Southern District of California
Press releases recorded for this federal judicial district.
Ohio Seminary Student Pleads Guilty, Admits Seeking Sex with Infants in TijuanaRead the Press Release
Assistant U. S. Attorney Alessandra Serano (619) 546-8104
NEWS RELEASE SUMMARY – April 13, 2016
SAN DIEGO – Joel Alexander Wright, a former seminary student from Ohio, pleaded guilty in federal court today, admitting that he attempted to adopt or purchase female infants and toddlers in Tijuana in order to sexually molest them.
In his plea agreement, Wright admitted that he was the author of numerous sexually explicit emails in which he describes to a cooperating witness and an undercover federal agent how he intended to sexually assault various children in Mexico, from infants up to 4 years old.
Wright admitted the following in his plea agreement:
Beginning in November of 2015, he placed ads on Craigslist Tijuana purporting to seek a female tour guide. When he received a response from a cooperating witness, he confided that he wanted to “adopt/own a baby girl (under the age of 3) and I want to have intercourse with her after I own her but don’t be telling people that…I won’t pay until I have seen the baby and I will pay the parents then…the cheapest baby under 3 would be good.”
In another email with an undercover federal agent, Wright admitted that he wrote he had “picked up an infant pain relief med and a pretty outfit which I think should fit the 1 or 2 year old.” He emailed that he “will try to find some lube here at the store that we can use.” He also wrote that he had purchased an American Airlines ticket to travel from Ohio to San Diego on January 29, 2016, arriving at 11:30 a.m.
On January 29, Wright deplaned at San Diego International Airport and called a number to the undercover agent stating that he had landed. Wright had two cell phones and a duffle bag. Inside the bag agents found baby clothes, sleep aids, bottles, toys, candy and lubricant.
Wright was arrested at the airport and has remained in custody since. He is scheduled to be sentenced on July 1, 2016 at 9 a.m. before U.S. District Judge Dana M. Sabraw.
“There are no words to describe the horror that might have happened, had this man carried out what he intended to do - sexually exploit and assault innocent toddlers and infants,” said U.S. Attorney Laura Duffy. “There is nothing more important on my agenda than keeping children safe from individuals who have a sexual interest in children both here in the United States and abroad from individuals who travel from the U.S. with that nefarious intent.”
“I commend our cybercrimes special agents whose tireless work during an exhaustive investigation has prevented further exploitation of innocent children by a significantly heinous, unspeakable form of child sexual predator activity,” said Dave Shaw, special agent in charge for HSI San Diego. “HSI is committed to working closely with our law enforcement partners both here and abroad to protect children from becoming victims of child sex predators.”
DEFENDANT Case Number: 16CR0354-DMS
Joel Alexander Wright Age: 23
SUMMARY OF CHARGE
Attempted Enticement of a Minor, in violation of Title 18, U.S. code Sec. 2422(b).
Maximum Penalty: Life in prison, with minimum mandatory 10-year sentence, maximum $250,000 fine, lifetime registration as a sex offender
AGENCY
Man Sentenced to 15 Years in Prison for Producing Sexually Explicit Photos of 11-Year-Old BoyRead the Press Release
Assistant U. S. Attorney Alexandra Foster (619) 546-6735
NEWS RELEASE SUMMARY – April 8, 2016
SAN DIEGO – James Murphy, a retiree living in San Diego, was sentenced today to 15 years in prison for taking sexually explicit photographs of an 11-year-old boy at a Tijuana orphanage.
According to the plea agreement, Murphy, 63, traveled to Tijuana, Mexico from San Diego on November 19, 2015, supposedly to participate in humanitarian work at an orphanage in Mexico. While there, he took sexually explicit pictures of the boy and shared pornographic photos with him. These encounters occurred inside a motor home, which Murphy used as his sleeping quarters while staying at the orphanage in Mexico.
During the sentencing hearing, U.S. District Judge Cathy Ann Bencivengo admonished the defendant for stealing a child’s innocence - which he will never be able to regain. She added her concern that the defendant was preying on children for his own sexual satisfaction.
“For at least the next 15 years, children will be safe from the clutches of this predator,” said U.S. Attorney Laura Duffy. “We will do everything possible to protect vulnerable children wherever they may be.”
“Justice was served today as a serial child predator was sentenced to 15 years in federal prison,” said Dave Shaw, special agent in charge for HSI San Diego. “While we are satisfied and relieved with this sentencing, we will not forget the young victims now left with permanent emotional and physical scars. HSI will continue its tireless work with our law enforcement partners around the world to seek out and bring justice to those who mercilessly exploit children.”
DEFENDANT Case Number: 15CR3175-JM
James Murphy Age: 63
SUMMARY OF CHARGES
Count One
Use of a Child to Produce a Sexually Explicit Visual Depiction, in violation of Title 18, U.S. code Sec. 2251(c)(1).
AGENCY
Immigration and Customs Enforcement’s Homeland Security Investigations
Indonesian Domestic Worker Rescued from Forced LaborRead the Press Release
Assistant U. S. Attorney Christopher P. Tenorio (619) 546-8413
NEWS RELEASE SUMMARY – April 8, 2016
SAN DIEGO –Firas Majeed and Shatha Abbas were arrested today and charged with forcing an Indonesian woman to work in their El Cajon home for up to 18 hours a day without pay. The victim was rescued from the home after providing a note to a visiting nurse, asking for help.
Majeed and Abbas were arraigned today on a criminal complaint before U.S. Magistrate Judge Karen S. Crawford. They were charged with Forced Labor, Trafficking with Respect to Forced Labor, and Document Servitude. The charges include allegations that Majeed and Abbas benefitted through a scheme intended to cause the victim to believe that she would suffer physical restraint if she did not perform labor and services. Majeed and Abbas are also alleged to have concealed the victim’s passport in order to prevent and restrict her liberty to move and travel, and to maintain her labor and services.
The victim reported that she was previously held at a home belonging to relatives of Abbas in Dubai, United Arab Emirates. In Dubai, the victim was allegedly required to provide domestic services for 20 hours a day, every day, for five years. The victim was not paid a salary, and was directed to travel to the United States and work at the home of Majeed and Abbas.
The complaint further alleges that the victim traveled to El Cajon with Majeed in November 2015, and thereafter was required to provide domestic services, including cleaning and laundry, for the entire household, for 16-18 hours every day of the week. The victim reported that she received no days off and was not paid for her services. The victim also reported that she speaks no English, had no money, and was not allowed to leave, except to throw away the family’s trash.
The victim was removed from the residence of Majeed and Abbas on March 22, 2016, by agents from Immigration and Customs Enforcement’s Homeland Security Investigations. Healthcare workers reported to the national Human Trafficking Resource Center that the victim was seen in the back of the residence and closely monitored. Agents translated the note requesting help that the victim had provided to a visiting nurse, which prompted her rescue.
Victims of labor trafficking are often overwhelmed by fear, and they fail to report crimes against them. Frequently victims are unfamiliar with U.S. culture. They may be unaware of their rights or may have been intentionally misinformed about rights in this country. Many don’t speak English, and are unable to communicate with service providers, police, or others who might be able to help them.
They many times don’t self-identify as victims and often blame themselves for predicaments. Many are not legally in the U.S. and they have a fear of being arrested or deported. And, even though an unfortunate number of victims have been beaten and/or raped, they feel their current situation may still be better than where they came from. They may be afraid that speaking out may result in harm to families in their home countries, who are often threatened by traffickers. For all those reasons, these cases are tremendously difficult to investigate and prosecute.
U.S. Attorney Laura Duffy praised the victim for having the courage to seek help, and the healthcare workers who responded to her note.
“Human trafficking is a deplorable practice that amounts to modern slavery, and many of these victims are hiding in plain sight,” Duffy said. “Bringing human traffickers to justice and assisting trafficking survivors is one my top priorities. We all need to work together to recognize the signs and put a stop to this devastating crime.”
“Today’s arrests bring to light the sad reality of modern day slavery,” said Dave Shaw, special agent in charge for HSI San Diego. “HSI will not tolerate any form of human exploitation. Forced labor, which often involves individuals who are held in isolation, degraded, and most alarming – stripped of their basic human freedom, has no place in a modern society.”
Majeed and Abbas are scheduled for a preliminary examination before U.S. Magistrate Judge Jan M. Adler on April 21, 2016.
DEFENDANTS Case Number: 16MJ1016
Firas Majeed (aka Firas Ghazi Majeed Al Tameemi) Age: 44
Shatha Abbas (aka Shatha Yehia Abbas Hussain) Age: 38
SUMMARY OF CHARGES
Title 18, United States Code, Section 1589 (Forced Labor)
Maximum penalty: 20 years of custody; $250,000 Fine
Title 18, United States Code, Section 1590 (Trafficking with Respect to Forced Labor)
Maximum penalty: 20 years of custody; $250,000 Fine
Title 18, United States Code, Section 1592 (Document Servitude)
Maximum penalty: 5 years of custody; $250,000 Fine
AGENCY
Homeland Security Investigations
*The charges and allegations contained in an indictment or complaint are merely accusations, and defendants are considered innocent unless and until proven guilty.
Six Defendants Indicted in Tunnel and Drug SeizuresRead the Press Release
Assistant U. S. Attorney Sherri Walker Hobson (619) 961-0287
NEWS RELEASE SUMMARY – April 7, 2015
SAN DIEGO – Six people – including two new defendants arrested in Arizona and San Bernardino County, California - were indicted today by a federal grand jury in San Diego in connection with the drug tunnel that was seized last month in Calexico, California.
The new defendants are Bertha Lidia Esquivel, aka Bertha Inzunza, of Rialto, California, and Kenneth Wayne Olmos, Jr., of Tucson, Arizona.
Also charged in the indictment with multiple federal offenses were Agustin Enriquez Cruz, aka Tinky, of Tucson, Arizona; Eva Medina De Duarte, aka Eva Duarte-Medina, aka Eva Duarte de Medina, of Tucson, Arizona; Joel Duarte-Medina of Mexico; and Manuel Gallegos-Jimenez, aka Jorge Alberto Torango, of Mexico. Eva Medina De Duarte is the grandmother of Agustin Cruz and the mother of Joel Duarte-Medina.
The defendants were previously charged via complaint; the grand jury indictment charges them with additional crimes. They are now charged with some or all of the following drug and tunnel related crimes: Conspiracy to distribute marijuana, possession of marijuana with intent to distribute, conspiracy to import marijuana, importation of marijuana, construction and financing a tunnel that crosses the border, use of a tunnel that crosses the border, conspiracy to use and maintain drug related premises, use and maintaining drug related premises, and criminal forfeiture.
All defendants are in federal custody.
Federal officials seized a cross-border tunnel on March 23, 2016 following a lengthy investigation that resulted in multiple arrests and the confiscation of more than a ton of marijuana. The tunnel, approximately 415 yards in length, stretches from El Sarape Restaurant in Mexicali, Mexico to a two-bedroom, two-bath house, located at 902 E. Third Street in Calexico, California, about 300 yards north of the international border. In the front room of the residence, agents found a hole in the floor covered with tile leading to a shaft descending underground.
On the day the tunnel was discovered, defendants Joel Duarte Medina and Manuel Gallegos Jimenez were arrested in Calexico. They were arraigned today on the indictment in El Centro, California, by United States Magistrate Judge Peter Lewis.
Augustin Enrique Cruz, the owner of the house in Calexico where the tunnel exit was discovered, and his grandmother, Eva Medina De Duarte, were arrested in Tucson, Arizona, the day after the tunnel discovery. They will appear before U.S. Magistrate Judge Karen Crawford, in San Diego, California, tomorrow at 2 p.m. for arraignment on the indictment.
Defendant Bertha Lidia Esquivel, who was arrested in Rialto, on March 24, appeared today in San Diego for a detention hearing; her matter was continued to Tuesday, April 12, before U.S. Magistrate Judge Jan Adler. Defendant Kenneth Wayne Olmos, Jr., was arrested in Arizona on March 25 and is pending removal and transfer to San Diego, California, for arraignment.
DEFENDANTS
Agustin Cruz, age 23, of Tucson, Arizona
Eva Medina De Duarte, age 74, of Tucson, Arizona
Joel Duarte-Medina, age 43, of Mexico
Manuel Gallegos-Jimenez, age 49, of Mexico
Bertha Lidia Esquivel, age 52, of Rialto, California
Kenneth Wayne Olmos Jr., age 33, of Tucson, Arizona
CHARGES
Count 1
Conspiracy To Distribute over 1,000 kilograms of marijuana 21 U.S.C 841 and 846
Maximum penalties:
10 year MM/life; 5 years of SR; $1,000,000 fine, $100 SA
Agustin Cruz
Eva Medina De Duarte
Joel Duarte-Medina
Manuel Gallegos-Jimenez
Bertha Lidia Esquivel
Kenneth Wayne Olmos Jr.
Count 2
Possession With Intent To Distribute 100 kilograms of marijuana 21 U.S.C. 841 and 18 U.S.C. 2
Maximum penalties: 5 year MM/40; 5 years of SR; $500,000 fine, $100 SA
MARCH 7, 2016 SEIZURE OF 1,389 POUNDS OF MARIJUANA
Agustin Cruz
Eva Medina De Duarte
Joel Duarte-Medina
Manuel Gallegos-Jimenez
Bertha Lidia Esquivel
Kenneth Wayne Olmos Jr.
Count 3
Possession With Intent To Distribute 100 kilograms of marijuana 21 U.S.C. 841 and 18 U.S.C. 2
Maximum penalties 5 year MM/40; 5 years of SR; $500,000 fine, $100 SA
MARCH 23, 2016 SEIZURE OF 1,532 POUNDS OF MARIJUANA
Agustin Cruz
Eva Medina De Duarte
Joel Duarte-Medina
Manuel Gallegos-Jimenez
Bertha Lidia Esquivel
Kenneth Wayne Olmos Jr.
Count 4
Conspiracy To Import over 1,000 kilograms of marijuana
21 U.S.C 960, 952, 963
Maximum Penalties: 10 year MM/life; 5 years of SR; $1,000,000 fine, $100 SA
Agustin Cruz
Eva Medina De Duarte
Joel Duarte-Medina
Manuel Gallegos-Jimenez
Bertha Lidia Esquivel
Kenneth Wayne Olmos Jr.
Count 5
Importation of 100 kilograms of marijuana
21 U.S.C. 952, 960 and 18 U.S.C. 2
Maximum Penalties: 5 year MM/40; 5 years of SR; $500,000 fine, $100 SA
MARCH 7, 2016 SEIZURE OF 1,389 POUNDS OF MARIJUANA
Agustin Cruz
Eva Medina De Duarte
Joel Duarte-Medina
Manuel Gallegos-Jimenez
Bertha Lidia Esquivel
Kenneth Wayne Olmos Jr.
Count 6
Importation of 100 kilograms of marijuana
Aiding & Abetting/Pinkerton Liability
21 U.S.C. 952, 960 and 18 U.S.C. 2
Maximum Penalties: year MM/40; 5 years of SR; $500,000 fine, $100 SA
MARCH 23, 2016 SEIZURE OF 1,532 POUNDS OF MARIJUANA
Agustin Cruz
Eva Medina De Duarte
Joel Duarte-Medina
Manuel Gallegos-Jimenez
Bertha Lidia Esquivel
Count 7
Conspiracy to Construct and Finance of Tunnel
18 U.S.C. 555(a) and (d)
Maximum Penalties: 20 years; 3 years of SR; $250,000 fine, $100 SA
Agustin Cruz
Count 8
Using Narcotics Tunnel 18 U.S.C. 555(c)
Maximum Penalties: 20 years; 3 years of SR; $250,000 fine, $100 SA
Agustin Cruz
Eva Medina De Duarte
Joel Duarte-Medina
Manuel Gallegos-Jimenez
Bertha Lidia Esquivel
Count 9
Conspiracy to Maintain/Use Drug-Related Premises
21 U.S.C. 856(a)(1) and 846
Maximum Penalties: 20 years; 3 years of SR; $250,000 fine, $100 SA
Agustin Cruz
Eva Medina De Duarte
Joel Duarte-Medina
Manuel Gallegos-Jimenez
Bertha Lidia Esquivel
Kenneth Wayne Olmos Jr.
Count 10
Maintain/Use Drug-Related Premises
21 U.S.C. 856 and 18 U.S.C. 2
Maximum Penalties: 20 years; 3 years of SR; $250,000 fine, $100 SA
Third Street Residence in Calexico
Agustin Cruz
Eva Medina De Duarte
Joel Duarte-Medina
Manuel Gallegos-Jimenez
Bertha Lidia Esquivel
Count 11
Maintain /Use Drug Related Premises
21 U.S.C. 856 and 18 U.S.C. 2
Maximum Penalties: 20 years; 3 years of SR; $250,000 fine, $100 SA
Horizon Residence in Calexico
Agustin Cruz
Eva Medina De Duarte
Joel Duarte-Medina
Manuel Gallegos-Jimenez
Bertha Lidia Esquivel
Kenneth Wayne Olmos Jr.
Count 12
Maintain/Use Drug Related Premises
21 U.S.C. 856 and 18 U.S.C. 2
Maximum Penalties: 20 years; 3 years of SR; $250,000 fine, $100 SA
Avenida Warehouse in Calexico
Agustin Cruz
Eva Medina De Duarte
Joel Duarte-Medina
Manuel Gallegos-Jimenez
Bertha Lidia Esquivel
Kenneth Wayne Olmos Jr.
AGENCIES
U.S. Immigration and Customs Enforcement’s Homeland Security Investigations
Homeland Security Investigations, Calexico
U.S. Border Patrol, El Centro Sector
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
SeaWorld Manager Accused of Embezzling $750,000Read the Press Release
Assistant U.S. Attorney Emily W. Allen (619) 546-9738
NEWS RELEASE SUMMARY – April 4, 2016
SAN DIEGO – Former SeaWorld San Diego manager Wilfred David Joseph Jobin-Reyes (known as “Sebastian Jobin”) was arraigned today in San Diego on wire fraud charges relating to an elaborate eight-year embezzlement scheme he orchestrated while working as a Show Producer at the marine mammal park.
Jobin-Reyes is charged with stealing more than $750,000 from SeaWorld by creating fake invoices from a fictitious company, then using his management position to approve their payment. He diverted the money to bank accounts he secretly controlled, and then withdrew cash or spent the proceeds on restaurants, plane tickets, hotels, and shopping.
As alleged in the complaint and other court documents unsealed today, Jobin-Reyes created a fake merchandise company, “SJ Merchandise,” which he registered with the Secretary of State but didn’t use to conduct any real business. He adopted the fictitious alias “John Caldwell” to communicate with SeaWorld, in order to conceal his ownership and control of the company. After uncovering the fraud, SeaWorld investigators discovered that Jobin-Reyes had used his work computer to create more than 100 fake invoices for goods that were never actually delivered to SeaWorld, including “wildlife animal bookmarks,” “sea creature rings,” “purple shiny ornaments,” and “poinsettia in pots.” Many of the invoices Jobin-Reyes created were for amounts just under the $10,000 threshold that resulted in limited review by his managers. SeaWorld unwittingly paid Jobin-Reyes more than $750,000 before discovering the fraud in early 2015.
“We are dedicated to protecting our local businesses and institutions from corruption inside and out,” said U.S. Attorney Laura E. Duffy. “We will root out and prosecute business insiders who abuse the trust of their employers and the community.”
U.S. Secret Service Special Agent in Charge David Murray said, “Today’s arraignment demonstrates that the U.S. Secret Service is dedicated to protecting our local communities and businesses against these types of fraudulent financial schemes, and will continue to collaborate with its law enforcement partners to target and arrest individuals who use U.S. financial institutions as part of their criminal activity.”
“IRS-Criminal Investigation is committed to working with our law enforcement partners to lend our financial expertise to trace the money, whatever the source, including embezzlement funds,” said IRS-CI Acting Special Agent in Charge Anthony J. Orlando. “We will protect American businesses and institutions from insiders who abuse positions of trust to commit this type of financial fraud.”
Jobin-Reyes was arrested in Dallas, Texas on March 12, 2016, and made his initial appearance there. On March 15, 2016, U.S. Magistrate Judge Paul D. Stickney of the Northern District of Texas found that Jobin-Reyes posed a serious risk of flight, and ordered him detained pending trial. He was brought to San Diego for his initial appearance in this district today. Jobin-Reyes’s next court appearance is for a detention hearing on Thursday, April 7 at 10:00 a.m. before U.S. Magistrate Judge Bernard G. Skomal.
DEFENDANT:
Wilfred David Joseph Jobin-Reyes Age: 47 San Diego, CA
CHARGES
Wire Fraud, in violation of 18 U.S.C. § 1343
Maximum Penalties: 20 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.
AGENCIES
United States Secret Service
Internal Revenue Service Criminal Investigation
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendant is considered innocent unless and until proven guilty.
Former Carlsbad Resident Jailed for Sale of Unapproved “Energy Wave” Medical DevicesRead the Press Release
Assistant U.S. Attorney Melanie K. Pierson (619) 546-7976
NEWS RELEASE SUMMARY – April 4, 2016
SAN DIEGO – Former Carlsbad resident David Perez was sentenced in federal court today to 30 months in custody for selling unapproved “Energy Wave” medical devices over the internet and mailing them to customers throughout the United States.
According to admissions in his plea agreement, Perez marketed the “Energy Wave” device using the website www.myenergywave.com. The Energy Wave device consists of a micro-current frequency generator with a digital readout, two stainless steel cylinders, two personal application plates with connectors and lead wire for the cylinders and plates. Users were provided with an operating manual and a list of Auto Codes that set forth over 450 digital settings for the device, directed to treat specific conditions from abdominal pain, AIDS and diabetes to stroke, ulcer and worms. The Auto Codes and Manuel advised users to connect the cylinders or plates to the machine, and touch them to the body for a recommended run time to treat each condition.
David Perez admitted selling each device for approximately $1,200-$1,500, and receiving gross proceeds of approximately $271,000. He also acknowledged that he intended to defraud and mislead the Food and Drug Administration by attempting to evade the agency’s oversight of medical claims made regarding the Energy Wave device by maintaining a separate website (rifecodes.com) to which he referred customers who needed to obtain the auto codes that allegedly were used to treat the various medical conditions. Perez admitted that he knew or should have known a number of his customers were vulnerable because they had purchased the device in an attempt to cure cancer, and that they were marketing the device without the proper FDA approvals.
“It’s unconscionable to sell useless medical devices to critically ill people who are hoping for a miracle,” said U.S. Attorney Laura Duffy. “This sentence reflects the serious nature of this crime, and our commitment to protecting those who are most vulnerable to being preyed upon by heartless predators.”
“This investigation uncovered a serious public health threat and should serve as a warning to those who put consumers at risk for their own financial gain,” said Dave Shaw, special agent in charge for HSI San Diego. “HSI agents will continue to work with our law enforcement partners, both here and abroad, to investigate medical-related fraud over the Internet, especially when it involves an online marketing scam, such as this case in which unregulated medical devices were sold under false pretense.”
“The U.S. Postal Inspection Service will continue to work with our partners in law enforcement to ensure that the U.S. Postal Service isn't used as a conduit for those criminals who seek to perpetrate medical quackery upon the American consumer,” said Robert Wemyss, Inspector in Charge of the U.S. Postal Inspection Service - Los Angeles Division. “This type of crime takes advantage of the most vulnerable segment of the population to include the elderly and terminally ill. The protection of our citizens remains the cornerstone of our mission.”
“Consumers rely on the FDA to ensure that the medical products they use, including medical devices, actually treat the diseases or conditions they claim to. When criminals sell misbranded devices not cleared by the FDA, they put users’ health at risk,” said Lisa L. Malinowski, Special Agent in Charge, FDA Office of Criminal Investigations’ Los Angeles Field Office. “We will continue to devote our resources to removing such threats to the public’s health from the U.S. marketplace.”
DEFENDANT Criminal Case No. 15cr0360-BEN
David Perez Age: 60 Medford, Oregon
SUMMARY OF CHARGES
Conspiracy– Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison and $250,000 fine
AGENCIES
Immigration and Customs Enforcement’s Homeland Security Investigations
Postal Inspection Service
Food and Drug Administration, Office of Criminal Investigations
Suspected Smuggler Slams into Semi-Truck, Two Undocumented Immigrants KilledRead the Press Release
Assistant U. S. Attorney Lara A. Stingley (619) 546-8403 or Assistant U.S. Attorney Brandon J. Kimura (619) 546-9614
NEWS RELEASE SUMMARY – March 29, 2016
EL CENTRO – A suspected alien smuggler who said she “panicked” and hit the accelerator when U.S. Border Patrol agents attempted to pull her over has been arrested and charged in connection with a subsequent crash that killed two of her customers, left another brain dead, and another paralyzed.
Lydiana Castro, a United States citizen, was arrested after the crash on March 23, 2016 near Andrade, California, and charged with illegally transporting aliens. In federal court in El Centro today, she elected to forgo a detention hearing and remain in custody.
According to a federal complaint, a Border Patrol agent saw several people running to a Dodge Durango at a gas station at the intersection of Sidewinder Road and Interstate 8 in Andrade, California. The agent alerted colleagues via radio.
When another Border Patrol agent in a marked vehicle saw the Durango, he activated his lights and attempted to stop the vehicle, which was being driven by Castro. At first the Durango began to slow down and pull over, but suddenly the vehicle accelerated and reached a high rate of speed. Castro lost control of the Durango and crashed into a semi-truck that was traveling westbound on Interstate 8. The Durango became entangled in the semi-truck trailer’s frame and the truck driver pulled onto the shoulder.
Border Patrol agents found five undocumented Mexican nationals in the Durango. Two men, Gustavo Sanchez-Orta and Jose Magdiel May-Gonzalez, were pronounced dead at the scene of the crash. Castro was taken to a hospital in Yuma, Arizona. The three men had more extensive injuries and had to be transported to a hospital in Phoenix, Arizona. They were identified as Miguel Angel May-Us, Rogelio Dzul-Castro and Javier Sanchez-Gonzalez.
According to the complaint, Castro told a Homeland Security Investigations agent that she picked up the undocumented immigrants at the gas station and drove away toward Yuma. The complaint said Castro stated that she panicked when she saw Border Patrol and she “pressed on the gas” and did not know what to do. She said she remembers hitting the semi-truck but not much after that.
In court today, Assistant U.S. Attorney Kyle Martin told U.S. Magistrate Judge Peter Lewis that Dzul-Castro is brain dead and on life support; Sanchez-Gonzalez is paralyzed from the waist down; and May-Us is in and out of consciousness.
A status hearing is scheduled for this Friday, April 1 at 10:00 a.m. before Judge Lewis.
DEFENDANTS Case Number 16MJ8265
Lydiana Castro Age: 30 Calexico, CA
SUMMARY OF CHARGES
Illegal Transportation of Aliens – Title 8, U.S.C., Section 1324(a)(l)(A)(ii)
Maximum penalty: 10 years in prison
AGENCY
U.S. Immigration and Customs Enforcement’s Homeland Security Investigations
U.S. Border Patrol
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Smuggler Sentenced to Five Years for Abandoning His Customers in the Otay MountainsRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Alexandra F. Foster (619) 546-6735
NEWS RELEASE SUMMARY – March 25, 2016
SAN DIEGO – Alien smuggler Efrain Delgado-Rosales was sentenced today by U.S. District Judge Cathy A. Bencivengo to five years in prison for smuggling four non-U.S. Citizens into the United States and then leaving three of them behind in the Otay Mountains once across the border into the United States.
Delgado-Rosales collected four Mexican citizens who sought to enter the United States illegally from a stash house in Tijuana. In anticipation of the trip, Delgado-Rosales sold them brown clothing to wear as camouflage so they would be less visible to U.S. Border Patrol agents as they crossed through the mountains into the United States. Once the four men bought the clothes, Delgado-Rosales took them from the stash house and walked them to the U.S.-Mexico border fence.
Delgado-Rosales left the four men for a period of hours on the Mexico side of the border fence. During that time, thieves swooped in and robbed the men of all their cash (thousands of dollars) and some of their cell phones. When Delgado-Rosales returned to resume the crossing into the United States, according to one of the robbed men, Delgado-Rosales was “indifferent” to the robbery. His lack of surprise caused his four charges to suspect that Delgado-Rosales was involved in the robbery.
Once over the border fence and into the U.S., Delgado-Rosales guided the four men into the Otay Mountains. Three of the four men had a hard time maintaining Delgado-Rosales’s pace. Instead of slowing down, Delgado-Rosales left the men behind. He only grudgingly returned to retrieve them after one of the three men called the one man who had kept pace with the Delgado-Rosales and begged him to return with the guide.
After almost a day of hiking through the mountains, Border Patrol was alerted to the men’s whereabouts. Border Patrol agents responded to the location –about one mile north of the U.S.-Mexico border and three miles east of the closest checkpoint at the Otay Mesa Port of Entry- to find Delgado-Rosales and the four men. All five men were arrested for being illegally in the United States. All four men identified Delgado-Rosales as their foot guide and explained that they and their families each promised to pay others $5,000 to get them each into the United States, for a total of $20,000.
The area where these men were arrested is remote and mountainous, far from human habitation and unlikely to have cell phone service. The location of the arrests matters, because Delgado-Rosales was implicated in another smuggling operation in the Otay Mountains, further east in more rugged and desert-like terrain. In the August 2014 event, one of the smuggled men, Jose de Jesus Hernandez-Adono, died. His mummified body was found by Border Patrol and Homeland Security Investigations Agents in late September 2014. A witness was located, who had been smuggled in with Hernandez-Adono. The witness identified Delgado-Rosales as the foot guide. According to the witness, Hernandez-Adono died, and the other three barely survived the trek.
The facts detailed in the August 2014 smuggling event mirror those detailed by the men in this case. As in this case, the men in August 2014 were housed at a stash house in Tijuana while waiting to be smuggled into the United States. Delgado-Rosales required that the men buy and wear drab, brown clothing during the crossing to hide from Borer Patrol. The group again consisted of four men and again Delgado-Rosales had them cross over the Otay Mountains. The smuggling fee was the same, $5,000, and Delgado-Rosales again appeared to lack any concern for the welfare of his charges.
Delgado-Rosales has been apprehended by Border Patrol 24 times dating back to July 19, 1999. Only once was he apprehended alone. Every other time, he was apprehended with at least two and up to 46 other undocumented individuals. Once, on September 14, 2003, he was apprehended in a load house in Los Angeles with 61 other undocumented individuals.
U.S. Attorney Laura Duffy said, “This case serves as an example of the extreme dangers associated with crossing illegally into the United States. Smuggling activities are run by criminal organizations that have little concern over the welfare of their charges. Our office will aggressively prosecute those who smuggle illegal aliens into the United States for financial gain, place those in their company in grave danger and needlessly cause deaths.”
Chief Border Patrol Agent Richard A. Barlow added, “The sentence of Delgado-Rosales sends a stern message to those who use dangerous means to smuggle individuals into this country for profit. I would like to acknowledge the U.S. Attorney’s Office for their efforts in this case.”
DEFENDANT Criminal Case No. 15CR02830-CAB
Efrain Delgado-Rosales 35 years old
SUMMARY OF CHARGE
Count 1: Title 18, United States Code, Section 1324 - Bringing in Illegal Alien for Financial Gain – statutory minimum of five years, statutory maximum of 10 years, a maximum fine of $250,000, a 3-year term of supervised release, and $100 special assessment.
INVESTIGATING AGENCY
Border Patrol - Chula Vista Intelligence Division
Highest-Ranking Navy Official Sentenced to 46 Months in Prison for Accepting Bribes from Foreign Defense Contractor in Massive Bribery and Fraud SchemeRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Mark W. Pletcher (619) 546-9714
NEWS RELEASE SUMMARY – March 25, 2016
SAN DIEGO – U.S. Navy Captain Daniel Dusek, the highest-ranking official charged in the massive Navy bribery scandal, was sentenced in federal court today to 46 months in prison for giving classified information to foreign defense contractor Leonard Glenn Francis in exchange for prostitutes, luxury travel and other gifts.
In addition to imposing the prison term, U.S. District Judge Janis L. Sammartino ordered Dusek to pay a $70,000 fine and $30,000 in restitution to the Navy. He was ordered to report to the U.S. Bureau of Prisons on June 15.
Dusek, 49, pleaded guilty in January 2015 to a single count of conspiracy to commit bribery. Dusek admitted that he used his influence as Deputy Director of Operations for the 7th Fleet, headquartered in Yokosuka, Japan, and later as executive officer of the USS Essex and the commanding officer of the USS Bonhomme Richard, to benefit Francis and his company, Singapore-based Glenn Defense Marine Asia, which for decades provided port services to U.S. Navy ships. Dusek admitted that in return, Francis plied him with meals, alcohol, entertainment, gifts, dozens of nights and incidentals at luxury hotels and the services of prostitutes.
Underscoring his importance to the conspiracy, in an email to one of his employees, Francis wrote: “(Dusek) is a golden asset to drive the big decks (aircraft carriers) into our fat revenue GDMA ports.”
During the sentencing hearing, Judge Sammartino told Dusek: “It’s truly unimaginable to the court that someone in your position with the United States Navy would sell out based on what was provided to you – hotel rooms, entertainment and the services of prostitutes.” She noted that Dusek’s actions “potentially jeopardized national security.”
“Captain Dusek’s betrayal is the most distressing because the Navy placed so much trust, power and authority in his hands,” said U.S. Attorney Laura Duffy. “This is a fitting sentence for a man who was so valuable that his conspirators labeled him their ‘Golden Asset.’”
“As a Navy officer, Captain Dusek took an oath to bear true faith and allegiance to the United States. Instead, he chose self-interest, greed and prurience,” said Assistant Attorney General Leslie R. Caldwell. “And when he learned of the investigation, Captain Dusek deleted his email accounts in an attempt to shield his crimes from law enforcement. The Department of Justice is committed to holding public officials responsible when they betray the public trust.”
“This outcome again sends the message that corruption will be vigorously investigated and prosecuted,” said Director James B. Burch of the Department of Defense, Defense Criminal Investigative Service. “This is an unfortunate example of dishonorable Naval officers who recklessly risked the safety of our troops by trading classified information for cash, extravagant gifts and prostitutes. Cases such as these are not motivated by need or other difficult personal circumstances; they are the product of simple greed. This investigation should serve as a warning that those who compromise the integrity of the United States will face their day of reckoning. DCIS and our law enforcement partners will pursue these crimes relentlessly.”
“Captain Dusek put greed and personal pleasure above the safety of his shipmates, and, in doing so, violated his sworn oath as a naval officer,” said Naval Criminal Investigative Service Director Andrew Traver. “His sentence today attests to the seriousness of his crimes. NCIS, along with our partners at the Department of Justice, the Defense Criminal Investigative Service, and the Defense Contract Audit Agency have been steadfast in our commitment to fully investigate the actions of all those involved in the GDMA case, and will continue with the same determination as the investigation proceeds.”
Anita Bales, director, of Defense Contract Audit Agency, said, “DCAA is honored to be a partner with DCIS, NCIS, and the Department of Justice in this investigation. Our investigative support auditors did an outstanding job analyzing the evidence. I'm proud of their work and its impact on bringing justice to those who corruptly defraud the government.”
According to Dusek’s plea agreement, he hand-delivered Navy ship schedules to the GDMA office in Japan or emailed them directly to Francis or a GDMA employee on dozens of occasions, each time taking steps to avoid detection by law enforcement or U.S. Navy personnel.
Dusek was so helpful to GDMA that an employee gloated, Dusek is “an official GDMA card holder.” He was lavishly rewarded for his efforts. In one example cited in the plea agreement, GDMA paid for a hotel for Dusek and his family at the Marriott Waikiki in Hawaii on July 19, 2010. A few weeks later, on August 5, 2010, GDMA paid for a hotel room for Dusek at the Shangri-La in Makati, Philippines and while there, GDMA provided him with the services of a prostitute.
Soon after Dusek’s vacations in Hawaii and the Philippines, Francis asked Dusek to exercise his influence on GDMA’s behalf by steering the aircraft carrier USS Abraham Lincoln and its associated strike group to Port Klang, Malaysia – a port terminal owned by Francis. Dusek replied in a series of emails to GDMA in late August 2010 that he would make it happen. “Good discussion with N00 (Admiral) today and convince him that PKCC (Francis’ terminal) is the better choice,” Dusek wrote to Francis on August 21, 2010. Three days later, Dusek reported to Francis that he had “everyone in agreement that the next CSG (Carrier Strike Group) through the AOR (area of responsibility) will stop at PKCC. Dates will be 08-12 Oct.”
In fact, the USS Abraham Lincoln Carrier Strike Group did make that visit to Francis’ port on October 8-12, 2010, a port visit that cost the United States approximately $1.6 million.
On September 17, 2013, when Dusek learned that Francis and Navy personnel had been arrested, he deleted the contents of his email accounts in an effort to avoid detection by law enforcement.
To date, 10 individuals have been charged in connection with this scheme; of those, nine have pleaded guilty, including Dusek, Lieutenant Commander Todd Malaki, Commander Michael Vannak Khem Misiewicz, NCIS Special Agent John Beliveau, Commander Jose Luis Sanchez and U.S. Navy Petty Officer First Class Dan Layug. Former Department of Defense civilian employee Paul Simpkins awaits trial. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; and 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; the others await sentencing.
The ongoing investigation is being conducted by NCIS, DCIS and the Defense Contract Audit Agency. The case is being prosecuted by Assistant U.S. Attorney Mark W. Pletcher of the Southern District of California and Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section.
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.
DEFENDANT Case Number: 15-CR-131-JLS
Daniel Dusek Age: 49 San Diego, CA
SUMMARY OF CHARGES
Conspiracy to Commit Bribery, in violation of 18 U.S.C. § 371. Maximum penalty five years in prison, $250,000 fine or twice the gross pecuniary gain or loss from the offense, whichever is greater.
INVESTIGATING AGENCIES
Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency
Highest-Ranking Navy Official Sentenced to 46 Months in Prison for Accepting Bribes from Foreign Defense Contractor in Massive Bribery and Fraud SchemeRead the Press Release
The highest-ranking official charged in a massive Navy bribery scandal was sentenced in federal court today to 46 months in prison for giving classified information to a foreign defense contractor in exchange for prostitutes, luxury travel and other gifts.
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 James B. Burch 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.
U.S. Navy Capt. Daniel Dusek was sentenced by U.S. District Judge Janis L. Sammartino of the Southern District of California, who also ordered Dusek to pay a $70,000 fine and $30,000 in restitution to the Navy. He was ordered to report to the U.S. Bureau of Prisons on June 15, 2016.
Dusek, 49, pleaded guilty in January 2015 to a single count of conspiracy to commit bribery. Dusek admitted that he used his influence as Deputy Director of Operations for the Seventh Fleet, headquartered in Yokosuka, Japan, and later as executive officer of the USS Essex and the commanding officer of the USS Bonhomme Richard, to benefit Leonard Glenn Francis and his company, Glenn Defense Marine Asia (GDMA). For decades, GDMA provided port services to U.S. Navy ships and in return, Francis plied Dusek with meals, alcohol, entertainment, gifts, dozens of nights and incidentals at luxury hotels and the services of prostitutes, Dusek admitted.
Underscoring his importance to the conspiracy, in an email to one of his employees, Francis wrote: “(Dusek) is a golden asset to drive the big decks (aircraft carriers) into our fat revenue GDMA ports.”
“As a Navy officer, Captain Dusek took an oath to bear true faith and allegiance to the United States,” said Assistant Attorney General Caldwell. “Instead, he chose self-interest, greed and prurience. And when he learned of the investigation, Captain Dusek deleted his email accounts in an attempt to shield his crimes from law enforcement. The Department of Justice is committed to holding public officials responsible when they betray the public trust.”
“Captain Dusek’s betrayal is the most distressing because the Navy placed so much trust, power and authority in his hands,” said U.S. Attorney Duffy. “This is a fitting sentence for a man who was so valuable that his conspirators labeled him their ‘Golden Asset.’”
“This outcome again sends the message that corruption will be vigorously investigated and prosecuted,” said Director Burch. “This is an unfortunate example of dishonorable naval officers who recklessly risked the safety of our troops by trading classified information for cash, extravagant gifts and prostitutes. Cases such as these are not motivated by need or other difficult personal circumstances; they are the product of simple greed. This investigation should serve as a warning that those who compromise the integrity of the United States will face their day of reckoning. DCIS and our law enforcement partners will pursue these crimes relentlessly.”
“Captain Dusek put greed and personal pleasure above the safety of his shipmates and, in doing so, violated his sworn oath as a naval officer,” said Director Traver. “His sentence today attests to the seriousness of his crimes. NCIS, along with our partners at the Department of Justice, the Defense Criminal Investigative Service and the Defense Contract Audit Agency have been steadfast in our commitment to fully investigate the actions of all those involved in the GDMA case, and will continue with the same determination as the investigation continues.”
“DCAA is honored to be a partner with DCIS, NCIS and the Department of Justice in this investigation,” said Director Bales. “Our investigative support auditors did an outstanding job analyzing the evidence. I’m proud of their work and its impact on bringing justice to those who corruptly defraud the government.”
According to Dusek’s plea agreement, he hand-delivered Navy ship schedules to the GDMA office in Japan or emailed them directly to Francis or a GDMA employee on dozens of occasions, each time taking steps to avoid detection by law enforcement or U.S. Navy personnel.
Dusek was lavishly rewarded for his efforts to help GDMA. For example, according to the plea agreement, GDMA paid for a hotel for Dusek and his family at the Marriott Waikiki in Hawaii on July 19, 2010, and on Aug. 5, 2010, GDMA paid for a hotel room for Dusek at the Shangri-La in Makati, Philippines, and provided him with the services of a prostitute.
Soon after, Francis asked Dusek to exercise his influence on GDMA’s behalf by steering the aircraft carrier USS Abraham Lincoln and its associated strike group to Port Klang, Malaysia (PKCC) – a port terminal owned by Francis. Dusek replied in a series of emails to GDMA in late August 2010 that he would make it happen. “Good discussion with N00 (Admiral) today and convince him that PKCC is the better choice,” Dusek wrote to Francis on Aug. 21, 2010. Three days later, Dusek reported to Francis that he had “everyone in agreement that the next CSG (Carrier Strike Group) through the AOR (area of responsibility) will stop at PKCC. Dates will be 08-12 Oct.” The port visit cost the United States approximately $1.6 million.
On Sept. 17, 2013, when Dusek learned that Francis and Navy personnel had been arrested, he deleted the contents of his email accounts in an effort to avoid detection by law enforcement.
To date, 10 individuals have been charged in connection with this scheme; of those, nine have pleaded guilty, including Dusek, Lieutenant Commander Todd Malaki, Commander Michael Vannak Khem Misiewicz, NCIS Special Agent John Beliveau, Commander Jose Luis Sanchez and U.S. Navy Petty Officer First Class Dan Layug. Former Department of Defense civilian employee Paul Simpkins awaits trial. 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; and on March 18, 2016, Alex Wisidagama, a former GDMA employee, was sentenced to 63 months and $34.8 million in restitution to the Navy; the others await sentencing.
The ongoing investigation is being conducted by NCIS, DCIS and DCAA. The case is being prosecuted by Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark W. Pletcher of the Southern District of California.
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.
Owner of Tunnel House in Calexico Arrested Today in ArizonaRead the Press Release
Assistant U. S. Attorney Sherri Walker Hobson (619) 961-0287
NEWS RELEASE SUMMARY – March 24, 2016
CALEXICO, California - Augustin Enrique Cruz, the owner of the house in Calexico where a subterranean drug tunnel exit was discovered yesterday, was arrested today in Tucson, Arizona and charged with various narcotics trafficking, money laundering and tunnel-related crimes.
Enrique Cruz, also known as “Tinky,” was taken into custody by agents from U.S. Immigration and Customs Enforcement Homeland Security Investigations and is expected to be arraigned in the District of Arizona before his transfer to the Southern District of California.
Yesterday, about 100 federal, state and local law enforcement officials seized the tunnel following an extensive, multi-agency investigation. In total, agents have arrested five people including Enrique Cruz and seized almost 3,000 pounds of marijuana. Agents continued to investigate the 415-yard tunnel which originated in El Sarape restaurant in Mexicali, Baja California, Mexico. Also yesterday, U.S. Border Patrol agents stood guard at the tunnel house.
According to a criminal complaint, Enrique Cruz traveled from Arizona to the Calexico area on multiple occasions in November and December 2014 to look for property that would serve as the exit point of a tunnel from Mexicali in Baja California, Mexico. In January 2014, Cruz purchased the property at 902 E. Third Street in Calexico. It is the first time in this district that drug traffickers are known to have purchased property and constructed a house for the sole purpose of concealing the exit of a drug tunnel.
To finance the purchase of the parcel, Cruz’s coconspirators arranged for various cash pickups in Arizona and California. Cruz also met with the title company for the closing. The parcel was placed in Enrique Cruz’s name on July 1, 2015.
In addition to purchasing the property, Enrique Cruz and his coconspirators hired local contractors to build a new house. Based on federal wiretaps, the construction of the residence was expected to cost $86,000. Enrique Cruz’s boss directed the contractor to leave a space in the foundation for a floor safe, which was intended to be the exit point for the tunnel. According to court documents, Enrique Cruz rented a walk-behind saw and concrete blade on January 27, 2016, to widen the exit point of the tunnel.
In the fall of 2015, Cruz and his coconspirators traveled to Calexico to meet with the contractor to make payments for the construction of the new residence and construction subsequently began. Throughout October 2015 and November 2015, crews continued with the construction of the residence which was completed in late December 2015.
Unbeknownst to the alleged traffickers, the purchase of the property and construction of the house and tunnel were completed under the watchful eye of Homeland Security Investigation (HSI) agents in Calexico.
Agents learned from monitoring court-authorized wiretaps of phones and from surveillance that Enrique Cruz and his coconspirators began smuggling narcotics through the tunnel on or after February 28, 2016. Agents intercepted several calls in which Enrique Cruz and his father discussed the conditions inside the tunnel.
According to the complaint, Enrique Cruz also arranged for the purchase of multiple vehicles that were used to transport marijuana. from the 3rd Street newly built residence to the secondary stash residence at 1056 Horizon Street in Calexico and another warehouse at 260 Avenida Campillo, Suite A, also in Calexico.
On March 7, 2015, HSI agents seized approximately 1,350 pounds of marijuana that was smuggled through the tunnel inside the Third Street residence, transported initially to the Horizon residence, and eventually to the Avenida Campillo warehouse before it landed in a Los Angeles warehouse – all under the eyes of law enforcement.
On March 23, 2016, multiple search warrants were executed by multiple federal agencies, led by HSI Special Agents. A tunnel was located inside the living room of the newly built Third Street residence. In addition, approximately 1,532 pounds of marijuana were found inside the Horizon stash location. Two individuals, Joel Duarte Medina and Manuel Gallegos Jiminez, were arrested in connection with the tunnel.
Duarte Medina, who was arrested at the Horizon stash location on March 23, 2016, and Gallegos Jiminez, who was arrested inside the Third Street residence where the tunnel was seized, were arraigned today before U.S. Magistrate Judge Peter C. Lewis in federal court in El Centro, California. They were charged with conspiracy to import marijuana (21 U.S.C. 952,960, 963, conspiracy to distribute (21 U.S.C 841, 846) and Conspiracy to Maintain Drug Premises (21 U.S.C. 856(a)(1).
Another defendant, Eva Duarte De Medina, was also arrested in Arizona in connection with this tunnel. She was charged with conspiracy to import marijuana (21 U.S.C. 952,960, 963, conspiracy to distribute (21 U.S.C 841, 846) and conspiracy to maintain drug premises (21 U.S.C. 856(a)(1). She was arraigned yesterday in the District of Arizona and was expected to be transferred to the Southern District of California for prosecution.
DEFENDANT
Augustin Enrique Cruz, aka Tinky
United States Citizen
Residence Tucson, Arizona
PENDING CHARGES AGAINST DEFENDANT ENRIQUE CRUZ
Conspiracy to Import Controlled Substances (Title 21, United States Code, Section 952, 960, 963)
Maximum Penalty: 20 years in custody; 3 years of supervised release, $1,000,000 fine
Conspiracy to Distribute Controlled Substances (Title 21, United States Code, Sections 841 and 846)
Maximum Penalty: 20 years in custody; 3 years of supervised release, $1,000,000 fine
Conspiracy to Maintain Drug Related Premises (Title 21, United States Code, Sections 845(a)(1) and 846)
Maximum Penalty: 20 years in custody; 3 years of supervised release, $250,000 fine
Conspiracy to Launder Money (Title 18, United States Code, Sections 1956(h) and 1956(a)(1)(A)(i)
Maximum Penalty: 20 years in custody; 3 years of supervised release, $500,000 fine
Aiding and abetting the construction, finance, and use of a narcotics tunnel (Title 18, United States Code, Sections 555 and 2)
Maximum Penalty: 20 years in custody; 3 years of supervised release, $500,000 fine
For visuals please see:
https://www.dvidshub.net/search?q=calexicotunnel
AGENCIES
U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations
Homeland Security Investigations, Calexico
U.S. Border Patrol, El Centro Sector
Drug Enforcement Administration
Customs and Border Protection
IRS Criminal Investigations
El Centro Police Department
Brawley 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.
**This case stems from an ongoing Organized Crime Drug Enforcement Task Forces (OCDETF) joint investigation conducted by the agencies noted above. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
Feds Seize Another Tunnel; Multiple Arrests and More Than a Ton of Marijuana ConfiscatedRead the Press Release
Assistant U. S. Attorney Sherri Walker Hobson (619) 961-0287
NEWS RELEASE SUMMARY – March 23, 2016
CALEXICO – Federal officials seized a cross-border tunnel this morning following a lengthy multiagency investigation that resulted in the arrests of four people in Calexico, California and Arizona and the confiscation of more than a ton of marijuana.
The tunnel, approximately 415 yards in length, stretches from El Sarape Restaurant in Mexicali, Baja California, Mexico to a three-bedroom, two-bath house, located at 902 E. Third Street in Calexico, California, about 300 yards north of the international border. In the front room of the residence, agents found a hole in the floor covered with tile leading to a shaft descending underground.
Two people were arrested in Arizona yesterday and two people were arrested today in Calexico and charged by federal complaint with various drug trafficking, money laundering and tunnel-related charges, including conspiracy to import a controlled substance and conspiracy to use border tunnels and passages.
Defendants Joel Duarte Medina and Manuel Gallegos Jiminez were arrested in Calexico. Defendant Duarte Medina was arrested inside a residence located on Horizon Street, in Calexico, which was used as a stash location for the tunnel organization. Agents also seized approximately 1,532 pounds of marijuana inside the Horizon Street residence this morning. Defendant Gallegos Jiminez was arrested today inside the tunnel residence. Both defendants are scheduled to make their first court appearances tomorrow in El Centro before U.S. Magistrate Judge Pete Lewis.
Among those charged in Arizona was Marcia Manuela Duarte-Medina, who was taken into custody in Nogales, Arizona, on Tuesday night. In court documents, she and others are alleged to be the purchasers of the tunnel residence in Calexico. She is scheduled to appear today before U.S. Magistrate Judge Eric Markovich in Arizona.
Also arrested in Arizona was Marcia Manuel Duarte Medina’s mother, Eva Duarte De Medina, who was charged in the Southern District of California, with various crimes including conspiracy to import drugs, conspiracy to distribute drugs and maintaining drug related premises. As stated in court documents, Eva Duarte De Medina assisted in moving vehicles loaded with narcotics between the tunnel residence and the Horizon Street stash location. She is scheduled to appear today before Judge Markovich in Arizona.
This is the first operational tunnel discovered in Calexico in a decade. According to federal investigators, it also represents the first time drug traffickers are known to have purchased property and constructed a house for the sole purpose of concealing the exit of a subterranean drug tunnel. The search warrant affidavit and charging documents allege the traffickers scouted properties in the area and selected the Third Street parcel in a residential section of Calexico. The property sale was finalized in April of 2015 for $240,000 by the drug traffickers.
“This house and tunnel were constructed under the watchful eye of law enforcement,” said U.S. Attorney Laura Duffy. “For the builders, the financiers and the operators of these passageways, there is no light at the end of the tunnel. We will seize your drugs and your tunnel before you even have a chance to use it.”
“Today’s enforcement actions are the culmination of months of tireless investigative work by HSI and its enforcement partners, showing yet again our collective resolve to use all of the resources at our disposal to combat this increasingly dangerous form of cross-border smuggling,” said Dave Shaw, special agent in charge for HSI San Diego. “I’d emphasize that our investigation in this case is still very much ongoing, but preliminarily we believe the shuttering of this latest sophisticated smuggling tunnel has dealt a serious blow to yet another narcotics trafficking organization that was determined to succeed at all costs.”
“If these drug trafficking organizations think they can move their operations east and no one will be the wiser, they are mistaken,” said DEA San Diego Special Agent in Charge William R. Sherman. “With the assistance of our law enforcement partners, we will remain vigilant in both San Diego and Imperial Counties to ensure that these dangerous cross border drug tunnels are shut down and the organizations responsible are put out of business.”
Court documents describe how HSI special agents used court-authorized wiretaps and other investigative techniques to monitor the construction of the house during October and November of 2015. According to the case affidavit, the property owners told the construction contractor to leave a space for a floor safe when pouring a cement foundation for the house. Investigators believe the owners intended to use that hole in the foundation as the tunnel’s exit point. In late December, 2015, coconspirators rented a “walk behind saw and concrete blade” from a local business in El Centro, California, presumably to create the tunnel exit. The residence was completed in December of 2015 at a cost of approximately $86,000.
Once the house was finished, the drug trafficking organization opened the tunnel’s exit point and began smuggling narcotics through the tunnel. Based on intercepted calls and surveillance, agents believe the traffickers began smuggling narcotics through the tunnel after February 28, 2016. Investigators are confident that was the first time the tunnel was used.
According to court records, the drug traffickers used another residence four miles from the tunnel exit as a stash house at 1056 Horizon Street, Calexico, to store the smuggled narcotics. Eventually, the traffickers moved the narcotics from that stash location to a warehouse located at 260 Avenida Campillo, Suite A, Calexico, where the smuggled narcotics were stored until they could be moved northbound by the transportation cells.
Drivers transported the marijuana from the tunnel exit to a stash house and then to the Santo Thomas Swap Meet in Calexico, where a new driver would transport the load to another stash location. Thus drivers taking contraband to the Horizon Warehouse Street site were not aware of the original stash location at the Third Street property. Using multiple locations and multiple drivers is a means for drug traffickers to compartmentalize their operations and keep various players in the dark about the organization’s methods.
On March 7, 2016, HSI agents and West Covina Police Department seized over 1,350 pounds of marijuana that were smuggled through the tunnel and funneled into the two stash locations before being transported northbound to Los Angeles via Brawley. This was the only known time that traffickers moved the drugs from Calexico stash houses for distribution via Brawley and Los Angeles.
In total, authorities seized almost 3,000 pounds of marijuana.
Calexico is generally considered a less desirable place to construct tunnels because soil composition is more difficult to penetrate, and because it is a largely a residential city, making tunnel exits and smuggling activity more difficult to conceal.
Traffickers have found the Otay Mesa region, where the majority of super tunnels have been discovered along the California-Mexico border in recent years, to be a more attractive option because the terrain is easier to excavate and the thousands of warehouses on either side of the border provide convenient camouflage.
The tunnel dismantled today is the 12th large-scale operational drug smuggling tunnel discovered along the California border since 2006. In the last five years, federal authorities have detected more than 75 cross-border smuggling tunnels, most of them in California and Arizona.
For visuals please see:
https://www.dvidshub.net/search?q=calexicotunnel
AGENCIES
U.S. Immigration and Customs Enforcement Homeland Security Investigations
Homeland Security Investigations, Calexico
U.S. Border Patrol,. El Centro Sector
Drug Enforcement Administration
Customs and Border Protection
IRS Criminal Investigations
El Centro Police Department
Brawley 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.
**This case stems from an ongoing Organized Crime Drug Enforcement Task Forces (OCDETF) joint investigation conducted by the agencies noted above. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.
Real Estate Brokers Imprisoned for Scheme to “Wash” Title to Million-Dollar San Diego HomesRead the Press Release
Assistant U.S. Attorney Emily W. Allen (619) 546-9738
NEWS RELEASE SUMMARY – March 21, 2016
SAN DIEGO – Brothers and former San Diego real estate brokers Adel Afkarian and Atef Afkarian were sentenced today to prison for their role in a fraudulent “debt elimination” scheme that purported to eliminate the mortgages on several million-dollar homes in San Diego.
U.S. District Judge John A. Houston sentenced Adel Afkarian to serve 18 months in custody and Atef Afkarian to serve 13 months. In addition to the time in custody, the brothers were both ordered to pay more than $5.5 million in restitution to the victims of the scheme.
To implement the scheme, the Afkarians identified underwater homeowners—including themselves—and began a process to make it appear as though the homeowners’ debts had been satisfied. To do so, they recorded fraudulent deeds that purported to extinguish the large mortgage loans encumbering each property. They then sold the properties to innocent purchasers, deceiving the buyers into paying the full purchase price to the Afkarians or their co-conspirators. The mortgage lenders, unaware of the fraudulent documents recorded on title or unable to prevent the sale in time, were left unpaid.
With regard to their own underwater home, the Afkarians pretended that $1.4 million in mortgage debt had vanished. They used the “debt elimination” method to successfully arrange the fraudulent sale of a total of four properties in and around San Diego, generating more than $4.3 million in proceeds which went directly into bank accounts owned by the brothers and their co-conspirators. In some cases, they sold this fraudulent “debt elimination” program to existing clients of their mortgage business.
In addition to the “debt elimination” scheme, Adel and Atef Afkarian also conspired to arrange fraudulent short sales for underwater clients through a simultaneous “double escrow” scheme. Rather than selling an underwater home at a pre-approved short sale price, the defendants arranged two simultaneous sales of the same property at two different sale prices, using a straw buyer as the intermediary and purported seller in the second transaction. This way, the short sale lender would believe that the property was being sold for initial first-escrow price, rather than the higher second-escrow price (which was in fact the arms-length market sales prices). The defendants and their co-conspirators would then pocket the difference, diverting money from the lenders.
The Afkarians each pleaded guilty in September 2013, admitting their participation in these schemes. As part of their guilty pleas, they also agreed to forfeit a home on Santa Fe Canyon Place, which they had purchased using approximately $715,000 in proceeds of the fraud, and an additional $388,000 recovered from bank accounts where they had transferred proceeds.
One of the Afkarians’ clients, Mehran Abazary, was also charged in connection with this case, and pleaded guilty on December 15, 2015. Abazary admitted that he owed more than $2 million in mortgage debt when he hired the Afkarians and their co-conspirators to help him “eliminate” this debt and sell the property. When the sale closed, Abazary received $250,000 in proceeds of the sale. Abazary pleaded guilty to filing a false tax return omitting to disclose this income to the Internal Revenue Service. He is scheduled to be sentenced by Judge Houston on September 6, 2016, at 8:30 am.
DEFENDANTS & CHARGES
Adel Afkarian, 13CR1469-JAH (1) Age: 42 Carlsbad, California
Atef Afkarian, 13CR1469-JAH (2) Age: 40 Slidell, Louisiana
Conspiracy to commit mail fraud and wire fraud, in violation of 18 U.S.C. § 371
Maximum Penalties: 5 years’ imprisonment, $250,000 fine or twice the pecuniary loss or gain, $100 special assessment, 3 years’ supervised release, restitution
ADDITIONAL DEFENDANT & CHARGES
Mehran Abazary, 15CR3073-JAH Age: 64 San Diego, CA
Subscribing to a false tax return, in violation of 26 U.S.C. § 7206(1)
Maximum Penalties: 3 years’ imprisonment, $250,000 fine, $100 special assessment, 1 year supervised release, restitution
INVESTIGATING AGENCIES
Federal Bureau of Investigation
Internal Revenue Service – Criminal Investigation
Man Sentenced to More Than Eight Years in Prison for two Fraud Schemes, Including one that Cost Verizon $17 MillionRead the Press Release
Assistant U. S. Attorneys Joseph Green (619) 546-6955 and Jennifer Resnik (213) 894-6595
NEWS RELEASE SUMMARY – March 21, 2016
SAN DIEGO – The owner of a Glendale-based ride-sharing business was sentenced in federal court today to more than eight years in prison in two separate fraud cases, including one involving the sale of more than 30,000 Apple iPhones fraudulently obtained from Verizon Wireless at substantially discounted prices.
Karen “Kevin” Galstian, 38, of Chatsworth, California, was sentenced by U.S. District Judge Barry Ted Moskowitz to 100 months in the scheme against Verizon Wireless that generated illegal profits of more than $13 million, and 87 months for defrauding Bank of America out of almost $700,000. The sentences are to run concurrently.
Judge Moskowitz also ordered Galstain to pay $17 million in restitution to Verizon and more than $200,000 in restitution to Bank of America.
Galstian pleaded guilty in November in San Diego to one count of wire fraud, admitting that he committed the offense while on pre-trial release in the case involving Bank of America. In that case, Galstian pleaded guilty in January 2014 to bank fraud.
As part of the scheme involving the iPhones, Galstian admitted that he used his company, Toro Ride, Inc., to induce Verizon Wireless to provide the business with more than 30,000 iPhones at a substantial discount. He purchased most of the mobile phones that usually sell for more than $500 for only 99 cents each – in connection with a two-year contract.
Galstian claimed that the phones would be used by drivers for Toro Ride’s ride-sharing service and that Toro Ride, which had only been operating in the Los Angeles area, was poised to expand nationwide. Galstian falsely told Verizon that Toro Ride had received $20 million from investors. When he brokered the deal with Verizon last year, Galstian failed to disclose the he was awaiting sentencing in the bank fraud case and thus would be incarcerated and unavailable to lead the company in the expansion.
As Verizon provided the iPhones that supposedly would be used by Toro Ride’s drivers, Galstian sold the vast majority of the devices to companies engaged in the international re-sale of consumer electronics. Thousands of the iPhones that Verizon shipped to Toro Ride were never used on its network and instead were activated in countries such as Vietnam, Iraq, China and Saudi Arabia.
Galstian fraudulently convinced Verizon to provide him with iPhones worth more than $19.4 million. In less than six months, Galstian generated illegal proceeds of more than $13 million by re-selling the iPhones. Toro Ride used some of the illicit proceeds derived from iPhone sales to make required monthly payments to Verizon, which enabled Galstian to continue to order thousands of additional iPhones.
In the bank fraud scheme, Galstian orchestrated a conspiracy to defraud Bank of America of approximately $689,000. As part of the scheme, members of the conspiracy opened over 90 accounts at Bank of America and engaged in a series of transactions that allowed them withdraw funds before Bank of America learned that there were not sufficient funds in the target accounts to cover the withdrawals.
In yet another scheme, Galstain admitted to cashing checks drawn on accounts in which fraudulently-obtained tax returns had been deposited.
Galstian used approximately $2.5 million of the proceeds from the Verizon fraud to purchase several properties, including a penthouse condominium in the Palms Casino in Las Vegas, and a Mercedes S550. The court ordered the forfeiture of various assets obtained by Galstian through the fraud scheme, including real properties in Northridge, Sherman Oaks, Tujunga and Las Vegas, as well as more than $200,000 seized from bank accounts and a number of vehicles.
DEFENDANTS
Karen “Kevin” Galstian Age: 38 Newport Beach, CA
SUMMARY OF CHARGES Case Number 15cr2509
15cr2509-BTM (Verizon iPhone scheme)
Wire Fraud, 18 USC 1343; Commission of an Offense While on Release, 18 U.S.C. 3147
Max penalties: 30 years prison, a fine in the amount of twice the gross gain or loss resulting from the offense, $100 special assessment, 3 years supervised release
SUMMARY OF CHARGES Case Number 13cr3481
13cr3481-BTM (Bank of America scheme)
Conspiracy to Commit Bank Fraud, 18 U.S.C. 1349
Max penalties: 30 years prison, $1,000,00 fine, $100 special assessment, 3 years supervised release
AGENCIES
Federal Bureau of Investigation
Internal Revenue Service
Local Tax Preparer Sentenced to Seven Years in Prison for Filing Thousands of False Tax Returns and Stealing Identities in Multi-Million Dollar ScamRead the Press Release
Assistant U.S. Attorneys Joseph J.M. Orabona (619) 546-7951 or Alexandra Foster (619) 546-6735
NEWS RELEASE SUMMARY – March 18, 2016
SAN DIEGO – The owner of a tax preparation business in San Diego County was sentenced in federal court today to seven years in prison, admitting that she filed more than 3,500 false income tax returns with the Internal Revenue Service, that she committed tax evasion, and that she stole the identities of minors and other persons in order to obtain more than $7 million in bogus refunds.
Melissa Ann Vega, also known as Lisa Vega, was a local tax preparer and owner of L&T Works, a tax return preparation business on Miramar Road. She was sentenced on charges of conspiracy to file false, fictitious, and fraudulent claims for federal tax refunds, tax evasion and aggravated identity theft before U.S. District Court Judge Jeffrey T. Miller.
As detailed in her plea agreement, Vega conspired with others from at least December 2009 through April 2015 to submit thousands of false income tax returns to the IRS in order to fraudulently obtain tax refunds to which Vega, her co-conspirators and her clients were not entitled. In carrying out her scheme, Vega falsified her clients’ tax returns without their knowledge or consent. As part of the conspiracy, Vega claimed thousands of dollars in false education expenses and tax credits for which her clients were not qualified.
Vega told her co-conspirators and employees that they should maximize clients’ refunds by filing for a $4,000 education credit, even though the clients did not attend school for that tax year. To conceal her role in the fraud, Vega intentionally omitted her name and tax return preparer identification number on the false tax returns she prepared for her clients. In total, Vega’s fraud caused the IRS to pay more than $7 million in artificially-inflated tax refunds based solely on the false education credits. Moreover, Vega admitted that she and her co-conspirators stole the identities of other persons, including minors, and used them on the false tax returns in order to further inflate the amount of the tax refund paid by the IRS.
Vega did not shy away from personally profiting from her fraudulent scheme. In addition to charging her clients between $150 and $200 per return, Vega also admitted that she stole more than $300,000 in false tax refunds from her clients by directing their refunds into bank accounts that she controlled. Vega also admitted that she evaded her own income taxes and filed false personal tax returns in which she fraudulently claimed withholding credits, education credits, and tax credits for minor dependents that she did not support and who were not related to her. According to court documents, Vega evaded more than $156,000 in taxes due to the IRS for tax years 2009 through 2013.
Vega was arrested on gun charges on December 16, 2014. On January 28, 2015, she was released on bond and ordered not to commit any federal crimes --specifically filing false tax returns-- while out in the community. Nonetheless, Vega once again began filing false tax returns with the IRS within days of her release. Without the clients’ knowledge, Vega again fraudulently inflated or created credits and deductions to maximize her clients’ false returns. In an attempt to cover up her criminal activity, Vega agreed with Deanna Dave (charged in Criminal Case No. 15CR2715-JM) that Dave was the owner and paid-return preparer for the tax returns filed in February 2015. In truth, Vega continued as the owner of her tax preparation business and prepared the false tax returns, which she filed for her clients. The IRS uncovered her fraud, and Vega was again arrested on February 25, 2015. Dave pled guilty to providing false statements to the grand jury and is set for sentencing on April 1, 2016, before Judge Miller.
In addition to sentencing Vega, a previously convicted felon, to 7 years in prison, the Court also ordered the forfeiture of several firearms seized from Vega’s residence during the execution of a search warrant in April 2014, including a sawed-off shotgun, shotgun shells, a 9mm handgun, and 9mm ammunition. Vega’s husband, Jamie Lang, was sentenced to 30 months for possessing the unregistered sawed-off shotgun. The Court ordered Vega to pay restitution to the IRS in the total amount of $7,176,836.
Furthermore, as part of her plea agreement, Vega agreed to be permanently enjoined from ever preparing or filing federal income tax returns for anyone other than herself. A permanent injunction will be entered by the IRS to prevent Vega from acting as a tax preparer in the future.
“Tax fraud results in an increasing burden on honest taxpayers and negatively impacts honest citizens’ confidence in our tax system,” said U.S. Attorney Laura Duffy. “Identity theft not only has a long-lasting financial impact on the victims, but also has an emotional impact affecting the stability of victims and their families. Today’s seven-year sentence for Ms. Vega sends a message to tax preparers and others who engage in refund schemes and identity theft that the government will prosecute you to the fullest extent of the law and that the punishment will be severe.” With the current tax return filing season underway, U.S. Attorney Duffy reminded the public 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.
“Over the span of six years, Ms. Vega operated a massive tax refund and identity theft scheme, often using the identities of children to falsify deductions,” stated Acting Special Agent in Charge Anthony J. Orlando, IRS Criminal Investigation. “As today’s sentence shows, the government will hold accountable those who use deceit and fraud to line their pockets with money, especially when that money represents stolen federal tax refunds.”
“Today’s sentencing is a direct result of the efforts of dedicated investigators and prosecutors, and is a reminder that the U.S. Secret Service will vigorously investigate identity thieves who use the personal information of unsuspecting victims,” stated Special Agent In Charge David Murray, U.S. Secret Service.
Separately, three more defendants have entered guilty pleas admitting their roles in the tax fraud conspiracy. Earlier this year, co-conspirators Tammie Cowles, Stephen Elliott, and Justin Vega entered guilty pleas to conspiracy to file false claims for tax refunds. Co-conspirators Justin Vega and Stephen Elliott are scheduled to be sentenced before U.S. District Judge Jeffrey T. Miller on April 15, 2016, and co-conspirators Tammie Cowles is scheduled for sentencing before Judge Miller on May 6, 2016.
The public is reminded that tax-related identity theft occurs when someone uses your stolen Social Security number (or the SSN of a dependent) to file a tax return claiming a fraudulent refund. If your SSN is compromised and you know or suspect you are a victim of tax-related identity theft, the IRS recommends these additional steps:
• Respond immediately to any IRS notice; call the number provided.
• Complete IRS Form 14039, Identity Theft Affidavit, if your e-filed return is rejected because of a duplicate filing under your SSN. Attach the completed form to your return and mail according to instructions.
• Continue to pay your taxes and file your tax return, even if you must do so by paper.
• If you previously contacted the IRS and did not have a resolution, you may contact them for specialized assistance at 1-800-908-4490.
Link: The link to IRS Form 14039 = https://www.irs.gov/pub/irs-pdf/f14039.pdf
DEFENDANT Criminal Case No. 14CR3658-JM
Melissa Ann Vega Age: 44 San Diego, CA
SUMMARY OF CHARGES THAT DEFENDANT VEGA PLEADED GUILTY TO:
Count 1 – Title 18, United States Code, Section 286 B Conspiracy to File False Claims
Maximum penalties: 10 years in prison, $250,000 fine, 3 years of supervised release.
Count 2 – Title 26, United States Code, Section 7201 – Tax Evasion
Maximum penalties: 5 years in prison, $250,000 fine, 1 year of supervised release.
Count 3 – Title 18, United States Code, Section 1028A – Aggravated Identity Theft
Maximum penalties: 2 years in prison to be served consecutive to any other term of imprisonment, $250,000 fine, 3 years of supervised release.
OTHER CO-CONSPIRATORS AND CHARGES:
Tammie Cowles Age: 41 San Diego, CA Criminal Case No. 15CR1591-JM
Pleaded Guilty to: Title 18, United States Code, Section 286 – Conspiracy to File False Claims
Stephen Elliott Age: 28 San Diego, CA Criminal Case No. 15CR1003-JM
Pleaded Guilty to: Title 18, United States Code, Section 286 – Conspiracy to File False Claims
Justin Vega Age: 26 San Diego, CA Criminal Case No. 15CR2198-JM
Pleaded Guilty to: Title 18, United States Code, Section 286 – Conspiracy to File False Claims
Deanna Dave Age: 49 San Diego, CA Criminal Case No. 15CR2715-JM
Pleaded Guilty to: Title 18, United States Code, Section 1623 – False Declaration before Grand Jury
Jamie Lang Age: 27 San Diego, CA Criminal Case No. 14CR3658-JM
Pleaded Guilty to: Title 26, United States Code, Section 5861(d) – Possession of Saw-Off Shotgun
Sentenced to: 30 months in prison, 3 years of supervised release, forfeiture of firearms
INVESTIGATING AGENCIES
Internal Revenue Service-Criminal Investigation
United States Secret Service
Bureau of Alcohol, Tobacco, and Firearms
Former Executive of Defense Contractor Sentenced to 63 Months in Prison for $30 Million Fraud SchemeRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Mark W. Pletcher (619) 546-9714
NEWS RELEASE SUMMARY – March 18, 2016
SAN DIEGO – Alex Wisidagama, a former executive of a Singapore-based defense contracting firm Glenn Defense Marine Asia, was sentenced to 63 months in prison today for his participation in a fraud scheme that over-billed the U.S. Navy by more than $34 million for ship husbanding services.
Wisidagama, 42, of Singapore, the former global manager for government contracts of Glenn Defense Marine Asia (GDMA), was sentenced today by U.S. District Judge Janis L. Sammartino. In addition to imposing the prison term, Judge Sammartino ordered Wisidagama to pay $34.8 million in restitution to the Navy.
In March 2014, Wisidagama pleaded guilty to one count of conspiracy to submit false claims for payment. He is the third defendant to be sentenced in a massive fraud and corruption scheme involving GDMA, which provided port services to U.S. Navy ships in the Asia-Pacific region.
According to admissions made as part of his plea agreement, Wisidagama and his cousin, GDMA CEO Leonard Glenn Francis, 51, of Malaysia, perpetrated a scheme to defraud the U.S. Navy on ship husbanding contracts by, among other things, over-billing for the sale of goods, fuel and port tariffs. Records show that GDMA’s contracts with the U.S. Navy allowed it to sell certain categories of supplies for which GDMA was the lowest bidder. To make it appear that GDMA’s prices were competitive, Wisidagama and others created false price quotations purporting to be from third-party vendors and submitted them to the U.S. Navy, he admitted. Because the contracts forbade GDMA from making up the price of fuel that it supplied to U.S. Navy ships, Wisidagama admitted that he and his conspirators created false invoices purporting to show that GDMA paid more to purchase fuel than was actually the case, which allowed GDMA to build undisclosed markups into the prices at which it supplied fuel to the U.S. Navy. According to the plea, GDMA inflated the cost of port tariff expenses that it passed on to GDMA, despite the fact that the contracts did not allow GDMA to mark up these items.
Wisidagama admitted that in October 2011, GDMA charged the U.S. Navy $2,739,351.49 to service the USS Mustin during a port visit to Thailand, $1,593,766.75 of the charges were fraudulent. Wisidagama admitted that the scheme caused more $34 million in total losses to the U.S. Navy.
To date, 10 individuals have been charged in connection with this scheme; of those, nine have pleaded guilty, including Malaki, Commander Michael Vannak Khem Misiewicz, Captain Daniel Dusek, NCIS Special Agent John Beliveau, Commander Jose Luis Sanchez and U.S. Navy Petty Officer First Class Dan Layug. Former Department of Defense civilian employee Paul Simpkins awaits trial. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; and 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; the others await sentencing.
NCIS, DCIS and the Defense Contract Audit Agency are conducting the ongoing investigation. Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark W. Pletcher 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.
DEFENDANT Case Number: 13cr4043-JLS
Alex Wisidagama 42 Singapore
SUMMARY OF CHARGES
Conspiracy to Defraud the United States in violation of 18 USC 286
Maximum of 10 years in prison; a maximum $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater
INVESTIGATING AGENCIES
Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency
Former Executive of Defense Contractor Sentenced to 63 Months in Prison for $30 Million Fraud SchemeRead the Press Release
A former executive of a Singapore-based defense contracting firm was sentenced to 63 months in prison today for his participation in a fraud scheme that over-billed the U.S. Navy by more than $34 million for ship husbanding services.
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, Special Agent in Charge Chris D. Hendrickson of the Defense Criminal Investigative Service’s (DCIS) Western Field Office and Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) made the announcement.
Alex Wisidagama, 42, of Singapore, the former global manager for government contracts of Glenn Defense Marine Asia (GDMA), was sentenced today by U.S. District Judge Janis L. Sammartino of the Southern District of California. In addition to imposing the prison term, Judge Sammartino ordered Wisidagama to pay $34.8 million in restitution to the Navy. In March 2014, Wisidagama pleaded guilty to one count of conspiracy to submit false claims for payment. He is the third defendant to be sentenced in a massive fraud and corruption scheme involving GDMA, which provided port services to U.S. Navy ships in the Asia-Pacific region.
According to admissions made as part of his plea agreement, Wisidagama and his cousin, GDMA CEO Leonard Glenn Francis, 51, of Malaysia, perpetrated a scheme to defraud the U.S. Navy on ship husbanding contracts by, among other things, over-billing for the sale of goods, fuel and port tariffs. Records show that GDMA’s contracts with the U.S. Navy allowed it to sell certain categories of supplies for which GDMA was the lowest bidder. To make it appear that GDMA’s prices were competitive, Wisidagama and others created false price quotations purporting to be from third-party vendors and submitted them to the U.S. Navy, he admitted. Because the contracts forbade GDMA from making up the price of fuel that it supplied to U.S. Navy ships, Wisidagama admitted that he and his conspirators created false invoices purporting to show that GDMA paid more to purchase fuel than was actually the case, which allowed GDMA to build undisclosed markups into the prices at which it supplied fuel to the U.S. Navy. According to the plea, GDMA inflated the cost of port tariff expenses that it passed on to GDMA, despite the fact that the contracts did not allow GDMA to mark up these items.
Wisidagama admitted that in October 2011, GDMA charged the U.S. Navy $2,739,351.49 to service the USS Mustin during a port visit to Thailand, $1,593,766.75 of the charges were fraudulent. Wisidagama admitted that the scheme caused more $34 million in total losses to the U.S. Navy.
To date, 10 individuals have been charged in connection with this scheme; of those, nine have pleaded guilty, including Malaki, Commander Michael Vannak Khem Misiewicz, Captain Daniel Dusek, NCIS Special Agent John Beliveau, Commander Jose Luis Sanchez and U.S. Navy Petty Officer First Class Dan Layug. Former Department of Defense (DoD) civilian employee Paul Simpkins awaits trial. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; and 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; the others await sentencing.
NCIS, DCIS and the Defense Contract Audit Agency are conducting the ongoing investigation. Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark W. Pletcher 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.
Son of Former U.S. Mint Employee Returns “1974-D Aluminum Penny” to MintRead the Press Release
Assistant U. S. Attorneys Joseph Price (619) 546-7642 and Joseph Purcell (619) 546-7643
NEWS RELEASE SUMMARY – March 17, 2016
SAN DIEGO – The son of a late United States Mint official has returned a rare and valuable 1974-D aluminum one-cent piece to the United States Mint, bringing an end to a lawsuit over the ownership of the piece.
Randall Lawrence, the son of the late Mint official Harry Lawrence, and Michael McConnell, the owner of the La Jolla Coin Shop, had brought a lawsuit against the United States to establish ownership rights of the penny.
Harry Lawrence had been a Deputy Director of the United States Mint at Denver until his retirement in 1980. He died later that year. In 2014, Harry Lawrence’s son, Randall Lawrence, gave multiple news interviews during which he claimed that among the property he inherited from his father was what appeared to be a 1974 aluminum penny bearing a “D” (for Denver) mintmark. Mr. Lawrence, who had recently moved from Colorado to San Diego, had met with Michael McConnell, the owner of the La Jolla Coin Shop, and they reached an agreement to exhibit the piece at coin shows and to offer it for public sale through a well-known auction house. Mr. Lawrence and Mr. McConnell claimed that there were estimates that the piece might fetch upwards of $2 million at auction.
Upon learning that the piece existed and that Mr. Lawrence and Mr. McConnell planned to sell it, the United States Mint contacted Mr. Lawrence and Mr. McConnell to demand its return. Mr. Lawrence and Mr. McConnell responded to the United States’ demand that the piece be returned by filing a lawsuit against the United Sates in United States District Court for the Southern District of California seeking a judicial declaration that they were the owners of the piece. The United States contended in litigation that it be declared the rightful owner of the piece because there was never any authorization for an aluminum one-cent piece to be struck at the Denver Mint, that the piece was clandestinely struck and unlawfully removed from the Denver Mint, that federal employees are not permitted to remove federal property without proper authorization, and that the piece always has been and remained federal property.
Mr. Lawrence and Mr. McConnell have now returned the 1974-D aluminum one-cent piece to the United States. By the terms of an agreement to end the litigation that they brought against the United States, Mr. Lawrence and Mr. McConnell have voluntarily relinquished all claims of ownership, legal title, or dominion over the 1974-D aluminum one-cent piece to the United States. The piece was transferred to the custody and control of the United States Mint for its use and display as it may determine.
“This result ends the litigation successfully and returns the subject piece to its rightful owner, the United States Mint. It also vindicates the Government’s position that items made at United States Mint facilities but not lawfully issued, or otherwise lawfully disposed of, remain Government property and are not souvenirs that government employees can merely remove and pass down to their heirs,” said U.S. Attorney Duffy.
“The Mint is very pleased with the agreement, and we are very grateful to the U.S. Attorney’s Office in San Diego for its work and efforts in reaching this resolution. We look forward to displaying the coin appropriately as an important Mint heritage asset,” said Rhett Jeppson, United States Mint Principal Deputy Director. “This agreement is not only good for the integrity of the coin collecting hobby but for the integrity of the government property and rule of law.”
The case was handled by Assistant United States Attorneys Joseph P. Price, Jr. and Joseph J. Purcell. Randall Lawrence and Michael McConnell v. United States Department of the Treasury; United States Bureau of the Mint; and the United States of America, District Court Case No. 14-cv-00594-WQH (MDD).
San Diego Man Sentenced to 96 months in Prison for Making False Statements in an International Terrorism InvestigationRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney John Parmley (619) 546-7957 and Michael Kaplan (619) 546-7927
NEWS RELEASE SUMMARY – March 14, 2016
SAN DIEGO – Mohamad Saeed Kodaimati of San Diego was sentenced in federal court today to eight years in prison for making false statements to FBI and State Department officials during a terrorism-related interview at the U.S. Embassy in Ankara, Turkey.
Kodaimati, a naturalized U.S. citizen, pleaded guilty in October 2015 to one count of False Statements Involving International Terrorism. As part of his guilty plea, Kodaimati acknowledged that he lied in March 2015 when he said he did not know any members of Islamic State in Iraq, a designated foreign terrorist organization known as ISIL; that he falsely claimed that while in Syria he was never involved with Al Nusrah, also a foreign terrorist organization; and that he again lied when he said that while in Syria he had never engaged in combat or fired a weapon at anyone.
In his plea agreement, Kodaimati admitted that he knew a member of ISIL and that while in Syria he participated in a battle against the Syrian regime, including shooting at others, in coordination with Al Nusrah fighters.
During today’s sentencing hearing, U.S. District Judge Anthony Battaglia noted that the crime involved “very, very serious” false statements and that an eight year sentence was necessary to deter others who might be tempted to lie when national security is at stake.
“The defendant deliberately hid his connections to terrorists and the fact that he participated in combat in Syria,” said U.S. Attorney Laura Duffy. “This is an appropriately severe sentence that underscores the very serious nature of a crime that has the potential to jeopardize our national security.”
“This international terrorism investigation that started in Ankara, Turkey and ended up in San Diego, California, exemplifies the tireless efforts of the FBI's Joint Terrorism Task Force (JTTF) members to aggressively investigate and prosecute those who engage in international terrorism activity,” said FBI Special Agent in Charge, Eric S. Birnbaum. “Today's sentencing will hold Mr. Kodaimati accountable for his lies and dissuade others from lying to FBI agents regarding international terrorism matters.”
“This investigation underscores the serious threat posed by the violent propaganda being spread by international terrorist organizations both here and abroad,” said Dave Shaw, special agent in charge for U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in San Diego. “I commend the San Diego Joint Terrorism Task Force for its outstanding work to connect the dots in this complicated case, which eventually tied back to San Diego. HSI is using all of the tools and authorities at its disposal to promote national security and protect our citizens.”
Kodaimati was born in Syria and became a naturalized U.S. citizen in September 2008. In December 2012, Kodaimati travelled from San Diego to Istanbul and was in Syria and Turkey until his return to the United States.
In March 2015, he met with an FBI agent and a State Department agent at the U.S. Embassy in Ankara, Turkey, where he made the false statements.
Kodaimati eventually returned to San Diego on March 29, 2015. He was arrested by FBI agents and members of the San Diego Joint Terrorism Task Force (JTTF) in Rancho Bernardo, California, without incident on April 22, 2015.
DEFENDANT Case Number: 15cr1298-AJB
Mohamad Saeed Kodaimati Age 25 San Diego
SUMMARY OF CHARGES
False Statements Involving International Terrorism, in violation 18 U.S.C. 1001(a)(2)
Maximum penalty eight years in prison, $250,000 fine
INVESTIGATING AGENCIES
Federal Bureau of Investigation
San Diego Joint Terrorism Task Force
Homeland Security Investigations
Federal Jury Convicts Four West Coast Crips Street Gang Members of Racketeering Conspiracy Involving Murders, Sex Trafficking and RobberyRead the Press Release
For Further Information, Contact Assistant U.S. Attorneys Todd Robinson (619) 546-7994 and David Leshner (619) 546-7921
NEWS RELEASE SUMMARY – March 11, 2016
SAN DIEGO, CA – Four members of the West Coast Crips criminal street gang were convicted by a federal jury today of participating in a racketeering enterprise involving execution-style murders, a takeover robbery, witness intimidation and other acts of violence.
The jury found defendants Terry Carry Hollins, Jermaine Gerald Cook, Marcus Anthony Foreman and Wilbert Ross guilty of Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity at the conclusion of a five-week trial and about eight hours of deliberations. The jury also found Ross guilty of two counts of sex trafficking. U.S. District Judge Dana M. Sabraw set sentencing for June 24, 2016 at 1 p.m. The defendants face up to life in prison.
The four convicted defendants were arrested and charged in 2014 as part of a larger investigation involving 36 other defendants. Thirty-four have pleaded guilty. One, Cleotha Young, went to trial in June 2015, was convicted by a jury and sentenced to 20 years in prison. The lead defendant, Randy Graves, is set for trial on March 28, 2016.
“As a result of today's verdicts, and the dozens of guilty pleas that preceded them, these ruthless and ultra-violent gang members will likely serve decades in prison, unable to further terrorize San Diego neighborhoods,” said U.S. Attorney Laura Duffy. “Today, Hollins, Cook, Foreman and Ross were held accountable for executing their friends, random people, and anyone else who dared to challenge them. With this verdict, the jury has said, ‘Enough!’”
"Today's convictions are an example of the FBI's commitment to working with our law enforcement partners in identifying, disrupting and dismantling violent street gangs that prey upon the vulnerable and threaten the safety of our communities" commented FBI Special Agent in Charge, Eric S. Birnbaum. "The FBI and our partners will continue to aggressively investigate and prosecute those who victimize our communities and undermine the safety and security of our neighborhoods.”
The federal racketeering statute known as “RICO” historically has been used to prosecute mobsters and organized crime, but federal prosecutors have been using the statute on street gangs in recent years because the gangs are increasingly acting as organized criminal enterprises.
During this trial, prosecutors set out to show the jury how the defendants worked together as a criminal enterprise to commit six murders, to use a 15-year-old girl and another female as prostitutes, and to commit robbery on behalf of the West Coast Crips.
The government called about 100 witnesses, including several street gang members, a shooting victim, friends and associates of the defendants, representatives from the Medical Examiner’s Office and dozens of San Diego Police Department homicide and gang detectives, police officers and criminalists.
The evidence presented by the government included court-authorized wiretap interceptions and recordings of telephone, cell phone and jailhouse conversations between the defendants and others, as well as cell phone videos of the defendants celebrating their West Coast Crips membership and discussing the crimes they were committing.
The jury found that the defendants acted as a criminal enterprise to commit the following murders and other violent acts:
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Defendant Cook fatally shot Joseph Hutchins, a 19-year-old who was fatally shot while riding his bicycle down Orange Avenue for wearing a red shirt, the color of a rival gang.
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Defendant Foreman approached the victim, Andres Caldera, asked for a cigarette then issued a gang challenge to him: “Where are you from?” When Caldera answered by asking where Foreman was from, Foreman yelled, “I am from West Coast 30s!” and pulled out a .40-caliber handgun, firing a single shot at Caldera’s face.
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Foreman, Ross and Hollins robbed a Logan Heights business in takeover style, forcing employees onto the floor and holding guns to their heads. During a police chase, the trio ditched their getaway car and the gun, but officers arrested all three and recovered the gun - which was the same gun used in the murder of Caldera.
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West Coast Crip member Meashal Fairley was murdered in front of a San Diego nightclub because of Fairley’s suspected cooperation with law enforcement. Hollins and Cook were connected to the scene of the crime through DNA evidence.
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Another killing occurred in the parking lot of a fast food restaurant. Defendant Ross had a dispute with a man over a rental car. They set up a meeting at the restaurant, supposedly to resolve the dispute. But upon arrival, the man was attacked by a group of West Coast Crips led by Ross. In self-defense, the man fatally stabbed one of his attackers, Jeffrey “JJ” Rees.
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West Coast Crips member Paris Hill was murdered by fellow Crips for giving a statement to police about the Rees murder. In one recording, Hollins told his cellmates: “That's how we did the boy…When it was time . . . I seen it all in his face . . . but cuz blue, he was a gangster though. And he
knew that . . . it was his doing.” Prosecutors argued before the jury that this was an admission that he participated in Hill’s murder.
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Chyrene Borgen, a West Coast Crip associate, was gunned down at a Halloween party after she had criticized the defendants for murdering Meashal Fairley. Following this murder, several defendants posted photos of themselves on Facebook from the murder scene. Defendant Hollins is wearing a T-shirt that said: “3 BABIEZ, YELLOW TAPE GANG, ANYBODY KILLA.” The defendants appeared on cell phone videos boasting about their crimes.
This case was prosecuted by Assistant U.S. Attorneys Todd Robinson, David Leshner, Jose Castillo and Stephen Wong.
These guilty verdicts are the fruit of the collaborative work of the FBI’s East County Regional Gang Task Force and the Violent Crimes Gang Task Force, the San Diego Police Department’s gang and homicide units; the ATF; the El Cajon Police Department; the La Mesa Police Department; San Diego County Probation; the IRS; U.S. Postal Inspectors; the San Diego County Sheriff’s Department; and the California Highway Patrol.
This investigation was coordinated by an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was created to consolidate and coordinate all law enforcement resources in this country's
battle against major drug trafficking rings, drug kingpins, and money launderers.
DEFENDANTS
Case Number: 14mj1494
Terry Carry Hollins Age: 33 San Diego
Jermaine Gerald Cook Age: 31 San Diego
Marcus Anthony Foreman Age: 28 San Diego
Wilbert Ross Age: 32 Chula Vista
SUMMARY OF CHARGES
All Defendants:
Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, in violation of Title 18, U.S.C. Section 1962 (d)
Maximum Penalty, based on the underlying racketeering crimes: Up to life in prison.
Defendant Ross:
Sex Trafficking of a Minor, in violation of 18 USC 1591
Maximum Penalty: Life in prison
Sex Trafficking by Force, Fraud or Coercion, in violation of 18 USC 1591
Maximum Penalty: Life in prison
INVESTIGATING AGENCIES
San Diego Police Department Gang and Homicide Units
East County Regional Gang Task Force
Violent Crimes Task Force - Gang Group
Task Force agencies include:
FBI
San Diego Police Department
ATF
El Cajon Police Department
La Mesa Police Department
San Diego County Probation
IRS
U.S. Postal Inspectors
San Diego County Sheriff’s Department
California Highway Patrol.
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Puretane Executives Admit Laundering Profits from Illegal Butane BusinessRead the Press Release
Assistant U.S. Attorney Andrew J. Galvin (619) 546-9721
NEWS RELEASE SUMMARY – March 10, 2016
SAN DIEGO – Former Chief Executive Officer Michael Tandberg and Chief Financial Officer Adam Hopkins of Lahar Manufacturing, Inc., pleaded guilty in federal court today, admitting that they conspired to launder proceeds from their illegal business. Their Newport Beach-based business—operating under the name Puretane—was the first and largest domestic manufacturer and distributor of butane specifically designed for use in making butane hash oil.
Butane hash oil (“BHO”) is a marijuana concentrate similar in appearance to honey or butter. BHO 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.”
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. In 2015 alone, there were 33 reported fires and explosions that occurred during the manufacture of BHO in California.
According to the DEA, Butane Hash Oil Extraction Laboratories have caused 10 fires and explosions in San Diego County since January of 2015. In the Southern District of California there have been a number of Butane Hash Oil Extraction cases. In a recent case, defendant Steve Mora was sentenced last month to 40 months in custody after pleading guilty to creating substantial risk to human life while manufacturing Butane Hash Oil. Mora operated a marijuana dispensary where BHO was manufactured and resulted in an explosion in 2014.
News reports indicate that butane-related blasts are happening all over the country. For example, a 2014 article reported that Butane-fueled blasts sent 17 people to a Portland burn unit with serious injuries in the past 16 months, including one Northeast Portland man who later died from his injuries and a 12-year-old girl who suffered multiple broken bones after leaping from a second floor apartment building rocked by a butane explosion. During just the first nine months of 2014, Colorado reported that there were 31 butane hash oil explosions in homes across the State. A 2015 news article reported that at two Northern California burn treatment centers, injuries from BHO explosions accounted for eight to ten percent of severe burn cases, which represents a larger percentage than from car wrecks and house fires combined.
The manufacture of BHO is met by an unregulated and largely underground industry that plays out in garages, basements and kitchens. In this type of setting a spark from something as ordinary as a refrigerator compressor can set off a fiery explosion. Puretane’s butane was marketed specifically for use in the unregulated manufacture of BHO. For example, in October 2014, High Times, a drug culture magazine, featured an article describing Puretane’s butane as “designed specifically for the needs of BHO makers.” Puretane posted a link to the High Times article on its website and social media accounts. Similarly, in January 2015, Puretane hosted a contest, in which it offered a case of Puretane butane to the contestant who could manufacture the highest quality BHO.
Puretane sold its butane in 300 ml canisters for approximately $4-5 per canister to retailers throughout the United States, including to at least 25 retailers in San Diego County such as Raw Smokeshop, Dr. Green’s Ink, and Holy Smoke. From just the period of February to August 2015, Puretane sold more than 400,000 canisters of their butane to retailers.
As part of their pleas, Tandberg and Hopkins agreed to forfeit the money remaining in their corporate bank account and over 66,000 canisters of Puretane butane. Tandberg and Hopkins will appear for sentencing on May 27, 2016, at 8:30 a.m. before U.S. District Judge Gonzalo P. Curiel.
DEFENDANTS: Case Number 16-CR-460-GPC
Michael Tandberg Age: 54 Newport Beach, CA
Case Number 16-CR-461-GPC
Adam Hopkins Age: 45 Santa Monica, CA
SUMMARY OF CHARGES
Money Laundering Conspiracy – Title 18, U.S.C., Section 1956(h)
Maximum penalty: 20 years’ imprisonment and $500,000 fine
AGENCY
Homeland Security Investigations
Founders of Film School for Wounded Veterans Sentenced to PrisonRead the Press Release
Assistant U.S. Attorneys Eric J. Beste (619-546-6695) and Rebecca S. Kanter (619-546-7304)
NEWS RELEASE SUMMARY – March 10, 2016
SAN DIEGO – Judith Paixao and Kevin Lombard, a husband and wife who embezzled federal funds from the Wounded Marine Careers Foundation that were intended to provide job training, benefits and equipment for injured Marines returning from Iraq and Afghanistan were sentenced today, following a July 2015 jury trial.
Paixao was sentenced to six months’ custody and six months’ home confinement; her husband, Lombard, was sentenced to three months’ custody followed by three months’ home confinement. In addition to these custodial sentences, the Court ordered the defendants to pay $150,000 in financial penalties and restitution.
At the hearing, Judge Jeffrey T. Miller, the district court judge who presided over the trial and imposed the sentences, denied the defendants motion for a new trial or judgment of acquittal. In doing so, Judge Miller observed that “whatever commendable vision served to launch the Foundation, that idealism spawned theft, embezzlement and worse.” He noted that there were several “tells,” i.e. facts which created the “lens through which the jury viewed the evidence in this case.” These “tells” included their continuous misrepresentations of donating hundreds of thousands of dollars to the Foundation from the sale of their home, which they actually had lost to foreclosure. Another “tell” related to the defendants’ misrepresentations regarding high-end video cameras acquired by the Foundation and billed to the Department of Veterans Affairs (“VA”) at “bogus” inflated costs.
From 2007-2009, Paixao and Lombard were directors of the Wounded Marine Careers Foundation (“the Foundation”), a tax-exempt entity that trained injured veterans for careers in the film industry. They used the Foundation to defraud the VA and submit false claims to the VA in order to get funds for training and equipment they never provided. Adding insult to injury, the defendants also embezzled funds from the Foundation for their own use.
As detailed in their trial, the defendants made numerous false and misleading statements to the VA in order to obtain funds for training and equipment, and then did not provide all the training or equipment to the veterans. Although the defendants claimed to have donated over $200,000 to start the Foundation, they ended up taking over $400,000 from the Foundation’s accounts over the course of two years.
Rather than paying the Foundation’s creditors (some of whom were members of the Foundation’s Board of Directors), the defendants transferred funds to their own personal credit cards and bank accounts. Although some of this money went to repay expenses they had fronted to the Foundation, evidence presented at trial showed that the defendants ended up taking over $100,000 for themselves. The defendants then used these funds to pay for a variety of personal expenses, including a family vacation in Bermuda; cell phone bills, car insurance and gifts for their family members; prescription medications and counseling costs; wine and dinners for two; and the costs of a New Year’s Day sailing trip around San Diego Bay.
U.S. Attorney Laura Duffy emphasized that “the fraud committed by these defendants - who used money set aside to help wounded veterans and spent it on themselves - was particularly offensive. These defendants capitalized on the misfortune of wounded marines in their time of vulnerability and took advantage of the VA’s commitment to serving wounded veterans to defraud the VA and enrich themselves. War profiteering which takes advantage of our veterans is not in any way, shape or form acceptable.”
The defendants routinely commingled the finances of the Foundation with their personal finances, thereby obstructing the ability of the Internal Revenue Service to monitor the Foundation’s tax-exempt status and determine the defendants’ personal income tax liability.
Among the witnesses who testified at trial were three of the injured veterans who used their vocational rehabilitation benefits to participate in the first training class: Gunnery Sergeant Nick Popaditch and Lance Corporal Joshua Frey. Lance Corporal Frey, who had previously been quoted in a favorable New York Times article, testified at trial that after the article was published the defendants did not give him all the equipment he was promised, and failed to provide him with certain training and job placement.
The trial evidence also showed that Defendant Paixao defrauded the Bob Woodruff Foundation in connection with a restricted grant of almost $100,000 by concealing the fact that one of the intended recipients – a Marine who had been injured in Fallujah – had left the program. Instead of notifying the Bob Woodruff Foundation and asking for a reallocation of the funds, Ms. Paixao took the grant money and used it for other purposes.
In explaining the reason for imposing custodial sentences well below the advisory sentencing guideline range, Judge Miller identified the unique characteristics of each defendant, including their extraordinary community support (including from many members of the military), the low risk of recidivism, and the court’s assessment that the defendants “began with a vision or goal that was worthy” when they first reached out to wounded Marines. Despite these mitigating factors, the Court observed that the defendants “deserved to be prosecuted,” and this case served as important deterrent against those who would be tempted to victimize charitable institutions, their donors or their beneficiaries.
Douglas J. Carver, Special Agent in Charge, VA OIG Western Region stated, “Fraud schemes capitalizing on the misfortune of wounded veterans are particularly egregious. The VA Office of Inspector General will continue to vigorously pursue those who defraud veterans and the Government for personal gain. It is our hope that the successful investigative and prosecutive efforts in this case will serve as a deterrent to others from engaging in criminal activity that cheats veterans and the VA programs designed to assist our nation’s heroes.”
“Today’s sentencing of Kevin Lombard and Judith Paixao sends a clear message that fraud against our veterans will not be tolerated. These veterans endured many sacrifices to protect our country from harm,” stated IRS Criminal Investigation Acting Special Agent in Charge Anthony J. Orlando. He further added, “IRS Criminal Investigation, in conjunction with our law enforcement partners, is committed to identifying, investigating, and prosecuting individuals who engage in fraud and deceit, and exploit programs designed to benefit others to satisfy their greed.”
DEFENDANTS
Case Number: 13cr3788-JM
Judith Ann Paixao
Age: 61
Afton, Virginia
Kevin Lombard
Age: 64
Afton, Virginia
CHARGES
Count 1: Conspiracy to defraud the United States and commit the offenses (18 U.S.C. § 371).
Guilty as to both defendantsCounts 2-9: Theft from an organization receiving federal funds (18 U.S.C. § 666(a)(1)).
Defendant Paixao: Guilty as to all counts
Defendant Lombard: Guilty on counts 2-4, 6-10Counts 10-12: False claims (18 U.S.C. § 287)
Guilty as to all counts for both defendantsCount 13: Mail fraud (18 U.S.C. § 1341)
Defendant Paixao: GuiltySENTENCES
PAIXAO – 6 months’ custody on all counts, 2 years’ supervised release with a condition of 6 months’ home confinement on all counts, concurrent; $1,300 special assessment; $75,956 restitution ($54,688 to VA and $21,268 to Bob Woodruff Foundation); $76,873 forfeiture
LOMBARD – 3 months’ custody on all counts, 2 years’ supervised release with a condition of 3 months’ home confinement on all counts, concurrent; $1,100 special assessment; $54,688 restitution to VA; $70,873 forfeiture
INVESTIGATING AGENCIES
Department of Veterans Affairs, Office of Inspector General
Internal Revenue Service, Criminal InvestigationFederal Jury Finds Man Guilty of Conspiracy and Theft of Brass Shell Casings from Marine Corps Base Camp PendletonRead the Press Release
Assistant U.S. Attorney Janet Cabral (619) 546-8715 and Michelle Pettit (619) 546-7972
NEWS RELEASE SUMMARY – March 9, 2016
SAN DIEGO - A federal jury has found John Vescuso guilty of theft of government property and conspiracy to sell and dispose of more than $500,000 of brass shell casings from Marine Corps Base Camp Pendleton from April 2010 to June 2012.
According to testimony and evidence presented at trial, Vescuso conspired with a former civilian employee on board Camp Pendleton, Cecil Garr, to remove the brass shell casings and other types of scrap metal from the School of Infantry’s hazardous materials lot, and to sell those materials for $555,640 over the two-year time period. The jury returned its verdict on Monday.
Vescuso, who was engaged in the business of recycling scrap metal, paid Garr cash to remove expended brass shell casings from the hazardous materials lot using his personal vehicles. Subsequently, he made arrangements directly with an Orange County, California, scrap metal company to place roll-off containers in the lot to collect the brass shell casings and other scrap metal. Once those containers were full, Vescuso contacted the scrap metal company to retrieve the containers from Camp Pendleton. Vescuso then collected payment directly from the scrap metal company and shared those proceeds with Garr, resulting in a substantial loss to the United States Marine Corps.
Prior to the trial against Vescuso, Garr pleaded guilty to conspiring with Vescuso to steal the more than $500,000 in brass shell casings from Camp Pendleton.
The investigation of the theft was a joint effort between the Naval Criminal Investigative Service (NCIS) and Defense Criminal Investigative Service (DCIS).
“It is unfortunate that anyone would try to take advantage of the military resources that are so important to our community and to our national security,” said U.S. Attorney Laura Duffy. “We will continue to do our part to ensure the military bases in our community are safe and secure from those who want to cause harm to the mission of the Armed Forces.”
Chris Hendrickson, DCIS Special Agent in Charge for the Western Field Office, said, “America's warfighters deserve the very best to perform their jobs and the taxpayers expect nothing less. Theft of USMC resources takes away precious dollars necessary for the dedicated American warfighter. This guilty verdict should serve as a warning for those intent on defrauding the U.S. military and American public that the Defense Criminal Investigative Service (DCIS) and our law enforcement partners will pursue these crimes relentlessly.”
“The Department of Defense has strict policies and procedures in place to ensure that all property and scrap materials generated during military training are recycled or reused for the benefit of our Armed Forces,” said Charles Warmuth, NCIS Special Agent in Charge for the Marine Corps West Field office. “In this case, the Marine Corps at Camp Pendleton and the taxpayers saw a loss of over a half a million dollars on board Marine Corps Base Camp Pendleton due to the greed of two individuals. NCIS, in partnership with DCIS, worked tirelessly to ensure these individuals were brought to justice. Theft of government property will not be tolerated, and NCIS will continue to investigate and aggressively prosecute all individuals who attempt to engage in this type of criminal activity.”
The defendant is scheduled to appear for sentencing before U.S. District Judge Thomas J. Whelan on June 13, 2016.
DEFENDANT Criminal Case No. 14CR2863-W
John Vescuso Age: 40 Wildomar, California
SUMMARY OF CHARGE
Count 1: Title 18, United States Code, Section 371: Conspiracy to Commit the Offense of Theft of Government Property.
Counts 2-4: Title 18, United States Code, Section 641: Theft of Government Property.
Maximum penalties: 10 years’ prison and a $250,000 fine.
INVESTIGATING AGENCIES
Naval Criminal Investigative Service
Defense Criminal Investigative Service
Chula Vista Woman Admits Stealing More Than $164,000 from IRSRead the Press Release
Assistant U.S. Attorney Michelle L. Wasserman (619) 546-8431
NEWS RELEASE SUMMARY – March 9, 2016
SAN DIEGO – Cecilia Hernandez pleaded guilty Tuesday to stealing more than $164,000 from the Internal Revenue Service – despite owing the agency for back taxes that she had failed to pay.
Hernandez admitted that she sent the IRS more than a half million dollars in worthless checks written on closed accounts. The checks were ostensibly intended to pay off a tax debt which Hernandez owed from previous years. The checks (written in 2011 and 2013) were for amounts far greater than the tax debt and triggered a series of fraudulent refunds. In all, Hernandez wrote more than $525,000 in bad checks to the IRS, which resulted in her obtaining over $164,000 in the form of fraudulent refunds. Among other things, Hernandez spent her illicit proceeds on a $33,000 Chrysler 300 and an extravagant Quinceañera for her daughter costing more than $40,000.
As part of her plea, Hernandez agreed to restitution of the funds stolen from the IRS. Hernandez will appear for sentencing on June 14, 2016 at 9:00 a.m. before U.S. District Judge Anthony J. Battaglia.
DEFENDANT: Case Number 16CR247-AJB
Cecilia Hernandez Age: 46 Chula Vista, CA
SUMMARY OF CHARGES
Title 18, United States Code, Section 641-Theft of United States’ Money
AGENCIES
Internal Revenue Service
Alleged Sinaloa Cartel Trafficker Victor Emilio Cazares Gastellum Extradited to the U.S.Read the Press Release
Assistant U. S. Attorney Michael Kaplan (619) 546-7927
NEWS RELEASE SUMMARY – March 7, 2016
SAN DIEGO – Alleged drug kingpin Victor Emilio Cazares Gastellum, who for years was one of the United States’ most-wanted Mexican drug trafficking suspects, was extradited on Friday and arraigned in federal court in San Diego this morning on drug conspiracy and money laundering charges.
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. According to the indictment, 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 and he and others distributed the drug throughout 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.
Until his arrest, 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 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.
During today’s hearing before U.S. Magistrate Judge David Bartick, the defendant was ordered detained without bail. His next court hearing is scheduled for April 4, 2016 at 9 a.m. before U.S. District Court Judge William Q. Hayes.
DEFENDANT Case Number: 07CR0449
Victor Emilio Cazares Gastellum Age: 52
SUMMARY OF CHARGES
Conspiracy to Import Controlled Substance, in violation of Title 21, U.S.C., Secs. 952, 960, and 963; Maximum penalty- Life
Conspiracy to Distribute Controlled Substance, in violation of Title 21, U.S.C., Secs. 846 and 841(a)(1); Maximum penalty- life
Engaging in a Continuing Criminal Enterprise, in violation of Title 21, U.S.C. Sec. 848(b); Maximum penalty- Life
Conspiracy to Launder Money, in violation of Title 18, U.S.C., Secs. 1956(a)(2)(A) and 1956(h); Maximum penalty 20 years
AGENCY
Drug Enforcement Administration
El Centro 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.
Retired Marine Pleads Guilty to Fatally Stabbing his Girlfriend, Dismembering her Body with a Machete and Dumping her Remains in the Panamanian JungleRead the Press Release
Assistant U.S. Attorneys W. Mark Conover (619) 546-6763 or Shane P. Harrigan (619) 546-6981
NEWS RELEASE SUMMARY – February 24, 2016
SAN DIEGO – Over four years after the disappearance and death of Yvonne Baldelli, Brian Karl Brimager pleaded guilty in federal court today to her murder, admitting that he fatally stabbed Baldelli in the back with a knife, dismembered her body with a machete and disposed of her remains in a remote jungle on the Panamanian island where they lived as a couple for two months. Baldelli’s skeletal remains were discovered by a Panamanian citizen approximately 21 months after her murder.
Brimager pleaded guilty before U.S. District Judge Jeffrey T. Miller to an information charging him with Foreign Murder of a United States National. In his guilty plea, Brimager also admitted that after he murdered Baldelli, he obstructed the investigation into her murder by destroying, concealing and disposing of evidence, including a blood-stained mattress and Baldelli’s dog, clothes and jewelry; accessing Baldelli’s email account after her murder and impersonating Baldelli in emails sent from her account to friends and family; withdrawing money from Baldelli’s bank account in Costa Rica after her death; and providing false statements to a federal agent – all in an attempt to make it seem as though Baldelli were alive and well and traveling with another man in Costa Rica.
As a result of his guilty plea, Brimager faces up to life in prison. Brimager has been in federal custody since June 2013. A sentencing hearing before Judge Miller is scheduled for May 25, 2016 at 10 a.m.
“Brian Brimager took a young woman’s life in a heinous way and then further victimized her family by creating a cruel lie that she was happily traveling the world with another man,” said U.S. Attorney Laura Duffy. “Now that Brimager has finally admitted his crime, we hope that the truth, and knowing that their daughter’s murderer will serve decades in prison, will give this grieving family a sense of justice and peace.”
Duffy added: “This prosecution was made possible by the hard work and dedication of the FBI Offices in San Diego and Panama, our colleagues in the Department of Justice, the U.S. Mission in Panama City, and most notably, the cooperation and assistance of the Panamanian Government, whose police and prosecutors enabled our office to bring this prosecution by providing access to witnesses and evidence.”
“Mr. Brimager's guilty plea is another step in obtaining justice for the victim in this case, Yvonne Baldelli,” said FBI Special Agent in Charge, Eric S. Birnbaum. “The FBI will continue to work with the U.S. Attorney's Office and our international law enforcement partners to obtain justice for Ms. Baldelli and hold Mr. Brimager accountable for her brutal murder.”
DEFENDANT Case Number: 13CR2381-JM
Brian Karl Brimager Age: 39
SUMMARY OF CHARGE
Foreign Murder of a United States National – Second Degree, Title 18, United States Code, Sections 1119 and 1111; Maximum Penalties: Life imprisonment, $250,000 fine, restitution
AGENCIES
Federal Bureau of Investigation, San Diego Division and Panama City Legal Attaché Office
U.S. Embassy, Panama City
Office of International Affairs, U.S. Department of Justice
Human Rights and Special Prosecution Section, U.S. Department of Justice
San Diego Man Who Stole Thousands of Pounds of Copper Wire from Midway Post Office SentencedRead the Press Release
Assistant U. S. Attorney Meghan E. Heesch (619) 546-9442
NEWS RELEASE SUMMARY – February 23, 2016
SAN DIEGO – James Stephen Dudley, who caused over $100,000 in damage to the Midway Post Office by breaking in and stealing copper wire, has been sentenced to 30 months in custody. U.S. District Court Judge Janis L. Sammartino also ordered Dudley to pay back the U.S. Postal Service for the cost to repair the building damages as restitution.
Dudley was charged in October 2015 with theft of government property, theft of postal service property, and forcibly breaking into a post office with intent to commit larceny after U.S. Postal Inspectors saw him break into the Midway Post Office located at 2535 Midway Drive on September 16, 2015. According to court records, Dudley had cut the lock on the fence of the Post Office to get inside.
After spending several hours in the Post Office stripping copper wire in the middle of the night, Postal Inspectors saw Dudley drive his vehicle onto Postal property and load approximately 673 pounds of copper wire inside it. Dudley was arrested but had planned to scrap the copper wire from the Post Office for cash as he had done on at least five prior occasions during 2015. Dudley pleaded guilty to theft of government property in December 2015.
Judge Sammartino, in sentencing Dudley on February 19, 2016, ordered him to pay restitution to the U.S. Postal Service for the full amount of the damage to the Midway Post Office, $123,984.08.
U.S. Attorney Laura Duffy said, “This office is committed to protecting the integrity of government buildings which ensures the employees who serve the public have a safe place to do their important work.”
“Today's sentence should send a clear message,” said Los Angeles Postal Inspector in Charge Robert Wemyss. “The Postal Inspection Service will not tolerate attacks on our facilities. Postal Inspectors will aggressively investigate these cases and bring the thieves to justice.”
DEFENDANT Case Number 15cr2685-JLS
James Stephen Dudley Age 40
SUMMARY OF CHARGES
Title 18, United States Code, Section 641 (theft of government property) - Maximum penalty: 10 years in prison; $250,000 fine
Title 18, United States Code, Section 1707 (theft of postal service property) - Maximum penalty: 3 years in prison; $250,000 fine
Title 18, United States Code, Section 2115 (forcibly breaking into a post office with intent to commit larceny) - Maximum penalty: 5 years in prison; $250,000 fine
AGENCIES
U.S. Postal Inspection Service
San Diego Police Department
Pharmaceutical Executive Defrauds Investors Out of Millions by Selling Fake Stock in Medical Research CompanyRead the Press Release
Assistant U.S. Attorneys Emily W. Allen (619) 546-9738 and Aaron Arnzen (619) 546-8384
NEWS RELEASE SUMMARY – February 11, 2016
SAN DIEGO – Oceanside businessman Greg Ruehle today admitted swindling more than 160 people out of investments totaling nearly $2 million.
As part of his plea to securities fraud charges, Ruehle admitted being hired by local medical research firm ICB International, Inc., to identify investors who could fund their research. Instead, Ruehle collected millions of dollars from investors and used the money for his own gambling and other personal expenses. Ruehle disguised and concealed his fraud by issuing the investors fake stock certificates and failing to report the purported “investment” to the company.
In a parallel action, the Securities and Exchange Commission today announced civil charges against Ruehle. For further information, please see http://www.sec.gov/news/pressrelease/2016-28.html.
Ruehle, who lives in Oceanside, targeted investors both locally and from his hometown in Minnesota. In 2015, some of the investors asked for proof that their money was being used at ICBI. In response, Ruehle sent them a letter on what appeared to be company letterhead, and purportedly signed by the company’s CEO. In fact, the letter was a forgery, which was borne out by the fact that Ruehle misspelled the CEO’s name. ICBI remained unaware of these “investors,” and never received a penny of their $1.9 million investments.
San Diego-based ICBI’s mission is to develop technologies to transport therapeutic treatments through the blood-brain barrier to treat neuro-degenerative diseases like Parkinson’s and Alzheimer’s disease. According to ICBI’s website, the company develops techniques for early diagnosis, monitoring of disease progression, and increased therapeutic efficacy of drugs for neuro-degenerative diseases and various cancers that currently cannot be reached by drugs.
Ruehle’s plea agreement requires that he forfeit the $1.9 million in proceeds and pay restitution to the victim investors.
In addition to the securities fraud charges, Ruehle pleaded guilty to possession of a stolen firearm. In his plea, Ruehle admitted that he owned three stolen firearms, including two semi-automatic pistols and a revolver. He has agreed to forfeit these weapons and another revolver to federal law enforcement.
“Business professionals who use their knowledge of industries and securities to prey on unsuspecting lay investors undermine the public’s confidence and ability to participate in the markets,” said U.S. Attorney Laura E. Duffy. “As this case demonstrates, they also jeopardize innovation and the success of small businesses. This type of egregious securities fraud is simply unacceptable.”
“Mr. Ruehle engaged in a pattern of lies and deceitful acts while violating the trust of family, friends, and associates,” said FBI Special Agent in Charge, Eric S. Birnbaum. “The FBI is committed to investigating and seeking the prosecution of those who steal money through fraudulent investment schemes.”
“Firearms must be obtained through proper procedures by eligible recipients.” said ATF Special Agent in Charge Eric D. Harden. “This investigation is a reminder that the illegal use of firearms permeates all spectrums of crime.”
Ruehle’s sentencing is set for May 2, 2016 at 9:30 before U.S. District Judge Michael M. Anello.
This investigation was started with a call to the FBI. The FBI encourages the public to report fraudulent investment schemes to the FBI at telephone number 1-800-CALL FBI (1-800-225-5324).
DEFENDANT Case Number 16cr0231-MMA
Greg Ruehle Age: 64 Oceanside, CA
CHARGES
Securities Fraud, in violation of 15 U.S.C. §§ 78j, 78ff
Maximum Penalties: 20 years’ imprisonment, $5,000,000 fine, $100 special assessment, restitution.
Possession of stolen firearms, in violation of 18 U.S.C. § 922(j)
Maximum Penalties: 10 years’ imprisonment, $250,000 fine, $100 special assessment.
AGENCIES
Federal Bureau of Investigation
Bureau of Alcohol, Tobacco, Firearms, and Explosives
Manager of Predatory Loan Modification “Law Firm” Sentenced to PrisonRead the Press Release
Assistant U.S. Attorneys Emily W. Allen (619) 546-9738 and Valerie Chu (619) 546-6750
NEWS RELEASE SUMMARY – February 8, 2016
SAN DIEGO – San Diego businessman Michael Nazarinia was sentenced today to 9 months in custody for his role in a fraudulent mortgage loan modification business that duped hundreds of struggling homeowners.
The business, known as “Haffar & Associates,” owned by figurehead attorney Mohamed Haffar, recruited new customers using telemarketers who lied to clients in order to induce more than 1,000 people to sign up to pay more than $3.5 million in total.
Haffar & Associates Scheme
Nazarinia’s co-conspirator Charles Rose managed a call center staffed with as many as 30 telemarketers, whose job was to recruit new clients. Rose trained the telemarketers, wrote telemarketing scripts for use on calls with potential clients, wrote form letters for the salespeople to send to potential clients, and recorded his own sales calls for telemarketers to emulate. Rose pleaded guilty in July, admitting that he and his business partners, including Nazarinia, trained telemarketers to make statements to potential clients that were false, such as the following:
- “Haffar & Associates has a 98% success rate.”
- “Haffar & Associates has never lost a home to foreclosure.”
- “We have had no complaints with the California state bar.”
- “When you sign up with Haffar & Associates you will be represented by a law firm, and an attorney will negotiate on your behalf.”
- “Once you sign up, you will be protected by the power of the law firm and the bank cannot foreclose on your home.”
- “You definitely qualify for a loan modification.”
- “Our team has settled countless loans with just about every lender, and we have built up connections with the banks and deal directly with many bank’s legal departments.”
- “We have direct phone numbers at banks to help you get your loan modification. We can go through the ‘back door’ at the bank to get your loan modified.”
- “We have had great success with your mortgage lender.”
- “Your lender will not deal with you because you don’t know how to deal with them.”
- “We conduct a forensic audit of the original loan documents in order to discover whether the lender . . . violated one of many predatory lending laws . . . . [Then] our lawyers can use these violations to either sue or threaten to sue the banks, therefore leveraging the lender into providing our client with a work out solution.”
- “We have a 100% money back guarantee.”
- “You will be paid a refund of your fee if Haffar & Associates is unsuccessful at obtaining a loan modification on your behalf, but no one has ever asked for a refund.”
In reality, Haffar & Associates did not have anything close to a 98% success rate in obtaining loan modifications for their clients. Similarly, Haffar & Associates did not have any special connections with banks or the legal departments of banks. The business also did not have sufficient numbers of staff or staff experienced enough to successfully complete loan modifications. And many dissatisfied customers never received refunds they requested. Although existing clients were not getting loan modifications, the telemarketers were encouraged to keep selling.
For his part, Nazarinia generated a fraudulent lease agreement, which was used to fraudulently delay eviction after Haffar & Associates failed to negotiate a modification for a client. Nazarinia also admitted to filing a false 2010 income tax return, omitting almost $100,000 in illegal income from Haffar & Associates. Among other things, Nazarinia supervised Haffar & Associates “case managers,” who submitted loan modification applications and negotiated with the banks on behalf of clients. Despite the representations made to clients, attorney Haffar did not directly supervise Nazarinia’s case managers, and instead, Nazarinia and the case managers provided legal services to clients without Haffar’s input or direction. Haffar rarely reviewed the clients’ files and almost never provided direction to the case managers. According to Rose’s plea agreement, Haffar, Nazarinia, and Rose all understood that Haffar’s fees were his compensation for the risk he took in allowing Nazarinia and Rose to use his name, bar license, and law firm, and not for any actual work Haffar did on loan modification cases.
After Haffar & Associates stopped doing new business, Rose and Nazarinia started a new company, called “REST Report Matters,” selling a product they claimed would facilitate mortgage lenders’ review of homeowners applications for loan modifications. Rose admitted as part of his guilty plea that he made false representations to potential clients in order to induce them to sign up and pay their fees. They told homeowners that the product was the only available tool that could definitely tell homeowners the modification terms their lenders would provide.
Federal Law Enforcement Condemns Loan Modification Schemers
United States Attorney Laura E. Duffy reiterated her belief that, “The real tragedy of this case is that the defendants chose to profit from the suffering of others. In difficult economic times, they exploited a particularly vulnerable segment of our population, homeowners who were desperately trying to make ends meet and stay in their homes.”
“Fraudulent mortgage fraud schemes affect consumers at the most basic level, jeopardizing their ability to retain ownership of their homes,” said Robert Wemyss, Inspector in Charge of the U.S. Postal Inspection Service – Los Angeles Division. "The U.S. Postal Inspection Service will continue to investigate these crimes to protect consumers and our nation's mail system from being used for illegal or dangerous purposes.”
“Using the guise of a law office and a legal team, the defendants preyed upon financially desperate homeowners struggling to keep a roof over their head,” stated Erick Martinez, Special Agent in Charge of IRS Criminal. “As today’s sentencing shows, those who find ways to profit by taking advantage of distressed homeowners and fail to report the income will be brought to justice.”
“Michael Nazarinia preyed on others’ misfortune to line his own pockets,” said Federal Housing Finance Agency – Office of Inspector General Special Agent in Charge Leslie DeMarco. “The sentence he received today provides justice and will hopefully act as a deterrent to anyone else who might be tempted to engage in similar conduct.”
Rose is scheduled to be sentenced on April 11, 2016, also by Judge Houston. Attorney Haffar has also pleaded guilty to tax charges relating to the venture, and admitted that he had no existing knowledge or experience in loan modifications when he started the business in 2008. Haffar stipulated to his disbarment in November 2011 for his conduct. He was formally disbarred in June 2012, and obligated to pay over $192,000 to reimburse former Haffar & Associates clients. Haffar pleaded guilty to the federal criminal charge in August 2014, and was sentenced to three months in prison in January 2015.
Another participant who worked for Rose’s telemarketing company, Stacy Tuers, pled guilty on tax charges in May 2015. As part of Tuers’s guilty plea, he admitted that he knew the telemarketers were making false statements to potential clients, but continued to sell Haffar & Associates loan modification services. Tuers is scheduled to be sentenced on the tax offense on March 10, 2016.
DEFENDANT
Michael Nazarinia, 15CR2718-JAH Age: 41 San Diego, CA
CHARGES
Mail fraud, in violation of 18 U.S.C. § 1341
Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary loss or gain, $100 special assessment, restitution.
Subscribing to a false tax return, in violation of 26 U.S.C. § 7206(1)
Maximum Penalties: 3 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.
DEFENDANTS PREVIOUSLY CHARGED:
Charles Rose, 15CR1786-JAH Age: 32 San Diego, CA
Mohamed Haffar, 14CR2251-JAH Age: 36 San Diego, CA
Stacy Tuers, 15CR1342-JAH Age: 54 San Diego, CA
AGENCIES
United States Postal Inspection Service
Internal Revenue Service – Criminal Investigation
Federal Housing Finance Agency – Office of Inspector General
U.S. Navy Officer Sentenced to 40 Months in Prison for Selling Classified Ship and Submarine Schedules as Part of Navy Bribery ProbeRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Mark W. Pletcher (619) 546-9714
NEWS RELEASE SUMMARY – January 29, 2016
SAN DIEGO – U.S. Navy Lieutenant Commander Todd Dale Malaki was sentenced in federal court today to 40 months in prison for accepting cash, hotel expenses and the services of a prostitute in return for providing classified U.S. Navy ship and submarine schedules and other internal Navy information to a foreign defense contractor.
Malaki, 44, of Oxnard, California, pleaded guilty in April to one count of conspiracy to commit bribery. As part of his guilty plea, Malaki admitted that in 2006, while he was working as a supply officer for the U.S. Navy’s Seventh Fleet, he began a corrupt relationship with Leonard Glenn Francis, the former president and chief executive officer of Glenn Defense Marine Asia (GDMA), a company that provided services to the U.S. Navy.
During today’s sentencing hearing, U.S. District Judge Janis L. Sammartino noted that a more significant sentence was warranted in this case in part because Malaki’s conduct was not a momentary lapse in judgment but long-term corruption that spanned more than seven years. She described Malaki’s case as “one of the most serious offenses the court has seen in its tenure in the Southern District of California.”
In addition to his prison sentence, Judge Sammartino ordered Malaki to pay a $15,000 fine and $15,000 in restitution to the Navy. He was ordered to report to the U.S. Bureau of Prisons on May 2, 2016.
As part of the scheme, Malaki provided Francis with classified U.S. Navy ship and submarine schedules and proprietary invoicing information about GDMA’s competitors. In exchange, Malaki admitted, Francis provided him with luxury hotel nights on at least a dozen occasions in Singapore, Hong Kong and the island of Tonga, as well as envelopes of cash, entertainment expenses and the services of a prostitute.
Malaki is the second defendant to be sentenced in the investigation of corruption and fraud in the U.S. Navy. Last week, U.S. Navy Petty Officer First Class Daniel Layug was sentenced to 27 months in prison for conspiracy to commit bribery
To date, 10 individuals have been charged in connection with this scheme; of those, nine have pleaded guilty, including Malaki, Commander Michael Vannak Khem Misiewicz, Captain Daniel Dusek, NCIS Special Agent John Beliveau, Commander Jose Luis Sanchez and Layug as well as GDMA executives Francis, Alex Wisidagama and Edmond Aruffo. Former Department of Defense civilian employee Paul Simpkins awaits trial. GDMA the corporate entity has also pleaded guilty.
“Malaki sold out the U.S. Navy which had provided him escape from his impoverished upbringing,” said U.S. Attorney Laura Duffy. “He put fellow sailors and warships at risk of exploitation, attack, or worse, and tarnished the reputations of those who had selected him from among the enlisted ranks and sponsored him to become a commissioned officer. Those who fail to uphold the public’s trust will pay the consequences for their crimes.”
“Today's sentencing of Lt. Commander Malaki is part of an ongoing joint effort by the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and the Department of Justice to identify, investigate and bring to justice those seeking to enrich themselves at the expense of U.S. taxpayers,” said James B. Burch, Director, DCIS. “While the conduct of the vast majority of those in the U.S. Navy is beyond reproach, we will vigorously pursue those individuals who put the safety and security of U.S. Navy personnel at risk. The conduct of Lt. Commander Malaki is reprehensible and today's sentencing demonstrates the Defense Criminal Investigative Service and its law enforcement partners will continue to pursue allegations of fraud and corruption that puts the Warfighter at risk.”
“Lieutenant Commander Malaki betrayed his oath of office, failed to uphold the standards of selfless service, and threatened the security of Sailors when he sold U.S. Navy ship schedules for cash, hotel expenses, and the services of a prostitute," said NCIS Director Andrew Traver. “NCIS, in collaboration with Defense Criminal Investigative Service and the Department of Justice, will continue to aggressively pursue this investigation."
The ongoing investigation is being conducted by NCIS, DCIS and the Defense Contract Audit Agency. The case is being prosecuted by Assistant U.S. Attorney Mark W. Pletcher of the Southern District of California and Trial Attorneys Brian R. Young and Lawrence Atkinson of the Criminal Division’s Fraud Section.
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.
DEFENDANT Case Number: 15cr967
Todd Dale Malaki Age: 44 Oxnard, California
SUMMARY OF CHARGES
Conspiracy to Commit Bribery, in violation of 18 U.S.C. § 371. Maximum penalty five years in prison, $250,000 fine or twice the gross pecuniary gain or loss from the offense, whichever is greater;
INVESTIGATING AGENCIES
Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency
U.S. Navy Officer Sentenced to 40 Months in Prison for Selling Classified Ship Schedules as Part of Navy Bribery ProbeRead the Press Release
A U.S. Navy Lieutenant Commander was sentenced today to 40 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 U.S. Navy ship and submarine schedules and other internal Navy information.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura Duffy of the Southern District of California, Deputy Inspector General for Investigations James B. Burch of the Defense Criminal Investigative Service (DCIS) and Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) made the announcement.
In April 2015, Todd Dale Malaki, 44, pleaded guilty to one count of conspiracy to commit bribery and admitted that in 2006, while he was working as a supply officer for the U.S. Navy’s Seventh Fleet, 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 Malaki to pay a $15,000 fine and $15,000 in restitution to the Navy.
As part of the scheme, Malaki provided Francis with classified U.S. Navy ship schedules and proprietary invoicing information about GDMA’s competitors in exchange for luxury hotel stays in Singapore, Hong Kong and the island of Tonga, as well as envelopes of cash, entertainment expenses and the services of a prostitute. Malaki admitted that the total value of the benefits he received from Francis was approximately $15,000.
To date, 10 individuals have been charged in connection with this scheme; of those, nine have pleaded guilty, including Malaki, Commander Michael Vannak Khem Misiewicz, Captain Daniel Dusek, NCIS Special Agent John Beliveau, Commander Jose Luis Sanchez and U.S. Navy Petty Officer First Class Dan Layug. Former Department of Defense (DoD) civilian employee Paul Simpkins awaits trial. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; the others await sentencing.
The NCIS, the DCIS and the Defense Contract Audit Agency are conducting the ongoing investigation. Assistant Chief Brian Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Robert S. Huie 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.
U.S. Navy Commander Pleads Guilty to Accepting Cash and Prostitutes in International Bribery SchemeRead the Press Release
A U.S. Navy Commander pleaded guilty today to bribery charges, admitting that he accepted cash, gifts, travel expenses, entertainment and the services of prostitutes from foreign defense contractor Glenn Defense Marine Asia (GDMA) in exchange for classified U.S. Navy information, including ship schedules that contained information related to the U.S. Navy’s ballistic missile defense operations in the Pacific.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura Duffy of the Southern District of California, Deputy Inspector General for Investigations James B. Burch of the Defense Criminal Investigative Service (DCIS) and Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) made the announcement.
Michael Vannak Khem Misiewicz, 48, of San Diego, pleaded guilty before U.S. Magistrate Judge Jan Adler of the Southern District of California to one count of conspiracy and one count of bribery. Sentencing is scheduled for April 29, 2016, before U.S. District Judge Janis L. Sammartino of the Southern District of California.
“In exchange for luxury vacations, gifts and other expenses, Commander Misiewicz betrayed his oath, the men and women of the U.S. Navy, and American taxpayers by directing lucrative government contracts to his financial patron,” said Assistant Attorney General Caldwell. “Working with our law enforcement partners, the Department of Justice’s Criminal Division is committed to prosecuting corrupt officials who abuse positions of public trust.”
“Commander Misiewicz provided information to a foreign contractor that, in the wrong hands, could’ve had a devastating impact on national security,” said U.S. Attorney Duffy. “By giving in to greed, he put his Navy shipmates and fellow Americans in harm’s way. This guilty plea is an important step in ensuring that all those who violated their duty of trust to the United States in this affair are held accountable.”
“Today's guilty plea of Commander Misiewicz is yet another example of a U.S. Navy officer who sought to enrich himself at the expense of U.S. taxpayers,” said Director Burch. “This type of reprehensible behavior will not be tolerated. Those who serve in the U.S. Navy have an obligation to uphold the public's trust or suffer the consequences. DCIS, the Naval Criminal Investigative Service and the Department of Justice will vigorously pursue this investigation wherever it may lead us.”
“Commander Misiewicz chose personal gain and gratification over sacrifice and service to our country," said Director Traver. “His actions are antithetical to the Navy’s core values of honor, courage and commitment. Along with DCIS, we will continue vigorously pursuing all aspects of the investigation.”
According to admissions in his plea agreement, from January 2011 until September 2013, Misiewicz provided classified U.S. Navy ship schedules and other sensitive U.S. Navy information to the defense contractor Leonard Glenn Francis, CEO and owner of Singapore-based GDMA. GDMA provided port services to U.S. Navy ships and submarines when they arrived at ports throughout the Pacific.
Misiewicz admitted that when he was stationed in Japan, on the USS Mustin and in Colorado Springs, Colorado, he used his position and influence within the U.S. Navy to advance the interests of GDMA, including by providing Francis with classified ship schedules and other proprietary U.S. Navy information. In return, Misiewicz admitted that Francis gave him cash, paid for luxury travel on at least eight occasions for Misiewicz and his family, provided his wife with a designer handbag and provided Misiewicz with the services of prostitutes on multiple occasions. Throughout the conspiracy, Misiewicz admitted that he and his conspirators took steps to avoid detection by law enforcement by, among other means, using clandestine email accounts, which they periodically deleted.
To date, nine individuals have been charged in connection with this scheme; of those, eight have pleaded guilty, including Misiewicz, Captain Daniel Dusek, Commander Jose Luis Sanchez, NCIS Special Agent John Beliveau and U.S. Navy Petty Officer First Class Daniel Layug. Former Department of Defense (DoD) civilian employee Paul Simpkins awaits trial. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; the others await sentencing.
The NCIS, the DCIS and the Defense Contract Audit Agency are conducting the ongoing investigation. Assistant Chief Brian R. Young and Trial Attorney Lawrence Atkinson of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark W. Pletcher 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.
Navy Commander Pleads Guilty to Accepting Cash and Prostitutes in International Bribery SchemeRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Mark W. Pletcher (619) 546-9714
NEWS RELEASE SUMMARY – January 28, 2016
SAN DIEGO, CA – U.S. Navy Commander Michael Vannak Khem Misiewicz pleaded guilty to bribery charges in federal court today, admitting that he gave classified ship schedules - including those that contained information related to the U.S. Navy’s ballistic missile defense operations in the Pacific - to a foreign defense contractor in exchange for cash, gifts, travel expenses, entertainment and the services of prostitutes.
Misiewicz, 48, who was indicted last January by a federal grand jury in the Southern District of California, pleaded guilty before U.S. Magistrate Judge Jan Adler to one count of conspiracy and one count of bribery. A sentencing hearing is scheduled for April 29, 2016 at 9 a.m. before U.S. District Judge Janis L. Sammartino.
According to admissions in his plea agreement, from January 2011 until September 2013, Misiewicz provided classified U.S. Navy ship schedules and other sensitive U.S. Navy information to the defense contractor, Leonard Glenn Francis, CEO and owner of Singapore-based Glenn Defense Marine Asia. GDMA provided husbanding services such as tugboats, fuel, and trash removal services for U.S. Navy ships and submarines when they arrived at ports throughout the Pacific.
In his plea agreement, Misiewicz admitted that he used his position and influence within the U.S. Navy to advance the interests GDMA, including by providing Francis with classified ship schedules and other proprietary U.S. Navy information, and that in return, Francis gave him cash, paid for luxury travel on at least eight occasions for Misiewicz, his mother, brother and children to the Philippines, Japan, Kuala Lumpur, Cambodia, Singapore and the United States, provided his wife with a designer handbag, and plied Misiewicz with the services of prostitutes on multiple occasions. Throughout the conspiracy, Misiewicz admitted, he and his conspirators took steps to avoid detection by law enforcement by, among other means, using clandestine email accounts, which they periodically deleted.
“Commander Misiewicz provided information to a foreign contractor that, in the wrong hands, could’ve had a devastating impact on national security,” said U.S. Attorney Laura Duffy. “By giving in to greed, he put his Navy shipmates and fellow Americans in harm’s way. This guilty plea is an important step in ensuring that all those who violated their duty of trust to the United States in this affair are held accountable.”
“In exchange for luxury vacations, gifts and other expenses, Commander Misiewicz betrayed his oath, the men and women of the U.S. Navy, and American taxpayers by directing lucrative government contracts to his financial patron,” said Assistant Attorney General Leslie R. Caldwell. “Working with our law enforcement partners, the Department of Justice’s Criminal Division is committed to prosecuting corrupt officials who abuse positions of public trust.”
“Today's guilty plea of Commander Misiewicz is yet another example of a U.S. Navy officer who sought to enrich himself at the expense of U.S. taxpayers,” said DCIS Director James B. Burch, Director. “This type of reprehensible behavior will not be tolerated. Those who serve in the U.S. Navy have an obligation to uphold the public's trust or suffer the consequences. DCIS, the Naval Criminal Investigative Service, and the Department of Justice will vigorously pursue this investigation wherever it may lead us.”
“Commander Misiewicz chose personal gain and gratification over sacrifice and service to our country. His actions are antithetical to the Navy's core values of honor, courage and commitment," said NCIS Director Andrew Traver. “Along with DCIS, we will continue vigorously pursuing all aspects of the investigation.”
So far, nine people have been charged; of those, eight have pleaded guilty, including Misiewicz, Captain Daniel Dusek, Commander Jose Sanchez, NCIS Special Agent John Beliveau and U.S. Navy Petty Officer First Class Daniel Layug; as well as GDMA’s Francis and GDMA employee Alex Wisidigama. Former Department of Defense civilian employee Paul Simpkins awaits trial. Layug was sentenced last week to 27 months in prison and a $15,000 fine; the others await sentencing.
The ongoing investigation is being conducted by NCIS, DCIS and the Defense Contract Audit Agency. The case is being prosecuted by Assistant U.S. Attorney Mark W. Pletcher of the Southern District of California and Trial Attorneys Brian R. Young and Lawrence Atkinson of the Criminal Division’s Fraud Section.
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.
DEFENDANT Case Number: 13-CR-4287
Michael Vannak Khem Misiewicz 48 San Diego, CA
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,
Bribery, in violation of 18 U.S.C. § 201
Maximum Penalty: 15 years in prison, a $250,000 fine
INVESTIGATING AGENCIES
Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency
Local Physician Convicted of Eight Counts of Tax Evasion After Earning over $1 MillionRead the Press Release
For Further Information, Contact: Assistant U.S. Attorneys Joseph J.M. Orabona (619)546-7951 and Melanie Pierson (619) 546-7976
NEWS RELEASE SUMMARY – January 28, 2016
SAN DIEGO – A federal jury today convicted Dr. William Bailey, a local physician of osteopathic medicine, on eight counts of tax evasion.
According to evidence presented at trial, between 2004 and 2011 Bailey earned over $1.1 million in compensation for his services as a physician at two different local clinics and paid no taxes. Bailey concealed his income by having his paychecks directed to an account in the name of a trust.
In his own testimony at trial, Bailey admitted that he cut and pasted other documents to create the trust himself and signed the name of another person as the creator of the trust. As the grantor, sole trustee and also the beneficiary of the so-called trust, the income was attributed to Bailey as an individual.
Bailey spent the $1.1 million he deposited in the trust account to pay his personal expenses, including the purchase of a home, two cars, a time share and approximately $400,000 in credit card bills. Despite earning a significant income, Bailey reported no taxable income on the tax returns he filed. Evidence presented at trial showed that Bailey owed a total of $315,000 in unpaid taxes for the period from 2004-2011.
“As today’s verdict shows, the law is clear on the issue of taxable income and who is required to file and pay taxes—there is no gray area on the subject,” said Special Agent in Charge Erick Martinez for IRS Criminal Investigation. “With filing season upon us, let this conviction serve as a warning to those who are considering similar conduct.”
Bailey is scheduled to be sentenced on April 20, 2016, at 9:00 a.m., before U.S. District Judge Cathy A. Bencivengo.
DEFENDANT Criminal Case No. 13CR3046-CAB
William Richard Bailey Age: 57 San Diego, California
SUMMARY OF CHARGES
Title 26, United States Code, Section 7201 B Tax Evasion
Maximum Penalties: 5 years of imprisonment and $250,000 fine per count
AGENCY
Internal Revenue Service-Criminal Investigations
Twenty-Two Charged with Racketeering Conspiracy and Related Crimes Involving Drug Trafficking, Illegal Gambling and Money LaunderingRead the Press Release
Assistant U. S. Attorneys Andrew Young (619) 546-7981, Mark W. Pletcher (619) 546-9714 or Benjamin Katz (619) 546-9604
NEWS RELEASE SUMMARY – January 27, 2015
SAN DIEGO – A federal grand jury sitting in the Southern District of California has charged 22 people with participating in an international narcotics trafficking and illegal gambling ring led by former University of Southern California athlete Owen Hanson.
Early today, authorities arrested 19 people at locations around San Diego, Orange and Los Angeles counties, as well as in Sacramento, Phoenix, Louisiana, and Virginia. Owen Hanson and Giovanni “Tank” Brandolino were previously arrested; Kenny Hilinski remains a fugitive.
According to court documents, Hanson and his associates conspired to operate “ODOG,” an enterprise engaged in international and domestic drug trafficking, illegal sports gambling and international money laundering. The organization used threats and violence against its gambling and drug customers to force compliance. For example, the organization sent a DVD of a beheading and a photo of an individual’s family gravestone in an effort to collect an alleged $2 million debt.
“Transnational criminal organizations pose a significant threat to our country and our allies throughout the world,” said U.S. Attorney Laura Duffy. “Such criminal organizations are unhindered by national boundaries, and unrestricted in the types of crimes they will commit in the pursuit of illegal profits. Here, we allege that the ODOG enterprise employed illegal gambling, drug trafficking and money laundering to expand its tentacles throughout the world, and its operators regularly used complicated financial transactions and encrypted communications to conceal their criminal activities. Those who mistakenly underestimate the dangers of illegal gambling should take note of the extreme threats of violence employed by the ODOG enterprise to extort payment from their ‘customers.’”
“Today's indictment will begin the process of dismantling a sophisticated international criminal enterprise that used violence and intimidation to advance their criminal objectives," commented FBI Special Agent in Charge, Eric S. Birnbaum. “The FBI is appreciative of the assistance from our domestic and international law enforcement partners in this investigation especially the Australian Crime Commission, the New South Wales Police Force and the New South Wales Crime Commission.”
“Utilizing the professional services of a Certified Public Account, the ODOG Enterprise laundered illicit funds through shell companies, phony bank accounts and structured bank deposits in an attempt to avoid detection by law enforcement,” said Erick Martinez, Special Agent in Charge for IRS Criminal Investigation. “This joint investigation continues to demonstrate our efforts to ensure that financial institutions will not be abused by narcotics traffickers and illegal gambling businesses attempting to conceal their ill-gotten gains.”
Here’s how the enterprise operated, according to the indictment:
Gambling Network
ODOG’s network of bookies and runners extended nationally from Virginia to California where various bookies accepted wagers on professional and collegiate football and baseball games. Hanson, who allegedly oversaw the organization, delegated a portion of the responsibility to operate the gambling network to Kenny Hilinksi, an expatriate living in Peru. From Peru, Hilinski maintained various websites used by gamblers to place bets, coordinated the collection of payments from various bookies and gamblers, and directed the organization’s runners to distribute the proceeds through shell companies and cash deliveries.
As indicated above, the ODOG gambling network employed violence and threats of violence to ensure that delinquent bettors paid their gambling debts. Daniel Portley-Hanks, a Los Angeles private investigator also charged in the indictment, allegedly assisted with the collection of debts from gamblers by obtaining personal identification information, locating the individuals, and coordinating the attacks.
Drug Distribution
The ODOG Enterprise distributed narcotics – including cocaine, methamphetamine, heroin, and ecstasy – both domestically and internationally in wholesale and retail quantities. Hanson, who oversaw the organization, shared domestic operations with Giovanni “Tank” Brandolino. Brandolino was arrested in October 2015 by DEA agents in Brooklyn, New York in a separate narcotics trafficking case. Derek Loville, a former professional football player, also distributed drugs for the ODOG Enterprise in Arizona.
Money Laundering
The ODOG Enterprise used sophisticated techniques and employed financial professionals to launder the proceeds of both the gambling and drug trafficking networks. Luke Fairfield, a Certified Public Accountant based in San Diego, set up shell corporations and advised members of the organization on methods to structure bank transactions to avoid detection by bank security and law enforcement. The ODOG Enterprise also used “runners” who collected and distributed the Enterprise’s illegal proceeds in a manner designed to evade detection by law enforcement.
The case stems from of a prior international sports gambling case against the Macho Sports Enterprise (13CR2196-JLS). In Macho Sports, a June 2013 federal grand jury charged 19 defendants with various crimes, including a racketeering conspiracy and running an illegal gambling business. Following the international criminal web identified in the Macho Sports case, the FBI began working with Australia’s New South Wales Police Force (in conjunction with the New South Wales Crime Commission) to uncover this second international sports betting—and drug—conspiracy.
Hanson was initially indicted and arrested on September 9, 2015 after arranging the delivery of five kilograms of cocaine and five kilograms of methamphetamine. This indictment adds additional charges relating to Hanson’s organization. Hanson and co-defendants Luke Fairfield, Kenny Hilinski, Giovanni Brandolino, Daniel Portley-Hanks, Jack Rissell, and Derek Loville are charged with a racketeering conspiracy related to illegal gambling and narcotics trafficking.
The indictment also charges Hanson, Fairfield, Hilinski, Brandolino, Portley-Hanks, Rissell, and fifteen others with operating an illegal gambling business. Of these additional fifteen defendants, thirteen (Charlie D’agostino, Marlyn Villareal, Dylan Anderson, Jim Muse, Jeff Bellandi, Curtis Chen, James Duley, Dee Foxx, Khalid Petras, Rahul Bhagat, David Kipper, Todd Oldham, and Daniel Ortega) were bookies working for Hanson, and two, Marlyn Villareal and Tim Bryan, were runners responsible for transporting gambling and drug trafficking proceeds funds on Hanson’s behalf.
Finally, Hanson, Fairfield, Hilinski, Brandolino, D’Agostino, Villareal, Anderson, Bryan, and Bellandi are charged with laundering the proceeds of the organizations drug and gambling businesses. This money laundering was done by depositing funds into bank accounts opened in the names of fictitious companies but controlled by Hanson and Hilinski. Villareal alone was responsible for the laundering of hundreds of thousands of dollars in drug and gambling proceeds.
In a related matter, Rufus Leon Rhone was also indicted and pled guilty on January 19, 2016 to charges of conspiring to distribute methamphetamine and cocaine. His sentencing is set for April 11, 2016.
DEFENDANT Case Number: 15CR2310-WQH
Owen Hanson Age: 33
Luke Fairfield Age: 39
*Kenny Hilinski Age: 38
Giovanni Brandolino Age: 41
Daniel Portley-Hanks Age: 69
Jack Rissell Age: 49
Derek Loville Age: 47
Chalie D’Agostino Age: 51
Marlyn Villareal Age: 31
Dylan Anderson Age: 33
Tim Bryan Age: 47
Jim Muse Age: 52
Jeff Bellandi aka “Jazzy” Age: 49
Curtis Chen Age: 32
James Duley Age: 40
Dee Foxx Age: 34
Khalid Petras Age: 54
Rahul Bhagat Age: 30
David Kipper Age: 34
Todd Oldham Age: 31
Daniel Ortega Age: 41
*Fugitives
SUMMARY OF CHARGES
Racketeering Conspiracy to Conduct Enterprise Affairs, 18 U.S.C. § 1962(d)
Maximum penalty: Life
Illegal Gambling Business, 18 U.S.C. § 1955
Maximum penalty: Five years
Money Laundering Conspiracy, 18 U.S.C. § 1956(h)
Maximum penalty: Twenty years
Conspiracy to Distribute Narcotics, 21 U.S.C. § 841(a)(1) and 846
Maximum penalty: Life
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
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Money Transmitter Pleads Guilty to Willful Failure to Maintain Adequate Anti-Money Laundering ProgramRead the Press Release
Assistant U.S. Attorney Daniel C. Silva at (619) 546-9713
NEWS RELEASE SUMMARY – January 22, 2016
SAN DIEGO – San Diego-based money transmitter Baltazar Fitch pleaded guilty today in federal court to failing to maintain an adequate anti-money laundering program at his various money transmitting businesses (“MTBs”). Fitch was the manager, supervisor, and owner of the MTBs.
As defined in the Bank Secrecy Act (the “BSA”), a money transmitting business is an entity that provides various financial services, including but not limited to accepting currency and transmitting the currency by any means. As part of Fitch’s duties as manager, supervisor, and owner of the MTBs, he coordinated the receipt, transmission, and delivery of currency for the MTBs’ customers. He was aware that the BSA, at Title 31, United States Code, Section, 5318(g), required the MTBs to “report any suspicious transaction relevant to a possible violation of law or regulation” (a “5318(g) Report”) with the Department of Treasury.
As detailed in the Plea Agreement entered today in front of U.S. Magistrate Judge Mitchell D. Dembin, the MTBs repeatedly accepted large quantities of cash from Mexican-based currency exchange houses, knowing that the cash transactions were relevant to a possible violation of law or regulation without filing any 5318(g) Reports. Fitch, acting through the MTBs, provided currency exchange and transmission services to clients in Mexico and the U.S. In order to be able to deposit currency into U.S. bank accounts and wire transfer those funds to locations abroad, Fitch partnered with businesses located within the Southern District of California that maintained active bank accounts at various U.S. financial institutions. By utilizing these bank accounts, Fitch knew that the banks falsely believed the cash deposits were revenues/expenses generated from the sale of goods, when, in reality, they were funds transferred on behalf of the MTBs.
Fitch was also aware that the BSA, specifically Title 31, Code of Federal Regulations, Section 1022.210, required each MTB to develop, implement, and maintain an effective anti-money laundering program that: (i) was reasonably designed to prevent the MTBs from being used to facilitate money laundering; (ii) maintained written policies, procedures, and controls governing the verification of customer identification, the filing of reports such as 5318(g) Reports, the creation and retention of records, response to law enforcement requests, and other compliance with BSA requirements; and (iii) the MTBs designated a compliance officer, who was responsible for assuring that the business complied with all BSA requirements. Fitch failed to comply with any of these regulations.
The criminal case is assigned to U.S. District Court Judge Cynthia Bashant (16cr123-BAS). U.S. Magistrate Judge Mitchell D. Dembin allowed Fitch to remain on pretrial release, pursuant to the terms of a bond posted by Fitch.
“When criminal networks attempt to evade U.S. banking regulations by concealing unlawful money transfers with legitimate business transactions, they can expect to quickly find law enforcement on the money trail,” said Dave Shaw, special agent in charge for ICE Homeland Security Investigations in San Diego. “I commend the investigators for their work that not only unraveled a significant financial scheme with cross border ties, but underscores HSI’s commitment to combating financial crime.”
DEFENDANT Case No. 16cr123-BAS
Baltazar Fitch Chula Vista, CA
SUMMARY OF CHARGES
Willful Failure to Maintain Adequate AML Program – Title 31, U.S.C., Section 5322
Maximum penalty: Five years’ imprisonment, $250,000 fine or twice the gross gain resulting from offense, whichever is greatest
AGENCY
Homeland Security Investigations
Drug Enforcement Administration
U.S. Navy Petty Officer Sentenced to 27 Months in Prison for Trading Classified Information in International Fraud and Bribery ScandalRead the Press Release
A U.S. Navy Petty Officer First Class was sentenced today to 27 months in prison for accepting cash, consumer electronics and travel expenses from foreign defense contractor Glenn Defense Marine Asia (GDMA) in exchange for classified U.S. Navy information.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura Duffy of the Southern District of California, Special Agent in Charge Chris D. Hendrickson of the Defense Criminal Investigative Service’s (DCIS) Western Field Office and Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) made the announcement.
In May 2014, Dan Layug, 27, pleaded guilty to one count of conspiracy to commit bribery and is the first defendant to be sentenced in the bribery scheme involving Singapore-based GDMA, which provided port services to U.S. Navy ships in the Asia Pacific region and used bribery to obtain information to win and maintain contracts.
According to court documents, GDMA owner and CEO Leonard Francis and other GDMA employees enlisted the clandestine assistance of Layug and other U.S. Navy personnel to provide classified ship schedules and other sensitive Navy information. GDMA allegedly overcharged the Navy under its contracts and submitted bogus invoices for tens of millions of dollars in port services.
In his plea agreement, Layug admitted that he accepted a $1,000 per month allowance from GDMA, plus luxury hotel stays for himself and others in Malaysia, Singapore, Indonesia, Hong Kong and Thailand. Layug also admitted that he sought consumer electronics from GDMA, including an iPad 3. According to the plea agreement, Layug used his position as a logistics specialist at a U.S. Navy facility in Yokosuka, Japan, to gain access to classified U.S. Navy ship schedules, then provided this information to GDMA’s vice president of global operations. Layug admitted that he also provided pricing information from one of GDMA’s competitors.
So far, nine individuals have been charged in connection with this scheme; of those, seven have pleaded guilty. Captain Daniel Dusek and Commander Jose Luis Sanchez were charged with bribery conspiracies involving GDMA and have pleaded guilty. Commander Michael Vannak Khem Misiewicz and former Department of Defense (DoD) civilian employee Paul Simpkins currently await trial. On Dec. 17, 2013, NCIS Special Agent John Beliveau pleaded guilty to conspiracy and bribery charges for regularly alerting Francis to the status of the government’s investigation into GDMA.
The NCIS, the DCIS and the Defense Contract Audit Agency are conducting the ongoing investigation. Trial Attorneys Brian Young and Lawrence Atkinson of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark W. Pletcher 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.
U.S. Navy Petty Officer Sentenced to 27 Months in Prison for Trading Classified Information for Cash and iPads; He is the First to be Sentenced in Colossal International Fraud and Bribery ScandalRead the Press Release
Assistant U. S. Attorney Mark W. Pletcher (619) 546-9714
NEWS RELEASE SUMMARY – January 21, 2016
SAN DIEGO – U.S. Navy Petty Officer First Class Daniel Layug was sentenced today to 27 months in prison for accepting cash, consumer electronics and travel expenses from foreign defense contractor Glenn Defense Marine Asia in exchange for classified U.S. Navy information.
Layug, who pleaded guilty in May 2014 to a single count of conspiracy to commit bribery, is the first defendant to be sentenced in the alleged bribery scheme involving Singapore-based Glenn Defense Marine Asia (GDMA), which provided port services to U.S. Navy ships in the Asia Pacific region and used information obtained through bribery to win and maintain contracts.
During today’s sentencing hearing, U.S. District Judge Janis Sammartino told the defendant that he had repeatedly betrayed the trust his country placed in him. “You put the Navy at risk. You put your colleagues at risk. And you put our country at risk…I think our security and safety were all at risk.”
Rear Admiral Jonathan A. Yuen, chief of Navy Supply Corps and Commander of Naval Supply Systems Command, testified during today’s hearing about the impact of Layug’s crime on the Navy. “I am very disappointed to learn that he admitted to receiving cash payments and electronic equipment in exchange for information concerning the movements of our ships. I do not have the words to express the depth of the betrayal such an exchange represents in contrast to the service and sacrifice that supply officers and sailors around the world perform every day. Every one of us in uniform owes the nation we serve our unswerving loyalty. Whatever the dollar value of the money and things Layug illicitly received, no amount of money is worth betraying our nation, our Navy or our shipmates.”
“In return for a monthly cash allowance, the latest gadgets and luxury accommodations for himself and his friends, the defendant betrayed the country that had given him every opportunity,” said U.S. Attorney Laura Duffy. “Layug essentially sold his honor for an iPad 3, and in doing so he put the U.S. Navy at risk of embarrassment, exploitation, attack or worse. Today’s sentence is the first of many that we hope will remind others to resist temptation.”
“Today's sentencing of Chief Petty Officer Daniel Layug is yet another example of the continued dedication by the Defense Criminal Investigative Service and its law enforcement partners to identify and prosecute those individuals who would abuse their positions of trust within the Department of Defense,” said Chris D. Hendrickson, Special Agent In Charge, Defense Criminal Investigative Service, Western Field Office. “The conduct of Chief Petty Officer Layug is reprehensible and deeply troubling. The Defense Criminal Investigative Service will continue to investigate and seek to prosecute any individual, regardless of position, who would put our mission of Protecting America's Warfighters at risk.”
“Petty Officer Layug intentionally traded the safety and security of Sailors and Marines aboard ships for cash and expensive gifts, betraying the longstanding trust among those who serve the Navy and the nation, said NCIS Director Andrew Traver. NCIS initially discovered this criminal activity and we will continue to work with the Defense Criminal Investigative Service and the U.S. Attorney's Office in vigorously investigating and prosecuting these crimes of corruption and fraud.”
So far, nine people have been charged; of those seven have pleaded guilty. Two are awaiting trial, including Commander Michael Michael Vannak Khem Misiewicz and former Department of Defense civilian employee Paul Simpkins. Layug was ordered to surrender to the U.S. Bureau of Prisons on April 1.
According to court documents, GDMA owner and CEO Leonard Francis and other GDMA employees enlisted the clandestine assistance of Layug and other U.S. Navy personnel - including Captain Daniel Dusek, Commander Misiewicz, Commander Jose Luis Sanchez and Naval Criminal Investigative Service Special Agent John Beliveau - to provide classified ship schedules and other sensitive Navy information. In total, GDMA allegedly overcharged the Navy under its contracts and submitted bogus invoices for tens of millions of dollars in port services.
In his plea agreement, Layug, 27, admitted that he accepted a $1,000 a month allowance from GDMA, plus luxury hotel stays for himself and others in Malaysia, Singapore, Indonesia, Hong Kong and Thailand. He also admitted asking GDMA for numerous electronics gadgets, including an iPad 3, a Nikon digital camera, a Blackberry, a VAIO computer, a PSP gaming unit and a Wii gaming unit.
According to the plea agreement, Layug worked secretly on behalf of GDMA, using his position as a logistics specialist at a U.S. Navy facility in Yokosuka, Japan, to gain access to classified U.S. Navy ship schedules and then provided this information to GDMA’s vice president of global operations. Layug admitted he also provided pricing information from one of GDMA’s competitors.
In return, GDMA gave Layug envelopes of cash on a regular basis, the plea agreement said. On May 21, 2012, GDMA’s vice president of global operations instructed a GDMA accountant that “at the end of each month, we will be providing an allowance to Mr. Dan Layug. Total of US $1,000. You may pay him the equivalent in Yen. He will come by the office at the end of each month to see you.”
According to the plea agreement, Layug sought consumer electronics from GDMA. In an email on March 9, 2012, Layug asked the vice president of global operations, “What are the chances of getting the new iPad 3? Please let me know.” In the plea agreement, Layug admitted that GDMA then provided him with an iPad 3.
In another email exchange on May 28, 2013, Layug asked the vice president of global operations for a “bucket list” of items including a high end camera, an iPhone5 cellular phone, a Samsung S4 cellular phone, and an Ipad Mini. Shortly after sending his “bucket list” to the vice president of global operations, Layug stated in an email that “the camera is awesome bro! Thanks a lot! Been a while since I had a new gadget!”
Francis was previously charged with conspiring to bribe U.S. Navy officials.
Three other senior Navy officials – Dusek, Misiewicz and Sanchez – have been charged separately with bribery conspiracies involving GDMA. Dusek and Sanchez have pleaded guilty. On December 17, 2013, Special Agent Beliveau II, has also pleaded guilty to conspiracy and bribery charges for regularly tipping off Francis to the status of the government’s investigation into GDMA.
The ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service and the Defense Contract Audit Agency.
The case is being prosecuted by Assistant U.S. Attorney Mark W. Pletcher of the Southern District of California and Trial Attorneys Brian Young and Lawrence Atkinson of the Criminal Division’s Fraud Section.
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.
DEFENDANT Case Number: 14mj1402
Dan Layug Yokosuka, Japan
SUMMARY OF CHARGES
Conspiracy to Commit Bribery in violation of 18 U.S.C. § 371
Maximum of 5 years in prison; a maximum $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater
INVESTIGATING AGENCIES
Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency
Two National Guard Soldiers Plead Guilty to Trafficking Firearms to an Undercover Agent Posing as a Member of a Mexican Drug CartelRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Andrew Haden (619) 546-6961
NEWS RELEASE SUMMARY – January 14, 2016
SAN DIEGO, CA – Two National Guard soldiers pleaded guilty to firearms charges in federal court today, admitting that they illegally sold numerous guns - including military-style assault rifles and ammunition – believing that they were destined for Mexico.
Andrew Reyes and Jaime Casillas, who worked in the Army National Guard Armory in La Mesa, both pleaded guilty before U.S. Magistrate Judge Mitchell Dembin to one count of dealing firearms without a license. Reyes also pleaded guilty to three counts of unlicensed transportation of firearms, admitting that he travelled to Texas on at least three occasions to purchase assault weapons which he then illegally transported to California and sold to an undercover agent from the Bureau of Alcohol, Tobacco, Firearms and Explosives.
The defendants are scheduled to be sentenced on April 15, 2016 at 9 a.m. before U.S. District Judge M. James Lorenz.
According to his plea agreement, Reyes sold an AK-47 rifle on Sept 2, 2014; two AR-15 rifles and four high-capacity .223-caliber rifles magazines on December 3, 2014; and another AR-15 rifle on March 16, 2015 - all to the undercover ATF agent. In all cases, Reyes admitted that he believed the guns were destined for Mexico.
According to his plea agreement, Casillas sold a .40-caliber pistol to the undercover agent on August 14, 2014; an AR-15 rifle on October 17, 2014; and was present when Reyes sold the AR-15 rifle on March 16, 2015. Casillas also admitted that he believed the weapons were also destined for Mexico.
The complaint alleges that some of the items were military-issued, while some were purchased by the defendants in Texas and re-sold to the undercover agent.
According to the complaint, the undercover agent made clear to the defendants on multiple occasions that the purchased guns were destined for Mexico; the defendants also noted that some of the guns acquired in Texas had obliterated serial numbers or were “hot,” meaning they’d been used in a crime or were stolen. The undercover agent told the defendants he was a member of a Mexican drug cartel, according to the complaint. During one transaction, the defendants showed up in U.S. Army uniforms.
“These National Guard soldiers have admitted to selling assault rifles and other firearms to a man they believed to be a Mexican cartel member,” said U.S. Attorney Laura Duffy. “Sadly, our nation has been frequently reminded that assault weapons possessed by the wrong people are a huge threat to public safety. This prosecution and conviction highlights the commitment of ATF and the U.S. Attorney’s Office to seek out, and then eliminate, the source of illegal firearms, wherever we find it in our community.”
“Casillas and Reyes’ conduct surpassed mere exploitation of military resources, and advanced to providing armaments usually reserved for law enforcement and combat personnel to individuals they believed were members of organized crime operating in the United States and Mexico,” said ATF Special Agent in Charge Eric D. Harden. “U.S. Service personnel make up a large percentage of the San Diego community. The community as a whole has an interest in combatting conduct that stains the public trust.”
DEFENDANTS Case Number: 15mj1179
Jaime Casillas Age: 22 El Cajon, CA
Andrew Reyes Age: 34 La Mesa, CA
SUMMARY OF CHARGES
Dealing Firearms without a License, in violation of United States Code 922(a)(1)(A) (Both defendants)
Maximum Penalty: Five years in prison
Unlicensed Transportation of Firearms, in violation of United States Code 922(a)(3) (Reyes only)
Maximum Penalties: Five years in prison
INVESTIGATING AGENCIES
Bureau of Alcohol Tobacco Firearms and Explosives
Patriarch of Family Drug Trafficking Ring Pleads Guilty, Faces 35 Year Sentence for Distribution of Fentanyl, Cocaine, Meth and HeroinRead the Press Release
Assistant U.S. Attorneys Joseph S. Green (619) 546-6955 and Lara W. Worm (619) 546-9697
NEWS RELEASE SUMMARY – January 7, 2016
SAN DIEGO – Hugo Adalberto Adrian Ramirez pleaded guilty this afternoon to conspiracy to distribute methamphetamine, cocaine, heroin and fentanyl in connection with a family drug trafficking ring that Ramirez directed.
Ramirez entered his guilty plea before U.S. Magistrate Judge Karen S. Crawford and remains in custody pending a sentencing hearing on March 7, 2016 at 9 a.m. before U.S. District Judge William Q. Hayes.
According to admissions in court and in his plea agreement, Ramirez conspired with family members, including his wife, sister, two adult children, and nephew, to distribute controlled substances within Southern California and to various locations throughout the United States, including the New York/New Jersey area and North Carolina.
According to his plea agreement, the government will recommend a sentence of no more than 35 years.
Ramirez directed and participated in all aspects of the conspiracy, including acquiring and negotiating the sale of controlled substances, conducting and directing counter-surveillance of law enforcement, and collecting drug proceeds. As a part of the conspiracy, Ramirez frequently changed his cellular telephone in a failed attempt to thwart law enforcement.
Ramirez also used his minor children to promote the conspiracy, including directing minor children to run errands, pass messages, and conduct counter-surveillance of law enforcement officers investigating Ramirez’s activities.
Ramirez admitted to organizing numerous shipments of methamphetamine, cocaine and heroin to sub-distributors in North Carolina, including approximately 6.6 kilograms of methamphetamine and 57.4 grams of heroin seized by law enforcement agents on August 22, 2014. Ramirez also admitted to the distribution of multi-kilogram quantities of cocaine and fentanyl to sub-distributors in New Jersey, including approximately 3 kilograms of cocaine and 1 kilogram of fentanyl seized by law enforcement agents on May 23, 2014.
Fentanyl is a synthetic opiate considered 50 to 100 times more powerful than morphine. It is typically administered to people in chronic pain, including end-stage cancer patients, and is also used as an anesthetic during surgery. Just a small amount – even a few grains - can be fatal. Authorities across the country have noted an increase in fatal overdoses of heroin that is spiked with fentanyl.
“This family operated a cross-country drug network that supplied users with dangerous and potentially deadly drugs like fentanyl,” said U.S. Attorney Laura Duffy. “With this final plea out of 12 arrested defendants, we have interrupted the supply and hopefully kept users from making a tragic mistake.”
“It is important that the residents of San Diego are aware of the danger of this powerful and potentially lethal drug,” says DEA San Diego Special Agent in Charge William R. Sherman. “DEA will continue to investigate and arrest distributors and manufacturers of this poison. It is marketed as a better high than heroin, but this clandestinely manufactured fentanyl is hundreds of times more potent than heroin.”
Kynan Barrios, Special Agent-In-Charge with the Bureau of Land Management in California stated, “Collaboration among law enforcement is vital to combating complex transnational criminal organizations that use America's public lands to smuggle dangerous drugs across international borders. These actions cause environmental degradation and threats to public safety throughout California as well as other states. The BLM is committed to ensuring these lands are safe to visit and remain healthy for the use and enjoyment of present and future generations.”
Ramirez’s guilty plea marks the 12th guilty plea in this case. Ramirez’s family members who participated in the conspiracy have received sentences ranging from 14 months to 10 years. Ramirez’s wife, Maria Ayala, received a sentence of 70 months following her guilty plea to laundering money in furtherance of the family’s drug trafficking operation. His son, Hugo Norberto-Adrian, Jr., received a sentence of 10 years in prison for conspiracy to distribute controlled substances.
Co-defendant Sonja Shenelle Holder, a New York rapper known as “Sonja Blade,” who pled guilty to money laundering charges in connection with this case on October 27, 2015, is scheduled to be sentenced on Monday, January 11, 2016. In her plea agreement, Holder admitted to laundering approximately $326,545 in cash to promote the acquisition of narcotics.
This investigation was conducted under the federal Organized Crime Drug Enforcement Task Force (OCDETF) program. The OCDETF program was created to consolidate and utilize all law enforcement resources in this country’s battle against major drug trafficking.
DEFENDANTS Criminal Case No: 14-CR-3057 Sentence
Hugo Adalberto Adrian Ramirez 42 Corona, CA Pending
Hugo Norberto-Adrian Jr. 21 Corona, CA 120 months
*Paul Dwight Doyley 49 Ashbury Park, NJ Fugitive
Sonja Shenelle Holder 37 Brooklyn, NY Pending
*Victor Jesus Gastelum 44 Unknown Fugitive
Sandra Bustos Juarez 32 Charlotte, NC 87 months
Alberto Mina 38 Charlotte, NC 87 months
Noe Mina 26 Charlotte, NC 87 months
Ricardo Mendoza 36 Ontario, CA Pending
Crystal Adrian 19 Corona, CA 15 months
Ghazi Catalan 22 Unknown Pending
Marvin Ventura Soto 25 Huntington Park, CA 120 months
Maria Ayala 44 Corona, CA 70 months
Sara Gricelda Adrian 41 Corona, CA 14 months
*Fugitives
SUMMARY OF CHARGES
Conspiracy to Distribute Controlled Substances in violation of Title 21, U.S.C. 841(a)(1) and 846; Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a $10 million dollar fine.
AGENCIES
Drug Enforcement Administration
Bureau of Land Management
Internal Revenue Service
Bureau of Alcohol, Tobacco, Firearms and Explosives
San Diego Police Department
Immigration and Customs Enforcement, Homeland Security Investigations
Fontana Police Department
Riverside County Sheriff’s Department
ICE Enforcement and Removal Operations
San Diego County Sheriff’s Department
*An indictment or complaint itself is not evidence that the defendants committed the crimes charged. The defendants are presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.
Former UCSD Professor Admits Fraud, Agrees to Forfeit $180,000Read the Press Release
Assistant U.S. Attorneys Rebecca S. Kanter (619-546-7304) and Christopher M. Alexander (619-546-6665)
NEWS RELEASE SUMMARY – January 7, 2016
SAN DIEGO - Dr. Homayoun Karimabadi, a former research professor at the University of California, San Diego (“UCSD”) and the Chief Executive Officer for SciberQuest, Inc., was charged in federal court today with fraudulently obtaining millions of dollars in government grants and contracts.
Dr. Karimabadi and SciberQuest, Inc., the corporation run by Dr. Karimabadi, both waived indictment and were arraigned on an information charging them with felony wire fraud and criminal forfeiture. SciberQuest entered a guilty plea before U.S. Magistrate Judge Karen S. Crawford; Dr. Karimabadi is scheduled to enter into a deferred prosecution agreement on January 15, 2016 at 8:30 a.m. before Judge Gonzalo P. Curiel. Additionally, Dr. Karimabadi and SciberQuest jointly agreed to forfeit $180,000 as money that was improperly received as a result of the fraud, in addition to a fine that will be imposed on the corporation at sentencing.
According to court records, during the fraud Dr. Karimabadi was the Chief Executive Officer and Chief Technology Officer at SciberQuest and at the same time was employed as a research professor at UCSD where, among other things, he served as the group leader of the space physics plasma simulation group.
According to the corporation’s plea agreement, from January 2005 to June 2013, Dr. Karimabadi, who has a Ph.D. in Plasma Astrophysics, applied for and received grants or contracts from the National Science Foundation (“NSF”), United States Air Force (“USAF”) and National Aeronautics and Space Administration (“NASA”) both through SciberQuest and UCSD. SciberQuest was awarded around $6.4 million under 22 separate grants or contracts. Of those, eight were Small Business Innovation Research (“SBIR”) grants with a value of about $1,760,000. The SBIR Program was enacted by Congress to strengthen the role of innovative small business concerns in federal-funded research and development in order to stimulate technological innovation, foster and encourage participation by socially and economically disadvantaged small business concerns, and increase private sector commercialization of innovations derived from federal research and development, thereby increasing competition, productivity and economic growth.
To obtain the SciberQuest grants or contracts, Dr. Karimabadi made false statements to government officials. Specifically, in award proposals, Dr. Karimabadi failed to disclose all of his and SciberQuest’s current and pending grants or contracts, thereby overstating the time he and SciberQuest could devote to the projects he was applying to receive. In one example, Dr. Karimabadi only disclosed to NSF four current and eleven pending grants, and knowingly failed to disclose an additional ten current and five pending grants. In all, Dr. Karimabadi disclosed to NSF only about three months per year of work that he was committed to, when in fact, he had already committed to various agencies over nineteen months per year of work.
Dr. Karimabadi also falsely certified in SBIR award proposals submitted to NASA and USAF that he was primarily employed by SciberQuest. In truth, he was employed full-time at UCSD both at the time of the award submission and during the performance of the grant. Dr. Karimabadi and SciberQuest made these false statements to be awarded grants or contracts that they likely would not have received but for the deception. As a result, from 2005 to 2013, Dr. Karimabadi received over $1.9 million in salary from SciberQuest due, in part, to the fraudulently obtained grants or contracts.
“Dr. Karimabadi took advantage of his trusted positions at SciberQuest and UCSD to deceive government agencies into awarding federal grants or contracts,” said U.S. Attorney Laura E. Duffy. “Federal research funding is an important stimulus to local economies, especially in San Diego, which has a large research university presence. Fraud in the award process threatens to undermine confidence in the continued federal funding of research and innovation. With the continued diligence of our agency partners, we will continue to deter the dishonest practices used in this case by prosecuting those responsible and taking away any ill-gotten gains.”
Chris Hendrickson, Special Agent in Charge of the Defense Criminal Investigative Service Western Field Office, said “As this matter demonstrates, we are committed to investigate not only those who make false claims in supplying goods and services for the national defense, but also those who misrepresent research and submit deceitful intellectual representations. Any such abuses of the public trust for personal gain simply will not be tolerated.”
Allison Lerner, NSF Inspector General said, “Dr. Karimabadi violated the public trust to enrich himself when he fraudulently represented his work on NSF awards. My office will continue to vigorously pursue those who attempt to illegally obtain scarce federal dollars intended for scientific research, and I commend the U.S. Attorney’s office for its sustained efforts in reaching this settlement agreement.”
“Individuals who fraudulently obtain federal research funds earmarked for small businesses deprive others of an opportunity to pursue meaningful technological discoveries,” said Paul Martin, NASA Inspector General. I commend the outstanding efforts of our agents and the other law enforcement agencies that are committed to ensuring the integrity of this program and prosecuting to the fullest extent of the law those who abuse research programs for the sake of personal enrichment.”SciberQuest will be sentenced on March 18, 2016 at 8:30 a.m. before U.S. District Judge Gonzalo P. Curiel. Dr. Karmabadi was placed on bond and ordered to return to court on January 15, 2016, for further proceedings to enter a Deferred Prosecution Agreement for his role in the matter.
A deferred prosecution agreement is an agreement between a criminal defendant and the United States Attorney’s Office wherein the defendant admits to the facts constituting a criminal offense, but the United States agrees to suspend the entry of judgment for a period of time and agrees to dismiss the charges if, during that period, the defendant complies with certain conditions set forth in the agreement.
The investigation was conducted by the Department of Defense, NSF, and NASA. The case is being prosecuted by Assistant U.S. Attorneys Rebecca S. Kanter and Christopher M. Alexander of the Southern District of California.
Those with information relating to fraud, corruption, or waste in government contracting should contact the DOD Hotline at www.dodig.mil/hotline or call (800) 424-9098.
DEFENDANTS
SciberQuest, Inc. Del Mar, California
Homayoun Karimabadi Age: 56 Del Mar, California
Criminal Case No. 16CR026-GPC
SUMMARY OF CHARGE
Wire fraud, a felony, in violation of Title 18, United States Code, Section 1343.
SciberQuest’s Maximum Penalty: 5 years of probation, and a minimum of 1 year of probation; a fine of $500,000, or twice the gross gain or loss derived from the offense; a mandatory special assessment of $400 per count; an order of restitution; and an order of forfeiture.
Karimabadi’s Maximum Penalty: 20 years in custody; a fine of $250,000, or twice the gross gain or loss derived from the offense; a mandatory special assessment of $100 per count; an order of restitution; and an order of forfeiture.
INVESTIGATING AGENCIES
Department of Defense, Office of Inspector General
National Science Foundation, Office of Inspector General
National Aeronautics and Space Administration, Office of Inspector General
Florida Man Who Sexually Exploited Escondido Middle Schoolers Sentenced to 27 Years in PrisonRead the Press Release
Assistant U.S. Attorneys Charlotte Kaiser (619) 546-7282 and David Leshner (619) 546-7921
NEWS RELEASE SUMMARY – January 7, 2015
SAN DIEGO – Tony McLeod of Tampa, Florida, was sentenced in federal court today to 324 months in custody and a lifetime of supervised release for multiple sexual crimes against two Escondido children.
Following an eight-day trial and less than two hours of deliberation, McLeod was convicted by a federal jury in June of 2015 of seven counts of sexual exploitation of a child, one count of attempted sexual exploitation of a child, one count of travel with intent to engage in illicit sexual conduct, and one count of transportation of a minor with intent to engage in criminal sexual activity as to a 14-year-old victim, and one count of attempted sexual exploitation of a child as to a 15-year-old victim. McLeod has been in custody since his arrest in Tampa, Florida in June 2013.
According to evidence presented to the jury, in spring 2013, McLeod struck up a friendship with the minor victims through on-line gaming. These friendships spilled over into phone calls, texts, and video chats between McLeod and the minors in which they discussed their personal lives and McLeod learned they were in middle school. Around May of 2013, McLeod’s relationships with these minors turned sexual in nature, which involved the exchange of sexually explicit photographs and videos. After one of the minor’s family members discovered the illicit relationship, McLeod traveled from his home in Tampa, Florida to Los Angeles, California, picked up that minor from his middle school in Escondido, and then transported that minor (under an alias) on a flight from California to Florida. On arrival of the flight, McLeod was arrested and taken into custody.
During the sentencing hearing before U.S. District Judge Janis L. Sammartino, the victims and their parents testified about the impact of McLeod’s actions. One of the minors, who was 14 years old when he travelled on the plane with McLeod, told Judge Sammartino, “I lost my childhood and lost my innocence.” The other victim, who had just turned 15 years old at the time of the offense, told the judge that McLeod’s actions and the aftermath “almost completely destroyed my family.” The mother of the 14-year-old victim testified that “we as a family have lost our sense of security.”
In handing down the sentence, Judge Sammartino described McLeod’s conduct as “horrendous” and imposed a lifetime of supervised release. As part of the conditions of release, McLeod will be subject to search at any time by any law enforcement or probation officer with reasonable suspicion concerning a violation, he cannot use or possess any electronic devices that would allow him to communicate with others, and he cannot be in the presence of a child under age 18 unless he receives prior approval from his probation officer and only in the presence of a supervising adult who knows of his convictions. A restitution hearing is scheduled for February 26.
“McLeod was a master manipulator who ingrained himself in these kids’ lives despite being thousands of miles away. He then exploited them for his own illicit sexual desire,” said U.S. Attorney Laura Duffy. “We will work tirelessly to bring to justice those who prey on our children and rob them of their innocence.”
“Protecting our children from sexual predators is a priority to the FBI,” said FBI Special Agent in Charge Eric S. Birnbaum. “The FBI will continue to work with our law enforcement partners to protect our nation’s children from those who would seek to exploit their innocence.”
McLeod’s arrest and prosecution was the result of coordination between multiple federal and state agencies in both San Diego, California and Tampa, Florida.
DEFENDANT Case Number: 13CR2297-JLS
Tony Lee McLeod Age: 38 Tampa, Florida
SUMMARY OF CHARGES
Title 18, United States Code, Section 2221(a) and (e) – Sexual Exploitation of a Child (Counts 2-9)
Title 18, United States Code, Section 2251(a) and (e) – Attempted Sexual Exploitation of a Child (Count 13)
Title 18, United States Code, Section 2423(b) – Travel with Intent to Engage in Illicit Sexual Conduct (Count 10)
Title 18, United States Code, Section 2423(a) – Transportation of a Minor with the Purpose of Engaging in Criminal Sexual Activity (Count 11)
LEAD INVESTIGATIVE AGENCY
San Diego FBI
INVESTIGATIVE AGENCIES
Escondido Police Department
Tampa Police Department
San Diego Regional Computer Forensics Laboratory
San Diego District Attorney’s Office
San Diego Internet Crimes Against Children Task Force
San Diego Sheriff’s Department
Tampa FBI
United States Marshal’s Service Task Force (Tampa)
Tampa International Airport Police
Florida State’s Attorney’s Office
U.S. Attorney’s Office for the Middle District of Florida
Mastermind of Multi-Million Dollar Real Estate Fraud Pleads GuiltyRead the Press Release
Assistant U.S. Attorneys Emily W. Allen (619) 546-9738 and Andrew Galvin (619) 546-9721
NEWS RELEASE SUMMARY – January 5, 2016
SAN DIEGO – Mazen Alzoubi, a real estate investor, admitted today that he orchestrated a scheme to steal title to Southern California homes and then sell the properties to unsuspecting buyers before the true owners could put a stop to the sale.
Alzoubi admitted that from May 2012 through August 2014, he and several co-conspirators fraudulently sold or attempted to sell at least 15 homes worth more than $3.6 million. On at least ten occasions, Alzoubi admitted, he was successful—earning illicit proceeds of nearly $2.2 million, which he then laundered and diverted to overseas bank accounts to ensure that the fraudulently-obtained proceeds could never be recovered.
Alzoubi and his co-conspirators, including Daniel Deaibes and Mohamed Daoud, would generate forged trust deeds, making it appear that the true owner had sold the home to a business Alzoubi controlled, when, in reality, the true owners were entirely unaware of Alzoubi’s actions. They would then record the fraudulent grant deeds at county recorder’s offices, so the deeds appeared legitimate. Once the fraudulent documents were recorded in the chain of title, Alzoubi would pose as the owner and immediately try to sell the properties. Alzoubi used a web of aliases (including “John Moran,” “Enrique Lopez,” “Dan Cox,” and “Zubu Wawa”) and a host of sham businesses (with names like “Land Investments 01”) to pose as the owner of properties he listed for sale. Alzoubi and his co-conspirators 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 sale proceeds, and the true owners were left with nothing.
In some cases, the real owners discovered the fraud, and made efforts to re-gain control of their property. In one instance, true owner Fannie Mae discovered that a fraudulent grant deed had been recorded relating to property it owned in Rowland Heights, California. Shortly after discovering the fraudulent deed, Fannie Mae filed a lawsuit to recover control over the property and recorded a lis pendens, notifying prospective buyers that Fannie Mae was challenging the fraudulent deed. Undeterred, Alzoubi and his co‑schemers created a fake “Withdrawal of Lis Pendens” in an effort to proceed with their fraudulent sale. When Fannie Mae won a judgment in its favor and obtained a court finding that the deed was fraudulent, Alzoubi and his co-schemers created a fake “Satisfaction of Judgment” and recorded that fraudulent document as well.
Alzoubi and his co-conspirators assumed the identities of others in order to keep the scheme going, and used the forged signatures and notary stamps of notaries to make fake documents look legitimate, and of lawyers to prepare and file fraudulent court documents. As a result, Alzoubi was charged with, and pleaded guilty to, aggravated identity theft, which carries a mandatory sentence of two 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. As part of his plea, Deaibes admitted 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.
Mohamed Daoud also pleaded guilty, in July 2015, admitting that he helped Alzoubi launder the proceeds of the scheme. Alzoubi used Daoud’s company, “Norway LLC,” to pretend to acquire title to some of the properties, by forging fake deeds and then recording the forgeries at county recorder’s offices. Daoud admitted that during his participation in the money laundering conspiracy, Alzoubi induced at least six different buyers to purchase properties he did not own, leaving them with worthless claims to title and generating at least $1.4 million in proceeds from the fraud. Daoud received approximately $270,000 of the proceeds.
Alzoubi, and his co-conspirators generated nearly $2.2 million in profits from the scheme. In each case, the unwitting third party buyer paid for homes Alzoubi and his co-schemers pretended to lawfully own. Most of these properties were post-foreclosure properties 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.
“We are committed to protecting the recovering housing market and the public’s confidence in the security of their most important investment, their homes,” said U.S. Attorney Laura Duffy. “Prosecuting people who continue to prey on and profit from the devastating mortgage meltdown is a top priority because they play such a significant role in our nation’s financial turmoil, and because the economic damage to taxpayers is immense.”
Federal Housing Finance Agency – Office of Inspector General Special Agent in Charge Leslie DeMarco said, “We will not let individuals such as Mazen Alzoubi chip away at the housing market nor the taxpayers who ultimately bear the burden of such ludicrous schemes. The actions of Alzoubi and his co-conspirators were brazen and we are committed to finding justice for all who were harmed.”
“As admitted in court today, Mr. Alzoubi and his co-conspirators sold fraudulently obtained homes to unsuspecting buyers for their own personal gain while attempting to hide the profits in offshore bank accounts,” said IRS Criminal Investigation’s Special Agent in Charge Erick Martinez. “Our agency is committed to unraveling complex identity theft and money laundering schemes where individuals attempt to conceal the true source of their illicit funds.”
“Sophisticated financial fraud schemes cost American taxpayers millions of dollars each year,” commented FBI Special Agent in Charge, Eric S. Birnbaum. “The FBI is resolute in using our intelligence and investigative expertise to mitigate complex financial fraud schemes that threaten our financial system.”
Alzoubi’s guilty plea was taken before U.S. Magistrate Judge Jan M. Adler. Alzoubi is scheduled to be sentenced by U.S. District Judge Cynthia Bashant on March 21, 2016 at 9 a.m. Daoud’s sentencing is scheduled for the same date and time, and Deaibes’s sentencing is slated for May 23, 2016 at 9:00 am, both also before Judge Bashant.
U.S. Attorney Duffy explained that the American public is the very real victim of this type of destructive fraud that is impeding the country’s ability to recover from the economic collapse of 2008. She emphasized that her office would aggressively prosecute such crimes and urged anyone in the community who has information relating to these charges to contact the San Diego branch of the Federal Bureau of Investigation at (858) 320-1800 or the Federal Housing Finance Agency—Office of Inspector General hotline at (800) 793-7724.
The swift resolution of this case was the result of coordinated investigations by the FBI, FHFA-OIG, and the Internal Revenue Service, Criminal Investigation Division.
DEFENDANT PLEADING GUILTY:
Mazen Alzoubi, 14CR3325-BAS Age: 32 Rancho Cucamonga, CA
CHARGES
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.
DEFENDANTS PREVIOUSLY CHARGED:
Daniel Deaibes, 14CR3325-BAS Age: 37 Rancho Cucamonga, CA
Mail fraud, 18 U.S.C. § 1341
Mohamed Daoud, 14CR3326-BAS Age: 50 Norway
Conspiracy to launder money, 18 U.S.C. § 1956(h)
AGENCIES
Federal Housing Finance Agency—Office of Inspector General
Federal Bureau of Investigation
Internal Revenue Service, Criminal Investigation
Medical Doctor and Wife Plead Guilty to Conspiring to Acquire Controlled Substances by Fraud and DeceptionRead the Press Release
Assistant U. S. Attorney Orlando B. Gutierrez (619) 546-6958
NEWS RELEASE SUMMARY – December 16, 2015
SAN DIEGO – Dr. Matthew Cole and his wife, Shireen Cole, pleaded guilty yesterday to prescription drug-related charges, admitting that they conspired to obtain scheduled pharmaceutical drugs commonly known as Percocet, Xanax and Ambien by submitting fraudulent prescriptions to pharmacies as if they were valid.
Dr. Cole, a dermatologist at Insight Dermatology with offices in San Diego and National City, used his own prescription pad with his assigned DEA registration number to write prescriptions in the names of friends with whom he had no doctor-patient relationship, and who had no knowledge of the prescriptions written in their names. He also wrote prescriptions for his wife using her maiden name.
For example, Dr. Cole admitted in his plea agreement that he wrote a prescription for 60 10-milligram tablets of Oxycodone in the name of a female college friend and on December 27, 2014, his wife took it to be filled at a CVS Pharmacy. While still in the CVS Pharmacy, Shireen Cole, a licensed Marriage and Family Therapist intern, handed the oxycodone tablets over to Dr. Cole.
Although the college friend was never a patient of Dr. Cole, on February 16, 2015, at his medical office, he created a false medical file for that friend, using his status as a licensed medical doctor to create the false appearance of a valid doctor/patient relationship.
In all, the defendants’ plea agreements listed 39 instances where fraudulent medical prescriptions were used to acquire Scheduled pharmaceutical drugs from commercial pharmacies. These 39 separate instances resulted in the acquisition of 1,820 tablets of scheduled pharmaceutical drugs, 1,280 of which were oxycodone – commonly known as Percocet. The other drugs were zolpidem tartrate, commonly known as Ambien, and alprazolam, known as Xanax.
According to statements made in court yesterday, the defendants are both in drug treatment programs.
DEFENDANT Case Number: 15CR3074-H
Matthew Cole, M.D. Age: 37
Shireen Cole Age: 37
SUMMARY OF CHARGE
Title 21 U.S.C. Sections 843(a)(3), 843(d)(1), and 846 – Conspiracy to Acquire Controlled Substances by Fraud, Deception, and Subterfuge
Maximum penalty: 4 years
AGENCY
Drug Enforcement Administration
Department of Health Care Services
Fugitive Arrested in Miami in Connection with Deaths of Two Migrants in Trunk at San Diego-Tijuana BorderRead the Press Release
Assistant U.S. Attorneys Patrick J. Bumatay (619) 546-8450 and Michael Wheat (619) 546-8437
NEWS RELEASE SUMMARY – December 16, 2015
SAN DIEGO – Suspected alien smuggler Eduard Cornejo-Saavedra, a fugitive being sought in connection with the deaths of two unauthorized immigrants who perished in the trunk of a car last year, was arrested in Miami today.
Saavedra, a 43-year-old citizen of Peru, was taken into custody by Homeland Security Investigations agents at the Miami International Airport on alien smuggling charges related to the August 2014 deaths of Tarcisio Casas-Blanco and Jose Aurelio Quiroz-Casas, both Mexican citizens.
Saavedra was arrested in Tijuana approximately six weeks ago at the request of the United States in connection with this case. Mexican officials sought his deportation and he was ultimately ordered deported to his native Peru. He was en route to Peru from Mexico City today when he was intercepted by U.S. law enforcement.
Saavedra was charged in October of 2014 with alien smuggling. That indictment was unsealed today. The United States is seeking his transfer from Miami to face charges in San Diego.
The smuggling incident in question occurred on August 12, 2014, when Nicholas George Zakov, 43, attempted to transport the two Mexican citizens, Casas-Blanco and Quiroz-Casas, into the United States by hiding them in the trunk of his 2012 Dodge Challenger.
Zakov pleaded guilty to the alien smuggling charges and received a sentence of seven years in prison on September 29, 2015. He has admitted that he drove the Challenger to the San Ysidro, California Port of Entry, where U.S. Customs and Border Protection officers discovered the two Mexican citizens unresponsive in Zakov’s trunk. Medical attention was immediately sought for the two, but they died a short while later of hyperthermia and mechanical asphyxiation.
Zakov also admitted that he continued to drive through the San Ysidro, California Port of Entry while ignoring the two Mexican citizens’ pleas to be let out of the trunk because of the extreme heat.
“This case is an important message to alien smugglers,” said U.S. Attorney Laura Duffy. “We will seek justice for all those that engage in this dangerous and harmful crime.”
“This apprehension demonstrates the importance of working together with our law enforcement partners on both sides of the border,” said Pete Flores, CBP director of field operations for San Diego. “Now this perpetrator may be brought to justice for his part in the death of two human beings.”
The investigation and arrest of Saavedra was the result of the collaboration of Homeland Security Investigations, U.S. Customs and Border Protection, San Diego Police Department, and the Baja California State Preventive Police Department.
Saavedra is charged with two counts of encouraging and inducing illegal aliens resulting in death and two counts of bringing illegal aliens into the United States for financial gain. Saavedra faces up to life imprisonment, a mandatory minimum sentence of three years in prison, and a $250,000 fine.
DEFENDANT Criminal Case No. 14CR3066-AJB
Eduard Cornejo-Saavedra Age: 43 Tijuana, Mexico
a.k.a. Edward Saavedra
a.k.a. Reenzo Saavedra-Cormeyo
SUMMARY OF CHARGES
Counts 1 and 2: Encouraging and Inducing Illegal Aliens, Aiding and Abetting, Resulting in Death, 8 U.S.C. §1324(a)(1)(A)(iv), (v)(II), and (a)(1)(B)(iv)
Counts 3 and 4: Bringing in Illegal Aliens for Financial Gain, Aiding and Abetting 8 U.S.C. §1324(a)(2)(B)(ii) and 18 U.S.C. § 2
INVESTIGATING AGENCIES
U.S. Customs and Border Protection
Homeland Security Investigations
San Diego Police Department
Baja California State Preventive Police Department
U.S. Border Patrol Supervisor Sentenced to 21 Months in Prison for Placing Hidden Camera in Women’s RestroomRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Alessandra Serano (619) 546-8104 and Lara Stingley (619) 546-8403
NEWS RELEASE SUMMARY – December 15, 2015
SAN DIEGO – U.S. Supervisory Border Patrol Agent Armando Gonzalez was sentenced in federal court today to 21 months in prison for placing a hidden camera in a floor drain of the women’s restroom at the Chula Vista Border Patrol station to capture images of female private parts.
In handing down the sentence, U.S. District Judge Roger T. Benitez said the “facts of this case were shocking,” and he described the conduct as “egregious” and “a violation of trust.” Gonzalez was permitted to remain free on bond until January 22, when he is required to report to the U.S. Bureau of Prisons.
During today’s hearing, Assistant U.S. Attorney Alessandra Serano told the court that the defendant’s crimes warranted a significant sentence, noting that the camera was in place for about 18 months and the defendant spent a lot of time editing, naming and saving the videos.
“When Armando Gonzalez put a video camera down the drain of a women’s restroom, he also put his career, his honor and his freedom down that drain,” said U.S. Attorney Laura Duffy. “This is a fitting sentence for a man who sullied his badge with such despicable behavior.”
Gonzalez pleaded guilty in May to one count of making a false statement to a federal officer and seven counts of video voyeurism. He admitted that he placed a hidden camera in a floor drain of the women’s restroom at the Chula Vista Border Patrol station to capture images of female private parts.
Gonzalez, a supervisor, also admitted that when Border Patrol superiors confronted him about the camera, he lied to cover up his crimes, saying that he’d placed the camera in the bathroom to conduct a drug investigation of one of his female employees.
According to the plea agreement, Gonzalez acknowledged that he captured video images of the unclothed private parts of seven women – all federal employees - who used the bathroom between July 24, 2013 and April 11, 2014. The videos were as short as 24 seconds and as long as nine minutes, 17 seconds.
The defendant saved the video images from those instances, and dozens of others, on an SD card he kept hidden at his workplace, the plea agreement said. Gonzalez admitted that after the hidden camera was discovered, he destroyed or discarded the hard drive from the Apple MacBook used to edit the videos before law enforcement had a chance to execute a search warrant at his home.
DEFENDANT Case Number: 15cr0806-BEN
Armando Gonzalez Age 47 El Cajon, CA
SUMMARY OF CHARGES
One Count, False Statements to a Federal Officer, in violation of 18 U.S.C. 1001
Maximum Penalty: Five years in prison, $250,000 fine
Seven Counts, Video Voyeurism, in violation of 18 U.S.C. 1801
Maximum Penalty: One year in prison, per count, and $100,000 fine per count
INVESTIGATING AGENCIES
Federal Bureau of Investigation
Department of Homeland Security
San Diego Police Department
Two Men Sentenced to Life Terms in Murder of U.S. Border Patrol Agent Brian TerryRead the Press Release
Assistant U.S. Attorneys Todd Robinson (619) 546-7994 or David Leshner (619) 546-7921
NEWS RELEASE SUMMARY – December 9, 2015
TUCSON, Arizona - Ivan Soto-Barraza and Jesus Lionel Sanchez-Meza were sentenced to life terms today for the first-degree murder of U.S. Border Patrol Agent Brian Terry.
The defendants were also sentenced by U.S. District Judge David C. Bury to additional prison time for other crimes related to the murders. They received four 20-year terms each, which are to be served concurrently, and a 10-year term for discharging a firearm during a crime of violence, which will run consecutive to the life terms.
Soto-Barraza and Sanchez-Meza were convicted by a federal jury in October of first-degree murder, second degree murder, conspiracy to interfere with commerce by robbery, attempted interference with commerce by robbery, using and carrying a firearm during a crime of violence, and assault on Agent Terry and three additional federal officers – Border Patrol Agents William Castano, Gabriel Fragoza, and Timothy Keller.
According to evidence presented at trial, during the evening of December 14, 2010, Soto-Barraza, Sanchez-Meza and three other men were in the United States for the purpose of robbing drug traffickers of their contraband. While Agent Terry and three other Border Patrol Agents were engaged in the performance of their official duties, members of the defendants’ group exchanged gun fire with the agents and one of the shots fired by a member of the defendants’ group killed Agent Terry.
U.S. Attorney Laura Duffy said, “The jury's verdict and life sentences imposed today reflect a just result for a crime which has had a profound effect not only on the family of Agent Brian Terry, but also the men and women who daily put their lives at risk to keep us all safe.”
Two other men, Manuel Osorio-Arellanes and Rosario Rafael Burboa-Alvarez, previously pleaded guilty to first-degree murder for their roles in Agent Terry’s death. Yet another two men, Jesus Rosario Favela-Astorga and Heraclio Osorio-Arellanes, remain fugitives.
At trial, the United States was represented by attorneys from the Southern District of California, Special Attorneys Todd W. Robinson and David Leshner. The U.S. Attorney’s Office for the District of Arizona is recused. The case was investigated by the Federal Bureau of Investigation.
Twenty Five People Charged as Members of $10 Million Illegal Gambling and Money Laundering OperationRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Joshua Mellor (619) 546-9733
NEWS RELEASE SUMMARY – December 9, 2015
SAN DIEGO – Twenty five people are charged in a federal grand jury indictment with participating in an illegal gambling operation that laundered an estimated $10 million in gambling proceeds through Chula Vista and San Diego card rooms in what is believed to be the biggest illegal gambling prosecution in San Diego county in recent memory.
More than 200 agents from the FBI, Homeland Security Investigations and the IRS plus San Diego County Sheriff’s deputies and investigators from the California Department of Justice Bureau of Gambling Control served five search warrants and 22 seizure warrants early today at locations in Chula Vista, San Diego and elsewhere.
The search and seizure locations included the Village Club Card Room, also known as Seven Mile Casino in Chula Vista, and the Palomar Card Room in San Diego. The card rooms are also charged in the indictment, which was unsealed in federal court this morning. Agents seized more than $600,000 during today’s searches of player accounts and bank accounts.
Authorities around the country arrested 21 people so far today at locations around San Diego, Orange and Los Angeles counties as well as San Jose, Las Vegas, New Jersey, Arizona, New Mexico, Pennsylvania and Iowa. Five indicted defendants remain fugitives and warrants have been issued for their arrests.
These defendants, plus the two corporations, are charged in a federal grand jury indictment with various crimes, including running an Illegal Gambling Business, Conspiracy to Launder Monetary Instruments, Failure to Maintain an Anti-Money Laundering Program and Transportation for Prostitution.
Four defendants were arraigned on the indictment in federal court this afternoon before U.S. Magistrate Judge Barbara Major. Craig Kolk, Ricardo Castellanos-Velasquez, Duy Trang were granted bail; Ali Lareybi was detained pending a hearing on Friday at 10 a.m. before Judge Major. The remaining San Diego are scheduled to be arraigned before Judge Major tomorrow. The United States is seeking the removal of out-of-state defendants to San Diego.
According to court documents, some of the defendants allegedly operated unlicensed casinos out of rented Rancho Santa Fe mansions. Up to three times a week, some defendants held intimate high-stakes poker and black jack games in extravagant settings that featured professional card dealers, prostitutes, chefs and waitresses.
Court documents allege that lead defendant David Stroj operated an illegal bookmaking business that extended throughout North America, including San Diego, Los Angeles, Albuquerque, Las Vegas, Chicago, Philadelphia, South Carolina and Florida, as well as locations in Mexico and Canada.
Millions of dollars in proceeds from the gambling events were laundered through the Palomar and Village Club card rooms, Las Vegas casinos, various bank accounts, shell companies, and a bail bonds business. The ring also operated illegal offshore online gaming websites.
“This indictment describes a massive operation that laundered millions of dollars in illicit proceeds,” said U.S. Attorney Laura Duffy. “We are committed to putting an end to any activity that enables criminals to hide illicit proceeds.”
“The defendants in this case allegedly acted as a criminal enterprise that allowed the proceeds from illegal gambling to be laundered through local card rooms thereby avoiding federal financial reporting requirements that help keep our communities safe,” said FBI Special Agent in Charge Eric S. Birnbaum. “Today's indictment is an example of the FBI's commitment to work with our law enforcement partners to identity, disrupt and dismantle complex criminal conspiracies.”
“HSI is committed to serving side-by-side with our partners in the San Diego law enforcement community,” said Dave Shaw, special agent in charge for HSI San Diego. “This investigation has dismantled an illicit gambling operation with ties to money laundering and a cross-border prostitution recruitment scheme. Let it be clear, HSI will aggressively pursue any and all leads involving transnational criminal activity linked to the U.S.-Mexico border.”
“These defendants allegedly participated in an illegal sports gambling business, lining their pockets with profits from an illicit poker and blackjack business,” said Special Agent in Charge Erick Martinez of IRS Criminal Investigation. “Taking assets away from illegal operations is one of the government’s most effective tools against money laundering and organized crime.”
California’s Bureau of Gambling Control Chief Wayne Quint, Jr. issued Emergency Closure Orders on both the Palomar and Village Club card rooms effective immediately.
“These casinos allegedly engaged in money laundering and illegal gambling schemes that undermine the well-being of our communities,” said Attorney General Kamala D. Harris. “I thank our California Department of Justice Bureau of Gambling Control Special Agents, as well as our local and federal law enforcement partners, for holding the alleged perpetrators accountable for their financial crimes.”
The investigation, which began in 2013, involved hundreds of intercepted calls and text messages, border crossing records plus extensive surveillance and reviews of financial records.
Stroj, the lead defendant, is described as a large-scale international bookmaker based in the San Diego area. He is charged with conducting an illegal bookmaking business, conducting an illegal poker and blackjack business and conspiracy to launder money.
According to court records, Stroj and codefendants used offshore gambling websites, including betblackdiamond.com, LBTsports.com and diamondsb.ag, to manage his bookmaking business. Stroj used financiers, a business manager, sub agents, money runners, money couriers and debt collectors to conduct the bookmaking business and launder millions of dollars.
The bookmaking clients would make checks out to the casinos such as Palomar and the Village Club, or the Wynn and Bellagio casinos in Las Vegas, and the funds would be deposited into marker or player bank accounts, court records said.
During one intercepted call, Stroj discussed gambling income and how to launder it through a card club: “Palomar is the best way I can wash the money. I don’t have to report it. I just deposit it at the Palomar and there’s no problems for me.”
In another call, Stroj said: “Between you and me, the best way to launder money, you do it through these local casinos in San Diego…that’s how, if someone owes me a 100 ($100,000) and they want to wire it to me, I wire it to the Palomar and leave it in my player’s bank and they give me chips.”
Card rooms are legal in the state of California if they comply with strict regulations. For example, an owner of a gambling establishment must apply for and obtain a valid state gambling license from the Bureau and the California Gambling Control Commission (Commission). The Bureau's Licensing staff will conduct in-depth background investigations on applicants to determine whether they are suitable to hold a state gambling license. Suitability is determined by a number of factors including but not limited to the applicant's honesty, integrity, general character, reputation, habits, and financial and criminal history.
DEFENDANTS Case Number: 15cr2932-BAS
David Stroj
Matthew Greenwood
Jeffrey Broadt
Jeffrey Stoff
*Arturo Diaz-Ramirez
Jaime Behar
Robert Stroj
Craig Kolk
Jean Paul Rojo
Joshua Jones
Ricardo Castellanos-Velasquez
*Alexandra Kane
Bryan Sibbach
Joseph Palermo
Thomas Mallozzi
Stephen Bednar
Christopher Parsons
*Jeffrey Mohr
*Kyle Allen
Michael Hipple
Duy Trang
Alfredo Barba
Ali Lareybi
Harvey Souza
Naseem Salem
*Fugitives
CORPORATIONS
Palomar Card Club
VC Cardroom, Inc., dba Seven Mile Casino and Village Card Club
SUMMARY OF CHARGES
Two counts, Conducting an Illegal Gambling Business, in violation of Title 18 U.S.C. Sec. 1955
Maximum Penalty Five Years in Custody, $250,000 fine, three years supervised release
(Count one is the first 20 defendants in the indictment)
(County two is David Stroj, Jeffrey Stoff, Arturo Diaz-Ramirez, Jaime Behar, Duy Trang and Alfredo Barba)
One count, Conspiracy to Launder Monetary Instruments, in violation of Title 18 U.S.C. Sec 1956 (h)
Maximum Penalty 20Years in Custody, $500,000 fine, three years supervised release
(David Stroj, Matthew Greenwood, Jeffrey Broadt, Jeffrey Stoff, Arturo Diaz-Ramirez, Jaime Behar, Robert Stroj, Craig Kolk, Jean Paul Rojo, Ricardo Castellanos-Velasquez, Alexandra Kane, Bryan Sibbach, Joseph Palermo, Christopher Parsons, Jeffrey Mohr, Duy Trang, Ali Lareybi, Naseem Salem and Palomar Card Club)
Two counts, Failure to Maintain Anti-Money Laundering Program , in violation of Title 31 U.S.C. Sec. 5318 (h) (1) and 5322 (a)
Maximum Penalty Five Years in Custody, $250,000 fine, three years supervised release
Once count for each corporation
Two counts, Transportation for Prostitution, in violation of Title 18 U.S.C. Sec. 2421
Maximum Penalty 10 Years in Custody, $250,000 fine, three years supervised release
(Defendants David Stroj and Jeffrey Broadt only)
AGENCIES
FBI
Homeland Security Investigations
Internal Revenue Service
California Department of Justice Bureau of Gambling Control
San Diego County Sheriff’s Department
eBay Salesman Who Ripped Off Postal Service and His Customers Convicted of Mail FraudRead the Press Release
Assistants U. S. Attorney Christopher P. Tenorio and Emily Keifer (619) 546-8413
NEWS RELEASE SUMMARY – December 8, 2015
SAN DIEGO - Jack Zeljko Pasic pleaded guilty earlier today to defrauding the U.S. Postal Service out of postage due on over 9,000 packages shipped from San Diego to eBay customers throughout the United States between April 2009 and October 2010.
From 2008 through 2010, Pasic ran a company, Diavega, which sold items to customers on eBay. In April 2009, Pasic purchased a postal meter to print postage labels that he would use to ship packages to his Diavega customers. Pasic altered the postage labels, however, to conceal that he had paid only $0.01 in postage when a larger amount of postage was actually owed.
According to his plea agreement, Pasic also labeled the packages to falsely indicate that they were being sent from, and mailed to, the same address in an effort to ensure that the items he shipped would reach their intended destination. In so doing, Pasic ensured the packages were delivered to the customers even when the USPS attempted to return the package to sender for underpayment of postage upon discovering that postage was due. In most cases, the customers were required to pay additional postage fees to the USPS even though they had sent earlier fees to Pasic. In total, Pasic defrauded the USPS out of over $18,000 in unpaid postage.
“The vigilance of the U.S. Postal Service has ensured that the defendant will pay for services unjustly billed to the American public,” said United States Attorney Laura Duffy.
Pasic entered his plea before U.S. Magistrate Judge Nita L. Stormes and is scheduled to be sentenced by U.S. District Judge Cathy Ann Bencivengo on January 8, 2016.
DEFENDANT Case Number 15CR2381-CAB
Jack Zeljko Pasic Age: 51
SUMMARY OF CHARGE
Title 18, United States Code, Sections 1341 (Mail Fraud)
Maximum penalty: 5 years of custody; $250,000 Fine
AGENCY
United States Postal Inspection Service
U.S. Attorney’s Office in San Diego Collects More Than $37 Million in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2015Read the Press Release
For Further Information, Contact: Executive Assistant U.S. Attorney Blair Perez (619) 546-7963
NEWS RELEASE SUMMARY – December 8, 2015
SAN DIEGO – The U.S. Attorney’s office in the Southern District of California collected over $37 million in civil and criminal actions, including forfeitures, in fiscal year 2015, which ended on Sept. 30, 2015. More than $7.7 million was collected in criminal and civil actions handled solely by the U.S. Attorney’s Office, including $4,311,334 million in criminal actions and $3,477,416 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 $3,041,041 in civil cases pursued jointly with these offices.
The U.S. Attorney’s office in the Southern District of California, working with partner agencies and divisions, also collected $26.3 million in asset forfeiture actions in FY 2015. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used for a variety of law enforcement purposes and to restore funds to crime victims.
“Restitution to victims and taxpayers is another way to ensure that justice is served,” said U.S. Attorney Laura Duffy. “The Southern District of California works hard to increase the amount collected each year through the recovery of ill-gotten gains from illegal activity.”
Major recoveries by the U.S. Attorney’s Office for the Southern District of California in civil cases this year included a case that resolved in May, when five ambulance companies entered into civil settlements with the Department of Justice requiring them to collectively pay more than $11.5 million in payments to the United States to resolve kickback allegations.
The settling defendants include three Orange-County based companies - Pacific Ambulance, Inc. and Bowers Companies, Inc., (both of which were subsequently acquired by Rural/Metro Corporation after the alleged misconduct occurred) and Care Ambulance Service, Inc.; and two San Diego-based companies - Balboa Ambulance Service, Inc., and E.R. Ambulance, Inc.
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.
Attorney General Loretta E. Lynch announced last week that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year (FY) ending Sept. 30, 2015. Collections in FY 2015 represent more than seven and a half times the approximately $2.93 billion of the Justice Department’s combined appropriations for the 93 U.S. Attorneys’ offices and the main litigating divisions in that same period.
“The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources and protecting the American people from exploitation and abuse,” said Attorney General Lynch. “The collections we are announcing today demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver. I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”
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 financial, health, safety, civil rights and 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.