U.S. Attorney Robert Brewer. “If civic leaders won’t uphold these standards, we will. We allege that these defendants traded on their positions of trust, selling the integrity of government in exchange for thousands of dollars. We will vigorously enforce the law whenever a public official puts his own greed ahead of the interests of his constituents.”
“Public corruption remains the FBI's top criminal priority. As such, the FBI in San Diego and Imperial County has a robust public corruption program that is dedicated to uncovering criminal conduct of public officials,” said Acting FBI SAC Omer Meisel. “The investigation of Mr. Romero and Mr. Suarez-Soto serves as another example of the FBI's commitment toward accountability for those serving the public and holding positions of trust.”
The charges allege that during a December 19, 2019 meeting at a restaurant in Calexico with the undercover FBI agent, Romero and Soto agreed to fast-track the agent’s purported application for a cannabis dispensary permit and guaranteed its rapid issuance in exchange for a $35,000 bribe. The defendants also offered to delay permit applications by competitors, court records said.
The charging document further alleges that toward the conclusion of the December 19, 2019 meeting, when the undercover agent asked if Romero and Soto might later ask for more than the $35,000 payment, Romero assured him that they would not. “This is done. Set and sealed,” Romero allegedly said. Romero explained that he and Soto would require the money to be paid up front, however, because they had done similar work for other people, and those people had not paid the agreed-upon fee after the favors had been rendered. Soto later added, “This isn’t our first rodeo.” Romero and Soto agreed to accept payment of the $35,000 from the agent in two installments, however: half up front, and half “when it’s a for sure thing.”
According to court filings, at this meeting the undercover agent asked whether the payment of $35,000 would “get us in front of the line” of applicants. Soto answered, “Hell yeah.” Romero added that he “didn’t want to say it in front of everybody, but it will.”
On January 9, 2020, Romero and Soto attended a second meeting with the undercover agent at a restaurant in El Centro, California. During the meeting, according to court records, Romero reminded the undercover agent how difficult it was to work with the City of Calexico, and how fortunate it was that the agent was working with Romero. Soto later added that in return for the bribe, Romero would cut through “so much bullshit [red] tape that exists” with the City.
During a discussion of the approval process for the permit application referenced in court records, Romero explained that the people who have to approve the undercover agent’s license were “my best friends at the entire City Hall.” When asked if the “best friends” had already signed off on the plan, Romero responded “Fuck, yeah!” and laughed.
Court filings reveal that at the conclusion of the January 9, 2020 meeting, in the parking lot outside the restaurant, with Romero looking on, the undercover agent handed Soto $17,500 in cash and explained that he divided the first installment of the bribe into two envelopes: one with $8,800 and another with $8,700. The agent asked whether “we’re good,” and Romero responded, “Trust me” and added, “In my line of business, I can’t fuck up. Which means he [Soto] can’t fuck up.”
According to the charging documents, the defendants accepted the second installment, $17,500 in cash, during a third meeting on January 30 in a parking lot outside a restaurant in El Centro. Court documents further allege both men also admitted to creating a shell corporation to launder the proceeds of their bribery scheme.
The charging document also alleges that both men lied to the FBI when interviewed by agents at the conclusion of the January 30 meeting. According to court filings, Romero falsely denied being part of any agreement with the undercover agent, and denied that anyone had made any “guarantees” to the agent. Similarly, Soto falsely denied making any “guarantees” to the undercover agent and denied receiving any prior payments from the agent.
U.S. Attorney Brewer praised Assistant U.S. Attorney Nicholas Pilchak, DOJ Public Integrity Section trial attorney Joshua Rothstein and FBI agents for working hard to achieve justice in this matter.
The case against Romero and Suarez-Soto is a public corruption investigation being conducted by the FBI and the U.S. Attorney’s Office. Any member of the public who has information related to this or any other public corruption matter in Imperial County or San Diego is encouraged to provide information to the FBI’s email tip line at tips.fbi.gov or to contact their local FBI Field Office. In Imperial County, the FBI can be reached 24 hours a day at 858-320-1800 or 1-877-NO-BRIBE (662-7423).
DEFENDANTS Case Number 20cr1215
Calexico City Councilman David Romero Age: 36 Residence: Calexico, CA
Calexico City Commissioner Bruno Suarez-Soto Age: 28 Residence: Calexico, CA
SUMMARY OF CHARGES
Conspiracy to Commit Federal Program Bribery, in violation of Title 18, United States Code, Sections
371 and 666 (a) (1) (B)
Maximum Penalty: Five years in prison; $250,000 fine.
AGENCY
Federal Bureau of Investigation
Local Firm Ordered to Pay More Than $150,000 for Hazardous Waste ViolationsRead the Press Release
Assistant U. S. Attorney Melanie K. Pierson (619) 546-7976
NEWS RELEASE SUMMARY – May 13, 2020
SAN DIEGO – Curtis Technology Inc., a San Diego firm that makes specialized coatings, was sentenced in federal court today to pay a $45,000 fine and $114,297 in clean-up costs for illegally transporting hazardous waste from its facility without a manifest.
Curtis Technology Inc. (CTI) pleaded guilty in February, admitting that it conducted metal finishing operations at its location on Sorrento Valley Road, which generated various wastes, including ferric chloride, alkaline, waste filter cake, solvents and other chemicals. The company admitted that between December 12, 2015 and August 22, 2019, the CTI owner and a maintenance employee transported chemicals, including waste ferric chloride, waste filter cake, waste alkaline, waste solvents and other chemical wastes, from the CTI location on Sorrento Valley Road to the CTI owner’s three residences located on Wrelton Drive, Corte Morea, and Bourgeois Way, without an accompanying hazardous waste manifest.
On November 8, 2019, a maintenance worker for CTI told the FBI that beginning in 2017, at the direction of the company owner, he transported various chemicals (both unused and waste) to be stored at the owner’s three residences in San Diego. The employee stated that the chemicals were hazardous, and that some could react with others stored at the same location if they were to come in contact with each other, potentially resulting in explosion. The employee further stated that he had been to the residences prior to 2017 with the owner and had observed containers of unknown chemicals at the residences prior to his first deliveries at each location. The chemicals he delivered were stored in five-gallon buckets with lids and jars with lids, and included selenium, cesium, ferric chloride, alkaline and filter cake (solids strained from liquids or sludges). All three residences where the chemicals were stored were unoccupied, and none of the chemicals were labeled as hazardous waste. None of the chemicals transported to the residences by the employee were accompanied by a hazardous waste manifest.
On November 14, 2019, federal search warrants were executed at the three residences identified by the employee as places where the hazardous waste was being stored. Collectively, at the three sites, over 300 containers of waste chemicals were discovered. At one of the locations, chemicals deemed too unstable to transport were discovered. The area was evacuated, the San Diego Fire Department Bomb Squad arrived, and the chemicals were detonated on site. The remaining chemicals were removed from the sites, and disposed of as hazardous waste through the EPA Superfund program at a cost of approximately $114,000. The illegal activity occurred after the company had been subject to an adverse administrative action relating to its management of its hazardous waste.
“This company was so cavalier and irresponsible about the storage of chemicals that it knowingly put an entire neighborhood at risk,” said U.S. Attorney Robert Brewer. “This sentence holds the company accountable for its illegal actions.” Brewer also commended the prosecution team headed by AUSA Melanie Pierson for their diligence in this case.
“The illegal transportation and storage of dangerous chemicals and hazardous waste could have easily resulted in a serious injury or death,” said San Diego FBI Acting Special Agent in Charge Omer Meisel. “Today’s conviction demonstrates the FBI's commitment to working with our law enforcement partners to hold accountable those individuals who do not follow proper hazardous waste protocol and put the community at risk.”
“The defendant illegally stored chemicals in a residential area that were too unstable to safely transport for disposal,” said Acting Special Agent in Charge Scot Adair of EPA’s criminal enforcement program in California. “These actions required the evacuation of a neighborhood to allow local law enforcement officials to detonate the chemicals safely. EPA and our law enforcement partners are committed to addressing these risks and enforcing our environmental laws.”
DEFENDANT Case Number 20cr0715-JAH
Curtis Technology Inc. Incorporated: 1981 San Diego, CA
SUMMARY OF CHARGES
Transportation of Hazardous Waste Without a Manifest – Title 42, U.S.C., Section 6928(d)(5)
Maximum penalty for corporation: Five years of probation and a fine of the greater of $500,000 or $50,000 per day of violation and a minimum fine of $5000 per day of violation
AGENCY
U.S. Environmental Protection Agency, Criminal Investigation Division
Federal Bureau of Investigation
U.S. Attorney Honors San Diego and Imperial County Law Enforcement Officials during National Police WeekRead the Press Release
Kelly Thornton (619) 546-9726
NEWS RELEASE SUMMARY – May 11, 2020
SAN DIEGO — In honor of National Police Week, U.S. Attorney Robert Brewer recognizes the service and sacrifice of federal, state, local, and tribal law enforcement in San Diego and Imperial counties. The week will be observed Sunday, May 10, through Saturday, May 16, 2020.
“Our police officers put themselves in harm’s way every day to protect all of us,” said U.S. Attorney Robert Brewer. “As both the U.S. Attorney and a crime victim, I am very grateful for their courage and sacrifice. The members of this profession not only face typical daily challenges, which can be harrowing, but now they face the added danger and stress of policing in the face of a global pandemic. This week, I ask all residents to join me in saying ‘thank you’ to our region’s federal, state, local and tribal law enforcement officers for their devotion to our peace and security.”
In 1962, President Kennedy issued the first proclamation for Peace Officers Memorial Day and National Police Week to remember and honor law enforcement officers for their service and sacrifices. National Peace Officers Memorial Day, which every year falls on May 15, specifically honors law enforcement officers killed or disabled in the line of duty.
Each year, during National Police Week, our nation celebrates the contributions of law enforcement from around the country, recognizing their hard work, dedication, loyalty and commitment in keeping our communities safe. This year, the COVID-19 pandemic has underscored law enforcement officers’ courage and unwavering devotion to the communities they swore to serve. As of May 7, 2020, the Fraternal Order of Police reports that 92 law enforcement officers have died from the Coronavirus nationwide.
Based on data collected and analyzed by the FBI’s Law Enforcement Officer Killed and Assaulted (LEOKA) Program, 89 law enforcement officers nationwide were killed in line-of-duty incidents in 2019.
Comprehensive data tables about these incidents and brief narratives describing the fatal attacks are included in the sections of Law Enforcement Officers Killed and Assaulted, 2019, released by the FBI on May 4, 2020.
The names of all fallen officers who have been added in 2020 to the wall at the National Law Enforcement Memorial will be read on Wednesday, May 13, 2020, during a Virtual Annual Candlelight Vigil. Because public events have been suspended as a result of COVID-19, the vigil will be livestreamed to the public at 8:00 p.m. EDT. To view this free online event, please visit: https://www.youtube.com/user/TheNLEOMF.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
U.S. Attorney Issues Warning to Landlords: Don’t Demand Sexual Favors from Financially-Strapped Tenants during Pandemic - or EverRead the Press Release
Assistant U. S. Attorney Christopher Tenorio (619) 546-8413
NEWS RELEASE SUMMARY – May 4, 2020
SAN DIEGO – U.S. Attorney Robert Brewer is warning landlords that it is against the law to demand sexual favors from cash-strapped tenants who can’t pay rent due to Covid-19, and he has deployed all available enforcement tools against anyone who tries to use the pandemic to sexually harass people in need of housing.
As the country adopts drastic measures to slow the spread of COVID-19, many Americans have lost their jobs and many more have seen their wages curtailed. These losses have forced many to seek abatements or suspensions of their rent, with reports that nearly one third of Americans were unable to pay their April rent at the beginning of the month.
Many landlords responded to these circumstances with understanding and care, trying to work with their tenants to weather the current crisis. There have been reports, however, of other landlords who have responded to requests to defer rent payments with demands for sexual favors and other acts of unwelcome sexual conduct.
“Taking advantage of tenants in this way is not only despicable - it is illegal,” Brewer said. “Such behavior is not tolerated in normal times, and certainly will not be tolerated now. Criminal conduct, such as the exchange of sexual favors for housing benefits, will result in an indictment.”
We're using all enforcement tools against anyone who tries to exploit this current crisis by sexually harassing people in need of housing. If you are a victim of #SexualHarassment by a landlord or person who has control over housing call: 1-844-380-617We're using all enforcement tools against anyone who tries to exploit this current crisis by sexually harassing people in need of housing. If you are a victim of #SexualHarassment by a landlord or person who has control over housing call: 1-844-380-617
U.S. Attorney Brewer appointed Assistant U.S. Attorney Christopher Tenorio as COVID-19 Civil Rights Coordinator to lead investigations into possible hate crimes and civil rights violations related to the nation's ongoing public health emergency. Tenorio is also Chairperson of the San Diego Regional Hate Crimes Coalition.
The Justice Department’s Sexual Harassment in Housing Initiative is an effort to combat sexual harassment in housing led by the Civil Rights Division, in coordination with U.S. Attorney’s Offices across the country. The goal of the Initiative is to address sexual harassment by landlords, property managers, maintenance workers, loan officers or other people who have control over housing.
Launched in 2017, the Initiative has filed lawsuits across the county alleging a pattern or practice of sexual harassment in housing and recovered millions of dollars in damages for harassment victims. The Justice Department’s investigations frequently uncover sexual harassment that has been ongoing for years. Many individuals do not know that being sexually harassed by a housing provider can violate federal law or that the Department of Justice may be able to help.
The Department of Justice, through the Civil Rights Division and the U.S. Attorney’s Offices, enforces the Fair Housing Act, which prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin, and disability. Sexual harassment is a form of sex discrimination prohibited by the Act.
The Department encourages anyone who has experienced sexual harassment in housing, or knows someone who has, to contact the Civil Rights Division by calling (844) 380-6178 or emailing [email protected].
Individuals may also file a complaint alleging harassment or discrimination in housing with the Department of Housing and Urban Development through HUD’s website or by calling (800) 669-9777.
San Diego Psychiatrist Pays $145,000 to Resolve Opioid Overprescribing InvestigationRead the Press Release
NEWS RELEASE SUMMARY – April 30, 2020
SAN DIEGO – San Diego area psychiatrist Prakash Bhatia, M.D., has paid $145,000 to resolve allegations that he overprescribed opioids. Dr. Bhatia previously owned and operated Progressive Health and Wellness in El Cajon, California, practicing pain medicine.
The settlement stems from an investigation that the Drug Enforcement Administration initiated into whether Dr. Bhatia improperly prescribed opioids to his patients at Progressive Health and Wellness (PHW) in violation of the civil provisions of the Controlled Substances Act.
Pursuant to the Controlled Substances Act, health care providers 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 March 2013 to December 2017, Dr. Bhatia wrote opioid prescriptions at PHW, including for hydromorphone, morphine, methadone, oxycodone, fentanyl and oxymorphone without a legitimate medical purpose and/or outside the usual course of his professional practice, in violation of the Controlled Substances Act. The United States alleged that Dr. Bhatia also prescribed these medications in combination with depressant medications (including benzodiazepines and muscle relaxants), which are known to increase the risk of abuse, addiction and overdose.
While the Department of Justice continues to aggressively investigate prescribers who brazenly seek to make money by writing opioid prescriptions to those who have no pain, this investigation exemplifies the Department’s willingness to scrutinize whether doctors treating patients who actually suffer painful conditions are nevertheless overprescribing opioids. 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, for over a decade, been increasingly warning health care providers that overdose risk is elevated in patients receiving medically prescribed opioids, particularly those receiving high dosages. As such, leading medical organizations, and domestic and international government agencies recommend 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.
“Overprescribing opioids to patients who need treatment for their pain has contributed to the opioid epidemic in this country,” said U.S. Attorney Robert Brewer. “This office is committed to utilizing all available tools to combat this epidemic, including civil prosecution under the Controlled Substances Act. As this settlement demonstrates, my office will continue to investigate health care providers for overprescribing opioids.” Brewer thanked prosecutors Dylan M. Aste and George V. Manahan and DEA agents for working hard to protect the public from opioid abuse.
“The DEA is committed to investigating health care providers to ensure they are dispensing opioid pain medications in compliance with the Controlled Substances Act,” said DEA Special Agent in Charge John W. Callery. “By holding the medical community accountable for improperly writing opioid prescriptions, the DEA is ensuring that San Diegans are safe from illicit prescribers who enable the abuse of prescription drugs for financial benefit.”
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.”
This matter was handled by Assistant U.S. Attorneys Dylan M. Aste and George V. Manahan of the U.S. Attorney’s Office for the Southern District of California, with the assistance of agents and investigators from the DEA.
The claims resolved by this settlement are allegations only and there has been no determination of liability.
Federal Law Enforcement Leaders Affirm Importance of Protecting Civil Rights Amid Coronavirus PandemicRead the Press Release
NEWS RELEASE SUMMARY – April 24, 2020
SAN DIEGO – U.S. Attorney Robert Brewer and FBI Acting Special Agent in Charge Omer Meisel today denounced discrimination and acts of hate related to the COVID-10 pandemic that target Asian Americans, Pacific Islanders, Native Americans, and other racial and ethnic minorities and called on residents of San Diego and Imperial counties to take steps to counter xenophobia throughout the state.
U.S. Attorney Brewer today appointed a COVID-19 civil rights coordinator, Assistant U.S. Attorney Christopher Tenorio, to lead investigations into suspected hate crimes and civil rights violations related to the nation's ongoing public health emergency. Tenorio is also chairperson of the San Diego Regional Hate Crimes Coalition.
“During this global pandemic, all families are worried about potential illness and death, financial security and their children’s education, but certain minority populations have the added fear that comes from being possible targets of hate,” said U.S. Attorney Robert Brewer. “We will protect vulnerable communities from racist scapegoating and xenophobia that lead to criminal acts.”
“The FBI is concerned about the potential for hate crimes by individuals and groups targeting minority populations in the United States who they wrongly believe are responsible for the spread of the virus. Investigating hate crimes against any person, including Asian Americans or individuals from East Asian countries, is one of the FBI's highest priorities, and we continue unabated in our pursuit of offenders during this time” said Acting Special Agent in Charge Meisel. “We will use all authority granted under federal law to hold those who commit hate crimes accountable.”
The Justice Department will prosecute hate crimes and violations of anti-discrimination laws against Asian Americans, Pacific Islanders, Native Americans, and others to the fullest extent of the law. Attorney General William Barr and Assistant Attorney General for Civil Rights Eric Dreiband have called upon department prosecutors throughout the country to watch for hate-motivated acts of violence.
U.S. Attorney Brewer and Special Agent in Charge Meisel urged San Diego and Imperial county residents to take the following steps to protect racial and ethnic minority community members from bias and hate:
• Use language supported by public health officials when referring to the global pandemic and the precipitating virus. World Health Organization (WHO) officials have recommended using “coronavirus disease 2019” or “COVID-19” as appropriate descriptors.
• Disseminate accurate COVID-19 information within professional and socialnetworks. U.S. Government officials have warned the public about widespread misinformation and disinformation related to the COVID-19 pandemic. Avoid spreading inaccurate information by relying on trusted sources for news and public health guidance. Examples include: the Centers for Disease Control and Prevention (CDC.gov), the WHO (WHO.int), and the California Department of Public Health https://www.cdph.ca.gov/Programs/CID/DCDC/Pages/Immunization/ncov2019.aspx.
• Encourage people you know to report all incidents of bias and hate. There is a significant disparity between hate crimes that actually occur and those reported to law enforcement. It is critical to report hate crimes not only to show support for the individual(s) directly impacted, but also to send a clear message that the community will not tolerate these kinds of crimes. Reporting also enables law enforcement to fully understand the scope of the problem in a community and assign resources toward preventing and addressing crimes of bias and hate.
If you or someone you know are in immediate danger, please call 911. If you believe you've been the target or victim of a hate crime, sexual harassment or other violation of your civil rights, please contact the FBI San Diego Field Office by calling (858) 320-1800 or submitting a tip online at tips.fbi.gov. The U.S. Attorney's Office COVID-19 civil rights coordinator will be notified of tips submitted via the above reporting methods.
Federal Prosecutors Team up with AARP to Provide Californians with Information on COVID-19 ScamsRead the Press Release
NEWS RELEASE SUMMARY – April 17, 2020
SAN DIEGO – Prosecutors from the four United States Attorney’s Office in California, along with representatives from the FBI, will be participating in a telephonic town hall being coordinated by the AARP to provide information to California residents to help them identify and avoid fraudulent schemes related to Coronavirus and COVID-19.
The telephonic town hall will happen on Monday, April 20 from 10 a.m. until 11 a.m. PDT. During the event, a special agent from the FBI and a federal prosecutor will make presentations, and participants from across California will be allowed to ask questions of a panel of Assistant United States Attorneys from the four offices that serve California.
The AARP Fraud Watch Network is providing the infrastructure for the event. Approximately 100,000 AARP members will receive a phone call Monday morning inviting them to participate in the town hall. Those who wish to receive an invitation can sign up on this AARP registration page: https://vekeo.com/aarpcalifornia/#.
During the current health crisis, federal investigators and prosecutors continue to fulfill their critical mission of protecting public safety. Federal officials have prioritized the disruption, investigation and prosecution of crimes related to Coronavirus and COVID-19, including fraudulent schemes, unapproved treatments, and scams related to stimulus money. During the town hall, federal officials will discuss the types of schemes currently being seen, along with tips on how to avoid becoming a victim.
“This innovative outreach event will deliver valuable information designed to protect potentially vulnerable seniors from scams, cyber-attacks and fake cures,” said Robert Brewer, U.S. Attorney for the Southern District of California. “Community members will also learn how to report suspected fraud, which is critically important. We need to partner with educated consumers to identify and investigate despicable felons seeking to profit from the current health emergency by preying on the public.”
U.S. Attorney Brewer commended Assistant U.S. Attorney Robert Huie, Deputy Chief of the Major Frauds Section, for his participation in the AARP town hall and prosecution of significant COVID-19 scams.
Soon after the event, the recording will be available at https://vekeo.com/aarpcalifornia/#.
The FBI continues to warn the public about health care fraud schemes: https://www.fbi.gov/news/pressrel/press-releases/fbi-warns-of-emerging-health-care-fraud-schemes-related-to-covid-19-pandemic and other COVID-19 related crimes at: https://www.fbi.gov/coronavirus.
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 (NCDF) hotline (1-866-720-5721) or by e-mailing the NCDF at [email protected].
Carmel Valley Physician Charged with Fraud for Selling Purported COVID-19 “Miracle Cure”Read the Press Release
NEWS RELEASE SUMMARY – April 16, 2020
SAN DIEGO – Dr. Jennings Ryan Staley, a licensed physician and the operator of Skinny Beach Med Spa in San Diego, was charged today with mail fraud in connection with the sale of what he described as a “100%” cure for COVID-19 that he said would render customers immune to the virus for at least six weeks. Staley is scheduled to be arraigned in federal court tomorrow at 2 p.m. before U.S. Magistrate Judge Jill L. Burkhardt.
FBI Agents began investigating this COVID-19 related fraud immediately upon receiving a tip from the public and shortly thereafter introduced an undercover agent. Today, FBI Agents also executed a search warrant at the business of Skinny Beach Med Spa located in Carmel Valley. As alleged in the criminal complaint, Skinny Beach Med Spa, based in Carmel Valley, offered a range of beauty-related services such as botox, hair removal, and fat transfer. In late March, Skinny Beach began sending emails advertising “COVID-19 treatment packs,” described as a “concierge medicine experience” priced at $3,995 for a family of four, that included among other things access to Dr. Staley, the medications hydroxychloroquine and azithromycin, and “anti-anxiety treatments to help you avoid panic if needed and help you sleep.” In a recorded call in which Dr. Staley was selling his services to a would-be customer – in fact, the undercover FBI agent – Dr. Staley described the medication he was offering as “an amazing cure” and a “miracle cure” that would cure COVID-19 “100%.” He added that if you take the medication without having the disease, “you’re immune for at least 6 weeks.” Staley referred to medication he offered as a “magic bullet,” and said, “It’s preventative and curative. It’s hard to believe, it’s almost too good to be true. But it’s a remarkable clinical phenomenon.” Staley also stated, “I’ve never seen anything like this in medicine, just so you know. Really, I can’t think of anything. That, you’ve got a disease that literally disappears in hours.”
Dr. Staley was interviewed a week later by the FBI as part of the overt investigation. When Dr. Staley was asked by agents whether Skinny Beach has told patients that the treatments are a 100% effective cure for COVID-19, Dr. Staley said, “No, that would be foolish. We would never say anything like that.” He also told the FBI that it was “not definitive” that the medication he offered cures COVID-19.
As set out in the complaint, Dr. Staley also offered the would-be customer Xanax (alprazolam) – a Schedule IV controlled substance – as part of his concierge package, and shipped the drug without conducting any sort of medical examination. He claimed that his broker was smuggling hydroxychloroquine from China to make his own pills, and had concealed the shipment from customs authorities by describing it as sweet potato extract. Shipping records confirmed that Dr. Staley was indeed importing a shipment of “yam extract,” scheduled to arrive in the U.S. in a matter of days.
“We will not tolerate COVID-19 fraudsters who try to profit and take advantage of the pandemic fear to cheat, steal and harm others,” said U.S. Attorney Brewer. “Rest assured: those who engage in this despicable conduct will find themselves in the crosshairs of federal prosecutors.”
“The sale of false cures, especially by a medical professional, will be vigorously investigated by the FBI,” said Omer Meisel, the Acting Special Agent in Charge of the FBI’s San Diego Field Office. “The FBI is using a variety of tools to identify anyone who exploits the current crisis with fraudulent scams or a variety of cyber schemes – and is proactively warning the public about products claiming to save lives, before losing their money or creating false hope. Scammers seeking to profit by exploiting fear and uncertainty during this COVID-19 pandemic will be brought to justice.”
“The FDA will continue to collaborate with our fellow law enforcement partners to bring to justice those who place profits above the public health during the Covid-19 pandemic,” said Special Agent in Charge Lisa L. Malinowski, FDA Office of Criminal Investigations Los Angeles Field Office. “Today’s announcement should serve as a reminder that we will take appropriate action against bad actors who take advantage of a crisis while jeopardizing the health of Americans.”
The FBI continues to warn the public about health care fraud schemes: https://www.fbi.gov/news/pressrel/press-releases/fbi-warns-of-emerging-health-care-fraud-schemes-related-to-covid-19-pandemic and other COVID-19 related crimes at: https://www.fbi.gov/coronavirus.
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 (NCDF) hotline (1-866-720-5721) or by e-mailing the NCDF at [email protected].
DEFENDANTS Case Number 20-mj-1407
Jennings Ryan Staley Age: 44 San Diego, CA
SUMMARY OF CHARGES
Title 18, United States Code, section 1341 (mail fraud)
Maximum penalty: 20 years in prison; fine; penalty assessment
AGENCY
Federal Bureau of Investigation
U.S. Food and Drug Administration
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
COVID-19 Concierge Medicine Pack (Criminal Complaint, Case No. 20-mj-1407, p. 9)Man Charged with Trafficking Almost $30 Million in Drugs through Cross-Border TunnelRead the Press Release
SAN DIEGO – Rogelio Flores Guzman, a Mexican national with legal residency in the U.S., was charged today with trafficking in fentanyl, methamphetamine, heroin, cocaine and marijuana via a subterranean tunnel stretching from Mexico to a warehouse in Otay Mesa.
Flores, who was known to live in Victorville, Las Vegas and Otay Mesa, was taken into custody at Los Angeles International Airport yesterday as he was boarding a plane to Guadalajara, Mexico. He was arraigned this afternoon in federal court before U.S. Magistrate Judge Barbara L. Major via live video because of COVID-19 precautions. The judge ordered that he be detained without bond after the government argued that he was a flight risk.
“Cross-border tunnels always spark fascination, but in reality they are a very dangerous means for major drug dealers to move large quantities of narcotics with impunity until we intervene,” said U.S. Attorney Robert Brewer. “We have seized this tunnel, confiscated almost $30 million in drugs and now we’ve charged one of the alleged crew members. They can dig tunnels, but we will find them, fill them in and put the leaders in prison.”
“This arrest reflects the unyielding commitment of the law enforcement community to curb the flow of illicit narcotics and keep our neighborhoods safe,” said Cardell T. Morant, acting Special Agent in Charge of Homeland Security Investigations (HSI) San Diego. “Despite the challenges we all face as we endure this pandemic, our federal agents and officers who make up the San Diego Tunnel Task Force, working alongside the U.S Attorney’s Office and local law enforcement, continue to investigate and serve justice to those involved with the construction and operation of this tunnel.”
“The DEA and our partners on the San Diego Tunnel Task Force are committed to finding cross-border tunnels, shutting them down, and holding people accountable for building, operating and using these tunnels to bring deadly drugs into our country,” said DEA Special Agent in Charge John W. Callery. “Today’s charges against one of the alleged crew members demonstrates our determination to do so. If any member of the public has information about a possible tunnel, I encourage them to contact the San Diego Tunnel Task Force at 1-877-9TUNNEL (1-877-988-6635).”
“We are grateful for the resolve, perseverance, and hard work that our law enforcement partners have demonstrated in making this arrest,” said Chief Patrol Agent Aaron Heitke, “Collaboratively, the task force has shut-down the tunnel, seized over two tons of narcotics, and made this crucial arrest despite the current challenges. Our agents remain vigilant and dedicated to protecting America.”
On March 20, 2020, pursuant to the service a federal search warrant issued by U.S. Magistrate Judge Mitchel D. Dembin, federal agents discovered an exit-point for a subterranean transnational tunnel within a commercial warehouse located at 2587 Otay Center Drive, occupied by Big Brands Warehouse Sales Corporation.
From the entry-point in Mexico, the tunnel continues northbound, crossing the international border, with its exit-point located within the Otay Warehouse. Within this tunnel, agents located approximately 575 packages. Based upon field-tests, these packages tested presumptively positive to contain controlled substances in the following approximate gross amounts:
- 394 packages containing 585 kilograms of cocaine;
- 133 packages containing 1355 kilograms of marijuana;
- 40 packages of containing 39.12 kilograms of methamphetamine;
- Seven packages containing 7.74 kilograms of heroin; and
- One package containing 1.1 kilograms of fentanyl.
According to a complaint, federal agents conducting surveillance had seen Flores Guzman frequently come and go from the Otay Warehouse over the course of several months.
On March 18, agents conducting surveillance saw Flores Guzman leave the Otay Warehouse as the driver and sole visible occupant of a medium sized box-truck (a truck that had a separate cargo area that was only accessible from the back of the truck). As agents proceeded to follow, the defendant started to drive in a way that made agents believe he was aware that he was being followed. Specifically, at one point, the defendant pulled over, parked in a no parking zone, and briskly walked away from the Box Truck. Agents approached the parked Box Truck and, through a gap in the back door of the truck’s cargo compartment, agents were able to see human fingers, indicating that there were several people located in the Box Truck’s cargo compartment. Within the cargo area, agents located 10 people who later self-identified as Mexican nationals who did not legally enter the United States. The defendant was released pending further investigation.
On April 9, agents contacted the defendant at the Los Angeles International Airport as he waited to board a flight to Guadalajara, Mexico. The complaint said that during this contact, agents verbally advised the defendant of his Miranda rights, and he admitted participating in the tunnel construction, controlling access to the tunnel and personally transporting drugs through the tunnel.
He was charged with Conspiracy to Distribute Controlled Substances.
The discovery of the tunnel resulted from an ongoing investigation by members on the San Diego Tunnel Task Force, which include Homeland Security Investigations, U.S. Border Patrol, the Drug Enforcement Administration and the United States Attorney’s Office.
The large seizure of mixed drugs represents the first time in San Diego’s history where five different types of drugs were found inside a tunnel. The total street value of the drugs seized from the tunnel is estimated at $29.6 million.
The tunnel extends for more than 2,000 feet underground from a warehouse in Tijuana, Mexico to a warehouse in the Otay Mesa area of San Diego. The tunnel has an average depth of 31 feet and is three-feet wide through most of the passageway.
Agents estimate the tunnel has been in existence for several months due to the advanced construction observed in several portions of the passageway, which included reinforced walls, ventilation, lighting and an underground rail system.
Flores Guzman’s next court appearances are scheduled for April 23 and May 7 at 9:30 a.m. before Judge Major.
DEFENDANT Case Number 20MJ1367
Rogelio Flores Guzman Age: 54 Victorville, Las Vegas, Chula Vista, CA
SUMMARY OF CHARGES
Conspiracy to Distribute Controlled Substances – Title 21, U.S.C., Secs. 841 (a)(1) and 846
Maximum Penalty: Life in prison, 10-year mandatory minimum; $10 million fine
AGENCY
Homeland Security Investigations
U.S. Drug Enforcement Administration
U.S. Border Patrol
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Department of Justice Makes $850 Million Available to Help Public Safety Agencies Address COVID-19 PandemicRead the Press Release
SAN DIEGO – The Department of Justice today announced that it is making $850 million available to help public safety agencies respond to the challenges posed by the outbreak of COVID-19. The Coronavirus Emergency Supplemental Funding program, authorized by the recent stimulus legislation signed by President Trump, will allow eligible state, local and tribal governments to apply immediately for these critical funds. The department is moving quickly to make awards, with the goal of having funds available for drawdown within days of the award.
“Our first responders and law enforcement officials are putting themselves in harm’s way to an even greater extent than usual in order to protect our communities from this invisible enemy,” said U.S. Attorney Robert Brewer. “We hope these funds will help keep them safe as they keep us safe.”
“This is an unprecedented moment in our nation’s history and an especially dangerous one for our front-line law enforcement officers, corrections officials, and public safety professionals,” said Office of Justice Programs Principal Deputy Assistant Attorney General Katharine T. Sullivan. “We are grateful to the Congress for making these resources available and for the show of support this program represents.”
The solicitation, posted by the Bureau of Justice Assistance in the Justice Department’s Office of Justice Programs (OJP), will remain open for at least 60 days and be extended as necessary. OJP will fund successful applicants as a top priority on a rolling basis as applications are received. Funds may be used to hire personnel, pay overtime costs, cover protective equipment and supplies, address correctional inmates’ medical needs and defray expenses related to the distribution of resources to hard-hit areas, among other activities. Grant funds may be applied retroactively to Jan. 20, 2020, subject to federal supplanting rules.
Agencies that were eligible for the fiscal year 2019 State and Local Edward Byrne Memorial Justice Assistance Grant Program are candidates for this emergency funding. Jurisdictions in the Southern District of California are eligible for about $2.5 million in grants.
City of Carlsbad
$47,395
City of Chula Vista
$166,711
City of El Cajon
$89,355
City of El Centro
$41,808
City of Escondido
$125,276
Imperial County
$39,018
City of La Mesa
$41,734
City of Lemon Grove
$35,545
City of Oceanside
$153,578
City of San Diego
$1,217,682
City of San Marcos
$42,488
Brawley
$33,734
National City
$67,168
San Diego County
$307,082
Vista
$81,883
TOTAL
$2,490,457
A complete list of eligible jurisdictions and their allocations can be found at https://bja.ojp.gov/program/fy20-cesf-allocations.
For more information about the Coronavirus Emergency Supplemental Funding program, please visit https://bja.ojp.gov/funding/opportunities/bja-2020-18553. For more information about the Office of Justice Programs, please visit https://www.ojp.gov/.
FBI Takes Down a Russian-Based Hacker Platform; Arrests Suspected Russian Site AdministratorRead the Press Release
NEWS RELEASE SUMMARY – March 24, 2020
San Diego – A Russian-based cyber platform known as DEER.IO was shut down by the FBI today, and its suspected administrator – alleged Russian hacker Kirill Victorovich Firsov - was arrested and charged with crimes related to the hacking of U.S. companies for customers’ personal information.
DEER.IO was a Russian-based cyber platform that allowed criminals to purchase access to cyber storefronts on the platform and sell their criminal products or services. DEER.IO started operations as of at least October 2013, and claimed to have over 24,000 active shops with sales exceeding $17 million. The platform was shut down pursuant to a seizure order issued by the Southern District of California Court.
FBI agents arrested Firsov, a Russian cyber hacker, on March 7 in New York City. Firsov not only managed the DEER.IO platform, he also advertised it on other cyber forums, which catered to hackers. Firsov is next scheduled to appear on April 16, 2020, before U.S. Magistrate Judge Allison H. Goddard.
According to a federal complaint, DEER.IO virtual stores offered for sale a variety of hacked and/or compromised U.S. and international financial and corporate data, Personally Identifiable Information (PII), and compromised user accounts from many U.S. companies. Individuals could also buy computer files, financial information, PII, and usernames and passwords taken from computers infected with malicious software (malware) located both in the U.S. and abroad. Law enforcement found no legitimate business advertising its services and/or products through a DEER.IO storefront. Store operators and customers accessed the storefront via the Internet. Specifically, in this case, the FBI made purchases from DEER.IO storefronts hosted on Russian servers.
The DEER.IO platform offered a turnkey online storefront design and hosting platform, from which cybercriminals could advertise and sell their products (such as harvested credentials and hacked servers) and services (such as assistance performing a panoply of cyber hacking activities). The DEER.IO online stores were maintained on Russian-controlled infrastructure. The DEER.IO platform provided shop owners with an easy-to-use interface that allowed for the automated purchase and delivery of criminal goods and services.
Once shop access was purchased via the DEER.IO platform, the site then guided the newly-minted shop owner through an automated set-up to upload the products and services offered through the shop and configure crypto-currency wallets to collect payments for the purchased products and/or services.
As of 2019, 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 payment methods such as WebMoney, a Russian based money transfer system similar to PayPal.
A cybercriminal who wanted to purchase from storefronts on the DEER.IO platform could use a web browser to navigate to the DEER.IO domain, which resolved to DEER.IO storefronts. DEER.IO contained a search function, so individuals could search for hacked accounts from specific companies or PII from specific countries, or the user could navigate through the platform, scanning stores advertising a wide array of hacked accounts or cyber criminal services for sale. Purchases were also conducted using cryptocurrency, such as Bitcoin, or through the Russian-based money transfer systems.
On or about March 4, 2020, the FBI purchased approximately 1,100 gamer accounts from the DEER.IO store ACCOUNTS-MARKET.DEER.IS for under $20 in Bitcoin. Once payment was complete, the FBI obtained the gamer accounts, including the user name and password for each account. Out of the 1,100 gamer accounts, 249 accounts were hacked Company A accounts. Company A confirmed that if a hacker gained access to the user name and password of a user account, that hacker could use that account. A gamer account provides access to the user’s entire media library. The accounts often have linked payment methods, so the hacker could use the linked payment method to make additional purchases on the account. Some users also have subscription-based services attached to their gamer accounts.
On or about March 5, 2020, the FBI purchased approximately 999 individual PII accounts from the DEER.IO store SHIKISHOP.DEER.IS for approximately $170 in Bitcoin. On that same date, the FBI purchased approximately 2,650 individual PII accounts from the DEER.IO store SHIKISHOP.DEER.IS for approximately $522 in Bitcoin. From those identities, the FBI identified names, dates of birth and U.S. Social Security numbers for multiple individuals who reside in San Diego County, including G.V. and L.Y.
“There is a robust underground market for hacked stolen information, and this was a novel way to try to market it to criminals hoping not to get caught,” said U.S. Attorney Robert Brewer. “Hackers are a threat to our economy, and our privacy and national security, and cannot be tolerated.”
FBI Special Agent in Charge Omer Meisel stated, “Deer.io was the largest centralized platform, which promoted and facilitated the sale of compromised social media and financial accounts, personally identifiable information (PII) and hacked computers on the internet. The seizure of this criminal website represents a significant step in reducing stolen data used to victimize individuals and businesses in the United States and abroad. The FBI will continue to be at the forefront of protecting Americans from foreign and domestic cyber criminals.”
The office extends its appreciation to the New York Division of U.S. Customs and Border Protection operating at John F. Kennedy International Airport and to private sector cyber-security company Black Echo LLC, which provided assistance throughout the investigation.
Report cyber crimes by filing a complaint with the FBI's Internet Crime Complaint Center, by calling your local FBI office or 1800 CALL FBI.
DEFENDANT Case Number: 20MJ1029
Kirill Victorovich Firsov Age: 28
SUMMARY OF CHARGE
Unauthorized Solicitation of Access Devices, 18 USC Sec. 1029(a)(6)(A)
Maximum Penalty: Ten years in prison, $250,000 fine, restitution.
AGENCIES
Federal Bureau of Investigation
Federal Prosecutors Ready for COVID-19 ScamsRead the Press Release
NEWS RELEASE SUMMARY – March 19, 2020
SAN DIEGO – The U.S. Attorney’s Office will remain vigilant in detecting, investigating and prosecuting fraud schemes related to the COVID-19 crisis.
There have been reports of individuals and businesses selling fake cures for COVID-19 online and engaging in other forms of fraud; reports of phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and Prevention; and reports of malware being inserted onto mobile apps designed to track the spread of the virus.
“The pandemic is dangerous enough without greedy lawbreakers seeking to profit from public panic,” said U.S. Attorney Robert Brewer. “This office will make the investigation and prosecution of all criminal conduct related to the current pandemic a top priority. It is important that criminals know that this national crisis offers no safe harbor for them. We will work together to ensure that those who violate federal law will be brought to justice.”
The U.S. Attorney’s Office will work closely with the Department of Justice as well state and local authorities to both ensure that we hear about misconduct as quickly as possible and that all appropriate enforcement tools are available to punish it.
Former Congressman Duncan D. Hunter Sentenced to 11 Months in Prison for Stealing Campaign FundsRead the Press Release
Assistant U.S. Attorneys Emily W. Allen (619) 546-9738; Mark Conover (619) 546-6763 and Phillip L.B. Halpern (619) 546-6964
NEWS RELEASE SUMMARY – March 17, 2020
SAN DIEGO – Former U.S. Representative Duncan D. Hunter was sentenced today to 11 months in prison for his admitted role in a years-long conspiracy to knowingly and willfully steal $250,000 in campaign funds that he and his wife used to maintain their lifestyle when their family was otherwise drowning in debt.
U.S. District Judge Thomas J. Whelan handed down the sentence and ordered Hunter to surrender to the Bureau of Prisons by May 29 at noon. The judge refused the defendant’s request to impose a sentence where Hunter would have served part or all of his sentence in home confinement, explaining that “the number of years and the amount of transactions” made such sentence inappropriate because this wasn’t a single act of theft but a crime committed repeatedly over almost a decade.
“Congressman Hunter violated the trust of his supporters by using hundreds of thousands of dollars they donated in good faith to his reelection campaign for personal expenditures,” said David Leshner, Attorney for the United States. Leshner praised prosecutors Phil Halpern, Emily Allen and Mark Conover as well as the Federal Bureau of Investigation for their tireless pursuit of justice in this case: “These prosecutors conducted the investigation with the utmost professionalism, and they exemplify the Department of Justice’s commitment to upholding the rule of law. This case would not have been possible without their hard work, talent, and dedication to the pursuit of justice.”
Assistant U.S. Attorney Phil Halpern, in arguing for a strong sentence, told the court: “Rather than admit his guilt and resign his seat when the charges came to light, or even when he was originally charged, Hunter chose to mislead the more than 700,000 people who live in the 50th congressional district.” “As we now know, Hunter lied to the people about his guilt. Not once, but countless times. As a result of his duplicity, the voters were robbed of their right to representation in Congress – representation they are denied to this day. A price must be exacted when an elected representative seeks to cover up corruption by hiding behind lies.”
The government had sought a sentence of 14 months, but prosecutors said they were pleased with the outcome of the case. “We have the utmost respect for Judge Whelan, who is probably the most experienced judge on the federal bench,” Halpern said. “If Judge Whelan believed this to be the appropriate sentence, then it certainly was.”
As court filings show, both Hunter and his wife, Margaret, who also pleaded guilty and is scheduled to be sentenced on April 7, used hundreds of thousands of dollars in campaign funds as their personal piggy bank from 2010 through 2016. During that time, the Hunters stole money from the campaign for items as inconsequential as fast food, movie tickets and sneakers; as trivial as video games, Lego sets and Playdoh; as mundane as groceries, dog food, and utilities; and as self-indulgent as luxury hotels, overseas vacations and plane tickets for their family pet rabbits, Eggburt and Cadbury. Hunter gave his wife access to campaign funds so that she could subsidize their personal lifestyle, and repeatedly ignored his senior staff when they tried to rein in the rampant personal spending. When questions arose and the case went public, he falsely blamed his wife and family rather than taking responsibility for the crime.
“Public corruption erodes public confidence and undermines the strength of our democracy,” said Omer Meisel, Acting Special Agent in Charge of the San Diego Division of the FBI. “The FBI is committed to investigate public officials who abuse the public trust and use their office to commit illegal acts.”
As detailed in the sentencing papers filed in court, beginning in 2010 and continuing up to late 2016, Duncan and Margaret Hunter agreed to use campaign funds for their own personal benefit and enjoyment—and to spend freely from Hunter’s campaign donors’ funds. Many of the Hunters’ personal outings with family or friends (which included trips to the Del Mar racetrack, dinners or drinks with friends, family and “couples” vacations, golf outings, and a weekend-long bachelor party) should not have been paid for with campaign funds. Among their improper spending, the Hunters paid $2,448.27 in campaign funds in August 2011 for a “couples” vacation in Las Vegas, Nevada, which Hunter concealed by falsely reporting to the campaign treasurer that the expenses were all “campaign related.” His friend, however, described the weekend as a “pure vacation” where the foursome enjoyed Las Vegas restaurants, lounging by the pool, sightseeing, and taking in a show. In order to conceal his illegal spending that weekend, Hunter went so far as to schedule a 20 minute tour of a charter school. Similarly, later that same month, knowing that their family bank account had a negative balance, the Hunters improperly used $113.73 in campaign funds to pay their half of the bill during another couples’ “date night” out with good friends at Jake’s Del Mar; improperly used $156.22 in campaign funds during a “couples” day at the Del Mar Racetrack; and improperly used $511.03 in campaign funds at the Hotel del Coronado to celebrate their child’s birthday. Hunter once again falsely told the campaign treasurer that all these charges were “campaign related.”
Previously, Hunter’s wife, Margaret, publicly acknowledged that these types of improper expenses went on for years and included spending as flagrant as: (1) $100.69 on November 16, 2013 at Casa De Pico in La Mesa to take their family and close friends out to dinner in relation to their son’s little league football game; (2) $1,489 on June 28, 2014 to treat their good friends to dinner at the Studio restaurant in the Montage Laguna Beach resort, and for room service, drinks, and meals the next day for the Hunters by themselves; (3) a family trip to Disneyland on September 26, 2015, which included $229.44 at Disneyland’s Star Trader shop for Minnie Mouse ear headbands and Star Wars-themed clothes for the Hunters’ children; and (4) $669.07 on March 27, 2016 at the Hotel del Coronado for a family Easter Sunday brunch in the Crown Room that the Hunters recognized was well outside their budget.
In her plea agreement, Margaret Hunter specifically acknowledged that she and Duncan Hunter used campaign funds to secretly make thousands of dollars in improper personal purchases (including family vacations, household goods and groceries, restaurants and bar tabs, a bachelor party, gas, fast food, retail shopping, cash withdrawals, a garage door, and personal Uber rides, among others) which they continued to disguise as campaign-related expenses.
Hunter enabled the theft by repeatedly providing his wife with a campaign credit card despite the advice from his treasurer that he not do so. Similarly, Hunter – against the advice of his campaign staff and congressional office staff – installed Margaret as his paid campaign manager on two separate occasions with full knowledge that she was misappropriating campaign funds in order to finance their personal lifestyle. When discussing her appointment as the salaried campaign manager for the second time in 2014, Margaret observed that Hunter “need[ed] the extra money as much as I do[.]”
According to court documents, the Hunters used campaign funds improperly on various family vacations, including:
- A July 2014 vacation to Washington, D.C. and a resort in Pennsylvania (which included personal items and activities such as purchasing cigarettes, $399 for zip lining for Hunter and two of his children, and $250 in airline travel charges for Eggburt);
- A February 2015 family trip to Minnesota, during which they improperly paid for personal family expenses including $250 in airline travel charges for Eggburt, and $132 in Uber rides to take the Hunter family to the Mall of America;
- A June/July 2015 family vacation to Hunter’s cousin’s wedding in Boise, Idaho, and a stopover in Las Vegas, in which the Hunters, among other things, spent $205.62 in campaign funds for personal items (including a pair of designer sunglasses for Hunter) at the North Face store;
- A November 2015 family vacation to Italy, in which the Hunters improperly used more than $14,000 in campaign funds, which Hunter justified by attempting to set up a one-day tour of a U.S. Navy facility in Italy (which never occurred);
- Similarly, Hunter used more than $1,000 in campaign funds to take one of his girlfriends on a 2010 winter ski trip to the Hyatt Regency Lake Tahoe Resort, Spa and Casino.
Hunter turned to campaign funds because his family’s finances were in constant disarray. During the course of the conspiracy, the Hunters overdrew their bank account more than 1,100 times in a seven-year period resulting in $37,761 in “overdraft” and “insufficient funds” bank fees. Their credit cards were frequently charged to the credit limit, often with five-figure balances, resulting in an additional $24,600 in finance charges, interest, and other fees related to late, over the limit, and returned payment fees.
Sentencing documents show that Hunter and his wife both recognized that campaign funds were being spent on personal activities. For example, after returning home from their Boise and Las Vegas vacation, Duncan and Margaret Hunter discussed how the campaign card had been declined as the family had “racked up a $600 minibar…and more charges at Caesars…” as well as a $200 family breakfast, the “kids room service” and pool drinks, and gift shop purchases. And, despite falsely telling the campaign treasurer that the various charges related to their 2015 Italy vacation “were mostly military/defense meet related,” Margaret Hunter emailed a friend that “Italy was amazing. Truly our best family trip so far. Like that saying ‘if traveling was free you’d never see me again’!” For his part, Hunter “doubled down” on this lie by having his Chief of Staff deny to the press that that the trip was a family vacation.
DEFENDANTS Case Number 18cr3677-W
Duncan D. Hunter Age: 43 Alpine, CA
Margaret E. Hunter Age: 44 La Mesa, CA
SUMMARY OF CHARGE
Conspiracy to Steal Campaign Funds – Title 18, U.S.C., Sec. 371
AGENCY
Federal Bureau of Investigation
- A July 2014 vacation to Washington, D.C. and a resort in Pennsylvania (which included personal items and activities such as purchasing cigarettes, $399 for zip lining for Hunter and two of his children, and $250 in airline travel charges for Eggburt);