Southern District of California
Press releases recorded for this federal judicial district.
Sea Turtle Egg Smugglers IndictedRead the Press Release
Assistant U.S. Attorney Melanie K. Pierson (619) 546-7976
NEWS RELEASE SUMMARY – December 8, 2015
SAN DIEGO – Olga and Jose Jimenez of Hemet were arrested in connection with the smuggling of 911 sea turtle eggs into the United States from Mexico and charged in a four-count indictment.
According to the indictment, on November 23, 2014, in Nayarit, Mexico, defendant Olga Jimenez boarded a bus destined for Tijuana with a large cooler containing approximately nine small plastic bags filled with a total of approximately 911 sea turtle eggs, while defendant Jose Luis Jimenez drove from Hemet, California, to the Mexican border and crossed into Mexico as a pedestrian with two small coolers.
The indictment alleges that at the bus station in Tijuana, the defendants moved the sea turtle eggs from the large cooler to the two small coolers, concealing them under layers of ice, fish and shrimp. The defendants allegedly gave the coolers to the owner of a pickup truck to bring to the United States, telling the driver the coolers contained only fish and shrimp. According to the indictment, the defendants then crossed back into the United States through the pedestrian lanes, after which Olga Jimenez placed a call to one of the occupants of the pickup truck in order to determine whether the sea turtle eggs had successfully entered the United States. The indictment seeks criminal forfeiture of the eggs.
The indictment alleges that the eggs belonged to endangered Olive ridley and Kemp’s ridley sea turtles. Both Olive ridley and Kemp’s ridley sea turtles were initially identified as endangered under the U.S. Endangered Species Act in 1978 and 1973. In 1981, Olive ridley and Kemp’s ridley sea turtles were placed on Appendix I of the Convention on International Trade in Endangered Species (“CITES”). Both Mexico and the United States are signatories to CITES. It is a violation of law in both countries to trade in Olive ridley and Kemp’s ridley sea turtles or any part of those sea turtles, including their eggs, without permission from the respective governments.
According to the National Oceanic and Atmospheric Administration, both Olive ridley and Kemp’s ridley sea turtles display one of the most unique synchronized nesting habits in the natural world. Large groups of turtles gather off shore of nesting beaches and then come ashore all at once to nest in what is known as an arribada. Females nest once or twice a year, laying clutches of approximately 100 eggs and burying them in the sand on the beach. The indictment alleges that during the spectacle of the arribada, the nesting sites are vulnerable to poachers, who collect the eggs for sale for human consumption. The eggs are considered a delicacy in Asia, where they are reputed to have aphrodisiac effects.
Olive ridley sea turtles (Lepidochelys olivacea) inhabit a broad range extending in the South Atlantic Ocean from West Africa to South America and in the eastern Pacific Ocean from Southern California to Northern Chile. Adults weigh approximately 100 pounds and have olive/grayish-green heart-shaped shells measuring 22‑31 inches in diameter.
Kemp’s ridley sea turtles (Lepidochelys kempii) are the smallest marine turtle in the world. Their top shell is grayish green and nearly circular, with a pale yellowish bottom shell. Adults weigh approximately 100 pounds and have shells measuring approximately 24-28 inches in diameter. Kemp’s ridley sea turtles are found in the Gulf of Mexico and the Atlantic Ocean from the Yucatan peninsula in Mexico to New England.
Jose Jimenez was ordered to appear before the Hon. Janis L. Sammartino on January 14, 2016 at 1:30 p.m. for a hearing on all motions in the case. Olga Jimenez, who was arrested in the District of Arizona, was ordered to appear in federal court in San Diego on December 16, 2015, at 9:00 a.m. before the duty magistrate.
“The U.S. Fish and Wildlife Service Office of Law Enforcement, along with our agency partners, is committed to investigating people who exploit endangered and protected species to line their own pockets,” said Jill Birchell, Special Agent in Charge of the agency’s California/Nevada office.
“Smuggling wildlife of any kind, especially endangered species, is something we take seriously,” said Eileen Sobeck, assistant administrator for NOAA Fisheries. “We will not tolerate violation of federal and international laws regarding the illegal trade of endangered species, and we will continue to take a hard stance in combating wildlife trafficking.”
*The charges and allegations contained in the Indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Criminal Case No. 15cr2867-JLS
DEFENDANTS
Olga Jimenez Age: 52
Hemet, California
Jose Jimenez Age: 64
Hemet, California
SUMMARY OF CHARGES
Conspiracy – Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison and $250,000 fine
Smuggling- Title 18, U.S.C., Section 545
Maximum penalty: Twenty years in prison and $250,000 fine
Importation Contrary to Law- Title 18, U.S.C., Section 545
Maximum penalty: Twenty years in prison and $250,000 fine
Unlawful Trafficking in Wildlife-Title 16, U.S.C. Sections 3372 and 3373
Maximum penalty: Five years in prison and $250,000 fine
Criminal Forfeiture- Title 16, U.S.C., Section 3374
AGENCIES
U.S. Fish and Wildlife Service, Office of Law Enforcement;
National Oceanic and Atmospheric Administration, Office of Law Enforcement
Pediatric Nurse Sentenced to 80 Years for Sexual Exploitation of Children in His CareRead the Press Release
Assistant U.S. Attorney Alessandra Serano (619) 546-8104
NEWS RELEASE SUMMARY – December 7, 2015
SAN DIEGO, CA – Michael William Lutts, a 52-year-old foster parent and pediatric nurse, was sentenced in federal court today to the statutory maximum 80 years in prison for sexually exploiting a two-month-old premature boy and an 11-month-old girl who had been placed in his care in 2014.
During the sentencing hearing, U.S. District Judge John Houston called Lutts the “worst of the worst” and described his conduct as “horrific” and “worse than a mass murderer shooting 20 people” because the newborns he targeted “are the most fragile people to victimize.”
Before the sentence was handed down, Assistant U.S. Attorney Alessandra Serano urged Judge Houston to hand down a 65-year prison term –essentially life in prison considering the defendant’s age. “This defendant is a parent’s worst nightmare and a predator to society. He should never see the light of day. Rehabilitation would be futile.”
Judge Houston handed Lutts a sentence that was 15 years more than the prosecutor had asked for – saying he wanted to “send a message to others who conduct this activity under the cover of dark.” The judge said he would not recommend any psychological treatment for the defendant as the “taxpayers shouldn't waste their money on treatment.”
Lutts pleaded guilty in January, admitting to 15 instances in July and August of 2014 in which he photographed and videotaped the babies in sexually explicit situations at both his home and workplace. In one image, the defendant photographed his own exposed genitals beside the infant, who was still wearing his hospital bracelet. In some of the images and videos, the baby is crying as Lutts sexually abuses him. Lutts also admitted emailing sexually explicit images of children to others.
Lutts pleaded guilty to two counts of sexual exploitation of a minor and one count of distribution of child pornography. In addition to his custodial sentence, he was ordered to forfeit his College area home where most of the crimes occurred.
“This is one of most appalling, heart-wrenching cases I have seen in this district,” said U.S. Attorney Laura Duffy. “All child exploitation cases are heinous. But it’s a whole new level of depravity when the victims are babies in the care of a trusted nurse. One of these victims was a premature, two-month-old foster child who was alone in this world except for a foster parent who was supposed to provide a safe and loving environment. We will do everything in our power to protect our precious, defenseless children from sexual abuse and exploitation.”
“Lutts was trusted with the care of two infants who he sexually exploited and abused repeatedly. These infants suffered in silence, unable to speak for themselves, and unable tell others of the horror they were suffering,” said FBI Special Agent in Charge, Eric S. Birnbaum. “When this type of sexual exploitation takes place, the FBI and our law enforcement partners will aggressively pursue these sexual predators and bring them to justice. In doing so, we will give a voice to the most vulnerable members of our society.”
DEFENDANT Criminal Case No. 14CR2542-JAH
Michael William Lutts Age: 52 San Diego
SUMMARY OF CHARGES
Counts 1, 17: Sexual Exploitation of a Minor, in violation of 18 U.S.C. §2251(a)
Maximum Penalties: Thirty years in prison, mandatory minimum 15 years per count
Counts 16: Distribution of Child Pornography, in violation of 18 U.S.C. §2252(a)(2)
Maximum Penalties: Twenty years in prison, mandatory minimum 5 years
INVESTIGATING AGENCIES
Federal Bureau of Investigation
National City Man Sentenced to 55 Months in Prison for Robbing Imperial Beach Credit UnionRead the Press Release
Assistant U. S. Attorney Matthew Brehm (619) 546-8983
NEWS RELEASE SUMMARY – December 7, 2015
SAN DIEGO – Tulio David Gasca was sentenced today by U.S. District Judge John Houston to 55 months in prison for robbing a North Island Credit Union branch and then leading sheriff’s deputies on a 40-minute foot chase.
In his plea agreement, Gasca, 24, admitted that on March 5, 2015, at approximately 12:41 p.m., he entered the branch in Imperial Beach wearing a mask and approached a teller and said, “Give me your money!” Gasca took $4,210 and ran from the credit union.
An off-duty correctional officer chased after Gasca, who ran into an apartment complex across the street from the credit union, through its courtyard, and then out a gate into an alley. The correctional officer continued to pursue Gasca but lost sight of him. A canine unit responded to the courtyard and began to track Gasca.
Before the canine unit found the defendant, a San Diego County Sheriff’s helicopter arrived and its crew spotted Gasca a few blocks away from the credit union and apartment complex. A responding sheriff’s deputy attempted to stop Gasca. Gasca wrenched himself free from the deputy’s hold and ran from him.
When the deputy caught up to Gasca and tried to stun him with a taser, Gasca physically resisted, injuring the deputy. Gasca then fled toward 13th Street. At approximately 1:25 p.m., deputies found Gasca hiding in the backyard of a 13th Street residence, where they arrested him. The stolen money was not recovered at that time.
On March 6, 2015, a resident on 13th Street notified law enforcement that she found a large amount of currency when cleaning shelves located in her backyard, where Gasca was found the day before. Deputies returned to her home and recovered $3,862 and an email addressed to Gasca from beneath a shelf in the backyard.
DEFENDANT Case Number: 15CR0731-JAH
Tulio David Gasca Age: 24
SUMMARY OF CHARGE
Bank Robbery, in violation of Title 18, United States Code, Section 2113(a)
Maximum penalty: 20 years in prison
AGENCY
Federal Bureau of Investigation
San Diego County Sheriff’s Department
Tax Preparer Admits Filing Thousands of False Returns in Multi-Million Dollar Tax Return ScamRead the Press Release
Assistant U.S. Attorneys Joseph J.M. Orabona (619) 546-7951 or Alexandra Foster (619) 546-6735
NEWS RELEASE SUMMARY – December 2, 2015
SAN DIEGO – The owner of a tax preparation business pleaded guilty today in federal court, admitting that she filed more than 4,000 false income tax returns with the Internal Revenue Service 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 entered her plea to charges of conspiracy to file false, fictitious, and fraudulent claims for federal tax refunds, tax evasion and aggravated identity theft before U.S. Magistrate Judge Bernard G. Skomal.
According to 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 client 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 spent this money for her own personal benefit. 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 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.
The plea agreement also sets forth a forfeiture provision whereby Vega, a previously convicted felon, agreed to the surrender of several firearms seized from her 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, pleaded guilty to possessing the unregistered sawed-off shotgun and is scheduled to be sentenced in this case before U.S. District Judge Jeffrey T. Miller on December 18, 2015 at 9:00 a.m. In addition, Vega consented in her plea agreement to the forfeiture of approximately $18,600 in cash, also seized during the search warrant, which represented proceeds of her tax fraud.
Furthermore, as part of her plea agreement, Vega agreed to be permanently enjoined from preparing or filing federal income tax returns for anyone other than herself. A civil complaint will be filed against Vega, and a permanent injunction will be entered to prevent Vega from acting as a tax preparer in the future.
Vega was released on bond in this case on January 28, 2015. Although the court informed her not to commit another federal crime, Vega once again began filing false tax returns with the IRS within days of her release. Without the clients’ knowledge, Vega fraudulently inflated or created credits and deductions to maximize her clients’ false returns. The IRS uncovered her fraud, and Vega was arrested on February 25, 2015. In furtherance of her conspiracy, Vega agreed with Deanna Dave (charged in Criminal Case No. 15CR2715-JM) to misrepresent to the grand jury 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. On November 17, 2015, Dave pleaded guilty to making a false declaration before the grand jury, and her sentencing is scheduled for February 5, 2016 before Judge Miller.
“Tax return preparers owe a duty to their clients to prepare tax returns that are accurate and comply with the law,” said U.S. Attorney Laura Duffy. “Tax return preparers who defraud the IRS out of millions of dollars, intentionally falsify tax returns, and steal the identities of minor dependents breach the public’s trust and undermine confidence in the tax system. This Office and our law enforcement partners will vigilantly pursue allegations of such misconduct in order to protect the community and the public.”
With a new tax return filing season right around the corner, 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.
Erick Martinez, Special Agent in Charge for IRS Criminal Investigation commented: “As we approach tax filing season, those who might consider committing refund fraud and identity theft should be aware of the extremely negative consequences of doing so,” said IRS Criminal Investigation's Special Agent in Charge Erick Martinez. “IRS Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false income tax returns.”
“The Secret Service remains committed to vigorously investigating and seeking prosecution of those individuals who commit identity theft. We are grateful for the efforts of the U.S. Attorney’s Office and our federal partners at the Internal Revenue Service in this investigation,” said David Murray, Special Agent in Charge, United States Secret Service, San Diego Field Office.
Separately, three other 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-conspirator Justin Vega is scheduled to be sentenced before U.S. District Judge Jeffrey T. Miller on January 22, 2016, and co-conspirators Tammie Cowles and Stephen Elliott are scheduled for sentencing before Judge Miller on March 4, 2016.
Vega is scheduled to be sentenced for her crimes before U.S. District Judge Jeffrey T. Miller on March 4, 2016 at 9:00 a.m.
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
INVESTIGATING AGENCIES
Internal Revenue Service-Criminal Investigation
United States Secret Service
Bureau of Alcohol, Tobacco, and Firearms
Report Finds Meth Epidemic in Full Force in San Diego CountyRead the Press Release
Contact: Kelly Thornton, 619-546-9726
NEWS RELEASE SUMMARY – November 30, 2015
SAN DIEGO – Methamphetamine continues to be a wrecking ball in San Diego County, as Mexican Super Labs flood the market with the purest and cheapest product ever seen here, creating a perfect storm of health and public-safety consequences.
The latest Methamphetamine Strike Force Report Card, which tracks nine indicators of the meth problem in San Diego County annually, found that the meth epidemic is in full force here, as numbers of meth-related deaths, emergency room visits, arrests and border seizures remain at alarming levels.
According to the report, emergency-room visits throughout San Diego County have increased by thousands of patients – up 141 percent since 2010. Seizures of methamphetamine at the San Diego-Tijuana border have marked a dramatic 129 percent increase from 2010 to 2014. Forty-five percent of adults arrested in 2014 had meth in their systems, compared to 27 percent in 2010.
Adding to law enforcement angst is voter-approved Prop. 47, which last year made meth use and possession a misdemeanor. These offenses used to be felonies, and the courts could require drug treatment for many offenders. That has completely changed. Today, someone can get arrested, released and re-arrested many times for what are considered non-violent meth offenses.
Twenty-five years ago meth was cooked up in the U.S., in small-scale labs in motorhomes, trailers or apartments, and it was maybe 50 percent pure. Today’s meth is being manufactured in huge quantities in Mexican Super Labs supplied by Asian chemical distributors and staffed by university educated chemists and engineers.
The result: U.S. Markets are being flooded with the highest quality and lowest priced meth to date. What was once 50 percent pure is now 95 percent pure. What was $1,800 a kilogram in 2010 is now as low as $400.
“The trend lines are deeply troubling and show that we must continue to wage war against a drug that is tearing families apart,” said county Supervisor Dianne Jacob. “Make no mistake: meth is death, meth breaks lives, and we need to continue to do all we can to stem the tide of this terrible drug into our communities.”
“Meth is a quadruple threat – it’s extremely pure, inexpensive, highly addictive and widely available,” said U.S. Attorney Laura Duffy. “We are tackling this monster problem by intensifying efforts to dismantle the cartels, and by offering prevention and education programs targeting young people and medical professionals.”
“This is a perfect storm for meth addicts and those just encountering the drug for the first time,” said Sheriff Bill Gore. “We can't incarcerate our way out of this problem – it will require education at all levels as to the severe consequences of this drug. This is the essence of public safety – to educate and inform.”
Dr. Danielle Douglass, an emergency physician at Sharp Grossmont Hospital, said that long term use of meth is related to many cardiovascular problems, including cardiomyopathy. “Meth use results in both chronic and acute heart disease,” Douglass said. “A good percentage of these meth-related deaths are people who die of natural disease, where their meth use contributed to an early death. Half of all meth-detected deaths are persons aged 40 to 60 years old.”
Some other trends:
--Meth use and crime are linked. Last year 45 percent of adults arrested and taken to county jails tested positive for methamphetamine. That number comes from both jail surveys and confirmed drug tests. This is a 66 percent increase over five years ago.
-Between fiscal years 2009 and 2014, Customs and Border Protection reported a 300 percent increase in the amount of meth seized at all of California’s ports of entry.
- While this year’s Methamphetamine Strike Force Report Card found meth-related deaths showed a slight 2-percent decrease from 2013 to 2014 –from 267 to 262 – the 2014 death toll is still two-thirds higher than five years ago.
-Meth, in its ever increasing role as “grim-reaper” doesn’t discriminate. In 2014, the youngest methamphetamine-related death reported by San Diego’s Medical Examiner was a 17-year-old female who committed suicide, and the oldest was a 70-year-old woman who died of heart disease with methamphetamine toxicity. This woman was not an anomaly. We have a “Silver Tsunami” of aging meth users whose bodies are less and less able to handle this powerful drug.
-Innovative traffickers will try anything and everything to smuggle their drugs across the border by land, sea or air – in Super Tunnels, on jet skis, superlight aircraft and even drones. They are using youth as mules to walk across the borders.
-Seven to 10 percent of methamphetamine now being smuggled into the U.S. from Mexico is in liquid form, meaning finished methamphetamine that has been dissolved or suspended in a liquid solvent. Once in the United States – the meth is taken to labs at which the liquid meth is converted into crystal meth. This process requires chemicals that are highly flammable and explosive - which presents a whole host of other issues for the communities, generally in the Central Valley, in which such labs are located.
Nick Macchione, director of the county’s Health and Human Services Agency and a chair of the Meth Strike Force, emphasized that treatment works, and is available. The County contracts with residential and outpatient programs in every region in San Diego County. A 2002 California Administrative Office study estimated that every dollar spent on drug treatment avoids seven dollars in criminal justice expenses.
Residents who need treatment referrals or who want to report anonymously suspicious meth-related crime are encouraged to call the Meth Hotline at 1-877-NO-2-METH or to give anonymous reports to www.no2meth.org
Five Individuals, Including Two Doctors, Charged in Kickback Schemes Involving nearly $600 Million in Fraudulent Claims by Southern California HospitalsRead the Press Release
Former Hospital Executive, Doctors and Two Others Admit Roles; Agree to Cooperate
In a series of related cases announced today, the former chief financial officer (CFO) of a Long Beach, California, hospital, two orthopedic surgeons and two others have been charged in long-running health care fraud schemes that illegally referred thousands of patients for spinal surgeries and generated nearly $600 million in fraudulent billings over an eight-year period.
Two of the defendants have pleaded guilty and three others have agreed to plead guilty in the coming weeks. All five defendants have agreed to cooperate in the government’s ongoing investigation into kickbacks for patient referrals and fraudulent bills for spinal surgeries.
The schemes involved tens of millions of dollars in illegal kickbacks to dozens of doctors, chiropractors and others. As a result of the illegal payments, thousands of patients were referred to Pacific Hospital in Long Beach, where they underwent spinal surgeries that led to more than $580 million in bills being fraudulently submitted during the last eight years of the scheme alone. Many of the fraudulent claims were paid by the California worker’s compensation system and the federal government.
In a second, similar scheme that also involved spinal surgeries, doctors received illegal kickbacks for referrals to a Hawaiian Gardens hospital.
Today, federal prosecutors today filed two cases related to the scheme, and yesterday three other cases were unsealed by a federal judge. Those named in the cases are:
- James L. Canedo, 63, of San Pedro, California, the former CFO of Pacific Hospital in Long Beach, who pleaded guilty on Sept. 4 to a criminal information charging him with participating in a conspiracy that engaged in mail fraud, honest services fraud, money laundering, paying or receiving kickbacks in connection with a federal health care program and violating the Travel Act, specifically, interstate travel in aid of a racketeering enterprise. The case against Canedo was unsealed yesterday by U.S. District Judge Josephine L. Staton of the Central District of California, who is scheduled to sentence the defendant on June 17, 2016.
- Philip Sobol, 61, of Studio City, California, an orthopedic surgeon who has agreed to plead guilty to conspiracy to commit mail fraud, honest services fraud and violations of the Travel Act; as well as a separate, substantive Travel Act violation. The information against Sobol and a related plea agreement were filed today in U.S. District Court, where the defendant is expected to be arraigned next month.
- Alan Ivar, 55, of Las Vegas, a chiropractor who formerly resided in San Juan Capistrano, California, and owned several businesses based in Costa Mesa, California, was charged today in a criminal information that alleges one count of conspiracy to commit mail fraud, honest services fraud, money laundering and violations of the Travel Act. In a plea agreement also filed today, Ivar admitted that for well over a decade, he had an agreement with the owner of Pacific Hospital to refer patients in exchange for a monthly retainer. Ivar, who also agreed to plead guilty, is expected to be arraigned next month.
- Paul Richard Randall, 56, of Orange, California, a health care marketer previously affiliated with Pacific Hospital and Tri-City Regional Medical Center in Hawaiian Gardens, pleaded guilty on April 16, 2012, before Judge Staton to conspiracy to commit mail fraud. Randall, who admitted recruiting chiropractors and doctors to refer patients to Tri-City in exchange for kickbacks, is scheduled to be sentenced on April 8, 2016.
- Mitchell Cohen, 55, of Irvine, California, an orthopedic surgeon, was charged last week with filing a false tax return. Cohen admits in a plea agreement filed on Nov. 16 admits the he failed to report income received from kickback payments and is expected to be arraigned next month.
All five defendants have agreed to cooperate with the government’s ongoing investigation, dubbed “Operation Spinal Cap,” into the kickback schemes, which involved dozens of surgeons, orthopedic specialists, chiropractors, marketers and other medical professionals.
Under the terms of their plea agreements, Sobol faces a federal prison term of up to 10 years; Canedo, Ivar and Randall face up to five years in prison; and Cohen faces up to three years in prison on the tax charge. All of the defendants will be required to pay restitution to the victims of the scheme, which in Canedo’s case will be at least $20 million.
In April 2014, Michael D. Drobot, the former CEO and owner of Pacific Hospital of Long Beach, pleaded guilty to participating in the scheme and is also cooperating with the investigation.
As described in court documents, Drobot, who was the owner and/or CEO of Pacific Hospital of Long Beach until late 2013, ran a 15-year-long scheme in which he and others billed workers’ compensation insurers and the U.S. Department of Labor hundreds of millions of dollars for spinal surgeries and other procedures performed on patients who had been referred by dozens of doctors, chiropractors and others who were paid illegal kickbacks.
As part of the scheme, the conspirators typically paid a kickback of $15,000 for each lumbar fusion surgery and $10,000 for each cervical fusion surgery. Some of the patients lived hundreds of miles away from Pacific Hospital and closer to other qualified medical facilities. The patients were not informed that medical professionals had been offered kickbacks to induce them to refer the surgeries to Pacific Hospital. From 2005 through 2013, only part of the overall scheme, Pacific Hospital billed insurers more than $580 million for spinal surgeries on more than 4,400 patients. Insurers paid the hospital more than $226 million for the surgeries performed as a result of illegal kickbacks.
“Health care fraud and kickback schemes burden our healthcare system, drive up insurance costs for everyone, and corrupt both the doctor-patient relationship and the medical profession itself,” said U.S. Attorney Eileen M. Decker of the Central District of California. “The members of this scheme treated injured workers and their spines as commodities, to be traded away to the highest bidder. This investigation should send a message to the entire industry: patients are not for sale.”
The conspirators in the Pacific Hospital scheme concealed the kickback payments by entering into bogus contracts to provide a “cover story” for the doctors, chiropractors and others who received illegal payments. For example, a number of doctors entered into agreements with a Pacific Specialty Physician Management (PSPM), a company owned by Drobot, under which the doctors received as much as $100,000 per month from PSPM in return for the right to purchase their medical practices – an option that was never exercised. PSPM paid some doctors inflated prices for the right to operate their practices and collect on their insurance claims. In still other cases, Pacific Hospital entered into contracts with doctors under which the doctors were to help the hospital collect on its surgery bills to insurance companies, but the hospital’s own collection staff, rather than the doctors, actually performed the collections work. Several doctors entered into lease agreements under which PSPM or Pacific Hospital paid rent for the use of office space, but rarely used the space. And other doctors had agreements to provide consulting services to Drobot’s companies, but did not actually provide the services. Still others, including marketers who introduced doctors to Pacific Hospital, had additional agreements with Drobot’s companies.
Canedo, as Pacific Hospital’s CFO from 1999 through October 2013, was responsible for tracking payments made directly to doctors by the hospital, as well as the number of patients each doctor referred to the hospital and the amounts the hospital collected for those patients’ procedures. Canedo also communicated directly with a number of the doctors regarding the payments and surgeries, and sometimes mediated disputes between different doctors who claimed credit for the same referrals.
Sobol, Ivar and Cohen each received, respectively, $5.2 million, $1.24 million and $1.64 million in kickbacks. Together they referred more than 200 patients to Pacific Hospital.
“The defendants carried out this elaborate scheme by callously gathering patients, remaining indifferent to patient needs, and greedily lining their pockets with a cut of the cash from taxpayer-funded health care systems,” said Assistant Director in Charge David Bowdich of the FBI's Los Angeles Field Office. “The effort by investigators and prosecutors in this case cannot be overstated and, as it continues, will play a part in restoring confidence in the medical marketplace.”
Two other Drobot companies, California Pharmacy Management (CPM) and its successor, Industrial Pharmacy Management (IPM), were also important players in the scheme. Both companies set up and managed what were essentially mini-pharmacies within doctors’ offices. CPM and IPM bought and dispensed medication that the doctors prescribed to their patients, and these businesses received a portion of the money reimbursed by insurance companies for the medications. Drobot, along with others at CPM and IPM, often agreed to increase the doctors’ shares of the insurance claims in return for those doctors’ referral of patients to Pacific Hospital. In many cases, for doctors who made such referrals, the conspirators “advanced” payments from CPM and IPM before the companies had collected any money for the medications or even prescribed them, and often simply “wrote off” payments as losses when collections fell short.
“Injured workers were treated like livestock by doctors and hospitals who paid or accepted kickbacks and bribes in exchange for referrals,” said California Insurance Commissioner Dave Jones. “Injured workers are put at risk when their medical treatment is based on kickbacks and bribes instead of their medical needs. Detectives from the Department of Insurance worked closely with federal law enforcement agencies to investigate and expose this illegal conspiracy, which is one of the largest workers compensation insurance fraud cases we have ever seen.”
Randall, who also facilitated the Pacific Hospital scheme by introducing doctors to Drobot and coordinating kickback arrangements, pleaded guilty to participating in a separate, similar scheme involving Tri-City Regional Medical Center. According to his plea agreement, Randall acted as a “marketer” for Tri-City and conspired with hospital executives to pay kickbacks to doctors and chiropractors to refer workers’ compensation patients Tri-City for spinal surgeries. As in the Pacific Hospital scheme, the surgeries at Tri-City involved use of spinal surgery hardware that Randall distributed to Tri-City at inflated prices through his company Summit Medical Group, knowing that the cost would be passed on to insurers. Using proceeds from the sale of the hardware, Randall paid a 5 percent kickback to Tri-City and kickbacks of up to $20,000 per surgery to the doctors and chiropractors who referred the patients. In addition, Randall paid kickbacks to doctors in return for referrals of patients for toxicology tests though a separate company, Platinum Medical. The scheme resulted in several million dollars in losses to insurers.
“Medical referrals should be based on what’s best for the patient – not what’s best for the doctor’s bank account,” said Special Agent in Charge Erick Martinez of IRS-Criminal Investigation (CI). “In paying the kickbacks and submitting the resulting claims for spinal surgeries and medical services, the defendants acted with the intent to defraud workers’ compensation insurance carriers and to deprive the patients of their right to honest services.”
“We are committed to preserving Postal Service resources by vigorously investigating allegations of fraud and corruption,” said Special Agent in Charge Tom Frost of the U.S. Postal Service’s Office of Inspector General (USPS OIG). “We are grateful for the efforts of the U.S. Attorney’s Office and our State and Federal partners in this investigation.”
The ongoing investigation into abuses involving the spinal pass-through law and kickbacks paid for spinal surgery patients is being conducted by the FBI, the USPS OIG, IRS-CI and the California Department of Insurance.
Leader of Bank Fraud Conspiracy Sentenced to 33 Months in CustodyRead the Press Release
Assistant U.S. Attorneys Joseph Green (619) 546-6955 and Eric Beste (619) 546-6695
NEWS RELEASE SUMMARY – November 23, 2015
SAN DIEGO – A leader of a sophisticated bank fraud scheme that used dozens of bank accounts in the names of fictitious businesses was sentenced today to 33 months in prison for his role in causing $689,000 in losses to Bank of America.
U.S. Chief District Judge Barry Ted Moskowitz sentenced Vahag Stepanyan of Las Vegas, Nevada, to almost three years in custody based on the defendant’s “brazen” scheme to defraud a federally insured financial institution, as well as for his participation in a separate tax fraud scheme that resulted in millions of dollars in fraudulent claims for tax refunds.
As a part of the bank fraud scheme, Stepanyan guided other co-conspirators in the creation of fictitious business entities in Nevada that were used to set up accounts at Bank of America. Stepanyan and other co-conspirators then engaged in a series of bank transactions that allowed co-conspirators to withdraw recently deposited funds from the bank accounts before Bank of America learned that the accounts did not have sufficient funds to cover the withdrawals. The scheme resulted in a loss of $689,000 to Bank of America.
In addition, as a part of a separate scheme to defraud the Internal Revenue Service, Stepanyan cashed checks drawn on accounts that had received fraudulent tax refunds. At the sentencing hearing, Judge Moskowitz remarked that Stepanyan’s participation in a scheme to defraud the United States “added insult to injury” because he sought to take advantage of the nation that had welcomed him from Armenia.
At the conclusion of today’s sentencing hearing, Judge Moskowitz remanded Stepanyan into custody to begin serving his 33-month sentence.
DEFENDANTS
Vahag Stepanyan Age: 34 Las Vegas, NV
SUMMARY OF CHARGES
Conspiracy to Commit Bank Fraud – Title 18, U.S.C., Section 1349
Maximum penalty: Thirty years in prison, $250,000 fine, restitution
AGENCY
Federal Bureau of Investigation
Internal Revenue Service – Criminal Investigation
Campaign Aid Sentenced for Launching Federal Investigation Aimed at Discrediting Congressional CandidateRead the Press Release
Assistant U.S. Attorneys Phillip L.B. Halpern (619) 546-6964 and
Emily J. Keifer (619) 546-7319
NEWS RELEASE SUMMARY – November 23, 2015
SAN DIEGO – Todd Bosnich, fired policy director for the failed Carl DeMaio congressional campaign, was sentenced today to five years of probation for sending anonymous emails to himself - making it appear that DeMaio threatened him – and then lying to the FBI about it.
U.S. District Judge Larry Burns also ordered Bosnich to undergo psychiatric counseling, complete 240 hours of community service and a pay a $2,500 fine. In imposing the sentence, Judge Burns noted that DeMaio lost the election.
“There is no way of knowing how much [Bosnich’s conduct] affected voters’ minds,” he said, emphasizing that this was not a victimless crime. “The victim is Mr. DeMaio, DeMaio’s campaign, or the democratic process.”
Bosnich pleaded guilty in June, admitting that he instigated and impeded the FBI investigation. According to his plea agreement, after he was terminated from his job in May of 2014, a disgruntled Bosnich made sexual harassment accusations against DeMaio. Among other things, he claimed that DeMaio offered him $50,000 in hush money to keep quiet about the harassment.
Bosnich also told a radio reporter during an interview on June 2, 2014 that he had received threatening emails from an anonymous source that he was “positive” were from DeMaio or someone closely associated with DeMaio.
According to his plea agreement, Bosnich admitted that three days later, on June 5, 2014, Bosnich set up a dummy yahoo email account, [email protected], from his North County residence using bogus personal information including a false date of birth and gender. According to his admissions, he then sent a “particularly ugly and threatening message” to his own personal email account. The email suggested that the “anonymous” author of the email would ensure that Bosnich never again worked in politics if he didn’t stop making accusations against DeMaio.
During multiple interviews with the FBI, Bosnich – supposedly the victim of threatening emails - continued to claim that he did not know who sent the emails, but he believed DeMaio was behind the anonymous threats. Based on these false claims, a grand jury issued subpoenas attempting to identify the source of the emails. All the while, it was Bosnich himself who had sent the emails.
“The integrity of the American electoral process is the very bedrock of our democracy,” said U.S. Attorney Laura E. Duffy. “Bosnich’s criminal act had the very real possibility of improperly tipping the scale towards a particular candidate. This was far from a harmless prank.”
“Mr. Bosnich engaged in a pattern of lies and deceitful acts in an effort to obstruct FBI Agents from getting to the truth in this case,” said FBI Special Agent in Charge Eric S. Birnbaum. “Today’s sentencing sends a clear message that the FBI will aggressively investigate and seek prosecution of those who attempt to obstruct justice by lying to the FBI.”
DEFENDANT: Case Number 14CR1544-LAB
Todd Bosnich Age: 29 Del Mar, CA
SUMMARY OF CHARGES
Obstruction of Justice – Title 18, U.S.C., Section 1512
Maximum penalty: 5 years’ imprisonment and $250,000 fine
AGENCY
Federal Bureau of Investigation
Jury Convicts Member of San Diego Counterfeiting OperationRead the Press Release
Special Assistant U. S. Attorney Stephanie G. Chau (619) 546-9174 and Assistant U.S. Attorney Michael G. Wheat (619) 546-8437
NEWS RELEASE SUMMARY – November 18, 2015
SAN DIEGO – Jermaine Harris of San Diego was convicted by a federal jury yesterday of manufacturing and passing counterfeit currency following a one-week trial before U.S. District Judge Cathy Ann Bencivengo.
A federal jury deliberated less than one day and found Harris guilty of one count of Counterfeiting and Forging Obligations of the United States, in violation of 18 U.S.C. Section 471 and one count of Passing Counterfeit Obligations, in violation of 18 U.S.C. Section 472.
At trial, the government presented evidence that Harris, along with co-defendants Alexander Eibeck, Sopeap Muk, Meghan Ripley, Nicole Cortes and Ashley Contreras, operated a counterfeit currency manufacturing plant from a hotel room in Mission Valley.
On November 15, 2014, the San Diego Police Department arrested one of the six individuals for passing counterfeit United States Federal Reserve Notes at the Fashion Valley Mall. On November 16, 2014, the San Diego Police Department and the United States Secret Service, Regional Task Force, discovered the manufacturing plant.
According to the evidence presented at trial, the six defendants manufactured counterfeit U.S. currency by “bleaching” or “washing” the ink off of genuine small-denomination bills and then using a printer to print images of higher-denomination bills on the washed currency paper. A search of the hotel room yielded a wide variety of physical evidence, including completed and partially completed counterfeit currency, printers, bleaching solution, and various tools used to replicate the security features of legitimate U.S. currency. U.S. Secret Service agents discovered that the defendants had been using electronic devices to view and manipulate images of legitimate U.S. currency features to produce counterfeit $100 bills.
Subsequent investigation revealed that the group victimized numerous businesses in the San Diego area by passing the counterfeit $100 bills. According to the plea agreement for Eibeck, the face value of the counterfeit bills manufactured and passed by the group exceeded $16,000.
Eibeck, Muk, Ripley, Cortes and Contreras were previously sentenced after pleading guilty. Judge Bencivengo will sentence Harris on February 19, 2016.
This case was investigated by United States Secret Service.
“The United States Secret Service would like to thank the San Diego Police Department, as well as our other state and local law enforcement partners in the San Diego Regional Fraud Task Force for all their efforts and assistance with this investigation,” said Special Agent in Charge David Murray.
DEFENDANT Case Number: 14CR3488-CAB
Jermaine Harris Age: 34
Alexander Eibeck Age: 27
Sopeap Muk Age: 28
Nicole Cortes Age: 29
Meghan Ripley Age: 35
Ashley Contreras Age: 22
SUMMARY OF CHARGES
Counterfeiting and Forging Obligations, in violation of Title 18, United States Code, Section 471
Maximum penalty: 20 years
Passing Counterfeit Obligations, in violation of Title 18, United States Code, Section 472
Maximum penalty: 20 years
AGENCIES
United States Secret Service, San Diego Regional Task Force
San Diego Police Department
San Diego Pharmacy Owners Pay $750,000 to Resolve Drug Diversion AllegationsRead the Press Release
Assistant U.S. Attorney Dylan M. Aste (619) 546-7621
NEWS RELEASE SUMMARY – November 17, 2015
SAN DIEGO – United States Attorney Laura E. Duffy announced today that a group of San Diego pharmacies and their owners have paid $750,000 to the federal government to resolve allegations that they mishandled significant amounts of highly addictive and frequently abused prescription narcotics, as well as ephedrine or pseudoephedrine products.
The settlement is with Park Medical Pharmacy, Inc., and owners Joseph Grasela and John Grasela. The Graselas and Park Medical Pharmacy, Inc. do business as Medical Center Pharmacy. They operate a dozen storefront pharmacies under various names such as Galloway Medical Center Pharmacy, Community Medical Center Pharmacy, and Medical Center Pharmacy.
The settlement arises from a U.S. Drug Enforcement Agency (“DEA”) investigation into suspected illegal activity at Medical Center Pharmacy. Based on DEA’s inventory audits, inspections, and other investigative activities, the United States asserts that Medical Center Pharmacy committed multiple violations of the Controlled Substances Act (“CSA”).
The alleged violations include diversion of a significant amount of controlled substances, failure to control the pharmacies’ inventory of controlled substances, and failure to maintain required records of the pharmacies’ distribution of controlled substances. The alleged violations also include failure to obtain the proper authorization required for the sale of ephedrine and pseudoephedrine products, which can be used to produce methamphetamine.
The United States asserts that Medical Center Pharmacy was unable to account for roughly 21,000 pills at four locations over a two-year span. In some instances, two pharmacy technicians allegedly diverted thousands of pills. In others, Medical Center Pharmacy allegedly delivered drugs to a residence that pill seekers used in conjunction with their sham identities. The unaccounted-for pills were the powerful and highly addictive drugs oxycodone and hydrocodone, commonly known by their brand names OxyContin, Roxicodone, and Percocet.
The United States contends that Medical Center Pharmacy violated the Combat Methamphetamine Epidemic Act (“CMEA”) portion of the CSA. The CMEA was enacted to curtail the illicit production and use of methamphetamine by requiring pharmacies to certify that they have met CMEA requirements such as properly training their employees in the proper sale of ephedrine, pseudoephedrine, and other listed chemical products. The CMEA also requires pharmacies to keep a logbook of certain listed chemical products sold, and the logbook must contain the identity of the purchaser and the product that was purchased. This requirement, along with a cap on the amount of listed chemical products an individual may purchase, helps prevent “meth smurfing” – the purchasing of legal amounts of ephedrine products but in many separate purchases. The United States asserts that Medical Center Pharmacy unlawfully sold listed chemical products without DEA authorization, did not properly maintain logbooks, and did not train employees.
“Pharmacies that are given the commercial benefit of selling controlled substances must meet their legal burden of adhering to the strict requirements prescribed under the Controlled Substances Act. We will aggressively pursue those who violate these requirements,” stated U.S. Attorney Duffy. “Oxycodone and hydrocodone have similar chemical structures to heroin and are similarly dangerous. The United States will not tolerate drug diversion or poor inventory control of highly abused and highly addictive prescription painkillers. This settlement conveys that message.”
In addition to paying $750,000 in settlement to the government, Medical Center Pharmacy has committed to implementing new inventory control procedures to assure full accountability of all controlled substances.
“It is DEA’s responsibility to guarantee that pharmacies are held accountable for their role in ensuring powerful and potentially dangerous drugs are not diverted for illegal use,” said DEA San Diego Special Agent in Charge William R. Sherman. “DEA will continue to monitor and investigate pharmacies to ensure that they are following all federal regulations so that these potent drugs don’t end up on the streets of our communities.”
This matter was handled by Assistant U.S. Attorney Dylan M. Aste of the Affirmative Civil Enforcement Unit of the U.S. Attorney’s Office.
Loan Fraud Defendant’s Lies and False Documents Qualify Him for Five Years in PrisonRead the Press Release
Assistant U.S. Attorneys Emily Allen (619) 546-9738 or Mark Conover (619) 546-6763
NEWS RELEASE SUMMARY – August 28, 2015
SAN DIEGO – Solomon Gordon Raymond, also known as Paul Anthony Raymond, was sentenced today to 57 months in custody by U.S. District Judge Roger T. Benitez for lying to banks on a series of business loan applications he used to take almost $500,000.
In addition to punishing Raymond for his fraudulent crimes, Judge Benitez increased Raymond’s sentence for the lies he told during testimony at his May 2015 trial. During the hearing, Judge Benitez described the defendant as “one of the worst conmen I have ever seen.” Raymond was taken into custody at today’s sentencing hearing to immediately begin serving his sentence.
Raymond was convicted by a jury of lying on several loan applications he submitted to Wells Fargo Bank, Bank of America, and the Bank of Escondido. Each application contained numerous false statements and omissions regarding Raymond’s financial and business affairs, criminal history, and other aspects of his creditworthiness. Evidence presented at trial established that Raymond was able to trick the banks into believing that he was a good candidate for the loans by strategically using a second social security number that was unmarred by his bad credit history and multiple prior bankruptcy filings. Indeed, even though he had exited bankruptcy just a few months before his first loan application, Raymond falsely claimed to the lender that he had not undergone bankruptcy. Raymond also lied about his criminal history, falsely claiming to the banks that he had never been arrested or convicted of a crime.
Evidence at trial showed that Raymond told extraordinary falsehoods about his finances. For example, he claimed that his income ranged from $308,841 to $543,933; in fact, his true income was only a fraction of these amounts. To support his false claims he submitted fraudulent tax returns that appeared to have been filed with the IRS. At trial, the government proved that the file stamps on these tax returns were completely fabricated, and that the returns had never been submitted to the IRS.
Raymond also submitted forged bank and brokerage account statements to support his Bank of Escondido application, showing balances close to $400,000 in each account. In fact, the balances in these accounts were substantially lower, with one account even having less than $100.
Just three days after Raymond collected the last payment of his nearly half million dollars from his fraudulent loans, he filed for bankruptcy, attempting to wipe away his obligation to repay these loans. Raymond has left the banks and the U.S. Small Business Administration (which guaranteed the loans) with hundreds of thousands of dollars in losses.
“Mr. Raymond’s string of lies and deceptions not only defrauded these banks – they also victimized the taxpayers whose funds are used to support business loans to deserving small businesses. We are pleased that they jury saw through the additional lies he told at trial, and that he was appropriately punished for his misconduct,” said U.S. Attorney Laura Duffy.
U.S. District Judge Benitez also ordered Raymond to repay the victims $729,192 in restitution.
DEFENDANTS
Solomon Gordon Raymond (a.k.a. Paul Anthony Raymond ) Age: 54
Golden Valley, Minnesota
SUMMARY OF CHARGES
Four counts of False Statement in a Loan and Credit Application, in violation of 18 U.S.C. § 1014.
Maximum penalty: Thirty years in prison, $1,000,000 fine, restitution, and $100 special assessment, per count.
AGENCIES
Federal Bureau of Investigation
Small Business Administration Office of Inspector General
Social Security Administration Office of Inspector General
Treasury Inspector General for Tax Administration
Tax Preparer Who Filed False Tax Returns for Veterans Pleads GuiltyRead the Press Release
Assistant U.S. Attorney Joseph J.M. Orabona (619) 546-7951
NEWS RELEASE SUMMARY – November 12, 2015
SAN DIEGO – On the day after Veteran’s Day 2015, former U.S. Navy sailor Leonard Damon Washington pleaded guilty to tax evasion and filing false tax returns for a scam that resulted in more than $1 million in inflated tax refunds for fellow Navy service members, and over $140,000 in fraudulent tax preparation fees for Washington. Washington entered his guilty plea before U.S. Magistrate Judge Barbara L. Major, and remains in custody pending a sentencing hearing on February 5, 2016.
According to admissions in court and in his plea agreement, Washington was an active-duty sailor aboard the USS Higgins in San Diego in 2010 when he marketed himself to more than 140 Navy service members as someone who could assist in preparing and filing income tax returns. Washington convinced his fellow Navy service members to hire him as their tax preparer, and to pay him the exorbitant fee of $1,000 per return, by using a variety of false and misleading representations, including that he could obtain “special military tax” deductions and other special tax preparation services because of their military status.
Washington then prepared and filed false income tax returns on behalf of clients, including returns that claimed falsified gambling winnings and phantom tax withholdings, and thereby generated fraudulent tax refunds for his clients. Although he received over $140,000 in preparation fees from clients, Washington concealed his role as their paid tax preparer from the Internal Revenue Service (IRS). Washington directed his fraudulently-acquired fees into various bank accounts (including nominee accounts) in order to frustrate and impede the IRS’s efforts at determining his true income. Ultimately, Washington spent a substantial portion of his fraud proceeds on hotels, flights, restaurants, luxury items, jewelry and other personal expenses, and evaded more than $49,000 in personal federal income taxes he owed for 2010.
“This service member used his position in the U.S. Navy to recruit clients and cheat the system,” said U.S. Attorney Laura Duffy. “On the day after Veteran’s Day, when we are reminded of the amazing character and sacrifice of our best and brightest, this defendant stands in sharp contrast.” She reminded the public to always review a copy of any tax return prepared and filed on their behalf.
“Leonard Washington perpetrated a scheme that systematically defrauded the government, his fellow service members, and the taxpaying public,” said IRS Criminal Investigation’s Special Agent in Charge Erik Martinez. “IRS Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false income tax returns.”
DEFENDANT Criminal Case No. 15CR0951-JM
Leonard D. Washington Age: 43 Springdale, Arkansas
SUMMARY OF CHARGES AGAINST DEFENDANT:
Count 1: Title 26, United States Code, Section 7201 B Tax Evasion. Maximum penalties: 5 years’ imprisonment, $250,000 fine, $100 special assessment, 3 years of supervised release
Count 2: Title 26, United States Code, Section 7206(2) – Aiding and Assisting Preparation of False Tax Returns. Maximum penalties per count: 3 years’ imprisonment, $100,000 fine, $100 special assessment, 1 year of supervised release
INVESTIGATING AGENCIES
Internal Revenue Service-Criminal Investigation
Doctors and Associates Indicted in First Wave of Massive Bribery SchemeRead the Press Release
For Further Information, Contact: Assistant U.S. Attorneys Fred Sheppard (619) 546-8237, Valerie Chu (619) 546-6750, and Caroline Han (619) 546-6968
NEWS RELEASE SUMMARY – November 10, 2015
SAN DIEGO – Eight medical professionals and associates are charged in federal grand jury indictments with buying and selling patients in a bribery scheme involving $25 million in improper claims for medical services and devices which were then billed to California Workers’ Compensation insurance companies.
FBI agents along with investigators from the California Department of Insurance and the San Diego County District Attorney’s Office served five search warrants and three seizure warrants today at locations in San Diego, Chula Vista, National City, Murietta and Los Angeles. Authorities arrested five people, including a radiologist, a chiropractor, a medical equipment provider, a medical clinic administrator and a so-called medical marketer. An attorney and a medical service provider were summoned to appear in federal court on Thursday. One indicted defendant, Gonzalo Paredes, remains a fugitive and a warrant has been issued for his arrest.
These defendants, plus six corporations, are charged in three federal grand jury indictments unsealed today with conspiracy and honest services mail fraud. The indictments allege that these players either paid or received tens of thousands of dollars to buy or sell hundreds of patients, without the patients’ knowledge - therefore depriving those patients of their right to their doctors’ honest services.
“Today’s indictments are only the first wave of charges in what we believe is rampant corruption on the part of some physicians and chiropractors in their dealings with the health care system in general, and California’s Workers’ Compensation System in particular,” said U.S. Attorney Laura Duffy. “A patient puts his trust, and his very life, into the hands of his physician. A doctor’s decisions should never, under any circumstances, be influenced by anything other than the patient’s best interest.”
“Today's indictments show how the defendants in this case allowed greed and corruption to influence their patient care decisions and treated their patients as a commodity to be bought and sold,” said FBI Special Agent in Charge Eric S. Birnbaum. “The FBI will continue to use our intelligence and investigative expertise to identify, disrupt and dismantle sophisticated criminal conspiracies that unlawfully enrich individuals at the expense of patient care. The FBI and our law enforcement partners are committed to rooting out corruption in our health care system.”
“This criminal network bought and sold patients like cattle,” said District Attorney Bonnie Dumanis. “They cashed in on people who trusted them with their health and they conspired to illegally game the system on a level that we’ve not seen before. But, the game is over.”
“Our detectives from the California Department of Insurance worked closely with the FBI, United States Attorney's Office and San Diego District Attorney's office to investigate and arrest these medical providers for insurance fraud, which adds crippling costs to California's workers compensation system,” said Department of Insurance Commissioner Dave Jones. “These are not victimless crimes. When medical providers defraud insurers, those costs are passed on to California businesses and consumers, who already are struggling to make ends meet.”
This is how the schemes worked:
Patients who said they were injured on the job filed a workers’ compensation claim with the state of California and sought treatment for their injury. In this round of indictments, the workers sought help from a chiropractor.
The chiropractors were the gateway to a wide-array of health care fraud. In these cases alone they prescribed medical equipment, referred the patients for MRIs and X-Rays, and ordered specialized treatments such as Shockwave therapy.
As alleged in one of the indictments, Los Angeles radiologist Ronald Grusd paid bribes to a San Diego chiropractor in exchange for patient referrals. The bribes were funneled to the chiropractor via Grusd’s corporation, Willows Consulting, a shell company. The checks were labeled “professional services,” but this was a sham.
In order to further hide the illegal kickbacks, checks were issued to intermediaries - defendants Alexander Martinez and his father, Ruben - through their front companies, “Line of Sight” and “Desert Blue Moon.” The Martinezes took their “cut” and then, in turn, paid off the chiropractor.
Grusd’s practice, California Imaging Network Medical Group, has clinics in San Diego, Los Angeles, Beverly Hills, Fresno, Rialto, Santa Ana, Studio City, Bakersfield, Calexico, East Los Angeles, Lancaster, Victorville and Visalia.
In another indictment, a second San Diego chiropractor, Dr. George Reese, with offices on El Cajon Boulevard, referred patients to a Los Angeles area medical service provider (controlled by attorney Lee Mathis and Fernando Valdes, president of Foremost Shockwave Solutions ) in return for bribes. The bribes were set by the conspirators at $100 per patient and paid through an intermediary. After taking a cut amounting to $25 per patient, the intermediary would pay the remaining $75 per patient to Reese.
Although disguised as “office rent” payments, the illegal bribes were paid in cash during clandestine exchanges in restaurants and parking lots. For example, $6,000 in cash was delivered to Reese in the parking lot of the Jolly Roger in Oceanside, hidden in a gift bag. Other times, it was passed in envelopes or stashed inside newspapers.
According to the indictment, Reese and his codefendants generated and submitted bills to insurers totaling in the tens of millions of dollars. Most of these treatments involved the providing of “Shockwave therapy,” which uses low energy sound waves to initiate tissue repair. Proceeds from the insurance claims generated through this scheme were paid to Mathis and Valdes.
In the final indictment, a San Diego chiropractor referred patients to a licensed provider of durable medical equipment, Julian Garcia. In return Garcia paid the chiropractor $50 for each patient – in cash, to disguise the kickbacks. Garcia then improperly billed Workers Comp insurers millions for hot and cold packs for patients who had been secured by bribes.
Anyone with information about healthcare fraud may call the FBI at 1-800-CALL-FBI, or 1-800-225-5324 or the California Department of Insurance’s toll-free fraud hotline, 800-927-4357.
An arrest itself is not evidence that the defendant committed crimes charged. The defendant is presumed innocent until the government meets its burden in court of proving guilt beyond a reasonable doubt.
DEFENDANTS Case Number: 15cr2821-BAS
Ronald Grusd Age 69 Los Angeles, CA
**Gonzalo Ernesto Paredes Age 59 LaVerne, CA
Alexander Martinez Age 37 Calexico, CA
Ruben Martinez Age 59 Murietta, CA
California Imaging Network Incorporated in 2007 Beverly Hills, CA
Willows Consulting Company Incorporated in 2011 Beverly Hills, CA
Line of Sight, Inc. Incorporated in 2002 Calexico, CA
Desert Blue Moon Incorporated in 2001 Las Vegas, NV
DEFENDANTS Case Number: 15cr2822-CAB
George K. Reese Age 50 San Diego, CA
*Lee Mathis Age 70 San Clemente, CA
*Fernando Valdes Age 50 Westminster, CA
George K. Reese Chiropractic Corp. Incorporated in 2001 San Diego, CA
Foremost Shockwave Solutions Incorporated in 2005 Garden Grove, CA
DEFENDANT Case Number: 15cr2820-BAS
Julian Garcia Age 32 National City, CA
SUMMARY OF CHARGES
Conspiracy to Commit Honest Services Mail Fraud, in violation 18 U.S.C. 371
Maximum Penalty: Five years in custody; $250,000 fine and three years’ supervised release
Honest Services Mail Fraud, in violation of 18 U.S.C. Secs. 1341 and 1346
Maximum Penalty: Twenty years in custody; $250,000 fine or twice the pecuniary gain or loss, whichever is greater, and three years’ supervised release
Travel Act, in violation of U.S.C. 1952
Maximum Penalty: Five years in custody; $250,000 fine and three years’ supervised release
INVESTIGATING AGENCIES
Federal Bureau of Investigation
San Diego County District Attorney’s Office
California Department of Insurance
*Not arrested, but were summoned to appear before a judge on Thursday.
**Still at large
Seminar Spokesman Who Claimed to Be Trillion-Dollar Philanthropist Sentenced for Defrauding Investors Out of MillionsRead the Press Release
Assistant U. S. Attorney Christopher P. Tenorio (619) 546-8413
NEWS RELEASE SUMMARY – November 6, 2015
San Diego, CA - William Ison, who recruited investors by making bogus claims during presentations at financial seminars throughout the United States, was sentenced today to 27 months in custody for defrauding investors, including several from San Diego, of approximately $7 million. U.S. District Judge Dana M. Sabraw also ordered Ison to pay back victim losses as restitution.
Ison previously admitted making fraudulent presentations to potential investors to persuade them to invest in “private placement programs” with co-defendant Douglas Ellingson (who was previously sentenced to 18 months in custody for his role in the scheme). Ison, who represented he was President of Blue Diamond Excavation, Inc. (“BDE”), a mining excavation company based in Newport Beach, claimed investors’ funds would be secured by the company’s assets worth $86 billion, which he had already used to secure medium-term notes (“MTNs”) valued at over $2 billion. In fact, BDE had not produced any income from mining and had not obtained any MTNs.
In addition to lying to seminar participants that he personally made more than $100 million through an investment program, Ison also falsely claimed he managed a consortium of large non-profit foundations that donated more than a trillion dollars annually to various humanitarian causes. Many victims reported they were induced to participate in the scheme only because of Ison’s promises that a portion of profits would go to successful charities that eradicated poverty and developed a cure for AIDS.
Ison and Ellingson, who together were responsible for over $10 million in victims’ losses, initially participated in a scheme involving the Winsome Investment Trust, with James Pantazelos and Robert Andres. Both Pantazelos and Andres were prosecuted for their roles in related fraud schemes. Pantazelos was sentenced in Chicago to 114 months in custody and ordered to pay over $3.3 million in restitution on February 15, 2013 (United States v. Pantazelos, No. 11CR50078 (N.D. Ill. 2011)). Andres was sentenced in Utah to 56 months in custody and ordered to pay over $3.2 million in restitution (United States v. Andres, No. 11CR0985-RJS (D. Utah 2011).
Judge Sabraw noted that the victims were injured in “immeasurable ways” as a result of Ison’s intentional misrepresentations that he knew would cause smart people to part with a lot of money, including from withdrawals of college and retirement savings.
U.S. Attorney Laura Duffy said, “Although we are comforted that these defendants can no longer target citizens in fraudulent get-rich-quick schemes under the guise of humanitarian charity, we understand there is no shortage of con men who seek to separate people from their savings. Thankfully, the FBI and IRS will maintain their vigilance for such scams.”
“Today’s sentencing marks the successful end of an investigation that uncovered an investment fraud scheme laced with a web of financial lies that generated millions of dollars through false promises and deceit,” said Special Agent in Charge Erick Martinez of IRS-Criminal Investigation. “Ison took advantage of unsuspecting investors for purported humanitarian causes. Hopefully he will now understand that his irresponsible actions have real consequences.”
DEFENDANT Case Number: 12CR4030-DMS
William Ison Age: 55
SUMMARY OF CHARGE
Title 18, United States Code, Sections 371, 1343 (Wire Fraud Conspiracy)
Maximum penalty: 5 years of custody; $250,000 Fine (or twice the gross loss of the offense
AGENCIES
Federal Bureau of Investigation
Internal Revenue Service
Attorney Sentenced for Defrauding Clients and InvestorsRead the Press Release
Assistant U.S. Attorney W. Mark Conover (619) 546-6763
NEWS RELEASE SUMMARY – November 2, 2015
SAN DIEGO – San Diego attorney Todd Macaluso, whose practice included representing plaintiffs in personal injury lawsuits, was sentenced today to five months in prison and ordered to pay $150,000 in restitution and a $100,000 fine for engaging in a scheme to defraud clients and investors.
Macaluso, who pleaded guilty in March, has admitted that he entered into funding agreements with investors that put his clients’ personal injury cases up as collateral without their knowledge or consent, and that he forged the signatures of his clients and used forged notary stamps and signatures in order to convince potential investors to advance him millions of dollars.
According to court records, Macaluso funded his personal injury law practice by entering into these funding agreements with various investors. Under these agreements, investors advanced Macaluso money in exchange for the right to collect a portion of his clients’ recoveries in the future. Although clients had to consent to the collateralization of their lawsuits in order for these transfers to be valid, Macaluso concealed these arrangements from many of his clients and forged their signatures on the financing documents. To conceal his scheme, Macaluso also forged the signatures and stamps of notary publics who purportedly witnessed the executions of these legal documents, but who (like his client) had no knowledge of the arrangements.
Because these funding agreements provided for extremely high rates of return, and the repayment schedules adjusted upward every six months, some agreements eventually required Macaluso to repay investors 200% of the original investment. These extreme rates of return gave Macaluso a strong incentive to settle his clients’ personal injury cases quickly. But Macaluso concealed from several clients this added pressure on him to secure a settlement before the next rate adjustment.
“Macaluso’s clients were stabbed in the back by the lawyer who was supposed to have their back,” said U.S. Attorney Laura Duffy. “Today there is a modicum of justice for them.”
FBI Special Agent in Charge Eric S. Birnbaum said, “Today's sentencing holds Mr. Macaluso accountable for violating his fiduciary responsibilities and betraying his clients' trust. The FBI is committed to maintaining the integrity of our justice system and will aggressively pursue those who act unethically and unlawfully at the expense of the American public.”
Macaluso was sentenced by U.S. District Court Judge Roger T. Benitez.
DEFENDANT Case Number: 15cr0948-BEN
TODD E. MACALUSO Age: 53 Rancho Santa Fe, California
SUMMARY OF CHARGE
Title 18, United States Code, Section 1343 - Wire Fraud. Maximum penalties: 20 years in prison, $250,000 fine, term of supervised release of three years, restitution, forfeiture, and $100 special assessment.
AGENCY
Federal Bureau of Investigation
GSA Official Jailed for Accepting Bribes and Stealing PropertyRead the Press Release
Assistant U.S. Attorneys Phillip L.B. Halpern (619) 546-6964 and Andrew G. Schopler (619) 546-8068
NEWS RELEASE SUMMARY – October 23, 2015
Timothy Francis Cashman, a Building Manager for the General Services Administration (“GSA”), was sentenced to 16 months in custody today for accepting bribes and stealing property owned by the United States.
At a sentencing hearing today, Judge Gonzalo P. Curiel noted that Cashman was a religious man who performed many good deeds and selfless acts throughout his life. Nevertheless, he told the packed courtroom of friends, family, and supporters who requested leniency for Cashman that it was vital the general public understood that “quid pro quo is not the status quo; quid pro quo is not acceptable.”
During the sentencing, the government demonstrated how Cashman used his position with GSA (overseeing operations and maintenance at the Otay Mesa, San Ysidro, and Tecate Ports of Entry) for his personal enrichment; rather than to fulfill GSA’s core mission of delivering “the best value in real estate, acquisition, and technology services to government and the American people.”
Over a number of years, Cashman provided favorable treatment relating to the awarding of GSA contracts. For example, he demanded $10,000 in cash and thousands of dollars’ worth of construction and renovation services on Cashman’s personal residence from government contractor Hugo Alonso Inc. (“HAI”). These services included having HAI paint Cashman’s Lakeside home and replace his roof and windows free of charge.
The former GSA building manager also demanded that HAI pay another government contractor (Company “A”) $120,000 in exchange for HAI being awarded a GSA construction contract at the Otay Mesa POE. Subsequently, Cashman accepted six checks from Company “A” totaling $42,000, which he deposited into his personal account. All of the income he received from HAI was concealed from the IRS when submitting his federal income tax returns.
In addition to accepting bribes from HAI, Cashman improperly obtained thousands of dollars in valuable United States Government building materials for his own benefit by causing GSA contractors and others to remove and transport such materials away from GSA facilities where he could sell or use them without the knowledge of GSA. Among other things, Cashman instructed government contractors: (1) in March 2011, to load approximately 25 stainless steel panels located at the San Ysidro POE into his personal Ford truck; (2) in January 2012, to load 35 heavy brass letters (spelling out “United States Border Inspection Station” and weighing approximately 2,000 pounds) into his personal truck; (3) in December 2012, to collect approximately 3,000 feet of underground copper cable belonging to the United States and to deliver it to, among other places, his personal residence; and (4) in November 2013, to set aside for his personal sale a large quantity of underground copper cable and approximately 5 aluminum panels located at the Otay Mesa POE.
United States Attorney Laura E. Duffy remarked that the Cashman case demonstrates that combatting public corruption in all its forms will remain one of her office’s highest priorities. She also thanked the Special Agents with the FBI, IRS-CI and GSA-OIG whose tireless work both uncovered this corruption and resulted in removing the corrupt official from the government fisc.
In addition to his custodial sentence, Cashman was also sentenced to three years of supervised release and ordered to pay $50,057.32 in restitution. HAI, and its principal, Hugo Alonso, previously pleaded guilty and were sentenced. In total, 11 individuals have been apprehended and pleaded guilty in related corruption investigations.
DEFENDANT Criminal Case No. 14CR3621-GPC
Timothy Francis Cashman Age: 54 Lakeside, CA
SUMMARY OF CHARGES
Count 1: 18 U.S.C. § 371 - Conspiracy to commit bribery and theft of government property
Maximum Penalty: 5 years’ imprisonment and a $250,000 fine
Count 2: 26 U.S.C. § 7206(1) - Filing False Tax Return
Maximum Penalty: 3 years’ imprisonment and a $250,000 fine
AGENCIES
Federal Bureau of Investigation
Internal Revenue Service – Criminal Investigations
General Services Administration – Office of Inspector General
Feds Seize Another Super Tunnel; Yields 22 Arrests and 12 Tons of Marijuana so FarRead the Press Release
Assistant U. S. Attorney David Finn (619) 546-7342
NEWS RELEASE SUMMARY – October 22, 2015
SAN DIEGO – Federal officials seized control of a sophisticated cross-border super tunnel last night following a six-month undercover investigation that resulted in the arrests of 22 people in San Diego and Tijuana and the confiscation of 12 tons of marijuana.
The tunnel, approximately eight football fields in length, stretches from a warehouse in Tijuana to the Otay Center Warehouse, located at 2587 Otay Center Drive in San Diego. The passageway is believed to be equipped with lighting, electricity and a rail system and is one of the largest tunnels uncovered along the southern border in recent years.
Isaias Enriquez-Acosta and Isidro Silva-Acosta were arrested and charged in federal complaints this morning with unlawful conspiracy to import a controlled substance and conspiracy to use border tunnels and passages. They are scheduled to make their first court appearances at 2 p.m. today before U.S. Magistrate Judge David Bartick.
Mexican officials reported 16 arrests and the seizure of 10 tons of marijuana at the Tijuana tunnel entrance; San Diego County Sheriff’s officials arrested four people in connection with tunnel activity. Federal authorities here have seized almost 2 tons of marijuana and counting - they were still bringing bundles out of the tunnel today.
The newly-completed tunnel was discovered as a result of a six-month investigation by the Tunnel Task Force, which includes agents from Homeland Security Investigations, the Drug Enforcement Administration and U.S. Border Patrol. The Task Force began the investigation in May of 2015 with the introduction of an undercover agent to Enriquez-Acosta, according to the complaint. The agent offered to help transport and store drugs for the defendants, the complaint said. The undercover agent also helped transport buckets filled with dirt away from the tunnel warehouse, the complaint said.
The enforcement action that led to the shuttering of the tunnel last night was triggered by a meeting at a San Diego restaurant between the undercover agent and the defendants yesterday. At that meeting, the defendants and the undercover agent discussed the logistics for moving loads of marijuana from the tunnel warehouse to another warehouse, the complaint said. This was an indication that a load was about to be moved through the tunnel from Mexico to the U.S. Officials believe this was the first time the tunnel was used to move a significant quantity of drugs.
Silva was taken into custody Wednesday about 5:30 p.m. as about 30 agents from Homeland Security Investigations’ Special Response Team moved to take down the tunnel; Enriquez was arrested at a nearby hotel. In the front room of the Otay Center Warehouse, agents found a hole in the floor about 3-feet in diameter which led to a shaft descending approximately 32 feet down into the ground. The shaft connected to an underground tunnel leading towards the U.S.-Mexico border. Agents saw plastic-wrapped marijuana bundles stacked inside the tunnel.
“We see a super tunnel open for business once every year or so,” said U.S. Attorney Laura Duffy. “Just when traffickers think they’re ready to move, we put them out of business. We continue to make good on our promise to relentlessly pursue and shut down any tunnel as soon as it opens.”
"Federal agents on the San Diego Tunnel Task Force have once again taken down a sophisticated cross border drug smuggling tunnel that was fully operational under the San Diego-Tijuana border,” said Dave Shaw, special agent in charge for ICE Homeland Security Investigations in San Diego. “The success of this investigation is yet another example of our commitment to secure the border while combating the increasingly dangerous underground smuggling activity.”
The marijuana seized in connection with the tunnel has an estimated street value of nearly $6 million. The tunnel dismantled Wednesday is the 10th large-scale drug smuggling tunnel discovered in the San Diego area 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.
DEFENDANT Case Number: 15MJ3133
Isaias Enriquez-Acosta Age: 53 Tijuana, Mexico
Isidro Silva-Acosta Age: 27 Tijuana, Mexico
SUMMARY OF CHARGES
Conspiracy – Unlawful Importation of a Controlled Substance, in violation of Title 21, United States Code, Sections 952, 960 and 963
Maximum penalty: Life in prison
Conspiracy – Border Tunnels and Passages, in violation of 18 United States Code, Section 555(d)
Maximum Penalty: Life in prison
AGENCIES
Tunnel Task Force, including agents from Homeland Security Investigations, Drug Enforcement Administration and 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.
Carlsbad Woman Sentenced to 41 months for $4.6 Million Fraud SchemeRead the Press Release
Assistant U. S. Attorney Benjamin Holley (619) 546-7952
NEWS RELEASE SUMMARY – October 13, 2015
SAN DIEGO – Susan Polmar of Carlsbad was sentenced in federal court today to 41 months in custody for stealing more than $4.6 million in a wire fraud scheme spanning six years.
As detailed in court filings, Polmar, a small-business owner, created a kiting scheme in which she submitted false customer information to a payment processing company, received advanced payment, and then covered the resulting debit by creating yet more fraudulent customer data. She then took money from the falsely inflated business accounts to fund numerous luxuries, including spending over $33,000 on trips to Disneyland and over $130,000 in construction on her Carlsbad home. Her fraud continued from 2007 through 2013, when it was discovered by an internal audit conducted by the owners of the payment processing company Polmar used.
The federal investigation, led by agents and detectives of the United States Secret Service’s San Diego Regional Fraud Task Force, revealed that the scheme required near-daily action by Polmar to maintain and that, over the course of her fraud, Polmar’s non-sufficient fund payments (from which she skimmed money for her personal and business use) totaled approximately $865 million.
During the sentencing hearing, Polmar also admitted that, after the investigation into her fraudulent conduct began but before she pleaded guilty, she defrauded the Pacific Rim PTA (of which she was then-President) by submitting false invoices for reimbursement totaling $3,700. After that fraud was discovered, Polmar repaid the money to the PTA.
At the sentencing hearing, United States District Court Judge Larry Alan Burns noted that Polmar had many positive qualities, including a supportive family and no criminal record. But, the judge said, the fact that Polmar stole millions of dollars for her personal expenses, especially when combined with her continued financial fraud after knowing of the federal investigation, justified a severe sanction. He accordingly imposed a 41-month prison sentence, to be followed by three years of supervised release. The judge also ordered Polmar to repay $4,655,464.34. At the conclusion of the hearing, Polmar was remanded into custody to begin serving her sentence.
DEFENDANT Case Number: 15CR1075-LAB
Susan Polmar Age: 47
SUMMARY OF CHARGE
Wire Fraud, in violation of Title 18, United States Code, Section 1343
Maximum penalty: 20 years
AGENCY
United States Secret Service
U.S. Border Patrol Supervisor Charged with Violating Civil Rights of Legal U.S. Resident Who Made Child-Rape Allegations Against Supervisor’s Family MemberRead the Press Release
Assistant U. S. Attorney Alessandra Serano (619) 546-8104
NEWS RELEASE SUMMARY – October 9, 2015
SAN DIEGO – U.S. Border Patrol Supervisory Agent Martin Rene Duran was arrested yesterday and charged with using his official position to create bogus alerts in a border-security law enforcement database so that a lawful U.S. resident and frequent border crosser would be repeatedly detained by Customs and Border Protection officers, sometimes at gunpoint.
According to a complaint unsealed in federal court today, Duran’s target was a man who had instigated a criminal investigation in Mexico of Duran’s brother-in-law, Raymundo Estrada Figueroa, who is accused of raping and abusing the man’s 11-year-old son for two years. Estrada was a boyfriend of the child’s mother at the time; the abuse is alleged to have taken place between 2010 and 2013 in Tijuana.
Estrada is charged in the same complaint as Duran with two counts of traveling from the United States to Mexico to engage in illicit sexual conduct. One count relates to the border crosser’s son; the other is in connection to that boy’s half-brother.
Duran, a supervisor at the Imperial Beach Border Patrol Station, was taken into custody at the Otay Mesa Port of Entry; Estrada was arrested at his Chula Vista home. Both appeared in federal court today; both will remain in custody until a detention hearing on Wednesday, October 14, 2015 at 2 p.m. before U.S. Magistrate Judge William V. Gallo.
The border crosser who reported the sexual abuse of his son is identified in court documents only by his initials, “R.C.” to protect his son’s identity. According to the complaint, R.C. - a Mexican national and legal U.S. resident with no criminal background - was sent to secondary and detained on five occasions at the San Ysidro border crossing in 2013 based on the false alerts entered by Duran into the system known as TECS, which is the principal database used by officers at the border to assist with screening and determinations regarding admissibility of arriving persons.
Duran’s alerts indicated, among other things, that R.C. was “known to carry firearms,” and that he was “associated with recent threats to CBP personnel.” Every time he was detained, no weapons or contraband were found and R.C. was released. On one occasion, R.C. and his wife were removed from their vehicle, handcuffed, separated from their minor children, escorted to the security office and put in a holding cell for almost two hours before they were released, the complaint said.
R.C. believed Duran was trying to pressure him into dropping the charges against Estrada in Mexico, the complaint said.
Duran is charged with five counts of unlawfully causing the detentions while acting under color of law, thereby willfully depriving R.C. of his Constitutional rights to liberty and freedom from unreasonable seizures, and three counts of falsification of records and obstruction.
In a separate complaint also unsealed yesterday, Duran was charged with firearms violations related to the purchase of guns in Arizona. The complaint alleges that Duran falsely claimed under penalty of perjury that he was a resident of Arizona when, in fact, he lived in Chula Vista.
“This type of corruption is in a category all by itself,” said U.S. Attorney Laura Duffy. “When an officer turns on those he is supposed to protect, and uses his significant power against law-abiding people who had faith in him, it’s a special kind of betrayal.”
"This investigation was a collaborative effort among a number of federal law enforcement agencies and demonstrates our commitment to address allegations of criminal misconduct by CBP employees,” said Kathryn Butterfield, Special Agent in Charge of Internal Affairs for U.S. Customs and Border Protection in San Diego. “Every CBP employee shares responsibility for promoting integrity and for meeting mission demands while sustaining the trust and confidence of the public we serve. An overwhelming majority of CBP personnel perform their duties with honor and distinction on a daily basis. However, CBP does not tolerate those who tarnish the badge and the agency’s reputation.”
“This investigation was conducted by agents from the U.S. Immigration and Customs Enforcement’s (ICE) Office of Professional Responsibility, Homeland Security Investigations, Custom and Border Protection Office of Internal Affairs, and the Department of Homeland Security Office of Inspector General. “We will move aggressively to investigate and bring to justice those who have allegedly betrayed the public’s trust. Guarding against illegal or unethical behavior is not an option; it’s an obligation we have to the people we serve.”
DEFENDANT
Martin Rene Duran Age: 46 Chula Vista
SUMMARY OF CHARGES
Case Number: 15mj3002
Falsification of Records/Obstruction, in violation of Title 18, U.S.C., Sec. 15
Deprivation of Rights Under Color of Law, in violation of Title 18, U.S.C., Sec. 242
Case Number: 15mj2957
Illegal Transportation of Firearms, in violation of Title 18, U.S.C., Sec. 922(a)(3) and
924(a)(l)(D) Maximum Penalty:
DEFENDANT
Raymundo Estrada Figueroa Age: 48 Chula Vista
SUMMARY OF CHARGES
Case Number: 15mj3002
Two counts, Travel in Foreign Commerce to engage in illicit sexual conduct, in violation of 18 U.S.C. 2423(c)
AGENCIES
Homeland Security Investigations
Immigration and Customs Enforcement – Office of Professional Responsibility
Bureau of Alcohol, Tobacco Firearms and Explosives
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Two Men Found Guilty of First-Degree Murder of a U.S. Border Patrol AgentRead the Press Release
Today, a federal jury in Tucson, Arizona, found Ivan Soto-Barraza, 37, and Jesus Leonel Sanchez-Meza, 27, guilty of first-degree murder and other offenses for the murder of United States Border Patrol Agent Brian Terry, announced U.S. Attorney Laura E. Duffy for the Southern District of California.
According to evidence presented at trial, during the evening of Dec. 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.
The jury found both Soto-Barraza and Sanchez-Meza guilty 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. The court scheduled the defendants’ sentencing hearing for Dec. 9, 2015. Both defendants face a mandatory sentence of life on the first degree murder charge (count 1).
“With these convictions, we have taken another important step towards securing justice for Agent Brian Terry,” said Attorney General Loretta E. Lynch. “Today’s verdict is the result of years of tireless effort from dozens of dedicated law enforcement officers, prosecutors, and investigators committed to ensuring that the murder of their friend and colleague does not go unpunished. The Department of Justice will continue to relentlessly pursue the remaining individuals responsible for Agent Terry’s loss, and to uphold the values of courage, duty, and honor that he embodied with his life and service.”
“Agent Terry gave his life protecting our country. Today’s verdict cannot undo that tragedy and loss, but brings another measure of justice to Agent Terry’s family and the United States,” said U.S. Attorney Duffy. “I commend the prosecution team, the Federal Bureau of Investigation, the United States Border Patrol and all other law enforcement partners who have assisted in the investigation and prosecution.”
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.
Last Defendant Sentenced in Major Maritime Marijuana Smuggling CaseRead the Press Release
Special Assistant U. S. Attorney Emily Reuter (619) 546-9706
NEWS RELEASE SUMMARY – September 28, 2015
SAN DIEGO – The last of four defendants was sentenced in federal court today to 37 months in custody for smuggling more than 11,600 pounds of marijuana on two panga boats traveling together in international waters approximately 115 nautical miles southwest of Ensenada, Mexico.
This is the largest marijuana interdiction by the U.S. Coast Guard off the California coast since 2011.
Armando Rodriguez-Ramirez was sentenced by U.S. District Judge Marilyn L. Huff. The defendant pleaded guilty on January 15, 2015 to Conspiracy to Import Marijuana Intended for Importation. Defendants Reyes Rodriguez-Gomez, Jose Transito Rangel-Luna and Francisco Antonio Castro-Aviles previously entered guilty pleas to the same crime and were sentenced to 78, 30 and 21 months, respectively.
“We aren’t going to let our oceans become a freeway for drug traffickers,” said U.S. Attorney Laura Duffy. “Smugglers might think the vast Pacific is a good place to be invisible, but these defendants know otherwise.”
According to the complaint, the four defendants were arrested on July 29, 2014, after their two drug smuggling vessels were spotted by a Coast Guard aircrew from Air Station Sacramento, California. The Coast Guard Cutter Stratton from Alameda, California, and Cutter Petrel from San Diego, were patrolling in the area and launched pursuit boats to intercept the vessels. The defendants abandoned an approximately 55-foot vessel laden with marijuana and fled in a 35-foot panga.
The Coast Guardsmen chased the defendants for approximately two hours before they stopped the fleeing vessel by shouldering it, thus allowing a Coast Guard boarding team to take the defendants into custody. The drug-laden panga as well as floating bales of marijuana were also recovered by the Coast Guard. The Coast Guard Cutter Haddock from San Diego also participated in the interdiction.
The crew of the Cutter Petrel turned the four defendants over to agents from Homeland Security Investigations who investigated the crime, according to the complaint.
“The success of prosecutors, investigators and Coast Guardsmen in this case highlights our whole-of-government campaign to combat the threats posed by violent transnational organized crime networks, which erode stability, security and prosperity in the Western Hemisphere,” said Vice Adm. Charles Ray, commander, Coast Guard Pacific Area. “Together we stand ready to target, attack and disrupt criminal networks using all of the authorities, capabilities, competencies and partnerships our Nation has to offer, both at home and abroad.”
“Homeland Security Investigations is committed to combating the threat of transnational criminal organizations and their illicit smuggling activity whether it be by land, air or sea,” said Mike Carney, deputy special agent in charge for ICE Homeland Security Investigations in San Diego. “In this smuggling event the San Diego Maritime Task Force, comprised of investigators from HSI, U.S. Border Patrol, San Diego Sheriff’s Department, San Diego Harbor Police and the Coast Guard Investigative Service, put together a strong case building upon the great work of the crew of the U.S. Coast Guard Cutter Stratton.”
In his plea agreement, Rodriguez-Ramirez admitted that the larger of the two pangas was loaded with about 5,305 kilograms of marijuana and that he and fellow crew members were helping transport it to the U.S. for distribution.
The Coast Guard and its interagency partners have seized more than 30,000 pounds of marijuana off the California coast in Fiscal Year 2015, which runs from Oct. 1, 2014, to Sept. 30, 2015. In Fiscal Year 2014, Coast Guardsmen seized more than 121,000 pounds of marijuana worth over $110 million. Coast Guard officials attribute the increased law enforcement presence in the California Coastal Region, through interagency operations, with the drop in maritime smuggling efforts.
Armando Rodriguez-Ramirez was sentenced by U.S. District Judge Marilyn L. Huff.
DEFENDANT Case Number: 14CR2415-H
Armando Rodriguez-Ramirez Age 24 Mazatlán, Mexico
Other Defendants:
Reyes Rodriguez-Gomez Age 46 Mazatlán, Mexico
Jose Transito Rangel-Luna Age 49 Mazatlán, Mexico
Francisco Antonio Castro-Aviles Age 25 San Quintin, Mexico
SUMMARY OF CHARGE
Conspiracy to Import Marijuana Intended for Importation, in violation of Title 21, United States Code, Sections 959, 960, and 963
Maximum penalty: Life in prison, $10 million fine, $100 special assessment, and a term of supervised release of at least 5 years.
AGENCIES
U.S. Coast Guard
Homeland Security Investigations
Video from the Bust -
https://www.dvidshub.net/video/425675/coast-guardsmen-interdict-11000-pounds-marijuana
Photos from the offload -
https://www.dvidshub.net/image/1476095/coast-guard-cutter-stratton-offloads-seized-marijuana
Video from the Offload -
https://www.dvidshub.net/video/353064/coast-guard-cutter-stratton-offloads-12000-pounds-seized-marijuana
La Jolla Bank Manager Conspired with Senior Bank Officials to Issue Hundreds of Millions of Dollars in Bad LoansRead the Press Release
Assistant U.S. Attorney Emily W. Allen (619) 546-9738
NEWS RELEASE SUMMARY – September 25, 2015
SAN DIEGO – Amalia Martinez, the head of Small Business Administration (“SBA”) lending at the now- defunct La Jolla Bank, pleaded guilty today to conspiracy to misapply bank funds, admitting that she and other senior bank executives accepted cash bribes and kickbacks from borrowers in return for issuing hundreds of millions of dollars in loans to borrowers they knew were unqualified and unlikely to repay. The mismanagement contributed to the bank’s collapse in February 2010, when the Federal Deposit Insurance Corporation (“FDIC”) took over and absorbed its outstanding debt of more than $1 billion. That $1 billion tab was ultimately passed on to the taxpayers.
Beginning in 2004, Martinez and senior bank officers agreed to issue loans under favorable terms to high-volume borrowers they referred to as “Friends of the Bank,” or “FOBs.” They accepted fraudulent loan applications from the FOBs, and overlooked negative information about the borrowers’ creditworthiness. When the FOBs defaulted on their repayment obligations, the bank executives would issue more loans, so that the borrowers could use bank funds to make payments on their existing loans. In this way, the executives covered up the bank’s true poor performance, and allowed the bad loans to inflate their performance measures—which, in turn, increased their compensation from the bank.
Several of the FOBs participated in the conspiracy by making large cash payments in return for loans. In late 2007, one construction borrower handed $100,000 in cash to a senior bank official, who went on to share that money with Martinez and others. Another borrower, who received $75 million in loans, met with the same bank official in Las Vegas in 2008, where he hand-delivered $250,000 in cash. In 2006, a restaurant owner paid $50,000 in cash in return for loans; later, when the borrower struggled to repay his debts, Martinez arranged to issue another $150,000 loan, to be used to make payments on existing debts.
The conspirators also took efforts to cover up the scheme. In 2009, as the bank was failing, regulators began to investigate La Jolla Bank’s poor performance. In order to conceal the mismanagement and self-dealing from the regulators, senior bank officials directed Martinez and other co-conspirators to destroy fraudulent financial statements and “FOB” designations contained within the bank’s files, according to Martinez’s plea agreement.
Martinez admitted that she arranged to lend more than $55 million in SBA-backed loans as part of the conspiracy, and lost nearly $20 million in bank funds when those loans defaulted. The bank’s conventional lending portfolio was much larger, resulting in hundreds of millions of dollars in loans issued as part of the conspiracy.
To date, three other defendants have been charged in this case. SBA borrower Annand Sluman pled guilty and admitted paying cash bribes to Martinez in return for several SBA loans he was issued between 2006 and 2008. By 2008, Sliuman was not qualified to borrow, and he submitted fraudulent documents as part of his loan application that made his businesses appear to be qualified. Sliuman’s assistant, Laura Ortuondo, assisted in creating the fraudulent loan documents. She pled guilty to making false statements to investigators about her involvement in the case; as part of her plea, she also admitted that she destroyed evidence and instructed her then-husband to testify falsely on her behalf to help cover up the crime.
In August 2015, La Jolla Bank loan broker Jocelyn Brown was indicted for paying bribes to Martinez and others, in return for their help arranging loans for Brown’s borrowers. According to the indictment, Brown kicked back a portion of her broker commission to ensure that loans she referred to the bank were approved, regardless of the soundness of the loans and their benefit to the bank. Brown was arrested on August 7, 2015, and her case is pending before United States District Judge Anthony J. Battaglia. No trial date has yet been set.
“By accepting bribes in exchange for lending out the bank’s money, corrupt officials at La Jolla Bank exposed the bank to a substantial risk and, ultimately, ran the bank into the ground. Their greed cost the taxpayers, who had to step in and repay its depositors,” said U.S. Attorney Laura E. Duffy. “Attacking corruption at financial institutions is one important tool we have to protect taxpayers and reduce the likelihood that our country will have to ‘bail out’ another bank.” U.S. Attorney Duffy noted that the investigation of La Jolla Bank continues, and anyone with information is encouraged to call the Federal Bureau of Investigation at 858-320-1800.
“The Treasury Inspector General for Tax Administration is committed to investigating and prosecuting individuals to the fullest extent of the law when they choose to commit acts of bribery,” said Special Agent in Charge Rod Ammari. “Bribery will never be tolerated and TIGTA is committed to rooting out such illegal activity, especially when the millions of dollars that are lost from bribery are passed on to the hard working American taxpayer.”
“The Federal Deposit Insurance Corporation Office of Inspector General is pleased to join our law enforcement colleagues in announcing today’s guilty plea,” said Wade V. Walters, Special Agent in Charge of the FDIC’s Office of Inspector General. “We are proud to have played a role in uncovering a complex conspiracy that contributed to substantial losses to the Deposit Insurance Fund. We are committed to continuing investigative efforts to protect the viability of the fund and ensure integrity in our nation’s banks.”
“Ms. Martinez abused her position of trust to unjustly enrich herself at the expense of American taxpayers," stated FBI Special Agent in Charge, Eric S. Birnbaum. "The FBI is committed to using our investigative and intelligence capabilities to identify, disrupt and dismantle corrupt business practices within our financial industry.”
“When individuals defraud a bank they are in effect defrauding the community as well,” said Special Agent in Charge Leslie P. DeMarco of the Federal Housing Finance Agency’s Office of Inspector General. “It is particularly egregious when the individuals engaging in the fraud are the very individuals entrusted by the bank to serve the community. These individuals caused great harm to the bank, the community, and ultimately the taxpayers. We are committed to holding all bad actors accountable for their actions.”
Martinez’s guilty plea was taken before U.S. Magistrate Judge Bernard G. Skomal. She is scheduled to be sentenced by Judge Battaglia on November 30, 2015 at 9:00 a.m. On September 12, 2014, Judge Battaglia sentenced Laura Ortuondo to three years’ probation including 12 months of home detention, and ordered her to pay a $3,000 fine. Annand Sliuman is scheduled to be sentenced by Judge Battaglia on December 14, 2015, at 9:00 am.
DEFENDANTS AND CHARGES:
Amalia Martinez, 15CR2471-AJB Age 51 San Diego, CA
Conspiracy to misapply bank funds, in violation of 18 U.S.C. § 371
Maximum Penalties: 5 years’ imprisonment, $250,000 fine or twice the pecuniary loss or gain, three years supervised release, $100 special assessment, restitution.
Jocelyn J. Brown, 15CR2049-AJB Age: 59 San Diego, CA
Conspiracy to commit bank bribery, in violation of 18 U.S.C. § 371
Maximum Penalties: 5 years’ imprisonment, $250,000 fine or twice the pecuniary loss or gain, three years supervised release, $100 special assessment, restitution.
Bank bribery, in violation of 18 U.S.C. § 215
Maximum Penalties: 30 years’ imprisonment, $1,000,000 fine or three times the value of the thing given, offered, or promised, five years’ supervised release, $100 special assessment, restitution.
Making a false statement to a federal agent, in violation of 18 U.S.C. § 1001
Maximum Penalties: 5 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.
Annand Sliuman, 13CR3673-AJB Age 34 Spring Valley, CA
Bank bribery, in violation of 18 U.S.C. § 215
Maximum Penalties: 30 years’ imprisonment, $1,000,000 fine or three times the value of the thing given, offered, or promised, five years’ supervised release, $100 special assessment, restitution.
Laura Ortuondo, 13CR3879-AJB Age 34 Cupertino, CA
Making a false statement to a federal agent, in violation of 18 U.S.C. § 1001
Maximum Penalties: 5 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.
AGENCIES
Federal Bureau of Investigation
U.S. Small Business Administration – Office of Inspector General
Treasury Inspector General for Tax Administration
Federal Deposit Insurance Corporation – Office of Inspector General
Department of the Treasury – Office of Inspector General
Federal Housing Finance Agency – Office of Inspector General
*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.
Imperial Business Owner Admits Trafficking in Millions of Dollars of Counterfeit Cell Phone PartsRead the Press Release
Assistant U.S. Attorneys Nicholas Pilchak (619) 546-9709 and Mark Pletcher (619) 546-9714
NEWS RELEASE SUMMARY – September 24, 2015
SAN DIEGO – Imperial Valley businessman Octavio Cesar Sana, a Spanish national with legal U.S. residency, pleaded guilty today to running a years-long conspiracy to traffic in millions of dollars of counterfeit Chinese cell phone parts.
Sana pleaded guilty before U.S. Magistrate Judge William Gallo to conspiring to traffic in counterfeit goods and related money laundering charges. According to the plea agreement, Sana sold at least $3.2 million worth of counterfeit Chinese cell phone parts through businesses he has operated since 2007—including through a website called “Flexqueen.com.”
Sana was arrested February 3, 2015 at the Imperial Valley Airport, along with Chinese national Hongwei Du. Du has also been charged with conspiracy to traffic in counterfeit goods.*
Sana admitted in his plea agreement that he and Du were attending meetings in the United States to set up further counterfeit trafficking ventures. The two were arrested in connection with a multi-year investigation spearheaded by Homeland Security Investigations (HSI) and the Internal Revenue Service, Criminal Investigations. HSI executed a series of searches nationwide coordinated with the arrest of Sana and Du, including Tampa, Florida; Brownsville, Texas; Boston, Massachusetts; Atlanta, Georgia; Pittsburgh, Pennsylvania; Nashville, Tennessee; and Orange, San Diego and Imperial counties in California. These searches resulted in the seizure of more than 55,000 counterfeit items, and additional criminal charges in several jurisdictions.
According to the plea agreement, since 2007, Sana’s businesses have sold approximately $6.5 million of cell phone parts and accessories to businesses and consumers throughout the United States. Sana admitted, however, that roughly half of those parts were counterfeits, sourced almost exclusively from China.
Sana also admitted in his plea agreement that he and his co-conspirators used extensive methods to frustrate the ability of U.S. Customs and Border Protection to detect, inspect and intercept their imported counterfeit goods. An example of such deception included shipping merchandise with “protective stickers” strategically placed to obscure the products’ infringing trademarks. The plea agreement also explains that Sana and Du utilized a dedicated shipping channel for branded goods to avoid attention from Chinese customs officials.
In the United States, Sana admitted that he supervised at least four other individuals who worked at his businesses distributing counterfeit merchandise, including Angela Vela, who also pleaded guilty to separate charges in federal court in El Centro today before Judge Peter Lewis. Sana admitted wiring more than $3.1 million to a bank account in Hong Kong to pay for that merchandise and other items, and acknowledged that at least $3.2 million of merchandise sold by his business since 2007 was fake.
Sentencing for both defendants is scheduled for January 4, 2016 at 8:30 a.m. before U.S. District Judge M. James Lorenz.
As part of his plea agreement, Sana has agreed to forfeit $3.2 million, along with 18 cell phones, 13 computers, and 2 hard drives seized the day of his arrest, and the two website domain names used by his businesses to sell the counterfeits.
“Trafficking in counterfeit goods threatens the integrity of the marketplace,” said U.S. Attorney, Laura E. Duffy. “Consumers who purchase sophisticated electronics equipment bearing a brand name trademark shouldn’t have to run the risk of being fleeced by a counterfeit.” U.S. Attorney Duffy observed that trafficking in counterfeit goods is a profitable and growing criminal industry; U.S. Customs and Border Protection (CBP) reported that in 2014 alone, it intercepted an estimated $1.2 billion of counterfeit goods in more than 23,000 seizures.
Duffy commended the close coordination between the investigating agencies—the Department of Homeland Security, Homeland Security Investigations; the Internal Revenue Service, Criminal Investigations; and the U.S. Postal Inspection Service—during the lengthy investigation of this case. The Department of Justice’s Office of International Affairs also provided invaluable assistance.
“The sale of counterfeit goods not only robs legitimate companies of billions in revenue every year, it also hurts the men and women who depend on those businesses for their livelihoods,” said David Shaw, Special Agent in Charge for HSI San Diego. “Beyond that, intellectual property theft poses a very real public safety threat, by generating proceeds for organized crime and introducing substandard, often dangerous goods into the commerce chain.”
“IRS Criminal Investigation will continue to focus on keeping illicit proceeds out of U.S. banks,” said Special Agent in Charge Erick Martinez. “Today's plea demonstrates the federal government is committed to maintaining the integrity of our financial system.”
Du, the remaining defendant, is next scheduled to appear in court on November 2, 2015.
DEFENDANT Case No. 15-cr-2316-L
Octavio Cesar Sana 42 years old El Centro, CA
CHARGES
Conspiracy to Traffic in Counterfeit Goods - 18 U.S.C. § 371
Maximum penalty: 5 years’ imprisonment and $250,000 fine
Money Laundering Conspiracy – 18 U.S.C. § 1956(h)
Maximum penalty: 20 years’ imprisonment and $500,000 fine
RELATED DEFENDANTS
Case No. 15-cr-526-L
Hongwei “Nick” Du 31 years old Shenzhen, China
Case No. 15-cr-612-L
Angela Rose Vela 36 years old El Centro, CA
AGENCIES
Homeland Security Investigations
Internal Revenue Service – Criminal Investigations
U.S. Postal Inspection Service
*An indictment or complaint 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.
Local Attorney Pleads Guilty to Operating an Unlicensed Money Transmitting BusinessRead the Press Release
Assistant U.S. Attorneys Luella Caldito and Daniel C. Silva at (619) 546-9713
NEWS RELEASE SUMMARY – September 15, 2015
SAN DIEGO – Attorney Richard Medina, Jr. pleaded guilty today in federal court, admitting that he and others operated an unlicensed money transmitting business that illegally conducted almost $12 million worth of international financial transactions in violation of the Bank Secrecy Act.
Medina entered his plea before U.S. Magistrate Judge Bernard G. Skomal. In his plea agreement, Medina admitted that he and other defendants operated a commercial enterprise that collected cash from clients in the U.S. and transferred it to points around the world without registering the business with the Secretary of the Treasury, as required by law. Medina also pleaded guilty to a conspiracy charge.
Medina and his co-conspirators, Omar Trevino Caro Del Castillo and Francisco Cuevas, obtained commissions for their services, extracting a fee from the millions of dollars transmitted abroad. Caro Del Castillo and Cuevas have already pleaded guilty and are awaiting sentencing.
Medina, in his role in the conspiracy, illegally utilized his law firm’s “Interest on Lawyers’ Trust Accounts” (IOLTA) for receipt, transport, and transmission of cash to international destinations. Civil attorneys routinely receive client funds, known as “Trust money,” to be held in trust for future use – including IOLTA Accounts.
Medina acknowledged in his plea agreement that he “knew or had reason to know that the cash transactions described [therein] were proceeds of unlawful activity, or were intended to promote unlawful activity.”
Medina is scheduled to be sentenced on December 7, 2015 by U.S. District Court Judge Roger T. Benitez. U.S. Magistrate Judge Skomal allowed Medina to remain on pretrial release, pursuant to the terms of a bond posted by Medina.
DEFENDANT Case No. 14cr2936
Richard Medina Age: 39
SUMMARY OF CHARGES
Operating an Unlicensed Money Transmitting Business – Title 18, U.S.C., Section 1960
Maximum penalty: Five years in prison, $250,000 fine, and forfeiture
Conspiracy – Title 18, U.S.C., Section 371
Maximum penalty: Five years in prison
AGENCY
Federal Bureau of Investigation
Drug Enforcement Administration
Internal Revenue Service
Carlsbad Couple Admits Selling Unapproved “Energy Wave” Medical DevicesRead the Press Release
Assistant U.S. Attorney Melanie K. Pierson (619) 546-7976
NEWS RELEASE SUMMARY – September 15, 2015
SAN DIEGO – David and Sandra Perez pleaded guilty in federal court today to charges relating to the sale of “Energy Wave” medical devices via the Internet – devices they marketed as an effective treatment for cancer and AIDS, yet had not received necessary approval from the U.S. Food and Drug Administration.
According to their plea agreements, the couple marketed the Energy Wave device over the Internet from their home in Carlsbad. They have since moved to Oregon. David Perez admitted scheming with the manufacturer of the devices, David Arthur, who marketed the “Energy Wave” device over the internet using the website www.myenergywave.com. Arthur previously pleaded guilty and is awaiting sentencing.
As detailed in court, the Energy Wave device consists of a micro-current frequency generator with a digital readout, two stainless steel cylinders and 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 hundreds of digital settings for the device, directed to specific conditions from abdominal pain, AIDS and diabetes to stroke, ulcer and worms. The Auto Codes and Manual 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 to $1,500, and receiving gross proceeds of approximately $271,000. He also acknowledged that he intended to defraud and mislead the FDA 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 effective in treating the various medical conditions.
Sandra Perez admitted assisting her husband by shipping the “Energy Wave” devices and depositing the funds necessary to pay coconspirator David Arthur for the devices. The couple admitted that they knew or should have known a number of their 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.
“Those who are sick and desperate for relief are particularly vulnerable to scams, and we are doing our best to protect them from people who exploit the weak for their own financial gain,” said U.S. Attorney Laura Duffy.
“The FDA oversees approvals for medical devices to ensure that the public is protected from devices that are unsafe or ineffective,” said Lisa L. Malinowski, Special Agent in Charge, FDA Office of Criminal Investigations’ Los Angeles Field Office. “We will continue to commit our efforts to remove potentially dangerous medical devices from the U.S. marketplace.”
David Perez is scheduled to be sentenced January 11, 2016 before U.S. District Judge Roger T. Benitez. His wife was sentenced by U.S. Magistrate Judge William Gallo to one year of probation, and ordered to perform 100 hours of community service and pay restitution of $1,495 to a purchaser of the device.
During today’s hearing, Judge Gallo stated: “I believe you had to know at some level that this was junk science.”
DEFENDANT Criminal Case No. 15cr0360-BEN
David Perez Age: 60
Medford, Oregon
Sandra Perez Age: 55
Medford, Oregon
SUMMARY OF CHARGES
David Perez:
Conspiracy– Title 18, U.S.C., Section 371
Maximum penalty: Three years in prison and $250,000 fine
Sandra Perez:
Sale of Unapproved Medical Devices-Title 21, U.S.C., Sections 331(a) and 333(a)(2), a misdemeanor
Maximum penalty: One year in prison and $100,000 fine
AGENCIES
Food and Drug Administration, Office of Criminal Investigations
Homeland Security Investigations
Postal Inspection Service
Brother of San Diego Man Killed Fighting with ISIL Indicted for False Statements Made in Connection with Terrorism InvestigationRead the Press Release
Assistant U.S. Attorneys Shane Harrigan (619) 546-6981 and Caroline Han (619) 546-6968
NEWS RELEASE SUMMARY – September 14, 2015
SAN DIEGO - Marchello Dsaun McCain was arraigned in federal court today on new charges that he made false statements to the FBI in connection with an international terrorism investigation of his brother, Douglas McCain, an American believed killed while fighting with the Islamic State of Iraq and the Levant (ISIL) in Syria.
According to the indictment, Marchello McCain made false statements to Federal Bureau of Investigation Joint Terrorism Task Force (FBI-JTTF) agents about his knowledge of his brother’s travel to Syria and the use of a credit card to purchase Douglas McCain’s airline tickets from the United States to Turkey, a transit point for individuals travelling to Syria. On August 26, 2014, several U.S. media outlets reported that Douglas McCain had been killed in Syria fighting for ISIL in a battle against the Free Syrian Army.
In January 2015, FBI-JTTF agents arrested Marchello McCain in connection with an indictment charging him with three counts of possession of firearms and ammunition by a felon. A superseding indictment charging him with two additional counts of possession of firearms and ammunition by a felon and one count of possession of body armor by a violent felon was filed against him in March 2015. The second superseding indictment was unsealed today during a hearing before U.S. District Judge Thomas Whelan. McCain is currently being held in custody without bond.
U.S. Attorney Laura E. Duffy praised the work of the FBI-JTTF in furthering our joint mission of safeguarding our national security by working countless hours on this investigation. The FBI-JTTF’s investigation of Douglas McCain’s travel to Syria is particularly important because it involves ISIL, a foreign terrorist organization which threatens to induce our youth into committing violence against foreigners and U.S. citizens alike.
Marchello McCain’s next court date is a motion hearing scheduled before District Judge Whelan on October 19, 2015.
This case is being prosecuted in federal court in San Diego by Assistant U.S. Attorneys Shane Harrigan and Caroline Han. This case was investigated by the San Diego Joint Terrorism Task Force; the Federal Bureau of Investigation; the Federal Air Marshal Service; the Department of Homeland Security, Homeland Security Investigations; and the Department of Homeland Security, U.S. Border Patrol.
DEFENDANT Criminal Case No. 15CR0174-W
Marchello Dsaun McCain San Diego, California Age 33
SUMMARY OF CHARGES
Counts 1-4, and 6:
Title 18, U.S.C., Sections 922(g)(1) – Felon in Possession of Firearms and Ammunition
Maximum penalties: Ten years in prison and a $250,000 fine.
Count 5:
Title 18, U.S.C., Sections 931 – Felon in Possession of Body Armor by a Violent Felon
Maximum penalties: Three years in prison and a $250,000 fine.
Count 7:
Title 18, U.S.C., Sections 1001(a)(2) – False Statements Involving International Terrorism
Maximum penalties: Eight years in prison and a $250,000 fine.
INVESTIGATING AGENCIES
San Diego Joint Terrorism Task Force
Federal Bureau of Investigation
Federal Air Marshal Service
Department of Homeland Security, Homeland Security Investigations
Department of Homeland Security, U.S. Border Patrol
*An indictment itself is not evidence that the defendants committed the crimes charged. The defendant is presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.
Broker Immediately Remanded into Custody to Begin Serving 33 Month SentenceRead the Press Release
Assistant U.S. Attorney Phillip L.B. Halpern (619) 546-6964
NEWS RELEASE SUMMARY – September 14, 2015
SAN DIEGO – Stock broker Sunil Sharma of Carlsbad was sentenced in federal court today to 33 months in custody for stealing more than $6 million from local investors by falsely claiming their funds were safely placed in conservative investments when, in reality, he was pursuing a risky day trading strategy that ultimately turned into a massive Ponzi scheme.
“You have not only destroyed the lives of the people who appeared in court today, but the lives of hundreds of others who make up their extended family,” said U.S. District Court Judge John A. Houston during the sentencing hearing.
As detailed in court papers, Sharma covered up his massive trading losses by continuing to falsely tell investors that their investments were doing well. Among other things, he would send investors monthly or quarterly statements that falsely reflected that their investments were generating the promised returns. Sharma admitted that even while reassuring investors, he diverted approximately $2.5 million in investor funds for his own personal use, including: (1) approximately $700,000 towards the down payment of a $2 million home off Artesian Road in San Diego; (2) approximately $12,000 for a cruise in the Mediterranean; and (3) for leasing a Mercedes SL and a BMW.
As revealed in court documents, Sharma was a Series 7 licensed broker, who had worked for Merrill Lynch, AG Edwards, and as an independent broker for Raymond James. In 2000, Sharma moved to San Diego where he continued to practice as an independent broker. Due to the market crash that followed September 11, 2001, Sharma and his clients lost a substantial amount of money. As a result, Sharma voluntarily gave up his license to act as a securities broker.
After relinquishing his broker’s license, Sharma began to work in the insurance industry. In 2002, Sharma sold insurance from his business in Rancho Bernardo. He also began teaching seminars highlighting various types of insurance and annuities which could be purchased by his clients.
In 2007, Sharma set up Gold Coast Holding, LLC (“Gold Coast”) as a vehicle to trade options and initially funded the company with approximately $50,000 of his own money. After experiencing a bit of “beginners luck” he began telling his insurance clients that they could make better returns if he could “day trade” their money. Recognizing that his customers would not give him money for risky options trading, he lied to them and falsely stated that Gold Coast was an extremely safe way to earn a monthly retirement income because their money was to be: (1) part of a diversified portfolio; (2) pooled with many other investors; (3) used to buy bonds from emerging markets in Brazil, Russia, India, and China (“BRIC”); and (4) managed by Goldman Sachs. Sharma guaranteed investors a rate of return (typically between 6%-7%) for two to three years and urged his clients to liquidate their retirement accounts and annuities based upon the safety of his investment scheme.
From the outset, Gold Coast (and later a second company he established, Safe Harbor Tax Lien Acquisitions) exclusively used the money for day trading options. Between January 2008 and November 2014, Sharma raised $8.36 million from 32 different clients using these two companies. In order to attract new investors, Sharma paid $2.12 million in “returns” to old clients from funds generally derived from the contribution of later investors.
For example, of the approximately $3.5 million he raised from investors in the first two years of day trading, Sharma was left with only about $250,000 by the end of 2009. As a result, Sharma turned Gold Coast into a classic “Ponzi scheme” by paying earlier investors their guaranteed rates of return with approximately $5 million in new funds solicited from later investors.
Prior to the investment scheme collapsing completely, Sharma stopped trading option spreads and switched over to purchasing straight “call” and “put” options. It was Sharma’s hope that adopting this new strategy would allow him to recoup all of his investment losses. Once again, however, Sharma’s strategy proved disastrous. Although he was able to make his December 2014 monthly payout to investors, he ran out of funds in January 2015.
United States Attorney Laura E. Duffy acknowledged that this Ponzi scheme was a bit harder to detect than usual as Sharma did not promise his investors outlandish returns. Nevertheless, she warned all investors to ensure that individuals soliciting money have appropriate licenses and audited financial statements. “All investors – especially when they are dealing with their retirement savings – must exercise due caution before turning over money even to long-time friends or else what appears to be a safe harbor might turn into a ship wreck.”
“Mr. Sharma engaged in an elaborate Ponzi scheme to steal millions of dollars from people who trusted him with their life savings,” said FBI Special Agent in Charge, Eric S. Birnbaum. “Today’s sentencing makes it clear that the FBI and U.S. Attorney’s Office will work together to identify, disrupt and hold accountable those individuals that are involved in sophisticated financial fraud schemes that steal money from the American public.”
DEFENDANT: Case Number 15cr1396
Sunil Sharma Age: 68 Carlsbad, CA
CHARGE
Wire Fraud, in violation of 18 U.S.C. § 1343.
Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, restitution.
AGENCY
Federal Bureau of Investigation
Employee Sent to Prison for Stealing from Charity and Cheating on TaxesRead the Press Release
Assistant U.S. Attorney Andrew J. Galvin (619) 546-9721
NEWS RELEASE SUMMARY – September 11, 2015
SAN DIEGO –Tamara Azizov, formerly an accounts payable clerk at the Lawrence Family Jewish Community Center (“JCC”) in La Jolla, was sentenced today by U.S. District Chief Judge Barry T. Moskowitz to 12 months and one day in jail for embezzling over $150,000 from the JCC, and concealing this income on her federal income tax returns.
Azizov served as an accounts payable clerk from June 1989 to May 2014. In this position, she had access to the JCC’s bank accounts, credit card accounts, and bookkeeping records. Azizov abused this access to misappropriate $154,192.74, which she used for a variety of purchases including: Tom Ford sunglasses; $1,820 for sushi at Zip Fusion; Simone Pérèle lingerie; and thousands of dollars’ worth of clothing from Neiman Marcus, Nordstrom, and Anthropologie.
At the same time Azizov was embezzling funds to pay for jewelry and designer clothing, the JCC had to reduce its community programs because Azizov was siphoning from the JCC coffers. Moreover, due in part to the embezzlement, the JCC was forced to cut personnel in order to balance its budget. Azizov continued her theft until leaving the JCC in May of 2014.
Azizov was able to carry out the embezzlement by virtue of her access to the full range of the JCC’s financial records and accounts. On most occasions, Azizov would simply use the JCC’s credit cards to make personal purchases. In order to fool the JCC’s executive staff, auditors, and bookkeepers, Azizov falsely characterized her personal purchases as legitimate JCC expenses.
The JCC was founded in 1945 and promotes the continuity and vibrancy of the Jewish community by offering social, cultural, educational, and recreational programs and services.
The JCC operates, among other things, a preschool, a center for senior citizens, and one of the largest single-site summer day camps in California. Each year, thousands of community members attend the JCC’s San Diego Jewish Film Festival and the San Diego Jewish Book Fair.
United States Attorney Duffy said that charitable organizations such as the JCC add much to the region’s quality of life, and need protection from the unscrupulous.
“This office is committed to ensuring that white collar predators don’t prevent those less fortunate from receiving all the benefits that the generous citizens of San Diego County provide through organizations such as the JCC.”
Chief Judge Moskowitz also ordered Azizov to pay $154,192.74 in restitution to the JCC.
This is the second conviction and sentencing associated with embezzlement from the JCC. On August 28, 2015, District Judge Dana M. Sabraw sentenced former CFO Nancy Johnson to 12 months and one day for a similar embezzlement scheme that she executed for several years while employed at the JCC. Please see U.S. v. Nancy Johnson, 15-CR-1446-DMS.
DEFENDANT: Case Number 15cr1447-BTM
Tamara Azizov Age: 62 San Diego, CA
SUMMARY OF CHARGES
Wire Fraud – Title 18, U.S.C., Section 1343
Maximum penalty: 20 years’ imprisonment and $250,000 fine
Filing a False Tax Return – Title 26, U.S.C., Section 7206(1)
Maximum penalty: 3 years’ imprisonment and $250,000 fine
Banker Sent to Prison for Taking More Than $1 Million in BribesRead the Press Release
Assistant U.S. Attorney Emily W. Allen (619) 546-9738
NEWS RELEASE SUMMARY – September 8, 2015
SAN DIEGO – Robert Moreno, a GMAC banker, was sentenced today by U.S. District Judge Roger T. Benitez to 37 months in prison for his role in a widespread commercial bribery and tax evasion scheme.
Moreno admitted accepting more than $1 million in bribes while he worked for GMAC in return for rigging bids for secondary market mortgages in favor of his preferred customers. At the sentencing hearing, Judge Benitez described Moreno as “the kingpin in this whole nasty affair,” and noted that the bribe payments had an adverse economic impact on the market. He ordered Moreno to pay back $1,143,560 in restitution to GMAC and an additional $140,941 to the IRS.
According to court records, Moreno admitted that between December 2011 and July 2013, he used his position and influence at GMAC to ensure that his preferred customers, including San Diego businessman Israel Hechter and Woodland Hills businessman Ben Keisari, won their bids to purchase mortgage loans that were being resold by GMAC. In order to ensure Hechter’s and Keisari’s bids won, Moreno would alter other bids, reject bids, and erase or ignore bids from qualified competitors, so that his corrupt customers would appear to be the most qualified bidders. Moreno also provided Hechter and Keisari with “inside information” about prices and competing bids, giving them a leg up in the bidding process and ensuring that they won the most lucrative deals.
In exchange, Hechter and Keisari, and others who worked for them, delivered bribe payments to Moreno totaling more than $1 million. Initially, Moreno arranged to be paid by personal check or in hand-delivered cash payments in order to conceal the bribes and avoid reporting them to the IRS. For example, Hechter recruited his father to deliver hundreds of thousands of dollars in cash bribes to Moreno on New York City street corners and at a car wash. In a similar vein, Moreno would meet Keisari in Las Vegas hotels and other places to arrange in-person deliveries of tens of thousands of dollars in cash. Moreno never disclosed the income on his 2011 and 2012 tax returns.
As the amount of the bribe payments increased, Moreno revised the plan to create a “cover story” that could be used to explain his illegal activity. He entered into sham “consulting” agreements with Hechter and Keisari, to make it appear as if the bribes were legitimate fees paid for services unrelated to Moreno’s work at GMAC. Using a business bank account opened for the purpose of receiving these bogus “consulting” payments, Moreno took in $550,000 in bribes. When later confronted by federal agents, Moreno stuck to the cover story and claimed that the bribe payments were consulting fees for legitimate work. Eventually, in October 2014, Moreno pleaded guilty and admitted his role the bribery scheme.
Including Moreno, over half a dozen defendants have been convicted for their roles in this bank bribery ring. Hechter, the owner of San Diego-based mortgage investment firms Ocean 18, LLC, and Note Tracker Corporation, pleaded guilty in September 2014. As part of his guilty plea, he admitted that he paid bribes to Moreno and to Lynda Sanabria, another banker who sold mortgages on the secondary market on behalf of JP Morgan Chase Bank. Sanabria also pleaded guilty, and admitted receiving hundreds of thousands of dollars in bribe payments from Hechter in return for her influence over Chase’s mortgage sales.
Zeev Hechter, Amir Hechter, and Jack Prober also pleaded guilty and admitted that they participated in the bribery on behalf of Ocean 18, LLC. Both Prober and Amir Hechter admitted writing personal checks to Moreno and Sanabria in order to assist the bankers in evading taxes on the illegal income. Zeev Hechter admitted hand-delivering approximately $330,000 in cash to Moreno. Ben Keisari, who operated the business BGK Investments out of Woodland Hills, California, also pleaded guilty to participating in the bribery scheme. Keisari admitted paying more than $350,000 in bribes to Moreno in return for Moreno’s help ensuring that BGK Investments won its bids to purchase mortgage notes from GMAC.
Moreno is the fifth defendant in this bribery ring to be sentenced. On March 2, 2015, Judge Benitez sentenced Zeev Hechter to six months in custody and ordered him to pay a $50,000 fine and restitution of $165,000. On May 11, 2015, Judge Benitez sentenced Amir Hechter to 18 months in prison for his role in the offense, and ordered him to pay a $25,000 fine and restitution of $63,474. On June 1, 2015, Judge Benitez sentenced Lynda Sanabria to six months in prison followed by six months of home confinement, and ordered her to pay $40,420 in restitution to the IRS. And on August 28, 2015, Judge Benitez sentenced Israel Hechter to 18 months in custody, along with restitution of nearly $400,000.
Jack Prober and Ben Keisari are both scheduled to be sentenced on October 18, 2015, at 9:00 am. Each of these defendants will also be sentenced by Judge Benitez.
U.S. Attorney Duffy praised the coordinated efforts of the Federal Bureau of Investigation, the Federal Housing Finance Agency – Office of Inspector General, and Internal Revenue Service, Criminal Investigation to dismantle Moreno’s bank bribery ring.
DEFENDANT SENTENCED TODAY:
Robert Moreno, 14CR2277-BEN Age: 42 Tempe, AZ
ADDITIONAL DEFENDANTS:
Israel Hechter, 14CR2703-BEN Age: 47 San Diego, CA
Amir Hechter, 14CR2701-BEN Age: 42 San Diego, CA
Jack Prober, 14CR2704-BEN Age: 56 La Jolla, CA
Zeev Hechter, 14CR2702-BEN Age: 68 Aventura, FL
Lynda Sanabria, 14CR2980-BEN Age: 51 Rockwall, TX
John Crisci, 14CR3269-BEN Age: 33 San Diego, CA
Ben Keisari, 15CR0550-BEN Age: 31 Woodland Hills, CA
CHARGES
Conspiracy to commit bank bribery and tax evasion, in violation of 18 U.S.C. § 371.
Maximum Penalties: 5 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.
AGENCIES
Federal Bureau of Investigation
Federal Housing Finance Agency – Office of Inspector General
Internal Revenue Service, Criminal Investigation
Bearded Bandit Sentenced to 70 MonthsRead the Press Release
Special Assistant U.S. Attorney Renee Green (619) 546-6775
NEWS RELEASE SUMMARY – September 1, 2015
SAN DIEGO – Christopher Andrew Gibson, dubbed the “Bearded Bandit,” was sentenced yesterday to 70 months in prison in connection with a string of bank robberies in the San Diego area in late 2014.
United States District Judge Marilyn L. Huff also ordered Gibson to pay restitution to the victim banks. During the sentencing hearing, prosecutors urged the judge to impose a significant sentence in part because of a bank teller’s continued emotional distress due to Gibson’s threats during one of the robberies.
In the course of the investigation, the Federal Bureau of Investigation learned that Gibson committed the first bank robbery within hours of being released from the George Bailey Detention Facility, where he was held on unrelated charges. Gibson was dubbed the “Bearded Bandit” because of the shaggy facial hair he had in the first two robberies.
According to his plea agreement, Gibson entered Wells Fargo Bank, located at 685 Saturn Boulevard, San Diego, on October 7, 2014, and presented a bank employee with a note that was paraphrased as follows: “I know your training. No dye packs. No GPS devices. I want $4,567. Hurry cause I'm not waiting all day.” Gibson then took approximately $1,419.00 from the employee and fled the bank.
Gibson admitted in his plea agreement that he followed up with a robbery a week later in Vista at a Chase Bank, located at 1641 South Melrose Drive, on October 15, 2014. During the robbery, Gibson presented a bank employee with a note, which in effect said, “I know your training. I want $4,788 in 15 seconds. No dye packs or GPS devices.” Gibson took approximately $2,240.00 from the employee and fled the bank.
Gibson’s final robbery occurred at a second Chase Bank, located at 985 Vista Way in Vista, on November 6, 2014. During the robbery, Gibson presented a bank employee with a note, reading to the effect, “Don't be stupid and press any buttons. I know your training so just cooperate. I want $4,000 and no GPS devices or dye packs. No fake bills. I'm counting to 30.” Gibson took approximately $4,000.00 from the employee and fled the bank. The demand notes were not recovered.
Gibson has been in custody since his arrest on November 10, 2014.
DEFENDANT
Christopher Andrew Gibson Age: 27 Vista, California
SUMMARY OF CHARGES
Counts 1-3: Bank Robbery – Title 18, U.S.C., Section 2113(a)
Maximum penalty: 20 years’ imprisonment and $250,000 fine
AGENCY
FBI
Nurse Sentenced for Adulterating DrugsRead the Press Release
For Further Information, Contact:
Assistant U.S. Attorney Melanie K. Pierson (619) 546-7976NEWS RELEASE SUMMARY – August 21, 2015
SAN DIEGO –Sarah Elizabeth Martin, a registered nurse from San Diego, was sentenced today to three years of probation, a $1,000 fine, 100 hours of community service and was ordered to pay restitution and complete a six-month residential drug rehabilitation program for removing Meperidine Hydrochloride (a generic form of Demerol®) from vials at the clinic where she worked in La Jolla with a syringe and replacing them with saline solution.
In order to conceal the adulteration, Martin glued the caps back on the vials and placed them back in the locker at the clinic with the other drugs to be administered to patients, intending to make it appear that the vials were untouched. Although the adulterated drugs were administered to between 50-250 patients at the clinic, based on the investigation, there is no evidence that Martin’s conduct led to the harm of any patient, or involved a conscious or reckless risk of death or serious bodily injury.
At sentencing, Martin acknowledged that as a result of receiving treatment for a medical condition, she developed an addiction to pain medication, and began injecting herself with the generic Demerol® she had taken from the clinic.
“Consumers and especially patients rely on FDA to ensure that the prescription drugs they take are safe and effective; when actions compromise either the safety or the effectiveness of those medications, we will intervene,” said Lisa L. Malinowski, Special Agent in Charge, FDA Office of Criminal Investigations’ Los Angeles Field Office. “We will continue our vigilance and work to ensure that those who violate the public’s trust and endanger the public health will be brought to justice.”
DEFENDANT
Sarah Elizabeth Martin Age: 25
SUMMARY OF CHARGES
Adulteration of Drug Held for Sale– Title 21, U.S.C., Sections 331(k) and 333(a)(2)
Maximum penalty: Three years in custody and $250,000 fine
AGENCY
Food and Drug Administration, Criminal Investigations Division
Ex-Marine Convicted in Sexual Assault of Another Marine on Camp PendletonRead the Press Release
For Further Information, Contact:
Assistant U.S. Attorneys Kathleen J. O’Hara (619) 546-7945 or
Michelle M. Pettit (619) 546-7972
SAN DIEGO – A former Marine was convicted by a federal jury yesterday of sneaking into the Camp Pendleton apartment of a female Marine he did not know and sexually assaulting her as she slept.
Pedro Javier Orellana, 24, was convicted of one count of sexual abuse of an incapacitated victim following a three-day trial. The jury deliberate for one day. The defendant, who had been released on bond with GPS monitoring since his arrest in March, 2015, was immediately taken into custody upon conviction. U.S. District Judge Larry Alan Burns scheduled sentencing for November 30, 2015.
According to evidence presented at trial, after the sexual assault, Orellana went to a neighbor’s house where he hid and the victim reported it to her friends. The Naval Criminal Investigative Service tracked Orellana down approximately five days later in Vista, California. He admitted to NCIS and to the jury at trial that he had only seen the victim in passing twice, that he did not know her name, and that he had never had a conversation with her.
Despite that fact, he walked into the apartment without knocking, looked for her on the couch, and then walked into a dark bedroom, where she lay asleep on top of the bed. When he spoke to NCIS, Defendant used the words “deep sleep,” “unconscious,” and “too drunk to know what was going on” to describe the victim’s state. Orellana also stated that he had received training as a former Marine regarding sexual assault prevention, and he knew that alcohol impaired a person’s ability to consent to sex.
“It is important for the security of our community and our military installations to pursue justice for sexual assault victims,” said U.S. Attorney Laura Duffy. “We will continue to support our NCIS partners to aggressively investigate and prosecute crimes on federal property, particularly when service members are victimized.”
DEFENDANT
Pedro Javier Orellana Age: 24 Laurel, MD
SUMMARY OF CHARGES
18 U.S.C. § 2242(2) – Sexual Abuse- Incapacitated Victim (Maximum Life Sentence)
AGENCY
Naval Criminal Investigative Service
Defendant Admits Smuggling Cocaine through an Underwater Narcotics Tunnel in Wetsuit and Scuba GearRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Sherri Hobson (619) 546-6986
NEWS RELEASE SUMMARY – August 19, 2015
SAN DIEGO – Evelio Padilla-Zepeda, a Honduran national, pleaded guilty in federal court today, admitting that he donned a wetsuit and scuba gear and smuggled 55 pounds of cocaine through an underwater drug tunnel that exited into the All-American Canal just north of the international border.
Padilla-Zepeda entered his plea before U.S. Magistrate Judge William Gallo. He is scheduled to be sentenced on December 7, 2015 at 9:00 a.m. before U.S. District Judge Roger Benitez.
On April 25, 2015, Border Patrol Agents were patrolling about seven miles east of the Calexico West Port of Entry at 10:25 p.m. when they were informed by a remote video surveillance operator that there was an individual along the All-American Canal.
According to court records, agents searched the southern embankment and encountered the defendant, who was soaking wet and dressed in a wetsuit. Agents apprehended the defendant and continued to search the immediate area and found 25 one-pound vacuum-sealed weighted and gift-wrapped packages of cocaine plus scuba tanks and diving gear, including two rebreather tanks which recirculate a diver’s exhaled breath and prevent tell-tale bubbles – a giveaway that a diver is in the water.
Subsequently, Border Patrol Agents found an underground tunnel from Mexicali, Mexico, continuing under the border and ending at the south bank of the canal. The exit point of the tunnel is in the embankment of the canal, partially submerged by the canal’s water and covered with rocks which have to be moved to access the exit. The tunnel was approximately 45 to 50 yards long.
In court, Padilla-Zepeda admitted that he entered the south canal bank of the All-American Canal in Calexico through an underground tunnel from Mexico into the United States, wearing scuba gear and carrying 25 packages of cocaine. The defendant also admitted that he intended to use his scuba gear to transport the cocaine in the canal and underwater to another location in the All-American Canal.
“Drug smugglers will try anything to move their product – even scuba diving in an underwater tunnel,” said U.S. Attorney Laura Duffy. “The ingenuity of the smugglers is matched only by our determination to thwart it, as we have done in this case.”
“This investigation demonstrates the incredible lengths that these drug trafficking organizations will go to ensure that their product makes it to the streets,” said DEA San Diego Special Agent in Charge William R. Sherman. “With the assistance of our law enforcement partners, a cross-border drug tunnel was shut down, keeping our communities safe.”
“We are pleased with the conclusion of this serious matter resulting from the arrest of this man and dangerous drugs seized by El Centro Sector Border Patrol agents,” said Chief Patrol Agent Carla Provost.
DEFENDANT Criminal Case No. 15CR1375-BEN
Evelio Padilla-Zepeda Age: 28 Hometown: Mexicali, Mexico; Citizen of Honduras
SUMMARY OF CHARGE
Possession of Cocaine With Intent To Distribute -- Title 21, U.S.C., Section 841(a)(1)
Maximum penalty: 20 years’ imprisonment and $250,000 fineAGENCIES
United States Border Patrol, Calexico Station
Homeland Security Investigation
Drug Enforcement Administration
Holtville Man Guilty of Illegally Purchasing Guns in Arizona and Selling Them in CaliforniaRead the Press Release
Assistant U.S. Attorney Andrew Haden (619) 546-6961
NEWS RELEASE SUMMARY – August 18, 2015
SAN DIEGO – A Holtville man pleaded guilty to a firearms charge in federal court today, admitting that he fraudulently obtained an Arizona identification card in order to illegally purchase at least 54 firearms in that state and illegally transport them to California.
Scott Singh Dhalliwal admitted in his plea agreement that he illegally sold many of those weapons in California. He entered his plea before U.S. Magistrate Judge Karen S. Crawford, who set sentencing for November 9, 2015.
Dhalliwal acknowledged that he claimed to live in Arizona in order to obtain an identification card there. There are fewer restrictions – such as registration requirements and waiting periods - on gun purchases in Arizona.
According to the plea agreement, Dhalliwal then used his fake identification at Sprague’s Sports Inc. in Yuma, Arizona, on July 22, 2011, to purchase a Smith and Wesson .357-caliber revolver. On the required paperwork, Dhalliwal swore under penalty of perjury, and federal prosecution, that his primary residence was in Arizona. He then took the weapon to California.
Dhalliwal further admitted that the July 22nd transaction was one example of a much larger gun trafficking scheme. According to the plea agreement, Dhallliwal had similarly – and illegally – acquired at least fifty four firearms in Arizona. He illegally sold many of those firearms to other people in the Imperial Valley.
“The United States Attorney’s Office for the Southern District of California is committed to finding and pursuing anyone who violates our nation’s firearms laws. The illegal acquisition and sale of firearms will not be tolerated because it makes our community less safe—plain and simple.”
DEFENDANT Case Number 15cr2117-MMA
Scott Singh Dhalliwal Age: 61 Hometown: Holtville, CA
SUMMARY OF CHARGE
Unlicensed Transportation of Firearms – Title 18, U.S.C., Section 922(a)(3)
Maximum penalty: Five years in prison and $250,000 fine
AGENCY
Bureau of Alcohol, Tobacco, Firearms and Explosives
Former civilian contractor admits stealing equipment from Camp PendletonRead the Press Release
Special Assistant U.S. Attorney Jeffrey D. Hill (619) 546-7924
NEWS RELEASE SUMMARY – August 18, 2015
SAN DIEGO -- Escondido resident James Dean Salmon pleaded guilty in federal court today, admitting that he stole thousands of dollars of United States property from Marine Corps Base Camp Pendleton.
In entering his plea, Salmon admitted that he exploited his position as a civilian contractor to cause unnecessary purchases of equipment. In doing so, Salmon would falsely represent functioning equipment as broken, or repairable equipment as unrepairable. When new equipment would arrive, Salmon would then falsely claim to have installed it – while, in fact, he would steal the new items for his own personal use.
From December 2007 through August 2011, Salmon used this scheme to steal a total of $27,362.68 worth of government equipment, much of it recovered from inside his residence during a search warrant. Salmon is scheduled to be sentenced on November 16, 2015, before U.S. District Judge John A. Houston.
DEFENDANT Criminal Case No. 15cr02116-JAH
James Dean Salmon Escondido, CA Age: 47
SUMMARY OF CHARGES
Theft of Public Property – Title 18, U.S.C., Section 641
Maximum penalty: 10 years’ imprisonment and $250,000 fineAGENCIES
United States Marine Corps, Criminal Investigation Division
Department of the Navy, Naval Criminal Investigative Service
Ex-Owner of Calexico Automobile Dealership Pleads Guilty to Laundering Drug ProceedsRead the Press Release
For Further Information, Contact: Assistant U.S. Attorney Sherri Hobson (619) 546-6986
NEWS RELEASE SUMMARY – August 18, 2015
SAN DIEGO, CA –Ignacio Gonzalez, the prior owner of Del Valle Auto Sales in Calexico, California, pleaded guilty in federal court today, admitting that he laundered tens of thousands of dollars in illicit drug proceeds and failed to file the required financial reports associated with the vehicle sales. In addition to his guilty plea, Gonzalez also agreed to forfeit $43,920 and pay a $20,000 fine.
According to the plea agreement, Gonzalez knowingly transferred and delivered funds from the sales of vehicles that were “represented by a law enforcement officer to be the proceeds of…drug trafficking” during the undercover operation. He then failed to file currency transaction reports, as required by law, in connection with the receipt of $19,420 in cash and $24,500 in cash for the purchase of these vehicles. He agreed to place the vehicles in nominee names, manipulated the purchase agreements, generated false receipts, and agreed not to report the cash transactions to the Internal Revenue Service or any other entity.
Gonzalez entered his plea before U.S. Magistrate Judge Karen Crawford. He is scheduled for sentencing on November 4, 2015, at 9:00 a.m. before Judge Janis L. Sammartino.
Chula Vista Man Sent to Penalty Box for Trafficking in over $100,000 Worth of Counterfeit World Cup JerseysRead the Press Release
For Further Information: Assistant U.S. Attorney Melanie K. Pierson (619) 546-7976
NEWS RELEASE SUMMARY – August 17, 2015
SAN DIEGO – Clemente Leon of Chula Vista was sentenced to four months in custody followed by five months in a halfway house for selling counterfeit World Cup soccer jerseys valued at between $120,000 and $320,000 over the internet. Leon was also ordered by U.S. District Court Judge John A. Houston to forfeit $50,000 of the proceeds and all the counterfeit merchandise seized by federal agents.
Leon pleaded guilty in May, admitting that he sold soccer jerseys bearing counterfeit trademarks over Amazon as well as from his own website, www.playerasfutbol.com. Among other methods, he used PayPal to process the proceeds of his crime. Leon imported the counterfeit soccer jerseys from China even after receiving a Cease and Desist letter from Nike in August of 2013. This allowed him to capitalize on the popularity of the World Cup. Leon further modified the counterfeit team jerseys in his garage in Chula Vista by attaching counterfeit World Cup team patches and stencils with World Cup player’s names on the backs of the jerseys, in order to be able to charge a higher price.
DEFENDANT Criminal Case No. 15cr1326-JAH
Clemente Leon Age: 37 Chula Vista, California
SUMMARY OF CHARGE
Importation Contrary to Law—Title 18, United States Code, Section 545
Maximum penalty: 20 years’ imprisonment and $250,000 fine
AGENCY
Homeland Security Investigations
International Smuggling by Drones Nets 28 Pounds of HeroinRead the Press Release
Contact: Assistant U.S. Attorney Sherri Walker Hobson (619) 546-6986
NEWS RELEASE SUMMARY – August 12, 2015
SAN DIEGO – El Centro residents Jonathan Elias and Brayan Valle pleaded guilty in federal court Tuesday to drug charges, admitting that they smuggled 28 pounds of heroin into the United States using drones.
This is believed to be the first international narcotics seizure by U.S. law enforcement involving the use of drones by Mexican drug traffickers, according to Homeland Security Investigations.
The defendants entered guilty pleas before U.S. Magistrate Judge Peter Lewis to possession of heroin with intent to distribute and aiding and abetting, in violation of Title 21, United States Code, Section 841 and Title 18, United States Code, Section 2. The offense involved approximately 28.55 pounds of heroin.
According to their guilty pleas, on or about April 28, 2015, Elias drove Valle to pick up packages of drugs that were smuggled by drones near an agricultural field in Calexico near the border. Using a drone controller, Valle picked up packages of narcotics and placed them inside a bag. They placed the bag in the trunk of their vehicle and were subsequently stopped by U.S. Border Patrol agents. As part of their plea, defendants admitted that they knew that there were narcotics inside the bag, but did not know the quantity or type of narcotics inside the bag.
“With border security tight, drug traffickers have thought of every conceivable method to move their drugs over, under and through the border,” said U.S. Attorney Laura Duffy. “We have found their tunnels, their Cessnas, their jet skis, their pangas, and now we have found their drones.”
“The use of drones to smuggle drugs across the U.S./Mexico border is an emerging threat, which fortunately, has not proven to be a lucrative criminal enterprise in the Imperial Valley,” said Ronnie Martinez, assistant special agent in charge for HSI El Centro. “HSI and our law enforcement partners on the Imperial Valley Border Enforcement Security Task Force are working together to identify and dismantle the criminal organizations behind drone smuggling activity and to wipe out their illicit experiments. As part of this effort, a dedicated group of investigators from multiple law enforcement agencies are assigned to investigate all aerial smuggling activity along the border, and to seize any illicit proceeds linked to their failed attempts.”
Sentencing is scheduled for October 20, 2015 at 8:30 a.m. before U.S. District Judge Gonzalo P. Curiel.
DEFENDANTS Case Number 15-cr-01437
Jonathan Elias Age 18 El Centro, California
Brayan Valle Age 19 El Centro, California
SUMMARY OF CHARGE
Title 21, United States Code, Section 841 and Title 18, United States Code, Section 2
Maximum Penalty: Twenty years in custody; $250,000 fine; three years of supervised release
INVESTIGATING AGENCIES
Homeland Security Investigations – Special Agents (HSI)
U.S. Border Patrol, El Centro Sector
San Diego Loan Broker Indicted for Bribing Bank Vice PresidentRead the Press Release
NEWS RELEASE SUMMARY – August 7, 2015
SAN DIEGO – Jocelyn J. Brown, a loan broker for the now-defunct La Jolla Bank, was indicted yesterday by a federal grand jury on charges that she paid kickbacks to the bank’s vice president and Small Business Administration (“SBA”) lending department manager.
According to the indictment, which was unsealed today, Brown paid the bribes in return for the banker’s assurance that the loans Brown referred would be approved and funded, and, more importantly, that Brown’s commissions would keep on flowing. Brown allegedly collected tens of thousands of dollars in referral fees from La Jolla Bank, and kicked back a portion to the bank manager, in cash, every time she was paid, the indictment said.
La Jolla Bank was a bank and financial services company that provided consumer, business, and construction loans. It opened its SBA lending department in 2005. In February 2010, the bank failed, and was taken over by the FDIC. At the time of its failure, the bank had outstanding debt of over $1 billion, which the FDIC absorbed—and ultimately passed on to the American taxpayers.
According to the indictment, Brown worked as an unofficial broker for La Jolla Bank, referring business loan customers to the bank’s SBA department. As part of this job, Brown helped her borrowers compile their loan application packages and submit them to the bank. In return for generating business, La Jolla Bank paid Brown a commission or referral fee, calculated as a percentage of each loan she referred.
In 2006, as alleged in the indictment, Brown and the SBA manager made a deal where Brown would pay a portion of her commissions back to the SBA manager, in cash, after her clients’ loans were funded. In turn, the SBA manager would make sure that Brown’s clients’ loans were approved so that Brown could continue collecting tens of thousands of dollars in commission payments. In addition, the bank manager arranged to pay Brown a fraudulent $30,000 “commission” for a loan she in fact had no part in brokering or referring to the bank. Brown went so far as to generate a fake invoice, pretending that she had earned the commission. After she was paid, Brown cashed the $30,000 check and gave a portion of the cash to the bank manager.
Brown and the SBA manager allegedly agreed to conceal these bribe payments by hiding the commissions from borrowers, making the payments in cash, and lying to law enforcement agents if they were asked about the payments. In fact, the indictment charges, Brown did lie to law enforcement to conceal the conspiracy. Despite the fact that she and the SBA manager traded several phone calls and text messages and had a sit-down meeting in June 2014, Brown falsely reported to federal agents in September 2014 that she had not spoken to or seen the bank manager since before she learned about the federal investigation.
Brown was taken into custody this morning after self-surrendering at the San Diego FBI Field Office.
“As this case demonstrates, bribing bank officials to issue loans threatens the security of the banking system and our economy,” said U.S. Attorney Laura E. Duffy. “These charges reflect our commitment to rooting out corruption at all levels.”
“Inside deals like the one alleged in this case undermine our nation’s financial system and cost taxpayers millions of dollars,” said FBI Special Agent in Charge Eric S. Birnbaum. “The FBI is committed to rooting out fraud and corruption within the financial industry.”
“Today’s indictment is a reminder that those who corrupt the banking system and place the integrity of government programs at risk will be brought to justice and held accountable for their actions,” said Inspector General Peggy E. Gustafson of the Small Business Administration. “Lies by individuals that are afforded a degree of trust by virtue of their professions are particularly egregious. I want to thank the U.S. Attorney’s Office for its dedicated leadership and professionalism in the pursuit of justice in this matter.”
“The Treasury Inspector General for Tax Administration is committed to investigating and prosecuting individuals to the fullest extent of the law when they choose to commit acts of bribery,” said TIGTA Special Agent in Charge Rod Ammari. “Bribery will never be tolerated and TIGTA is committed to rooting out such illegal activity, especially when the millions of dollars that are lost from bribery are passed on to the hard working American taxpayer.”
These charges are the result of an active, ongoing criminal investigation. Anyone with information relating to these charges should contact the San Diego branch of the Federal Bureau of Investigation at (858) 320-1800.
*An indictment is not evidence that the defendant committed the crime charged. The defendant is presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
DEFENDANT Case Number 15CR2049-AJB
Jocelyn J. Brown, Age: 59 San Diego, CA
CHARGES
Conspiracy, in violation of 18 U.S.C. § 371
Maximum Penalties: 5 years’ imprisonment, $250,000 fine or twice the pecuniary loss or gain, three years supervised release, $100 special assessment, restitution.
Bank bribery, in violation of 18 U.S.C. § 215
Maximum Penalties: 30 years’ imprisonment, $1,000,000 fine or three times the value of the thing given, offered, or promised, five years’ supervised release, $100 special assessment, restitution.
Making a false statement to a federal agent, in violation of 18 U.S.C. § 1001
Maximum Penalties: 5 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.
AGENCIES
Federal Bureau of Investigation
U.S. Small Business Administration – Office of Inspector General
Treasury Inspector General for Tax Administration
Federal Deposit Insurance Corporation – Office of Inspector General
Department of the Treasury – Office of Inspector General
Federal Housing Finance Agency – Office of Inspector General
International Sports Gambling Ring Leaders Sentenced for RacketeeringRead the Press Release
NEWS RELEASE SUMMARY – August 7, 2015
SAN DIEGO - Two brothers were sentenced today for leading an international gambling ring that took millions of dollars in illegal sports wagers over the last decade in the San Diego and Los Angeles areas.
U.S. District Judge Janis L. Sammartino sentenced Jan Harald Portocarrero to 18 months in custody and a $50,000 fine; Erik Portocarrero received a 22-month sentence and a $50,000 fine.
Judge Sammartino ordered the Portocarreros to forfeit $1.7 million that they obtained from their illegal gambling business, “Macho Sports.” In addition, the brothers and 16 other defendants were ordered to forfeit unlawful gambling proceeds valued at over $10 million.
According to court documents, the FBI investigation of Macho Sports began in 2011, and employed wiretaps and undercover agents to infiltrate the organization and uncover the defendants’ illegal gambling and extortionate debt collection activities. Nearly two years ago, in coordinated law enforcement actions in Norway, Los Angeles, and San Diego, FBI agents and Norwegian police arrested 18 members of Macho Sports, and seized nearly $12 million in illegal assets.
Jan Portocarrero and Erik Portocarrero were both arrested in June 2013, although they were half a world apart – Jan Portocarrero surrendered to authorities in Los Angeles, California, and Erik Portocarrero was arrested in Oslo, Norway. For the next 22 months Erik Portocarrero fought his extradition from Norway, but that legal battle ended when the Kingdom of Norway extradited him to the United States.
According to the superseding indictment and admissions in court, Jan Portocarrero and Erik Portocarrero started their illegal gambling business shortly after the 1995 Super Bowl. Although originally from California, the Portocarrero brothers set up Macho Sports in Peru after being investigated for gambling crimes in the Los Angeles area.
Using the Internet and toll-free telephone lines, Macho Sports accepted high-stakes sports bets from customers throughout California. The organization ensured the prompt payment of gambling debts through, among other means, intimidation and a reputation of violence toward delinquent customers. The co-conspirators avoided detection by laundering their illegal proceeds and maintaining a company headquarters and physical platform outside the United States.
The Portocarreros employed managers in Peru to oversee the enterprise’s telephone and internet operations, resolve disputes and adjust customers’ lines of credit. The organization also used teams of bookies—such as Amir Mokayef of La Jolla, California (who operated primarily in the San Diego area) and Joseph Barrios (who operated primarily in the Los Angeles area)—to recruit customers, pay off winning bets, and collect losing bets.
Mokayef and Barrios, in turn, managed their own network of “sub-bookies” to recruit customers and collect payments. The enterprise also used “runners,” who dealt directly with customers and maintained thousands (and sometimes millions) of dollars in cash to handle customer payments and collections. Millions of dollars from these “banks” – which the conspirators kept in their homes and safe deposit boxes – were seized by authorities as part of the investigation.
Mokayef and Barrios have pleaded guilty and are awaiting sentencing. The other individual defendants have also pleaded guilty and either have been sentenced, or are awaiting sentencing.
“After running an international racketeering organization for two decades, Jan and Erik Portocarrero finally faced American justice today,” said U.S. Attorney Laura Duffy. “Despite attempting to evade U.S. law enforcement by moving their sophisticated operations to Peru and Norway, they must now face substantial custodial sentences and millions in forfeitures. No longer can their global Macho Sports enterprise engage in violence, threats, and intimidation to amass illegal profits.”
Duffy added: “We wish to thank our law enforcement partners in Norway for their invaluable assistance throughout this case.”
FBI Special Agent in Charge Eric S. Birnbaum commented, “Today’s sentencings mark the end of a sophisticated international gambling criminal enterprise that preyed upon the gambling addiction of its customers. It also reaffirms the FBI’s commitment to working with our domestic and international law enforcement partners, integrating intelligence into our criminal investigations and dismantling sophisticated criminal enterprises such as Macho Sports.”
The Portocarreros were ordered to report to prison on August 31, 2015.
DEFENDANTS Case Number: 13CR2196-JLS
Jan Harald Portocarrero Age: 42 Los Angeles, CA
Erik Portocarrero Age: 44 Oslo, Norway
SUMMARY OF CHARGES
Count 1: Racketeering Conspiracy to Conduct Enterprise Affairs (RICO Conspiracy), in violation of Title 18, United States Code, Sections 1962(c)&(d)
Maximum penalties: 20 years in prison, 3 years supervised release; and a $250,000 fine
INVESTIGATING AGENCIES
Federal Bureau of Investigation
Internal Revenue Service – Criminal Investigation
Norwegian Police
Utah woman admits fraudulent sale of medical deviceRead the Press Release
For Further Information, Contact:
Assistant U.S. Attorney Melanie K. Pierson (619) 546-7976
SAN DIEGO – Salt Lake City resident Beth Campbell pleaded guilty in federal court today, admitting that she fraudulently sold a prescription medical device to an undercover agent who she knew did not have a prescription.
In pleading guilty, Beth Campbell admitted that she sold medical devices from her home in Utah over the Internet, and in December of 2014, she offered to sell an undercover agent a medical device without a prescription, to treat a condition for which the device was not approved for use. Campbell acknowledged that she sold the device for $3,495, knowing that a prescription was required and that the agent had no prescription.
Campbell stated that she told the undercover agent that the device required a prescription, which could be easily obtained from a chiropractor, or one could enroll as a distributor with her and then buy the device without a prescription. Campbell advised the agent that it was not necessary to sell the machines to be a distributor, but only to enroll as one to purchase the machine. Campbell admitted that when the agent expressed discomfort over the distributorship agreement, she offered to personally order a machine herself and then ship it to the agent, without a prescription or distributorship agreement.
Campbell admitted that she acted with the intent to defraud by attempting to make it appear that this transaction was a legitimate sale of a prescription medical device by ordering it herself, and falsely representing that it was a display model for a distributor.
The device, the Wellness Pro, is a prescription medical device approved by the FDA for use to treat pain, and not to treat cancer, as she claimed. The Wellness Plus device sold in this transaction was misbranded because it lacked adequate directions for use in that it was a prescription device sold to a layperson who was not under the supervision of a licensed practitioner.
Campbell is scheduled to be sentenced on November 2, 2005, at 9:00 a.m. before the Honorable Roger T. Benitez.
DEFENDANT Criminal Case No. 15cr0360-BEN
Beth Campbell Age: 54 Salt Lake City, Utah
SUMMARY OF CHARGE
Misbranding– Title 21, U.S.C., Sections 331(a) and 333(a)(2)
Maximum penalty: Three years in prison and $250,000 fineAGENCIES
Food and Drug Administration, Office of Criminal Investigations
Homeland Security Investigations
Postal Inspection ServiceAttorney Sentenced for $4 Million FraudRead the Press Release
For Further Information, Contact:
Assistant U.S. Attorney Eric J. Beste (619) 546-6695SAN DIEGO – Attorney Gino Paul Pietro appeared in two federal courthouses this week, where he was collectively sentenced to serve 30 months in prison for participating in separate fraud schemes in Orange and San Diego counties.
On July 20, 2015, U.S. District Judge Andrew Guilford in Santa Ana ordered Pietro to serve 24 months in custody for a sophisticated loan fraud scam that used a “straw buyer” to conceal his client’s receipt of over $4 million in commercial loans that were backed by the federal government.
And on July 24, 2015, Pietro was sentenced by U.S. District Judge Dana M. Sabraw in San Diego to serve 10 months in custody for defrauding six different defendants being held in pretrial detention (and their families) out of $3,000 each by falsely representing that his investigator was a licensed attorney who could “globally” resolve their criminal and immigration cases. Six months of that sentence are to be served consecutive to the Orange County sentence; four months concurrently.
In imposing additional custodial time on Pietro, Judge Sabraw told the defendant his conduct had brought “dishonor and disgrace to the entire legal profession.” And although his six victims had committed crimes by entering the country illegally, “they didn’t deserve this.”
Pietro was ordered to repay $18,000 in restitution to the victims of the San Diego fraud scheme, and is scheduled to appear in federal court in Santa Ana on October 26, 2015, to determine the amount of restitution he must pay to the victims of the loan fraud scheme.
Pietro was ordered to report to prison on November 27, 2015.
Pietro’s sentencing in federal court in Santa Ana concerned his role in defrauding Hana Bank out of two commercial loans that his client – Donald Goff – used to purchase lucrative gas stations in Anza and Imperial, California. In order to facilitate these transactions and conceal Goff’s involvement, defendant Pietro created two shell companies (Rock Petroleum, Inc. and the Golden Oso Group, Inc.) and made it appear that a “straw buyer” was actually going to purchase the properties for over $6 million – using a $2.1 million down payment and $4.5 million in loans from Hana. In truth, however, the purchase price was closer to $3.45 million, and the “down payment” was a total fabrication. And to secure favorable lending terms, the schemers fraudulently obtained guarantees from the U.S. Small Business Administration (“SBA”).
Soon after the fraudulent loan scheme was underway, Goff, his wife and stepdaughter were indicted in the Central District of California for executing similar loan fraud schemes. Instead of backing out of the Hana Bank scam, Pietro appeared in federal district court in Santa Ana and represented Goff in the criminal case – at the same time he was working with Goff to defraud Hana Bank. On December 7, 2012, the loans with Hana Bank closed, and over half a million dollars was diverted from these loan proceeds to pay the schemers – including $250,000 to defendant Pietro. The loans ultimately went into default, resulting in Hana Bank suffering the substantial losses that will ultimately be borne by the SBA and taxpayers.
Don Goff was sentenced to 78 months in prison. His wife, Melanie Goff, was sentenced to eight months custody; stepdaughter Monty Brown was sentenced to 18 months custody.
The following year, after withdrawing from representing Goff in the criminal case, Pietro embarked on a second fraud scheme that targeted defendants held in federal custody on immigration charges in San Diego. To obtain access to federal detainees facing criminal charges, Pietro arranged for an investigator to falsely represent to authorities that he was a licensed attorney. The investigator used this fraudulent access to falsely claim to detainees that he and Pietro could “globally” resolve their criminal and immigration charges within a matter a matter of months if they retained them for between $6,000 and $10,000. Between September 2013 and January 2014, Pietro and the investigator fraudulently induced six detainees and their family members to wire transfer $3,000 each to Pietro’s client trust account. Pietro then appeared in federal court for these defendants, replacing their court-appointed counsel. In the end, of course, Pietro was unable to execute a favorable “global” resolution of the criminal and immigration charges. Soon after pleading guilty in Santa Ana for his role in the Hana Bank scam, Pietro withdrew from representing these San Diego clients.
“Because members of the bar are given special privileges, they are rightly held to a strict standard of honesty and fair dealing,” said U.S. Attorney Laura E. Duffy. “Unfortunately, Pietro placed his own financial interests ahead of his obligations to his clients, to banks, and to the courts. Attorneys who engage in fraudulent conduct should not be surprised to find themselves in federal court – but this time, as defendants.”
Because the United States Attorney for the Central District of California was recused from the prosecution of Pietro, the United States Attorney for the Southern District of California handled both of these prosecutions.
“Today’s sentence reflects the serious nature of the defendant’s breach of public trust through his fraud schemes,” said David L. Bowdich, Assistant Director in Charge of the FBI Los Angeles Field Office. “Mr. Pietro was entrusted to uphold the law but instead, gave in to greed and broke the law, while enabling others to do the same. This sentence should serve as a deterrent for anyone contemplating similar criminal activity.”
“Pietro’s sentence is a reminder that those who defraud the government will be brought to justice and held accountable for their actions,” said Inspector General Peggy E. Gustafson of the Small Business Administration. “Lies by individuals that are afforded a degree of trust by virtue of their professions are particularly egregious. I want to thank the U.S. Attorney's Office for its dedicated leadership and professionalism in pursuit of justice in this case.”
DEFENDANT
Gino Paul Pietro Age: 54 Newport Beach, CASUMMARY OF CHARGES
Case No. SA CR 14CR0019-AG (C.D.C.A.)
Wire Fraud – Title 18, U.S.C., Section 1343Maximum penalty: Twenty years in prison; $250,000 fine, or twice the gross gain or loss caused by the offense; mandatory restitution; $100 special assessment.
Case No. 14CR1623-DMS (S.D.C.A.)
Wire Fraud – Title 18, U.S.C., Section 1343Maximum penalty: Twenty years in prison; $250,000 fine, or twice the gross gain or loss caused by the offense; mandatory restitution; $100 special assessment.
AGENCIES
U.S. Small Business Administration, Office of Inspector General
Federal Bureau of InvestigationAnimal Rights Activists Accused of Going on Cross-Country SpreeRead the Press Release
For Further Information, Contact:
Assistant U.S. Attorneys
John Parmley (619) 546-7957 or Michael Kaplan (619) 546-7927SAN DIEGO – Animal-rights activists Joseph Buddenberg and Nicole Kissane were arrested by the FBI today and charged with terrorizing the fur industry during cross-country road trips in which they released thousands of mink from farms around the country and vandalized various properties.
According to a federal grand jury indictment unsealed today, Buddenberg and Kissane caused hundreds of thousands of dollars in damage during the nationwide spree in the summer of 2013. The indictment alleges that the pair snuck onto farms and freed minks and destroyed breeding records in Idaho, Iowa, Minnesota, Wisconsin and Pennsylvania during multiple trips, and in one case they released a bobcat from a farm in Montana.
The defendants were charged under the Conspiracy to Violate the Animal Enterprise Terrorism Act. They were arrested in Oakland this morning by agents from the FBI’s San Francisco field office. The government will seek the removal of Buddenberg and Kissane to the Southern District of California to face charges.
In one instance described in the indictment, the defendants traveled from Oregon to San Diego in their 2012 Honda Fit on July 15, 2013 and used paint, paint stripper, a super glue-type substance, butyric acid, muriatic acid and glass etchant to vandalize Furs by Graf, a retail furrier located in San Diego, as well as the Spring Valley and La Mesa residences and personal property of the current and former owners of the business.
To publicize their crimes, the defendants drafted “communiqués” describing their conduct and posted them on websites associated with animal rights extremists, the indictment said.
Among some of the incidents of vandalism cited in the indictment: The defendants slashed tires of a meat distributor’s truck in San Francisco; smashed windows and glued the door locks at a furrier business in Minneapolis, Minnesota; vandalized and attempted to flood the Sun Prairie, Wisconsin home of an employee of the North American Fur Auctions.
According to the indictment, the unemployed defendants sold items on eBay and Amazon to finance their trips. To avoid detection by law enforcement, the defendants withdrew large sums of cash from their bank accounts immediately before setting off on a road trip. During the trips, they largely avoided the use of phones, used only cash for purchases and stopped logging in to known online accounts and email. Instead, they used public internet computers and encrypted email.
Once they returned from the trips, they resumed normal use of phones and computers and no longer relied solely on cash to make purchases.
“Whatever your feelings about the fur industry, there are legal ways to make your opinions known,” said U.S. Attorney Laura Duffy. “The conduct alleged here, sneaking around at night, stealing property and vandalizing homes and businesses with acid, glue, and chemicals, is a form of domestic terrorism and can’t be permitted to continue.”
“Today's indictment represents the collective efforts of several FBI Joint Terrorism Task Forces (JTTF) around the country,” said Eric S. Birnbaum, Special Agent in Charge of the FBI's San Diego Field Office. “The FBI and our JTTF partners will continue to investigate and seek the prosecution of those who engage in similar criminal conduct for the purpose of advancing their own personal agenda.”
Indictment Document (335.58 KB)
DEFENDANTS
Joseph Brian Buddenberg Age: 31 Oakland, CA
Nicole Juanita Kissane Age: 28 Oakland, CASUMMARY OF CHARGES
Conspiracy to Violate the Animal Enterprise Terrorism Act – Title 18, U.S.C., Section 43 (a) (1), (2) (c) and (b) (3) (A) Maximum penalty: Ten years in prison and $250,000 fineAGENCIES
Federal Bureau of Investigation, San Francisco and San Diego Field Offices
Joint Terrorism Task Force*The charges and allegations contained in the indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty
Officials Take Down Gang-affiliated Drug Traffickers; Take Dozens of Guns Off the StreetRead the Press Release
Crystal Palace II
Unsealed Indictments
CHIEN VAN NGUYEN Indictment
CU VAN HUYNH Indictment
DAT MINH TO Indictment
DUNG VAN NGUYEN Indictment
KHAMSOUK INTHAVONG Indictment
MARIO ALBERTO MIRANDA-VERDUGO Indictment
VINH VAN PHAN Indictment
VINCENT RUBIO Indictment
ISRAEL SOTO Indictment
TAM MINH TA Indictment
Search Warrant
Search Warrant-2943 Reynard.pdf
Video Footage
Click HereNational Crime Victims’ Rights Week 2015 Engaging Communities | Empowering VictimsRead the Press Release
San Diego, CA - April 19-25, 2015 is National Crime Victims’ Rights Week – a time for law enforcement, prosecutorial agencies, victim advocates and community members to come together and support victims of crime.Enforcing victims’ rights protects victims, enhances public safety and fosters public confidence in our criminal justice system. Agencies that partake in this Tribute and those who attend will acknowledge and honor crime victims nationwide.
The Victim Assistance Coordinating Council (VACC) and the United States Attorney’s Office in San Diego invite you to attend the 26th annual Candlelight Tribute for Crime Survivors on Monday, April 20, 2015 at 5:30 p.m. The Tribute will be held at the San Diego Police Officers’ Association Hall, 8388 Vickers St., San Diego, CA 92111. The keynote speaker will be San Diego Police Chief Shelley Zimmerman. The Tribute is a time to memorialize victims and to hear inspirational words from local law enforcement agencies, victim advocates and personal stories from the victims themselves.
The Tribute is sponsored by the Victim Assistance Coordinating Council (VACC). VACC is comprised of the following agencies: Alliance for Community Empowerment, the Crime and Trauma Recovery Program, the District Attorney’s Victim Assistance Program, the Drug Enforcement Administration (DEA) Victim Witness Program, the Federal Bureau of Investigation (FBI) Victim Assistance Program, First Avenue Counseling Centre, the Jenna Druck Center, Mothers Against Drunk Driving (MADD), Parents of Murdered Children, San Diego Police Department Crisis Intervention, San Diego County Sherriff’s Department, the San Diego Police Officers Association, Therapy Changes, the United States Attorney’s Office Victim/Witness Program, the U.S. Postal Inspection Service, and other victim advocates.
By providing a single, uniform message from these agencies and service providers, we can help increase awareness and improve the assistance provided to all crime victims.
To receive further information about National Crime Victims’ Rights Week, and ideas on how to serve victims in your community please visit www.ovc.gov or www.sdvacc.com.
###Final Defendant in Federal Courthouse Bombing SentencedRead the Press Release
San Diego, CA - Donny Love, Sr., 44, was sentenced today to serve 55 years in federal prison and pay $325,000 in restitution to the General Services Administration, based on his conviction for the use of a weapon of mass destruction and other charges, arising from the bombing of the Edward J. Schwartz Federal Courthouse in San Diego on May 4, 2008, United States Attorney Laura E. Duffy announced. Love was found guilty by a federal jury on June 6, 2011, following a two-week trial before the Honorable M. Margaret McKeown.
U.S. Attorney Duffy praised the perseverance and coordinated effort of the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives and other federal, state, and local law enforcement agencies that participated in the Joint Terrorism Task Force in the investigation and prosecution of this case.
U.S. Attorney Duffy also expressed satisfaction as to the sentence imposed by the court. “Over twenty-one months ago, a federal jury held defendant Donny Love, Sr., accountable for masterminding the May 4, 2008 bombing of the Edward J. Schwartz Federal Courthouse. The sentence imposed by the Court today recognizes the extreme act of violence committed by Love. It is only by blind luck that no one, including Love’s coconspirator, Rachelle Carlock, was killed or injured by Love’s actions. The device detonated at the doors of the federal courthouse in the early morning hours of May 4, 2008, contained over two pounds of explosive powder jammed into three galvanized steel pipes with end caps, along with over 100 roofing nails. The subsequent explosion not only blew out the doors to the federal courthouse, causing substantial property damage, but also sent shrapnel and nails flying in all directions – over a block away and at least six stories into the air. Defendant’s actions showed a callous disregard for the lives of those individuals who were still working in the federal courthouse in those early morning hours, as well as the lives of pedestrians passing by. Today’s sentence ensures that the defendant will never again be able to endanger the lives of the citizens of our community.”
According to evidence presented at trial, Love was the person who instructed Rachelle Lynette Carlock and Ella Louise Sanders to purchase explosive powder and to steal bombmaking materials. Love and others constructed pipe bombs at Love's residence in Menifee, California, and then Love directed others to test pipe bombs by detonating them at various locations leading up to the courthouse bombing. According to testimony presented at trial, on the night of the courthouse bombing, Carlock and Eric Reginald Robinson drove from Love's residence to San Diego with a backpack containing three pipe bombs, and Carlock then detonated the bombs at the front doors of the federal courthouse.
The evidence further showed that Love was the mastermind and driving force behind the federal courthouse bombing. At the time of the bombing, he was in dire financial straits and faced significant jail time arising from two pending California state criminal cases. The evidence showed that he directed the May 4, 2008, bombing for the purpose of obtaining reward money and consideration on his state charges by providing information about the bombing to law enforcement. The success of this fraudulent scheme required that he provide false and misleading information about the bombing and induce others to do the same in order to conceal his own involvement.
Judge McKeown previously sentenced co-defendants Carlock and Sanders to serve ten years, and Robinson to serve eleven years, in federal prison for their roles in the bombing.
This investigation was coordinated by special agents from the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Joint Terrorism Task Force and prosecuted in the Southern District of California by Assistant U.S. Attorneys Shane P. Harrigan and Fred A. Sheppard.
Airplane Broker Charged with 200 Counts of Laundering $3.6 Million for Drug Traffickers via Purchase of More than 35 AirplanesRead the Press Release
SAN DIEGO – A Mexican airplane broker, his wife and others are charged in a 200-count grand jury indictment with laundering the funds of drug traffickers through the sale of 35 Cessna airplanes intended for use in illicit smuggling.
Vincente Contreras-Amezquita, who lived in San Diego during the time period in question, was arrested last week and appeared in court today before U.S. Magistrate Judge Bernard G. Skomal. The judge scheduled a detention hearing for July 30, 2015 at 2:30 p.m.
According to the indictment, Contreras-Amezquita and others facilitated the acquisition and purchase of the Cessnas and airplane parts, including auxiliary fuel tanks, heavy duty tires and landing gear for landing on clandestine airfields. Cessna 206s and 210s are types of airplanes preferred by drug-trafficking organizations operating in Mexico because of their reliability, speed and ability to carry heavy payloads over long distances.
The indictment alleged that Contreras-Amezquita and others used 46 different U.S. bank accounts to deposit $3.6 million in cash deposits during a five-year period and initiated inter-fund transfers for the purchase of airplanes and airplane parts.
The indictment further alleged that in order to conceal his crimes, Contreras-Amezquita collected the unlawful drug proceeds in random locations, like strip malls, parking lots, aircraft hangars and fast-food restaurants.
In order to hide the source of the illicit cash, and to evade the currency reporting requirements, Conreras-Amezquita instructed his money laundering crew to arrange for structured cash deposits under $10,000 into multiple bank accounts at different U.S. financial institutions to avoid reporting requirements.
As part of the money laundering scheme, defendant Contreras-Amezquita and his money laundering crew opened new accounts using different names, different forms of identification, and different addresses. Often times, the money laundering crew would conduct multiple deposits on the same and consecutive days, into multiple bank accounts at multiple branch offices of these financial institutions. On occasion, defendants would travel to multiple branches of the financial institutions located within the same geographic location. They would also travel to multiple states, including Connecticut, Texas, Georgia, Arizona, Michigan, and California, to conduct these financial transactions.
Immediately following the structured deposits, defendants Vincente Contreras-Amezquita and his crew engaged in convoluted financial transactions by initiating and authorizing various fund transfers between these multiple bank accounts. Defendants would engage in fund transfers into designated bank accounts because these designated bank accounts would be used to initiate payment for the airplanes or airplane parts.
Contreras-Amezquita faces up to 20 years in custody.
DEFENDANT Case Number 15CR1144MMA
Vicente Contreras-Amezquita Age 44 Tijuana
CHARGES
CONSPIRACY CHARGES
Count 1
Conspiracy To Launder Money
- Avoid a transaction reporting requirement
- To Conceal & Disguise Nature, Location, Source, Ownership, and Control of Proceeds
18/1956(h)
18/1956(a)(1)(B)(ii)
18/1956(a)(1)(B)(i)
Count 2
Conspiracy to Engage in Monetary Transactions
18/1956(h)
18/1957
Count 3
Conspiracy to Violate Structure Currency Deposits
31/5324(a)(3)
SUBSTANTIVE COUNTS
CESSNA #1 – N761KT
Counts
4-17
Aiding and Abetting/ML - Avoid a transaction reporting requirement (deposits only)
18/1956(a)(1)(B)(ii)
18/2
Counts
18-22
Aiding and Abetting/ML – Conceal & Disguise Nature, Location, Source, Ownership & Control of Proceeds
(inter fund transfers only)
18/1956(a)(1)(B)(i)
18/2
Counts
23-24
Aiding and Abetting/ Engage in Monetary Transactions (payments from accounts only)
18/1957
18/2
Count
25
Aiding and Abetting/Structuring
31/5324(a)(3)
18/2
CESSNA #2 – N6474C
Counts
26-45
Aiding and Abetting/ML - Avoid a transaction reporting requirement (deposits only)
18/1956(a)(1)(B)(ii)
18/2
Counts
46-51
Aiding and Abetting/ML – Conceal & Disguise Nature, Location, Source, Ownership & Control of Proceeds
(inter fund transfers only)
18/1956(a)(1)(B)(i)
18/2
Counts
52-53
Aiding and Abetting/ Engage in Monetary Transactions (payments from accounts only)
18/1957
18/2
Count
54
Aiding and Abetting/Structuring
31/5324(a)(3)
18/2
CESSNA #3 – N6364Y
Counts
55-65
Aiding and Abetting/ML - Avoid a transaction reporting requirement (deposits only)
18/1956(a)(1)(B)(ii)
18/2
Count
66
Aiding and Abetting/ML – Conceal & Disguise Nature, Location, Source, Ownership & Control of Proceeds
(inter fund transfers only)
18/1956(a)(1)(B)(i)
18/2
Counts
67-68
Aiding and Abetting/ Engage in Monetary Transactions (payments from accounts only)
18/1957
18/2
Count
69
Aiding and Abetting/Structuring
31/5324(a)(3)
18/2
CESSNA #4 – N4960C
Counts
70-84
Aiding and Abetting/ML - Avoid a transaction reporting requirement (deposits only)
18/1956(a)(1)(B)(ii)
18/2
Counts
85-86
Aiding and Abetting/ML – Conceal & Disguise Nature, Location, Source, Ownership & Control of Proceeds
(inter fund transfers only)
18/1956(a)(1)(B)(i)
18/2
Counts
87-88
Aiding and Abetting/ Engage in Monetary Transactions (payments from accounts only)
18/1957
18/2
Count
89
Aiding and Abetting/Structuring
31/5324(a)(3)
18/2
CESSNA #5 – N6195Y
Counts
90-105
Aiding and Abetting/ML - Avoid a transaction reporting requirement (deposits only)
18/1956(a)(1)(B)(ii)
18/2
Counts
106
Aiding and Abetting/ML – Conceal & Disguise Nature, Location, Source, Ownership & Control of Proceeds
(inter fund transfers only)
18/1956(a)(1)(B)(i)
18/2
Counts
107-109
Aiding and Abetting/ Engage in Monetary Transactions (payments from accounts only)
18/1957
18/2
Count
110
Aiding and Abetting/Structuring
31/5324(a)(3)
18/2
CESSNA #6 – N345HI
Counts
111-120
Aiding and Abetting/ML - Avoid a transaction reporting requirement (deposits only)
18/1956(a)(1)(B)(ii)
18/2
Counts
121-122
Aiding and Abetting/ML – Conceal & Disguise Nature, Location, Source, Ownership & Control of Proceeds
(inter fund transfers only)
18/1956(a)(1)(B)(i)
18/2
Counts
123-124
Aiding and Abetting/ Engage in Monetary Transactions (payments from accounts only)
18/1957
18/2
Count
125
Aiding and Abetting/Structuring
31/5324(a)(3)
18/2
CESSNA #7 – N7615Q
Counts
126-136
Aiding and Abetting/ML - Avoid a transaction reporting requirement (deposits only)
18/1956(a)(1)(B)(ii)
18/2
Counts
137-139
Aiding and Abetting/ML – Conceal & Disguise Nature, Location, Source, Ownership & Control of Proceeds
(inter fund transfers only)
18/1956(a)(1)(B)(i)
18/2
Furniture Company Owner Admits Role Running International “Fish” Smuggling OperationRead the Press Release
A Los Angeles-based furniture business, Kaven Company, Inc. (“Kaven”) and its owner, Kam Wing Chan, pled guilty today on charges related to the smuggling of endangered abalone and Totoaba that could have been sold for millions of dollars in China.
The charging documents allege that Chan used Kaven, which was ostensibly an importer of Asian furniture, to purchase endangered fish in Mexico, import them into the United States, and then export them to Asia. For example, in entering guilty pleas, Chan admitted that on one occasion on October 9, 2013, he smuggled into the United States 37 pounds of dried abalone (including the endangered white and black abalone) and 58 Totoaba swim bladders, which had been purchased in violation of Mexican law. The seafood was then illegally exported to companies owned by one of Chan’s relatives in China. Both abalone and Totoaba are prized in Asia where they are considered "culinary delicacies," and often adorn the buffets of festival meals and are served at formal dinners.
As part of their plea agreements, the defendants agreed to forfeit the smuggled wildlife and make restitution to the government of Mexico in the total amount of $55,000 for the loss of the natural resource, and pay fines totaling $14,500.
Background on Totoaba:
Totoaba macdonaldi, also known as Cynoscion macdonaldi, is a species of marine fish. It can grow to more than 6½ feet in length, weigh up to 220 pounds, and live up to 25 years. This marine fish is the largest species within the scaienidae family. It is endemic only to the Gulf of California, the narrow inlet between Baja California and the Mexico’s mainland (also called the Sea of Cortez). During the Totoaba’s spawning season, which runs from approximately March to May each year, Totoaba fish travel to the shallower waters at the mouth of the Colorado River, making them vulnerable to commercial and sport fishermen.Totoaba fish have internal air bladders that help them control their buoyancy in water. These air bladders, also called swim bladders, are highly prized in Asia for a variety of uses: as an ingredient in a specialty soup, for perceived therapeutic and medicinal purposes, and to improve the complexion. Swim bladders from the endangered Totoaba fish can be identified by distinctive tubes that are attached to the bladders. Totoaba fish are protected as an endangered species under the Endangered Species Act (16 U.S.C. § 1531, et seq.) (“ESA”), the Lacey Act (16 U.S.C. § 3731, et seq.), and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (“CITES”). These laws generally prohibit the taking, possessing, transporting, importing, sale, and trade of Totoaba fish.
Based on information law enforcement officers have developed from conversations with researchers in Mexico and Totoaba fish smugglers, the value of Totoaba swim bladders in Mexico is approximately $1,500-$1,800 each. Once imported into the United States, the value increases to $5,000 each. They can be resold for $10,000 to $20,000 apiece in the overseas market.
As it is not legal to fish for Totoaba in Mexico, a poacher cannot risk being caught in possession of the easily-identified body of the endangered fish. It is much simpler to transport only the bladder, which is lighter, smaller, and much more valuable. As a result, PROFEPA (the Mexican federal agency tasked with the protection of endangered species) reports encountering Totoaba taken from the Colorado River, carved open so their swim bladders can be removed, and left to die on the shores.
Background on White Abalone:
White abalone (Haliotis sorenseni) are herbivorous gastropods (the same taxonomic class as snails and slugs) that live in rocky ocean waters. Their shell is oval-shaped and very thin. The bottom of their feet is orange, and the epipodium (a sensory extension of their foot that has tentacles) is a mottled orange-tan. They are generally 5-8 inches (13-20 cm) long, but can grow to as big as 10 inches (25 cm). They weigh about 1.7 pounds (0.8 kg) on average. They were the first marine invertebrate to be listed as endangered under the ESA.Due mainly to overfishing, there has been a 99% reduction in white abalone density since the 1970’s. Once occurring in numbers as high as 1 per square meter of suitable habitat, recent surveys show that densities average 1 per hectare (10,000 square meters) in the Channel Islands off southern California. Although historically there have been millions of white abalone off our coast, recent studies suggest that the current population is approximately 1,600-2,500 individuals. Unfortunately, adults do not occur in high enough densities to successfully reproduce, contributing to repeated recruitment failure and an effective population size near 0.
Background on Black Abalone:
Black abalone (Haliotis cracherodii) are large marine gastropod mollusks found in rocky intertidal and subtidal habitats. Both their "mantle" and "foot" are black. They have 5-9 open respiratory pores along the left sides of their shell and spiral growth lines on the rear. Their tentacles (surrounding their foot and extending out of their shell) sense food and predators. Black abalone are herbivores. They primarily eat giant kelp and feather boa kelp in southern California (i.e., south of Point Conception) habitats, and bull kelp in central and northern California habitats.Black abalone commercial fishing peaked in 1973 at 868 metric tons (nearly 2 million pounds). By 1993, both commercial and recreational fisheries for black abalone closed. Black abalone have experienced significant declines in abundance and have gone locally extinct in most locations south of Point Conception, CA.
Increasing distance among spawning males and females has led to reproductive failure as population density decreases. In addition to disease, black abalone face challenges due to elevated water temperature caused by the thermal discharge of power plants. Other factors responsible for the decline of black abalone are illegal harvest and habitat destruction. Natural predation by a variety of predators (sea stars, the southern sea otter, and striped shore crab) as well as competition with purple and red sea urchins for space also threaten their survival.
DEFENDANTS Case Number: 14-CR-3662-AJB Kaven Company Los Angeles, California Kam Wing Chan Age; 61 Monterey Park, California CHARGESCounts 3 and 6
Smuggling/Importation Contrary to Law, in violation of Title 18, United States Code, Section 545
Maximum Penalty: 20 years in custody, the greater of a $250,000 fine or twice the illegal gain or loss and a $100 penalty assessment
Forfeiture in violation of Title 16, United States Code, Section 3374 and Title 18, United States Code, Section 981.
INVESTIGATING AGENCIESNational Oceanic and Atmospheric Administration, Office of Law Enforcement
U.S. Fish and Wildlife Service, Office of Law Enforcement"Hedge Fund Manager" Pleads Guilty to $2.6 Million Ponzi SchemeRead the Press Release
SAN DIEGO – Paul Moore IV pleaded guilty in federal court today to defrauding local investors through his purported hedge fund. Moore admitted that he falsely told investors he was an experienced financial professional and investment adviser, and that his “hedge fund” traded investors’ money in the stock market on their behalf. In reality, Moore had no relevant education or experience, and was actually stealing most of the investors’ money in the course of running a Ponzi scheme.
In a parallel action, the Securities and Exchange Commission announced today that it has filed a civil complaint alleging that Moore siphoned nearly $2 million of client funds to pay travel expenses and buy retail goods. Please see http://www.sec.gov/news/pressrelease/2015-148.html.
According to his plea agreement in the criminal case, Moore established Coast Capital Management LLC in 2009, when he began soliciting friends and acquaintances to invest in this “hedge fund.” Moore told investors that he had earned an undergraduate degree in economics from a respected state university, had worked as a senior analyst at a large, national securities firm, had registered himself and his firm with securities regulators, and was making tremendous profits for his clients through his knowledge and expertise in securities trading. In truth, Moore quit college without earning any credits toward a degree, had never worked for the securities firm he touted, did not register himself or his fund with regulators, and when he did trade a small portion of the investor funds entrusted to him, he was losing money.
Moore ultimatley stole most of clients' funds in the course of perpetrating a Ponzi scheme. Of the $2.8 million he “managed” for investors, Moore used $1.7 million of it for personal travel, shopping sprees, meals, entertainment, and other expenses. To keep the scheme going and to conceal his theft, Moore complied with certain investor’s redemption requests by paying them with funds deposited by other, usually more recent, investors. And when it came time to tell investors about his performance in the stock market, Moore added another deception – he created and distributed false account statements showing large volumes of highly profitable trades that he supposedly made on behalf of investors. The problem, of course, was that the trades never happened and Moore had concocted the account statements from whole cloth.
United States Attorney Laura E. Duffy warned investors to perform their own due diligence before turning money over to an investment advisor, and to be wary of performance figures that seem “too good to be true.” The public can obtain additional information regarding Ponzi Schemes, and how to avoid them, on the Securities and Exchange Commission’s website posts, at http://www.sec.gov/answers/ponzi.htm.
The defendant is scheduled to be sentenced by U.S. District Judge Cynthia Bashant on October 5, 2015 at 9:00 a.m.
DEFENDANT Case Number: Paul Moore IV Age: 51 San Diego, California CHARGESSecurities Fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff.
INVESTIGATING AGENCIES
Maximum Penalties: 20 years’ imprisonment, $5,000,000 fine, $100 special assessment, restitution.Federal Bureau of Investigation
Securities and Exchange CommissionFounders of Film School for Wounded Veterans Found Guilty of Conspiracy, Fraud, and EmbezzlementRead the Press Release
SAN DIEGO – A federal jury returned guilty verdicts this afternoon against Judith Paixao and Kevin Lombard, a husband and wife who embezzled federal funds that were intended to provide job training, benefits and equipment for injured Marines returning from Iraq and Afghanistan.
Instead, the jury found, the couple used some of the funds to pay for a variety of personal expenses, including a vacation in Bermuda, cell phone bills for their family members, and the costs of a New Year’s Day sailing trip around San Diego Bay.
“Any fraud against our federal agencies is a serious matter,” said U.S. Attorney Laura Duffy. “But the fraud committed by these defendants -who used money set aside to help wounded veterans and spent it on themselves - is 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.”
“Today, the jury’s guilty verdicts of Kevin Lombard and Judith Paixao send a clear message that fraud against our veterans will not be tolerated. These veterans endured many sacrifices to protect our country from harm. IRS-Criminal Investigation is committed to working with our partners to protect America’s veterans from tax evaders and fraudsters.”
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. Evidence presented at trial showed that the defendants conspired to defraud the Department of Veterans Affairs (“VA”) and submitted false claims to the VA to get funds for training and equipment they never provided. In addition, the defendants were convicted on several felony counts related to embezzling funds from the Foundation. Finally, Defendant Paixao was convicted on one count of mail fraud for her role in a scheme to defraud another charity out of scholarship funds.
Evidence presented at trial showed that 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 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 board members), 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, 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 vacation in Bermuda, cell phone bills for their family members, and the costs of a New Year’s Day sailing trip around San Diego Bay.
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.
Evidence at trial 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.
Both defendants remain on bond and were ordered to return to court on October 19, 2015 for a sentencing hearing.
DEFENDANTS Case Number: 13cr3788-JM Judith Ann Paixao Age: 61 Brunswick, Georgia Kevin Lombard Age: 64 Brunswick, Georgia CHARGESCount 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, 6-10; not guilty on count 5.Counts 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)
INVESTIGATING AGENCIES
Defendant Paixao: Guilty
Defendant Lombard: Not GuiltyDepartment of Veterans Affairs, Office of Inspector General
Internal Revenue Service, Criminal Investigation