Southern District of California
Press releases recorded for this federal judicial district.
Seven Defendants Plead Guilty to Millions of Dollars of Fraudulent Sales to Defense DepartmentRead the Press Release
Assistant U.S. Attorney Rebecca S. Kanter (619-546-7304)
NEWS RELEASE SUMMARY – February 28, 2017
Jeffrey Harrington and Michael Mayer, the owners of several defense contracting firms, pleaded guilty before U.S. Magistrate Judge Karen Crawford this morning to conspiring to commit wire fraud and file false claims, and to making false statements on their federal income tax returns.
The defendants admitted obtaining money from the United States by making false representations and false claims to the Department of Defense (“DoD”) for payment on items defendants knew had not been sold to the Navy, but which had been substituted with other, unauthorized products. Three of the companies owned by Harrington and Mayer, including San Diego-based Veteran Logistics, Inc. (“VLI”), as well as two employees, also pleaded guilty to conspiracy for their role in the offense.
The three defense contractors – VLI, Industrial Xchange, Inc., and Boston Laser Technology, Inc. – regularly sold supplies to the DoD, the Department of Navy, the General Services Administration and other federal departments and agencies. Each company had multiple contracts with DoD’s Defense Logistics Agency (“DLA”) to sell products to the federal government through “EMALL,” a web-based electronic commerce site that allows authorized users to search, compare and purchase commonly used products. Each contract allowed the company to sell up to $5 million in pre-approved goods at set, maximum prices. As detailed in court filings, however, the defendants fraudulently manipulated the EMALL system to substitute unapproved, overpriced items for the materials purportedly sold to the government.
In one example, the defendants agreed on EMALL to supply Maritime Expeditionary Security Group Two at Norfolk Naval Shipyard with over 10,000 “Post-It” writing paper pads, but then replaced these approved items with 50 electronic transceivers they were not authorized to sell. By fraudulently substituting these products, the defendants were able to circumvent procurement controls and charge the military a 134% mark-up on the transceivers. The defendants repeatedly employed this fraudulent technique dozens of times, on a host of products, across a wide array of components in the military.
The scheme also allowed the defendants to conceal the sale of consumer electronics and other items that could be used to corrupt military officials. For example, in one contract VLI agreed to supply the USS Ronald Reagan aircraft carrier with industrial, motorized plumber snakes. VLI then fraudulently substituted that order with 100 29” Toshiba TVs, 60 32” Toshiba TVs and 160 TV tilt mounts. VLI purchased these items for only $39,558, but billed the government $66,807.
The plea agreements also detailed a series of transactions between October 2013 and April 2014, wherein IXI and another VLI-affiliated company, At Your Command (“AYC”), created approximately 20 EMALL carts for Navy Explosive Ordnance Disposal Group #2 (EODG-2) in Norfolk, Virginia, containing various items, including bags, canvas organizer bags, and pouches, for which the defendants billed DLA and received $1,303,024. In reality, the defendants actually provided EODG-2 with parachutes, altimeters and other sky diving gear purchased for approximately $924,252, realizing a profit of $378,772 by substituting improperly procured parachuting equipment.
The defendants were hugely successful in their fraud, and received approximately $45 million for EMALL sales related to over 12,000 transactions between approximately March 1, 2008 and January 31, 2015. On a small sample of 60 of those transactions between August 2009 and October 2013, totaling approximately $2,868,590 in sales, the loss to the Navy was approximately $1,417,395, indicating a fraud loss of approximately 50%.
Acting United States Attorney Robinson observed: “Not only did the defendants inflict financial harm on the taxpayers by charging obscene mark-ups on these items, but they potentially compromised combat readiness by providing unauthorized, non-conforming parts. What’s more, their scheme posed a significant danger of corrupting Navy personnel and others by essentially creating a ‘slush fund’ to purchase non-military items, such as televisions, computers, cameras, iPhones and other electronics. This Office will continue to use all the tools available, including the District’s Procurement Fraud Working Group, to prevent and deter those who pose the threat of fraud and corruption to our procurement process.”
“Corrupt contracting practices damage the public trust and ultimately undermine the efforts of the Department of Defense to support our men and women in uniform,” said Chris Hendrickson, Special Agent in Charge of the Defense Criminal Investigative Service Western Field Office. “Along with our law enforcement partners, we make the investigation of such offenses a top priority. Cases such as these are not motivated by need or other difficult personal circumstances; they are the product of simple greed.”
“The successful prosecution of this case was the direct result of collaborative teamwork between the Naval Criminal Investigative Service, our Federal Law Enforcement partners and the U.S. Attorney’s Office,” said Gunnar Newquist, Special Agent in Charge of the NCIS Southwest Field Office. “Convictions like this should be a warning to those who would attempt to take advantage of the US Navy, for personal gain.” As SAC Newquist observed, “We are unified in our efforts to catch criminals who not only defraud the US Navy, but specifically are stealing money from the American taxpayers at the direct loss to our warfighters.”
FBI Special Agent in Charge Eric S. Birnbaum stated, “Today’s convictions are a result of federal partners teaming together to stop the loss of millions of government dollars as well as the greed and deceit employed in this case.” SAC Birnbaum continued, “The FBI will continue to work to root out fraud against our government and uncover the schemes to steal federal taxpayer dollars.” The FBI encourages the public to report allegations of public corruption to the FBI public corruption hotline at telephone number (877) NO-BRIBE (662-7423).
In addition to the fraud charges, Harrington and Mayer also pleaded guilty to false statements on their tax returns for the tax years 2010 and 2014. Harrington and Mayer both used VLI to pay personal expenses in excess of $200,000 and $100,000, respectively, thereby underreporting their 2010 income on their personal tax returns. Both defendants, in contravention of the advice of their tax professionals, continued this behavior of using VLI to pay for personal expenses and not declaring the additional money as income, causing their 2014 income tax returns to under-report their income by approximately $436,017 and $674,704. By under-reporting their income, Harrington underpaid taxes by $141,113 and Mayer underpaid taxes by $299,511 for 2010 and 2014.
“IRS Criminal Investigation remains committed to investigating individuals who treat corporate funds as their personal piggy bank,” said Acting Special Agent in Charge Anthony J. Orlando, IRS Criminal Investigation. “As admitted in court today, Mr. Harrington and Mr. Mayer used their positions within VLI to defraud not just their own company, but the honest, hardworking Americans who pay their tax obligations.”
All defendants also agreed to forfeiture of the proceeds of their offense, and have collectively agreed to forfeit over $1.6 million in illegal proceeds. All defendants were ordered to return to court on May 19, 2017, at 8:30am, for a hearing before District Judge Gonzalo Curiel.
CORPORATE DEFENDANTS
Veteran Logistics, Inc.
Industrial Xchange, Inc.
Boston Laser Technology, Inc.
INDIVIDUAL DEFENDANTS Criminal Case No. 17CR0488-GPC
Jeffrey Harrington Age: 55 San Diego, CA
Michael Mayer Age: 63 San Diego, CA
Kimberlee Hewitt Age: 45 Ridgewood, New York
Natalee Hewitt Age: 49 Virginia Beach, Virginia
SUMMARY OF CHARGES
Count 1 (All): Conspiracy to commit wire fraud and file false claims (18 U.S.C. § 371).
Maximum penalties: 5 years’ imprisonment; 3 years’ supervised release; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and a mandatory special assessment of $10.
Count 2 (Harrington): False Statement on Tax Return (26 U.S.C. § 7206(1)).
Maximum penalties: 3 years’ imprisonment; 1 year supervised release; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and a mandatory special assessment of $100.
Count 3 (Mayer): False Statement on Tax Return (26 U.S.C. § 7206(1)).
Maximum penalties: 3 years’ imprisonment; 1 year supervised release; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and a mandatory special assessment of $100.
AGENCIES
Defense Criminal Investigative Service
Defense Logistics Agency, Office of Inspector General
Federal Bureau of Investigation
General Services Administration, Office of Inspector General
Internal Revenue Service, Criminal Investigation
Naval Criminal Investigative Service
Former Major and Lt. Col. Sentenced for Defrauding the Marine CorpsRead the Press Release
Assistant U.S. Attorneys Nicholas W. Pilchak (619) 546-9709 and C. Seth Askins (619) 546-6692
NEWS RELEASE SUMMARY – February 27, 2017
SAN DIEGO – A former Lieutenant Colonel in the U.S. Marine Corps Reserves was sentenced to three months in custody followed by six months’ community confinement in a halfway house and ordered to pay forfeiture and restitution today for participating in a four-year wire fraud conspiracy to defraud the Marine Corps out of over $205,000.
Lieutenant Colonel Michael K. Strom pretended to rent the home of his fellow officer, former reservist Major Jason H. Wild, in order to claim reimbursements from the Marines when called to active duty at Camp Pendleton. Wild, in turn, pretended to rent Strom’s home. Both men submitted phony lease agreements and rental receipts to support their false claims. In truth, each man owned his own home next to Camp Pendleton and never paid any of the claimed rent.
During the sentencing hearing, U.S. District Judge Anthony J. Battaglia told the defendant: “Those that are so key to our country’s safety, our way of life, when they cross the line, it’s serious.” Strom pleaded guilty in October 2016 to conspiring to commit wire fraud, and filing false claims with the United States.
Co-defendant Wild, who was convicted by a jury at trial last November, was sentenced on February 21, 2017, to nine months in custody followed by six months’ community confinement in a halfway house. Judge Battaglia also imposed the same $205,628 forfeiture judgment and restitution order against Wild.
Wild owned his own home in Oceanside, California throughout the time he claimed rental benefits from the Marine Corps. Evidence at Wild’s trial, including witness testimony, credit card statements, tax returns, and bank records, established that Wild lived in his Oceanside home throughout the period he falsely claimed to pay $38,442 to rent Strom’s home in Laguna Niguel, California.
Five months after Wild’s “rental” concluded, Strom was activated at Camp Pendleton and falsely claimed for two years to rent Wild’s Oceanside home from Wild’s friend. Although Strom told the Marine Corps he paid $98,736 to rent Wild’s home, the evidence at trial demonstrated that Strom lived in his own home in Laguna Niguel throughout the sham “lease” period.
Financial records, including a bank analysis performed by the Naval Audit Service, established that neither defendant had paid a dollar of the claimed rent.
“Members of the armed forces who defraud the military out of its funds don’t just steal from taxpayers; they rob their comrades in arms of the resources they need to defend each other and our country,” said Acting U.S. Attorney Alana W. Robinson. “This Office will continue to investigate and prosecute those who put their own financial gain before the public trust they are sworn to uphold.”
Robinson commended the close coordination between the investigating agencies—the Department of Defense, Defense Criminal Investigative Service; the Naval Criminal Investigative Service; and the Department of Homeland Security, Office of the Inspector General—during the investigation of this case.
“The successful investigation and prosecution of these two former U.S. Marine Corp Reserve Officers, who prioritized greed over duty, demonstrates a commitment to hold accountable those who unlawfully divert precious resources needed to protect our Marines,” said Chris Hendrickson, Special Agent in Charge, Defense Criminal Investigative Service.
“The successful prosecution in this case was the direct result of collaborative teamwork between the Naval Criminal Investigative Service, its law enforcement partners, and the U.S. Attorney’s Office,” said Gunnar Newquist, Special Agent in Charge of the NCIS Southwest Field Office. “Convictions like this should serve as a deterrent to those who would put personal gain above their responsibility to American taxpayers and warfighters.”
“I am pleased with this successful investigation and prosecution,” said Amanda Thandi, Special Agent in Charge for the U.S. Department of Homeland Security, Office of the Inspector General. “We all suffer when federal programs are undermined by fraud. DHS OIG agents and our law enforcement partners will work aggressively to protect these vital programs and make sure that those who steal from them ultimately pay for their crimes.”
DEFENDANT Case No. 15-cr-2771-AJB
Jason H. Wild 45 years old Oceanside, California
Michael K. Strom 48 years old Laguna Niguel, California
CHARGES
Wire Fraud Conspiracy - 18 U.S.C. § 1349
Maximum penalty: 20 years’ imprisonment, $250,000 fine, three years’ supervised release, forfeiture and restitution.
False Claim – 18 U.S.C. § 287
Maximum penalty: 5 years’ imprisonment and $250,000 fine, three years’ supervised release, forfeiture and restitution.
AGENCIES
Department of Defense, Defense Criminal Investigative Service
Naval Criminal Investigative Service
Department of Homeland Security, Office of the Inspector General
Former Corrections Officer, Inmates and Others Arrested in Drug Smuggling Conspiracy at Richard J. Donovan Correctional FacilityRead the Press Release
Assistant U. S. Attorney Andrew Young (619) 546-7981
Assistant U.S. Attorney Todd Robinson (619)-546-7994
NEWS RELEASE SUMMARY – February 28, 2017
SAN DIEGO – Eleven people, including a former Corrections Officer at Richard J. Donovan (“RJD”) Correctional Facility, are charged in federal court as members of a network that smuggled methamphetamine, heroin, marijuana and cellular telephones into the prison.
The key defendant, Anibal Navarro, the former Corrections Officer at RJD, was arrested by FBI Agents and officials from the California Department of Corrections and Rehabilitations-Office of Internal Affairs on June 26, 2016 as he attempted to smuggle heroin, methamphetamine and cellular telephones into the prison.
Ten additional individuals, including inmates and their associates on the outside, were indicted by a federal grand jury on charges that they conspired with Navarro to smuggle drugs and cellular telephones into the prison. Navarro was released on bond.
Four defendants were arrested today in Los Angeles; six are already in custody in California state prisons.
According to the indictment, Martin Gomez, while an inmate at RJD in 2014, recruited Navarro to smuggle contraband into the prison. After Gomez was moved to another California state prison, he continued to coordinate and supervise the operation by conducting conference calls with Sylvia Gonzales, Gomez’s associate outside the prison, Navarro and others. During these calls, the conspirators arranged for narcotics, cellular telephones and cash to be delivered to Navarro at various locations in Southern California.
In addition to Gonzales, the smuggling operation was also aided by others outside the prison, including Everaldo Santana, Norma Alvardo-Medina and Vanessa Jackson, according to allegations in the indictment. These individuals provided Navarro with the narcotics and cellular telephones to smuggle into the prison. return, Navarro was paid between $1,000 and $2,000 each time he smuggled contraband into the prison. According to the dictment, this smuggling operation began in April 2014 and lasted nearly two years until it was dismantled in June 2016 with Navarro’s arrest.
The indictment alleges that after the contraband was smuggled into the prison, RJD inmates Agustin Aceves, Juan Gutierrez, John Price, Jeremy Gaither and Hugo Alvarado received and distributed the narcotics and cellular telephones to other inmates. The phones were used to coordinate criminal activity both inside and outside the facility.
Deputy United States Attorney Mark Conover said, “Corrections officers play a critical role in protecting the public from some of the most dangerous criminals. By placing greed above his duty, former Officer Navarro compromised the security of the public and enabled violent felons to continue committing crimes within the prison walls. We will continue to aggressively investigate and prosecute every individual involved in these criminal activities.”
FBI Special Agent Eric S. Birnbaum said, “The FBI is responsible for investigating corruption involving government officials and their entire criminal networks. Today’s arrests are an example of how our investigators work with our law enforcement and corrections partners to reveal the individuals fulfilling each role of the criminal network that affect the safety and security of our correctional facilities.”
The FBI encourages the public to report allegations of public corruption to our hotline at (877) NO-BRIBE (662-7423).
DEFENDANTS Case No. 17cr0446-AJB
MARTIN GOMEZ Age 56 Lancaster Prison
SYLVIA GONZALES Age 57 Sylmar, California
EVERALDO SANTANA Age 25 Los Angeles, California
AGUSTIN ACEVES Age 42 Lancaster Prison
NORMA ALVARADO-MEDINA Age 33 El Monte, California
JUAN GUTIERREZ Age 42 Vacaville, California
JOHN PRICE Age 20 Salinas Valley Prison
VANESSA JACKSON Age 39 Pasadena, California
JEREMY GAITHER Age 33 Valley State Prison
HUGO ALVARADO Age 24 High Desert Prison
DEFENDANTS Case No. 16cr1664-AJB
ANIBAL NAVARRO Age 38 Chula Vista, California
SUMMARY OF CHARGES
Conspiracy to Distribute Controlled Substances – Title 21, U.S.C., Sections 841(a) (1) and 846
Maximum Penalty: Life in Prison
Conspiracy to Commit Honest Services Fraud – Title 18, U.S.C., Sections 1349
Maximum Penalty: 20 years in prison
AGENCY
Federal Bureau of Investigation – San Diego Field Office
California Department of Corrections and Rehabilitation’s Office of Internal Affairs
California Department of Corrections and Rehabilitation’s Investigative Service Unit
United States Postal Service – Inspection Service
San Diego 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.
Sinaloa Cartel Leader Jaime Huerta-Tizoc Pleads Guilty to Drug Trafficking and Money Laundering Conspiracy and Agrees to Forfeit $2 MillionRead the Press Release
Assistant U.S. Attorney Adam L. Braverman (619) 546-6717
NEWS RELEASE SUMMARY – February 23, 2017
Sinaloa Cartel leader Jaime Huerta-Tizoc pleaded guilty to drug trafficking and money laundering charges in federal court today, admitting that he was responsible for moving tons of cocaine and marijuana and millions of dollars in proceeds across the U.S.-Mexico border.
Huerta-Tizoc appeared before U.S. Magistrate Judge Mitchell D. Dembin. The defendant was charged in a sealed indictment on August 19, 2016. A sealed arrest warrant was issued that same day. On December 15, 2016, was arrested at the San Ysidro, California Port of Entry as he attempted to enter into the United States.
In connection with the entry of his guilty plea, Huerta-Tizoc admitted that he was a high-level leader of the Sinaloa Cartel and that his primary responsibility was transporting large quantities of narcotics on behalf of the Sinaloa Cartel for importation from Mexico into the United States. Huerta-Tizoc utilized a fleet of tractor-trailers to transport ton quantity levels of both cocaine and marijuana from Mexico into the United States, including the Southern District of California. He also admitted that he agreed to transport millions of dollars in narcotics proceeds from the United States to Mexico. As part of his plea agreement, Huerta-Tizoc agreed to forfeit $2 million in United States Currency as proceeds of this conspiracy.
“Any day a Sinaloa cartel leader is no longer free to bring ton quantities of life-crushing drugs to our communities is a good day,” said Acting U.S. Attorney Alana W. Robinson. “As long as people are dying from overdoses and lives are being destroyed by illicit drugs, we will pursue the cartels.”
“Today, a dangerous drug trafficker pleaded guilty to his crimes,” said DEA San Diego Special Agent in Charge William Sherman. “Keeping this poison off the streets of our neighborhoods is our number one priority in the face of the addiction epidemic we are facing in the U.S. today.”
Sentencing is set for May 12, 2017, at 9 a.m. before U.S. District Judge Dana M. Sabraw.
DEFENDANT Criminal Case No. 16-CR-1895-DMS
Jaime Huerta-Tizoc Age: 41
SUMMARY OF CHARGES
Conspiracy to Import Cocaine and Marijuana, in violation of Title 21, United States Code, Sections 952, 960 and 963.
Penalties: Mandatory Minimum 10 years and Maximum Life in Prison, $10,000,000 fine, $100 Special Assessment, Supervised Release up to Life
Conspiracy to Launder Money, in violation of Title 18, United States Code, Sections 1956(a)(2)(A) and (h).
Penalties: Maximum 20 years in prison, a fine of the greater of twice the value of the property involved in the transaction or $500,000, $100 Special Assessment, Supervised Release up to 5 years
INVESTIGATING AGENCIES
Drug Enforcement Administration
Customs and Border Protection Office of Field Operations
Customs and Border Protection Office of Border Patrol
San Diego Law Enforcement Coordination Center
Homeland Security Investigations
Internal Revenue Service
Man Pleads Guilty after Oceanside Cop Finds $2.1 Million in Illicit Drugs Hidden in Car’s Floorboards, Door Panels During Traffic StopRead the Press Release
Assistant U. S. Attorney Sherri Hobson (619) 961-0287
NEWS RELEASE SUMMARY – February 23, 2017
SAN DIEGO – San Ysidro resident Ricard Lujan, who was arrested in November during a routine traffic stop when an Oceanside police officer discovered millions of dollars’ worth of methamphetamine and cocaine hidden inside his vehicle, entered a guilty plea in federal court today.
Lujan pleaded guilty to two counts of possession of controlled substances with intent to distribute before U.S. Magistrate Judge Barbara Lynn Major. Lujan was arrested on November 17, 2016, after the police officer discovered the drugs hidden inside the floorboards, door panels, center console and elsewhere in Lujan’s vehicle.
In his plea agreement, Lujan admitted that he drove his vehicle loaded with controlled substances from Mexico into the United States and that he intended to deliver the controlled substances to another person.
According to a federal complaint, the Oceanside Police Officer was conducting random vehicle registration checks at 12:40 a.m. on Harbor Drive in Oceanside. While doing this he noticed a car with expired tags. The officer then saw Lujan enter the Mitsubishi Endeavor SUV and attempt to leave the area. The officer stopped the vehicle. While talking to the officer, Lujan, the registered owner of the vehicle, appeared nervous and agreed to a search of his vehicle.
A Border Patrol canine handler responded to the traffic stop to assist Oceanside Police. The dog alerted to the odor of narcotics. Agents from the Drug Enforcement Administration, San Diego Narcotics Task Force, subsequently searched Lujan’s vehicle and found 99 packages that were vacuum sealed in plastic containers of cocaine and 58 rectangular vacuum sealed in plastic containers of methamphetamine. The agents seized approximately 89.50 kilograms of cocaine and approximately 68.90 kilograms of methamphetamine.
The estimated wholesale of the cocaine is $1.7 million dollars. The estimated wholesale value of the methamphetamine is $450,000.
Lujan is scheduled for sentencing on June 5, 2017 at 9 a.m. before U.S. District Judge Roger T. Benitez. He faces up to 20 years in custody.
DEFENDANT
Ricardo Lujan, age 44
San Ysidro, California
CHARGE
Criminal Case 16CR2910BEN
Two Counts of possession with intent to distribute controlled substances (cocaine and methamphetamine)
Title 21, United States Code, Section 841
Penalties: 20 years in custody, 3 years of supervised release, $500,000 fine; $100 special assessment
AGENCIES
Oceanside Police Department
Drug Enforcement Administration, San Diego Narcotics Task Force
U.S. Border Patrol, San Clemente Station
Torrance Airplane Broker Pleads Guilty to Laundering Drugs Proceeds through Acquisition of Multiple Airplanes for Drug TraffickersRead the Press Release
Assistant U. S. Attorney Sherri Walker Hobson (619) 961-0287
NEWS RELEASE SUMMARY – February 21, 2017
SAN DIEGO – Torrance airplane broker Hector Hernandez pleaded guilty in federal court today to money laundering charges, admitting that he helped hide the true origin of drug money through the purchase of airplanes for drug traffickers.
Hernandez, 48, entered his guilty plea before U.S. District Judge Michael M. Anello to conspiracy to launder drug proceeds and conspiracy to engage in monetary transactions. Sentencing is set for June 5, 2017 at 9 a.m. before Judge Anello.
Hernandez was the owner of Pacific Coast Aero at Zamparini Field, at Torrance Airport. In his plea agreement, he admitted that he facilitated the purchase of airplanes and airplane parts for exportation and deregistration to Mexico on behalf of third parties. Hernandez admitted that he arranged for delivery of substantial bulk cash to codefendant Vicente Contreras-Amezquita
According to an indictment, codefendant Contreras-Amezquita used 46 bank accounts at multiple U.S. financial institutions and made structured cash deposits in excess of $3 million dollars for the purchase of over 35 airplanes. As part of the scheme, Hernandez admitted that he facilitated the purchase of seven airplanes.
As part of his guilty plea, Hernandez admitted that knew that bulk cash was derived in part from unlawful proceeds that constituted a felony and were criminally derived. Hernandez believed that the proceeds or bulk cash were in part from drug trafficking activities and that the planes would be used for drug trafficking activities in Mexico, even though Hernandez was not personally involved in drug trafficking activities.
According to the indictment, codefendant Contreras-Amezquita and others facilitated the acquisition and purchase of the Cessnas and airplane parts, including auxiliary fuel tanks, heavy duty tires and landing gear for landing on clandestine airfields. Cessna 206s and 210s are types of airplanes preferred by drug-trafficking organizations operating in Mexico because of their reliability, speed and ability to carry heavy payloads over long distances.
Codefendant Vicente Contreras-Amezquita’s hearing was continued to March 16, 2017. His trial date is on April 25, 2017.
DEFENDANT Case Number 15CR1144-MMA
Hector Hernandez Age 48 Wilmington, California
GUILTY PLEA TO TWO CONSPIRACY CHARGES
Count 1
Conspiracy to Launder Money by avoiding transaction reporting requirements and concealing nature, location, source, ownership and control of drugs proceeds); Title 18, United States Code, Sections 1956(h), 1956(a)(1)(B)(i) and 1956(a)(1)(B)(ii); 20 years maximum, 3 years of supervised release; $100 special assessment; $500,000 fine
Count 2
Conspiracy to Engage in Monetary Transactions); Title 18, United States Code, Sections 1956(h) & 1957; 10 years maximum, 3 years of supervised release; $100 special assessment; $500,000 fine
AGENCIES
Internal Revenue Service –Criminal Investigations
Drug Enforcement 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.
Convicted Sex Offender Sentenced to 40 Years for Sex Trafficking a 16-Year-Old Girl by ForceRead the Press Release
Assistant U.S. Attorneys Alessandra P. Serano (619) 546-8104 and Connie V. Wu (619) 546-8592
NEWS RELEASE SUMMARY – February 22, 2017
SAN DIEGO, CA – Luther Gene Ray, aka “Pumpkin,” was sentenced in federal court today to 40 years in prison for sex trafficking a 16-year-old minor female by force in 2014.
Ray was found guilty after jury trial in December 2015 for one count of sex trafficking of a minor by force, fraud or coercion and one count increased penalties for sex offenders.
The victim was a runaway girl. She met Ray at a local retail store within 30 days of his release from federal prison. Ray had previously been convicted of the same crime in Los Angeles back in 2007 and thus, was required to register as a sex offender. Ray served just 8 years on the prior offense and was on supervised release during the time. Ray lured the victim to work as a prostitute as a way to make money for herself.
The evidence at trial demonstrated that the victim received none of the money she earned through prostitution while Ray received thousands of dollars from the victim as well as at least three other women working as prostitutes for Ray. Ray used social media such as Facebook to brag about his lifestyle. The victim testified that Ray assaulted her - and other women in front of her - if they even looked at another man who might be a pimp. Law enforcement was alerted to Ray’s illicit activities after the victim called police while in juvenile hall.
As a result of Ray’s status as a sex offender, U.S. District Court Judge Roger T. Benitez was required to impose an additional 10 years in custody. In imposing the 40-year sentence, Judge Benitez said the sentence will send a message that sexually exploiting women and girls through violence will not be tolerated.
“This defendant terrorized and traumatized his 16-year-old victim, and now he will pay a very serious price for his crimes,” said Acting U.S. Attorney Alana Robinson. “We will continue to work tirelessly with our law enforcement partners to detect and prosecute persons who engage in sex trafficking, a form of modern day slavery”.
FBI Special Agent in Charge Eric S. Birnbaum stated: “The sentence imposed on this defendant is a genuine reflection of both the horrific victimization suffered by these young girls and the terrible impact that this type of criminal behavior has on the life and the well-being of our communities. The FBI, along with our law enforcement partners, will continue to pursue the perpetrators of this type of heinous conduct with all of the resources available to us.”
DEFENDANT Criminal Case No. 15CR0498-BEN
Luther Gene Ray aka “Pumpkin” Age: 33 Hemet, CA
SUMMARY OF CHARGES
Count 1: Sex Trafficking by Force, Fraud or Coercion, in violation of 18 U.S.C. §1591
Maximum Penalties: Life in prison, mandatory minimum 15 years per count
Count 2: Increased Penalties for Registered Sex Offenders, in violation of 18 U.S.C. §2260A
Maximum Penalties: Ten years in prison consecutive
INVESTIGATING AGENCIES
Federal Bureau of Investigation
San Diego Police Department
U.S. Navy Commander Charged as Part of Expanding Navy Bribery ScandalRead the Press Release
A current U.S. Navy Commander was charged in a complaint unsealed today with accepting luxury travel, elaborate dinners and services of prostitutes from foreign defense contractor Leonard Francis in exchange for classified and internal U.S. Navy information.
Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Alana Robinson of the Southern District of California, Director Andrew L. Traver of the Naval Criminal Investigative Service (NCIS) and Director Dermot F. O’Reilly of the Defense Criminal Investigative Service (DCIS) made the announcement.
Mario Herrera, 48, of Helotes, Texas, was charged with one count of conspiracy to commit bribery in connection with interactions with Leonard Francis, the former CEO of Glenn Defense Marine Asia (GDMA), a defense contracting firm based in Singapore. Herrera was arrested in San Antonio, Texas, this morning and is scheduled to make his initial appearance in federal court in the Western District of Texas. The United States will seek removal of Herrera to San Diego to face charges.
According to the complaint, Herrera participated in a bribery scheme with Francis in which he accepted luxury travel and entertainment expenses and the services of prostitutes in exchange for helping to steer lucrative U.S. Navy contracts to Francis and GDMA. Herrera provided Francis with internal, proprietary U.S. Navy information and intervened on GDMA’s behalf in contract disputes. According the complaint, Herrera directed ships to take alternative routes that benefitted GDMA on two separate occasions, costing the U.S. Navy $3.6 million.
To date, a total of 17 individuals have been charged in connection with the scheme; of those, 13 have pleaded guilty, including: Admiral Robert Gilbeau, Captain Michael Brooks, Commander Bobby Pitts, Captain Daniel Dusek, Commander Michael Misiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez, former NCIS Special Agent John Beliveau and U.S. Petty Officer First Class Daniel Layug.
Brooks, Gilbeau and Sanchez await sentencing. In May 2016, Pitts was charged and his case is currently pending. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and to pay a $15,000 fine. On Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine. On March 25, 2016, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine. On April 29, 2016, Misiewicz was sentenced to 78 months in prison and to pay $95,000 in restitution to the Navy and a $100,000 fine. On Oct. 14, 2016, Beliveau was sentenced to 12 years in prison and to pay $20 million in restitution. On Dec. 2, 2016, Simpkins was sentenced to 72 months in prison, to pay $450,000 in restitution, to forfeit $150,000 and pay a $50,000 fine.
A criminal complaint is merely an accusation, and the accused is presumed innocent unless proven guilty in a court of law.
DCIS, NCIS and the Defense Contract Audit Agency are investigating the case. Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case.
Anyone with information relating to fraud or corruption should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.Tax Preparers and Recruiter Admit Filing False Returns in Elaborate Tax Return ScamRead the Press Release
Assistant U.S. Attorney Joseph J.M. Orabona (619) 546-7951
NEWS RELEASE SUMMARY – February 16, 2017
SAN DIEGO – Two tax preparers and a recruiter working with those preparers pleaded guilty today in federal court, admitting to their involvement in a tax return scam that resulted in the filing of false returns, the use of stolen identities and the receipt of more than $880,000 in bogus tax refunds.
Rahim Ali Cummings and Ebrahim Ashamu were local tax preparers in El Cajon, California. Ashamu operated his tax preparation business as Vista Tax Services on El Cajon Boulevard. Rashad Abdul-Rahim worked with Cummings and Ashamu by recruiting customers and obtaining stolen identities to use in their fraudulent scheme. Cummings and Abdul-Rahim pleaded guilty to conspiracy and Ashamu pleaded guilty to filing false claims and aggravated identity theft before U.S. Magistrate Judge Nita L. Stormes.
According to the plea agreements, Cummings and Ashamu prepared and filed the false tax returns with the Internal Revenue Service between September 2011 and September 2012. Abdul-Rahim solicited and obtained the personal identifying information from the victims using false pretenses, such as informing the victims they could obtain “free” government money from alleged grant and senior programs. He concealed his intention to use the information to file false tax returns. Abdul-Rahim provided Cummings and Ashamu with the personal information of the victims in order for Cummings and Ashamu to prepare and file the false tax returns. The IRS uncovered the scheme because a majority of the refunds were mailed to addresses controlled by Cummings, Ashamu, and Abdul-Rahim.
The plea agreement for each defendant sets forth the amount of refunds directly deposited into bank accounts under their control. In particular, Cummings received approximately $470,042 in fraudulent refunds directly deposited into bank accounts he controlled. Ashamu received approximately $367,631. Abdul-Rahim received approximately $44,937 in fraudulent refunds and additional cash payments from Cummings and Ashamu for providing the victims’ information. As a result of their crimes, Cummings, Ashamu, and Abdul-Rahim caused approximately $882,610 in losses to the IRS. Each defendant has agreed to make full restitution to the IRS for the total amount of false refunds they each received.
Furthermore, as part of their plea agreements, Cummings, Ashamu, and Abdul-Rahim agreed to be permanently enjoined from preparing or filing federal income tax returns for anyone other than themselves. A civil complaint will be filed against them, and a permanent injunction will be entered to prevent Cummings, Ashamu, and Abdul-Rahim from acting as a tax preparer in the future.
With a new tax return filing season upon us, the public is reminded to always review a copy of any tax return prepared and filed on their behalf and to be skeptical of tax preparers that offer to obtain substantial tax refunds.
Cummings, Ashamu, and Abdul-Rahim are scheduled to be sentenced on May 1, 2017 at 9 a.m. before U.S. District Judge Roger T. Benitez.
DEFENDANTS Criminal Case No. 16CR0768-BEN
Rahim Ali Cummings Age: 47 Detroit, Michigan
Ebrahim Ashamu Age: 58 El Cajon, California
Rashad Abdul-Rahim Age: Age: 46 El Cajon, California
CHARGES THAT DEFENDANTS CUMMINGS AND ABDUL-RAHIM PLEADED GUILTY TO:
Count 1 – Title 18, United States Code, Section 286 B Conspiracy to Commit Mail Fraud, File False Claims, Fraudulently Use a Social Security Number of Another, and Aggravated Identity Theft
Maximum penalties: 5 years in prison, $250,000 fine, 3 years of supervised release.
CHARGES THAT DEFENDANT ASHAMU PLEADED GUILTY TO:
Count 33 – Title 18, United States Code, Section 287 B Filing False, Fictitious and Fraudulent Claims
Maximum penalties: 5 years in prison, $250,000 fine, 3 years of supervised release.
Count 56 – Title 18, United States Code, Section 1028A – Aggravated Identity Theft
Maximum penalties: Mandatory 2-year sentence, to be served consecutive to any other prison term, $250,000 fine, 3 years of supervised release.
INVESTIGATING AGENCIES
Internal Revenue Service-Criminal Investigation
United States Secret Service
Navy Commander Charged as Part of Corrupt “Brotherhood” that Accepted Luxury Travel and Prostitutes from Foreign Defense ContractorRead the Press Release
Assistant U.S. Attorneys Mark W. Pletcher (619) 546-9714 and Patrick Hovakimian (619) 546-9718
NEWS RELEASE SUMMARY – February 16, 2017
SAN DIEGO – U.S. Navy Commander Mario Herrera was charged in a complaint unsealed today with accepting prostitutes, luxury travel, elaborate dinners and $1,800 steaks from foreign defense contractor Leonard Glenn Francis in exchange for classified and internal U.S. Navy information.
Herrera, the 12th U.S. Navy official to be charged so far, was arrested in San Antonio, Texas this morning and is scheduled to make his initial appearance in federal court in the Western District of Texas. The United States will seek removal of Herrera to San Diego to face charges.
According to the complaint, Herrera received bribes in return for sending U.S. Navy ship schedules and other proprietary information to Francis, sometimes through U.S. Navy Commander Jose Luis Sanchez, who was among the first officers charged in the massive bribery and fraud case in 2013. Sanchez pleaded guilty to bribery charges in January 2015 and awaits sentencing.
Hererra, Sanchez and other U.S. Navy 7th Fleet officers who were committed to doing the bidding of Francis in exchange for prostitutes and other perks called themselves the “Band of Brothers” and the “Wolf Pack,” the complaint said. In one email, Sanchez asked Francis to send pictures of prostitutes, saying “the brothers are ready to indulge.” A few days later in another email, Sanchez thanked Francis for the prostitutes and hotel accommodations during a port stop in Manila, Philippines: “A warm thank you from the brotherhood…we thoroughly enjoyed ourselves and had a great time.”
The complaint also alleges that Herrera made recommendations within the Navy to benefit Francis’ company, Glenn Defense Marine Asia, including on several occasions manipulating the movement of U.S. Navy ships and diverting them to ports financially lucrative to Francis. GDMA is a multinational corporation and longtime government contractor based in Singapore, which provides hundreds of millions of dollars of “husbanding” services for the U.S. Navy in at least a dozen countries throughout the Pacific. Husbanding involves supplying food, water, fuel, tugboats and fenders, security, transportation, trash and liquid waste removal, and other goods and services to ships and submarines in foreign ports.
So far, a total of 17 named individual defendants have been charged in connection with the GDMA corruption and fraud investigation. Of those, 12 are current or former U.S. Navy officials, including Herrera, Sanchez, Admiral Robert Gilbeau, believed to be the first active-duty U.S. Navy flag officer charged in a federal criminal case; Captain (ret.) Michael Brooks; Captain Daniel Dusek; Commander Michael Misiewicz; Commander Bobby Pitts; Lt. Commander Gentry Debord; Lt. Commander Todd Malaki; Petty Officer First Class Daniel Layug; Naval Criminal Investigative Service Supervisory Special Agent John Beliveau; and Paul Simpkins, a former DoD civilian employee, who oversaw contracting in Singapore.
Gilbeau, Brooks, Dusek, Misiewicz, Sanchez, Debord, Malaki, Layug, Beliveau, and Simpkins have pleaded guilty. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine. On March 25, 2016, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; and on April 29, 2016, Misiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy. Beliveau was sentenced on October 14, 2016 to 12 years in prison and to pay $20 million in restitution; Simpkins was sentenced on December 2, 2016 to 72 months in prison; Gilbeau, Brooks, and Sanchez await sentencing.
Pitts was charged in May 2016 and his case is pending.
Also charged are five GDMA executives – Francis, Alex Wisidagama, Ed Aruffo, Neil Peterson and Linda Raja. Three have pleaded guilty; Wisidagama was sentenced on March 18, 2016 to 63 months and $34.8 million in restitution to the Navy. Francis and Aruffo await sentencing; Peterson and Raja were extradited from Singapore in September 2016 and their cases are pending.
The Defense Criminal Investigative Service, Naval Criminal Investigative Service, and the Defense Contract Audit Agency are investigating. Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California and Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section are prosecuting the case.
Anyone with information relating to fraud or corruption should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.
DEFENDANT Case Number: 17mj0424
Lieutenant Commander Mario Herrera Age 48 Helotes, Texas
SUMMARY OF CHARGES
Conspiracy to Commit Bribery, in violation of 18 U.S.C. § 371
Maximum Penalty: 5 years in prison, a $250,000 fine,
INVESTIGATING AGENCIES
Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency
Members and Associates of the Westside Crips and Hotel Manager Indicted in Racketeering Conspiracy Involving Drug Trafficking, Prostitution and Other CrimesRead the Press Release
Assistant U. S. Attorneys Alessandra P. Serano (619) 546-8104 or Joseph Orabona (619) 546-7951
NEWS RELEASE SUMMARY – February 10, 2017
SAN DIEGO – Eleven alleged gang members and associates of the Westside Crips street gang and the manager of two national brand hotels in Oceanside are charged in a federal grand jury indictment with participating in a racketeering conspiracy involving narcotics trafficking, prostitution and other crimes.
Early this morning, detectives and agents from the Narcotics Task Force, U.S. Drug Enforcement Administration and Oceanside Police Department, with assistance from other agencies, made five arrests in North County and one in New Mexico. One defendant remained at large at midday; five were already in state custody and will be transferred to federal custody.
Some of the local defendants are scheduled to make their first court appearances today at 2 p.m. before U.S. Magistrate Judge Barbara L. Major and Monday before U.S. Magistrate Judge Andrew G. Schopler.
The indictment, unsealed today, alleges that the defendants are associated with the Westside Crips, a criminal street gang that primarily operates in Oceanside. According to the indictment and other court documents, the members of the conspiracy were involved in drug trafficking, prostitution, attempted murder, assaults and robberies. The acts alleged date back to 2004 and continue to up to 2016.
According to court documents, members of Westside Crips are akin to a crime family, where all members work together committing various crimes for the purpose of making money. The indictment alleges that the defendants took on different responsibilities within the criminal enterprise. Some sold narcotics. Others managed prostitutes and transported them all over the country. The hotel manager provided a safe haven for the alleged gang members to conduct their illegal activities. For that reason, the defendants are charged with racketeering conspiracy—the statute traditionally used for organized-crime syndicates and mobsters.
This is the fourth time the U.S. Attorney’s office here has used the racketeering statute to charge large numbers of gang members, associates, and facilitators with operating a criminal enterprise that included drugs, human trafficking, and violence. In the first case, 39 Oceanside gang members and associates were charged with racketeering, and, to date, 35 have pleaded guilty. The second case involved gangs in North Park; that case is pending, with 21 guilty pleas so far and two guilty verdicts after a jury trial in July 2016. The third case involved 22 defendants as members and associates of the Tycoons street gang. To date, all 22 defendants in that case have pleaded guilty.
“This case, along with many others like it in our district, demonstrates that human and drug trafficking by criminal street gangs is rampant,” said Acting U.S. Attorney Alana Robinson. “Not only are we targeting the traffickers and customers, but we are also going after the businesses that facilitate this type of gang activity.”
“The members of the criminal street gang that were arrested today face serious charges,” said DEA San Diego Special Agent in Charge William Sherman. “It is critical to the safety of our citizens to get these violent drug traffickers off the streets.”
“The Oceanside Police Department continues to be committed to fighting gang crime and gang activity in our City,” said Chief Frank S. McCoy. “The arrests today are an example of our commitment to utilize law enforcement agencies at all levels to help us to that end. I am very proud of all the hard teamwork and commitment our officers and the other law enforcement agencies had in this operation to make it such a success.”
“Today's enforcement actions mark the beginning of the end for the Westside Crip street gang,” said IRS Criminal Investigation’s Acting Special Agent in Charge Anthony J. Orlando. “Our agency plays a unique role in federal law enforcement’s resolve to dismantle the criminal gang enterprises terrorizing our streets. Our agents target the profit and financial gains of these organizations, following the money in an effort to disrupt these organizations and bring their members to justice.”
DEFENDANTS Case Number 17cr0270-JAH
Corey Austin aka Westwood Age: 36 Oceanside, CA
William Bright aka “Slim” Age: 51 Oceanside, CA
Ameer Roby aka “Tiny Dum” Age: 36 Oceanside, CA
Michael Sullivan aka “Du-Low” Age: 33 Oceanside, CA
Peter Miranda aka “Lil’ Burger” Age: 33 Oceanside, CA
Shane Anderson aka “Tiny West” Age: 25 Oceanside, CA
Jasiri Lacey aka “Baby West” Age: 25 Oceanside, CA
Demetrius McFarland aka “Mecchi Ruu” Age: 23 Oceanside, CA
Travion McHenry aka “2Much” Age: 25 Oceanside, CA
Richard Cleveland aka “Face” Age: 37 Oceanside, CA
Larry Monroe Age: 59 Oceanside, CA
Umesh Oza aka “Kevin” Age: 32 Oceanside, CA
SUMMARY OF CHARGES
Title 18, United States Code, Section 1962(d) - Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity; Title 18, United States Code, Section 1963 - Criminal Forfeiture
Maximum Penalties: 20 years’ incarceration, a fine of $250,000, three years of supervised release
AGENCIES
North County Narcotics Task Force
Drug Enforcement Administration
Oceanside Police Department
Internal Revenue Service Criminal Investigation
U.S. Marshal’s Service
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Company Owner Admits to Supplying Butane to Make Illegal Hash OilRead the Press Release
Assistant U.S. Attorney Andrew J. Galvin (619) 546-9721
NEWS RELEASE SUMMARY – February 9, 2017
SAN DIEGO – The owner of a large butane supply company pleaded guilty to a drug charge today, admitting that his company illegally sold thousands of butane canisters to smoke shops, knowing that some of the butane would be used to illegally manufacture hash oil.
Bosco Kwon, the owner of BK Power Imports, Inc., admitted in his plea agreement that he knew the manufacture of hash oil, a marijuana concentrate, poses a significant risk of fires and explosions.
As part of his plea agreement, Kwon agreed to forfeit $1,026,614 and over 94,152 canisters of butane. Sentencing is scheduled for April 28, 2017 at 9 a.m. before U.S. District Judge Janis L. Sammartino.
Kwon pleaded guilty to a single count of selling drug paraphernalia. The Los Angeles-based business, which sold Power-branded butane, was the nation’s largest supplier of butane specifically designed for use in making hash oil.
Butane Hash Oil (BHO) is a marijuana concentrate, which is a Schedule I controlled substance. The manufacture of BHO is a violation of federal law, Title 21, US Code, Section 841. The manufacture of BHO is also a violation of California state law, Health and Safety Code, Section 11379.6
BHO is similar in appearance to honey or butter. It contains extremely high levels of tetrahydrocannabinol, or THC, and can be up to four times more potent than high grade marijuana. BHO is commonly manufactured by packing marijuana into a glass, plastic, or metal tube. Butane is then sprayed into the top of the tube. The butane strips the marijuana of its cannabinoid-containing oils, which drip from the bottom of the tube, often through a filter and into a holding container. The end product is highly-profitable and can be ingested as an oil, consumed in edibles, or solidified to make concentrated forms of cannabis known as “wax.”
According to admissions in Kwon’s plea agreement, BK Power Imports sold its butane to wholesalers and retailers in San Diego County and throughout the United States, including smoke shops “Greener Side of Life,” “Marry Jane House of Glass Inc,” “Twilight Zone,” “Smoke Tokes Inc,” “Puff and Stuff,” “Cali Kulture-Magic Glass,” and “The Grow Shop.” The butane was sold under the brand names Power, Power 5x, Power 7x, Power 9x, and Power 11x. Kwon imported in excess of 350,000 canisters of butane into the United States every month.
During the manufacture of BHO, butane, a flammable gas that is odorless, colorless, and heavier than air, can evaporate out of the substance and collect on the floor, accumulating to explosive levels without proper ventilation. This process creates an invisible, but very real, risk of fires, explosions, and chemical burns.
Since 2011, the manufacture of hash oil using Power butane has caused at least 54 fires and explosions, 29 serious injuries, and four deaths in California, Oregon, Nevada, and Washington, according to Homeland Security Investigations agents. In 2015, BK Power Imports and Kwon were sued because of an explosion and fire that occurred while two individuals made hash oil using Power butane. One of the individuals died while the other suffered third-degree and full-thickness burns over 40 percent of his body that kept him in an intensive care unit for nearly two months. Despite this lawsuit, Kwon continued to sell Power butane.
“Whatever one believes about marijuana use, the manufacture of hash oil is an extremely dangerous process and puts lives in danger,” said U.S. Attorney Alana Robinson. “We will do everything we can to safeguard the public.”
“Hash oil manufactured with butane gas has led to an alarming number of explosions and fires in recent years,” said Dave Shaw, special agent in charge for HSI San Diego. “HSI is committed to targeting the supply chains where butane gas is sold on the black market for use in hash oil labs. By going after the supply chains and the illicit proceeds, we are able to dismantle the distribution networks, which is a critical step toward shutting down a dangerous epidemic that has put the public’s safety in harm’s way for too long.”
This investigation follows the successful prosecution of the owners of the Newport Beach-based business Puretane. In that case, Puretane’s Chief Executive Officer and Chief Financial Officer admitted that they conspired to launder the proceeds of their illegal butane business. With these prosecutions, Homeland Security Investigations and the U.S. Attorney’s Office for the Southern District of California have shut down the nation’s two leading suppliers of butane designed for use in making hash oil.
DEFENDANT: Case Number 17CR331-JLS
Bosco Kwon Age: 53 La Habra, CA
SUMMARY OF CHARGES
Sale of Drug Paraphernalia – Title 21, U.S.C., Section 863
Maximum penalty: Three years in prison and $250,000 fine
AGENCY
Homeland Security Investigations
*Reporters interested in interviews may contact Assistant U.S. Attorney Andrew Galvin, at (619) 546-9721, or ICE PAO Lauren Mack at 619 719 7921.
Two San Diego Ship Owners Plead Guilty After Intentional Sinking for Insurance MoneyRead the Press Release
Special Assistant U.S. Attorney Ari D. Fitzwater (619) 546-8756 and Assistant U. S. Attorney Patrick J. Bumatay (619) 546-8450
NEWS RELEASE SUMMARY – February 1, 2017
SAN DIEGO – Christopher Switzer and Mark Gillette pleaded guilty in federal court today to conspiring to destroy their own vessel, the “Commander,” a 57-ft boat used for charter sport-fishing trips, in order to fraudulently collect an insurance payout.
According to their plea agreement, on October 11, 2016, Switzer and Gillette headed out to sea on the Commander from its homeport in Mission Bay and headed toward Long Beach. The two had planned to intentionally sink the Commander and submit a claim to their insurance company.
Switzer and Gillette admitted how they attempted to sink the Commander while off the coast of California by destroying plastic PVC piping in the ship’s engine room, which caused sea water to flood into the vessel. They also pumped sea water onto the vessel and punctured its bulkhead to let sea water spread faster throughout the boat.
After sea water had flooded the Commander and as it was starting to go under, Switzer and Gillette called the United States Coast Guard for help which promptly launched a helicopter to find the two. A Dana Point Harbor Patrol rescue fireboat later found the two boatmen atop the partially submerged ship. As part of their plea agreement, Switzer and Gillette acknowledged that their actions subjected themselves and the emergency responders to the risk of death or serious injury.
Upon their rescue, Switzer and Gillette gave a series of false statements to officials to cover their plot to sink the Commander for insurance money. They indicated the first sign of a problem on the Commander was a power failure and they could not figure out why the vessel was flooding.
Switzer and Gillette’s actions failed to completely sink the Commander and it was found adrift near Dana Point, California the next day. A commercial salvage company was able to successfully tow the Commander back to San Diego Bay, California, where investigators uncovered the scheme to intentionally sink the ship.
Switzer and Gillette pleaded guilty before U.S. Magistrate Judge Jill L. Burkhardt. They face a maximum penalty of 10 years in prison and a maximum $250,000 fine. As part of their plea, they are required to reimburse the U.S. Coast Guard over $15,000 for the price of launching the rescue helicopter and other costs.
Sentencing is scheduled for March 6, 2017 at 9 a.m. before U.S. District Judge Michael M. Anello.
DEFENDANTS Case Number 17cr0251-MMA
Christopher Switzer Age: 39
Mark Gillette Age: 37
SUMMARY OF CHARGES
Conspiracy to Destroy Vessels – Title 18, U.S.C., Section 2271
AGENCY
U.S. Coast Guard Investigative Service
Local Woman Sentenced and Ordered to Pay $1.8 Million for Complex Fraud SchemeRead the Press Release
Assistant U. S. Attorney Christopher P. Tenorio (619) 546-8413
NEWS RELEASE SUMMARY – January 30, 2017
SAN DIEGO – Deborah Tumlinson of Valley Center was sentenced yesterday to a year and a day in custody for her participation in a fraudulent scheme devised after the 2007 Witch Creek Wildfire. U.S. District Judge Janis L. Sammartino also ordered Tumlinson to pay restitution in the amount of $1,838.742.24.
On May 13, 2016, Tumlinson pleaded guilty to a wire fraud scheme that ran from May 2010 to April 2013. Part of the scheme involved obtaining loan proceeds from U.S. Claims (Lifeline Funding, LLC), a funding company based in Moorestown, New Jersey that provides loans for individuals who can use expected or actual lawsuit proceeds as collateral. To obtain a loan from U.S. Claims in the amount of $750,000, Tumlinson made false representations, and caused others to do the same.
On May 20, 2010, Tumlinson caused her attorney, Carter Johnston, to send a letter to her real estate broker, which misrepresented that Tumlinson and her husband had reached a settlement in their pending lawsuit against SDG&E. The lawsuit (Edward Malone, et al. v. SDG&E, et al., Case No. 37-2008-00081779-CU-PO-CTL in San Diego Superior Court) was based on allegations that the Tumlinsons’ former residence in Ramona, California, was damaged by the Witch Creek Wildfire on October 21, 2007. Tumlinson caused Johnston to send a second letter to her real estate agent on September 30, 2010, which misrepresented that the Tumlinsons had obtained funding for the purchase of a new residence in Valley Center, California. Mr. Johnston has since been disbarred by the State of California.
On October 2, 2010, Tumlinson caused Johnston to send a letter to U.S. Claims, misrepresenting that the Tumlinsons had settled the SDG&E lawsuit for $2,490,000. Three days later, Tumlinson falsely told U.S. Claims that a court-appointed mediator in the SDG&E lawsuit had already awarded $2.4 million to the Tumlinsons. The next day, the Tumlinsons signed a Purchase Agreement in support of a U.S. Claims loan application. The Purchase Agreement falsely provided that Johnston represented the Tumlinsons in connection with their “settled claim” in the SDG&E lawsuit when, in fact, they were represented at that time by other attorneys, and no settlement had been obtained which could be used as collateral to secure the U.S. Claims loan. The Tumlinsons received a loan from U.S. Claims in the amount of $750,000, which they never repaid.
After receiving the loan proceeds from U.S. Claims, Tumlinson wire-transferred $550,000 into escrow on October 8, 2010, for the purchase of the Valley Center property. Using the equity from the Valley Center property, Tumlinson sought a new loan from Seaside Funding Inc., a mortgage broker, based in Carlsbad, California. In December 2010, Tumlinson signed, and caused her husband to sign, Seaside Funding loan documents for a $250,000 home-equity loan. The application and supporting documents falsely represented that the Tumlinsons did not intend to live in the Valley Center property as their primary residence, and that it would be used as a rental property that generated income necessary to make loan payments. As a result of the misrepresentations, Seaside Funding funded the requested loan, which the Tumlinsons never repaid. The loan proceeds were later recovered when Seaside Funding foreclosed on the Valley Center property.
At sentencing, Judge Sammartino noted that Tumlinson’s property did receive some damage from the 2007 fire, but that her subsequent actions made her “pain and anguish spread to others.”
“The defendant suffered losses during a terrible wildfire, like many others did,” said Acting U.S. Attorney Alana W. Robinson. “But she exploited her own tragedy and the compassion of others, and in the process made sure it became someone else’s tragedy, too. The people she fleeced paid a high price, and for that, she will pay a high price.”
Special Agent in Charge Eric S. Birnbaum said, “The San Diego Division of the FBI remains committed to uncovering these complex fraud schemes and bringing those to justice who would attempt to cheat the banking system for personal gain.”
DEFENDANT Case Number: 14CR2978-JLS
Deborah Tumlinson Age: 55
SUMMARY OF CHARGE
Title 18, United States Code, Section 1343 (Wire Fraud Scheme)
Maximum penalty: 20 years of custody; $100,000 Fine
AGENCY
Federal Bureau of Investigation
Defendant Sentenced to 46 Months for Sexual Abuse of a MinorRead the Press Release
Assistant U. S. Attorney Jennifer Gmitro (619) 546-9692
NEWS RELEASE SUMMARY – January 23, 2017
SAN DIEGO – Dylan Wayne Cowdrey was sentenced in federal court today to 46 months in prison for sexually abusing a 14-year-old old girl by coercing her through threatening text messages.
According to his October 2016 plea agreement, Cowdrey admitted to having sexual intercourse with the victim on a military base in the Southern District of California. He also admitted to engaging in undue influence to coerce her into the sexual acts. That is, between approximately June 5, 2016 and June 9, 2016, Cowdrey sent anonymous text messages to the victim threating to cause serious bodily harm to her family and loved ones if she did not perform sexual acts with him. Among other threats, Cowdrey stated that if the victim did not comply, she would “lose her love[d] ones and everyone else [she] knows.”
He also claimed that he was receiving threatening text messages from the same source. When the defendant met up with the victim and she told him she did not want to perform sex acts, he responded that he “didn’t want to die” as a result of her refusal. On the same day, the defendant engaged in sexual acts with the victim.
The defendant, then 22, admitted in his plea agreement he knew the victim was 14.
At sentencing, U.S. District Judge William Q. Hayes stated that the defendant’s conduct could only be described as “manipulative” and “diabolical.” Noting the youth of the victim, Judge Hayes added, “It is hard for me to understand the sense of betrayal” that the victim must feel, “to learn that all of it wasn’t true.”
“It is a despicable thing to deceive and abuse a child,” said Acting U.S. Attorney Alana W. Robinson. “This defendant will now pay a high price for striking fear in the heart of a child to the point where she believed she had to sacrifice herself to protect her family.”
DEFENDANT Criminal Case: 16CR1929-WQH
Dylan Wayne Cowdrey Age 23 San Diego, California
SUMMARY OF CHARGES
Sexual Abuse of a Minor within Maritime and Territorial Jurisdiction (18 U.S.C. § 2243(a))
Maximum penalty: 15 years in prison and $250,000 fine
AGENCY
Naval Criminal Investigative Service
Animal Rights Activist Sentenced to 21 Months for Cross-Country Crime Spree Targeting Fur IndustryRead the Press Release
Assistant U.S. Attorneys John Parmley (619) 546-7957 or Michael Kaplan (619) 546-7927
NEWS RELEASE SUMMARY – January 17, 2017
SAN DIEGO – Animal-rights activist Nicole Kissane was sentenced in federal court today to 21 months in prison for terrorizing the fur industry during cross-country road trips in which she and coconspirator Joseph Buddenberg caused hundreds of thousands of dollars in damage by vandalizing properties and releasing mink from commercial farms.
During today’s sentencing hearing, U.S. District Judge Larry A. Burns described Kissane’s conduct as a “calculated, premeditated reign of terror over those in the fur industry.” Judge Burns also ordered Kissane to pay $423,477 in restitution to the victims.
Kissane pleaded guilty on December 27, 2016, to Conspiracy to Violate the Animal Enterprise Terrorism Act. Buddenberg entered his guilty plea to the same charge earlier in the year, on February 9, 2016. He was sentenced on May 2, 2016 to two years in prison and $398,272 in restitution.
“Vandalizing homes and businesses with acid, glue and chemicals in the dark of night is a form of domestic terrorism,” said Acting U.S. Attorney Alana W. Robinson. “Whatever your feelings about the fur industry, these sentences are a pretty strong signal that this isn’t the right way to effect change.”
“Today’s sentence sends a message to those who commit crimes in an attempt to advance their personal agendas,” stated FBI Special Agent in Charge Eric S. Birnbaum. “The FBI and our Joint Terrorism Task Force (JTTF) partners work together, share intelligence, and are able to connect cases to expose individuals engaged in this, or any, form of domestic terrorism.”
According to her plea agreement, Kissane admitted that during the summer and fall of 2013, she and Buddenberg caused hundreds of thousands of dollars in damage during their crime spree.
The defendants were charged under the Conspiracy to Violate the Animal Enterprise Terrorism Act. They were arrested in Oakland by agents from the FBI’s San Francisco field office.
In one instance described in the indictment, the defendants traveled from Oregon to San Diego in their 2012 Honda Fit on July 15, 2013 and used paint, paint stripper, a super glue-type substance, butyric acid, muriatic acid and glass etchant to vandalize Furs by Graf, a retail furrier located in San Diego, as well as the Spring Valley and La Mesa residences and personal property of the current and former owners of the business.
To publicize their crimes, the defendants drafted “communiqués” describing their conduct and posted them on websites associated with animal rights extremists, the indictment said.
Among some of the incidents of vandalism cited in the indictment: The defendants slashed tires of a meat distributor’s truck in San Francisco; smashed windows and glued the door locks at a furrier business in Minneapolis, Minnesota; vandalized and attempted to flood the Sun Prairie, Wisconsin home of an employee of the North American Fur Auctions.
DEFENDANTS
Nicole Juanita Kissane Age: 30 Oakland, CA
Joseph Brian Buddenberg Age: 32 Oakland, CA
SUMMARY OF CHARGES
Conspiracy to Violate the Animal Enterprise Terrorism Act – Title 18, U.S.C., Section 43 (a) (1), (2) (c) and (b) (3) (A) Maximum penalty: Ten years in prison and $250,000 fine
AGENCIES
Federal Bureau of Investigation, San Francisco and San Diego Field Offices
Joint Terrorism Task Force
Navy’s “Supply Officer of the Year” Sentenced to 30 months in Expanding Bribery and Fraud InvestigationRead the Press Release
Assistant U.S. Attorneys Mark W. Pletcher (619) 546-9714 and Patrick Hovakimian (619) 546-9718
NEWS RELEASE SUMMARY – January 12, 2017
SAN DIEGO – U.S. Navy Lieutenant Commander Gentry Debord, who was named U.S. Navy Supply Officer of the Year while he was secretly accepting bribes and prostitutes from a foreign defense contractor in exchange for confidential information, was sentenced in federal court today to 30 months in prison.
Debord, 41, who pleaded guilty in October 2016 to a bribery charge, was also ordered to pay a $15,000 fine and $37,000 in restitution to the Navy. Debord has admitted that he accepted cash, luxury hotels and prostitutes from foreign defense contractor Leonard Glenn Francis between 2007 and 2013. In return he provided proprietary Navy information that benefitted Francis’ company, Singapore-based Glenn Defense Marine Asia.
During today’s hearing, U.S. District Judge Janis L. Sammartino told the defendant that he picked the wrong side. “You were clearly on their team and not the Navy’s team.”
Acting U.S. Attorney Alana Robinson said: “This is a fitting sentence for a man who sullied his stripes with such despicable behavior. We will continue to move forward in this investigation until all involved are held accountable.”
According to his plea agreement, from November 2007 to January 2013, Debord provided Francis and others with internal, proprietary U.S. Navy information; directed Francis and GDMA to inflate invoices to reflect services not rendered; advocated for the U.S. Navy to procure items from GDMA under its husbanding contracts; and otherwise used his position and influence in the U.S. Navy to advocate for and advance GDMA’s interests, as opportunities arose.
During the conspiracy, Debord was a supply officer aboard the U.S.S. Essex and later became a logistics officer for the Pacific Fleet. As a supply officer, Debord was responsible for procuring goods and services to meet the ship’s logistical and supply needs and for confirming that the U.S. Navy’s contractors provided these services. As logistics officer, he helped direct ship movements and port visits in the Western Pacific region.
As part of this conspiracy, Debord, Francis and others attempted to conceal the nature and extent of their relationship, by, among other things, using fictitious email accounts to communicate and using coded language and other means designed to obfuscate the true nature of their corrupt relationship, including referring to prostitutes as “cheesecakes” and “bodyguards.”
For example, on or about February 26, 2008, Debord emailed a GDMA executive to ask him to provide the services of prostitutes during the U.S.S. Essex’s upcoming port visit to Manila, Philippines: “[D]ouble checking to see if I will have my security for the 2nd and the 4th. I however do not want anyone to know I have a bodyguard.” The executive responded: “Bodyguards are standing by.”
About eight months later, around October 30, 2008, Debord emailed GDMA executives advising them that the U.S. Navy’s ship husbanding contract in the Philippines was “coming up for renew[al],” and asking that GDMA provide him with an apartment in conjunction with an upcoming port visit by the U.S.S. Essex to Hong Kong. Debord noted that he and another GDMA employee “had fun up [near Clark Air Force Base,] ate lots of cheesecake, even ate some in a group session.”
From May 2010 until December 2011, Debord was specially selected to attend the Naval Postgraduate School in Monterey, California, during which time he was not in direct contact with GDMA.
In December 2011, however, Debord accepted a position in Singapore, putting him again in close proximity to GDMA. On or about May 26, 2012, after recognizing Debord’s name on an email chain regarding fuel issues, GDMA’s Vice President of Global Operations Neil Peterson executive emailed another GDMA employee, “Look at who's the replenishment officer for ctf73, you remember sex crazy LT Debord from Essex!” Peterson emailed Debord on May 28, 2012 and invited him out for “cheesecake…just like the good ol days.”
So far, a total of 16 named individual defendants have been charged in connection with the GDMA corruption and fraud investigation. Of those, 11 are current or former U.S. Navy officials, including Debord, Admiral Robert Gilbeau, believed to be the first active-duty U.S. Navy flag officer charged in a federal criminal case; Captain (ret.) Michael Brooks; Commander Bobby Pitts; Captain Daniel Dusek; Commander Michael Misiewicz; Lt. Commander Todd Malaki; Commander Jose Luis Sanchez; Petty Officer First Class Daniel Layug; Naval Criminal Investigative Service Supervisory Special Agent John Beliveau; and Paul Simpkins, a former DoD civilian employee, who oversaw contracting in Singapore.
Debord, Brooks, Gilbeau, Dusek, Misiewicz, Malaki, Beliveau, Sanchez, Layug, and Simpkins have pleaded guilty. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine. On March 25, 2016, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; and on April 29, 2016, Misiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy. Beliveau was sentenced on October 14, 2016 to 12 years in prison and to pay $20 million in restitution; Simpkins was sentenced on December 2, 2016 to 72 months in prison; Brooks, Gilbeau and Sanchez await sentencing.
Pitts were charged in May 2016 and his case are pending.
Also charged are five GDMA executives – Francis, Alex Wisidagama, Ed Aruffo and Neil Peterson and Linda Raja. Three have pleaded guilty; Wisidagama was sentenced on March 18, 2016 to 63 months and $34.8 million in restitution to the Navy. Francis and Aruffo await sentencing; Peterson and Raja were extradited from Singapore in September 2016 and their cases are pending.
In the government’s sentencing memorandum, Assistant U.S. Attorney Mark Pletcher wrote that Debord’s conduct was particularly galling considering he received a prestigious award while he was in cahoots with Francis. “Ultimately, that Debord was effectively working for GDMA and against the U.S. Navy in dereliction of his official duties at the same time as being awarded the Supply Officer of the Year Award is an unparalleled example of duplicity, even considering the high bar set by the industrious cast of defendants in this investigation.”
The Defense Criminal Investigative Service, Naval Criminal Investigative Service, and the Defense Contract Audit Agency are investigating. Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California and Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section are prosecuting the case.
Anyone with information relating to fraud or corruption should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.
DEFENDANT Case Number: 16cr1457-JLS
Lieutenant Commander Gentry Debord Age 41 San Diego
SUMMARY OF CHARGES
Conspiracy to Commit Bribery, in violation of 18 U.S.C. § 371
Maximum Penalty: 5 years in prison, a $250,000 fine,
INVESTIGATING AGENCIES
Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency
Navy Officer Sentenced to 30 Months in Expanding Bribery and Fraud InvestigationRead the Press Release
A U.S. Navy Lieutenant Commander was sentenced today to 30 months in prison for accepting cash, hotel expenses and the services of a prostitute from foreign defense contractor Glenn Defense Marine Asia (GDMA) in exchange for classified Navy information.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Alana Robinson of the Southern District of California, Director Dermot O’Reilly of the Department of Defense’s (DoD) Defense Criminal Investigative Service (DCIS) and Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) made the announcement.
In October 2016, Gentry Debord, 41, pleaded guilty to one count of conspiracy to commit bribery and admitted that in 2007 he began a corrupt relationship with Leonard Glenn Francis, the former president and CEO of GDMA, a company that provided port services to U.S. Navy ships and submarines throughout the Pacific. In addition to his prison sentence, U.S. District Judge Janis L. Sammartino of the Southern District of California ordered Debord to pay a $15,000 fine and $37,000 in restitution to the Navy.
As part of the scheme, between 2007 and 2013, Debord accepted cash, luxury hotels and the services of prostitutes from Francis in exchange for proprietary Navy information that benefitted GDMA. During this period, Debord served as a supply officer aboard the U.S.S. Essex and later as a logistics officer for the Pacific Fleet. Debord further admitted that he provided Francis and others with internal, proprietary U.S. Navy information; directed Francis and GDMA to inflate invoices to reflect services not rendered; advocated for the U.S. Navy to procure items from GDMA under its husbanding contracts; and otherwise used his position and influence in the U.S. Navy to advocate for and advance GDMA’s interests.
To date, a total of 16 individuals have been charged in connection with the scheme; of those, 10 have pleaded guilty, including Debord, Admiral Robert Gilead, Captain Michael Brooks, Commander Bobby Pitts, Captain Daniel Dusk, Commander Michael Mickiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez and U.S. Petty Officer First Class Daniel Layup.
On Jan. 21, 2016, Layup was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine. On March 25, 2016, Dusk was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; and on April 29, 2016, Mickiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy. Beliveau was sentenced on Oct. 14, 2016, to 12 years in prison and to pay $20 million in restitution; Simpkins was sentenced on Dec. 2, 2016, to 72 months in prison; Brooks, Gilbeau and Sanchez await sentencing. Pitts was charged in May 2016 and his case is pending.
DCIS, NCIS and the Defense Contract Audit Agency are investigating the case. Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case.Former Government Contractor Sentenced to Five Years for Bribing an Officer and Smuggling Aliens for Financial GainRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Lara A. Stingley (619)546-8403
NEWS RELEASE SUMMARY – January 12, 2017
SAN DIEGO – Irma Perez, a former government contractor who worked in the lunchroom at the San Ysidro Port of Entry, was sentenced in federal court today to five years in prison for bribing a U.S. Customs and Border Protection officer to allow her to smuggle undocumented aliens into the U.S.
Perez pleaded guilty in August of 2016, admitting that she offered to pay approximately $4,000 per alien if Perez could use the officer’s lane to smuggle people into the United States. After the initial meeting, the officer immediately reported Perez’s bribery attempt to CBP-Office of Professional Responsibility. The officer continued to work with law enforcement, which led to Perez’s arrest during a smuggling event on May 16, 2016.
“This officer showed strength of character and bravery in coming forward to immediately report this crime,” said Acting U.S. Attorney Alana Robinson. “The officer put our nation’s security first, and as a result a smuggler who boldly attempted to corrupt a public official will be locked up for years.”
Perez’s arrest on May 16, 2016 stemmed from an investigation conducted by the Border Corruption Task Force (BCTF), which is composed of agents and officers working at the Federal Bureau of Investigation, Customs and Border Protection – Office of Professional Responsibility, Customs and Border Protection – Office of Field Operations, and U.S. Border Patrol.
During Perez’s change of plea hearing, she admitted that she knowingly bribed a U.S. Customs and Border Protection Officer to allow her to smuggle aliens through that officer’s lane without inspection on February 22 and May 16 of 2016. These smuggling events involved one Chinese national (on February 22, 2016) and three Brazilian nationals (on May 16, 2016). Perez later brought one of her children with her to meet with the CBP officer to pay the $4,000 bribery payment for the February 22, 2016 smuggling event. She also admitted that she used her children’s U.S. passports for the undocumented aliens.
In addition to the prison term, U.S. District Judge Janis L. Sammartino ordered Perez to pay a $15,400 special assessment and forfeiture of $4,000 for the bribery payment Perez paid the CBP officer on February 22, 2016. Judge Sammartino ordered that Perez be taken into custody at the conclusion of the sentencing hearing.
“The FBI, along with our law enforcement partners on the San Diego Border Corruption Task Force, will continue to leverage our resources to combat those who attempt to influence the security at our borders,” stated Special Agent in Charge Eric S. Birnbaum. “Let this case be a reminder that officers on the line uphold their duties with integrity and honor and attempts to tarnish that honor will not be tolerated.”
The FBI encourages the public to report allegations of public corruption to our hotline at (877) NO-BRIBE (662-7423).
“Because this CBP officer came forward, Perez is being brought to justice for attempting to corrupt our officer and for her alien smuggling activities,” said CBP Director of Field Operations for San Diego, Pete Flores. “We count on CBP employees and officers to perform their duties with honor and distinction, working tirelessly every day to keep our country safe, and this CBP officer is no exception. This officer’s work and cooperation with the investigation after being approached, is exemplary.”
DEFENDANT Criminal Case No. 16CR1189-JLS
Irma Perez, Chula Vista, CA Age: 32
SUMMARY OF CHARGES:
Count 1 – Bribery of a Public Official (18 U.S.C. § 201(b)(1)(A) and (C))
Maximum Penalties: maximum of 15 years in prison; maximum fine of $250,000; mandatory special assessment of $100; maximum term of supervised release for 3 years
Counts 12 and 13 – Bringing in Certain Aliens for Financial Gain (8 U.S.C. § 1324(a)(2)(B)(ii))
Maximum Penalties: mandatory minimum of 3 years in prison; maximum sentence of 10 years in prison; maximum fine of $250,000 per count; maximum term of supervised release of 3 years per count; mandatory special assessment of $100; additional special assessment of $5,000 per count
Count 14 – Bringing in Unlawful Aliens for Financial Gain (8 U.S.C. § 1324(a)(2)(B)(ii))
Maximum Penalties: mandatory minimum of 5 years in prison; maximum sentence of 15 years in prison; maximum fine of $250,000; maximum term of supervised release of 3 years; special assessment of $100; additional special assessment of $5,000
INVESTIGATING AGENCIES
The Border Corruption Task Force (BCTF) is composed of the Federal Bureau of Investigation, Customs and Border Protection – Office of Professional Responsibility, Customs and Border Protection – Office of Field Operations, U. S. Border Patrol.
Ring Leader of Violent Drug Trafficking and Illegal Gambling Enterprise Pleads Guilty to RacketeeringRead the Press Release
Assistant U. S. Attorneys Andrew P. Young (619) 546-7981,Benjamin Katz (619) 546-9604 or Mark W. Pletcher (619) 546-9714
NEWS RELEASE SUMMARY – January 10, 2016
SAN DIEGO – Owen Hanson, leader of the violent “ODOG Enterprise,” pleaded guilty today to conspiring to operate an international drug trafficking, gambling and money laundering enterprise in the United States, Central and South America and Australia from 2012 to 2016.
According to his plea agreement, ODOG Enterprise trafficked hundreds of kilograms of cocaine, heroin, methamphetamine, MDMA (also known as “ecstasy”), anabolic steroids and Human Growth Hormone (“HGH”). As Hanson admitted, ODOG Enterprise’s drug operation routinely distributed controlled substances at wholesale and retail levels, including selling performance enhancing drugs to numerous professional athletes. The ODOG Enterprise also operated a vast illegal gambling operation focused on high-stakes wagers placed on sporting events. The Enterprise used threats and violence against its gambling and drug customers to force compliance.
Three of Hanson’s associates also pleaded guilty today: Giovanni Brandolino (aka “Tank”), Marlyn Villarreal and Jeff Bellandi.
In one instance discussed in court papers, an individual who owed the ODOG Enterprise more than $2 million received a DVD showing a beheading, and a photo of his desecrated family’s gravestone, in an effort to collect the alleged debt. Hanson pleaded guilty today to conspiring to operate the ODOG enterprise, in violation of the Racketeer Influenced and Corrupt Organization (“RICO”) statute, and to conspiring to distribute controlled substances.
Brandolino, the second-highest ranking member of the ODOG Enterprise, pleaded guilty to conspiracy to violate RICO and conspiracy to commit money laundering. As part of the plea agreement Brandolino admitted that he assisted Hanson with the importation and distribution of hundreds of kilograms of cocaine and heroin. Brandolino specifically admitted establishing a drug distribution network in New Jersey and New York. Villarreal and Bellandi also pleaded guilty to conspiracy to commit money laundering.
So far, 16 of the 22 defendants charged in connection with this case have pleaded guilty, including Daniel Portley-Hanks, Jack Rissell, Kenny Hilinski, and Rufus Rhone. Portley-Hanks, a Los Angeles based private investigator who assisted Hanson with tracking down delinquent gamblers and other individuals who owed the enterprise money, pleaded guilty to extortion on December 27, 2016. Jack Rissell, labeled as an “enforcer” in the Superseding Indictment, also pleaded guilty to extortion on December 17, 2016. Kenny Hilinski, Hanson’s associate, pleaded guilty to the RICO conspiracy on May 24, 2016. Hilinski operated much of the gambling apparatus from Peru where he maintained various gambling websites, coordinated the collection of payments from various bookies and gamblers, and directed the organization’s runners to distribute the proceeds to Hanson through shell companies and cash deliveries. Portley-Hanks, Rissell, and Hilinski are awaiting sentencing.
Rhone, who pleaded guilty to conspiracy to distribute methamphetamine and cocaine early last year, was sentenced on September 19, 2016 to 72 months in prison.
The remaining defendants are set for trial on February 14, 2017. Luke Fairfield, a San Diego based Certified Public Accountant is accused of assisting Hanson with laundering the proceeds of his various illegal endeavors by, in part, setting up shell corporations and advising members of the Enterprise on how to structure bank transactions to avoid detection by bank security and law enforcement. Derek Loville, a former professional football player, is accused of distributing retail quantities of drugs for the ODOG Enterprise in Arizona. Dylan Anderson and Khalid Petras, the other two remaining defendants, are accused of running an illegal gambling business. charges against these four defendants are merely accusations, and they are considered innocent unless and until proven guilty.
The case arose out of a joint investigation by FBI, IRS and the New South Wales (Australia) Police Force in conjunction with the New South Wales Crime Commission. Hanson was initially indicted and arrested on September 9, 2015 after arranging the delivery of five kilograms of cocaine and five kilograms of methamphetamine. Eight individuals in Australia have been arrested in connection with Hanson’s global organization. Assistant U. S. Attorneys Andrew P. Young, Benjamin Katz and Mark W. Pletcher are prosecuting the case.
DEFENDANT Case Number: 15CR2310-WQH
Owen Hanson Age: 34
Luke Fairfield Age: 40
Kenny Hilinski Age: 39
Giovanni Brandolino Age: 42
Daniel Portley-Hanks Age: 70
Jack Rissell Age: 50
Derek Loville Age: 48
Chalie D’Agostino Age: 52
Marlyn Villareal Age: 32
Dylan Anderson Age: 34
Tim Bryan Age: 48
Jim Muse Age: 53
Jeff Bellandi aka “Jazzy” Age: 50
Curtis Chen Age: 33
James Duley Age: 41
Dee Foxx Age: 35
Khalid Petras Age: 55
Rahul Bhagat Age: 31
David Kipper Age: 35
Todd Oldham Age: 32
Daniel Ortega Age: 42
SUMMARY OF CHARGES
Count 1 (Defendants Hanson and Brandolino)
Racketeering Conspiracy to Conduct RICO Enterprise Affairs, 18 U.S.C. § 1962(d)
Maximum penalty: Life in prison, fine of $250,000 or twice the gross gain or loss caused by the offense, forfeiture of any property obtained or operated by RICO enterprise, five years of supervised release.
Count II (Defendants Bellandi and Villarreal)
Illegal Gambling Business, 18 U.S.C. § 1955
Maximum penalty: Five years in prison, fine of $250,000 or twice the gross gain or loss caused by the offense, forfeiture of proceeds, three years of supervised release.
Count 3 (Defendants Brandolino, Villarreal and Bellandi)
Money Laundering Conspiracy, 18 U.S.C. § 1956(h)
Maximum penalty: Twenty years in prison, fine of $500,000 or twice the gross gain or loss caused by the offense, forfeiture of property involved in the offense, three years of supervised release.
Count 4 (Defendant Hanson)
Conspiracy to Distribute Narcotics, 21 U.S.C. § 841(a)(1) and 846
Maximum penalty: Life in prison, fine of $20 million or twice the gross gain or loss caused by the offense, forfeiture of any proceeds, 10 years of supervised release.
AGENCY
Federal Bureau of Investigation – San Diego Field Office
Internal Revenue Service – San Diego
Australian Crime Commission
New South Wales Police Force
New South Wales Crime Commission
Customs and Border Protection Officer Pleads Guilty to Bribery and Smuggling Aliens for Financial GainRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Lara A. Stingley (619)546-8403 or Assistant U.S. Attorney Joseph J.M. Orabona (619)546-7951
NEWS RELEASE SUMMARY – January 10, 2017
SAN DIEGO – U.S. Customs and Border Protection Officer Jose Luis Cota pleaded guilty in federal court today to bribery and alien smuggling, admitting that he accepted cash and sexual favors from smugglers in exchange for permitting them to bring undocumented aliens into the United States without inspection through Cota’s lane at the San Ysidro Port of Entry.
Miriam Juarez-Herrera and Gilberto Aguilar-Martinez, the two Mexican nationals working with Cota to commit these crimes, pleaded guilty last week.
Cota, a 15-year veteran with Customs and Border Protection, was arrested in September 2016 following an alien smuggling event with co-defendants Juarez-Herrera and Aguilar-Martinez. According to court documents, Cota confessed to his crimes at the time of his arrest.
The arrests of Cota, Juarez-Herrera and Aguilar-Martinez occurred after a lengthy investigation conducted by the Border Corruption Task Force (“BCTF”), which is composed of agents and officers working at the Federal Bureau of Investigation, Customs and Border Protection – Office of Professional Responsibility, Customs and Border Protection – Field Operations, and U.S. Border Patrol.
According to his plea agreement, Cota pleaded guilty to four separate crimes – three counts of bringing in unlawful aliens for financial gain and one count of bribery of a public official. In his agreement, Cota admitted that from at least November 2015 through September 2016, he conspired with Juarez-Herrera to smuggle and transport unlawful aliens from Mexico into the United States for financial gain – charging as much as $15,000 per person.
Cota and Juarez-Herrera had an agreement that as part of the criminal enterprise, Juarez-Herrera would locate and recruit undocumented aliens in Mexico who wanted to be smuggled into the United States. These undocumented aliens would then be smuggled through Cota’s vehicle primary lane at the San Ysidro, California Port of Entry.
Cota also agreed with Juarez-Herrera to obtain the highest smuggling fee from the undocumented aliens and to obtain fraudulent entry documents for the smuggling enterprise. Finally, Cota received bribes from Juarez-Herrera in the form of cash and sexual favors in exchange for permitting Juarez-Herrera and the undocumented aliens whom she smuggled to enter the United States without inspection through Cota’s primary vehicle inspection lane at the San Ysidro Port of Entry. Between November 2015 and September 2016, Cota admitted that he allowed Juarez-Herrera to successfully smuggle at least ten undocumented aliens from Mexico into the United States.
After Juarez-Herrera successfully crossed the undocumented aliens into the United States, Cota received his bribes, according to court documents. Following one event, Cota admitted to receiving $13,000 in cash for allowing two undocumented aliens to illegally enter the United States through his inspection lane. Cota agreed that the government could prove that he deposited more than $44,000 in cash bribes into his bank accounts at the time he was under investigation. In addition, federal agents seized more than $17,000 in cash bribes from Cota’s residence following a lawfully executed search warrant in September 2016. Pursuant to the terms of his plea agreement, all of this cash will be forfeited to the United States.
Acting United States Attorney Alana W. Robinson said, “This officer violated the public’s trust for his own personal benefit and financial gain, while risking our nation’s safety and security. Combatting this type of border corruption will remain one of our office’s highest priorities.” She also thanked the agents and officers working on the BCTF whose tireless work both uncovered this corruption and resulted in removing this corrupt official from our border security.
“The vast majority of CBP officers are highly skilled, hard-working professionals dedicated to our mission to protect the American public and we do not stand for those that would tarnish our badge,” said Pete Flores, Director of Field Operations in San Diego. “As in all corruption cases, we worked diligently alongside our law enforcement partners and I’m appreciative of the collaborative effort to bring Cota to justice.”
“This investigation was a collaborative effort among a number of federal law enforcement agencies and demonstrates our commitment to investigate DHS employees who choose to violate the core values they swore to uphold,” said Kathryn Butterfield, Special Agent in Charge for U.S. Customs and Border Protection, Office of Professional Responsibility, in San Diego. “Every CBP employee shares responsibility for promoting integrity and for meeting mission demands while sustaining the trust and confidence of the public we serve. An overwhelming majority of CBP employees do so on a daily basis by performing their duties with honor and distinction. However, like any preeminent law enforcement agency, we must be committed to identifying those who do not adhere to the highest standards of conduct. It’s a matter of personal and professional pride. DHS, Customs and Border Protection, Office of Professional Responsibility, will not tolerate those who tarnish the badge and the agency’s reputation.”
“Public corruption, which includes border corruption, is the number one criminal priority for the FBI because of the potential harm that actions, like Officer Cota’s actions, can have on our nation’s security,” commented FBI Special Agent in Charge Eric S. Birnbaum. “With this important mission, the San Diego Border Corruption Task Force will continue working with our law enforcement partners and combine our agencies’ resources to root out these corrupt actors.”
The San Diego FBI and the Border Corruption Task Force encourages the public to report allegations of public corruption to our hotline at (877) NO-BRIBE (662-7423).
A sentencing hearing for Cota has been scheduled for April 7, 2017 at 9:00 a.m. before U.S. District Judge Jeffrey T. Miller. Cota is currently out of custody on bond. Cota submitted a resignation letter to U.S. Customs and Border Protection effective today.
DEFENDANTS Criminal Case No. 16CR2280-JM
Jose Luis Cota Age: 50
SUMMARY OF CHARGES:
Counts 1-3 – Bringing in Unlawful Aliens for Financial Gain (8 U.S.C. § 1324(a)(2)(B)(ii))
Maximum Penalties: mandatory minimum of 3 years in prison for two or less aliens; mandatory minimum of 5 years in prison for three or more aliens; maximum sentence of 10 years in prison; maximum fine of $250,000; maximum term of supervised release of 3 years
Count 5 – Receiving Bribe by Public Official (18 U.S.C. § 201)
Maximum Penalties: maximum sentence of 15 years in prison; maximum fine of $250,000; maximum term of supervised release of 3 years
INVESTIGATING AGENCIES
The Border Corruption Task Force (BCTF) is composed of the Federal Bureau of Investigation, Customs and Border Protection – Office of Professional Responsibility, Customs and Border Protection – Field Operations, U.S. Border Patrol, Transportation Security Administration and Drug Enforcement Administration
Bank Robber Sentenced to 46 Months in PrisonRead the Press Release
Assistant U.S. Attorney Blanca Quintero (619) 546-7118
NEWS RELEASE SUMMARY – January 3, 2017
SAN DIEGO – Alvin Lee Neal was sentenced today by U.S. District Judge Anthony J. Battaglia to 46-months in prison for robbing a Wells Fargo Bank branch in downtown San Diego. Judge Battaglia also ordered Neal to pay $565 in restitution to Wells Fargo Bank.
In his plea agreement, Neal, 56, admitted that on May 13, 2016, he entered the Wells Fargo bank located on 610 First Avenue, San Diego, and approached a teller. At first, Neal swiped his Wells Fargo debit card through the Wells Fargo customer card reader located at the counter. Neal’s bank profile appeared on the teller’s computer screen. When the teller asked Mr. Neil what he wanted to do at the branch, the defendant responded, “You’re being robbed. Don’t make a mistake.” Neal also handed a note to the teller that read, “You’re being robbed no mistake [sic]” and further told the teller “You don’t want anyone to get hurt, don’t make a mistake.” Neal took $565 and fled from the bank.
Based on the information from Neal’s customer profile, FBI agents and San Diego Police Department detectives established surveillance around Neal’s residential address and ultimately arrested Neal.
DEFENDANT Case Number: 16CR1188-AJB
Alvin Lee Neal Age: 56
SUMMARY OF CHARGE
Bank Robbery, in violation of Title 18, United States Code, Section 2113(a)
Maximum penalty: 20 years in prison
AGENCY
Federal Bureau of Investigation
San Diego Police Department
California Tax Return Preparer Pleads Guilty to Preparing False Tax ReturnsRead the Press Release
An El Cajon, California tax return preparer pleaded guilty today in the U.S. District Court for the Southern District of California, to three counts of aiding and assisting in the preparation of a false tax return, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Laura Duffy for the Southern District of California.
According to documents filed with the court, Marla Cunningham, 50, of San Diego, California, owned and operated Cunningham’s Tax Service, a tax preparation business in El Cajon, California. Cunningham admitted that she prepared false individual income tax returns for her clients for tax years 2008 through 2010 that included false charitable deductions, unreimbursed employee expenses, education credits, medical and dental expenses and business expenses. Cunningham agreed that she caused a loss of more than $1.2 million.
Cunningham faces a statutory maximum sentence of three years in prison for each count of aiding and assisting in the preparation of a false return, a period of supervised release, restitution and monetary penalties at her sentencing scheduled for March 10, 2017.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Duffy thanked special agents of IRS–Criminal Investigation, who conducted the investigation, and Trial Attorneys Matthew Hoffman and Benjamin Weir of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
North Park Gang Member Sentenced for Racketeering Conspiracy Involving Sex Trafficking of Minors and AdultsRead the Press Release
Assistant U. S. Attorney Alessandra Serano (619) 546-8104 or Joseph Orabona (619) 546-7951
NEWS RELEASE SUMMARY – December 21, 2016
SAN DIEGO, CA – A member of a North Park-based criminal street gang was sentenced in federal court today for participating in a racketeering enterprise involving sex trafficking of minors, robbery and drug sales.
Tony “Lil’ Play Doh” Brown was sentenced by U.S. District Judge John A. Houston to 66 months in prison followed by three years of supervised release.
In July 2016, a jury found the defendant and his co-defendant, Robert “Pimpsy” Banks III, guilty of Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity at the conclusion of a two-plus week trial and about ten hours of deliberations. The jury also found both Brown and Banks guilty of three counts of sex trafficking of minors and one count of transportation of a minor for prostitution.
The two convicted defendants, members of the Black Mob/Skanless Enterprise, were arrested and charged in 2014 as part of a larger investigation involving 22 other defendants. Twenty-two have pleaded guilty. Banks is set for a status hearing in January 2017.
“Sex trafficking is a crime that causes devastating long-term effects for victims,” said U.S. Attorney Laura Duffy. “Because of today’s sentence, and the numerous guilty pleas that preceded them, this gang member will no longer be able to subject women and girls to the pain, humiliation and suffering associated with sex trafficking. Unfortunately, more gangs are expanding from traditional pursuits like drug dealing into this lucrative business. These gangsters are preying upon our youth, and we are using every law enforcement resource to keep our children and our communities safe from these predators.”
“Today's sentence is a reminder of the terrible impact child exploitation has on our community,” said FBI Special Agent in Charge Eric S. Birnbaum. “The FBI Innocence Lost Task Force will continue to work tirelessly on dismantling these greedy and ruthless criminal gangs who victimize our children.”
During this trial, prosecutors set out to show the jury how the defendants worked together as a criminal enterprise to sex traffic multiple women including four 15 and 16-year-old minors, and to commit drug sales and a robbery on behalf of the Black Mob/Skanless Enterprise.
This case was prosecuted by Assistant U.S. Attorneys Alessandra P. Serano and Joseph J.M. Orabona. These guilty verdicts are the fruit of the collaborative work by the San Diego Police Department and the FBI’s Innocence Lost Task Force.
DEFENDANTS Case Number: 13CR4510-JAH
Tony “Lil Play Doh” Brown Age: 33 Tolleson, Arizona
SUMMARY OF CHARGES
Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, in violation of Title 18, U.S.C. Section 1962 (d) – Maximum Penalties: 20 years in Prison
Sex Trafficking of Children - Maximum Penalties: 20 years in Prison, Sex Offender Registration
Transportation of a Minor for Prostitution - Maximum Penalties: 20 years in Prison, Sex Offender Registration
INVESTIGATING AGENCIES
San Diego Police Department
Federal Bureau of Investigation
Small Business Owner Sentenced to Prison for Bankruptcy FraudRead the Press Release
Assistant U.S. Attorneys Joseph J.M. Orabona (619)546-7951 or Michael Heyman (619) 546-9615
NEWS RELEASE SUMMARY – December 19, 2016
SAN DIEGO – Phillip E. Southwood, Jr., a 50-year-old former owner of Southwood Industries, Inc., a holding company for Jefferson Liquor in Poway, was sentenced in federal court today to 12 months and one day in prison for multiple bankruptcy-related crimes. Southwood was also ordered to pay $119,000 in restitution.
Following a referral from the U.S. Trustee’s Office and a lengthy investigation by the Federal Bureau of Investigation, Southwood was indicted on six counts of fraud involving his personal Chapter 7 bankruptcy, including bankruptcy fraud, making false oaths in bankruptcy, and making false statements under penalty of perjury in bankruptcy. After a two-week jury trial before U.S. District Judge M. James Lorenz in January 2016, the jury deliberated for several hours and found Southwood guilty on all 6 counts.
According to the evidence proven at trial and court documents, Southwood devised a scheme to defraud his creditors by voluntarily filing a false and fraudulent bankruptcy petition. From at least December 2007 and continuing up to and including March 5, 2009, Southwood caused a number of acts to be undertaken in furtherance of his fraudulent scheme.
He drafted and executed a fraudulent Fictitious Business Name Statement for Southwood Industries, whereby he admittedly forged his father’s signature. Thereafter, Southwood caused his parents to open a bank account for the purpose of receiving and concealing proceeds from the sale of a liquor store. Southwood was not named on this account.
Then, Southwood caused to be deposited approximately $171,000 in cash from that sale into the account he directed his parents to open. Once the funds were deposited into this account, Southwood directed his parents to use the funds to pay for Southwood’s personal expenses and to give him cash at his request. When he filed his bankruptcy on March 5, 2008, Southwood concealed the proceeds from the sale of the liquor store and the bank account opened by his parents at Southwood’s direction which was used to receive and disburse these funds.
During the bankruptcy process, Southwood testified falsely about his schedules and financial affairs, including the funds he received from the sale of the liquor store. Southwood made false statements about the amount of cash he had on hand on the date he filed his bankruptcy. Southwood also made false statements about the timing and amount of preferential payments he made to certain creditors, family members, and insiders prior to filing his bankruptcy.
“The bankruptcy system is intended to provide eligible individuals an opportunity to obtain a fresh financial start. Unfortunately, in this case, the defendant used the bankruptcy system as a means to defraud his creditors by concealing a substantial amount of money that could have been used to pay off most of his debts,” said U.S. Attorney Laura Duffy. “Individuals who are contemplating bankruptcy are reminded that if they intentionally abuse the bankruptcy process, they will be investigated and prosecuted for their crimes.”
“Criminal bankruptcy fraud threatens the integrity of the bankruptcy system, as well as public confidence in that system,” said Tiffany Carroll, Acting U.S. Trustee for Southern California, Hawaii, and Guam (Region 15). “I am grateful to U.S. Attorney Laura Duffy and our law enforcement partners for their commitment to combating bankruptcy-related crimes, as demonstrated by today’s sentencing.”
The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. Region 15 is headquartered in San Diego, with an additional office in Honolulu.
DEFENDANT Criminal Case No. 13CR0785-L
Phillip E. Southwood, Jr. Age: 50 Poway, California
SUMMARY OF CHARGES:
Count 1 – Bankruptcy Fraud (Title 18, United States Code, Section 157(1))
Maximum Penalties: 5 years in prison and $250,000 fine
Counts 2-3 – False Oath and Account in Bankruptcy (Title 18, United States Code, Section 152(2))
Maximum Penalties: 5 years in prison and $250,000 fine
Counts 4-6 – False Statement in Bankruptcy (Title 18, United States Code, Section 152(3))
Maximum Penalties: 5 years in prison and $250,000 fine
AGENCY
Federal Bureau of Investigation
Vista Man Arrested for Trying to Coerce an 11-Year-Old Boy and a 16-Year-Old Girl to Send Him Naked Pictures of ThemselvesRead the Press Release
Assistant U. S. Attorneys Alexandra Foster (619) 546-6735 and Sabrina Feve (619) 546-6786
NEWS RELEASE SUMMARY – December 16, 2016
SAN DIEGO – Joseph Daniel Saucedo of Vista was arraigned in federal court yesterday on charges that he attempted to coerce two children, ages 11 and 16, into sending naked and sexually explicit photographs of themselves, and then threatened to expose them if they didn’t continue.
Saucedo was charged with production, attempted production and receipt of photographs of minors. U.S. Magistrate Judge Jill Burkhardt ordered him detained pending a hearing on December 22, 2016.
According to a complaint, Saucedo posed as a teenage girl and began communicating online with an 11-year-old Canadian boy. At first the two had normal conversations about everyday life. But then Saucedo, pretending to be “Amy,” sent naked pictures of young girls and asked the boy to communicate with her friend, an adult male, via telephone. “Amy” threatened to disparage the boy online if the boy did not contact her adult male friend.
After days of pressure from “Amy,” the boy relented and texted the adult male, who then called the boy using FaceTime and sent the boy photos of himself naked on his bed and other sexually explicit images. The Canadian boy continued to hang up on the adult male.
The harassment continued, and finally, on January 25, 2016, the boy received a message from “Amy” which included a video of a young boy masturbating. Amy threatened to leak the video and claim it depicted the Canadian boy.
Around this time, police in Calgary began investigating Saucedo’s online accounts that they had linked to child pornography. According to the complaint, they linked Saucedo to scores of illicit images and traced him to Vista, California.
They also discovered that Saucedo was carrying on a similar online relationship with a 16-year-old girl in Florida – this time pretending to be a modeling agent.
“As parents we need to be aggressively monitor what our children are doing online, and as prosecutors, we will aggressively go after predators who are coercing, extorting and harming our kids,” said U.S. Attorney Laura Duffy. Duffy asked that potential victims to please contact our Victim-Witness Coordinator, Polly Montano, at 619-546-8921.
“The tireless efforts and great investigative work by our special agents has lead us to serious charges against Mr. Saucedo,” said David Shaw, Special Agent in Charge for United States Homeland Security Investigations, San Diego. “Working hand in hand with our law enforcement partners, we continue to keep our children's safety as one of our top priorities.”
“The United States Secret Service will continue to work closely with our partners at Homeland Security Investigations, as well as our state, local and foreign law enforcement partners, in assisting them with investigations that involve sexually exploited children,” said David Murray, Special Agent in Charge, U.S. Secret Service San Diego Field Office. “With a collaborative effort, law enforcement has a greater impact on our communities, especially in stopping those who prey on innocent children.”
DEFENDANT Case Number: 16-MJ-3834
Joseph Daniel Saucedo Age:25 Vista, CA
SUMMARY OF CHARGES
Count One
Attempted Use of a Child to Produce a Visual Depiction, in violation of 18 USC Sections 2251(a) and (e).
Minimum Penalty: 25 years
Maximum Penalty: 50 years
Count Two
Use of a Child to Produce a Visual Depiction, in violation of 18 USC Section 2251(a).
Minimum Penalty: 25 years
Maximum Penalty: 50 years
Count Three
Receipt of Images of Minors Engaged in Sexually Explicit Conduct, in violation of Title 18, United States Code, Section 2252(a)(2)
Minimum Penalty: 15 years
Maximum Penalty: 40 years
AGENCY
United States Homeland Security Investigations
United States Secret Service
*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 Collects $20,557,036 in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2016Read the Press Release
Assistant U. S. Attorney Blair Perez (619) 546-7963
NEWS RELEASE SUMMARY – December 16, 2016
SAN DIEGO – U.S. Attorney Laura E. Duffy announced today that the Southern District of California collected $20,557,036 in criminal and civil actions in Fiscal Year 2016. Of this amount, $11,664,495 was collected in criminal actions and $8,892,541 was collected in civil actions. Additionally, the Southern District of California worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $6,924,822 in civil actions pursued jointly with these offices.
“The U.S. Attorney’s Office is committed to making victims of crime whole and to protecting the federal fisc from fraud,” Duffy said. “Through robust enforcement of federal restitution statutes in criminal cases and rigorous affirmative civil enforcement of the False Claims Act and civil rights statutes, our federal prosecutors are successfully recovering property and funds for victims and the U.S. taxpayers.”
As an example of a civil recovery this past year, San Diego-based medical diagnostic laboratory, Pathway Genomics Corporation, paid $4,036,622.74 to resolve allegations that it violated the False Claims Act by paying improper kickbacks to physicians and physician groups in exchange for patient referrals. The settlement resolved allegations that Pathway induced health care providers to refer Pathway genetic testing kits and services, and then received government reimbursement for those tests in violation of the law. The United States alleged that individual physicians received as much as $13,534 in improper reimbursements from Pathway. It was further alleged that, as its referrals increased, Pathway billed the high costs of these laboratory analyses to federal health care programs such as Medicare and TRICARE. Pathway has since voluntarily discontinued its physician reimbursement program. The whistleblower in the case, a former Pathway employee, received $686,225 under the qui tam, or whistleblower, provisions of the False Claims Act.
And in July, the Southern District of California made another significant recovery – valuable coins – including 365 one-ounce American Eagle gold coins; 40 1/10 ounce American Eagle gold coins; and 712 one-ounce South African Krugerrand gold coins to apply to defendant Lloyd Irvin Taylor’s restitution. Taylor was previously convicted of aggravated identity theft, violations of the tax code, and making false statements to financial institutions in connection with a gold purchasing scheme. He was ordered to pay $2,241,691.08 in restitution to the victims of his criminal acts. The recovered American Eagle and Krugerrand coins were auctioned under armed escort and the United States received over $1.4 million to apply to Mr. Taylor’s outstanding restitution.
Attorney General Loretta E. Lynch announced on Wedesday that the Justice Department collected nearly $15.4 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2016. The $15,380,130,434 in collections in FY 2016 represents more than five times the appropriated $2.93 billion budget for the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period.
“Every day, the men and women of the Department of Justice work tirelessly to enforce our laws, ensuring that taxpayer dollars are used properly and that the American people are protected from exploitation and abuse,” said Attorney General Lynch. “Today’s announcement is a testament to that work, and it makes clear that our actions deliver a significant return on public investment. I want to thank the prosecutors and trial attorneys who made this year’s collections possible, and I want to emphasize that the department remains committed to the well-being of our people and our nation.”
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Additionally, the U.S. Attorney’s office in Southern District of California, working with partner agencies and divisions, collected $10,628,622 in asset forfeiture actions in FY 2016. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
Two Navy Contractors Arrested for Separate Bomb HoaxesRead the Press Release
Assistant U.S. Attorney Michelle Pettit (619) 546-7972
NEWS RELEASE SUMMARY – December 15, 2016
SAN DIEGO – Two Navy contractors were arrested and arraigned Wednesday on charges that in unrelated cases, they gave false information about bogus bomb threats that resulted in mass evacuations of Navy ships and the pier where they were docked.
Contractor Joshua Rice, 26, is charged in a grand jury indictment with reporting to Navy security personnel that he saw an inscription of the word “bomb” on the inside of a portable toilet near three Naval vessels docked at Naval Base San Diego on the morning of May 17, 2016, when he knew there was no true threat. The false report caused a security response, shutting down all work on the nearby ships and the pier. At the time, Rice was working as a contractor for American Marine.
Roberto Rubio, 22, is charged in a separate indictment with writing “9-24-16 400 bomb” on an interior wall onboard USS Cowpens and reporting it to another contractor on September 24, 2016. At the time, USS Cowpens was undergoing maintenance on the San Diego Ship Repair Facility, and Rubio’s false report also caused the anticipated security response, shutting down all work on the ship until it could be verified that there was no bomb. At the time, he was working as a welder for Navy contractor BAE Systems.
For each bomb threat, there is a security response that includes clearing the area and stopping all work, which has a significant negative impact on all affected personnel and Navy readiness.
“Everyone should know that making false bomb threats is taken very seriously by federal law enforcement, and it is a felony offense,” said U.S. Attorney Laura E. Duffy. “This is not a legal or smart way of getting out of work.”
“The bomb threats on and around Naval Base San Diego since November 2015 have had a huge negative impact on the efficiency and productivity of the shipyard's efforts to maintain Navy readiness,” said Gunnar Newquist, Special Agent in Charge of the Naval Criminal Investigative Service Southwest Field Office. “NCIS is appreciative of the tips received during the course of this ongoing investigation.”
Joshua Rice is scheduled to appear next on January 30, 2017, before Judge William Q. Hayes for a motion hearing and trial setting.
Robert Rubio is scheduled to appear next on January 9, 2017, before Judge John A. Houston for a motion hearing and trial setting.
DEFENDANT Criminal Case No. 17CR2855-WQH
Joshua Rice Age: 26 San Diego, California
SUMMARY OF CHARGE
Count 1:Title 18, United States Code, Section 1038(a)(1): False Information and Hoaxes.
Maximum penalties: 5 years’ prison and a $250,000 fine.
DEFENDANT Criminal Case No. 17CR2856-JAH
Robert Rubio Age: 22 San Diego, California
SUMMARY OF CHARGE
Count 1:Title 18, United States Code, Section 1038(a)(1): False Information and Hoaxes.
Maximum penalties: 5 years’ prison and a $250,000 fine.
INVESTIGATING AGENCY
Naval Criminal Investigative Service
*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 Mexican Nationals Plead Guilty in Sinaloa Cartel-Related Drug Trafficking and Money Laundering ProbeRead the Press Release
Assistant U. S. Attorney Larry Casper (619) 546-6734
NEWS RELEASE SUMMARY – December 15, 2016
SAN DIEGO – Osvaldo Contreras-Arriaga of Tijuana pleaded guilty in federal court today to managing and supervising a $20 million drug trafficking conspiracy in which multi-kilo quantities of cocaine were smuggled from Mexico to the United States.
Contreras-Arriaga, a 28-year-old Mexican National who was extradited from Colombia to the United States in June 2016, admitted that he arranged for drug smugglers to bring cocaine into the United States and ensured that smugglers were paid for transporting the cocaine. According to his plea agreement, he also arranged for U.S. bulk currency pickups from drug dealers so that these drug proceeds could be smuggled from the United States to Mexico.
As part of his plea agreement, Contreras-Arriaga agreed to an enhancement under the U.S. Sentencing Guidelines, which will result in him receiving an elevated Guidelines sentencing range. Contreras-Arriaga admitted that, during the period charged, he was responsible for smuggling more than 50 kilograms (110 pounds) but less than 150 kilograms (330 pounds) of cocaine into the United States.
Contreras-Arriaga also admitted to working with co-defendant Omar Ayon-Diaz, 38, also a Mexican National, who owned and operated currency exchange houses in Tijuana and who was also extradited from Colombia in August 2016. On December 6, 2016, Ayon-Diaz pleaded guilty to conspiracy to commit international money laundering and admitted that he and his exchange houses knowingly received $24.5 million in smuggled proceeds from the sale of narcotics trafficking in the United States.
Joel Acedo-Ojeda, a money-laundering co-defendant, was also sentenced this week to 135 months in custody. At that sentencing, the prosecutor told the court that funds were believed to have been laundered for Sinaloa Cartel drug traffickers.
Contreras-Arriaga pleaded guilty before U.S. Magistrate Judge Barbara L. Major and Ayon Diaz pleaded guilty before U.S. Magistrate Judge Bernard G. Skomal. Both Contreras-Arriaga and Ayon-Diaz will be sentenced on March 6, 2017 at 9:00 a.m. before U.S. District Judge Roger T. Benitez.
Contreras-Arriaga faces up to life in prison, a mandatory minimum of ten years in prison, and a $10 million fine. Ayon-Diaz faces up to 20 years in prison, a maximum fine of $49 million (twice the value of the funds involved), and a forfeiture judgment of $24,500,000.
The U.S. Attorney’s Office is working this matter together with the Asset Forfeiture and Money Laundering Section of the Department of Justice in Washington, D.C.
DEFENDANT Case Number 15cr0950-BEN
Osvaldo Contreras-Arraiga Age: 28 Tijuana, Mexico
SUMMARY OF CHARGES
Conspiracy to import cocaine, in violation of Title 21, U.S.C., Secs. 952, 960 and 963.
Maximum Penalties: Life in prison and 10-year mandatory minimum sentence, and $10 million fine.
DEFENDANT
Omar Ayon-Diaz Age: 38 Tijuana, Mexico
SUMMARY OF CHARGES
Conspiracy to Commit International Money Laundering, in violation of Title 18, U.S.C., Sec. 1956(a)(2)(B)(i) and (h).
Maximum Penalties: 20 years in prison; $500,000 fine or twice the value of the funds involved.
AGENCY
Homeland Security Investigations
Property Manager and Firm Charged with Defrauding Homeowners’ Association of $247,000Read the Press Release
NEWS RELEASE SUMMARY – December 12, 2016
SAN DIEGO – Property manager Robert Walsh and his firm, Cornerstone Management Professionals, were charged with four counts of wire fraud in connection with a scheme to defraud a homeowners’ association of $247,000. Walsh made his first appearance in court today.
The indictment alleges that Cornerstone and Walsh falsely represented that Cornerstone could properly submit bids to the homeowners’ association for construction projects, and in submitting such bids, the defendants concealed the lower bids to make it appear as if Cornerstone was the low bidder in order to be awarded the projects. The indictment seeks forfeiture of $247,000 of illegal proceeds.
The indictment further alleges that on March 26, 2015, the defendants sent an email, seeking a change order from the homeowner’s association to cover the cost of asbestos removal. According to the indictment, the defendants then sent an email to the contractor working on the project on April 28, 2015, falsely representing that there was no asbestos present in order to induce the contractor to conclude the demolition project without involving an asbestos abatement firm so that the defendants could retain the entire value of the change order.
“The public health dangers of asbestos exposure are well known,” said Jay M. Green, Special Agent in Charge of EPA’s criminal enforcement program in California. “Materials containing asbestos must be handled safely – and legally. EPA and its law enforcement partners are committed to protecting the health and safety of workers and the communities in which they live.”
“The FBI remains committed to rooting out fraud that affects homeowners in San Diego,” stated FBI Special Agent in Charge Eric S. Birnbaum. “This indictment is a stark reminder to those who reside in communities governed by Home Owners Associations (HOAs) to remain vigilant and engaged in the financial affairs of your communities.”
After his arraignment today, Robert Walsh was ordered to appear before U.S. District Judge Barry Ted Moskowitz on January 27, 2017 at 2:00 pm for a hearing on all motions. A hearing for the arraignment and status of counsel for the corporate defendant was set for December 22, 2016, at 2:00 pm before U.S. Magistrate Judge Andrew G. Schopler.
*The charges and allegations contained in the Indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Criminal Case Number 16cr2872-BTM
DEFENDANTS
Cornerstone Management Professionals, Inc. Incorporated: 2012 San Diego, California
Robert Walsh Age: 37 Ramona, California
SUMMARY OF CHARGES
Counts 1-4
Wire Fraud – Title 18, U.S.C., Section 1343
Maximum penalty: Twenty years in prison and $250,000 fine
AGENCIES
U.S. Environmental Protection Agency, Criminal Investigation Division;
Federal Bureau of Investigation
Mexican National Sentenced to 135 Months in Prison for Conspiring to Launder $20 Million in Drug Trafficking ProceedsRead the Press Release
Assistant U. S. Attorney Larry Casper (619) 546-6734
NEWS RELEASE SUMMARY – December 12, 2016
SAN DIEGO –A Culiacan, Mexico, man was sentenced today to 135 months in prison for conspiring to launder $20 million worth of drug trafficking proceeds.
Joel Acedo-Ojeda, 32, was sentenced today by U.S. District Judge Roger T. Benitez, who also ordered Acedo-Ojeda to forfeit $20 million and to pay a fine of $20,000. Acedo-Ojeda pleaded guilty to conspiracy to commit international money laundering on June 23, 2015.
According to admissions made in connection with his guilty plea, between approximately April 2013 and April 2015, Acedo-Ojeda and his co-conspirators coordinated the smuggling of $20 million in bulk U.S. currency, which he knew to be the proceeds of drug trafficking, from the United States to Mexico. Upon arrival in Mexico, the bulk currency was transferred to the drug smugglers who were supplying the narcotics either directly or by being smuggled back into the United States, placed into the financial system and then wired back into Mexico.
At sentencing, Assistant U.S. Attorney Larry Casper told the court that Acedo-Ojeda is believed to have laundered funds for Sinaloa Cartel drug traffickers. The Sinaloa Cartel is one of the most notorious drug trafficking organizations operating in Mexico and imports and distributes hundreds of tons of cocaine, methamphetamine and marijuana into the United States each year. Casper also noted that the investigation of this matter resulted in the seizure by U.S. law enforcement of more than $5 million dollars in United States currency as well as several hundred pounds each of cocaine and methamphetamine.
“Those who launder drug monies to further the flow of narcotics that have a devastating impact on our communities and citizens should pay a stiff price” said U.S. Attorney Laura Duffy. “We will continue to aggressively pursue those individuals, wherever they may be located, who attempt to employ any means, financial or otherwise, in aid of efforts to move narcotics through our Southwestern border.”
“HSI is committed to stopping the flow of illicit drug proceeds across our borders that fill the coffers of the world’s most violent drug trafficking organizations,” said Michael Carney, acting special agent in charge of ICE Homeland Security Investigations (HSI) in San Diego. “Today’s sentencing highlights the commitment of HSI and our agents to bring these international money launderers to justice.”
HSI investigated the case. Assistant U.S. Attorney Larry Casper of the Southern District of California and Senior Trial Counsel Mark Irish of the Criminal Division’s Asset Forfeiture and Money Laundering Section.
DEFENDANTS Case Number 15cr0950-BEN
Joel Acedo-Ojeda Age: 32 Culiacan, Mexico
SUMMARY OF CHARGES
Conspiracy to Commit International Money Laundering, in violation of Title 18, U.S.C., Sec. 1956(a)(2)(B)(i) and (h).
Maximum Penalties: 20 years in prison; $500,000 fine or twice the value of the funds involved in the offense.
AGENCY
Homeland Security Investigations
Mexican National Sentenced to 135 Months in Prison for Conspiring to Launder $20 Million in Drug Trafficking ProceedsRead the Press Release
A Culiacan, Mexico, man was sentenced today to 135 months in prison for conspiring to launder $20 million worth of drug trafficking proceeds.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura Duffy of the Southern District of California and Acting Special Agent in Charge Michael Carney of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) made the announcement.
Joel Acedo-Ojeda, 32, was sentenced today by U.S. District Judge Roger T. Benitez of the Southern District of California, who also ordered Acedo-Ojeda to forfeit $20 million and to pay a fine of $20,000. Acedo-Ojeda pleaded guilty to conspiracy to commit international money laundering on June 23, 2015.
According to admissions made in connection with his guilty plea, between approximately April 2013 and April 2015, Acedo-Ojeda and his co-conspirators coordinated the smuggling of $20 million in bulk U.S. currency, which he knew to be the proceeds of drug trafficking, from the United States to Mexico. Upon arrival in Mexico, the bulk currency was transferred to the drug smugglers who were supplying the narcotics either directly or by being smuggled back into the United States, placed into the financial system and then wired back into Mexico.
At sentencing, the government told the court that Acedo-Ojeda laundered funds for drug traffickers associated with the Sinaloa Cartel, one of the most notorious drug trafficking organizations operating in Mexico that imports and distributes hundreds of tons of cocaine, methamphetamine and marijuana into the United States each year. As a result of the investigation, law enforcement seized more than $5 million dollars in U.S. currency as well as several hundred pounds each of cocaine and methamphetamine.HSI investigated the case. Senior Trial Counsel Mark Irish of the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorney Larry Casper of the Southern District of California prosecuted the case.
Children of Deceased Beneficiaries Admit Stealing Almost $300,000 from Social SecurityRead the Press Release
Special Assistant U.S. Attorney Jeffrey D. Hill (619) 546-7924
NEWS RELEASE SUMMARY – December 9, 2016
SAN DIEGO – Pamela Anita Thomas of Lemon Grove and Darla Ann Ausman, formerly of Henderson, Nevada, pleaded guilty in unrelated cases this week to stealing Social Security benefits intended for their parents who had died years earlier.
According to court documents, Thomas’ father began receiving Social Security retirement benefits via direct deposit into his bank account in 1998. Although her father died in November 2001, Thomas made no effort to notify the Social Security Administration that the beneficiary of these retirement benefits had passed away, or to cancel the direct deposit. Over more than a decade, Thomas allowed an additional $170,000 in benefits to be deposited into her deceased father’s bank account, and then repeatedly transferred the money for her own personal use.
Similarly, Ausman’s mother began receiving Social Security retirement benefits via direct deposit into her bank account in 1996, and died in May 2007. Ausman also failed to notify the Social Security Administration that the retirement benefits were no longer warranted, and allowed over $120,000 in benefits to continue to be deposited directly into her deceased mother’s bank account.
Both defendants admitted knowing that their respective parent’s Social Security retirement benefits should not have continued to be paid after their deaths.
“By collecting benefits that did not belong to them, these defendants took money away from those who need it most – elderly retirees, people with severe illnesses and widows and children of deceased wage earners,” said U.S. Attorney Laura Duffy. “This office will continue to investigate and prosecute fraud and waste in these important government programs.”
“The Social Security Administration’s Office of the Inspector General is committed to pursuing those who violate the public trust,” said Robb Stickley, the Special Agent in Charge of the San Francisco Field Division, which is responsible for Southern California. “We will continue to uphold the integrity of Social Security’s benefit programs, which are a lifeline for so many Americans and their families.”
As a part of their plea agreements, Thomas and Ausman agreed to repay all the money that they stole from the Social Security Administration, but each still faces up to ten years in prison and a fine of up to $250,000. Both were released on bail pending sentencing.
Thomas is scheduled to be sentenced on February 27, 2017, before U.S. District Court Judge Cynthia Bashant. Ausman is scheduled to be sentenced on February 17, 2017, before Chief U.S. District Judge Barry Ted Moskowitz.
DEFENDANT Case Number 16cr2811-BAS
Pamela Anita Thomas Lemon Grove, CA
DEFENDANT Case Number 16cr2831-BTM
Darla Ann Ausman Henderson, NV
SUMMARY OF CHARGES
Theft of Public Property – Title 18, U.S.C., Section 641
Maximum penalty: 10 years’ imprisonment, $250,000 fine, restitutionINVESTIGATING AGENCY
Social Security Administration’s Office of Inspector General
Former Supervisory Contracting Officer Sentenced to 72 Months in Prison as Part of Expanding Navy Bribery ScandalRead the Press Release
A former supervisory contracting officer was sentenced to 72 months in prison today for accepting bribe payments in exchange for steering U.S. Navy contracts to the president and chief executive officer of a defense contractor.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Director Andrew L. Traver of the Naval Criminal Investigative Service (NCIS) and Director Dermot F. O’Reilly of the Defense Criminal Investigative Service (DCIS) made the announcement.
Paul Simpkins, 62, of Haymarket, Virginia, was sentenced by U.S. District Judge Janis L. Sammartino of the Southern District of California for his role in steering contracts to Leonard Francis, the president and CEO of Glenn Defense Marine Asia (GDMA). Judge Sammartino also ordered Simpkins to pay $450,000 in restitution, to forfeit $150,000 and pay a $50,000 fine. Simpkins pleaded guilty on June 23 to conspiracy to commit bribery and bribery.
“Paul Simpkins abused his position as a Navy contracting officer to obtain cash, air travel, hotel rooms and prostitutes,” said Assistant Attorney General Caldwell. “Along with others convicted in this ongoing investigation, Simpkins tarnished the reputation earned by the U.S. Navy officers and enlisted and civilian personnel who honorably serve this nation every day.”
“With premeditation beyond that of many of the other defendants in this case, Simpkins methodically plotted to receive hundreds of thousands of dollars in bribe money and launder it through a secret foreign bank account in someone else’s name,” said U.S. Attorney Duffy. “We tip our hat to the investigators who discovered this crime and brought the perpetrator to justice. With the lengthy prison sentence imposed today, we take another step on this long journey toward deterring future misconduct and restoring the public’s trust in our most storied institutions.”
“Simpkins is yet another example of an individual forsaking his responsibility to American warfighters and taxpayers in favor of personal gain,” said Director Traver. “As the GDMA investigation moves forward, NCIS will continue to fulfill our responsibility of holding people like Simpkins accountable for their actions.”
“Today’s sentencing of Paul Simpkins is yet another example of the continued dedication by DCIS and our law enforcement partners to bring to justice those individuals who would abuse their positions of trust within the Department of Defense,” said Director O’Reilly. “Corrupt contracting practices damage the public trust and ultimately undermine the efforts of the Department of Defense to support our men and women in uniform.”
According to admissions made as part of his plea agreement, Simpkins held a number of managerial-level contracting positions throughout the federal government, including positions as a supervisory contract specialist at the U.S. Navy Regional Contracting Center in Singapore from April 2005 through June 2007; a contracting officer assistant director with the Executive Office of U.S. Attorneys in Washington from June 2007 to December 2007; and as a supervisory manager in the Department of Defense’s (DoD) Office of Small Business Programs beginning in December 2007. Simpkins admitted that from approximately May 2006 to September 2012, he participated in a bribery scheme with Francis in which he accepted travel and entertainment expenses, the services of prostitutes and at least $300,000 in exchange for helping to steer lucrative U.S. Navy contract to Francis and GDMA. Simpkins provided Francis with internal, proprietary U.S. Navy information and intervened on GDMA’s behalf in contract disputes, he admitted.
To conceal the true nature of wire transfers, Simpkins used an email account belonging to his mistress to advise Francis of the routing and account information for a bank account belonging to his wife. In another email, Simpkins asked Francis to provide “some clean, disease free” women and in another email Simpkins advised Francis that he “will arrive in Singapore on 11 September. Whats [sic] the plan to meet up and maybe do some honey’s? [sic]”
Simpkins used his influence within the U.S. Navy to benefit GDMA, including by helping GDMA to secure valuable ship husbanding contracts to service U.S. Navy vessels in Thailand and the Philippines, he admitted. In addition, Simpkins interceded on GDMA’s behalf in contract disputes with the U.S. Navy. In one incident in 2006, for example, Simpkins’s subordinate recommended that GDMA’s husbanding contract in Thailand not be extended due to “many exceedingly high cost” items and concluded that the contract should be re-opened to competitive bidding, which would have allowed other firms to bid on the contract. Simpkins overruled the subordinate and extended GDMA’s contract, he admitted. In another example, Simpkins instructed U.S. Navy officials in Hong Kong to discontinue the use of meters that monitored the volume of liquid waste that GDMA removed from U.S. Navy ships under its husbanding contracts. In June 2006, Simpkins instructed a U.S. Navy official not to review invoices that GDMA submitted in connection to a recent port call in Hong Kong after Francis complained that U.S. Navy personnel were asking questions, Simpkins admitted.
To date, a total of 16 individuals have been charged in connection with the GDMA corruption and fraud investigation. Francis has pleaded guilty and awaits sentencing. As part of his plea agreement, Francis admitted to over-billing the U.S. Navy for over $35 million on ship husbanding contracts by, among other means, reporting that GMDA had removed more liquid waste from ships than it actually did. Four other GDMA executives have also been charged, Alex Wisidagama, Ed Aruffo, Neil Peterson and Linda Raja. Wisidagama has pleaded guilty and was sentenced on March 18 to 63 months in prison and $34.8 million in restitution to the Navy. Aruffo has pleaded guilty and awaits sentencing; Peterson’s and Raja’s cases are pending.
The remaining 11 of the 16 individuals charged are current or former U.S. Navy officials, including Admiral Robert Gilbeau, Lt. Commander Gentry Debord, Commander Bobby Pitts, Captain Daniel Dusek, Commander Michael Misiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez, former NCIS Supervisory Special Agent John Beliveau II, Petty Officer First Class Daniel Layug and Paul Simpkins, a former DoD civilian employee who oversaw contracting in Singapore.
Gilbeau, Debord, Dusek, Misiewicz, Malaki, Beliveau, Sanchez and Layug have also pleaded guilty in connection with the scheme. On Jan. 21, Layug was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine; on March 25, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; on April 29, Misiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy; and on Oct. 14, 2015, Beliveau was sentenced to serve 144 months in prison and ordered to pay $20 million in restitution to the Navy. Gilbeau and Sanchez await sentencing. Pitts was charged in May 2016 and his case remains pending.
NCIS, DCIS and DCAA investigated the case. Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case.
The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country. Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.
Local Couple Pays over $18,000 to Worker Held Unlawfully at Their HomeRead the Press Release
Assistant U. S. Attorney Christopher P. Tenorio (619) 546-8413
NEWS RELEASE SUMMARY – November 3, 2016
SAN DIEGO – Firas Majeed and Shatha Abbas were sentenced today to three years of probation and ordered to pay $18,270 in restitution for illegally withholding the passport of an Indonesian woman who worked in their home without pay.
Majeed and Abbas were arrested on April 8, 2016, after the Indonesian woman – whose identity is being withheld – was rescued from their El Cajon home. On August 18, 2016, both Majeed and Abbas pleaded guilty before U.S. Magistrate Judge Jan M. Adler to procuring the victim’s passport without lawful authority in order to maintain her labor between November 2015 and March 2016. As part of the agreement, Majeed and Abbas agreed to pay the victim in full for her labor.
The victim reported that she was previously held at a home belonging to relatives of Abbas in Dubai, United Arab Emirates. She explained that she was required to provide domestic services in Dubai for 20 hours a day, every day, without pay. The victim explained that, after five years in Dubai, she was instructed to travel to the United States and work at the home of Majeed and Abbas in El Cajon.
The victim reported that, once in El Cajon, she was required to clean and provide other services for the entire household for up to 18 hours every day of the week. The victim explained that, again, she received no days off and was not paid for her services. She also reported she speaks no English, had no money, and was not allowed to leave the El Cajon residence alone, except to throw away the family’s trash.
Agents from Immigration and Customs Enforcement’s Homeland Security Investigations rescued the victim from the residence of Majeed and Abbas on March 22, 2016, after receiving a translated note the victim surreptitiously gave to a healthcare worker who had visited the residence.
Investigators from the United States Department of Labor’s Wage and Hour Division determined that the victim was owed $18,270 in back wages for her labor (2,520 hours, plus 800 hours of overtime). The victim was provided $7,280 that was seized from the defendants’ home, and the defendants paid an additional $10,990 as a condition of their plea.
“Forcing someone to work under these horrible conditions is slavery, pure and simple,” said U.S. Attorney Laura Duffy. “Victims of domestic servitude live in misery and fear. We stand ready to rescue victims and investigate and prosecute these crimes, but we need the public’s help to recognize and report these crimes.”
“Firas Majeed and Shatha Abbas’ reprehensible decision to dehumanize an innocent person has resulted in a justified sentence,” said David Shaw, special agent in charge of Homeland Security Investigations in San Diego. “It is impossible to quantify the extent of the harm done by Majeed and Abbas, but holding them accountable will continue to prove that our agents are dedicated to identifying and putting a stop to those engaged in human trafficking.”
“We have been seeing more and more of these types of domestic servitude cases involving unpaid wages of individuals of vulnerable communities,” said Rodolfo Cortez, district director of the U.S. Department of Labor’s Wage and Hour Division in San Diego. “We are committed to keep working together with the DOJ to fight against these bad actors. Our message is clear: if you are evading the law, you will be caught and held accountable.”
DEFENDANTS Case Number: 16CR0819-JMA
Firas Majeed (aka Firas Ghazi Majeed Al Tameemi) Age: 45
Shatha Abbas (aka Shatha Yehia Abbas Hussain) Age: 39
SUMMARY OF CHARGE
Title 18, United States Code, Section 1597 (Unlawful Conduct with Respect to Immigration Documents)
Maximum penalty: 1 year of custody; $100,000 Fine
AGENCIES
Homeland Security Investigations
Department of Labor, Wage and Hour DivisionAssistant U. S. Attorney Christopher P. Tenorio (619) 546-8413
Three-year Crackdown by U.S. Attorney and District Attorney Keep Career Criminals in Prison Longer, Communities SaferRead the Press Release
Assistant U. S. Attorney Andrew R. Haden (619) 546-6961
NEWS RELEASE SUMMARY – November 22, 2016
SAN DIEGO –Steven Doyle Burton, a documented Skyline PIRU gang member, was sentenced in federal court recently to 15 years in prison for possession of crack cocaine with intent to distribute and for being a felon in possession of firearms and ammunition.
Burton’s case is one of more than 100 prosecuted in federal court over the last three years under a renewed emphasis on gun crimes by the U.S. Attorney’s Office.
In 2013, U.S. Attorney Laura E. Duffy committed additional resources to the aggressive prosecution of firearms cases – particularly those involving career felons who would get more significant sentences in federal court versus state court. The aim was to work with the San Diego County District Attorney’s Office to use federal statutes to their fullest extent to protect communities from the most dangerous felons.
“This collaborative effort is working,” said U.S. Attorney Laura Duffy. “These career criminals are getting sentences that are as much as three times longer than what they would’ve received in state court, and that means our communities are safer.”
“Our gang prosecutors routinely coordinate and cooperate with the U.S. Attorney’s Office to reduce gang violence and keep our neighborhoods safer,” District Attorney Bonnie Dumanis said. “Our common goal is to determine which agency can best hold an offender accountable.”
Without the increased emphasis on firearms-related cases, Burton would have been prosecuted by the state, where he would have been eligible for a 50 percent reduction that didn’t apply on the federal side. In contrast, by statute all federal prisoners are required to serve a minimum of 85 percent of their prison sentence.
Duffy tapped Assistant U.S. Attorney Andrew Haden to head the U.S. Department of Justice’s Project Safe Neighborhoods program in this district. The nationwide program aims to reduce gun and gang crime. Duffy directed Haden to coordinate with the District Attorney’s Office and law enforcement agencies to aggressively prosecute firearms cases.
Since then, the U.S. Attorney’s Office has federally prosecuted more than one hundred cases involving firearms that would not typically have been pursued.
In Burton’s case, a federal jury found him guilty earlier this year.
At trial, the jury heard the testimony of several officers from the San Diego Police Department’s Crime Suppression Team (CST) who had arrested Burton with approximately 38 grams of crack cocaine, along with multiple firearms and $35,700 in cash.
A career criminal, Burton had been previously convicted in Superior Court in San Diego in 2005 and 2014 for dealing crack cocaine. Burton was referred by the San Diego District Attorney’s Office Gang Unit for federal prosecution via the Project Safe Neighborhoods program after his most recent arrest. He was sentenced on November 15, 2016.
The largest source of cases for the PSN program has been the San Diego District Attorney’s Office. Specifically, the Gang Unit began to strategically refer cases involving firearms for federal prosecution. In doing so, they have attempted to identify individuals that pose a significant threat to citizens of San Diego who – for a variety of reasons – are not being deterred by the California criminal justice system.
For example, the first firearms case brought under the renewed program was U.S. v. Catlin, 13-CR-1568-JLS. Catlin was known to law enforcement as a prominent leader within the 5/9 Brim street gang in southeast San Diego. Despite his notoriety, Catlin had been able to avoid a serious criminal conviction after receiving a five-year prison sentence for dealing crack cocaine in 2002.
In March 2013, Catlin was caught by officers from the San Diego Police Department in possession of a loaded firearm. Because it had been more than a decade since his last criminal conviction, Catlin was perceived as likely to receive a probationary sentence in state court. Instead, Catlin was prosecuted federally and was sentenced to 71 months in federal prison.
After the successful prosecution of Catlin, the San Diego Police Department Gang Suppression Team (“GST”) continued to refer cases for federal prosecution. Those cases often highlighted the dangerous scenarios that officers face on patrol in southeast San Diego.
In another example, several officers from the GST, including Jonathon DeGuzman, testified at a federal trial in 2015 in support of U.S. v. Angulo, 15-CR-2713-GPC. Angulo had been arrested during a traffic stop for being a felon in possession of a firearm. After being convicted, Angulo was sentenced to 48 months in federal prison by U.S. District Court Judge Gonzalo P. Curiel. Officer DeGuzman was killed in the line of duty approximately seven months later, on July 28, 2016.
The Department of Homeland Security has also been a source of firearms cases prosecuted under the renewed PSN commitment. Sergio Garcia-Rico from Chula Vista was sentenced to five years and eight months in prison after admitting to buying weapons and ammunition at gun shows across California intending to sell them to members of a drug cartel in Mexico.
Finally, although they have played a significant role in every federal firearms case brought via the PSN program, the Bureau of Alcohol Tobacco Firearms & Explosives (“ATF”) has also referred their own independent firearms investigations for prosecution.
The cases referred by ATF have been diverse. They have included cases involving individuals who illegally purchased firearms in Arizona and were transporting them to California, like former Border Patrol Agent Rene Martinez in U.S. v. Martinez, 16-CR-462. ATF has also brought cases involving the illegal manufacturing and selling of assault-style firearms within San Diego, like U.S. v. Soukkeo, et al., 14-CR-3004-LAB.
Investigations into the unlawful sale of assault-style firearms often lead ATF to potentially larger criminal activity. In April, Jessie Soto pleaded guilty in federal court to unlawfully selling assault-style firearms and for conspiring to have someone murdered by a Mexican hitman – who was actually an ATF agent working in an undercover capacity. Soto is scheduled to be sentenced on December 16, 2016. U.S. v. v. Soto, 16-CR-248-JLS.
DEFENDANT Case Number 16cr746-AJB
Steven Doyle Burton Age: 36 San Diego, CA
SUMMARY OF CHARGES
Possession of Crack Cocaine with Intent to Distribute, in violation of Title 21 US.C. 841(a)(1),
Maximum penalty: 40 years’ imprisonment and $5 million fine
Felon in possession of Firearms, in violation of Title 18 U.S.C. 922(g)(1)
Maximum penalty: 10 years’ imprisonment and $1 million fine
Felon in possession of Ammunition, in violation of Title 18 U.S.C. 922(g)(1)
Maximum penalty: 10 years’ imprisonment and $1 million fine
AGENCY
Bureau of Alcohol Tobacco Firearms & Explosives
Leader of Teenage Drug Smuggling Ring Pleads Guilty; Used Facebook to Coordinate Drug TraffickingRead the Press Release
Assistant U. S. Attorney Patrick J. Bumatay (619) 546-8450
NEWS RELEASE SUMMARY – May 31, 2016
SAN DIEGO – Roberto Torres Jr., 22, pleaded guilty in federal court today to leading a drug smuggling ring that used young adults and teenagers to smuggle vast quantities of methamphetamine into the United States.
Torres, a U.S. citizen, admitted that he and his co-conspirators recruited dozens of minors, some as young as 15 years old, from Imperial Valley, California high schools and elsewhere to transport narcotics from Mexico into the United States. Torres used Facebook, the social networking platform, to coordinate the drug trafficking activity with his young smugglers.
As part of his plea agreement, Torres agreed to a “use of a minor” enhancement under the U.S. Sentencing Guidelines, which will result in him receiving an elevated Guidelines sentencing range.
Several of Torres’ codefendants have already pleaded guilty to participating in the drug trafficking enterprise, including Genesis Flores De Anda, Hector Beltran-Garcia, Eleazar Sanchez-Aguilar, and Diana Carrillo.
Torres pleaded guilty before U.S. Magistrate Judge Bernard G. Skomal. He will be sentenced on February 17, 2017 at 9 a.m. before U.S. District Judge Cathy Ann Bencivengo. Torres faces up to life imprisonment, a mandatory minimum of ten years in prison, and a $10 million fine.
DEFENDANTS Case Number 15cr2503-CAB/15CR3143-CAB
Roberto Torres, Jr. Age: 22
Hector Beltran-Garcia Age: 22
Genesis Flores De Anda Age: 20
Diana Lizeth Carrillo Age: 21
Eleazar Sanchez-Aguilar Age: 39
SUMMARY OF CHARGES
Conspiracy to Import Methamphetamine– Title 21, U.S.C., Sections 952, 960, 963
AGENCY
Homeland Security Investigations
Founder of Litigation Marketing Company Guilty of Multi-Million Dollar Securities FraudRead the Press Release
Assistant U.S. Attorneys Aaron P. Arnzen (619) 546-8384 and Billy Joe McLain 619-546-6762
NEWS RELEASE SUMMARY – November 22, 2016
SAN DIEGO – David Aldrich pleaded guilty in federal court today to defrauding investors through litigation marketing company PLCMGMT LLC dba Prometheus. Aldrich admitted that he conspired with James Catipay, who pleaded guilty on October 26, 2016, to lie to investors when convincing them to invest.
Specifically, Aldrich and Catipay falsely told investors that they could redeem their investments at any time; that funds were available to pay both redemptions and hefty returns; and that their investments were secured by enforceable liens. In reality, as Aldrich admitted, the investments were risky and unsecured and there was no existing source of funds to pay investor redemptions or returns.
According to his plea agreement, Aldrich and Catipay established Prometheus in 2013. They then devised a business plan and began soliciting investors. According to the business plan, Prometheus would use investor funds to pay for marketing efforts to recruit potential plaintiffs for tort actions against the manufacturers of prescription drugs and medical devices. Any proceeds from those tort actions would fund investor redemptions and returns.
To convince investors to entrust Prometheus with their funds, Aldrich and Catipay created marketing materials for prospective investors. The marketing materials falsely stated that the tort plaintiffs that Prometheus identified through its legal marketing would, as soon as the claims were filed, be entitled immediately to funds from legal actions that had already been settled and for which funds had been placed on escrow.
In fact, only 1% of the tort plaintiffs’ legal actions had been settled, and an overwhelming majority of the legal actions had not been litigated or successfully negotiated for settlement. The marketing materials also represented that investor funds, once received by Prometheus, were “100%” secured by a legally enforceable lien and that investors could redeem their investments on demand. The truth was that investor funds were never secured by a lien, and Prometheus had denied, and would continue to deny, a large majority of redemption demands received from investors.
In exchange for investing in a “Prepaid Forward Contract,” Prometheus promised to pay investors returns ranging from 100% to 300%, depending on the amount invested and the time horizon for the investment. Based on these lies, and during the time the Aldrich was associated with Prometheus, approximately 200 investors entrusted Prometheus with more than $8.5 million. Despite the defendant’s promises, Prometheus was only able to pay back approximately $300,000 of this amount. Most investors, many of them retirees, lost their entire investments.
United States Attorney Laura E. Duffy reminded investors to exercise appropriate caution when presented with unproven investments and promises of exorbitant returns. In a civil case filed by the Securities and Exchange Commission (SEC v. PLCMGMT LLC, et al., LACV16-02594-TJH), a District Court in the Central District of California has appointed a receiver to take control of Prometheus and recover investor funds.
“The FBI remains committed to uncovering fraud schemes that affect our community,” said FBI Special Agent in Charge Eric S. Birnbaum. “Today’s conviction is a reminder of the financial perils associated with high yield investment fraud scams.” If you believe you are a victim of or otherwise have information concerning an investment fraud scheme, you are encouraged to contact the FBI at 1-800-CALL-FBI.
Aldrich is scheduled to appear before District Judge John A. Houston on February 13, 2017 for sentencing.
DEFENDANT 16CR2688-JAH
David Aldrich Age: 43 San Diego, CA
SUMMARY OF CHARGES
Conspiracy to Commit Securities Fraud, in violation of 18 U.S.C. § 371.
Maximum Penalties: 5 years’ imprisonment, a maximum $250,000 fine (or twice the gross gain or loss caused by the offense), $100 special assessment, restitution.
AGENCIES
Federal Bureau of Investigation
Securities and Exchange Commission
Former Major and Lt. Col. Convicted of Four-Year Fraud Against the Marine CorpsRead the Press Release
Assistant U.S. Attorneys Nicholas W. Pilchak (619) 546-9709 and C. Seth Askins (619) 546-6692
NEWS RELEASE SUMMARY – November 22, 2016
SAN DIEGO – A former major in the U.S. Marine Corps Reserves was convicted by a federal jury yesterday for participating in a four-year conspiracy to defraud the Marine Corps out of more than $205,000.
Jason H. Wild pretended to rent the home of his fellow officer, former reservist Lieutenant Colonel Michael K. Strom, in order to claim reimbursements from the Marines when called to active duty at Camp Pendleton. Strom, in turn, pretended to rent Wild’s home from Wild’s friend. Both men submitted phony lease agreements and rental receipts to support their false claims. In truth, each man owned his own home next to Camp Pendleton and never paid any of the claimed rent.
Following a three-day jury trial before U.S. District Judge Anthony Battaglia, the jury deliberated for about 35 minutes before finding Wild guilty of wire fraud and making false claims. Strom pleaded guilty on October 28, 2016 before Judge Battaglia, admitting the wire fraud conspiracy and two counts of false claims.
Wild owned his own home in Oceanside, California throughout the time he claimed rental benefits from the Marine Corps. Evidence at trial, including witness testimony, credit card statements, tax returns, and bank records, established that Wild lived in his Oceanside home throughout the period he falsely claimed to pay $38,442 to rent Strom’s home in Laguna Niguel, California.
Five months after Wild’s “rental” concluded, Strom was activated at Camp Pendleton and falsely claimed for two years to rent Wild’s Oceanside home from Wild’s friend. Although Strom told the Marine Corps he paid $98,736 to rent Wild’s home, the evidence at trial demonstrated that Strom lived in his own home in Laguna Niguel throughout the sham “lease” period.
Financial records, including a bank analysis performed by the Naval Audit Service, established at trial that neither defendant had paid a dollar of the claimed rent.
“Military service members who choose to defraud the armed forces deprive our nation—and their fellow soldiers—of the resources they need to complete their difficult mission,” said U.S. Attorney Laura E. Duffy. “This Office will continue to vigorously pursue fraudsters in or out of uniform who seek to enrich themselves by diverting taxpayer money from the men and women defending this country.”
Duffy commended the close coordination between the investigating agencies—the Department of Defense, Defense Criminal Investigative Service; the Naval Criminal Investigative Service; and the Department of Homeland Security, Office of the Inspector General—during the lengthy investigation of this case. The Internal Revenue Service also provided valuable assistance.
“The successful prosecution in this case was the direct result of collaborative teamwork between the Naval Criminal Investigative Service, its law enforcement partners and the US Attorney's Office,” said Edward Denion, Assistant Special Agent in Charge of the NCIS Southwest Field Office. “Convictions like this should serve as a deterrent to those who would put personal gain above their responsibility to American taxpayers and warfighters.”
“Yesterday’s guilty verdict should send a clear message that we intend to stop these types of fraudulent practices,” stated David Canez, Acting Special Agent in Charge for the U.S. Department of Homeland Security, Office of the Inspector General. “This office will be vigilant in seeking prosecution of any cases in which federal officials and their conspirators cross the line into criminal activity. DHS OIG and its law enforcement partners will continue to hold these shameless individuals accountable.”
“The guilty verdict of former U.S. Marine Corps Officer, Major Jason Wild, and related guilty plea of former Lieutenant Colonel Michael Strom demonstrates the Department of Defense's commitment to fight fraud, waste and abuse. This investigation exemplifies the dedication by the Defense Criminal Investigative Service and its law enforcement partners to identify and prosecute those individuals who seek to enrich themselves at the expense of the taxpayer,” said Chris Hendrickson, Special Agent in Charge, Defense Criminal Investigative Service.
Wild was ordered to appear on February 21, 2017 at 9:00 a.m. for sentencing before Judge Battaglia. Strom was previously ordered to appear for his own sentencing on February 13, 2017.
DEFENDANT Case No. 15-cr-2771-AJB
Jason H. Wild 45 years old Oceanside, California
Michael K. Strom 48 years old Laguna Niguel, California
CHARGES
Wire Fraud Conspiracy - 18 U.S.C. § 1349
Maximum penalty: 20 years’ imprisonment and $250,000 fine
False Claim – 18 U.S.C. § 287
Maximum penalty: 5 years’ imprisonment and $250,000 fine
AGENCIES
Department of Defense, Defense Criminal Investigative Service
Naval Criminal Investigative Service
Department of Homeland Security, Office of the Inspector General
Owner of Stock Lending Firm Convicted by Jury in $100 Million Stock-Loan Fraud SchemeRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Joseph J.M. Orabona (619)546-7951or Assistant U.S. Attorney Michael G. Wheat (619) 546-8437
NEWS RELEASE SUMMARY – November 21, 2016
SAN DIEGO – Jeffrey Spanier, a 51-year-old former owner of Amerifund Capital Finance, LLC located in Boca Raton, Florida, was convicted by a federal jury today for his role in an elaborate stock-loan fraud scheme in which executives and shareholders of publicly traded corporations collectively lost over $100 million when the stock they pledged as collateral for loans was immediately sold in order to fund the loans.
After a two-week trial before U.S. District Judge Roger T. Benitez, the jury deliberated for several hours and found Spanier guilty on all 16 counts, which included conspiracy, mail fraud, wire fraud, and securities fraud.
During the trial, the government offered testimony from several executives, many of whom had faithfully paid off their loans over a period of years, completely unaware that their pledged stock had been sold. All testified of the frustration, emotional stress, and grief they experienced when they unsuccessfully attempted to recover their stock once the loan balance was paid, and ultimately realized they were the victims of a massive fraud. Victims came from the United States as well as Canada, Mexico, China, Hong Kong, and the Netherlands.
Following a lengthy investigation conducted by the Federal Bureau of Investigation (FBI), Spanier was indicted on March 9, 2012, along with Douglas McClain, Jr. and James Miceli. All were charged with multiple counts of conspiracy, mail fraud, wire fraud, securities fraud, and money laundering. On May 31, 2013, a federal jury returned guilty verdicts on all counts in the indictment against McClain. Miceli committed suicide shortly before that trial.
McClain, president of Argyll Equities, Inc., was sentenced in September 2013 to 15 years in prison and ordered to pay $81,731,879.98 in restitution. He is currently serving his sentence in a federal prison.
Following an appeal in the prior criminal case, Spanier was re-indicted on July 1, 2016 on charges of conspiracy, mail fraud, wire fraud, and securities fraud. According to the evidence presented at trial, Spanier and his company (Amerifund Capital Finance) conspired with McClain and Miceli to defraud clients by falsely representing that San Diego-based Argyll Equities, LLC was an institutional lender with significant cash to lend to corporate executives and other individuals. Spanier and the co-conspirators falsely represented to borrowers that their stock would not be sold unless there was a default on the loan, and concealed from borrowers the truth about the fees Spanier was getting from deals. In fact, much of the stock was immediately sold by the conspirators to fund the loans made to the clients, and Spanier earned millions of dollars in fees from these fraudulent loans.
The evidence also showed that Spanier, McClain, and others fraudulently induced the borrowers to make monthly interest payments on their loans by falsely representing that their collateral was safe and would be returned as long as they did not default. At the end of the loan terms, when borrowers paid off their loans, Spanier and McClain kept the money and provided false excuses about why they could not return their stock.
The evidence further showed that the unauthorized sales of stock held by insiders of publicly traded companies caused the stock price to fall which defrauded purchasers of these publicly traded securities who purchased stock through public stock exchanges.
The jury rejected defense claims that Spanier was merely a broker who was unaware of the fraud scheme.
“This was a massive fraud that cost victims tens of millions of dollars and many years of emotional distress,” said U.S. Attorney Laura Duffy. “Because of dedicated investigators and prosecutors, this verdict means the defendant will be held accountable for such a brazen and destructive scheme.”
“This case demonstrates the FBI’s continued commitment to aggressively pursue those who would defraud the public through deceit and false claims,” said FBI Special Agent in Charge Eric Birnbaum.
In addition, the jury today returned special verdicts forfeiting millions in cash and property, including Spanier’s residence in Delray Beach, Florida, because proceeds were traceable to Spanier’s fraud.
Spanier was ordered to return for sentencing on February 27, 2017.
DEFENDANT Criminal Case No. 16CR1545-BEN
Jeffrey R. Spanier Age: 51 Delray Beach, Florida.
SUMMARY OF CHARGES:
Count 1 – Conspiracy (Title 18, United States Code, Section 371)
Maximum Penalties: 5 years in prison and $250,000 fine
Counts 2-7 – Mail Fraud (Title 18, United States Code, Section 1341)
Maximum Penalties: 20 years in prison and $250,000 fine
Counts 8-13, 15 and 16 – Wire Fraud (Title 18, United States Code, Section 1343)
Maximum Penalties: 20 years in prison and $250,000 fine
Count 19 – Securities Fraud (Title 15, United States Code, Sections 78j(b) and 78ff)
Maximum Penalties: 20 years in prison and $250,000 fine
Criminal Forfeiture (real and personal property)
AGENCY
Federal Bureau of Investigation
Traffic Stop Leads to Seizure of $2.1 Million Worth of Narcotics; Vehicle Owner ChargedRead the Press Release
Assistant U. S. Attorney Sherri Walker Hobson (619) 961-0287
NEWS RELEASE SUMMARY – November 17, 2016
SAN DIEGO – San Ysidro resident Ricardo Lujan was charged in federal court today with a drug-related offense after an Oceanside police officer discovered millions of dollars’ worth of methamphetamine and cocaine hidden inside the floorboards, door panels, center console and elsewhere in Lujan’s vehicle.
According to a federal complaint, the Oceanside Police Officer was conducting random vehicle registration checks at 12:40 a.m. on Harbor Drive in Oceanside. While doing this he noticed a car with expired tags. The officer then saw Lujan enter the Mitsubishi Endeavor SUV and attempt to leave the area. The officer stopped the vehicle.
While talking to the officer, Lujan, the registered owner of the vehicle, appeared nervous and agreed to a search of his vehicle. A Border Patrol canine handler responded to the traffic stop to assist Oceanside Police. The dog alerted to the odor of narcotics.
Agents from the Drug Enforcement Administration, San Diego Narcotics Task Force, subsequently searched Lujan’s vehicle and found 99 packages that were vacuum sealed in plastic containers of cocaine and 58 rectangular vacuum sealed in plastic containers of methamphetamine.
The agents seized approximately 89.50 kilograms of cocaine and approximately 68.90 kilograms of methamphetamine.
The estimated wholesale of the cocaine is approximately $1.7 million dollars. The estimated wholesale value of the methamphetamine is approximately $450,000.
Lujan is scheduled to appear in federal court before U.S. Magistrate Judge Barbara Major for arraignment hearing on November 18 at 2 p.m.
DEFENDANT
Ricardo Lujan, age 44
San Ysidro, California
CHARGE
Possession with intent to distribute
Title 21, United States Code, Section 841
AGENCIES
Oceanside Police Department
Drug Enforcement Administration, San Diego Narcotics Task Force
U.S. Border Patrol, San Clemente Station
*The charges and allegations contained in a complaint are merely accusations, and the defendant is considered innocent unless and until proven guilty.
Navy Officer Pleads Guilty in Massive Fraud and Corruption ScandalRead the Press Release
A retired Navy Captain pleaded guilty today for his role in a massive bribery and fraud scheme involving a foreign defense contractor for the U.S. Navy.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Acting Director Dermot O’Reilly of the Department of Defense’s Defense Criminal Investigative Service (DCIS), Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) and Director Anita Bales of Defense Contract Audit Agency (DCAA) made the announcement.
Michael Brooks, 57, of Fairfax Station, Virginia, pleaded guilty to one count of conspiracy to commit bribery before U.S. Magistrate Judge Karen Crawford of the Southern District of California. In May 2016, Brooks was charged in connection with his interactions with Leonard Glenn Francis, the former CEO of Glenn Defense Marine Asia (GDMA), a defense contracting firm based in Singapore. Brooks is scheduled to be sentenced on Feb. 17, 2017.
According to admissions made in connection with the plea agreement, from June 2006 to July 2008, Brooks served as the U.S. Naval Attaché at the U.S. Embassy in Manila, Philippines. In exchange for travel and entertainment expenses, hotel rooms and the services of prostitutes, Brooks used his office to benefit GDMA and Francis, including by securing quarterly diplomatic clearances for GDMA vessels, which allowed GDMA vessels to transit into and out of the Philippines under the diplomatic clearance of the U.S. Embassy. Brooks also allowed Francis to ghostwrite official U.S. Navy documents and correspondence, which Brooks submitted as his own. In addition, Brooks provided Francis with sensitive, internal U.S. Navy information, including billing information belonging to a GDMA competitor and U.S. Navy ship schedules.
So far, a total of 16 individuals have been charged in connection with the GDMA corruption and fraud investigation. Including Brooks, 11 of those are current or former U.S. Navy officials, including Admiral Robert Gilbeau, Lt. Commander Gentry Debord, Commander Bobby Pitts, Captain Daniel Dusek, Commander Michael Misiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez, former NCIS Supervisory Special Agent John Beliveau II, Petty Officer First Class Daniel Layug and Paul Simpkins, a former DoD civilian employee who oversaw contracting in Singapore.
Gilbeau, Debord, Dusek, Misiewicz, Malaki, Beliveau, Sanchez, Layug and Simpkins have also pleaded guilty. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine; on March 25, 2016, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; on April 29, 2016, Misiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy; and on Oct. 14, 2015, Beliveau was sentenced to serve 144 months in prison and ordered to pay $20 million in restitution to the Navy. Gilbeau, Sanchez and Simpkins await sentencing. Pitts was charged in May 2016 and his case remains pending.
Also charged are five GDMA executives: Francis, Alex Wisidagama, Ed Aruffo, Neil Peterson and Linda Raja. Wisidagama has pleaded guilty and was sentenced on March 18, 2016, to 63 months in prison and $34.8 million in restitution to the Navy. Francis and Aruffo have pleaded guilty and await sentencing; Peterson’s and Raja’s cases are pending.
The NCIS, DCIS and DCAA are conducting the ongoing investigation. Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case.
Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DoD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.
Former U.S. Naval Attaché in the Philippines Pleads Guilty to Conspiracy to Commit Bribery in Massive Navy Corruption ScandalRead the Press Release
Assistant U.S. Attorneys Mark W. Pletcher (619) 546-9714 and Patrick Hovakimian (619) 546-9718
NEWS RELEASE SUMMARY – November 15, 2016
SAN DIEGO – Retired U.S. Navy Captain Michael Brooks pleaded guilty today for his role in a massive bribery and fraud scheme involving a foreign defense contractor.
Brooks, 57, a retired Navy Captain, of Fairfax Station, Virginia, pleaded guilty to one count of conspiracy to commit bribery before U.S. Magistrate Judge Karen Crawford. In May 2016, Brooks was charged in connection with his interactions with Leonard Francis, the former CEO of Glenn Defense Marine Asia (GDMA), a defense contracting firm based in Singapore. Brooks is scheduled to be sentenced on February 17, 2017.
According to admissions made in connection with the plea agreement, from June 2006 to July 2008, Brooks served as the U.S. Naval Attaché at the U.S. Embassy in Manila, Philippines. In exchange for travel and entertainment expenses, hotel rooms and the services of prostitutes, Brooks used his office to benefit GDMA and Francis, including by securing quarterly diplomatic clearances for GDMA vessels, which allowed GDMA vessels to transit into and out of the Philippines under the diplomatic clearance of the U.S. Embassy. Brooks also allowed Francis to ghostwrite official U.S. Navy documents and correspondence, which Brooks submitted as his own. Brooks also provided Francis with sensitive, internal U.S. Navy information, including billing information belonging to a GDMA competitor and U.S. Navy ship schedules.
So far, a total of 16 individuals have been charged in connection with the GDMA corruption and fraud investigation. Including Brooks, 11 of those are current or former U.S. Navy officials, including Admiral Robert Gilbeau, Lt. Commander Gentry Debord, Commander Bobby Pitts, Captain Daniel Dusek, Commander Michael Misiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez, former NCIS Supervisory Special Agent John Beliveau II, Petty Officer First Class Daniel Layug and Paul Simpkins, a former DoD civilian employee who oversaw contracting in Singapore.
Gilbeau, Debord, Dusek, Misiewicz, Malaki, Beliveau, Sanchez, Layug and Simpkins have also pleaded guilty. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine; on March 25, 2016, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; on April 29, 2016, Misiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy; and on Oct. 14, 2015, Beliveau was sentenced to serve 144 months in prison and ordered to pay $20 million in restitution to the Navy. Gilbeau, Sanchez and Simpkins await sentencing. Pitts was charged in May 2016 and his case remains pending.
Also charged are five GDMA executives: Francis, Alex Wisidagama, Ed Aruffo, Neil Peterson and Linda Raja. Wisidagama has pleaded guilty and was sentenced on March 18, 2016, to 63 months in prison and $34.8 million in restitution to the Navy. Francis and Aruffo have pleaded guilty and await sentencing; Peterson’s and Raja’s cases are pending.
The NCIS, DCIS and DCAA are conducting the ongoing investigation. Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California and Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section are prosecuting the case.
Anyone with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.
DEFENDANT Case Number: 16-CR-1206
U.S. Navy Captain Michael Brooks, retired Age 57 Fairfax Station, Virginia
SUMMARY OF CHARGES
Conspiracy to Commit Bribery, in violation of 18 U.S.C. § 371
Maximum Penalty: 5 years in prison, a $250,000 fine,
INVESTIGATING AGENCIES
Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency
Former Long Beach Firefighter Pleads Guilty to Underground Disposal of SewageRead the Press Release
Assistant U.S. Attorney Melanie K. Pierson (619) 546-7976
NEWS RELEASE SUMMARY – November 10, 2016
SAN DIEGO – A former Long Beach firefighter pleaded guilty in federal court today to conspiring to illegally dispose of sewage underground, in violation of the Safe Drinking Water Act.
Kyle Vestermark admitted that he and the company he owned, Dunes Edge Storage, illegally discharged sewage from recreational vehicles (RVs) stored at Dunes Edge Storage in Brawley, California, as well as another location, Dunes Toy Storage in Holtville, California, without a permit from June of 2004 through April of 2015.
Vestermark acknowledged that he and his company obtained a permit in 2004 for a 10,000 gallon holding tank for RV sewage at the Dunes Edge location from the Imperial County Public Health Department, which specifically prohibited the installation of underground leach lines (an issue which Vestermark had raised during the permitting process). Vestermark further admitted that he also obtained a Conditional Use Permit from the Imperial County Planning Department in 2005 from the Imperial County Planning Board for the Dunes Toy Storage location in Holtville, which also specifically prohibited the installation of underground leach lines for the disposal of the RV sewage. The permits required Vestermark to hire a septage firm to pump out the RV sewage from the holding tanks and dispose of it at a wastewater treatment plant.
In spite of the specific prohibitions, Vestermark admitted that he used heavy equipment in 2005 and 2006 to install underground leach lines at both locations which would permit the RV sewage to leach out underground for disposal. Vestermark admitted that he used heavy equipment himself to install the leach lines, and hit the water table when installing the dump station at the Dunes Edge location – meaning that the sewage would contaminate the local water supply. The leach lines were removed in 2015 after Vestermark’s actions were discovered by Imperial County authorities. Vestermark also agreed to forfeit up to $200,000, if determined by the court to be the proceeds of the offense.
U.S. Magistrate Judge Barbara L. Major set a sentencing hearing February 17, 2017 at 9:30 a.m.
DEFENDANTS
Dune Edge Storage, LLC Incorporated: 2006 Brawley, California
Kyle Vestermark Age: 46 Long Beach, California
SUMMARY OF CHARGES
Count 1
Conspiracy to Illegally Discharge Sewage – Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison and $250,000 fine ($500,000 for a corporation)
Counts 2-8
Unlawful Injection of Sewage – Title 42, U.S.C., Section 300h-2(b)(2)
Maximum Penalty – 3 years in prison and a $250,000 fine
AGENCY
U.S. Environmental Protection Agency, Criminal Investigation Division; Bureau of Land Management, Office of Law Enforcement
Ten-Year Sentence for Fentanyl Smuggler; In Another Courtroom, Guilty Plea to Smuggling Approximately 6,000 pills of FentanylRead the Press Release
Assistant U. S. Attorneys Sherri Hobson (619) 546-6986, Brandon Kimura (619) 546-9614, Kevin Mokhari (619) 546-8402 and Lara Stingley (619) 546-8403
NEWS RELEASE SUMMARY – November 7, 2016
SAN DIEGO – One fentanyl smuggler was sentenced in federal court today to 10 years in prison while another pleaded guilty in an unrelated case involving a deadly drug that has become an extremely dangerous public safety threat.
In the first case, Graciela Poteciano, of Chula Vista, was sentenced by U.S. District Judge Roger T. Benitez to 120 months in prison for attempting to smuggle more than 26 pounds of fentanyl, methamphetamine and heroin.
Also today, U.S. District Judge Cynthia Bashant accepted the guilty plea of another defendant, Jose Arturo Acevedo, who attempted to smuggle 5,857 pills containing fentanyl, 55 pounds of methamphetamine, 24 pounds of cocaine, and 12 pounds of heroin. The blue pills had markings and the physical dimension of oxycodone, but the Drug Enforcement Administration lab determined that they contained fentanyl.
Poteciano, 43, of Tijuana, Mexico, was convicted by a federal jury in July 2016 of three counts of smuggling into the United States approximately 26.59 pounds of fentanyl, 10 pounds of methamphetamine, and 6.57 pounds of heroin, following her jury trial in July 2016. Poteciano was charged with importation of controlled substances into the United States. in violation of Title 21, United States Code, Sections 952 and 960.
According to evidence presented at trial, Potenciano entered the San Ysidro Port of Entry on May 24, 2016, as the driver of a Chevy Avalanche. U.S. Customs and Border Protection officers discovered the drugs in a spare tire located in the under carriage. The seized methamphetamine had a retail value of up to 80,000; the seized heroin had a retail value of up to $78,840; the seized fentanyl had a retail value of up to $510,000.
In sentencing Poteciano today, Judge Benitez remarked about the dangers of the deadly fentanyl and how fentanyl was connected to multiple overdoses in the nation. When fentanyl, a Schedule II synthetic opioid painkiller, is produced in clandestine laboratories, it can be 100 times more potent than morphine. Exposure to even a trace amount of fentanyl through inhalation or absorption through the skin can be fatal.
According to his plea agreement, Acevedo entered the San Ysidro Port of Entry on July 19, 2016 in his vehicle, which contained 24 packages of drugs concealed in a speaker box lying on the floor of the vehicle behind the front seats near the passenger door. He is scheduled to be sentenced on January 30, 2016 before Judge Bashant.
“Fentanyl remains an extremely dangerous public safety threat,” said U.S. Attorney Laura Duffy. “I continue to be alarmed by the number of fentanyl seizures we are seeing at our borders, which can only mean more tragic deaths if users don’t wake up and take these warnings to heart.”
Last year, the Drug Enforcement Administration released a nationwide public health alert on Fentanyl, a Schedule II synthetic opioid painkiller. Fentanyl is anywhere from 25 to 50 times more potent than heroin. DEA investigations reveal that the Mexican drug cartels, including Sinaloa, are producing fentanyl from precursors sourced from China.
DEFENDANTS
Graciela Potenciano Age 43 Chula Vista, California Criminal Case: 16CR1285
Jose Arturo Acevedo Age 35 Tijuana, Mexico Criminal Case: 16CR1877
SUMMARY OF CHARGES
Importation of Controlled Substances (21 U.S.C. 952 and 960)
Maximum penalty: 20 years’ imprisonment and $500,000 fine
AGENCY
Customs and Border Protection
Homeland Security Investigations
Forty-four Undocumented Immigrants Found in North Park Stash House; Resident Charged with Harboring ThemRead the Press Release
Assistant U. S. Attorney Mark Conover (619) 546-6763
NEWS RELEASE SUMMARY – November 7, 2016
SAN DIEGO – North Park resident Dania Olivero was arrested and charged yesterday with harboring and hiding 44 undocumented immigrants, some of whom reported that they were locked in a small backyard shed with dozens of others - without light, ventilation or a bathroom.
According to a complaint filed in federal court, the San Diego Police Department received calls from neighbors who were concerned about two vehicles dropping off multiple individuals who then nervously and hurriedly entered the home in the 4900 block of University Avenue in North Park.
When police arrived to investigate, defendant Olivero told officers that she had invited the people over to drink beer. Officers found people who appeared to be nervous, not drinking unopened beer in front of them. Some of the people ran to the back yard when they saw the officers.
Police suspected the people were undocumented immigrants and asked the U.S. Border Patrol for assistance. When Border Patrol officers questioned the people in the house, all but two identified themselves as Mexican nationals without legal status in the U.S.; the other two said they citizens of Guatemala without legal status in the U.S. All were taken into custody.
Seven remained in custody as material witnesses; the remainder are in the custody of immigration authorities pending immigration proceedings.
DEFENDANT Case Number 16mj3460
Dania Olivero Age: 51 Cuba
SUMMARY OF CHARGES
Harboring and Concealing – Title 18, U.S.C., Section 1324(a)(1)(A)(iii)
Maximum penalty: 10 years in prison and $500,000 fine
INVESTIGATING AGENCIES
U.S. Border Patrol
San Diego 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.
Architect of Multi-Million Dollar Real Estate Deed Theft Scheme Sentenced to 75 Months in PrisonRead the Press Release
Assistant U.S. Attorneys Emily W. Allen (619) 546-9738 and Andrew J. Galvin (619) 546-9721
NEWS RELEASE SUMMARY – November 7, 2016
SAN DIEGO – Mazen Alzoubi, a longtime Southern California real estate investor, was sentenced today to 75 months in custody by U.S. District Judge Cynthia Bashant for leading a scheme to steal title to homes and then “sell” the properties to unsuspecting buyers – before the buyers realized who the true owners were and before the true owners could put a stop to the sale.
From September 2012 through his arrest in November 2014, Alzoubi fraudulently sold or attempted to sell at least 15 homes worth more than $3.6 million that actually never belonged to him. On at least ten occasions, he was successful—earning illicit proceeds of nearly $2.2 million.
Alzoubi pleaded guilty in January 2016 to fraud, money laundering, and identity theft. As part of this plea, he admitted that he forged deeds that would make it appear the true owners of property had sold the home to a sham “investment” business Alzoubi controlled, when, in reality, the true owners were entirely unaware of Alzoubi’s actions.
Alzoubi would then record the forged deeds at county recorder’s offices, to make them appear legitimate. Once the fraudulent documents were recorded in the chain of title, Alzoubi would pose as the new owner—using a web of aliases and sham businesses (with names like “Land Investments 01”) and immediately try to sell the properties. Alzoubi worked with co-conspirators to set up bank accounts for the sham companies, so that the proceeds could be diverted directly to them. In this way, Alzoubi collected all the proceeds of the sale, and the true owners were left with nothing.
Alzoubi and his co-conspirators assumed the identities of others in order to keep the scheme going, setting up dummy email accounts and obtaining fake driver’s licenses. They also forged the signatures and notary stamps of real notaries to make fake documents look legitimate, and forged the signatures of real lawyers to prepare and file fraudulent court documents. Alzoubi, the ringleader of the scheme, assumed multiple fake identities to keep the fraud going. He also posed as real people, pretending on one occasion that he was the attorney for one of the true owners. (Unbeknownst to Alzoubi at the time, he was talking to an undercover federal agent.) As a result, Alzoubi was charged with, and pled guilty to, aggravated identity theft, which carries a mandatory sentence of 2 years in prison in addition to his sentence for the fraud and money laundering.
Alzoubi’s co-conspirator Daniel Deaibes pleaded guilty in March 2015, admitting that he participated in the scheme according to Alzoubi’s directions. He used the alias “John Moran” to pose as the seller’s representative in several of the fraudulent sales. Deaibes went so far as to introduce himself as “Moran” and present a fake driver’s license to two notaries public in 2014. He admitted that he signed fraudulent documents using this alias in an effort to sell or encumber properties that belonged to unsuspecting owners. On October 24, 2016, Judge Bashant sentenced Deaibes to 24 months in custody for his role in the scheme.
Mohamed Daoud, another co-conspirator, pleaded guilty in July 2015, admitting that he helped Alzoubi launder the proceeds of the scheme. They used Daoud’s company, “Norway LLC,” to pretend to acquire title to some of the properties. Daoud received approximately $270,000 in proceeds. In December 2015, before he was sentenced, Daoud fled the country and is now a fugitive.
Most of the properties the co-conspirators “sold” were post-foreclosure homes owned by banks or institutions such as Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are government sponsored enterprises with a mission to provide liquidity, stability, and affordability to the United States housing and mortgage markets. As part of this mission, Fannie Mae and Freddie Mac purchase residential mortgages in the secondary market, enabling lenders to replenish their funds to finance additional single family loans. Fannie Mae and Freddie Mac can become the property owners if they own the mortgage loan at the time a home is foreclosed.
“The strength of our housing market and public confidence in our economy depends on strong enforcement efforts to root out schemes like this,” said U.S. Attorney Laura Duffy. “The lengthy sentence in this case is a loud, clear message to anyone inclined to prey on the fallout from the devastating economic meltdown: your crimes will not be tolerated or go unpunished.”
Federal Housing Finance Agency – Office of Inspector General Special Agent in Charge Leslie DeMarco said, “Mazen Alzoubi and his co-conspirator’s greedy scheme undermines the stability of the housing market, which in turn places additional burden on innocent taxpayers. Alzoubi earned the sentence he received today, and he has no one to blame but himself. We will continue to root out bad actors and work to protect the housing market.”
“This fraud scheme involved each co-defendant playing a role in a tangled web of deceit. Today’s sentencing of Mr. Alzoubi highlights the ability and commitment of law enforcement to untangle the web in order to protect innocent victims and ultimately the taxpayers from mortgage fraud schemes,” said FBI Special Agent in Charge Eric S. Birnbaum. “We are proud to be a part of the multi-agency effort to hold accountable those who engage in mortgage and bank fraud.”
“Identity theft fraud schemes are a growing problem that victimizes both the United States government and individuals who are law-abiding consumers. IRS Criminal Investigation takes these complex schemes very seriously,” stated Acting Special Agent in Charge Anthony J. Orlando. “As today’s sentence shows, the government will hold accountable those who use fraud and deceit to line their pockets with money, especially when that money represents taxpayer dollars and causes harm to U.S. financial institutions.”
In addition to his jail sentence, Alzoubi was ordered to pay $2,506,414 in restitution to the victims of the fraud.
DEFENDANT:
Mazen Alzoubi, 14CR3325-BAS Age: 33 Rancho Cucamonga, CA
COUNT ONE: Conspiracy to commit mail fraud and wire fraud, in violation of 18 U.S.C. § 1349.
Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution, and forfeiture.
COUNT TWO: Mail fraud, in violation of 18 U.S.C. § 1341.
Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.
COUNTS THREE AND FOUR: Aggravated identity theft, in violation of 18 U.S.C. § 1028A.
Maximum Penalties: mandatory 2 years’ imprisonment, consecutive to any other term of imprisonment, $250,000 fine, $100 special assessment, restitution.
COUNT FIVE: Conspiracy to launder money, in violation of 18 U.S.C. § 1956(h).
Maximum Penalties: 20 years’ imprisonment, $500,000 fine or twice the value of the property involved in the transaction, $100 special assessment, restitution, and forfeiture.
CO-DEFENDANTS:
Daniel Deaibes, 14CR3325-BAS Age: 38 Rancho Cucamonga, CA
COUNT ONE: Mail fraud, in violation of 18 U.S.C. § 1341
Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.
Mohamed Daoud, 14CR3326-BAS Age: 53 Norway
COUNT ONE: Conspiracy to launder money, in violation of 18 U.S.C. § 1956(h)
Maximum Penalties: 20 years’ imprisonment, $500,000 fine or twice the value of the property involved in the transaction, $100 special assessment, restitution, and forfeiture.
AGENCIES
Federal Housing Finance Agency – Office of Inspector General
Federal Bureau of Investigation
Internal Revenue Service, Criminal Investigation
Sinaloa Cartel Trafficker Victor Emilio Cazares Gastellum Sentenced to 180 Months in PrisonRead the Press Release
Assistant U. S. Attorney Orlando Gutierrez (619) 546-6958
NEWS RELEASE SUMMARY – October 25, 2016
SAN DIEGO – Drug kingpin Victor Emilio Cazares Gastellum, who for years was one of the United States’ most-wanted Mexican drug trafficking suspects, was sentenced in federal court today to 180 months in custody for his role as the leader of a large-scale narcotics trafficking organization.
Cazares, also known as “El Licenciado,” was indicted by a federal grand jury in San Diego in 2007, along with 18 of his suspected lieutenants and foot soldiers. Cazares’ organization shipped multi-ton quantities of drugs from Colombia and Venezuela through Central America to Mexico. The narcotics were then smuggled across the Southwestern border, eventually making their way throughout the United States.
During today’s sentencing hearing before U.S. District Judge William Q. Hayes, Cazares was also ordered to forfeit $10 million which he admitted represented proceeds from his drug distribution activities. Prior to his sentencing, Cazares provided the government with $150,000 cashier’s check as a partial initial payment.
According to his plea agreement, Cazares admitted he was the head of a large-scale Mexico-based drug distribution organization referred to as the “Cazares Organization.” The Cazares Organization was a vertical drug trafficking organization responsible for purchasing and coordinating the importation and distribution of controlled substances from Mexico into the United States.
Cazares admitted that during the course of the conspiracy, he was responsible for distributing more than 450 kilograms of cocaine within the Southern District of California. Cazares utilized a narcotics transportation cell that imported Cazares’s controlled substances into the United States.
The United States issued a provisional arrest warrant for Cazares following his indictment, and the U.S. Department of State offered a reward of up to $5 million for information leading to his arrest and/or conviction. Cazares was captured by Mexican authorities about five years later, on April 8, 2012, at a highway checkpoint near the western city of Guadalajara.
Cazares was believed to be aligned with Joaquin “Chapo” Guzman, former leader of the Sinaloa drug cartel, one of the most notorious and violent drug trafficking organizations operating in Mexico. The Sinaloa Cartel imports and distributes hundreds of tons of cocaine, methamphetamine, and marijuana into the United States each year.
The underlying indictments were announced at a news conference in San Diego by then Attorney General Alberto Gonzales. The 22-month sting, code-named “Operation Imperial Emperor,” resulted in the nationwide arrests of 402 people suspected of working for the cartel, more than $45 million in cash and tons of cocaine, heroin and marijuana.
DEFENDANT Case Number: 07CR0449
Victor Emilio Cazares Gastellum Age: 53
SUMMARY OF CHARGES
Conspiracy to Distribute Controlled Substance, in violation of Title 21, U.S.C., Secs. 846 and 841(a)(1);
AGENCIES
Drug Enforcement Administration
El Centro Police Department
German Shipping Corporations Convicted of Environmental CrimesRead the Press Release
Assistant U. S. Attorney Melanie Pierson (619) 546-7976
NEWS RELEASE SUMMARY – October 25, 2016
SAN DIEGO – Two German shipping companies that owned and operated the Motor Vessel “Nils B” pleaded guilty to an environmental crime in federal court today, admitting that they knowingly failed to keep records related to the discharge of sludge into the ocean.
W. BOCKSTIEGEL REEDEREI GmBH & CO. KG (which operated the vessel) and W. Bockstiegel GmBH & Co. Reederei KG MS “NILS B” (which owned the vessel), pleaded guilty to one felony violation of the Act to Prevent Pollution from Ships, 33 U.S.C. § 1908(a), for failing to accurately maintain an Oil Record Book for the Motor Vessel (M/V) Nils B.
By not maintaining an accurate Oil Record Book, the firms failed to disclose that oil contaminated water had been discharged into the ocean from the vessel without the use of pollution prevention equipment. As admitted at the time of the plea, on August 5, 2014, personnel from the United States Coast Guard boarded the vessel after its entry into the Port of San Diego, California. Once onboard, the Coast Guard discovered that the crew had failed to keep an Oil Record Book for a significant period of time, modifications had been made to piping coming from the Oil Water Separator, and oil was discovered in discharge piping that should not have been present.
The defendant acknowledged that Coast Guard examiners took oil samples from the Oil Water Separator’s overboard discharge valve and from the vessel’s sludge tank and the samples from the two locations matched. Sludge is never to be discharged through an Oil Water Separator; only machinery space bilge water may be discharged in that manner. The Coast Guard also discovered a black hose near the Oil Water Separator that contained slightly weathered light fuel oil mixed with lubricating oil. In the industry, such a hose is known as a “magic hose” because it makes the oil and sludge disappear like magic.
The defendants, in pleading guilty, admitted that the Oil Record Book on board the vessel did not disclose any discharges of sludge between the time that the overboard discharge valve had been cleaned (while the vessel was in dry dock in June of 2014) and its entry into the Port of San Diego in August.
According to the plea documents, the company and the United States agree to recommend that the Court impose a total criminal penalty of $750,000, of which $250,000 will be a community service payment for the benefit of the Tijuana River National Estuarine Research Reserve to further research related to the effects of pollution on the marine estuarine environment.
This case was investigated by U.S. Coast Guard Investigative Service and U.S. Environmental Protection Agency, Criminal Investigation Division personnel in San Diego, California. The case was prosecuted by Senior Trial Attorney Kenneth E. Nelson of the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice, and Assistant U.S. Attorney Melanie Pierson of the U.S. Attorney's Office for the Southern District of California.
Sentencing is scheduled for November 3, 2016 at 9:30 a.m. before U.S. District Judge Dana Sabraw.
DEFENDANTS Case Number 16cr2440
W. Bocksteigel GmBH & Co., Reederei KG MS “NILS B”
Emden, Germany
W. Bockstiegel Reederei GmBH & Co. KG
Emden, Germany
SUMMARY OF CHARGES
Failure to Maintain Accurate Oil Record Book– Title 33, U.S.C., Section 1908(a)
Maximum penalty for a corporation: $500,000 fine
AGENCY
U.S. Coast Guard Investigative Service
U.S. Environmental Protection Agency, Criminal Investigation Division
U.S. Attorney’s Office Launches Program in Elementary Schools to Teach Fifth Graders to Make Good ChoicesRead the Press Release
Assistant U. S. Attorney Marietta Geckos (619) 546-6952
NEWS RELEASE SUMMARY – October 21, 2016
SAN DIEGO - The United States Attorney’s Office, in partnership with San Diego Unified School District, has launched a law-related elementary school program aimed at giving fifth-grade students the tools to sharpen positive decision-making skills and resist pressures to join gangs, take drugs or partake in other harmful behaviors. The program is designed to teach kids that their decisions have consequences.
More than 30 volunteers from the U.S. Attorneys’ Office, including federal prosecutors and administrative staff, and the U.S. Coast Guard, are spending time in local classrooms, teaching a program called “Project LEAD” to 270 fifth graders in nine classes at five schools.
The eight-week curriculum, which includes class discussion, short skits and small-group activities, is designed to help the children develop the skills to reject alcohol, drugs, gang membership, criminal activity, truancy, bigotry, bullying and other behaviors that have extremely negative consequences for youth.
The program also serves as an informal mentoring program where students are guided by volunteers with either government, administrative, community service, criminal justice, or military backgrounds, who encourage the students to reach high for their goals.
“We can’t solve all of society’s problems by prosecuting and incarcerating people,” said U.S. Attorney Laura Duffy. “The best way to stop crime is to prevent it. This is a program that gives children the tools they need to choose a positive path for a productive, happy life. These fifth-graders will be our leaders in 20 years. There is no greater investment our society can make.”
The participating elementary schools for the inaugural launch of this U.S. Attorney-administered program are Valencia Park, Johnson, Emerson-Bandini, Logan and St. Rita’s.
The program is patterned after the original 20-week Project LEAD that goes back to 1993 – and is a collaboration between the Los Angeles District Attorney’s Office and the Constitutional Rights Foundation. Project LEAD is taught in 46 Los Angeles elementary schools and has become a national model.
Project LEAD arrived in San Diego in 2012 at the urging of U.S. District Judge Gonzalo P. Curiel. While a federal prosecutor in Los Angeles from 2002-2006, Judge Curiel was a volunteer for Project LEAD in Los Angeles.
After his appointment to the San Diego Superior Court, he encouraged the San Diego County District Attorney’s Office and La Raza Lawyers Association in San Diego to sponsor classrooms at Laura Rodriguez Elementary and Johnson Elementary schools.
Judge Curiel has supported LEAD since 2002 because it offers positive role models to children who may not have any and helps them avoid bad choices such as using drugs, joining gangs and skipping school. “This program shows kids they can be anything they want to be – a lawyer, a doctor, an engineer, an architect - anything.”
This year, U.S. Attorney Duffy sought to create a federal version of Project LEAD and expand the number of children participating in San Diego by dispatching teams of volunteers to five elementary schools in an effort to replicate the successes of Los Angeles. Duffy credited San Diego Unified Superintendent Cindy Marten, the principals of the five elementary schools and a team of over 30 enthusiastic volunteers with making the program possible.
This implementation of Project LEAD in San Diego is a collaboration between the U.S. Attorney’s Office, the San Diego Unified School system and the San Diego Commission of Gang Intervention and Prevention which adopted this prevention program in July 2016.
Duffy hopes to expand the program to additional school next fall.
Since 2013, President Obama and then-Attorney General Eric Holder have stressed that federal law enforcement entities should make a stronger commitment to prevention and reentry efforts, in addition to the more traditional role of law enforcement through the various facets of the “Smart on Crime” initiatives. Prevention, one of the tenants of Smart on Crime, is the main goal for Project LEAD.
For more information, contact:
Assistant U. S. Attorney Marietta I. Geckos (619) 546-6952
Rosa Vazquez, Guidance Counselor at Logan Elementary School. 619-344-6500 x3055
Mike Candelario, Counselor at Valencia Park Elementary School. 619-344-3500 x 3557
Rev. Rickey Laster, Executive Director of the City of San Diego’s Commission on Gang Prevention and Intervention. 619-533-4873. [email protected]
Lt. Timothy Nicolet, United States Coast Guard Public Affairs. [email protected] 619-278-7020
Jennifer Rodriguez, San Diego Unified School District – Public Affairs – 619-725-5598
Kerry Bigornia, Public Affairs Division Chief, Los Angeles District Attorney’s Office, 213-257-2966