Southern District of California
Press releases recorded for this federal judicial district.
Waste Disposer Gets Jail Term for Dumping Toxic Mix of Chemicals in Public LandfillRead the Press Release
SAN DIEGO – Raul Antonio Gonzalez Lopez was sentenced to seven months in custody by United States District Court Judge Michael M. Anello, for illegally disposing of trash containing a potentially fatal brew of acids and potassium cyanide.
In pleading guilty, Gonzalez Lopez admitted that on March 12, 2011, he picked up trash at We Lend More, a business located in National City, California. As he was aware, this trash included containers of acid and potassium cyanide. The following day, Gonzalez Lopez dumped the chemicals (which included federally regulated hazardous wastes such as nitric acid and potassium cyanide) in the Miramar Landfill. Due to the dangerous nature of these chemicals, they are prohibited from being disposed at the Miramar Landfill.
According to Joe Lowry, Chief Scientist for the U.S. Environmental Protection Agency, when potassium cyanide and acids are combined they produce a deadly hydrogen cyanide gas. One breath of pure hydrogen cyanide gas would be enough to kill a person, and 50 ppm of hydrogen cyanide is the level that has been determined to be immediately dangerous to life or health. Lowry viewed the evidence from the case and prepared a dispersion model showing the threat area where the concentration of hydrogen cyanide is greater than or equal to 50 ppm, assuming a wind of 3 mph. This zone extends approximately 71 yards from the initial point of combination, and anyone within 30 yards when the chemicals combined would have been killed instantly.
Emphasizing the government’s commitment to enforcing environmental statutes, U.S. Attorney Laura Duffy stated that “we will continue to work with our federal law enforcement partners to take firm and decisive action when slipshod, cavalier practices pose a threat to human health.”
“Hazardous wastes pose a great risk to human health and the environment when intentionally mismanaged,” said Jay M. Green, Special Agent-in-Charge of EPA’s criminal enforcement program in California. “The defendant’s illegal disposal of dangerous acids and cyanides could have easily resulted in a serious injury or death had it not been for the vigilance of the Miramar Landfill operators. Today’s sentence demonstrates the government’s commitment to hold accountable those individuals who would attempt to profit by illegally dumping hazardous wastes.” San Diego FBI Acting Special Agent-In-Charge W Robert Howe added that this case “demonstrates the dedication of the FBI to the apprehension of those persons who jeopardize the health and lives of innocents through the deliberate mishandling and improper disposal of deadly chemicals.”
In February of 2011, We Lend More and its owner, Marc Vogel, were convicted by a jury of aiding and abetting the illegal transportation and disposal of hazardous waste. The trial evidence indicated that the acid (in a breakable glass bottle) and cyanide (in aged plastic containers) were disposed of together in the same cardboard box, which was dumped at the landfill. Because the landfill operators use heavy equipment on a regular basis to compact the face of the landfill, such activity would be expected to cause the containers to break and the chemicals (in the same box) to combine, causing instant death to the landfill operator and anyone else within 30 yards (such as other landfill personnel or customers).
Gonzalez Lopez was arrested on January 14, 2014, in Mexico and extradited to the United States to face these charges.
DEFENDANT Case Number: 11cr3327-MMA Raul Antonio Gonzalez Lopez Age: 55 Tijuana, Mexico CHARGESUnlawful Disposal of Hazardous Waste– Title 42, U.S.C., Section 6928(d)
INVESTIGATING AGENCY
Maximum penalty: 5 years’ imprisonment and $250,000 fineEnvironmental Protection Agency, Federal Bureau of Investigation
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
HP Executive Assistant Fuels Million Dollar Spending Spree with Stolen Company FundsRead the Press Release
San Diego, CA - Holli Dawn Coulman, who served as an executive to a Hewlett Packard (“HP”) Senior Vice President from 2008 to May 2012, admitted defrauding the company of nearly $1 million through a series of fraudulent employee reimbursements. According to documents filed in federal court, Coulman fraudulently justified the payments of international trips, country club expenses, and high-end clothing purchases by falsely claiming them as legitimate business expenses.
Coulman began working at HP in San Diego in approximately June 2000, and served as an executive assistant. In this position, she received a number of American Express corporate credit cards, which were to be used solely for authorized and approved business expenses. Coulman, however, used the credit cards to support an extravagant and luxurious lifestyle, including spending: (1) in excess of $100,000 at the La Costa Resort Spa; (2) more than $43,000 at the Lodge at Pebble Beach and Casa Palmero at Pebble Beach; (3) thousands of dollars in airfare for trips to Hawaii and Europe; (4) thousands of dollars purchasing items at the Apple Store; (5) more than $33,000 in BTO Sports motocross gear; and (6) thousands of dollars in charges to Neiman Marcus and Nordstroms. In addition, Coulman admitted using the company credit cards to pay for more than $350,000 in expenses accrued by her brother’s custom painting business in Colorado.
As revealed in court pleadings, Coulman went to great lengths to cover up her theft of company funds. Among other things, she intercepted emails sent from HP program administrators that questioned her various personal expenditures. After intercepting the incriminating emails, Coulman would often delete them before they could be reviewed by her boss, a senior vice president. Occasionally, she would fabricate responses indicating that the expenses had been authorized by her boss, even going so far as to submit fabricated supporting documentation, receipts, and invoices. In total, Coulman stole approximately $954,292.31 from HP through her scheme.
United States Attorney Duffy added, “This type of brazen corporate theft directly harms the shareholders of the company and the public at large due to increases in the cost of goods sold by companies. I commend the FBI for its work in uncovering this theft.”
Coulman entered her guilty plea before U.S. Magistrate Judge Jill L. Burkhardt, and is scheduled for sentencing on before U.S. District Judge Marilyn Huff on December 1, 2014.
DEFENDANT Case Number: 14CR2424-H Holli Dawn Coulman Age: 43 CHARGESTitle 18, United States Code, Section 1343 (Wire Fraud)
Maximum penalty: 20 years of custody; $250,000 Fine (or twice the gross loss from the offense)INVESTIGATING AGENCY
Federal Bureau of Investigation*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Financier Steals Millions by Falsely Claiming Investor Funds Secured by Billion Dollar Mining CompanyRead the Press Release
San Diego, CA - United States Attorney Laura E. Duffy announced that William Ison pled guilty earlier today to defrauding investors, including San Diego residents, of nearly $7 million. According to documents filed in federal court, Ison obtained these funds between March 2008 and September 2012 by falsely claiming that the funds would be secured by his own mining company which was supposedly worth billions of dollars.
In his guilty plea, Ison admitted helping Douglas Ellingson (who previously pled guilty and is awaiting sentencing) solicit investors for “private placement programs” through Ellingson’s business entity, Destiny’s Partners Ventures. Among other things, Ison gave presentations to potential investors at seminars throughout the United States, in which he made fraudulent representations to induce individuals to invest with Ellingson. These false representations included the claim that investors’ funds would not be subject to risk as they were backed by Ison’s multi-billion dollar mining company.
In order to mislead investors, Ison claimed that his role as President of Blue Diamond Excavation, Inc. (“BDE”), a mining excavation company based in Newport Beach, allowed him to safely secure loans as its assets were worth $86 billion. In fact, BDE had yet to begin mining operations or produce any income from mining. Ison embellished his story by falsely telling investors that he had already used BDE’s assets to secure medium-term notes (“MTNs”) valued at $2-2.5 billion. Ison went so far as to claim that individuals had already committed to purchase one MTN worth $250 million as a “guaranteed exit sale” in the event capital was required to replace investor funds. In fact, Ison had not obtained any MTNs and no buyers had been secured.
Ison also misled potential investors by claiming that he had already been involved with incredibly successful investment programs in which he had personally made more than $100 million. He also lied to investors by telling them that he managed a consortium of large non-profit foundations that donated more than a trillion dollars annually to various humanitarian causes. During his plea, Ison admitted that he had not received such profits, did not personally manage active non-profit foundations, and that the claimed donations were fictitious.
Ellingson and Ison initially wire-transferred investor funds for placement in the Winsome Investment Trust, through James Pantazelos and Robert Andres. Both Pantazelos and Andres have already pled guilty for their roles in the fraud scheme. Pantazelos was sentenced in Chicago to 114 months in custody on February 15, 2013, and ordered to pay over $3.3 million in restitution (United States v. Pantazelos, No. 11CR50078 (N.D. Ill. 2011)). Andres is presently scheduled to be sentenced in Utah on September 1, 2014 (United States v. Andres, No. 11CR0985-RJS (D. Utah 2011).
Ison entered his guilty plea before U.S. District Court Judge Dana M. Sabraw, and he is scheduled for sentencing on January 30, 2015. Ellingson is presently scheduled to be sentenced by Judge Sabraw on October 24, 2014.
DEFENDANT Case Number: 12CR4030-DMS William Ison Age: 54 CHARGESTitle 18, United States Code, Sections 371, 1343 (Wire Fraud Conspiracy)
INVESTIGATING AGENCY
Maximum penalty: 5 years of custody; $250,000 Fine (or twice the gross loss of the offense)Federal Bureau of Investigation
Internal Revenue Service*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Qualcomm Sales Director Guilty of Insider TradingRead the Press Release
SAN DIEGO – United States Attorney Laura E. Duffy announced today that Robert William Herman pled guilty to one count of insider trading. At the time of his illegal trade, Herman was a director in the North America Sales Department of Qualcomm, Inc. (QCOM).
According to Herman’s plea agreement, Herman and a co-defendant were part of an informal stock trading group, and occasionally shared tips and opinions about the stock market. By November 2010, Qualcomm was conducting a review of Atheros Communications, Inc., a technology company, to determine whether to acquire it.
Also according to Herman’s plea agreement, Herman and the co-defendant repeatedly heard from their immediate supervisor that Qualcomm was contemplating a major acquisition—emphasizing that the information was secret. As part of Herman’s plea, he admitted that, on January 4, 2013, he and his co-defendant learned that the acquisition target was Atheros, and they spoke to each other about it by telephone.
Shortly after the telephone call ended, Herman purchased 4,000 shares of Atheros at approximately $37.17 per share for a total price of more than $148,680. Later that day, after news of the acquisition became public, shares of Atheros increased in value. Herman then sold them all for a profit of $29,318.
FBI Special Agent in Charge, Daphne Hearn, said, “Today’s conviction sends a message, that insider trading results in only temporary gains that can lead to long-term losses, to include fines and prison time. The FBI will continue to aggressively pursue those cheaters who don't play by the same rules so the American public will have confidence in our economic system.”
United States Attorney Duffy commented: “Insider trading is a serious offense. This office will continue to work closely with the FBI and other law enforcement partners to protect our nation’s financial markets.”
Herman’s sentencing is currently set for November 21, 2014 at 9:00 a.m. before the Honorable Janis L. Sammartino.
DEFENDANT Robert William Herman Age: 52 City: San Diego, CA CHARGESTitle 15, U.S.C., Secs. 78j(b), 78ff – Securities Fraud (Insider Trading). Maximum penalties include 20 years in prison, $5 million fine and three years of supervised release.
INVESTIGATING AGENCYFederal Bureau of Investigation
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
International “Con Man” Sentenced for Scamming Investors and Dodging TaxesRead the Press Release
Svein Erik Ulsteen, a former executive and shareholder of Anturion Limited, a company formed in the Channel Islands, was sentenced today to 46 months in custody for bilking investors of more than $2 million by selling them counterfeit and forged Anturion securities. Ulsteen used the investor funds to pay for his personal entertainment and living expenses—such as yacht and BMW payments—rather than to operate Anturion. Ulsteen was also sentenced in a separate case with corruptly preventing the Internal Revenue Service from determining his true tax liability, and attempting to cheat the IRS out of almost $400,000 in lawfully owed taxes. Ulsteen has been in custody since December 16, 2013, when he attempted to board a plane leaving for his home country of Norway. United States District Judge M. James Lorenz rejected Ulsteen’s request to be released from custody today, commenting that Ulsteen’s sole motivation to commit his crimes was to benefit himself, and “there are too many victims out there that have lost everything because of your greed. Now it’s time to make the defrauded public whole.” District Judge Lorenz also rejected Ulsteen’s attempt to characterize himself as a credible businessman, and instead commented, “You’re just a con man.”
According to court records and admissions by Ulsteen, between October 2011 and June 2013 Ulsteen solicited investors by pretending to either: (1) sell them shares of Anturion stock; or (2) borrow money on behalf of Anturion, which would be paid back with interest. In fact, however, Ulsteen was neither authorized to sell company stock nor borrow money on its behalf. To support his deceptive solicitations, Ulsteen created fake “subscription agreements” and phony “loan” documents that purported to be authentic securities of Anturion. Using these counterfeit securities, Ulsteen convinced investors throughout the United States to send more than $2 million to Ulsteen’s nominee accounts.
Personal Luxury Expenditures
Ulsteen admitted that instead of transferring these investments and loans to Anturion, he took the money for himself. For example, from a $300,000 loan one victim thought was going to Anturion, Ulsteen spent over $8,500 on his 82-foot yacht moored in Florida, over $42,000 paying personal credit card expenses, $5,000 in payments to his then-spouse, more than $4,600 in BMW car payments, over $66,650 in insurance premiums, as well as numerous other personal expenditures such as cell phone service, health care premiums and on-line dating services.Investors Received Nothing, or Worthless Shares
Multiple investors who thought they were purchasing stock in Anturion received nothing. Other investors eventually received shares, but by that time the price of Anturion stock had dramatically declined. This stock came from Ulsteen’s own personal holdings (and not directly from the company as Ulsteen had promised) and could not be sold through any investment firm in the United States. Indeed, trading in Anturion is presently suspended on London’s ISDX Growth Market, so there is no way to reliably value any of the shares Ulsteen eventually provided to his victims. And those individual victims who thought they were loaning money to Anturion were never repaid as promised.Tax Evasion
In addition to selling forged securities, Ulsteen admitted to corruptly obstructing the IRS’s attempts to assess his true tax liability. Between 2010 and 2012, Ulsteen earned over $1 million from various activities, including the sale of his Anturion stock. Although the IRS notified Ulsteen that he needed to file federal income tax returns as he owed taxes, penalties and interest, Ulsteen refused to file for any of these years, and took several steps to prevent the IRS from learning how much income he had earned. These steps included depositing investor funds into the nominee accounts he controlled and paying his personal expenses out of these company accounts.Ulsteen was ordered to return to court on December 11, 2014, for a hearing to determine how much restitution he owes to his victims.
Today’s sentencing was announced by United States Attorney for the Southern District of California Laura E. Duffy, who commended and thanked her colleague Benjamin B. Wagner, the United States Attorney for the Eastern District of California, for his Office’s excellent work on the case before Ulsteen’s arrest in San Diego late last year. That arrest and the prompt conviction of these fraud and tax charges was the result of coordinated investigations by the San Francisco and San Diego Divisions of the Federal Bureau of Investigation, and the San Diego Division of the Internal Revenue Service, Criminal Investigation.
DEFENDANT Case Numbers: 14CR0923-L (S.D. Cal.),
14CR0924-L (S.D. Cal.), and
3:14-CR-0067-WHA (N.D. Cal.) Svein Erik Ulsteen Age: 50 San Diego, CA CHARGESCounterfeit and Forged Securities, in violation of 18 U.S.C. § 513.
Maximum Penalties: 10 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.Obstruction of Internal Revenue Laws, in violation of 26 U.S.C. § 7212(a).
INVESTIGATING AGENCY
Maximum Penalties: 3 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.Federal Bureau of Investigation – San Francisco Division and San Diego Division
Internal Revenue Service, Criminal Investigation*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Former San Ysidro School District Superintendent Pleads Guilty to Extracting Political Contributions from Prospective Contractor by Threatening to Withhold WorkRead the Press Release
SAN DIEGO – Former superintendent of the San Ysidro School District Manuel Paul pled guilty today in federal court to deprivation of benefits for political contributions. Paul worked in the San Ysidro School District (“SYSD”) for 38 years as a teacher, principal, and superintendent, a post he held from 2007 until his resignation in 2013.
According to court documents, Paul had several duties as superintendent, including recommending contractors for consideration and approval by the SYSD Governing Board for SYSD construction projects.
Paul admitted in his plea agreement to requesting that a contractor (“Contractor A”) make $3,600 in campaign contributions to three political candidates for the 2010 Board election, identified in the plea agreement as Candidates A, B, and C. Paul admitted that he made clear that Contractor A’s inclusion on the list of potential contractors for future District building projects was contingent on Contractor A making the payment. According to the plea agreement, shortly thereafter – and only two months before the 2010 Board election – Paul accepted $2,500 in cash from Contractor A in the parking lot of a Chula Vista restaurant. Paul admitted that he then contributed a portion of the $2,500 to the political campaigns of Candidates A, B, and C by purchasing campaign signs from a print shop in Tijuana. According to court documents, Candidates A, B, and C won the three open seats.
Charging documents allege that almost two years later, in July 2012, Paul provided Candidates A, B, and C a receipt for the purchase of $1,401 in campaign signs for the 2010 election. The receipt lists a third party as the purchaser of the signs.
Simultaneous with his guilty plea, Paul also entered into a stipulation with California’s Fair Political Practices Commission, in which he admitted to receiving a gift in excess of the annual gift limit by accepting the $2,500 from Contractor A. As part of his settlement with the FPPC, Paul agreed to pay a $5,000 fine. The stipulation will be considered by the FPPC at its October hearing.
United States Attorney Laura E. Duffy stressed that her office will continue to pursue vigorously any criminal activity that seeks to introduce illegal money into campaigns. “Today’s guilty plea is a stark reminder that illegal money in our elections – regardless of the amount – is a threat to our democratic form of government and will be treated as such by our office. All citizens of our district have the right to elections free from dollars obtained through coercion.”
FBI Special Agent in Charge, Daphne Hearn, commented, "We demand the best from our public servants and expect them to deal honestly and fairly when conducting the public's business. Mr. Paul did not do that, and will now be held accountable for his actions." The FBI encourages the public to report allegations of public corruption to the FBI public corruption hotline at telephone number (877) NO - BRIBE (662-7423).
United States Magistrate Judge William V. Gallo ordered Paul to appear on November 18, 2014, for sentencing.
DEFENDANT Case Number: 14CR2351-H Manuel Paul Age: 63 Bonita, CA CHARGESDeprivation of Benefit for Political Contribution – Title 18, U.S.C., Section 601
INVESTIGATING AGENCY
Maximum penalty: 1 year imprisonment and $100,000 fineFederal Bureau of Investigation
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
New Indictment in Campaign Finance Case Adds Gun, Bribery and Falsification of Records ChargesRead the Press Release
San Diego – A federal grand jury issued a new indictment this morning against Mexican businessman Jose Susumo Azano Matsura and alleged co-conspirators Ravneet Singh, his Washington, D.C.-based campaign-services company ElectionMall Inc. and San Diego lobbyist Marco Polo Cortes, detailing 26 counts of various campaign-finance, falsification of records, bribery, and gun charges.
Besides adding numerous charges, the superseding indictment also brings the defendants into a single case and alleges they were part of a broader conspiracy to illegally and surreptitiously funnel Azano’s money into various political campaigns and committees, including those of three San Diego mayoral candidates and a political party committee supporting federal candidates. The indictment details approximately $600,000 in such illegal donations. According to federal law, it is illegal for a foreign national to donate to political campaigns in the U.S.
The most-recent indictment lists 20 instances in which various defendants allegedly falsified campaign finance records with the San Diego City Clerk, the Federal Election Commission, or the California Secretary of State. Specifically, the indictment lists multiple occasions in which the defendants failed to identify Azano as the true source of campaign donations or concealed the donation altogether.
The new indictment also charges Singh, a social media consultant, and his corporation, ElectionMall Inc., with a single count of bribery. According to the indictment, Singh offered $1,000 to a federal official in exchange for confidential and classified information between December of 2013 and January of 2014. The superseding indictment also charges that Azano was an alien in possession of a firearm, namely, a black Sig Sauer P225 semi-automatic pistol. Federal law prohibits possession of firearms, ammunition or explosives by an alien who is unlawfully in the United States or who has been admitted to the United States under a nonimmigrant visa.
Among other things, the new indictment alleges that members of the conspiracy would survey candidates for various elective offices to determine which ones to support. Azano would seek a private meeting with a candidate and conspirators would then design secret methods of financing that candidate’s campaign. They would use various methods to inject the cash into campaigns – including straw donors and un-reported in-kind donations. Azano would also use companies and an independent expenditure committee of his own creation to support favored candidates, the indictment alleges.
Singh, his corporation, Cortes and retired San Diego Police Detective Ernesto Encinas were first charged in January of 2014 via complaint. Azano, Singh, ElectionMall and Cortes were first indicted in February of 2014.
Ernesto Encinas, a former San Diego police detective and owner of a private security firm, pleaded guilty in March to conspiracy to commit crimes against the United States and filing a false tax return.
Marc Allen Chase, a co-owner of a La Jolla luxury car dealership, pleaded guilty in March to eight misdemeanor counts of campaign finance crimes, including conspiracy, aiding and abetting contributions by a foreign national and making a “straw” contribution in connection with a federal campaign.
DEFENDANT Case Number: 14CR388-MMA Jose Susumo Azano Matsura Age: 48 Coronado, CA Ravneet Singh Age: 41 Washington, D.C. ElectionMall Inc. Washington, D.C. Marco Polo Cortes Age: 44 San Diego, CA CHARGESCount 1: Conspiracy to Commit Offenses Against the United States – Title 18, U.S.C., Sec. 371.
Maximum Penalties: Up to five years in prison and $250,000 fine
*All DefendantsCount 2: Conspiracy to Commit Offenses Against the United States – Title 18, U.S.C., Sec. 371.
Maximum Penalties: Up to five years in prison and $250,000 fine
*Azano and Cortes onlyCount 3: Donation and Contribution by a Foreign National Aggregating $25,000 or more – Title 2, U.S.C., Secs. 437g (d) (1) (A) (i) and 441e (A) (1).
Maximum Penalties: Up to five years in prison and $250,000 fine
*All DefendantsCount 4: Contribution in the Name of Another Aggregating $25,000 or more – Title 2, U.S.C., Secs. 437g(d) (1) (A) (i) and 441f.
Maximum Penalties: Up to five years in prison and $250,000 fine
*Azano and Cortes onlyCounts 5-24: Falsification of Records – Title 18, U.S.C., Sec. 1519.
Maximum Penalties: Up to 20 years in prison per count and $250,000 fine per count.
*All defendants charged with one or more countsCount 25: Bribery – Title 18, U.S.C., Sec. 201(b).
Maximum Penalties: Up to 15 years in prison and $250,000 fine
*Singh and ElectionMall Inc. onlyCount 26: Alien in Possession of a Firearm - Title 18, U.S.C., Sec. 922 (g) (5) (B).
INVESTIGATING AGENCY
Maximum Penalties: Up to 10 years in prison and $250,000 fine
*Azano onlyFederal Bureau of Investigation
Internal Revenue Service
San Diego Police Department*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Dumper of Deadly Cyanide Pleads GuiltyRead the Press Release
SAN DIEGO – Raul Antonio Gonzalez Lopez pleaded guilty today to the Illegal Disposal of Hazardous Waste before United States Magistrate Judge Mitchell D. Dembin. In pleading guilty, Gonzalez Lopez admitted that on March 12, 2011, he drove to We Lend More, a business located in National City, California, to pick up trash. As he was aware, the trash included containers of acid and potassium cyanide. Gonzalez Lopez further admitted that on March 13, 2011, he dumped the trash from We Lend More at the Miramar Landfill, including containers of nitric acid and potassium cyanide (federally regulated hazardous wastes). The Miramar Landfill does not possess a permit that would allow it to accept federally regulated hazardous waste for disposal.
According to court documents, Joe Lowry, Chief Scientist for the U.S. Environmental Protection Agency advised that when combined, potassium cyanide and acids produce a deadly hydrogen cyanide gas. One breath of pure hydrogen cyanide gas would be enough to kill a person, and 50 parts per million (ppm) of hydrogen cyanide is the level that has been determined to be immediately dangerous to life or health. Lowry viewed the evidence from the case and prepared a dispersion model showing the threat area where the concentration of hydrogen cyanide is greater than or equal to 50 ppm, assuming a wind of 3 mph. The zone extends approximately 71 yards from the initial point of combination, and anyone within 30 yards when the chemicals combined could have been killed instantly.
In February of 2011, We Lend More and its owner, Marc Vogel, were convicted of aiding and abetting the illegal transportation and disposal of hazardous waste, following a jury trial. The evidence adduced at trial indicated that the acid (in a breakable glass bottle) and cyanide (in aged plastic containers) were disposed of together in the same cardboard box, which was dumped at the landfill. Because the landfill operators use heavy equipment on a regular basis to compact the face of the landfill, such activity would be expected to cause the containers to break and the chemicals (in the same box) to combine, posing grave risk to the landfill operator and anyone else within 30 yards (such as other landfill personnel or customers).
Gonzalez Lopez was arrested on January 14, 2014, in Mexico and extradited to the United States to face these charges. On July 16, 2014, Gonzalez Lopez appeared in court in San Diego.
DEFENDANT Case Number: Raul Antonio Gonzalez Lopez Age: 55 Tijuana, Mexico CHARGESUnlawful Disposal of Hazardous Waste– Title 42, U.S.C., Section 6928(d)
INVESTIGATING AGENCY
Maximum penalty: Five years in prison and $250,000 fineEnvironmental Protection Agency
Federal Bureau of Investigation*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Fishy Business – Smuggler of Swim Bladders Is Sentenced in Federal CourtRead the Press Release
Today United States Attorney Laura E. Duffy announced the sentencing of Song Shen Zhen, for smuggling 241 swim bladders from endangered Totoaba fish from Mexico into the United States. The Honorable Marilyn L. Huff handed down a one year sentence to Zhen and ordered him to pay restitution in the amount of $120,500 to the “Procuraduria Federal de Proteccion al Ambiente,” Mexico’s environmental protection agency.
According to information presented during the sentencing, on April 10, 2013, at approximately 12:45 a.m., Zhen drove his 2010 Dodge Attitude into the United States at the Calexico West Port of Entry (“POE”). Zhen, the sole occupant of the vehicle, told the Customs and Border Protection Officer that he had nothing to declare.
The officer, however, observed a deformity in both floor mats located in the rear of the vehicle. Upon closer inspection, he discovered what appeared to be dried Totoaba swim bladders, which were contained in two plastic grocery bags hidden under the mats. In total, the inspector found 27 swim bladders weighing a total of approximately 1.85 kilograms (4.07 pounds). One bladder was seized for testing and Zhen was permitted to leave the POE.
Unbeknownst to Zhen, CBP agents followed him to his home in Calexico and conducted surveillance. After Zhen left the house in mid-morning, the agents obtained a search warrant. Inside the house, they discovered that the residence was sparsely furnished, contained few personal effects, and appeared instead to be set-up as a Totoaba drying factory. An additional 214 Totoaba swim bladders were laid out in rows to dry, with fans positioned to blow air over them. There was a significant quantity of packaging materials and other evidence consistent with the shipment of Totoaba swim bladders overseas. Based on the estimated values set forth above, the 241 swim bladders possessed by Zhen (27 smuggled and another 214 in the house) were worth approximately $361,500 in Mexico, $1.265 million upon resale in the U.S, and $3.6 million in the overseas black market.
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.
DEFENDANT Case Number: Song Shen Zhen Age: 75 Calexico, California CHARGESSmuggling, Title 18, United States Code, Section 545
INVESTIGATING AGENCY
Maximum penalties: 20 years in prison, $250,000 fine, 3 years of Supervised Release.Department of Homeland Security – Homeland Security Investigations
U.S. Fish and Wildlife Service*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Seventh Defendant Indicted in Border Patrol Agent Brian Terry Murder CaseRead the Press Release
SAN DIEGO, CA – Rosario Rafael Burboa-Alvarez was indicted by a federal grand jury in Tucson yesterday, becoming the seventh man charged in connection with the murder of U.S. Border Patrol Agent Brian Terry.
Agent Terry was fatally shot on Dec. 14, 2010, when he and other Border Patrol agents encountered armed robbers in a rural area north of Nogales, Arizona. Of the defendants charged so far, two have pleaded guilty, three are awaiting trial and two are fugitives.
Burboa-Alvarez was already in custody in Tucson for immigration-related crimes. He is scheduled to be arraigned in federal court in Tucson at 1:45 p.m. today before U.S. Magistrate Judge Bernardo P. Velasco.
Burboa-Alvarez, 30, is described in the indictment as the recruiter who assembled the crew of armed robbers to travel from Mexico to the United States and forcibly take marijuana from smugglers through threats or actual violence.
The crew members were identified in the indictment as Manuel Osorio Arellanes, Jesus Rosario Favela-Astorga, Ivan Soto-Barraza, Heraclio Osorio-Arellanes, Lionel Portillo-Meza and Rito Osorio-Arellanes.
The indictment charges Burboa-Alvarez and others with first degree murder, second degree murder, conspiracy to interfere with commerce by robbery and attempted interference with commerce by robbery. Other crew members are also charged with use and carrying a firearm during a crime of violence and assault on a federal officer. In addition to the murder of Agent Terry, the indictment alleges that the defendants assaulted Border Patrol Agents William Castano, Gabriel Fragoza, and Timothy Keller, who were with Agent Terry during the firefight.
Portillo-Meza was captured in Mexico in September 2012 and extradited to the U.S. on June 17, 2014. Soto-Barraza was captured in Mexico in September 2013 and was extradited to the U.S. on July 31, 2014. Favela-Astorga and Osorio-Arellanes are fugitives.
Another defendant, Manuel Osorio-Arellanes, pleaded guilty to first degree murder and was sentenced to 30 years in prison in February 2014. Another defendant, Rito Osorio-Arellanes, who was in custody at the time of Agent Terry’s murder, pleaded guilty to conspiracy to interfere with commerce by robbery and was sentenced to eight years in prison in January 2013.
This case is being prosecuted in federal court in Tucson by attorneys from the Southern District of California. They are Special Assistant United States Attorneys Todd W. Robinson, David D. Leshner and Fred Sheppard. The U.S. Attorney’s Office for the District of Arizona is recused. This case is being investigated by the FBI. The Justice Department’s Office of International Affairs provided assistance with the extraditions.
The public is reminded that an indictment is a formal charging document and defendants are presumed innocent until the government meets its burden in court of proving guilt beyond a reasonable doubt.
“Ho-Hum Bandit” Sentenced to Almost Six Years in Prison for Seven San Diego Bank RobberiesRead the Press Release
United States Attorney Laura E. Duffy announced that Adam Lynch was sentenced to prison this morning in federal court in San Diego in connection with his conviction on seven counts of bank robbery. Lynch, dubbed the “Ho Hum Bandit” for his reportedly nonchalant manner in robbing banks, committed a string of bank robberies in San Diego beginning in February 2010. United States District Judge Roger T. Benitez sentenced Lynch to 70 months in prison, and ordered him to pay restitution to the victim banks.
As described in his plea agreement, Lynch committed his first bank robbery on February 27, 2010, robbing a US Bank in San Diego. He thereafter went on a spree of robberies in the area, committing his seventh on June 5, 2010. Typically, Lynch would commit the robbery by walking up to the counter, passing a note to the teller, identifying himself as being armed with a gun, and demanding cash. Lynch stole a combined total of $25,094. He did not physically injure any of the bank personnel.
Lynch’s robberies in San Diego were the start, but not the end, of his career. On May 6, 2013, in Denver, Lynch was convicted of four counts of bank robbery, based on robberies he committed in the Denver area in August 2010, December 2010, and March 2011; as well as a robbery he committed in Cheyenne, Wyoming, in November 2010. For those offenses, on April 19, 2013, Lynch was sentenced by a federal judge to 64 months in prison.
In imposing a 70-month sentence this morning, Judge Benitez ordered that 56 months of that sentence run consecutive to the 64-month sentence that Lynch had previously received, and that the remainder of today’s sentence run concurrent to the previous sentence. In other words, today’s sentence increases Defendant’s total custodial sentence to 120 months. Lynch has been in custody since his arrest on April 21, 2011, and he remains in custody.
DEFENDANT Case Number: Adam Lynch Age: 37 Corte Madera, California CHARGESBank robbery in violation of Title 18, United States Code, Section 2113(a) - Maximum penalties per count: 20 years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment.
INVESTIGATING AGENCYFederal Bureau of Investigation
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Smuggler of Counterfeit Levi Labels Sentenced to Six Months in PrisonRead the Press Release
United States Attorney Laura E. Duffy announced today that a Washington State resident was sentenced by U.S. District Judge Barry Ted Moskowitz to serve six months in custody for smuggling counterfeit Levi Strauss tags, labels and buttons into the United States. Angel Garcia Hernandez admitted that on December 28, 2013, he entered the United States from Mexico with a duffel bag stuffed with counterfeit Levi Strauss buttons, tags and labels, which he intentionally failed to declare. Hernandez possessed enough counterfeit labels to manufacture 3,000 pairs of counterfeit Levis 501 jeans, which were valued at $192,000.
An hour and a half later the same day that Garcia Hernandez entered the United States, defendant Amadeo Calderon Valdivinos also entered the United States from Mexico at the same Port of Entry, with enough counterfeit Levi Strauss buttons, tags and labels to make $127,000 of counterfeit 501 jeans. Valdivinos pled guilty in Criminal Case 13cr4346-JAH, and was sentenced in April to four months in custody by U.S. District Judge John A. Houston.
“Intellectual property crimes, such as the counterfeit trademark offenses in these cases, strike at the heart of America’s modern economy,” said U.S. Attorney Laura Duffy. “Those who seek to steal and misuse intellectual property should know that the Department of Justice and our law enforcement partners will use the full range of enforcement tools available – including, where appropriate, criminal prosecution – to prevent these offenders from profiting at the expense of the reputation of United States companies and individuals.”
DEFENDANT Case Number: 14cr1034-BTM Angel Garcia Hernandez Age: 55 Bridgeport, Washington CHARGESSmuggling, in Violation of Title 18, United States Code, Section 545.
Maximum Penalties: 20 years in custody and/or $250,000 fine, $100 special assessment.
DEFENDANT Case Number: 13cr4346-JAH Amadeo Calderon Valdivinos Age: 55 Rialto, California CHARGESSmuggling, in Violation of Title 18, United States Code, Section 545.
INVESTIGATING AGENCY
Maximum Penalties: 20 years in custody and/or $250,000 fine, $100 special assessment.U.S. Department of Homeland Security, Office of Immigration and Customs Enforcement
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
San Diego Realtor Pleads Guilty to Sex with 13-year-old GirlRead the Press Release
SAN DIEGO – San Diego realtor Michael E. Lustig pleaded guilty in federal court today to prostitution-related crimes, admitting that he paid for sex with a 13-year-old girl on several occasions.
Lustig, who was indicted by a federal grand jury in October of 2013, entered his plea before U.S. Magistrate Judge Mitchell D. Dembin. Sentencing was set for November 3, 2014, at 9 a.m. before U.S. District Judge Roger T. Benitez.
According to court records, Lustig, 70, was first contacted in June of 2012 by San Diego Sheriff's deputies during an operation targeting customers of prostitution in the Encinitas area. At the time that Lustig was arrested, deputies seized two cellular telephones which led to information that he had been in contact with two minor females.
Interviews with the minors revealed that Lustig had contacted them separately to engage in commercial sex activity. One of the minors was 11 years old at the time that sexual activity began with Lustig, and the other was 13 years of age. According to court records, surveillance video from a motel in El Cajon, California, showed Lustig entering a motel room with one of the minors and emerging 43 minutes later.
According to court records, Lustig had contacted the minors multiple times over a span of multiple months. Interviews with the minors confirmed that Lustig, known to them as “George,” had paid them for sexual activity and that at least one of the minors had identified herself as a minor.
In the plea agreement, Lustig admitted that he used a cellular telephone to contact the 13-year-old minor on multiple occasions between at least October 2011 and June 2012, seeking to engage in commercial sex activity. Lustig admitted that he thereafter engaged in commercial sex activity with the minor, paying the minor in return for sexual activity.
For example, according to the plea agreement, Lustig admitted that on October 15, 2011, he wrote the minor, asking, “Hey, is the bookstore open? I'm in desperate need of books rite now.” Lustig admitted in court that he was using code for commercial sex activity. On November 11, 2011, Lustig wrote the same minor, “U free sometime in the next 2 hours?” and “Any chance for library in 35 min, @ 7:15?”
Lustig again admitted that he used code to recruit the minor for commercial sex activity. On June 8, 2012, Lustig wrote the minor simply “Bookstore?” meaning that he wanted to establish a date for commercial sex activity.
“The United States will vigorously pursue any adult preying on children for sexual activity,” said U.S. Attorney Laura Duffy. “Defendants like Michael Lustig victimize the most vulnerable population in our community – children - and these predators will be brought to justice.”
“A predator is off our streets today and can't victimize the innocents," said Sheriff Bill Gore. “This investigation showcases the success of collaborative federal and local investigations working toward the common good.”
FBI Special Agent in Charge, Daphne Hearn, commented, “The average age of a child targeted for prostitution is between the ages of 12 to 14 for girls and 11 to 13 for boys. As a result, the FBI will remain vigilant and continue our efforts to protect our nation's children from sexual predators by working with our law enforcement partners and removing these individuals from society through the justice system.”
On October 23, 2013, a federal grand jury returned a two-count indictment charging Lustig with two counts of sex trafficking of a minor in violation of 18 U.S.C. § 1591, and criminal forfeiture.
DEFENDANT Case Number: Michael Lustig Age: 70 San Diego, California CHARGESThree counts of Interstate Travel in Aid of Racketeering Enterprises, in violation of 18 USC 1952(a) Maximum Penalty: Five years per count, 15 years total; 3 years supervised release.
INVESTIGATING AGENCYSan Diego County Sheriff’s Department
Federal Bureau of Investigation*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Defendant Extradited to Face Charges in Border Patrol Agent Brian Terry Murder CaseRead the Press Release
SAN DIEGO, CA – Ivan Soto-Barraza, who is charged with the first degree murder of United States Border Patrol Agent Brian Terry, was extradited to the United States from Mexico today, announced Attorney General Eric Holder and U.S. Attorney Laura E. Duffy of the Southern District of California.
Agent Terry was fatally shot on Dec. 14, 2010, when he and other Border Patrol agents encountered Soto-Barraza and others in a rural area north of Nogales, Arizona. Of six defendants charged so far, two have pleaded guilty and two are awaiting trial.
“This marks another step forward in our aggressive pursuit of those responsible for the murder of Agent Brian Terry, who made the ultimate sacrifice while serving his country,” said Attorney General Holder. “We will never stop seeking justice against those who do harm to our best and bravest.”
“This extradition is another major development in the pursuit of justice for Agent Terry and his family,” said U.S. Attorney Laura Duffy. “As we continue to make significant progress in this case, we are constantly motivated by the memory of Agent Terry and his sacrifice for our country.”
Soto-Barraza is scheduled to be arraigned in federal district court in Tucson, Arizona, on August 1, 2014. The indictment charges Soto-Barraza and others with first degree murder, second degree murder, conspiracy to interfere with commerce by robbery, attempted interference with commerce by robbery, use and carrying a firearm during a crime of violence and assault on a federal officer. In addition to the murder of Agent Terry, the indictment alleges that the defendants assaulted Border Patrol Agents William Castano, Gabriel Fragoza, and Timothy Keller, who were with Agent Terry during the firefight.
On July 20, 2012, in order to seek the public’s assistance, Department of Justice officials announced a reward of up to $1 million for information leading to the arrest of four fugitives: Jesus Rosario Favela-Astorga, Heraclio Osorio-Arellanes, Lionel Portillo-Meza and Soto-Barraza. Portillo-Meza was captured in Mexico in September 2012 and extradited to the U.S. on June 17, 2014. Soto-Barraza was captured in Mexico in September 2013. Favela-Astorga and Osorio-Arellanes are fugitives.
A fifth defendant, Manuel Osorio-Arellanes, pleaded guilty to first degree murder and was sentenced to 30 years in prison in February 2014. A sixth defendant, Rito Osorio-Arellanes, who was in custody at the time of Agent Terry’s murder, pleaded guilty to conspiracy to interfere with commerce by robbery and was sentenced to eight years in prison in January 2013.
This case is being prosecuted in federal court in Tucson by attorneys from the Southern District of California, Special Attorneys Todd W. Robinson, David D. Leshner, and Fred Sheppard. The U.S. Attorney’s Office for the District of Arizona is recused. This case is being investigated by the FBI. The Justice Department’s Office of International Affairs provided assistance with the extradition.
The public is reminded that an indictment is a formal charging document and defendants are presumed innocent until the government meets its burden in court of proving guilt beyond a reasonable doubt.
###“godfather” of Camp Pendleton Sentenced to Two Years for BriberyRead the Press Release
Dept. of Defense Supervisor Nate Cervantes Accepted
Over $100,000 in BribesA Department of Defense supervisor, the self-described “Godfather” of Camp Pendleton, was sentenced today to two years in prison for accepting over $100,000 in bribes from contractors who sought to win or retain government construction and service contracts at Camp Pendleton worth millions of dollars.
Natividad Lara “Nate” Cervantes pleaded guilty in January to bribery and conspiracy to commit bribery of a public official. At today’s hearing, U.S. District Judge Anthony J. Battaglia also ordered Cervantes, who is free on bond, to self-surrender by September 30, 2014, and to forfeit $106,964 in ill-gotten gains.
“Nate Cervantes used his considerable influence and popularity at Camp Pendleton to foster a culture of corruption among contractors at the military base,” said U.S. Attorney Laura Duffy. “This scandal has undermined public confidence in the fairness of the system. Hopefully, today’s sentence will restore some of that confidence. We will investigate and expose corruption wherever it occurs in the U. S. military.”
FBI Special Agent in Charge Daphne Hearn commented, “When a government official like Mr. Cervantes violates his oath to protect and serve the citizens of this nation, it undermines the public's trust. When that happens, the FBI will aggressively pursue people like Mr. Cervantes to root out corruption at all levels of government and restore that trust. This case like many of our investigations was initiated based upon a call from the public to the FBI and shows what can happen when the public joins with law enforcement to fight crime. The FBI encourages the public to report allegations of public corruption to our hotline at (877) NO-BRIBE.”
“Today’s sentencing is a reminder that individuals who scheme to defraud the U.S. Government and violate the public’s trust will be brought to justice,” said Small Business Administration Inspector General Peggy E. Gustafson. “The actions of Natividad Cervantes and his conspirators grossly undermine the honest work being done every day by Federal employees and government contractors. I want to thank the U.S. Attorney's Office for its dedicated leadership and professionalism in pursuit of justice served today.”
Special Agent in Charge Chris Hendrickson of the Defense Criminal Investigative Service (DCIS) Western Field Office commented, “Cases such are this are not motivated by need, or other difficult personal circumstances; they are products of simple greed. We are committed to aggressively pursuing those who abuse the public trust and ultimately undermine the efforts of the Department of Defense to support our warfighters.”
“Failure to play by the rules will land you in prison,” said Erick Martinez, Special Agent in Charge of IRS Criminal Investigation. “Today’s sentencing supports IRS Criminal Investigation’s commitment to bring to justice to those individuals who seek to illegally enrich themselves through the improper awarding of government contracts.”
Bribery at Camp Pendleton
When he entered his guilty plea in January, Cervantes admitted using his position at Camp Pendleton to solicit bribes from construction companies seeking to do business on the base, including codefendant Hugo Hernandez Alonso’s company, Hugo Alonso, Inc. (HAI), and codefendant Bayani Yabut Abueg, Jr.’s company, MBR Associates, Inc. (MBRA). From about 2008 until March 2013, Cervantes served at Camp Pendleton as the Supervisor of the Construction and Service Contracts Inspection Branch, Facilities Support Contract Division. During that time Cervantes used his position supervising construction and service contracts to solicit Alonso and Abueg for bribes from their companies, HAI or MBRA. In return for helping to steer contracts to HAI and MBRA, Cervantes received cash payments from Alonso and Abueg and extensive free construction work on his personal condominium. Alonso, Abueg, and their respective companies were all sentenced last month.
As an example, Cervantes admitted that in about 2008 he agreed to accept a $25,000 bribe to assist Alonso and HAI in obtaining a $3.5 million government contract to install flooring at Camp Pendleton. In arranging for the bribe payment, Cervantes, through a third-party conduit, requested that Alonso “have the 25 package” (code for the $25,000 bribe) available on September 5, 2008. On that same day, Alonso provided the $25,000 to the third party conduit for delivery to Cervantes. Cervantes admitted that HAI paid Cervantes a total of at least $119,000 in bribes between 2008 and 2011.
The bribes to Cervantes were not limited to just HAI. Cervantes admitted to exchanging a bribe in 2011 related to the awarding of a $3 million contract at Camp Pendleton to Abueg’s company, MBRA. Further, Cervantes admitted that on March 26, 2013, he met with a cooperating witness, who agreed to pay Cervantes a $40,000 bribe in exchange for assistance in obtaining a new $4 million contract at Camp Pendleton. The bribe was to be structured over a number of payments. The first payment was scheduled for March 28, 2013, with the balance of the bribe to be paid after the contract was awarded.
On March 28, 2013, the cooperating witness met with Cervantes at a local business on Miramar Road in San Diego, California, to make the first payment that was discussed earlier in the week. During this meeting, Cervantes discussed, among other things, the payment schedule and the source of funds for the bribe payments. At the end of the meeting, the cooperating witness handed Cervantes an envelope containing $10,000 cash. At that point, FBI agents arrested Cervantes.
The public is encouraged to report possible public corruption criminal activity by calling the FBI’s public corruption/border corruption hotline at (877) NO-BRIBE or (877) 662-7423, or by calling the Department of Defense’s hotline at (800) 424-9098 or emailing [email protected].
DEFENDANT Case Number: 13cr1345-AJB Natividad Lara Cervantes Age: 64 San Diego, California CHARGESTitle 18, United States Code, Section 201(b)(2)—Bribery of public official
Maximum penalties: 15 years’ imprisonment, $250,000 fine, or three times the monetary equivalent of the bribeTitle 18, United States Code, Section 371 – Conspiracy to commit bribery of public official
INVESTIGATING AGENCY
Maximum penalties: 5 years’ imprisonment, $250,000 fine, or twice the gross amount of defendant’s pecuniary gain from the offenseFederal Bureau of Investigation
Naval Criminal Investigative Service
Internal Revenue Service, Criminal Investigation
Department of Defense Criminal Investigative Service
General Services Administration, Office of Inspector General
Small Business Administration, Office of Inspector General*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Alleged Sinaloa Cartel Leader Extradited to the United States from the NetherlandsRead the Press Release
SAN DIEGO –Jose Rodrigo Arechiga-Gamboa, also known as “Chino Antrax,” was formally extradited to the United States by the Netherlands today.
Arechiga-Gamboa arrived at San Diego International airport about 2 p.m. under heavy security. He was flown in by the United States Marshals Service and the Drug Enforcement Administration from Amsterdam to San Diego. He was booked into federal custody and is scheduled to be arraigned on Friday, July 11, 2014, at 2:00 p.m. before U.S. Magistrate Judge Mitchell D. Dembin.
A federal grand jury in San Diego returned an indictment on December 20, 2013, charging Arechiga-Gamboa with Conspiracy to Distribute Controlled Substances Intended for Importation and Conspiracy to Import Controlled Substances. That same day, the Clerk of the Court issued a sealed warrant for his arrest.
Arechiga-Gamboa was arrested on December 30, 2013, at the Schiphol Airport in Amsterdam, Netherlands at the request of the United States. Arechiga-Gamboa was taken into custody at the airport traveling under a fraudulent name, “Norberto Sicairos-Garcia,” as he deplaned a KLM flight from Mexico City, Mexico to Amsterdam. The United States made formal requests for assistance from foreign authorities via a provisional arrest warrant and an Interpol Red Notice. The indictment was unsealed in San Diego a few days later, on January 3, 2014.
According to formal documents filed in support of Arechiga-Gamboa’s extradition from the Netherlands, Arechiga-Gamboa is alleged to have worked for the Sinaloa Cartel as a bodyguard and the leader of an enforcement group called “Los Antrax.” In this position, he allegedly assisted the Sinaloa Cartel by providing security for narcotics shipments and conducting enforcement operations.
According to extradition documents, Arechiga-Gamboa later rose to become one of the highest-level leaders of the Sinaloa Cartel. Despite traveling under a fraudulent Mexican passport by assuming the identity of a deceased individual, undergoing significant plastic surgery and attempting to alter his fingerprints, U.S. law enforcement officials were able to confirm Arechiga-Gamboa’s identity through forensic techniques. A Dutch Court considered the extradition request and, on May 28, 2014, ordered that Arechiga-Gamboa be extradited to the United States to stand trial on the narcotics trafficking offenses.
The Justice Department’s Criminal Division Office of International Affairs provided substantial assistance in the extradition of the defendant.
DEFENDANT Case Number: 13-CR-4517-DMSJose Rodrigo Arechiga-Gamboa, aka “Chino Antrax,”
CHARGES
aka “Norberto Sicairos-Garcia”Count 1: Title 21, United States Code, Sections 959, 960 and 963 – Conspiracy to Distribute Controlled Substances Intended for Importation
Count 2: Title 21, United States Code, Sections 952, 960 and 963 – Conspiracy to Import Controlled Substances
INVESTIGATING AGENCYDrug Enforcement Administration
Customs and Border Protection Office of Field Operations
Customs and Border Protection Office of Border Patrol
San Diego Law Enforcement Coordination Center
Homeland Security Investigations
Internal Revenue Service
Interpol*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Former U.S. Navy Officer Pleads Guilty in International Bribery Scandal; Defendant Admits Overcharging the Navy by up to $2.5 Million for Port Services in JapanRead the Press Release
SAN DIEGO – A retired Navy official who started a second career orking for defense contractor Glenn Defense Marine Asia (GDMA) pleaded guilty in federal court today, admitting that he and others overcharged the Navy by up to $2.5 million for port services to American ships and then used some of the proceeds to treat Navy officials to lavish dinners, cocktails and entertainment.
Edmond A. Aruffo, who retired in 2007 at the rank of lieutenant commander after a military career spanning more than 20 years, is the seventh defendant charged – and the fourth to plead guilty - in the expanding corruption scandal involving GDMA’s illicit relationships with Navy officials. GDMA is a Singapore-based contractor that has serviced Navy ships and submarines in the Pacific for decades.
Aruffo, who became manager of GDMA’s Japan operations in 2009, entered his plea before U.S. Magistrate Judge Karen S. Crawford to a single count of conspiracy to defraud the United States. Aruffo’s bond was set at $40,000; however he indicated to the court he not post bond and immediately self-surrender. A sentencing hearing was scheduled for October 3, 2014 at 9 a.m. before U.S. District Judge Janis L. Sammartino.
“This corruption scandal continues to lead us in new directions, and we continue to marvel at the extent of it,” said U.S. Attorney Laura Duffy. “If there are others who, like Edmond Aruffo, have traded integrity and honesty for greed and profit, we will find them and prosecute them.”
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division said: “There is an old Navy saying: ‘Not self, but country.’ Edmond Aruffo instead put self before country when he stole from the U.S. Navy as part of a massive fraud and bribery scheme that cost the U.S. Navy more than $20 million.”
“Retired U.S. Navy Lieutenant Commander Edmond A. Aruffo who previously held a position of trust and responsibility conferred on him by the Navy betrayed his former Service for personal financial gain by rigging invoices and deserves to be held accountable for his criminal actions. NCIS will continue to work with the Defense Criminal Investigative Service and the US Attorney's Office in vigorously investigating and prosecuting these crimes of corruption and fraud.”
“The guilty plea of Edward Aruffo is part of an ongoing effort by the Defense Criminal Investigative Service and its law enforcement partners to bring to justice individuals who seek to illegally enrich themselves at the expense of U.S. taxpayers," said James R. Ives, Acting Deputy Inspector General for Investigations, U.S. Department of Defense. “While the vast majority of DoD contractors engage in lawful business practices, a few are driven by greed to break the law. Those who do will be caught and punished. American taxpayers will accept nothing less.”
According to court documents, GDMA owner and CEO Leonard Francis and his cousin, GDMA executive Alex Wisidigama, enlisted the clandestine assistance of Navy personnel - including Commander Michael Vannak Khem Misiewicz, Commander Jose Luis Sanchez, Naval Criminal Investigative Service Special Agent John Beliveau and Petty Officer First Class Daniel Layug - to provide classified ship schedules and other sensitive information about an ongoing criminal investigation of GDMA. In total, GDMA allegedly overcharged the Navy under its contracts and submitted bogus invoices for more than $20 million. Wisidagama, Beliveau and Layug have pleaded guilty; the others are awaiting trial.
According to his Arrufo’s plea agreement, Aruffo was hired by GDMA’s Francis, who is accused of bribing Navy personnel with cash, luxury travel, expensive meals, consumer electronics and prostitutes in exchange for classified and proprietary information to win contracts and favorable treatment for his company.
According to the plea agreement, Aruffo was serving as the operations officer of the USS Blue Ridge when he met Francis. GDMA was providing “husbanding” services, such as tug boats, harbor pilots, trash removal, line handlers and transportation, to that ship and numerous others, including.
The plea agreement said Aruffo and others defrauded the U.S. Navy in connection with charges for port services provided to nearly every Navy ship that came to port in Japan from July 2009 to September 2010.
As part of its contract with the Navy, GDMA was required to coordinate various vendors to provide port services for the Navy ships. Those vendors were to submit invoices directly to the Navy, rather than through GDMA.
The plea agreement said Aruffo and others obtained letterhead from the Japanese vendors and used it to prepare bogus invoices which inflated the cost for services by tens of thousands of dollars. Aruff admitted he arranged kickbacks to GDMA from the vendors, once they were paid by the Navy.
For example, according to the plea agreement, in February of 2010 the USS Lake Erie visited the port of Sukomo, Japan. Aruffo arranged for a Japanese vendor to provide tugboats, harbor pilots, trash removal, line handlers, transportation and other services. The vendor invoiced the Navy $145,229.77 – an amount inflated by about $50,000, which the vendor ultimately gave to GDMA as a kickback.
A few days later, Aruffo arranged for another Japanese vendor to provide such services to the USS Blue Ridge at the port of Otaru, Japan, the plea agreement said. The vendor billed the Navy in the amount of $432,476.14 and then kicked back $204,961.20 to GDMA.
The ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service and the Defense Contract Audit Agency.
The case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California, Director of Procurement Fraud Catherine Votaw and Trial Attorneys Brian Young and Wade Weems of the Criminal Division’s Fraud Section.
Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.
DEFENDANT Case Number: 14cr1924 Edmond A. Aruffo Age: 45 San Diego, California CHARGESConspiracy to Defraud the United States, in violation of 18 U.S.C. § 371
INVESTIGATING AGENCY
Maximum of 5 years in prison; a maximum $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater.Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
San Diego Man Who Stole Identities of Deceased Children Convicted on All Countys of Identity Theft, Tax Evasion and False Statements to BanksRead the Press Release
Lloyd Irving Taylor, a San Diego tax attorney and Certified Public Accountant, was convicted by a federal jury today in a complex tax-evasion scheme involving the creation of bank accounts in the names of deceased children and fake churches.
Following a week-long trial, a jury deliberated for 30 minutes before reaching a verdict that rendered Taylor, 71, guilty of all 19 counts charged, including aggravated identity theft, false statements to a financial institution, tax evasion, corruptly endeavoring to impair or impede the IRS and making false statements on United States passport applications. The defendant has been in custody since his arrest in April of 2013.
According to evidence presented at trial, Taylor stole the identities of deceased children, used them as aliases and obtained fraudulent passports and other identification documents. He then used the passports and other documents to open and maintain multiple financial accounts in order to hide his income from the IRS and to transfer funds from these accounts to purchase various assets, such as gold coins. The purchase of gold coins was done, in part, to evade taxes.
Likewise, Taylor formed over a dozen fraudulent tax-exempt religious institutions and opened 31 related bank accounts, including investment accounts in the names of the fake churches, so his income could grow tax free.
Among the witnesses who testified at trial were the brother of one of the deceased children as well as a blind elderly woman whose social security number was stolen and used by the defendant. Also during the trial, prosecutors showed the jury death certificates of four deceased children, who died in the 1950s, and displayed $1.6 million in gold coins the defendant had hidden in a storage locker.
According to trial witnesses, Taylor failed to report $5 million in income during the span of the fraud, and he owed the IRS $1.6 million. During his 42 years of working, Taylor had filed a tax return just seven times, according to trial testimony.
At Taylor’s bond hearing in April, 2013, a judge ordered him detained while pending trial based on a number of circumstances, including his international travel on his false passports, the millions of dollars he controlled through dozens of bank accounts, and his numerous false statements to banks in furtherance of his criminal activity.
“We are very pleased with the jury’s quick and decisive verdict,” said U.S. Attorney Laura Duffy. “Lloyd Taylor was able to hide his money for a while, but his days of exploiting dead children and the elderly to line his pockets are over.”
“Mr. Taylor tried in every conceivable way to hide his income from the IRS—from hiding income in the names of his stolen identities and non-existent churches to converting income to gold coins,” said IRS Criminal Investigation’s Special Agent in Charge Erick Martinez. “This conviction sends a clear message that IRS Criminal Investigation is working hard to make sure that all taxpayers file and pay their fair share of taxes.”
“The U.S. Department of State’s Diplomatic Security Service is committed to the protection of the U.S. passport, and the investigation of those who would obtain and use it for illegal gain. DSS is pleased to have contributed the initial charges in this investigation, leading to the arrest, indictment and conviction of Taylor,” said DS Los Angeles Field Office Special Agent-in-Charge Robert Myers.
DEFENDANT Criminal Case No. 13CR1390-MMALloyd Taylor
Age: 71 San Diego, CA CHARGESCounts 1-3: Title 18, United States Code, Section 1542 – Making a False Statement on a United States Passport Application
INVESTIGATING AGENCIES
Maximum penalties: 10 years custody; $250,000 fine; $100 Special Assessment; 3 year supervised release.
Count 4: Title 26, United States Code, Section 7212 – Corrupt Endeavor to Impede and Impair the Due Administration of the Internal Revenue Laws
Maximum penalties: 3 years in prison, a fine up to $250,000, and term of supervised release of not more than 1 year.
Counts 5-6: Title 26, United States Code, Section 7201 – Tax Evasion
Maximum penalties: 5 years in prison, a fine of $250,000, and a term of supervised release of not more than 3 years.
Counts 7-13: Title 18, United States Code, Section1014 – False Statements to a Federally Insured Financial Institution
Maximum penalties: 30 years in prison, a fine of $1,000,000, and a term of supervised release of 5 years.
Counts 14-19: Title 18, United States Code, Section 1028A – Aggravated Identity Theft
Maximum penalties: 2 years consecutive to the sentence imposed for the underlying offense.San Diego Regional Fraud Task Force (multi-agency task force comprised of members of the United States Secret Service, the San Diego Police Department, and the San Diego District Attorney’s Office)
Internal Revenue Service
United States Department of State, Office of Diplomatic Security*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Retired Air Force Service Member Indicted for Stealing and Using Credit Cards of Fellow Service MembersRead the Press Release
SAN DIEGO – A retired Air Force senior master sergeant is charged in an indictment unsealed today with stealing credit cards from fellow service members on numerous San Diego area military installations, often while they exercised at base gymnasiums, and using the cards to make unauthorized purchases and obtain thousands of dollars in cash advances.
Christopher Dwan Underwood, 42, was indicted by a federal grand jury and arrested Friday. He made his first appearance in federal court this morning to face charges of wire fraud, bank fraud and aggravated identity theft. A bond hearing was set for July 3, 2014 at 10 a.m. before U.S. District Judge Gonzalo P. Curiel.
According to the indictment, Underwood had access to military installations because of his retiree status. He preyed on victims who left their personal belongings unattended during gym workouts on bases, and on more than 30 occasions he swiped military-issued credit and debit cards and victims’ personal information, such as dates of birth and social security numbers.
Government Travel Charge Cards, known as GTCCs, are authorized for use only when a cardholder is authorized to go on official military travel. Posing as the cardholders and using their personal information, Underwood called Citibank, the card issuer, to activate the cards. Once the cards were activated, he made over $20,000 in unauthorized purchases and cash advances, the indictment said.
DEFENDANTChristopher Dwan Underwood
Age: 42 San Diego, CA CHARGES18 U.S.C. § 1343 – Wire Fraud (30 years maximum sentence)
INVESTIGATING AGENCIES
18 U.S.C. § 1344 – Bank Fraud (30 years maximum sentence)
18 U.S.C. § 1028A – Aggravated Identity Theft (mandatory-minimum two-year sentence)Naval Criminal Investigative Service
Marine Corps Criminal Investigation Division
Navy Criminal Investigation Division*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Methamphetamine Transportation Coordinator Sentenced to 210 MonthsRead the Press Release
SAN DIEGO – Tijuana-based methamphetamine trafficker Salvador Walker was sentenced today by U.S. District Judge Roger T. Benitez to more than 17 years in prison for his leadership role as a transportation coordinator in a large drug-trafficking conspiracy.
Walker, 56, was convicted by a federal jury in September of 2013 after a three-day trial. According to evidence presented at trial, Walker’s trafficking activity first came to the attention of authorities in 2011 after Customs and Border Protection officers arrested Jaime Garcia-Covarrubias, George Ramirez and Gerardo Ramos-Tabardillo as they attempted to drive separate vehicles loaded with methamphetamine through the San Ysidro, California Port of Entry. All three couriers were subsequently convicted of importation of methamphetamine.
According to court documents, an investigation conducted by the Department of Homeland Security identified Salvador Walker as the link among each of the methamphetamine loads. The investigation revealed that Walker was responsible for recruiting drivers to import narcotics into the United States, and that he directly oversaw efforts to load methamphetamine into compartments in vehicles to bring to the United States. Agents learned that the three couriers alone made dozens of trips to Tijuana to load their vehicles with methamphetamine and then successfully crossed the drugs into the United States and traveled to deliver the methamphetamine to Walker’s associates in the Los Angeles area.
During Walker’s trial, the United States presented evidence that Walker supervised these drug couriers as they transported methamphetamine to associates in Anaheim as well as narcotics proceeds back to Mexico. After the presentation of evidence, a jury convicted Walker of conspiring with others to import methamphetamine.
“Methamphetamine is a particularly dangerous drug with devastating effects on the user and the community,” said United States Attorney Laura E. Duffy. “The leaders and organizers of drug importation rings face significant consequences for their actions. Today’s sentence is a warning to all those leaders that they will be brought to justice and face significant custodial time for their aggravated crimes.”
DEFENDANT Criminal Case No. 12-CR-0909-BENSalvador Walker
Age: 56 Tijuana, Baja California CHARGESCount 1: Title 21, United States Code, Sections 952, 960 and 963 - Conspiracy to Import Methamphetamine; Maximum penalty: Life Imprisonment
INVESTIGATING AGENCIESHomeland Security Investigations
Customs & Border Protection*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Camp Pendleton Marine Captain Sentenced to Prison for Multi-Year Housing and VA Fraud SchemesRead the Press Release
Former U.S. Marine Captain Shawn A. Joyce was sentenced in federal court today to four months in prison followed by a year of home confinement for submitting tens of thousands of dollars in false lodging receipts to the Marine Corps and the Department of Veterans Affairs from 2009 to 2011. At the time of the offenses Joyce was on active-duty and stationed at Marine Corps Base Camp Pendleton.
U.S. District Judge John A. Houston also ordered Joyce to pay over $90,000 in restitution.
Joyce pleaded guilty on August 21, 2013, to two counts of wire fraud. As detailed in his plea agreement, Joyce had initially been discharged from active duty in October 2008, entered the Marine Corps reserves, and thereafter sought and obtained orders placing him back on active duty at Camp Pendleton. Under certain circumstances, reservists who are called to active duty become eligible for a housing reimbursement benefit during the term of their active duty, in addition to the basic allowance for housing that they receive.
Joyce exploited this housing reimbursement benefit by falsely claiming reimbursement for rent that he never paid. Specifically, in 2009 and 2010, Joyce falsely claimed to be paying rent up to $4,030 per month for an address in Solana Beach. In 2011, Joyce falsely claimed to be paying rent of $3,700 per month for an address in Fountain Valley.
In order to conceal and disguise the fraud, Joyce submitted false rental receipts to the Marine Corps and created a fake email address in the name of his former landlord at the Solana Beach address. This email address was then used without his former landlord’s knowledge or consent to facilitate the fraud.
In his plea agreement, Joyce also admitted to devising a separate scheme to defraud the Department of Veterans Affairs of tens of thousands of dollars. Under federal law, a service member receiving VA disability benefits is not entitled to simultaneously receive active duty compensation. To avoid this type of “double payment,” service members who receive VA disability benefits are required to inform the VA when they are placed on active duty.
Despite this regulation, Joyce failed to advise the VA and continued to receive VA disability benefits to which he was not entitled. Compounding the loss, Joyce contacted the VA from time to time trying to increase the amount of his improper disability payments.
Joyce pled guilty to two counts of wire fraud and acknowledged defrauding the Defense Department of $48,740 (count one) and the VA of $41,862 (count two). In his plea agreement, Joyce also agreed to pay restitution in the full amount of the losses.
This morning, Judge Houston ordered Joyce to pay those amounts back to the Defense Department and the VA as part of the sentence.
U.S. Attorney Duffy stated, “We will vigorously investigate and prosecute those who try to defraud this country’s Armed Forces or to cheat the Department of Veterans Affairs.”
Special Agent in Charge Douglas J. Carver, VA Office of Inspector General Western Field Office in Los Angeles, said: “The Department of Veterans Affairs depends on the honesty of claims filed by our veterans. Cases like this are thoroughly investigated by the VA OIG to reclaim the VA’s limited resources to insure funds are properly paid to entitled veterans.”
DEFENDANTShawn A. Joyce
Age: 34 Encinitas, California INVESTIGATING AGENCIESDepartment of Veterans Affairs, Office of Inspector General
Naval Criminal Investigative Service*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Prison Sentences and over $500,000 in Fines for Contractors Who Bribed the “Godfather” of Camp PendletonRead the Press Release
The presidents of two government contracting companies, as well as the companies themselves, were sentenced today for bribing the so-called “Godfather” of Camp Pendleton in exchange for millions of dollars in construction and service contracts at Camp Pendleton and other federal facilities.
At today’s hearing, U.S. District Judge Anthony J. Battaglia sentenced Hugo Hernandez Alonso, president of Hugo Alonso, Inc. (HAI), to one year in prison, three years of supervised release and a fine of almost $127,000. His company was sentenced to five years of probation and the same fine, which could be offset by payment of Alonso’s individual fine.
Bayani Yabut Abueg, Jr., president of MBR Associates, Inc. (MBRA), was sentenced to six months in prison, three years supervised release, $105,025 in restitution to the IRS and a fine of $366,140. His company was sentenced to five years of probation plus a $375,000 fine, which could be offset by payment of Abueg’s individual fine.
The judge ordered both men, who are free on bond, to self-surrender by January 2, 2015.
Alonso, Abueg, their respective companies, and Natividad Cervantes, who was known as the “Godfather” of Camp Pendleton, all pleaded guilty in January, each admitting their parts in the bribery-kickback scheme. Cervantes is scheduled to be sentenced by Judge Battaglia on July 24, 2014.
According to Alonso’s plea agreement, the bribes were made in connection with the awarding of at least six government construction and service contracts from 2008 to 2011.
In addition, Alonso, Abueg and their respective companies pleaded guilty to soliciting and accepting kickbacks from subcontractors in relation to government contracts awarded to Alonso and Abueg’s companies (some of which were steered to them by Cervantes).
The defendants admitted that they solicited and accepted the kickbacks from various subcontractors in exchange for favorable treatment in connection with future subcontracts. Abueg also admitted filing a false federal income tax return for 2010 that failed to report over $268,000 in illegal kickbacks.
Bribery at Camp Pendleton
When he entered his guilty plea, Cervantes admitted using his position at Camp Pendleton to solicit bribes from Alonso and Abueg’s construction companies seeking to do business on the base. Cervantes made it clear that since at least as early as September 2008, he used his position supervising construction and service contracts to seek bribes from Alonso and Abueg, on behalf of either HAI or MBRA.
In return for awarding HAI and MBRA contracts, Cervantes received cash payments from Alonso and Abueg and extensive free construction work on his personal condominium.
As part of his plea agreement, Cervantes admitted that in approximately 2008, he agreed to accept a bribe of $25,000 to assist Alonso and HAI in obtaining a $3.5 million government contract to install flooring at Camp Pendleton.
In arranging for a bribe payment, Cervantes, through a third-party conduit, requested that Alonso “have the 25 package” (code for the $25,000 bribe) available on September 5, 2008. On that same day, Alonso provided the $25,000 to the third party conduit for delivery to Cervantes. Cervantes and Alonso admitted that Alonso paid Cervantes a total of at least $119,000 in bribes between 2008 and 2011. Abueg admitted delivering $20,000 of these bribes to Cervantes, at the direction of Alonso. Alonso’s company, HAI, also entered a guilty plea regarding the paying of bribes to Cervantes.
The bribes to Cervantes were not limited to just HAI. Both Cervantes and Abueg admitted to exchanging a bribe in 2011 related to the awarding of a $3 million contract at Camp Pendleton to Abueg’s company, MBRA. Further, Cervantes admitted that on March 26, 2013, he met with a cooperating witness, who agreed to pay Cervantes a $40,000 bribe in exchange for assistance in obtaining a new $4 million contract at Camp Pendleton. The bribe was to be structured over a number of payments. The first payment was scheduled for March 28, 2013, with the balance of the bribe to be paid after the contract was awarded.
On March 28, 2013, the cooperating witness met with Cervantes at a local business on Miramar Road in San Diego, California, to make the first payment that was discussed earlier in the week. During this meeting, Cervantes discussed, among other things, the payment schedule and the source of funds for the bribe payments. At the end of the meeting, the cooperating witness handed Cervantes an envelope containing $10,000 cash. At that point, FBI agents arrested Cervantes.
Kickbacks Related to Government Contracts and Subcontracts
In addition to the bribery scheme, Alonso and Abueg engaged in a vast scheme to solicit kickbacks from subcontractors in exchange for favorable treatment in the awarding of subcontracts on various government contracts awarded to HAI and MBRA. Some of these government contracts were the same contracts at Camp Pendleton improperly awarded to HAI and MBRA with Cervantes’ help in exchange for bribes.
Abueg, as a representative of HAI and then MBRA, admitted that between 2008 and 2011, he solicited, received, and accepted over $539,000 kickbacks from various subcontractors. The kickbacks typically consisted of cash given to Abueg or to Abueg’s son, and checks issued to Abueg, his son, or his daughter, all in an attempt to conceal the nature of the kickbacks. Other kickbacks to Abueg consisted of subcontractors performing discounted work at the personal residences of Abueg’s wife, relatives, and associates, including Cervantes. For some of the kickbacks, Abueg requested that the subcontractors inflate their original estimate for certain work associated with the government contract. The inflated amount used for the kickback was then improperly included in corporate books and records as a legitimate business expense.
Separately, Alonso, as representative of HAI, admitted that in 2009, he accepted a kickback in the form of discounted remodeling of his Chula Vista residence by a subcontractor. Abueg’s and Alonso’s companies, MBRA and HAI, respectively, also entered guilty pleas regarding the solicitation and acceptance of kickbacks.
“We are not going to allow criminals to turn the contracting system into their own little fiefdoms,” said U.S. Attorney Laura Duffy. “The extreme home makeover party is over for these defendants, who will no longer be ordering up new kitchens and baths for relatives at taxpayer expense.”
FBI Special Agent in Charge Daphne Hearn commented, “Members of our community expect government employees to act ethically and honestly. When even one person dishonors that trust, it rips away the professional dignity that others government servants have spent a lifetime building. At a time when our nation’s military must do more with fewer resources, the actions of the defendants undermine our country’s best interests for their own financial gains.”
“It’s all about playing by the rules—you earn an honest dollar and you report it on your tax return. Failure to do so will land you in prison,” said Erick Martinez, Special Agent in Charge of IRS Criminal Investigation. “IRS Criminal Investigation is proud to work with our law enforcement partners by lending its financial expertise in any investigation involving the improper awarding of government contracts.”
“The Defense Criminal Investigative Service works closely with its law enforcement partners to bring to justice those individuals who seek to illegally enrich themselves at the expense of U.S. taxpayers,” said Chris Hendrickson, Special Agent in Charge of the Western Field Office. “While the vast majority of DoD contractors exercise lawful business practices and engage in fair competition, a few are driven by greed to break the law. Those who do will be caught and punished. The American taxpayer will accept nothing less.”
According to David A. House, Special Agent in Charge, Pacific Rim Regional Office of Investigations General Services Administration, Office of Inspector General: “This investigation demonstrates GSA OIG’s commitment to ensuring the integrity of the procurement process, especially when dealing with public buildings. Bribes and kickbacks are an affront to every taxpayer; we are dedicated to investigating these allegations thoroughly.”
“Hugo Alonso and Bayani Abueg instigated a bribery and kickback scheme that defrauded our government and American taxpayers for personal gain,” said Inspector General Peggy E. Gustafson. “Today’s sentencing demonstrates the SBA OIG’s resolve to bring those who commit fraud in SBA’s set-aside contracting programs and erode the public’s trust in government to justice. I want to thank the U.S. Attorney’s Office for its dedicated leadership and professionalism in pursuit of justice served today.”
The public is encouraged to report possible public corruption criminal activity by calling the FBI’s public corruption/border corruption hotline at (877) NO-BRIBE or (877) 662-7423, or by calling the Department of Defense’s hotline at (800) 424-9098 or emailing [email protected].
DEFENDANT Case Number: 14cr0120-AJBHugo Hernandez Alonso
Age: 50 City: Chula Vista, CA Case Number: 14cr0144-AJBBayani Yabut Abueg, Jr.
Age: 51 San Diego, CACORPORATE DEFENDANTS
Case Number: 14cr0120-AJBHugo Alonso, Inc.
Chula Vista, CA
Case Number: 14cr0144-AJBMBR Associates, Inc.
National City, CA
CHARGESTitle 18, United States Code, Section 371 – Conspiracy to commit bribery of public official
Maximum penalties for individual defendants: 5 years’ imprisonment, $250,000 fine, or twice the gross amount of defendant’s pecuniary gain from the offense
(Defendants Alonso and Hugo Alonso, Inc.)Title 41, United States Code, Sections 8701, 8702, and 8707 – Anti-Kickback Act Violation
Maximum penalties for individual defendants: 10 years’ imprisonment, $250,000 fine, or twice the gross amount of defendant’s pecuniary gain from the offense
(Defendants Alonso, Hugo Alonso, Inc., Abueg, and MBR Associates, Inc.)Title 26 United States Code, Section 7206(1) – Filing a False Tax Return
INVESTIGATING AGENCY
Maximum penalties: 3 years imprisonment, $250,000 fine, or twice the gross amount of the tax loss from the offense
(Defendant Abueg only)Federal Bureau of Investigation
Naval Criminal Investigative Service
Internal Revenue Service, Criminal Investigation
Department of Defense Criminal Investigative Service
General Services Administration, Office of Inspector General
Small Business Administration, Office of Inspector General*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Imperial Valley RV Storage Company Charged with Illegally Disposing over A Million Gallons of Raw SewageRead the Press Release
SAN DIEGO – United States Attorney Laura E. Duffy announced that Glamis Dunes Storage Inc. and its owner, Michael Mamelli, Sr. were arraigned today on charges that they injected and disposed of potentially millions of gallons of sewage underground at the Glamis Dunes Storage site, in violation of the Safe Drinking Water Act.
According to the indictment, in August of 2007, Glamis Dunes Storage obtained a conditional use permit from Imperial County to install and operate a 20,000 gallon holding tank for RV waste (including sewage and grey water) at the facility. At that time, Glamis Dunes Storage represented that the wastewater would be pumped out by a licensed septage hauler and disposed of at the Holtville wastewater treatment plant, and estimated that at full occupancy, they would dispose of approximately 1.25 million gallons of RV sewage and grey water at a wastewater treatment plant per year.
The indictment alleges that on December 16, 2009, a Cease and Desist Order was issued to Michael Mamelli of Glamis Dunes Storage by the Imperial County Department of Environmental Health Services, after it was discovered that Glamis Dunes Storage and Mamelli were illegally disposing of sewage from the RV holding tank by pumping out the sewage and discharging it into an underground septic tank on the site. The Cease and Desist Order required them to immediately cease the discharge of sewage to the underground septic tank, remove the underground septic tank and to retain the services of a registered hauler to pump out the RV holding tank and provide evidence of disposal at a wastewater treatment plant.
The indictment further alleges that between February 16, 2010, and March 12, 2010, the defendants had a contractor build a leach field in the rear of the property, place a pump in the RV holding tank, and connect a pipe directly from the RV holding tank out to the leach field, concealing the power connection for the pump under gravel near the RV holding tank. Thereafter, it is alleged that defendant Mamelli and other employees of Glamis Dunes Storage illegally disposed of the sewage in the RV holding tank by activating the pump and discharging the sewage through the underground leach field.
Between August and October of 2012, the defendants had a contractor add a new pump and two 2,500-gallon septic tanks in series to the pipe connecting the RV holding tank to the leach field, and continued to illegally dispose of the sewage in the RV holding tank by discharging the sewage through the underground septic tanks and leach field without a permit or other authorization from the EPA.
The Safe Drinking Water Act, Section 300h-2(b) of Title 42 of the United States Code, prohibits the willful violation of any requirement of an applicable underground injection program. The underground injection program applicable to Class V injection wells in the State of California is the national underground injection control program, which is administered by the Environmental Protection Agency.
Under the federal regulations, injection wells are regulated according to the classification that the well is given. Class V injection wells include septic system wells used to inject the waste or effluent from a multiple dwelling, business establishment, community or regional business establishment septic tank. The regulations prohibit any underground injection of fluids, except into a well permitted or otherwise authorized under this program. The construction of any well required to have a permit is prohibited until the permit has been issued.
The indictment also seeks criminal forfeiture of the sum of $125,000, alleged to be the proceeds of the offense.
Michael Mamelli and Glamis Durnes Storage, Inc. are scheduled to appear before U.S. District Court Judge William Q. Hayes on August 8, 2014, at 2:00 p.m. for a hearing on all motions.
DEFENDANT Case No.: 14-CR-1766-WQH Glamis Dunes Storgage, Inc. Incorporated: 2006 Glamis, California Michael J. Mamelli, Sr. Age: 63 Newport Beach, California CHARGESUnlawful Injection of Pollutants, a felony, in violation of Title 42, United States Code, Section 300h-2(b)(2); Maximum Penalty: Three years in custody, the greater of a $10,000 fine or twice the illegal gain or loss and a $100 penalty assessment
INVESTIGATING AGENCYEnvironmental Protection Agency, Criminal Investigations Division
Bureau of Land Management*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Owner of Florida Stock Lending Firm Sentenced to 10 Years in Prison for His Part in $100 Million Fraud SchemeRead the Press Release
Jeffrey R. Spanier, former owner of Amerifund Capital Finance, LLC located in Boca Raton, Florida, was sentenced today by U.S. District Judge Roger T. Benitez to serve 10 years in federal prison and pay almost $20.7 million in restitution for his role in a $100 million stock loan fraud scheme that bilked victims all over the world.
Spanier was also ordered to forfeit several million dollars in assets that were the proceeds of the fraud, including cash and securities held in brokerage accounts, and a luxury home in Florida. The case was investigated by the FBI.
Spanier was indicted on April 13, 2012, along with Douglas McClain Jr. and James Miceli. All were charged with multiple counts of conspiracy, mail fraud, wire fraud, securities fraud, and money laundering. On May 31, 2013, a federal jury returned guilty verdicts on all counts in the indictment against McClain. Miceli committed suicide shortly before that trial. On December 20, 2013, a separate jury found Spanier guilty on multiple counts of conspiracy, mail fraud, wire fraud, and securities fraud.
According to trial testimony, Spanier, through his entity Amerifund Capital Finance, partnered with McClain, Miceli, and Argyll Equities, and together with his partners fraudulently induced corporate executives to pledge millions of dollars’ worth of stock the executives held in publicly traded companies as collateral for loans by falsely representing that the borrowers' stock would not be sold unless there was a default on the loan.
The evidence presented at trial showed that Argyll, the purported lender, had no cash to lend and instead survived for years by immediately selling borrowers stock on the day after the stock was pledged as collateral. The proceeds from the sale of the stock were used to fund the loans creating the appearance that Argyll had plenty of cash to lend.
The evidence also showed that Spanier, McClain, and others fraudulently induced the borrowers to make monthly interest payments on their loans by falsely representing that their collateral was safe and would be returned as long as they did not default. At the end of the loan terms, the borrowers paid off their loans. Instead of returning the stock to the borrowers, Spanier and McClain kept the money and provided false excuses about why they could not return their stock.
The evidence further showed that the unauthorized sales of stock held by insiders of publicly traded companies caused the stock price to plummet which defrauded purchasers of these publicly traded securities who purchased stock through public stock exchanges.
During the trial, the government offered testimony from several executives, many of whom had faithfully paid off their loans over a period of years, completely unaware that their stocks had been sold. All testified about the frustration, emotional stress and grief they experienced when they unsuccessfully attempted to recover their stock once the loan balance was paid, and ultimately realized they were the victims of a massive fraud. Victims were located in the United States, Canada, Mexico, Panama, China, England, and Belgium.
The jury rejected defense claims that Spanier was merely a broker who was unaware of the fraud scheme.
U.S. Attorney Laura Duffy praised the efforts of the FBI for its investigation of the case and described today’s sentence as a fitting end to a brazen deception. “Jeffrey Spanier not only stole tens of millions of dollars from his own clients, but he victimized the public market when his actions caused stock prices to plummet. This significant sentence means Spanier’s days driving a Bentley and living in a gated country club community at the expense of others will soon be a distant memory.”
FBI Special Agent in Charge, Daphne Hearn, commented, “Today's sentencing ensures that Mr. Spanier is being held accountable for his illegal and unscrupulous actions. The FBI is committed to pursuing those who illegally line their pockets at the expense of the public.”
DEFENDANT Case Number: 12CR0918BEN Jeffrey R. Spanier Age: 49 City: Delray Beach, Florida CHARGESCount 1: Conspiracy (Title 18, United States Code, Section 371):
INVESTIGATING AGENCY
Counts 2-7 Mail Fraud (Title 18, United States Code, Section 1341
Counts 8-18 Wire Fraud (Title 18, United States Code, Section 1343)
Count 19 Securities Fraud (Title 15, United States Code, Sections 78j(b) and 78ff)Federal Bureau of Investigation
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Doctor and Wife Convicted of Decade-Long Tax FraudRead the Press Release
SAN DIEGO – United States Attorney Laura E. Duffy announced that a federal jury returned guilty verdicts on all counts against Dr. James Francis Murphy and his wife, Denine Christine Murphy, based on their years-long efforts at preventing the IRS from assessing and collecting the hundreds of thousands of dollars of income taxes they owed from the operation of their medical practice in Encinitas, California, and Omaha, Nebraska.
Evidence presented at trial showed that despite earning as much as $1 million a year from their osteopathic medical practice, Dr. and Mrs. Murphy paid almost no federal income taxes for a decade. Instead of accurately declaring their income and paying taxes lawfully owed to the United States, and despite repeated warnings from the IRS, the Murphys filed false income tax returns for the medical practice using a bogus “trust,” filed false personal income tax returns that concealed their true income, and in certain years simply refused to file required tax returns at all.
As presented at trial, when confronted by the IRS and notified that they owed substantial sums in taxes, the Murphys engaged in a variety of schemes to thwart the United States’ attempts to correctly assess and collect these taxes. These schemes included: (1) falsely claiming that they were not citizens of the United States; (2) frivolously claiming that the federal tax laws did not apply to them; (3) fraudulently presenting fictitious documents such as “Private Offset Discharge and Indemnity Bonds” and “Bonded Promissory Notes,” purportedly worth hundreds of millions of dollars, as payment on their tax obligations; and (4) fraudulently claiming that the hundreds of thousands of dollars they paid to credit card companies, utilities and other vendors were actually withholdings of federal income taxes, thereby entitling them to over a million dollars in refunds from the IRS. The defendants even claimed that then-Secretary of the Treasury Henry Paulson was their “fiduciary” and was responsible for paying their taxes.
The defendants were found guilty by a jury after a two-week trial held before U.S. District Judge Anthony J. Battaglia, and were ordered to appear again for sentencing on September 12, 2014.
U.S. Attorney Duffy said she is pleased with the jury’s verdict. “The Murphys have found out that the old adage is true: Nothing is certain but death, taxes and prosecution if you don’t pay your taxes.”
Erick Martinez, Special Agent in Charge of IRS Criminal Investigation’s Los Angeles Field Office commented, “James and Christine Murphy’s use of a sham trust served no other purpose than to hide the income they earned from the medical practice. Their filing of false tax returns and false claims of payment to the IRS were tax elimination tactics, used to further promote their criminal activities. Today’s jury verdict emphasizes that those who use these elaborate tax schemes run the risk of criminal prosecution.”
DEFENDANT Dr. James Francis Murphy Age: 53 Encinitas, California Denine Christine Murphy Age: 51 Encinitas, California CHARGESCount 1: Corrupt interference with the administration of the internal revenue laws, in violation of 26 U.S.C. § 7212(a). Both defendants. Maximum penalties – 3 years’ custody, $250,000 fine.
Counts 2-5: Presenting fictitious financial obligations, in violation of 18 U.S.C. § 514. Defendant Dr. James Francis Murphy. Maximum penalties – 10 years’ custody and $250,000 fine (per count).
Counts 6-8: False claims to the United States, in violation of 18 U.S.C. § 287. Both defendants. Maximum penalties – 5 years’ custody and $250,000 fine (per count),
INVESTIGATING AGENCYInternal Revenue Service, Criminal Investigation
TIGTA (Treasury Inspector General for Tax Administration)
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Cases Involving Sex Trafficking and Exploitation of Children on the Rise; Four Sentenced in One Day in Separate CasesRead the Press Release
SAN DIEGO – Four defendants from unrelated cases were sentenced in federal court today for crimes involving the sex trafficking and sexual exploitation of children, underscoring a continuing trend as prosecutions in this category continue to rise.
The number of defendants prosecuted for sex crimes that victimize and exploit children in the Southern District of California has increased 85 percent in the last five years, from 61 in 2009 to 113 in 2013. The increase is even more dramatic compared to 10 years ago, when only a few cases were logged.
The number of prosecutions involving sex crimes that victimize and exploit children in the Southern District of California has increased 65 percent in the last five years, from 49 in 2009 to 81 in 2013. And those numbers do not reflect that several recent sex trafficking cases have dozens of defendants each.
“The statistics show that one of our highest priorities is protecting children from predators who commit these heinous crimes against our community’s most vulnerable members,” said U.S. Attorney Laura Duffy.
The prosecutions are part of Project Safe Childhood, a nationwide initiative launched by the U.S. Department of Justice in 2006 to combat the growing epidemic of child sexual exploitation and abuse via the internet. The program’s primary goal is to locate, apprehend and prosecute individuals who exploit children through pornography and sex trafficking as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
DEFENDANT Tyson Lee Channell Age: 29 Case Number: 13cr1372-AJB Sentenced by U.S. District Judge Anthony J. Battaglia to 10 years in prison, followed by 10 years of supervised release, for acting as a pimp to a 14-year-old girl, at one point taking her to Las Vegas to work as a prostitute. Channel pleaded guilty in April of 2013 to transportation of a minor to engage in prostitution. Jamal Leland Landrum Age: 26 Case Number: 13cr1227-AJB Sentenced to 10 years in prison by U.S. District Judge Anthony J. Battaglia for sex trafficking of a 15-year-old girl in El Cajon. Landrum pleaded guilty in June of 2013 to sex trafficking of a minor. James Michael DiSalvo Age: 55 Case Number: 13cr4165-GPC Sentenced to nine years by U.S. District Judge Gonzalo P. Curiel. DiSalvo pleaded guilty in February 2014 to distribution of child pornography. Christopher Wissmath Age: 36 Case Number: 13cr3159-JM Sentenced by U.S. District Judge Jeffrey T. Miller to 30 months in prison and seven years of supervised release. Wissmath pleaded guilty in October of 2013 to transmitting information about a minor with intent to entice the minor. A fifth sentencing, that of Martell Davis, was scheduled to take place today but was postponed. Davis, who was wearing a T-shirt that said, “I Make Pimpin’ Look Easy” when he was arrested, pleaded guilty in September of 2013 to transportation of a minor to engage in prostitution, admitting he drove a 17-year-old girl to Yuma, Arizona, to engage in commercial sex acts. Case No. 13cr3149-JLS. INVESTIGATING AGENCYU.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI)
Federal Bureau of Investigation
San Diego Police Department
El Cajon Police Department*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Defendant Extradited to Face Charges in Border Patrol Agent Brian Terry Murder CaseRead the Press Release
SAN DIEGO, CA – Lionel Portillo-Meza, who is charged with the first degree murder of United States Border Patrol Agent Brian Terry, was extradited to the United States from Mexico on June 17, 2014, announced Attorney General Eric Holder and U.S. Attorney Laura E. Duffy of the Southern District of California.
Agent Terry was fatally shot on Dec. 14, 2010, when he and other Border Patrol agents encountered Portillo-Meza and four others in a rural area north of Nogales, Arizona.
“This marks a major step forward in our aggressive pursuit of those responsible for the murder of Agent Brian Terry, who made the ultimate service while serving his country,” said Attorney General Eric Holder. “By securing the extradition of this suspect, the Department of Justice has ensured that he will stand trial and face justice here in the United States. And we will never waver in our commitment to ensure that those who commit acts of violence against our best and bravest can be caught and held accountable – to the fullest extent of the law.”
“This development brings us one step closer to achieving justice for a beloved agent who paid the highest price in protecting this country,” U.S. Attorney Duffy said. “While there is nothing that can be done to bring Agent Terry home again, we hope this news will bring some level of comfort to the family knowing that our team of prosecutors and investigators within the Department of Justice will not stop until the case is resolved.”
Portillo-Meza was arraigned in federal district court in Tucson, Arizona, on June 18, 2014. He entered a not-guilty plea and was detained without bond. The indictment charges Portillo-Meza and others with first degree murder, second degree murder, conspiracy to interfere with commerce by robbery, attempted interference with commerce by robbery, use and carrying a firearm during a crime of violence and assault on a federal officer. In addition to the murder of Agent Terry, the indictment alleges that the defendants assaulted Border Patrol Agents William Castano, Gabriel Fragoza, and Timothy Keller, who were with Agent Terry during the firefight.
On July 20, 2012, in order to seek the public’s assistance, Department of Justice officials announced a reward of up to $1 million for information leading to the arrest of four fugitives: Jesus Rosario Favela-Astorga, Ivan Soto-Barraza, Heraclio Osorio-Arellanes, and Portillo-Meza. Portillo-Meza was captured in Mexico in September 2012. Soto-Barraza was captured in Mexico in September 2013.
A fifth defendant, Manuel Osorio-Arellanes, pleaded guilty to first degree murder and was sentenced to 30 years in prison in February 2014. A sixth defendant, Rito Osorio-Arellanes, who was in custody at the time of Agent Terry’s murder, pleaded guilty to conspiracy to interfere with commerce by robbery and was sentenced to eight years in prison in January 2013.
This case is being prosecuted in federal court in Tucson by attorneys from the Southern District of California, Special Attorneys Todd W. Robinson, David D. Leshner, and Fred Sheppard. The U.S. Attorney’s Office for the District of Arizona is recused. This case is being investigated by the FBI. The Justice Department’s Office of International Affairs provided assistance with the extradition.
The public is reminded that an indictment is a formal charging document and defendants are presumed innocent until the government meets its burden in court of proving guilt beyond a reasonable doubt.
Leader of Armenian Alien Smuggling Ring Arraigned on Federal ChargesRead the Press Release
The alleged leader of an Armenian alien smuggling ring was arraigned on an indictment unsealed today in federal court. Grigor Chatlayan, 44, is charged with coordinating and directing an international alien smuggling organization that brought undocumented Armenian nationals illegally into the United States in exchange for thousands of dollars. Chatalyan, of North Hollywood, California, was arrested on Saturday as he applied for entry into the United States from Mexico at the San Ysidro, California Port of Entry. He was arraigned in federal court this morning before U.S. Magistrate Judge David H. Bartick.
The indictment makes it clear that Chatalyan led an international smuggling enterprise whereby Armenian nationals were smuggled from Armenia to the United States by way of Moscow, Russia and Cancun, Mexico. In exchange, Armenian nationals were made to pay up to $18,000 each to be brought into the United States. Chatalyan’s smuggling group arranged for the Armenian nationals to fly into Moscow, Russia, where they were given fraudulent Russian passport to travel to Cancun, Mexico. Once in Mexico, the smuggling organization would transport the Armenian nationals to Tijuana, Mexico. Chatalyan and his co-conspirators would then procure valid U.S. legal permanent resident or passport cards from within the United States and attempt to use those documents to pass imposter Armenian nationals through the San Ysidro, California Port of Entry.
According to the indictment, Chatalyan coordinated these activities with several co-conspirators, including two others charged in the indictment with Chatalyan: Varduhi Avagyan, 42, and Meri Avetsiyan, 40, both of Glendale, California. Avagyan and Avetisyan were arrested on November, 1, 2013 attempting to smuggle two Armenian nationals into the country.
All three are charged with conspiracy and bringing in illegal aliens for financial gain. In addition, Chatalyan is charged with aiding and abetting aggravated identity theft. Chatalyan and his co-conspirators face a maximum penalty of up to 15 years’ imprisonment and a $250,000 fine. If convicted on all charges, Chatalyan could be sentenced to a mandatory minimum of seven years in custody.
DEFENDANT Grigor Chatalyan Age: 44 North Hollywood, California Varduhi Avagyan Age: 42 Glendale, California Meri Avetsiyan Age: 40 Glendale, California CHARGESConspiracy, 18 U.S.C. § 371
Bringing in Illegal Aliens for Financial Gain, 8 U.S.C. §1324(a)(2)(B)(ii)
Aiding and Abetting Aggravated Identity Theft, 18 U.S.C. § 1028A and 18 U.S.C. § 2
INVESTIGATING AGENCYU.S. Department of Homeland Security - Homeland Security Investigations
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Ringleader Pleads Guilty to Million Dollar Bank Fraud Conducted in California and Nevada CasinosRead the Press Release
United States Attorney Laura E. Duffy announced today that Ara Keshishyan pleaded guilty to leading and organizing a 14-defendant conspiracy to steal more than $1 million from Citibank using cash advance kiosks in a dozen casinos from Southern California to Las Vegas.
Keshishyan presided over a conspiracy to exploit a gap in Citibank’s electronic transaction security protocols in order to overdraw more than 20 Citibank accounts by tens of thousands of dollars each. The scheme worked as follows: Keshishyan recruited conspirators to open Citibank checking accounts that Keshishyan would fund with “seed” money that would form the basis for future fraudulent withdrawals. Keshishyan and his various conspirators then traveled to casinos in Southern California and Nevada, including the Morongo, Pechanga, San Manuel, Agua Caliente, Chukchansi, and Spa Resort casinos in California; the Tropicana, Wynn, Bicycle, and Whiskey Pete’s casinos in Las Vegas, Nevada; and Harrah’s in Laughlin, Nevada. Once inside the casino, Keshishyan instructed the conspirator how to conduct identical, fraudulent withdrawals at cash advance kiosks within a short time window in order to circumvent Citibank security protocols. Keshishyan’s technique exploited a glitch that allowed his conspirators to withdraw several times the amount of seed money deposited into the accounts. In one case, Keshishyan and one of the co-conspirators were able to withdraw 10 times the amount of money deposited into one of the accounts opened in furtherance of the fraud. The conspirators were careful to keep their deposits and withdrawals under $10,000 (typically between $9,000 and $10,000) in order to avoid federal transaction reporting requirements.
As part of his guilty plea today, Keshishyan admitted that, using these methods, he and his co-conspirators stole more than $1 million from Citibank between June 2009 and January 2010. Keshishyan further admitted that, as the organizer of the conspiracy, he personally took a cut of every fraudulent withdrawal that he directed.
United States Attorney Duffy said, “This is an example of a class of cyber-fraud that burdens our financial system and results in a higher cost of doing business for American consumers. Along with our agency partners, my office is committed to detecting and prosecuting these schemes in whatever form they take.”
FBI Special Agent in Charge Daphne Hearn commented, “While advancements in technology have created a world of accessibility to users and a convenience for consumers, they have also left room for cyber criminals to exploit even the smallest of loopholes. The FBI will continue to use our investigative expertise in cyber and financial crimes to pursue those who illegally abuse our financial system for their own personal gain.”
Keshishyan is the 13th defendant to plead guilty in the case. The lone remaining charged defendant is a fugitive. Several of Keshishyan’s codefendants have already been sentenced to prison time and have been ordered to pay restitution for their roles in the scheme. Keshishyan is scheduled to be sentenced by Judge Janis L. Sammartino on September 12, 2014 at 9:00 a.m. His guilty plea is subject to acceptance by Judge Sammartino.
DEFENDANT Case Number: Ara Keshishyan Age 31 Filmore, CA - Sentencing hearing set for September 12, 2014, before Judge Sammartino. Ara Harutyunyan Age 32 Glendale, CA- Sentence: imprisonment for 12 months and one day; supervised release for three years; restitution of $307,161
Artur Harutyunyan Age 26 Glendale, CA- Sentence: imprisonment for 12 months and one day; supervised release for three years; restitution of $307,161
Vahe Asatrian Age 31 North Hollywood, CA- Sentence: imprisonment for 12 months; supervised release for three years; restitution of $307,161
Sarkis Mooshidian Age 39 Burbank, CA- Sentence: probation for five years; restitution of $66,500
Levon Karamyan Age 60 FUGITIVEThe charges and allegations contained in the Indictment are merely accusations, and this defendant is considered innocent unless and until proven guilty.
Migran Yamalyan Age 32 Winnetka, CA- Sentencing hearing set for June 20, 2014, before Judge Sammartino
Seryozha Harutyunyan Age 61 Glendale, CA- Sentence: imprisonment for six months; supervised release for three years; restitution of $106,370
Lianna Avetisyan Age 26 North Hollywood, CA- Sentencing hearing set for August 22, 2014, before Judge Sammartino
Ashot Oganisyan Age 32 Mission Hills, CA- Sentencing hearing set for June 27, 2014, before Judge Sammartino.
Ovsep Sarafyan Age 35 North Hollywood, CA- Sentence: imprisonment for one month; home detention for seven months; supervised release for three years; restitution of $85,924
Daniel J. Thomas Age 58 Huntington Beach, CA- Sentence: probation for five years; restitution of $65,260
Hilda Hakverdyan Age 55 Glendale, CA- Sentence: probation for five years; restitution of $105,960
Asatur Asatryan Age 35 Pasadena, CA- Sentencing hearing set for August 15, 2014, before Judge Sammartino
CHARGESConspiracy to Commit Bank Fraud – Title 18, U.S.C., Section 371 (all defendants)
INVESTIGATING AGENCY
Maximum penalty: five years’ imprisonment and $250,000 fineFederal Bureau of Investigation
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Child Pornographer Sentenced to 10 Years in PrisonRead the Press Release
A Spring Valley college student was sentenced by U.S. District Judge Marilyn Huff today to 10 years in prison in connection with child pornography charges.
Anthony Michael Gonzales, 23, pleaded guilty in December 2013 to a single count of Receipt of Images of Minors Engaged in Sexually Explicit Conduct. He was also sentenced to five years of supervised release and ordered to pay $5,000 in restitution to a victim and register as a sex offender upon release from prison.
According to a complaint, from October 2011 through March of 2012, agents with Homeland Security Investigations identified an Internet Protocol address on a peer-to-peer file sharing program that was trading in files suspected of containing child pornography. The agents tracked the Internet Protocol address to Gonzales’ residence, which was located in Spring Valley, California.
In May 2012, the agents executed a search warrant on the residence and seized Gonzales’ laptop computer, which had the user name “Metatron.” A forensic examination uncovered approximately 170 videos and 22,300 images suspected of containing child pornography. On review of a sampling of at least 883 of the thousands of images, agents determined six of those images included bondage of children.
There also were images involving children who appeared to be under two years old. One DVD had approximately 100 images of child pornography. At the time of his subsequent arrest, Gonzales was a 23-year-old student who possessed a thumb drive that also contain additional images of child pornography.
DEFENDANT Case Number: 13CR3108-H Anthony Michael Gonzales Spring Valley, CA CHARGESCount 4 – Title 18, United States Code, Section 2252(a)(2) Receipt of Images of Minors Engaged in Sexually Explicit Conduct. Maximum penalties: Five year mandatory minimum, 20 year maximum, restitution, $250,000 fine
INVESTIGATING AGENCYU.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI)
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Bank Manager Admits Stealing Tens of Thousands of Dollars from J.P. Morgan ChaseRead the Press Release
San Diego bank manager Mark Masiglat pleaded guilty in federal court today, admitting that he secretly siphoned $36,000 from J.P. Morgan Chase’s general ledger through dozens of unauthorized cash withdrawals.
In entering his plea, Masiglat acknowledged that he embezzled the funds between January 2011 and August 2012, while employed as the Assistant Branch Manager at a J.P. Morgan Chase branch in Point Loma. The bank’s deposits are insured by the Federal Deposit Insurance Corporation.
“Corrupt bankers cannot be allowed to treat federally-insured accounts as their own personal piggy bank,” said U.S. Attorney Laura Duffy. “My office will not tolerate abuse of the public’s trust in our financial institutions. I want to thank the FBI for its commitment to ensuring the integrity of our local banks.”
Masiglat is scheduled to be sentenced by Judge Battaglia on August 22, 2014 at 9:00 a.m.
DEFENDANT Mark Masiglat CHARGESEmbezzlement by a Bank Employee – Title 18, U.S.C., Section 656
INVESTIGATING AGENCY
Maximum penalty: 30 years’ imprisonment and $1 million fineFederal Bureau of Investigation
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Online Merchant Convicted for Trafficking in Endangered FishRead the Press Release
United States Attorney Laura E. Duffy announced today that Michael Loo was sentenced to 3 years of probation and a fine of $1,000, following his plea of guilty to selling the endangered Asian arowana fish (Scleropages formosus). Loo admitted that after posting an ad on Craigslist, he illegally offered an endangered Asian arowana for sale to an undercover agent for $2,800. This is the second sentencing for the illegal sale of Asian arowanas in this district in the last two weeks. In a related case, Kiem Tran, the owner of the Fish Warehouse in Westminster, California, was sentenced on May 16, 2014, to a term of two years of probation and a $1,000 fine, following his plea of guilty to Transportation of Merchandise Imported Contrary to Law. In pleading guilty, Tran admitted that he engaged in transactions with Loo involving Asian arowana, knowing that the arowana would be transported between Westminster and San Diego. Tran acknowledged that he was aware that the arowanas involved in the transactions were an endangered species and that they had been brought into the United States illegally.
During the investigation of Loo and Tran, 13 Asian arowana fish were seized by agents of U.S. Fish and Wildlife. The endangered fish were forfeited to the government, and have been kept at SeaWorld and the San Diego Zoo during the pendency of the cases.
The Asian arowana fish is found in the rivers of Southeast Asia. Due to loss of habitat and over-fishing for aquarium collections, the Asian arowana was listed among the most restrictive species in the Convention on International Trade in Endangered Species (CITES) in 1975. The fish, also known as the “bonytongue” or “dragon fish,” can grow to three feet in length and are identified by large metallic scales, double barbels on the jaw, and large pectoral fins which make it look like a dragon in flight. The fish are symbols of prosperity and luck in the Asian culture and are believed to preserve its owner from death by dying itself. The fish is commonly green but the more rare red or golden arowanas are highly prized by collectors, selling for thousands of dollars.
DEFENDANT Case Number: 12CR2245-JM Michael Loo CHARGESUnlawful Sale of Fish, a felony, in violation of Title 16, United States Code, Sections 3372 and 3373
Maximum Penalty: 20 years in custody, a $250,000 fine and a $100 penalty assessment
DEFENDANT Case Number: 14CR396-JM Kiem Tran CHARGESTransportation of Merchandise Imported Contrary to Law, a felony, in violation of Title 18, United States Code, Section 545
INVESTIGATING AGENCY
Maximum Penalty: 5 years in custody, a $20,000 fine and a $100 penalty assessmentU.S. Fish and Wildlife Service
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Tank Cleaning Firm Fined $50,000 for Spilling Toxic Acid Near Elementary SchoolRead the Press Release
A San Diego tank cleaning firm was sentenced yesterday by U.S. District Judge Marilyn L. Huff to pay a $50,000 fine for failing to report an acid spill that occurred at its facility.
Pacific Tank Cleaning (PTC), a family-owned business that employs 85 people on three shifts, is engaged in the business of cleaning industrial tanks and piping, primarily aboard ships. On Monday, March 28, 2011, in the former PTC yard on National Avenue in San Diego, the valve on a 275-gallon plastic container (tote) failed, spilling the contents of the tote onto the ground at the facility. The liquid pooled on the concrete at the facility, and flowed out a hole at the base of the wall. The fluid ran down an alley at the rear of the facility (etching the concrete) and pooled along the curb in front of a nearby elementary school.
Two days later a nearby business reported the spill. The San Diego Fire Department Hazardous Incident Response Team (HIRT) and the San Diego County Department of Environmental Health Service, Hazardous Materials Management Division (DEH) responded to the scene, and closed the affected streets and alley. The responders traced the spill from the school, down the alley to the PTC facility. Samples of the liquid pooled in the street and samples of the soil just outside the PTC facility were found to be extremely acidic, with a pH of less than 1. Measured pH values are typically between 14 (most basic) to 0 (most acidic). Pure water has a pH of about 7.
One of the HIRT responders contacted a PTC vice president at the site. The vice president falsely advised that there were no acids at PTC, only contaminated water. The HIRT responder asked to inspect the facility and observed multiple large totes containing a product called Dynamic Descaler which contains hydrochloric acid. There was no evidence of any spill on the grounds of the PTC facility. Although PTC denied that they were the source of the spill, PTC contacted a clean-up company that afternoon. The clean up company washed and vacuumed the remaining liquid from the street and alley and properly disposed of the vacuumed material, at a cost of $17,000 (which was reimbursed to PTC by their insurance carrier).
Subsequently, the criminal investigation revealed that an employee on the first shift at PTC had been directed by Production Manager Jorge Luquin to use the contents of a 275 gallon tote to clean piping that was in the PTC yard that had come from a Navy ship. On March 28, 2011, the first shift employee discovered that the valve on the tote of used acid had failed, spilling the contents. The first shift employee reported the spill to Luquin, and advised Luquin that he had seen liquid in the alley.
Luquin ordered the PTC employees to clean up the spill on the site. PTC employees rinsed the area and vacuumed the liquid from the yard, placing it in another tote at the facility labeled “oily water” that was later sampled by DEH (and relabeled by health officials as “corrosive”). Although PTC had a Health and Safety Manager, that individual was not aware of the spill until the HIRT response two days later. The acid spill involved well over the reportable quantity of a hazardous substance (100 pounds of a corrosive liquid), but upon discovery of the release, PTC did not report it to the National Response Center, or any other governmental agency, as required by law.
PTC pled guilty in February. In addition to the criminal fine, PTC was placed on probation for three years, assessed a $400 penalty, and also ordered to reimburse DEH $11,238.60 for the costs of responding to the spill.
Pacific Tank Cleaning Production Manager Jorge Luquin pled guilty to the Unlawful Discharge of Pollutants in February of 2014. In pleading guilty, Luquin admitted that although he was aware the tank had leaked, he made no effort to contain the spill outside the facility, which allowed the acid to enter the storm drain system and ultimately the waters of the United States. Luquin is scheduled to be sentenced on June 24, 2014, at 1:30 p.m. before the Honorable Mitchell D. Dembin.
DEFENDANT Case Number: 14CR395-H Pacific Tank Cleaning, Inc Incorporated: 1996 San Diego, CA CHARGESFailure to Report a Release, a felony, in violation of Title 42, United States Code, Sections 9602 and 9603
Maximum Penalty for a corporation: 5 years of probation, a $500,000 fine, $400 special assessment
DEFENDANT Criminal Case No. 14CR394-MDD Jorge Luquin CHARGESUnlawful Discharge of Pollutants, a misdemeanor, in violation of Title 33, United States Code, Sections 1311, 1342 and 1319(c)(1)(A)
INVESTIGATING AGENCY
Maximum Penalty: 1 year in custody, a fine of at least $2500 but not more than $25,000 per day of violation, $25 special assessmentU.S. Environmental Protection Agency, Criminal Investigation Division
Federal Bureau of Investigation
San Diego County Department of Environmental Health Services, Hazardous Materials Management Division*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Lead Defendant Admits Stealing Identities from Elderly Victims in Order to Steal More Than $250,000 in Taxpayer’s Money Federal Authorities Continue to Focus on the Growing Problem of Identity Theft.Read the Press Release
Arman Eritsian pled guilty today to conspiracy to commit wire fraud as part of his conspiracy to defraud the Internal Revenue Service of over $250,000 – by filing false tax returns in the names of stolen identities.
As set forth in his plea agreement, Eritsian admitted stealing personal identity information from innocent victims in order to file false tax returns in their names. These false returns generated hundreds of thousands of dollars in fraudulent tax refunds that should never have been taken from the U.S. Treasury. As part of this scheme, Eritsian and his fellow conspirators directed the IRS to send the ill-gotten refunds to postal addresses and/or bank accounts under their control.
For his part, Eritsian admitted that he stole the identities of people to use on the fraudulent tax returns. Eritsian also informed the Court that he attempted to conceal and disguise his illegal activity by using multiple email addresses to communicate with conspirators, and using debit cards to access the proceeds of the fraudulent refunds. In all, Eritsian admitted filing false tax returns in the names of more than a score of victims. In addition to jail time, Eritsian is required by the terms of his plea to make full restitution to the IRS for the losses caused by his criminal conduct.
Eritsian’s plea is the latest in a series of 22 guilty pleas following the September arrests of over 30 people in “Operation Trillions Trouble” a multi-agency investigation – led by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation Division -- into multiple tax fraud conspiracies, as well as several schemes to defraud various banks. These disparate criminal plans resulted in the bringing of four related indictments charging 58 defendants, 28 of whom are international fugitives.
United States Attorney Laura E. Duffy praised the hard work of the agents from the FBI and IRS on their continued success in these related cases. AToday's guilty plea is yet another example of our office's commitment to investigate and prosecute those who illegally take advantage of others for their own personal gain and at the expense of the American taxpayer.
FBI Special Agent in Charge Daphne Hearn commented, “The FBI will continue to work with our law enforcement partners and provide leadership and expertise when it comes to investigating sophisticated and complex criminal conspiracies. The FBI will aggressively pursue these cases to prevent criminals from lining their own pockets with precious taxpayer's dollars.”
Erick Martinez, Special Agent in Charge of IRS Criminal Investigation, stated, “Our agents investigated and worked together with our law enforcement partners in bringing to light a massive tax fraud scheme. Arman Eritsian’s guilty plea represents another major step forward in bringing this sophisticated network of scammers to justice.”
DEFENDANT Case Number: Arman Eritsian Age: 35 San Diego, CA CHARGESCount 1: Title 18, United States Code, Section 371 B Conspiracy
PROGRESS OF CASES CHARGED AS PART OF
Maximum penalties: 5 years custody; $250,000 fine; 3 years supervised release; mandatory restitution.
OPERATION TRILLIONS TROUBLE
Summary: As of May 22, 2014,
22 of 30 (non-fugitive) defendants have been convicted.13CR3479-BTM B Convictions (Conspiracy to commit wire fraud)
Harout Gevorgyan
Yvonne Mihailescu
Yelena Sklyarova
Yermek Dossymbekov
Vyacheslav Tsoy13CR3480-BTM B Convictions
Arman Eritsian – Conspiracy to commit wire fraud13CR3481-BTM B Convictions (Conspiracy to commit bank fraud – All defendants)
Karen Galstian
Vahag Stepanyan
George Karapetian
Ara Adamyan
Christopher Buckely
Carlos Ferrufino
Akop Galstian
Farbob Golhassani
Paul Gonnelly
Tatiana Kabachinskya
Sedrak Movesyan
Robert Rodriguez
Christopher Ruiz13CR3482-BTM B Convictions (Conspiracy to commit bank fraud – All defendants)
INVESTIGATING AGENCY
Tigran Eritsyan
Konstantin Yugay
Mae Barbara WeissbergerFederal Bureau of Investigation
Internal Revenue Service
Los Angeles Police Department*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Leader of Drug-Trafficking Organization Sentenced to 15 YearsRead the Press Release
United States Attorney Laura E. Duffy announced today that Jesus Manuel Rivera-Villareal, aka “Chuy,” was sentenced to 15 years in prison for his role as a leader in a family-run drug-trafficking organization (DTO) that recruited young women to smuggle controlled substances into the United States.
Rivera-Villareal, who was sentenced by U.S. District Judge M. James Lorenz, pled guilty to conspiracy to import methamphetamine, cocaine, and heroin.
In August 2011, agents with the Department of Homeland Security, Homeland Security Investigations (HSI) in San Diego, California, began investigating the Rivera-Villareal DTO for its involvement in importing large quantities of narcotics into the United States. Using four recruiters, Rivera-Villareal and an associate hired, at least, five young women from the Riverside area to smuggle 27.38 kilograms of cocaine, 6.16 kilograms of pure methamphetamine, and 2.99 kilograms of heroin into the United States. After hiring the women, Rivera-Villareal arranged for another associate to load up the narcotics into secret compartments of various cars during brief trips to Mexicali, Mexico. Once the cars were loaded with narcotics, Rivera-Villareal returned the cars to the women who would then drive them into the United States in exchange for money.
United States Attorney Duffy complimented the efforts of HSI and stated, “This investigation demonstrates the commitment of the U.S. Department of Justice to keep dangerous drugs off the streets of our community by aggressively prosecuting high-level leaders of drug trafficking organizations.”
DEFENDANT Case Number: 13-cr-3920-L Jesus Manuel Rivera-Villareal Age: 32 Corona, CA CHARGESTitle 21 U.S.C. §§ 952, 960, 963 Conspiracy to Import Controlled Substances
Maximum penalties: Mandatory Minimum of 10 years in prison; Maximum of Life in prison; Maximum $10 Million fine; 5 years of supervise release.
INVESTIGATING AGENCYHomeland Security Investigations
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Former Qualcomm Directors Indicted for Insider Trading Derek Cohen and Robert Herman Bought More Than $500,000 in Securities of Atheros Communications, Inc. Just One Day Before Qualcomm Officially Announced Its Acquisition of That CompanyRead the Press Release
San Diego, CA – Two former Qualcomm sales directors have been charged with four counts of insider trading in an indictment unsealed today.
According to the indictment, Derek Montague Cohen and Robert William Herman were both directors of Qualcomm’s North America Sales Department. In addition to their day jobs, they were also part of an informal stock trading group, sharing tips and opinions about the stock market. According to the indictment, while still employed by Qualcomm, Cohen and Herman learned that Qualcomm (QCOM) was about to acquire Atheros Communications, Inc. (ATHR), then a publicly traded technology company headquartered in California. Based on this inside information—and just one day before Qualcomm officially announced the acquisition—Cohen and Herman placed more than $500,000 in trades on various Atheros securities, including stocks purchases and option contracts. At the same time, Cohen allegedly covered a short position that he maintained, in violation of company policy, on Qualcomm stock.
Shortly after Cohen and Herman placed their trades, the New York Times’ DealBook blog leaked news of the impending acquisition, causing shares of Atheros to dramatically increase in value. Cohen and Herman then sold their securities, realizing a total profit of nearly $230,000. The indictment alleges that Cohen and Herman later falsely claimed to in-house Qualcomm lawyers and staff that they had only traded after reading a leaked news item—even though trading records, combined with records of the New York Times Company, show that this was impossible.
United States Attorney Laura E. Duffy said: “Insider trading is a threat to public companies and investors alike. This indictment should send a message throughout Southern California and beyond: the Department of Justice will not tolerate the manipulation of the securities markets for cynical and selfish personal gain.”
In a parallel action, the Securities and Exchange Commission today announced civil insider trading charges against Cohen and Herman.
Michele Wein Layne, director of SEC’s Los Angeles Regional Office, said: “As alleged in our complaint, Qualcomm placed trust in these sales managers who proceeded to exploit the confidential information shared with them and conduct insider trading for their personal gain.”
Cohen was arrested Saturday at Los Angeles International Airport at the request of the Federal Bureau of Investigation after he returned from an overseas visit to the Philippines. Herman remains at large.
Cohen was arraigned on the indictment in federal court in Los Angeles this afternoon; he entered a not-guilty plea, and was to be released on a $100,000 bond. He is scheduled to appear before U.S. Magistrate Judge Ruben B. Brooks in San Diego on May 14, 2014 at 10:30 a.m., for a status hearing.
DEFENDANT Case Number: 14CR1202-JLS Derek Montague Cohen Age: 52 San Diego, CARobert William Herman
Age: 52 San Diego, CA CHARGESCounts 1-4: Securities Fraud – 15 U.S.C. §§ 78j(b) and 78ff. Maximum penalties: 20 years in prison, 3 years of supervised release, $3 million fine and a $100 special assessment for each count.
INVESTIGATING AGENCYFederal Bureau of Investigation
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Real Estate Developer Pleads Guilty to $50 Million Securities Fraud SchemeRead the Press Release
SAN DIEGO – A commercial real estate developer and mortgage broker pleaded guilty today for his role in a $50 million securities fraud scheme.
Bradley Holcom, 55, entered his plea before U.S. District Judge Cathy Ann Bencivengo, admitting that he committed wire fraud in connection with the sale of approximately $50 million worth of promissory notes which he sold to investors located throughout the United States.
According to court documents, Holcom solicited investors to provide funds for the development of raw land for commercial and residential purposes through an investment program he operated called the Trust Deed Investment Program. Holcom admitted that he falsely told investors who purchased notes through the Trust Deed Investment Program that they would receive a first-position lien on a specific piece of property he was developing.
However, as Holcom further admitted, he never provided investors with a lien in the property he was purportedly developing and instead conveyed to investors a lesser interest that did not allow investors to directly foreclose on the property to protect their investment. In addition, he admitted that while he promised investors that their purported lien would be in first position, he subsequently solicited investments for properties that he knew were already encumbered by first position liens.
According to court documents, Holcom also sold properties that were supposedly serving as the security for investors without informing investors that the property they had financed for development was gone. Holcom admitted that in 2008 and 2009, even though his financial condition had seriously deteriorated, he continued to solicit investors for new funds by making misrepresentations about his true financial condition and the manner in which he was using investor money.
As part of his plea, Holcom admitted that his conduct caused approximately $50 million in losses to over 50 victims. Holcom faces a maximum prison sentence of 20 years. Holcom is scheduled to be sentenced on July 25, 2014.
This case was investigated by the FBI’s Phoenix Division – Yuma Resident Agency. The case is being prosecuted by Trial Attorney Henry P. Van Dyck and Deputy Chief Daniel Braun of the Criminal Division’s Fraud Section, and by Assistant United States Attorney Mark Pletcher of the United States Attorney’s Office for the Southern District of California. The Department recognizes the substantial assistance of the U.S. Securities and Exchange Commission.
DEFENDANT Case Number: 13-CR-01723-CAB Bradley Holcom Age: 55 Escondido, CA CHARGESTitle 18, United States Code, Section 1343 -- Wire Fraud
INVESTIGATING AGENCY
Maximum penalties: 20 years’ imprisonment, $250,000 fine or twice the gross pecuniary gain or twice the gross pecuniary loss (whichever is greatest), $100 special assessment, 3 years of supervised release, restitution, and forfeiture.Federal Bureau of Investigation
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Former Camp Pendleton Marine Gunnery Sergeant Guilty of Nearly $100,000 FraudRead the Press Release
United States Attorney Laura E. Duffy announced today that a former U. S. Marine Gunnery Sergeant admitted to submitting false lodging reimbursement requests to the Marine Corps from 2009 to 2011, totaling nearly $100,000. At the time, the defendant, Gunnery Sergeant Devin Pierre Alario was stationed at Marine Corps Base Camp Pendleton.
As detailed in his plea agreement, under certain circumstances, reservists who are called to active duty become eligible for a housing reimbursement benefit during the term of their active duty, in addition to the basic allowance for housing that they receive. Alario exploited this housing reimbursement benefit by falsely claiming reimbursement for rent that he never paid. Specifically, on 27 occasions from June 2009 through October 2011, Alario submitted false rental receipts that inflated the amount he was paying for rent, included a fictitious landlord, or contained a false address. To substantiate his lodging claims and conceal the fraud, Alario also submitted fake leases that he prepared. Typically, Alario’s false claims sought rental reimbursement for up to $3,800 per month. All told, he made $95,013.10 from his fraud.
Alario pleaded guilty to one felony count of making false claims against the United States.
In his plea agreement, Alario agreed to pay restitution to the U.S. Marine Corps in the full amount of the losses.
United States Attorney Duffy stated, “We will aggressively prosecute anyone who siphons much-needed taxpayer funds from our nation’s armed forces, including those who exploit their positions within the military to do so.”
Acting Special Agent in Charge Kevin F. Boyne of the Defense Criminal Investigative Service (DCIS) Western Field Office commented, “DCIS is committed to working with the Naval Criminal Investigative Service and other partner agencies to aggressively pursue those individuals who undermine the public trust and the efforts of the Department of Defense to support the warfighter and their families. Schemes motivated by greed betray the values of the Marine Corps and cannot be tolerated.”
The case has been assigned to U. S. District Judge Cathy Ann Bencivengo. The next scheduled court appearance is July 25, 2014 at 9:00 a.m. for sentencing.
DEFENDANT Case Number: Devin Pierre Alario Age: 40 Temecula, CA CHARGESFalse claims, in violation of Title 18, United States Code, Section 287 - Maximum penalties: 5 years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment.
INVESTIGATING AGENCYDefense Criminal Investigative Service
Naval Criminal Investigative Service*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Woman Guilty of Obstructing Investigation of $1.8 Million Fraud Against Failed La Jolla BankRead the Press Release
United States Attorney Laura E. Duffy announced today that former San Diego resident Laura Ortuondo pleaded guilty before Magistrate Judge William V. Gallo to one count of making false statements to federal agents concerning her role in a nearly five-year cover-up of a scheme to defraud La Jolla Bank in connection with a $1.8 million Small Business Administration (“SBA”) loan that her former boss sought from the bank.
According to court records, in 2008, Ortuondo worked for a local small business owner named Annand Sliuman (who previously pleaded guilty in a separate case). In her role as Sliuman’s assistant, Ortuondo, among other things, helped Sliuman manage loans and loan applications with La Jolla Bank. In May 2008, Ortuondo assisted Sliuman in fraudulently obtaining a $1.8 million loan from La Jolla Bank by knowingly submitting two fraudulent tax forms to the bank on Sliuman’s behalf, which falsely stated that Sliuman had satisfied certain tax liabilities. Sliuman and Ortuondo submitted the fraudulent records to the bank in order to make it appear that he was eligible for the SBA loan from the bank. La Jolla Bank was a San Diego County-based bank and a member of the Federal Home Loan Bank of San Francisco (“FHLB”). La Jolla Bank failed in 2010 and was taken over by the Federal Deposit Insurance Corporation (“FDIC”) after the bank ran up a debt of approximately $1 billion, including approximately $700 million in outstanding advances from the FHLB.
According to court records, after assisting Sliuman in defrauding La Jolla Bank, Ortuondo then undertook a nearly five-year long effort to thwart federal agents’ investigation of the fraud. The cover-up began in October 2008, when Ortuondo lied to investigators and claimed that she was unaware that she had submitted false documents to the bank. Then, shortly after lying about her knowledge of the fraud, Ortuondo assisted Sliuman in destroying Ortuondo’s personal laptop, knowing that it contained incriminating evidence of their fraud against the bank. To make matters worse, Ortuondo also convinced her husband at the time to lie to federal agents and a federal grand jury on her behalf, claiming – falsely – that he had destroyed her laptop.
In November 2011, federal agents interviewed Ortuondo again regarding her role in the fraudulent procurement of Sliuman’s loan from La Jolla Bank. Again, Ortuondo lied about her role in the fraud and the cover-up, falsely denying that she knowingly submitted fraudulent tax forms to the bank and falsely claiming that her ex-husband destroyed her laptop. In today’s guilty plea, Ortuondo admitted to making these false statements to federal agents with the intent to obstruct the federal investigation of the La Jolla Bank fraud.
“My office will not tolerate lies and deceit intended to obstruct our system of justice,” said U.S. Attorney Laura Duffy. “As this case illustrates, no matter how long it takes, we will not rest until the truth sees the light of day. I want to thank our agency partners for their dogged commitment to seeing this investigation through.”
“Lies and deceit will not earn you entry into SBA’s small business lending program,” said SBA Inspector General Peggy E. Gustafson. “Together with our law enforcement partners, the OIG will continue to ensure those who commit fraud are brought to justice. We would like to thank the U.S. Attorney’s Office for its dedicated leadership and professionalism throughout this investigation.”
Treasury Inspector General for Tax Administration Special Agent in Charge Rod Ammari stated, “Individuals that use fraudulently created IRS documents to further their schemes and then actively obstruct the Government’s investigation will be investigated to the fullest extent. This investigation is a great example of collaboration by all agencies involved to hold the perpetrators of this scheme responsible for their actions.”
Daphne Hearn, FBI Special Agent in Charge, San Diego Field Office, commented, “Fraudulent schemes like this undermine our country's economy and ultimately leave American taxpayers on the hook. The FBI will continue to work with our law enforcement partners to protect our precious tax dollars from waste, fraud and abuse.”
Michael P. Stephens, Acting Inspector General of the Federal Housing Finance Agency, said: “All individuals who engage in fraudulent behavior, whether they are the ring leader or an assistant, will be held accountable for their actions. We are proud to have worked with our law enforcement partners on this case and are again pleased to see justice served.”
Matthew Alessandrino, FDIC Assistant Inspector General for Investigations, stated, “The FDIC Office of Inspector General is pleased to have joined the Department of Justice and our law enforcement colleagues in conducting this investigation. We are firmly committed to joint efforts such as this one in the interest of ensuring integrity in the banking system and helping to prevent losses to the Deposit Insurance Fund.”
Ortuondo is scheduled to be sentenced by Judge Anthony J. Battaglia on July 25, 2014 at 9 a.m. Her guilty plea is pending final acceptance by Judge Battaglia. Sliuman previously pleaded guilty in a separate case to bribing an officer of La Jolla Bank in exchange for the officer approving loans on his behalf, and admitted his role in the fraud and obstruction of justice conspiracy with Ortuondo. Sliuman is scheduled to be sentenced by Judge Battaglia in his case on September 26, 2014.
DEFENDANT Case Number: 13CR3879-AJB Laura Ortuondo Age: 33 Cupertino, CA CHARGESFalse Statement to a Federal Agent, in violation of Title 18, United States Code, Section 1001
Maximum penalties: 5 years’ imprisonment, $250,000 fine.
DEFENDANT Case Number: 13CR3879-AJB Annand Sliuman Age: 33 Spring Valley, CA CHARGESBank bribery, in violation of Title 18, United States Code, Section 215(a)(1)
INVESTIGATING AGENCY
Maximum penalties: 30 years’ imprisonment, $1,000,000 fineSmall Business Administration – Office of the Inspector General
Department of Treasury – Inspector General for Tax Administration
Federal Bureau of Investigation
Federal Housing Finance Agency – Office of Inspector General
Federal Deposit Insurance Corporation – Office of Inspector General*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
San Diego Man Sentenced to 14 Years in Prison for Receipt of Child PornographyRead the Press Release
Howard Willie Carter, II, a San Diego resident, was sentenced yesterday by U.S. District Judge Barry Ted Moskowitz to 168 months in federal prison, followed by 10 years of supervised release, based on Carter’s conviction for receipt of child pornography.
Carter, who has been in custody since his arrest by the Federal Bureau of Investigation on October 17, 2012, pled guilty on November 14, 2013.
According to court documents, in August 2012, Carter was receiving and viewing images of minors engaged in sexually explicit conduct. After a forensic review of his computer, it was discovered that he possessed well over 600 illegal images and videos, with the majority of the images involving minors under the age of 12. The forensics examination of the computer conducted by the San Diego Regional Computer Forensic laboratory (RCFL) revealed that Carter attempted to upload one of those videos to YouTube to be viewed by others.
At sentencing yesterday, Judge Moskowitz stated that given Carter’s past criminal history and his conduct in the current case, Carter appeared to be a danger to the community and a significant sentence was warranted.
“Unfortunately, child exploitation is an epidemic in this nation,” said U.S. Attorney Laura Duffy. “Howard Carter’s actions highlight the dangerousness of this type of activity in our community. I hope this long sentence will prevent him and others from exploiting a victim in the future.”
FBI Special Agent in Charge Daphne Hearn, commented, “Each image Mr. Carter possessed represented the victimization of a child. We hope today's sentencing sends a clear message to anyone involved in the online sexual exploitation of a child, that the FBI will not tolerate the victimization and destruction of our children's future. We will remain vigilant and committed to removing sexual predators from our children's lives.”
This case stems from an investigation by the Federal Bureau of Investigation.
DEFENDANT Case Number: 12CR4191-BTM Howard Willie Carter Age: 37 San Diego, California CHARGESTitle 18, United States Code, Section 2252(a)(2) – Receipt of Child Pornography
INVESTIGATING AGENCYFederal Bureau of Investigation
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
San Bernardino Man Admits Smuggling Counterfeit Levi Labels for $192,000 Worth of JeansRead the Press Release
United States Attorney Laura E. Duffy announced today that Angel Garcia Hernandez pled guilty to smuggling labels, tags and buttons for counterfeit Levi jeans Tuesday before U.S. Magistrate Judge Karen S. Crawford. In pleading guilty, the defendant admitted that on December 28, 2012, he smuggled counterfeit Levi Strauss & Co. labels, buttons and tags, enough to make $192,000 worth of counterfeit jeans.
Within an hour of Garcia’s border crossing, another defendant, Amadeo Calderon Valdivinos, also attempted to smuggle counterfeit Levi Strauss & Co. labels, buttons and tags into the United States through the San Ysidro Port of Entry. Calderon had enough labels to manufacture $128,000 worth of counterfeit jeans. Examination of the labels smuggled by both Garcia and Calderon by representatives of Levi Strauss & Co. revealed the same defects in the labels, suggesting that they came from the same source. According to court filings, although Garcia and Calderon both denied knowing each other at the time they crossed the border with the counterfeit labels, their cell phone records showed numerous calls between them. Calderon pled guilty to smuggling and was sentenced to time served (four months).
Sentencing for Garcia Hernandez is set for August 1, 2014, at 10:00 a.m. before the Honorable Barry Ted Moskowitz.
DEFENDANT Case Number: 14cr1034-BTM Angel Garcia Hernandez Age: 55 CHARGESSmuggling, in Violation of Title 18, United States Code, Section 545 Maximum Penalty: 20 years in custody and/or $250,000 fine and a $100 special assessment
INVESTIGATING AGENCYDepartment of Homeland Security Investigations
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Notorious Conman-Turned-Pastor Barry Minkow Sentenced to Five Years in Prison for Bilking Congregation of More Than $3 MillionRead the Press Release
SAN DIEGO – Former San Diego Community Bible Church Pastor Barry Minkow, a prolific fraudster whose crimes and claimed rehabilitation landed him on 60 Minutes and the cover of Fortune Magazine, was sentenced today to five years in prison for embezzling more than $3 million from his own parishioners and then concealing the funds from the Internal Revenue Service.
Minkow, who pleaded guilty in January, has admitted that he tricked a widower into making a $75,000 donation for a hospital in the Sudan to honor his wife after she died of cancer. Only there was no hospital, and Minkow pocketed the money. He also admitted, among others things, that he stole $300,000 from a widowed grandmother who is trying to raise her teenage granddaughter.
“It doesn’t get much worse than that in the world of non-violent crime,” said U.S. District Judge Michael Anello in handing down the maximum sentence. The judge ordered that term to be served after Minkow completes the time he has left on his current prison term for another financial crime.
During the sentencing hearing today, the widower, Brett Wright, was one of eight victims who addressed the court, describing their suffering over Minkow’s betrayal. Wright recalled Minkow’s duplicity in comforting his family through his wife’s illness while plotting to steal the honorarium upon her death. “He was so adept at showing care and concern for our situation,” Wright told the court. “But it was all a lie.”
Minkow even sent Wright and his daughter bogus thank you emails, purportedly from the charity. The message described the gift as worthy of “applause from heaven.” He signed the email, “Love in Christ, Barry.” An email forwarded by Minkow to Wright’s daughter said, “I believe we are honoring your mom’s heart directly helping the sick and needy in Darfur through this hospital construction.”
Minkow pleaded guilty in January to fraud charges, admitting to a litany of improper conduct spanning a decade, including opening unauthorized bank accounts on behalf of the church, forging signatures on the SDCBC checks, using funds drawn on legitimate church accounts for his personal benefit, and charging unauthorized personal expenses on church credit cards. Minkow also confessed to diverting SDCBC member donations for his own benefit and embezzling money intended as church donations.
“Barry Minkow is among the worst kind of predators,” said U.S. Attorney Laura Duffy. “He gained the affection and trust of his victims from the pulpit and then stole not only their money, but their faith in humanity, the clergy, the church, and themselves. This sentence will keep him from exploiting another victim for a while.”
FBI Special Agent in Charge Daphne Hearn commented, “Mr. Minkow violated the faith and trust of his congregation to unjustly enrich himself. The FBI is committed to pursuing those individuals who hide behind a facade of honesty and integrity, only to use their position to unlawfully enrich themselves.”
Erick Martinez, Special Agent in Charge for IRS Criminal Investigation commented: “Barry Minkow skillfully operated as a predator, using his trusted position as pastor at San Diego Community Bible Church and Fraud Discovery Institute to fraudulently obtain over $3 million for his own benefit. His concealment of his diversion from the IRS, in an attempt to reduce his tax obligations, further displays his uncanny ability to deceitfully use every mechanism to line his own pockets. Today's sentencing reinforces IRS Criminal Investigation's commitment to investigate those who will stop at nothing to perpetuate financial and tax crimes.”
Bilking money from SDCBC is just the latest fraud scheme perpetrated by Minkow. In December 1988, Minkow was convicted of running an elaborate Ponzi scheme related to his ZZZZ Best carpet cleaning enterprise, a NASDAQ-traded entity. In that case, Minkow bilked banks and investors of millions of dollars, for which he was sentenced to 25 years in prison. While incarcerated, Minkow became involved in the Christian ministry, and upon his release in 1995 after having served approximately seven and a half years, he went to work at the Church at Rocky Peak in Chatsworth, California.
In 1997, SDCBC gave the defendant a second chance, a “do-over” of sorts. Soon thereafter founded the Fraud Discovery Institute (“FDI), a for-profit entity, which allegedly was aimed at the detection and prevention of fraudulent business practices. Through the work of FDI, Minkow soon garnered national media attention as a fraud detection expert, and his turn-around story was profiled on 60 Minutes in August 2006.
Yet even as he touted his redemption to gain the trust of parishioners, he began to steal money from the church and congregation. He used the money to found FDI and to fund what he hoped would be a Hollywood blockbuster movie about his life. He insisted that he star in the movie alongside Hollywood actors James Caan and Ving Rhames.
And, even while working through FDI to detect fraud, Minkow was engaged in manipulating the stock prices of the companies he was investigating. Most prominently in 2009, Minkow released a report accusing major homebuilder Lennar of massive accounting irregularities and fraud. In the wake of this report, Lennar’s share price was sliced in half – from 11.57 a share to $6.55 a share. According to court records, unbeknownst to the public, Minkow shorted Lennar stock in advance of the issuance of his report. Based on these transactions, Minkow was charged with conspiracy to commit securities fraud, and on March 30, 2009, he pled guilty in Miami to conspiring to manipulate Lennar’s share price, for which he was sentenced to serve five years in prison and to pay $583.5 million in restitution to Lennar. Minkow is currently serving that sentence. The facts of the current case “show a professional con man expertly plying his craft in an effort to line his pockets with millions of dollars in order to fund his own Hollywood movie,” prosecutor Mark Pletcher wrote in a sentencing memo.
“The facts show a predator from the pulpit ravaging those widowers and elderly, among others, that he convinced to trust him most intimately. This crime went far beyond money and greed, ultimately consuming the congregants of SDCBC physically and emotionally.
“In pursuit of the personification of Barry Minkow, nothing was sacrosanct,” Pletcher wrote. “From counseling a grieving family and then stealing the $75,000 honorarium donated in the deceased’s memory, to preying on a single, elderly woman raising her granddaughter, defendant used every deceit imaginable to slowly bleed SDCBS as an institution and its congregants personally of every last dollar.”
A restitution hearing was set for May 19 at 11:30 a.m.
DEFENDANT Case Number: 14-CR00153 Barry Minkow Age: 48 formerly of Poway, CA CHARGESConspiracy To Commit Mail Fraud, Wire Fraud, Bank Fraud and To Defraud the United States, in violation of Title 18, United States Code, Section 371
INVESTIGATING AGENCY
Maximum penalties: Five years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment.Federal Bureau of Investigation
IRS Criminal Investigations*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Fifty-Five Charged in Massive Crackdown on West Coast Crips Street Gang and OthersSome Defendants Charged in RICO Case That Includes Allegations of Execution-style Murders of Fellow Gang Members and an AssociateRead the Press Release
SAN DIEGO, CA – Thirty-five people, many of whom are alleged members and associates of the West Coast Crips criminal street gang, are charged in complaints unsealed today with participating in three drug- and gun-related conspiracies, including one that alleges a racketeering enterprise with execution-style murders, a takeover-style robbery, high-speed chases, witness intimidation and other acts of violence.
At the same time, the District Attorney’s office will be filing charges against 22 defendants in a parallel investigation involving crimes such as robbery, drug sales, and illegal firearm possession and sales.
This morning before dawn, a contingent of more than 500 local, state and federal law enforcement officials hit dozens of locations around the county looking for defendants, guns and drugs. Thirty federal defendants and 19 state defendants are in custody as of 3 p.m. today, and during searches yesterday and over the course of the yearlong investigation, authorities have seized more than 16 firearms, including sawed-off shotguns, pistols and revolvers, many rounds of ammunition plus 4.5 pounds of methamphetamine, 4,400 pounds of marijuana and $300,000 in counterfeit bills.
Five federal defendants are still at large, including Randy Alton Graves, the lead defendant in the racketeering case. Graves is considered armed and dangerous and believed to be driving a baby blue Mercedes with paper license plates. Anyone with information is asked to contact the FBI at 858-320-1800.
According to the racketeering complaint, Graves was overheard on court-authorized wiretaps discussing his connections to past killings and his status as a “G,” or senior member. “I got multiples on my jacket…I don’t think it’s too many (expletives) as highly decorated the way I am. I know I got 5, 6 bodies…I got 35 years in and ain’t been around here flexing my muscle cause I’m a G and everybody respects me.”
In another call quoted in the complaint, Graves expressed fear that a female gang associate was going to talk to police about a murder committed by West Coast Crip members. “You run your mouth, you die, period. You run and hide, we get the next closest thing to you, period, no ifs ands or buts.”
The federal racketeering statute known as “RICO” historically has been used to prosecute mobsters and organized crime, but federal prosecutors have been using the statute on street gangs in recent years because they are increasingly acting as organized, sophisticated criminal enterprises.
The federal RICO complaint charges 17 alleged members and associates of the West Coast Crips and describes a criminal enterprise that has committed five murders, numerous attempted murders, armed robberies, high speed chases and other violent crimes, as well as prostitution, money laundering and importation and distribution of methamphetamine, cocaine and marijuana.
Two other complaints charge 12 and 6 people, respectively, with Methamphetamine trafficking conspiracies and firearms offenses. The 12-defendant complaint alleges that for at least a period of time last fall, a methamphetamine source-of-supply was using El Cajon Valley High School students to smuggle methamphetamine into the United States from Mexico. The six-defendant complaint alleges that both WCC and 5/9 Brim gang members worked together to conduct their methamphetamine and other trafficking activities.
The five murders alleged in the RICO conspiracy equate to about ONE-THIRD of all gang-related murders in the city of San Diego in 2013 – and about 13 percent of the overall murder tally in the entire city.
“Today’s RICO charges can be viewed as nothing less than a virtual wrecking ball crashing into the ruthless, ultra-violent West Coast Crips, a gang that has been a scourge on San Diego communities for far too long,” said U.S. Attorney Laura Duffy. “This violent gang culture has spilled over into our communities with public acts of violence, high-speed chases and the recruitment of kids to be drug couriers. With these charges, we are restoring some peace to our residents.”
“Working cooperatively with our law enforcement partners, we shut down a significant arm of this violent street gang today, pulling dozens of its members off the streets in one coordinated sweep,” District Attorney Bonnie Dumanis said. “The DA’s Gangs Division is proud to participate in targeted operations like this one. It’s an approach that’s working and is disrupting some of San Diego's most violent gangs.”
San Diego FBI Special Agent in Charge, Daphne Hearn, commented, “Today's arrests and charges are the result of two long term multi-agency investigations conducted by two FBI Safe Streets Task Forces, specifically the Violent Crimes Task Force - Gang Group and the East County Regional Gang Task Force. Dedicated personnel from federal, state and local law enforcement agencies worked in unison to go after violent street gang members and associates who pose a serious threat to the safety and security of our communities. The FBI will continue to work with our law enforcement partners to restore safety and security to our neighborhoods."
“This is a true collaborative effort by all involved and I am extremely proud of the investigators who made this happen. Many of the offenders arrested today have gang ties to the City of San Diego. This operation combined with continued enforcement will have a positive impact on all of our neighborhoods.”
“This case perfectly demonstrates how agencies share information and work together to increase the reach and depth of their individual investigations. The number of defendants indicted, the variety of the charges filed, the quantities of the drugs and number of firearms seized, and the stiff prison sentences many defendants will face if convicted are the result of committed teamwork,” said Carlos A. Canino, Special Agent in Charge, Bureau of Alcohol, Tobacco Firearms and Explosives, Los Angeles Field Division.
The West Coast Crips gang has been around for more than 30 years and claims several hundred members. The gang claims territory with borders roughly defined by Interstate 94 to the north, National Avenue to the South, Interstate 5 on the West and Interstate 15 on the east.
Membership can be gained through family connections. Or, some are inducted through acts of violence. All are expected to put in “work,” which in gang jargon means committing criminal acts when asked to.
The West Coast Crips is a hierarchical organization with seniority based on a member’s age. The oldest are referred to as Original Gangsters, or OGs, mostly in their 40s and 50s. They call the shots. They supply younger gang members with guns and drugs and let the youngsters to their dirty work.
The “homies” are in their 30s and early 40s. They’ve already put in the “work” for the gang and have earned the trust of fellow gang members.
The so-called “babies” are the youngest members, in their 20s and 30s. Many create cliques within the larger gang, and maintain a distinct identity. “3-Babiez” is one of the cliques of 20-somethings. The younger generation typically receives drugs from more senior gang members and deals to street users and distributors. This generation also manages prostitutes and enforces discipline on gang members and associates.
The following are key acts of violence alleged in the RICO complaint:
- Three members of the “3-Babiez” clique - Marcus Anthony Foreman, Wilbert Ross and Terry Carry Hollins – were involved in the fatal shooting of a random Hispanic gang member as revenge for the October 31, 2012 carjacking of West Coast Crip with a .40-caliber handgun.
According to the complaint, a Crip approached the victim, Andres Caldera, and asked for a cigarette. When Caldera asked where the man was from, he yelled, “I am from West Coast,” pulled out a .40-caliber handgun and fired a single shot at Caldera’s face. - A few days after that murder on December 2, 2012, the same trio of defendants robbed a Logan Heights business in takeover style, forcing employees onto the floor and holding guns to their heads, the complaint said. During a police chase, the trio ditched their getaway car and the gun, but officers arrested all three and recovered the gun - which happened to be the same gun used in the Oct. 31 murder.
- The complaint says that on April 6, 2013, West Coast Crip member Meashal Fairley was murdered in front of a San Diego nightclub during an argument over Fairley’s suspected cooperation with law enforcement.
- The third killing described in the complaint occurred in the parking lot of a fast food restaurant on October 25, 2013. Defendant Ross had a dispute with a person identified in the complaint as A.H. They set up a meeting at the restaurant, supposedly to resolve the dispute, which was over a rental car. But upon arrival, A.H. was attacked by a group of West Coast Crips led by Ross. In self-defense, A.H. fatally stabbed one of his attackers, Jeffrey “JJ” Rees, the complaint said.
- Chyrene Borgen, a West Coast Crip associate, was gunned down at a Halloween party early on November 1, 2013, after she had criticized the “3-Babiez” for what she believed was their involvement in Meashal Fairley’s murder, the complaint said. Following this murder, several defendants posted “selfies” on Facebook from the murder scene. One of the defendants is wearing a T-shirt that said: “3 BABIEZ, YELLOW TAPE GANG, ANYBODY KILLA.” About the same time, Cook appeared on a cell phone video along with other members of the 3-Babiez clique in which, as a group, they boasted about how they are willing to kill anybody, including women.
- A pregnant woman and West Coast Crips member, who is identified in the complaint by the initials K.S., was shot by a 3-Babiez member because she, too, dared to criticize the gang for the murders of her friends Meashal Fairley and Chyrene Borgen, the complaint said. K.S.and her baby survived the shooting, but gang members were still looking to kill her in the hospital.
- According to the complaint, West Coast Crips member Paris Hill was murdered by fellow Crips for giving a statement to police about the Rees gang-related murder. Within days of Hill’s murder, the gang was already putting hits out on witnesses, the complaint said.
This case is the latest in a series of large-scale, multiagency crackdowns on street gang activity in San Diego County neighborhoods. Including today’s indictments and complaints, more than 350 people, many of them documented gang members and associates, have been charged in a number of major federal gang prosecutions since January of 2012, with scores of guilty pleas entered.
This kind of law enforcement action would not have been possible without our partners from the FBI’s East County Regional Gang Task Force and the Violent Crimes Gang Task Force. Participating agencies include the FBI, the San Diego Police Department’s gang unit; the ATF; the El Cajon Police Department; the La Mesa Police Department; San Diego County Probation; the IRS; U.S. Postal Inspectors; the San Diego County Sheriff’s Department; and the California Highway Patrol.
This investigation was coordinated by an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was created to consolidate and coordinate all law enforcement resources in this country's battle against major drug trafficking rings, drug kingpins, and money launderers.
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Link: FBI NEWS RELEASE
Link: Press Conference Slides
DEFENDANT Case Number: 14MJ1494 Randy Alton Graves Age: 50 El Cajon, CA Darnell James Graves-Butler Age: 27 El Cajon, CA Dameon Deshawn Shelton Age: 40 National City, CA Leon Franklin Age: 39 San Diego, CA Brandon Lamar Whittle Age: 29 San Diego, CA Andre Lamar Harrison Age: 44 San Diego, CA Cleotha Young Age: 36 San Diego, CA Sharod Levale Jackson Age: 45 San Diego, CA Terry Carry Hollins Age: 32 San Diego, CA Jermain Gerald Cook Age: 29 San Diego, CA Donald Eugene Bandy Age: 25 San Diego, CA Marcus Anthony Foreman Age: 26 San Diego, CA Wilbert Ross Age: 31 Chula Vista, CA Brenda Rodriguez Age: 23 San Diego, CA Gaquayla Aunicia Lagrone Age: 31 San Diego, CA Solcamire Castro-Hernandez Age: 28 San Diego, CA Luis Salgado-Viscarra Age: 26 Spring Valley, CA SUMMARY OF CHARGESConspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, in violation of Title 18, U.S.C. Section 1962 (d)
Maximum Penalty, based on the underlying racketeering crimes: Up to life in prison.
DEFENDANT Case Number: 14MJ1492 David William Centrone Age: 31 El Cajon, CA Alexis Rubeiry Beltran-Rodriguez Age: 18 Unknown Terry Gerald Woods Age: 53 El Cajon, CA Reuben Carlton Morales Age: 27 El Cajon, CA Rene Faburrieta Age: 33 Long Beach, CA Steven Luis Figueroa Age: 25 Long Beach, CA Anthony Gilbert Garcia Age: 31 El Cajon, CA Blake Austin Tenney Age: 21 El Cajon, CA Tima Jeanmarie Gates Age: 40 Spring Valley, CA Jorge Aguilar-Valdez Age: 19 El Cajon, CA Dean Fredrick Malzahn Age: 51 El Cajon, CA Mark Manuel Espinosa Unknown SUMMARY OF CHARGESConspiracy to Distribute Methamphetamine, in violation of Title 21, U.S.C. Sections 841 (a)(1) and 846
Maximum Penalties, based on alleged drug amounts: Up to life in prison; 10 year mandatory minimum.Carrying a Firearm During and in Relation to Drug Trafficking Crime, in violation of Title 18, U.S.C. Section 924 (c)(1)
Maximum Penalties: Five year mandatory minimum penalty, which must be run consecutive to any other penalty imposed in the case (for the first 924(c) conviction); 25 year mandatory minimum penalty, which must be run consecutive to any other penalty imposed in the case (for each subsequent 924(c) conviction).
DEFENDANT Case Number: 14MJ1491 William Eugene Wash Age: 27 Lemon Grove, CA Jessie Smith Age: 30 San Diego, CA David Rojas Age: 21 San Diego, CA Terrence Mack Carter Age: 29 El Cajon, CA Terrell Davon Guss Age: 22 Spring Valley, CA Kevin Darryl Adell Age: 33 San Diego, CA SUMMARY OF CHARGESConspiracy to Distribute Methamphetamine, in violation of Title 21, U.S.C. Sections 841 (a)(1) and 846
Maximum Penalties, based on alleged drug amounts: Wash, Smith and Rojas: Up to life in prison; Carter, up to 40 years in prison.Possession of Marijuana with Intent to Distribute, in violation of Title 21, U.S.C. Section 841 (a)(1)
Maximum Penalties, based on alleged drug amounts: Up to 5 years in prison.Carrying a Firearm During and in Relation to Drug Trafficking Crime, in violation of Title 18, U.S.C. Section 924 (c)(1)
Maximum Penalties: 5 year mandatory minimum penalty, which must be run consecutive to any other penalty imposed in the case.Felon in Possession of a Firearm, in violation of Title 18, U.S.C., Sections 922(g)(1) and 924(a)(2)
Maximum Penalties: 10 years in prison.
INVESTIGATING AGENCYEast County Regional Gang Task Force
Violent Crimes Gang Task Force
Task Force agencies include:
FBI
San Diego Police Department’s gang unit
ATF
El Cajon Police Department
La Mesa Police Department
San Diego County Probation
IRS
U.S. Postal Inspectors
San Diego County Sheriff’s Department
California Highway Patrol.*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
- Three members of the “3-Babiez” clique - Marcus Anthony Foreman, Wilbert Ross and Terry Carry Hollins – were involved in the fatal shooting of a random Hispanic gang member as revenge for the October 31, 2012 carjacking of West Coast Crip with a .40-caliber handgun.
East County Regional Gang Task Force Seeks Public’s Assistance to Locate FugitiveRead the Press Release
SEE OFFICIAL FBI NEWS RELEASEThe East County Regional Gang Task Force is seeking the public’s assistance in locating Randy Graves, age 51, of El Cajon, California. Graves is wanted on federal racketeering charges and considered to be armed and dangerous. Graves is approximately 6’0” feet tall, 205 pounds, black hair, and brown eyes.
Graves is known to drive a 2007 Mercedes Benz, SL 600 light blue in color with paper license plates.
Anyone with information concerning the whereabouts of Graves is asked to contact the FBI at telephone number (858) 320-1800. Graves should be considered armed and dangerous.
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
La Jolla-Based Luxury Car Dealer Pleads Guilty to Campaign Finance CrimesRead the Press Release
San Diego, CA – Marc Alan Chase, the proprietor of a La Jolla-based luxury car dealership, pleaded guilty today to eight misdemeanor counts of campaign finance crimes, including conspiracy, aiding and abetting contributions by a foreign national and making a conduit or “straw” contribution in connection with a federal campaign. He faces up to eight years in prison and $800,000 in fines for his conduct.
At the same hearing, two of Chase’s corporations – South Beach Acquisitions, Inc., and West Coast Acquisitions, Inc. – consented to the filing of felony charges of conspiracy, and entered into deferred prosecution agreements with the government.
As part of his plea agreement, Chase admitted that he conspired with Jose Susumo Azano Matsura, Ravneet Singh, Ernesto Encinas and Marco Polo Cortes (all of whom were indicted on February 18, 2014) to make several illegal campaign contributions in connection with various campaigns for elective office during the 2012 primary and general election cycles. Chase confessed to helping make a series of donations by Azano, a foreign national who by law cannot provide financing to American political campaigns. In addition, Chase admitted to facilitating a conduit contribution in connection with a federal campaign—which is illegal even if the source is a citizen.
In acknowledging his participation in the conspiracy, Chase admitted that he acted to cover up the illegal activity, ensuring that Azano’s name did not appear in any public record or filing.
In addition, Chase detailed one of the earliest incarnations of the illegal campaign finance scheme, admitting that, in 2011, Azano told him to recruit friends and relatives so that each would make the maximum possible donation to “Candidate 1,” a candidate for the office of mayor of San Diego during the 2012 primary election cycle. After giving Chase this instruction, Azano “caused one of his employees” to hand Chase approximately $10,000 in cash. Chase admitted that, just as Azano had instructed him, he distributed the cash among employees, contractors and acquaintances, asking them to make the maximum allowable donation to Candidate 1. Chase told many of them that he was reimbursing them with Azano’s money.
Also as part of the plea, Chase admitted to making three large contributions totaling $180,000 in September and October 2012. According to the plea agreement, Azano told Chase to make the contributions and promised to provide financing for them. In particular, on October 2, 2012, Azano wrote a $380,000 check to “Symbolic,” which Chase deposited into one of his corporations’ bank accounts. Chase admitted that, as agreed with Azano, $180,000 of this money would be used to make campaign contributions in connection with the campaigns of “Candidate 2,” a candidate for federal office, and “Candidate 3,” who was running for mayor. The remaining $200,000 was used to pay for one Andy Warhol serigraph, depicting dollar signs, which Chase had previously sold to Azano.
Incorporated into Chase’s plea agreement was a chart detailing the transactions in September and October 2012, which is reproduced in an appendix to this news release.
Chase’s sentencing hearing has been set for November 13, 2014 at 1:30 p.m. before U.S. Magistrate Judge David H. Bartick.
Plea Agreement (click HERE)
Information 14CR0926 (click HERE)
DEFENDANT Case Number:Marc Alan Chase
Age: 52 Solana Beach, CA CHARGESCount 1: Conspiracy to Commit Offenses against the United States – 18 U.S.C. § 371.
INVESTIGATING AGENCIES
Count 2-5 and 7-8: Contribution by a Foreign National – 2 U.S.C. §§ 437g(d)(1)(A)(ii) and 441e(a)(1)
Count 6: Conduit Contribution – 2 U.S.C. §§ 437g(d)(1)(A)(ii) and 441f
Maximum penalties for all counts, total: 8 years in prison (one year per count), 1 year of supervised release, and $800,000 in fines ($100,000 per count)Federal Bureau of Investigation
Internal Revenue Service, Criminal Investigation
San Diego Police Department*Charging documents, including indictments and informations, are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
International Business Executive Pleads Guilty to Scamming Investors and Dodging TaxesRead the Press Release
SAN DIEGO - Sven Erik Ulsteen, a former executive and shareholder of a Channel Islands company named Anturion Limited, pled guilty today to fraudulently using counterfeit and forged securities to take over $2 million from investors.
Ulsteen also admitted that he attempted to conceal this income from the Internal Revenue Service, and in so doing defrauded the United States out of more than $200,000 in taxes. The defendant tendered his guilty plea before U.S. Magistrate Judge Mitchell Dembin, who had previously ordered Ulsteen held on $1 million bond because of the substantial risk that Ulsteen would flee to his native Norway during the pendency of this case.
Ulsteen has been in custody since December 16, 2013, when he left his San Diego home and attempted to leave the country for Norway. Agents from the Federal Bureau of Investigation intercepted Ulsteen at the airport and arrested him on a criminal complaint filed by the FBI’s San Francisco Field Office that alleged Ulsteen had used counterfeit and forged Anturion securities on at least six instances to defraud investors.
At today’s hearing the defendant admitted that between November 2012 and December 2013, he solicited investors from the United States to purportedly purchase shares of stock from, or lend money to, Anturion. At the same time, Ulsteen also created counterfeit and forged “subscription agreements” and “loan” documents that purported to be authentic securities of Anturion. The defendant presented these counterfeit securities to investors in order to convince them to part with money, and with the intent to deceive investors into believing that the securities were legitimate and that their funds were going to Anturion.
Ulsteen’s scam defrauded investors throughout California out of more than $2 million, which he then directed to accounts in the name of Anturion and another company that Ulsteen controlled. The defendant admitted that instead of transferring these investments and loans to Anturion, he took the monies for himself and used them to pay for personal expenses and to wire funds to bank accounts overseas.
Multiple investors who attempted to buy Anturion shares from Ulsteen never received them. The only Anturion shares victims received from the defendant came from his own personal holdings, and not from the company as they had been promised. Investors only received these shares long after they had paid Ulsteen for their supposed purchases, and after a lawyer representing multiple investors sent a letter to Ulsteen accusing him of fraud. Individual investors who believed they were loaning funds to Anturion either never received their repayment as promised, or never received the Anturion shares to which their loan repayments were supposedly convertible.
In addition to selling forged securities, Ulsteen admitted to corruptly obstructing the IRS’s attempts to assess his true tax liability. Between 2010 and 2012, Ulsteen earned over $1 million from various activities, including from the sale of his Anturion stock. And several times the IRS notified Ulsteen that he needed to file a federal income tax return and that he owed taxes, penalties and interest. Despite these notifications Ulsteen refused to file a federal income tax return for any of these years, and took several steps to prevent the IRS from learning how much income he had earned. These included depositing investor funds into the nominee company accounts he controlled, payment of his personal expenses out of these company accounts, and providing incomplete and inaccurate information to a tax return preparer in order to create false federal income tax returns.
Ulsteen remains in custody and is scheduled to be sentenced June 30, 2014, at 2 p.m. before U.S. District Judge M. James Lorenz.
The charges were announced by United States Attorney for the Southern District of California Laura E. Duffy, and by United States Attorney for the Eastern District of California Benjamin B. Wagner, whose office is handling the prosecution in San Francisco. The timely arrest of Ulsteen by the FBI before he could leave for Norway – a country which will not extradite its own nationals to the United States – and the prompt resolution of these fraud and tax charges was the result of coordinated investigations by the Federal Bureau of Investigation and Internal Revenue Service, Criminal Investigation.
DEFENDANT Case Number: 14cr923-L and 14cr924-L Sven Erik Ulsteen Age: 50 San Diego, CA CHARGESCounterfeit and Forged Securities, in violation of 18 U.S.C. §513.
Maximum Penalties: 10 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.Obstruction of Internal Revenue Laws, in violation of 26 U.S.C. § 7212(a).
INVESTIGATING AGENCY
Maximum Penalties: 3 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.Federal Bureau of Investigation
Internal Revenue Service, Criminal Investigation*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Former Executive Director Caught with Hand in Congregation Beth El’s TillRead the Press Release
Today United States Attorney Laura E. Duffy announced the arraignment and guilty plea of Eric S. Levine for stealing hundreds of thousands of dollars from La Jolla’s Congregation Beth El synagogue.
Levine served as Beth El’s Executive Director from July 2007 to December 2013, overseeing the synagogue’s annual budget of nearly $2 million. Importantly, he also had access to, and control over, Beth El’s bank accounts, credit card accounts, and bookkeeping records. Levine admitted today that starting in February 2008, he began embezzling money from the synagogue for his own use. He continued his thefts until he left the position in December 2013. In total, Levine admitted misappropriating $394,872.99 from the synagogue over those five years.
Levine was able to carry out his embezzlement by virtue of his control over Beth El’s bank account and credit card. On most occasions, he simply used money located in the congregation’s bank account to pay his own bills directly. On other occasions, he transferred balances from his personal credit card to the congregation’s credit card account, and then paid his balances with the congregation’s funds.
In order to fool the congregation, its bookkeepers, and its executive staff, Levine falsified Beth El’s books and records to cover up his ongoing theft. He hid thousands of dollars in payments to himself by creating entries for legitimate expenses of the synagogue, in categories such as “Ritual Fund”, “Rabbi Emeritus,” “High Holidays,” “Purim Baskets,” “janitorial expense,” “utilities,” “landscaping expense,” and “repair / replace reserve fund.” His mischaracterization of payments made it appear that more of Beth El’s funds were spent on legitimate synagogue expenses than was actually spent. Levine also prepared false financial reports and annual budget proposals based on these inflated figures.
Instead of these legitimate expenses, the funds were used to pay a variety of Levine’s credit card charges, which included the following: Trips to Mexico, Las Vegas, and Canada; stays at the Mandalay Bay and Bally’s in Las Vegas, the Hilton Waikiki, the Grand Mayan Los Cabos and La Costa Resort Spa; monthly membership and regular $1,400 charges for a personal trainer at 24 Hour Fitness; and tickets from StubHub. Levine was able to outfit his home with expensive leather furniture and BBQ equipment, buy fancy jewelry, send his children to private school, and purchase exclusive Disney vacations.
As part of his plea, Levine will be required to pay Congregation Beth El back the funds he stole. He will next appear in court on June 27, 2014, at 9 a.m. before U.S. District Judge Dana M. Sabraw for sentencing as well as a hearing to determine the amount of restitution.
DEFENDANT Case Number: 14CR0879-DMS Eric S. Levine Age: 36 CHARGESMail fraud, Title 18, United States Code, Section 1341
Maximum penalties: 20 years in custody; $250,000 fine; 3 years of supervised release; mandatory order of restitution to victims
INVESTIGATING AGENCYFederal Bureau of Investigation
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Second Defendant Charged in Connectionwith Cross-Border TunnelRead the Press Release
SAN DIEGO, CA – A second defendant was charged today in connection with a sophisticated cross-border tunnel discovered by the San Diego Tunnel Task force last week.
Gilberto Quezada-Madrid made his first appearance in federal court this morning on tunnel-related charges, including Use of Cross-Border Tunnel and Conspiracy to Maintain a Drug Involved Premises. The government moved for detention based on risk of flight, and U.S. Magistrate Judge David Bartick set a detention hearing for Thursday, April 10, at 9:30 AM.
According to the complaint, agents with Homeland Security Investigations, who are part of the task force, connected Quezada-Madrid with suspected tunnel locations in San Diego and Tijuana, including numerous sightings during surveillance dating back to 2013.
Most recently, on March 31, 2014, agents observed as the defendant arrived at the San Diego location - a warehouse at 10145 Via de la Amistad. The next day, on April 1, agents found a concealed cross-border narcotics tunnel inside the Via de la Amistad warehouse and learned that the entry point was inside a mini-storage facility named Mini Bodegas de la Frontera in Tijuana, about 800 feet south of the international border.
Two days later, members of the Tunnel Task Force, in collaboration with enforcement counterparts in Mexico, uncovered a second sophisticated smuggling tunnel connecting a commercial building in San Diego's Otay Mesa industrial park with a warehouse in Tijuana.
The first tunnel, approximately 600 yards in length, was discovered Tuesday evening based on evidence developed during a five-month probe by the task force. The passageway – equipped with lighting, a crude rail system and wooden trusses – exited inside the Via de la Amistad warehouse. The entrance was accessed down a 70-foot shaft secured by a cement cover. The builders had installed a pulley system at the tunnel's U.S. entrance to hoist contraband up into the warehouse. The warehouse itself was filled with a variety of children's toys, including plastic three-wheelers, and boxes of televisions, similar to the merchandise found in the warehouse linked to the smuggling tunnel uncovered locally in October 2013.
Task force investigators arrested a 73-year-old Chula Vista woman for allegedly overseeing the logistics at the Via de la Amistad warehouse. She is charged in a criminal complaint with conspiring with others to maintain a drug involved premises.
The second tunnel was detected Thursday morning as investigators from Mexico, in close coordination with special agents from U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), tracked leads related to the passageway uncovered Tuesday. The second passageway, which originated inside a warehouse located at 10005 Marconi Drive, was the more sophisticated of the two. Stretching for more than 700 yards, it was equipped with a multi-tiered electric rail system and an array of ventilation equipment.
The two tunnels are the sixth and seventh cross-border passageways discovered in the San Diego area in less than four years. If laid end-to-end, the seven tunnels would extend a distance of nearly two miles.
The ongoing investigations into the two tunnels are being conducted by the agencies that make up the San Diego Tunnel Task Force, including HSI; U.S. Customs and Border Protection (CBP) - Border Patrol; the DEA; and the U.S. Attorney's Office. Additional support for this investigation has been provided by CBP's Office of Field Operations.
DEFENDANT Case Number: 14mj1274 Gilberto Quezada-Madrid Age: 26 City: Tijuana CHARGESUse of a Cross Border Tunnel in violation of 21 U.S.C. Sections 555 and 2 Maximum Penalties: 20 years in prison.
Conspiracy to Maintain A Drug Involved Premises in violation of 21 U.S.C. Sections 856 (a)(1) and 846 Maximum Penalties: 20 years in prison.
INVESTIGATING AGENCYSan Diego Tunnel Task Force
*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
National Crime Victims’ Rights Week 2014 30 Years: Restoring the Balance of Justice the United States Attorney’s Office Participates in Candlelight Tribute for Crime SurvivorsRead the Press Release
San Diego, CA - April 6-12, 2014 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 victim’s 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, CA invite you to attend the 25th annual Candlelight Tribute for Crime Survivors on Monday, April 7, 2014 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 County District Attorney Bonnie M. Dumanis.
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), San Diego Police Department Crisis Intervention, San Diego County Sherriff’s Department, the San Diego Police Officers Association, San Diego Slide Shows, 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 or the U.S. Attorney's Office Southern District of California webpage.
Corrupt U.S. Customs and Border Protection Officer Sentenced to 7.5 YearsRead the Press Release
Veteran U.S. Customs and Border Protection Officer Lorne “Hammer” Jones was sentenced today by U.S. District Judge Marilyn Huff to 7½ years in custody for his role in a decade-long crime spree in which he sold his badge to alien-smuggling groups and ultimately to marijuana transportation cells working for Mexican drug cartels. In court, the defendant acknowledged he has waived his right to appeal.
At today’s sentencing and during the December 2013 trial, federal prosecutors Andrew Schopler and W. Mark Conover described the scheme Jones employed to allow over 30,000 kilograms of drug cartel marijuana and multiple illegal aliens into the United States. Jones’ corruption began by first waving cars and vanloads of aliens and drugs through his lane at the San Ysidro port of entry, and later escalated to smuggling tractor-trailers jammed with marijuana through the commercial port at Otay Mesa.
Jones, an inspector since 1994, worked at both the San Ysidro and Otay Mesa border crossings and had been a canine officer since the 1990s. He was indicted by a federal grand jury and arrested at work in 2010, charged with conspiracy to commit bribery and to smuggle drugs and aliens.
A dozen witnesses testified that Jones was on the take, including Michael Taylor, a former colleague and friend who was also being paid by smugglers to corruptly allow contraband into the United States; Jones’ ex-wife, who recruited him to be a smuggler; a friend and financial adviser who testified that the two had discussed ways to hide ill-gotten gains, and who had personally used Jones to smuggle his girlfriend across the border twice; and several of Jones’ co-conspirators.
Prosecutors also presented evidence from a database that tracks information about people crossing the border – such as license plate numbers, names of those who were inspected and when, and by whom. During trial, prosecutors said the data proved that Jones allowed known load vehicles and drivers for drug trafficking organizations to pass though his lanes for years, without being inspected.
According to testimony, Jones volunteered to work overtime shifts as a primary inspector so he could wave through vans jammed with aliens and drugs, and trucks full of marijuana. Jones also employed a beeper code system to notify smugglers which one of the 24 inspection lanes he was working when their loads approached the border crossing. But the system failed in 2002 when Jones was randomly and unexpectedly reassigned to another position, and a load driver was forced to abandon his van full of drugs in the inspection line. In a second failure months later, a van stuffed with four nearly three tons of marijuana was intercepted in the lane assigned to Jones just a few just car lengths away from him. While Jones’ furiously tried to “waved on” the cars in front of the load vehicle, the driver and passenger of the load vehicle jumped out of the van and attempted to escape from several inspectors who hurried over to apprehend them. Notably, Jones did not try to apprehend the smugglers; rather, as federal prosecutor W. Mark Conover said during closing argument, Jones was frozen “[s]itting in his booth, paralyzed with fear. His load was caught.” This marijuana seizure remains the largest ever at the San Ysidro Port of Entry.
“Lorne Jones allowed greed to destroy everything his badge represents,” said U.S. Attorney Laura Duffy. “We hope this outcome serves as a reminder that we will not allow rogue officers to compromise national security and the public trust.”
Pete Flores, CBP Director of Field Operations in San Diego, said: “The actions that Lorne Jones has been convicted of tarnish the badge he wore, and I’m appreciative of the work done to bring him to justice. My CBP officers are hard-working professionals who are vigilant in their protection of the U.S. border and service of the traveling public. CBP does not tolerate corruption within our workforce and we will seek out and work to prosecute to the fullest extent of the law any employees who commit unethical or unlawful acts that tarnish our badge.”
FBI Special Agent in Charge (SAC) Daphne Hearn commented, “When a law enforcement officer violates his oath to protect and serve the citizens of this nation, it undermines the public's trust. When that happens, the FBI and our law enforcement partners at the Border Corruption Task Force are determined to restore the public's confidence and trust by rooting out corruption at all levels of government.” The public can report alleged instances of corruption by calling the FBI hotline at 1-877-NO-BRIBE.
“I am pleased by today's sentence,” said Dennis M. McGunagle, Special Agent in Charge of Department of Homeland Security, Office of Inspector General. “The DHS OIG is committed to working with our law enforcement partners to identify and aggressively investigate allegations of corruption to protect our borders and the integrity of DHS personnel, programs, and operations.”
DEFENDANT Case No. 10cr4141-H Lorne Leslie Jones, aka “Hammer” Age: 50 Chula Vista, CA CHARGESConspiracy to Commit Offenses Against the United States, in violation of
Attempted Importation of Marijuana, in violation of 21 U.S.C. § 841 INVESTIGATING AGENCY
18 U.S.C. § 371Federal Bureau of Investigation, Border Corruption Task Force
Department of Homeland Security, Office of Inspector General
Customs and Border Protection, Office of Field Operations*Indictments and complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.