Southern District of California
Press releases recorded for this federal judicial district.
Drug Trafficker Pleads Guilty to Murdering Two Men over Stolen ProfitsRead the Press Release
SAN DIEGO – Roberto Ochoa of Tijuana pleaded guilty in federal court today, admitting that he slashed the throats of two fellow drug traffickers whom he believed had stolen methamphetamine and cocaine proceeds from their organization.
Ochoa entered a guilty plea to two counts of an Intentional Killing during the course of a Drug Trafficking Conspiracy before U.S. District Judge Dana M. Sabraw.
Ochoa was indicted in November 2011 along with a dozen others who were accused of drug trafficking and money laundering offenses. To date, eight have pleaded guilty, including Ochoa. Seven have been sentenced. Two are fugitives; the other cases are pending.
According to court records, in December 2011, Drug Enforcement Administration (DEA) agents initiated an investigation into a San Diego-based narcotics distribution cell. During the course of the investigation, agents identified a number of people that worked for this cell, including the defendant Roberto Ochoa.
On October 19, 2012, the defendant and others interrogated Hector Gonzalez and Rodolfo Robles at a home located on Multnomah Ct., in San Jacinto, California, about the theft of narcotics proceeds.
At this time, the defendant and another individual used knives to cut the throats of Gonzalez and Robles. Gonzalez and Robles died as a result of their wounds. On November 9, 2012, Riverside County Sheriff’s Officers responded to this address in order to conduct a welfare check and discovered the two bodies.
Sentencing was set for June 6, 2014, at 9 a.m. before Judge Sabraw.
DEFENDANT Case No. 12CR4711-DMS Roberto Ochoa Age: 35 Tijuana, Mexico CHARGESCount 1:
Title 21, United States Code, , Section 848(e)(1)(A) Intentional Killing during the course of a Drug Trafficking Conspiracy, in violation of Title 21, United States Code.
Maximum penalties include: Life imprisonment or death and a mandatory minimum
20- year sentence; maximum $2 million fine; mandatory special assessment of $100 per count and a term of supervised release of at least 5 years and up to life.Count 2:
INVESTIGATING AGENCY
Title 21, United States Code, , Section 848(e)(1)(A) Intentional Killing during the course of a Drug Trafficking Conspiracy, in violation of Title 21, United States Code.
Maximum penalties include: Life imprisonment or death and a mandatory minimum
20- year sentence; maximum $2 million fine; mandatory special assessment of $100 per count and a term of supervised release of at least 5 years and up to life.Riverside County Sheriff’s Office
Drug Enforcement Administration
Federal Bureau of Investigation
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.
Fourth Defendant Sentenced in Murder of U.S. Border Patrol Agent Robert RosasRead the Press Release
SAN DIEGO – Emilio Samyn Gonzales-Arenazas was sentenced today to 40 years in prison for his participation in the July 2009 robbery and murder of United States Border Patrol Agent Robert Rosas, Jr.
Gonzales, a 25-year-old Mexican national, pleaded guilty on July 25, 2011, admitting he was one of five armed individuals who conspired to rob a Border Patrol agent of his night vision device, which resulted in Agent Rosas being fatally shot during a struggle. He pleaded guilty to murder of a federal officer committed in perpetration of a robbery and unlawful confinement.
Court filings indicate that in July 2009, Gonzales and four others plotted to rob a Border Patrol agent of his night vision device. On July 23, 2009, the group, bearing firearms, traveled by car and foot to the international border near Campo, California. Gonzales entered into the United States at night and waited for a Border Patrol agent to arrive in the area while two co-conspirators stood watch on the Mexican side of the border. After Agent Rosas arrived in the area and exited his vehicle, he was detained at gunpoint. Agent Rosas resisted and, during the ensuing struggle, Gonzales and his co-conspirators shot Agent Rosas multiple times, killing him. Gonzales and his co-conspirators then stole the agent’s firearm, night vision device, and other equipment and fled back to Mexico.
In August 2010, Mexican officials arrested Gonzales at the request of the United States. Gonzales was extradited to the United States in March 2011.
Gonzales is the fourth defendant to be sentenced for Agent Rosas’s murder. In April 2010, United States District Judge M. James Lorenz sentenced Christian Daniel Castro-Alvarez to 40 years of imprisonment. On November 14, 2013, he sentenced Marcos Rodriguez-Perez to 56 years to run consecutive to a two-year sentence Rodriguez is currently serving for violating his supervised release from a prior alien smuggling conviction. On December 19, 2013, Jose Luis Ramirez-Dorantes was sentenced to 55 years in custody. The last defendant, Jose Juan Chacon-Morales, remains a fugitive, and there is a reward of up to $100,000 for information leading to his arrest or location.
After Gonzales’ sentencing, United States Attorney Laura E. Duffy expressed her condolences to Agent Rosas’s family and colleagues at the Border Patrol: “For over four and a half years, the Rosas family and Border Patrol have waited for justice to be completed against the individuals who brutally ended the life of a dedicated husband, father, son, brother, colleague, and friend. While I know there is nothing that can be done to bring Agent Rosas home again, I hope the sentences in this case provide some comfort and demonstrate that Agent Rosas and his sacrifice for his country will never be forgotten.”
Chief Patrol Agent Paul Beeson, of the U.S. Border Patrol’s San Diego Sector, said: “Border Patrol Agent Robert Rosas was a sincere professional dedicated to securing and defending our nation’s borders. He lost his life in defense of all he held dear: His country, his family and his friends. On behalf of the men and women of the U.S. Border Patrol I want to express our sincere gratitude to everyone who contributed countless hours to the investigation and prosecution of this case. Thanks to the cooperation of law enforcement agencies on both sides of the border and to the U.S. Attorney’s Office, those responsible for Robert’s murder have been brought to justice.”
FBI Special Agent in Charge Daphne Hearn commented, “Today’s sentencing demonstrates the FBI's continued commitment to hold those responsible for the death of U.S. Border Patrol Agent Robert Rosas. Agent Rosas served his country with dedication, honor, and courage. The FBI recognizes that no punishment will lessen Agent Rosas' death, but we hope today’s sentencing will help bring some closure to the family.”
At the sentencing, Judge Lorenz praised all federal law enforcement involved in the case for their thorough and professional investigation. Duffy also expressed her gratitude to the Federal Bureau of Investigation and Homeland Security Investigations for their tenacity and dedication. “The investigating agents from FBI and HSI worked tirelessly for many years to solve this crime and bring those responsible to justice. It was their incredible investigative efforts that made these convictions and sentences possible. They are owed much gratitude for their unwavering devotion and dedication to this investigation.”
DEFENDANT Criminal Case No. 10CR3487 Emilio Samyn Gonzales-Arenazas Age: 25 Mexico CHARGESCount 4: Title 18, United States Code, Sections 1114 and 2: Murder of a federal officer committed in perpetration of a robbery and unlawful confinement, aiding and abetting
INVESTIGATING AGENCYFederal Bureau of Investigation
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.
Singapore Executive Is Second to Plead Guilty in International Navy Corruption Scandal; Admists Bilking U.S. Navy of More Than $20 MillionRead the Press Release
SAN DIEGO - Alex Wisidagama, a former executive with Glenn Defense Marine Asia (GDMA), pleaded guilty today to participating in a scheme to defraud the United States, admitting that he and others duped the U.S. Navy into overpaying by at least $20 million for supplies and services to American ships in Asian ports.
Wisidagama’s plea is the second in an extensive international fraud and bribery scandal that has ensnared GDMA employees and several U.S. Navy officials. The government has alleged that Wisidagama’s cousin and owner of GDMA, Leonard Glenn Francis, bribed Navy officials with luxury travel and prostitutes in exchange for confidential information and other assistance in winning and retaining hundreds of millions of dollars in Navy contracts.
In his plea agreement, Wisidagama, 40, of Singapore, admitted that he and others used numerous methods to trick the Navy into overpaying for things like fuel and port fees. According to his plea agreement, Wisidagama and others submitted fraudulent or inflated invoices to the Navy; offered up phony competitive bids from non-existent companies so GDMA could win every time; and created fictitious port authorities with significantly inflated port tariff rates.
For example, the plea agreement describes details of the USS Mustin’s visit to Laem Chabang, Thailand, in the fall of 2011. GDMA billed the Navy $2.3 million for fuel that really cost $900,000 and $133,232 for “port dues” that really cost $6,849. The overcharges totaled $1.5 million.
“Wisidagama and others were creative, deceitful and audacious in their efforts to manipulate the Navy and steal millions of dollars from U.S. taxpayers,” said U.S. Attorney Laura Duffy. “This plea is an important development in our ongoing case, and we will continue to pursue all avenues.”
“Today's guilty plea of former Glenn Defense Marine Asia Vice President Alex Wisidagama is part of a far reaching corruption investigation by the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and the Defense Contract Audit Agency,” said James B. Burch, Deputy Inspector General for Investigations, Office of the Inspector General, Department of Defense. “Corrupt contracting practices damage the public trust and ultimately undermine the efforts of the Department of Defense to support our men and women in uniform. Along with our law enforcement partners, we make the investigation of such offenses a top priority. Cases such as these are not motivated by need or other difficult personal circumstances; they are the product of simple greed.”
NCIS Director Andrew L. Traver said: “Special Agents from the Naval Criminal Investigative Service and the Defense Criminal Investigative Service have worked diligently with support from the Defense Criminal Audit Agency, our foreign law enforcement partners, and the Department of Justice to uncover the fraud committed by Alex Wisidagama and his co-conspirators. Today’s guilty plea highlights the strength of the evidence, and our investigative team continues to aggressively pursue all leads related to GDMA.”
The plea was accepted by U.S. Magistrate Judge Jan M. Adler and is subject to acceptance by U.S. District Judge Janis L. Sammartino. Sentencing was set for June 13, 2014 at 9 a.m. before Judge Sammartino.
Wisidagama, who was arrested in San Diego, California, on September 16, 2013, served as the general manager of Global Government Contracts for GDMA. GDMA was a multi-national corporation with headquarters in Singapore and operating locations in other countries, including Japan, Singapore, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, Philippines, Sri Lanka and the United States. GDMA provided hundreds of millions of dollars in husbanding services to the U.S. Navy, such as the coordinating, scheduling and procurement of items and services required by ships and submarines when they arrive at port. These services included providing tugboats; paying port authority and customs fees; furnishing security and transportation; supplying provisions, fuel and water; removing trash and collecting liquid waste.
Wisidagama is the second defendant to plead guilty as part of this investigation. On December 17, 2013, former NCIS Supervisory Special Agent John Bertrand Beliveau Jr. pleaded guilty to conspiracy to commit bribery and bribery charges after admitting to providing Francis with sensitive law enforcement information in exchange for things of value such as cash, luxury travel accommodations, lavish dinners and prostitutes. In addition to Beliveau and Wisidagama, Francis and U.S. Navy Commanders Michael Vannak Khem Misiewicz and Jose Luis Sanchez have been charged as part of the bribery scheme.
The ongoing investigation is being conducted by the Naval Criminal Investigative Service, 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 and 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 No. 13cr4043-JLS Alex Wisidagama Age: 40 Singapore CHARGESConspiracy to Defraud the United States in violation of 18 USC 286
INVESTIGATING AGENCY
Maximum of 10 years in prison; a maximum $250,000 fine, or twice the gross gain or loss from the offense, whichever is greaterDefense 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.
Former San Diego Police Detective Pleads Guilty to Campaign Finance ConspiracyRead the Press Release
San Diego, CA – Former San Diego police detective Ernesto Encinas pled guilty today to charges that he conspired to commit campaign finance crimes in connection with a series of elections at the local and federal level. At the same hearing, Encinas also pled guilty to charges that he made false statements to the Internal Revenue Service when filing tax returns on behalf of his private security business, Coastline Protection and Investigations, Inc.
As part of his plea agreement, Encinas admitted to a range of allegations first brought to light on January 21, 2014, when prosecutors unsealed a complaint against him. Speaking under oath before U.S. Magistrate Judge William V. Gallo, Encinas admitted that he and his coconspirators agreed to make illegal contributions on behalf of Jose Susumo Azano Matsura, a foreign national who was arrested by FBI agents on related campaign finance charges in February. Foreign nationals cannot lawfully contribute to any campaign at the federal, state or local level. Also as part of the plea, Encinas confirmed that he and others, including Azano, Ravneet Singh and Marco Polo Cortes, agreed to make conduit contributions in connection with a federal election, as well as falsify records with the intent to impede a federal investigation—both of which are felonies regardless of whether the source is a citizen or foreign national. (Azano, Singh and Cortes, who were charged earlier this year, have pleaded not guilty to the charges filed against them.)
Encinas’s plea agreement detailed other aspects of the scheme not previously disclosed in public filings. For example, Encinas admitted to FBI agents that Azano induced a series of individuals to donate directly to “Candidate 1,” described as a candidate for the office of mayor of San Diego during the 2012 primary election cycle. Encinas stated that Azano provided cash, which the straw donors each used to make the maximum possible donation to Candidate 1.
In addition, as part of his plea agreement, Encinas admitted that during tax years 2011 and 2012, Azano paid Encinas approximately $10,000 in cash “off the books.” Encinas failed to report approximately $147,300 of such cash payments in tax year 2011, and approximately $74,900 in cash payments in tax year 2012, for a total of approximately $222,200 in unreported cash income. This resulted in a tax loss of $69,394.36 over two years, which Encinas agreed to pay back as restitution.
First Assistant United States Attorney Cindy M. Cipriani said: “To secretly inject foreign money into our elections is an affront to the transparency and integrity of our electoral system. In obtaining this guilty plea, we demonstrate our continuing efforts to investigate and prosecute campaign finance crimes in San Diego and beyond.”
FBI Special Agent in Charge, Daphne Hearn said, “Illegal campaign contributions from foreign sources undermines our electoral process and ultimately our democracy. The FBI is committed to working with our law enforcement partners to identify and root out public corruption wherever it may be happening.”
Special Agent in Charge of Internal Revenue Service Criminal Investigation (IRS CI), Erick Martinez, commented: “Retired San Diego Police Detective Ernesto Encinas intentionally failed to report over $222,000 in cash received by keeping this money ‘off the books.’ Today’s guilty plea should serve as a reminder- all of us have an obligation to file an accurate and truthful tax return. Failure to do so could result in criminal prosecution.”
Encinas’s sentencing hearing has been set for June 9, 2014 at 9 a.m. before United States District Judge Michael M. Anello.
DEFENDANT Case No. 14CR0344-MMAErnesto Encinas
Age: 57
San Diego, CA CHARGESCount 1: Conspiracy to Commit Offenses against the United States – 18 U.S.C. § 371. Maximum penalties: 5 years in prison, 3 years of supervised release, $250,000 fine and a $100 special assessment
Count 2: False Tax Return – 26 U.S.C. § 7206(1): 3 years in prison, 1 year of supervised release, $250,000 fine and a $100 special assessment
INVESTIGATING AGENCYFederal Bureau of Investigation
Internal Revenue Service, Criminal Investigation
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.
Baggage Handlers at San Diego International Airport Charged with Smuggling Drugs via AircraftRead the Press Release
SAN DIEGO – Four baggage handlers at San Diego International Airport were indicted by a federal grand jury Friday on charges that they conspired to smuggle cocaine and methamphetamine onto aircraft by exploiting their ability to pass unchecked through security screening areas.
It’s believed to be the first federal drug prosecution of airport employees at San Diego’s largest airport.
The indictment alleges that Felix Samuel Garcia, Paulo Mendez Perez and Saul Bojorquez, all current or former employees of Delta Global Services, which provides ground services for several airlines, flashed badges numerous times and walked through checkpoints with drugs in their backpacks. Brian Alberto Gonzalez, also a DGS employee, allegedly worked as a courier.
According to the indictment, the drug-toting baggage handlers connected with drug couriers during clandestine meetings in airport restrooms in the secured area of Terminal 2, where they would wait for adjoining stalls to become available and once inside, would hand off the cocaine and methamphetamine under the stalls’ divider.
Also charged were seven alleged couriers, drug suppliers and middlemen. After the bathroom rendezvous, the couriers would board flights and proceed to destinations like New York City, Nashville, Detroit, Baltimore and Hawaii, where they were met by other members of the drug trafficking organization. While the street price of methamphetamine in San Diego is about $5,000 a pound, the value skyrockets to $25,000 a pound in Hawaii.
The alleged traffickers charged in the indictment include Sergio Mejia-Gamboa, Angel Ortega, David Camacho, Jesus Morales, Candelario Perez, Israel Acosta and Henry Garcia-Arambula. All were arrested last week during sweeps by federal agents. All defendants are in custody but Ortega.
The following defendants are scheduled to be arraigned tomorrow before U.S. Magistrate Judge Ruben B. Brooks: Garcia; Mejia-Gambo; Camacho; Morales; Acosta and Gonzalez.
According to a complaint, agents seized 8 kilograms (17 pounds) of cocaine with an estimated street value of $144,000; 18 pounds of methamphetamine with an estimated street value of $90,000 in San Diego and up to $450,000 in Hawaii; and $103,846 in cash during the yearlong investigation.
“This was a brazen scheme to smuggle drugs right under the noses of airport security officials,” said U.S. Attorney Laura Duffy. “We aren’t going to let dangerous drugs fly in unchecked bags in the overhead bins of commercial aircraft.”
“Throughout this investigation, DEA San Diego’s Narcotic Task Force worked closely with law enforcement counterparts nationwide, including airport authorities, to ensure the successful apprehension and dismantlement of this drug trafficking organization,” said DEA San Diego Assistant Special Agent in Charge Gary Hill. “All agencies involved understand how important the security protocols of our airports are, and will continue to work together to formulate plans to thwart other criminal elements from exploiting and circumventing airport security in the future.”
DEFENDANT Case Number 14cr0657 Felix Samuel Garcia Age: 29 Imperial Beach, CA Paulo Mendez Perez Age: 36 Chula Vista, CA Sergio Mejia-Gambo Age: 22 San Bernadino, CA Angel Ortega Age: 26 San Bernadino, CA David Camacho Age: 27 San Bernadino, CA Jesus Morales Age: 21 San Bernadino, CA Candelario Perez Age: 24 Fresno, CA Israel Acosta Age: 48 San Bernadino, CA Brian Alberto Gonzalez Age: 30 San Diego, CA Saul Bojorquez Aviles Age: 26 Chula Vista, CA Henry Garcia-Arambula Age: 22 San Berndino, CA CHARGESConspiracy to Possess Controlled Substances with Intent to Distribute – Title 21, U.S.C., Section 846 and 841 (a) (1); Maximum Penalties: 20 years in prison
Possession of Cocaine and Methamphetamine with Intent to Distribute – Title 21, U.S.C., Section 841 (a) (1); Maximum Penalties: 10 years to life in prison
INVESTIGATING AGENCYNarcotic Task Force
Drug Enforcement 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.
Federal Authorities Continue Crackdown on Smuggling of Protected Marine Animals on Southwest BorderRead the Press Release
SAN DIEGO - United States Attorney Laura E. Duffy announced that yesterday Cheng Zhuo Liu, pled guilty to smuggling protected sea cucumbers. In pleading guilty, Liu admitted that he had smuggled 100 pounds of dried sea cucumber into the United States from Mexico on October 3, 2013, concealed in the spare tire area of his Hyundai. The smuggled sea cucumbers were members of the species Isostichopus fuscus, with a market value of between $5,000-$10,000.
According to scholarly articles, sea cucumbers are marine animals with a leathery skin and an elongated body. They are found on the sea floor worldwide with the greatest number of species being located in the Asian Pacific Ocean. Sea cucumbers serve a useful role in the marine ecosystem as they help recycle nutrients, breaking down detritus and other organic matter after which bacteria can continue the degradation process. Due to overfishing, many species of sea cucumber (including Isostichopus fuscus) are protected under Appendix III of the Convention on International Trade in Endangered Species (CITES) and require a CITES permit from the country of origin and a U.S. Fish and Wildlife Import/Export permit to import them into the United States. Liu admitted that he had neither permit.
Unfortunately, there is presently a thriving black market in sea cucumbers driven by demand in Asia where a pound might sell for $300. In China, the sea cucumber is used in Chinese cuisine (as Hoi Sam) as well as for medicinal purposes. Our Southwest border is not the only area where smuggling sea cucumber is a problem. India has been grappling with sea cucumbers being smuggled in large quantity to Indonesia, Japan and Sri Lanka due to its alleged medicinal properties. Similarly, in the Caribbean Sea off the shores of the Yucatàn Peninsula near fishing ports such as Dzilam de Bravo, illegal harvesting devastated the population of sea cucumbers and resulted in conflict in the community as rival gangs struggled to control the illegal harvest.
According to the American Cancer Society, although it has been used in traditional Asian folk medicine for a variety of ailments, "there is little reliable scientific evidence to support claims that sea cucumber is effective in treating cancer, arthritis, and other diseases."
Liu agreed to forfeit the sea cucumber seized as part of the case and is scheduled to be sentenced on June 9, 2014, at 9:00 a.m. before the Honorable Roger T. Benitez.
DEFENDANT Criminal Case No. 13-CR-4347-BEN Cheng Zhuo Liu Age: 50 Chula Vista, California CHARGESSmuggling, 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 assessmentNational Oceanic and Atmospheric Administration (NOAA); U.S. Fish and Wildlife Service
San Diego Cfo Embezzles His Way into Rancho Santa Fe and the High LifeRead the Press Release
United States Attorney Laura E. Duffy today announced the arraignment and guilty plea of Alfonso Fierro, Jr., for stealing millions of dollars from his employer, WSA Distributing, Inc., a wireless handset distributor headquartered in San Diego.
According to court documents, Alfonso Fierro, Jr. worked as WSA Distributing’s Corporate Controller from 2008 through 2012. In 2012, he was promoted to Chief Financial Officer (“CFO”) of the company. From September 2011 through December 2013, Fierro abused his position within the company to steal millions of dollars in company funds. Among other things, he forged the authorized signatures on WSA checks; made false statements on WSA letterhead about his income; falsified WSA’s corporate books and records to cover up his thefts, and concealed material information about his scheme from his employer. All told, Fierro admitted forging 110 WSA checks, totaling $2,480,967.11.
As revealed today in court, Fierro used the stolen funds to catapult him instantaneously into the lifestyles of the rich and famous. His biggest purchase was a $2.79 million home in Rancho Santa Fe. To purchase his dream home, Fierro first forged the authorized signatures on a WSA check for $83,700 made out to an escrow account at Heritage Escrow set up for the purchase of the home. He then forged the authorized signatures on a WSA check for $988,000 made out to himself as the payee. A few days later, he used these funds to make a second escrow deposit in the amount of $767,100.
Instead of stealing all of the purchase money outright, Fierro next turned to deception of a different sort to pay the remaining balance on the house. He created a letter on WSA letterhead purportedly signed by WSA’s Chief Executive Officer. The letter falsely claimed that Fierro earned a base salary of $450,899.52 from WSA and was guaranteed an annual bonus of $200,000. Instead of over $650,000 a year, Fierro’s actual annual salary was $125,000. Heedless of the outright falsity, Fierro forged WSA’s CEO’s signature on the letter and submitted it to Bank of America in connection with his applications for two mortgages (in the amounts of $1,500,000 and $450,000) to complete the purchase of the house.
Fierro concealed his crime by, among other things, lying to WSA’s CEO about his purchase of the home. Fierro claimed that he was able to buy the Rancho Santa Fe home using $1 million his father had received from selling property in Mexico. Fierro hid the fact that that he was actually using misappropriated funds from WSA to purchase the property.
Fierro also acquired for himself the accoutrements of his newly rich lifestyle, complete with membership at an exclusive San Diego Country Club ($54,904 paid in forged WSA checks), luxury vehicles ($90,000 worth paid in forged WSA checks), plenty of fine jewelry and watches ($185,382 paid in forged WSA checks), and exclusive travel and accommodations (e.g., $67,000 in private jet airfare and $24,000 hotel accommodations for a December 2013 trip to Hawaii).
As part of his plea, Fierro will be required to pay WSA Distributing back the $2,480,967.11 he stole. He will next appear in court on May 30, 2014, at 9 a.m., before U.S. District Judge Dana M. Sabraw.
DEFENDANT Case No. 14CR0573-DMS Alfonso Fierro, Jr., 41 Rancho Santa Fe, California CHARGES Mail 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 AGENCY Federal Bureau of InvestigationFeds Bust Tijuana-based Identity Theft RingRead the Press Release
SAN DIEGO – Two men are charged in indictments unsealed this week with hacking into the computer servers of a major U.S. mortgage broker to steal personal information and use it to siphon funds from the brokerage accounts of thousands of victims.
Jason Ray Bailey and Victor Alejandro Fernandez were charged in a two-count indictment with conspiracy to commit wire fraud and computer hacking. Bailey was arraigned today before U.S. Magistrate Judge Jan Adler; Fernandez was arraigned on Wednesday.
According to charging documents, both men are part of a Tijuana-based conspiracy that hacked the computer servers of a U.S mortgage broker and obtained mortgage applications containing customers’ personal identification information such as names, dates of birth, social security numbers, addresses, assets, tax information and driver’s licenses.
Approximately 4,200 customers had their information stolen between December 2012 and June 2013 and the conspiracy dates back to July 2011, the charging documents say.
Members of the conspiracy used victims’ stolen information to impersonate the mortgage customers, open credit lines in their names, and steal their assets, according to the charging documents. For example, members of the conspiracy identified multiple victims’ brokerage accounts and fraudulently took control of the accounts by first calling the brokerage companies and providing the victims’ personal identification information, and then changing the victims’ passwords and contact information. Once the defendants gained control of the accounts, members of the conspiracy allegedly wired funds from the victims’ brokerage accounts to coconspirators’ U.S. bank accounts in the San Diego and Calexico areas. Several of these wires were over $20,000 and $30,000 each.
Bailey’s detention hearing was scheduled for March 4, 2014 at 3 p.m. and Fernandez’s detention hearing was scheduled for March 6, 2014 at 2:45 p.m. Both defendants are scheduled for a motion hearing and trial setting conference before U.S. District Judge Gonzalo P. Curial on April 11, 2014 at 10:30 a.m.
DEFENDANT Case No. 14CR0277-GPCJason Ray Bailey
Age: 38 Chula Vista, CA Victor Alejandro Fernandez Age: 38 Mammoth Lakes, CA CHARGESCount 1: Conspiracy to Commit Wire Fraud – Title 18, U.S.C., Section 1349
Maximum Penalties: Up to 30 years in prison and $1,000,000 fine.Count 2: Computer Hacking – Title 18, U.S.C., Sections 1030 (a) (4) and (c) (3) (A)
INVESTIGATING AGENCY
Maximum Penalties: Up to five years in prison 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.
Carlsbad Credit Repair “Predator” Receives Prison SentenceRead the Press Release
United States Attorney Laura E. Duffy today announced the sentencing of Eric Phillips for his role in a scheme to defraud clients of Georggin Law, formerly located in Carlsbad, California, who were seeking to repair their credit histories. District Judge Michael M. Anello imposed a sentence of 33 months in custody on Phillips, who victims at today’s hearing described as a “predator.”
Phillips helped create Georggin Law in 2010 – despite the fact that he is not an attorney and has never been licensed to practice law – and claimed that the firm could provide credit repair services to clients attempting to purchase real estate. Phillips falsely represented to potential clients that he had been at Georggin Law for 34 years, that he was an attorney, and that he had a California bar number. Phillips gave presentations at realtors’ offices, targeting individuals who hoped to buy homes but had poor credit scores due to a prior short sale or foreclosure. During these sales pitches, Phillips claimed that Georggin Law could file lawsuits in small claims courts and have prior short sales and foreclosures removed from clients’ credit reports. In addition to lying about his history and qualifications, Phillips also falsely claimed that Georggin had won over 600 victories in small claims courts, had a 100% success rate and had never lost a case. Phillips also promised a “money back guarantee,” despite the fact that Georggin Law maintained little or no money to actually refund unsatisfied clients.
Phillips admitted that Georggin defrauded over 250 clients using such false statements, and that he personally pocketed at least $150,000 from the scheme.
According to the State Bar of California, the attorney nominally affiliated with Georggin Law, Ernest George Georggin, has agreed to surrender his law license and pay restitution to certain clients of the firm.
Victims of Phillips’ scheme addressed the court at today’s sentencing hearing. One man, who has been a firefighter for 34 years, spoke about how devastating it was to have been victimized by Phillips. He said he had withdrawn money from his retirement savings to pay Georggin Law’s fees, but after paying over the money he could not get any calls back from the firm. Another victim described a similar experience, explaining that Phillips promptly called her back when she was ready to pay the fees, but then failed to return her calls thereafter. Both described Phillips as a “predator.”
Other victims sent written statements to the court, describing Phillips as a “habitual liar [who told] us that he was an attorney,” “smart, cunning, and very convincing,” and a “man selling snake oil.” One man from La Mesa wrote to the court, “I was abused by the credit report system, then further abused by Mr. Phillips who did nothing for two years after taking my money.” As a man from San Diego explained, “Eric Phillips pretended to be an attorney and guaranteed our money back … Buying a home here in San Diego is expensive enough … But add in a criminal like Eric Phillips … makes a tough situation even worse … He is a smooth talker with a smile that lures clients in and banks on your trust.”
Phillips will next appear before Judge Anello on April 14, 2014, for a determination of how much restitution he will be ordered to pay the victims of his scheme.
DEFENDANT Eric Dean Phillips Age: 58 Riverside, California CHARGESMail fraud, Title 18, United States Code, Section 1341
INVESTIGATING AGENCY
Maximum penalties: 20 years in custody; $250,000 fine; 3 years of supervised release; mandatory order of restitution to victimsFederal Bureau of Investigation, North County Resident Agent
*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.
Local Biotech Firm Fined $250,000 for Concealing Toxic Nature of Product from the FDARead the Press Release
San Diego biomedical device manufacturer Valor Medical, Inc. was fined $250,000 today by U.S. District Judge Dana M. Sabraw for intentionally withholding unfavorable test results from the Food and Drug Administration about products under development for the treatment of aneurysms.
Valor had been seeking FDA approval to proceed with clinical trials of the devices in question, including one intended for use in blood vessels in the brain, known as Neucrylate AN, and one intended for use in blood vessels near the heart, called Neucrylate AVM. But the actual preclinical test results would have cast doubt on the safety of Neucrylate, so the company concealed the results.
No Americans were harmed because the FDA never permitted clinical trials to proceed in the United States. However, one death and two strokes occurred as part of clinical trials of the product in Europe, where the European authorities were also unaware of the undisclosed test reports.
Former Valor CEO and current member of the Board of Directors H. Clark Adams and Valor Regulatory and Clinical Affairs Manager Cathy Bacquet pleaded guilty to misdemeanors, and Valor founder Dr. Charles Kerber and Chief Scientist Peter Friedman entered into Deferred Prosecution Agreements, for their roles in the matter.
Because Neucrylate is considered be a Class III medical device under the Food, Drug and Cosmetic Act (“FDCA”), premarket approval from the FDA is required before it can be sold in the United States. In order to perform clinical trials on humans to obtain the data needed to support an application for premarket approval, Valor needed to obtain an investigational device exemption (“IDE”) from the FDA. The regulations relating to investigational device exemptions require the applicant to submit “reports of all prior clinical, animal and laboratory testing of the device.”
As the device is intended to be permanently implanted in the body, biocompatibility is very important. The FDA evaluates the biocompatibility of medical devices pursuant to international standards, which require a series of at least three tests. Two of the three tests typically performed to satisfy these requirements are the mouse lymphoma assay (MLA) and the chromosomal assay (CAA) tests.
According to sentencing documents filed with the court, Valor sent samples of Neucrylate to a laboratory to perform the CAA and MLA tests in early 2007. Shortly thereafter, the lab reported to Alan Donald, a consultant hired by Valor, that all the chromosomes in the CAA test had been destroyed by initial contact with the Neucrylate, indicating toxicity.
The lab asked if Valor wanted the lab to dilute the samples of Neucrylate and try the test again, which is the standard protocol. Donald requested that no further testing be performed. The final report, dated April 25, 2007, indicated that “no chromosomes were present to be scored.” While the destruction of all chromosomes indicated that the Neucrylate was cytotoxic, the official conclusion to the report stated that no conclusion could be drawn from the testing because the testing had not been completed pursuant to the testing protocol.1
At about the same time, the laboratory sent an email to Friedman, with the preliminary results of the MLA test attached, advising that “all testing has been completed and the test article is considered to be mutagenic.” Friedman forwarded the email, with the attached preliminary results, to Donald, Adams, and Kerber later that same day. Adams replied to all, saying “Let’s huddle and determine how we overcome this obstacle. I have confidence that we can find an answer.”
Neither the CAA test results nor the MLA test results were ever provided to the FDA by Valor, which filed two separate investigational device exemption applications and responded to several additional requests for information from the FDA (virtually all of which specifically requested that the CAA and/or MLA tests be performed).
The FDA rejected all of Valor’s IDEs for Neucrylate.
After a December 2010 inspection of Valor uncovered the CAA test, the FDA sent a warning letter to Adams at Valor. The letter referenced the failure to disclose the CAA testing as a violation of the regulations requiring an applicant to submit all preclinical testing to the FDA.
When responding to the FDA on behalf of Valor, Defendant Bacquet claimed that Valor “inadvertently” left out the CAA and MLA tests in the application for the IDE. Valor blamed this “unintentional violation” on Valor’s reliance on the work of consultant Alan Donald, who had separated from the company nearly a year before that IDE was filed. The letter falsely stated that “Prior to February 10, 2011, the existence of this report [the MLA] was not known to VM management or Quality/Regulatory staff.” This statement was contradicted by a series of emails between Friedman, Kerber, Adams, and Donald from the time period when the MLA results were received by Valor in 2007, as well as by presence of the MLA report on the computers of Friedman and Bacquet.
The American people depend on the FDA to determine that there is sufficient scientific basis to believe that a proffered medical device is safe and effective before permitting clinical trials on human beings. The FDA, in turn, depends on the full and truthful disclosure of all pre-clinical testing by device manufacturers to make an educated determination. When information is withheld from the FDA, as in the instant case, the decision-making process is corrupted.
____________________
1The lab’s internal Quality Event Details Form noted that the samples for the CAA test were “cytotoxic,” and the results were valid, but the sponsor was “choosing to cancel the study rather than perform dilutions” so a “full conclusion as to the genotoxicity of the sample will not be made.”
DEFENDANT Criminal Case No. 14cr0196-DMSValor Medical, Inc. San Diego, California
Date of Incorporation: 2007 SUMMARY OF CHARGESFailure to Provide Required Information, a felony, in violation of Title 21, United States Code, Section 331(q)(1)(B) and 333(a)(2)
INVESTIGATING AGENCY
Maximum Penalty for a corporation: 5 years of probation, a $500,000 fine, $400 special assessmentU.S Food and Drug Administration, Office of Criminal Investigations
Alvarado Pharmacy and Its Owner Ordered to Repay Medicare over $1 MillionRead the Press Release
United States Attorney Laura E. Duffy announced today that Alvarado Medical Plaza Pharmacy, Inc. was sentenced by United States District Court Judge Janis L. Sammartino to repay Medicare over $1 million, and to pay a $10,000 fine, following its conviction of federal Health Care Fraud for billing Medicare for unapproved oncology drugs.
The pharmacy had admitted that between May 2010 and June 2011, it ordered $752,688.00 of prescription oncology drugs from Quality Specialty Products (QSP) in Canada. The drugs ordered from QSP were unapproved versions of drugs sold in the United States as Avastin, Eloxatin, Gemzar, Neupogen, Rituxin, Taxotere, and Zometa, which were shipped from Canada to defendant in San Diego. The pharmacy further admitted that it was aware that the drugs were not intended for sale in the United States because (a) the packaging and shipping documents indicated that the drugs were shipped to the office from outside the United States; (b) many of the invoices identified the origin of the drugs and intended markets as countries other than the United States; (c) the labels did not bear the “RX Only” language required by the Food and Drug Administration (FDA); (d) the labels did not bear the National Drug Code (NDC) numbers found on the labels of the drugs intended for the U.S. market; (e) many of the labels had information in foreign languages; (f) the drugs were purchased at a substantial discount; and (g) the packing slips indicated that the drugs came from Canada.
The pharmacy further admitted that it supplied the prescription oncology drugs purchased from QSP to doctors, pre-mixed in infusion bags, without advising the doctors that the drugs came from abroad and were not approved for use in the United States. As known to the pharmacy, Medicare provides reimbursement only for drugs approved for use in the United States. Each drug approved by the FDA for use in the United States is assigned a specific code by Medicare for reimbursement claim purposes. The pharmacy admitted that it was aware that some of the drugs purchased from QSP would be administered to Medicare patients, and that doctors would bill Medicare for those drugs using the reimbursement code for U.S. approved drugs. The pharmacy admitted that by causing doctors to falsely claim that the drugs were approved by the FDA for use on patients in the United States, Medicare was fraudulently overbilled at least $1,004,284.04 between May 2010 and June 2011.
Also today Judge Sammartino sentenced William Burdine, a pharmacist licensed in the State of California and the owner of Alvarado Medical Plaza Pharmacy. Burdine was sentenced to 8 months’ home confinement, and ordered to complete 240 hours of community service over his five year period of probation. Burdine admitted that he ordered the prescription oncology drugs from QSP in Canada, knowing that it was unlawful for him to import those drugs into the United States under the Food, Drug and Cosmetic Act, and was convicted of Importation of Goods Contrary to Law. Burdine was also ordered to repay Medicare in the same amount as Alvarado Medical Plaza Pharmacy.
Criminal Case No. 13cr4295-JLS
DEFENDANTSAlvarado Medical Plaza Pharmacy, Inc.
Incorporated:1992
William Burdine
Age: 65 San Diego, California SUMMARY OF CHARGESAlvarado Medical Plaza Pharmacy Inc.
Health Care Fraud, in Violation of Title 18, United States Code, Section 1347.
Maximum Penalty for a corporation: 5 years probation, a $500,000 fine and $400 special assessment.William Burdine
AGENCY
Importation Contrary to Law, in Violation of Title 18, United States Code, Section 545.
Maximum Penalty: 10 years in custody and/or $250,000 fine and a $100 special assessmentU.S. Food and Drug Administration, Office of Criminal Investigations
Mexican Businessman Indicted in Broadening Campaign Finance InvestigationRead the Press Release
San Diego – Mexican businessman Jose Susumo Azano Matsura was charged in an indictment unsealed today with making an illegal campaign contribution to a San Diego mayoral candidate.
Azano, 48, was arrested by FBI agents at his Coronado home Wednesday morning. He was arraigned in federal court this afternoon before U.S. Magistrate Judge Mitchell D. Dembin.
Today’s indictment makes it clear that Azano was the foreign national responsible for the $120,000 illegal campaign contribution to a San Diego mayoral candidate referred to in prior court records. According to federal law, it is illegal for a foreign national to donate to political campaigns in the U.S. Also charged in related cases are San Diego lobbyist Marco Polo Cortes, former San Diego Police detective Ernesto Encinas and Ravneet Singh, owner of the campaign services company known as ElectionMall Inc., which is also charged as a corporate entity.
According to court documents, Cortes, Singh and Encinas conspired to funnel more than $500,000 of illegal foreign money into San Diego municipal and federal campaigns, primarily in 2012 and 2013. The source of the illegal foreign money, the court records said, was a person referred to as “the Foreign National.”
The $120,000 sum in the Azano indictment is the same transaction described in a January 21, 2014 complaint that charges Cortes with conspiracy to finance political campaigns using money from an illegal foreign source. That complaint says: “Using money that the Foreign National had given him, the straw donor wrote a $120,000 check from one of his corporation’s bank accounts to an independent expenditure committee that favored Candidate 3.”
The “straw donor” is still identified in court records only as a La Jolla businessman who acted as a conduit for large campaign donations from the Foreign National.
According to a February 18 grand jury indictment charging Cortes, Singh and his company, ElectionMall Inc., “After directing the Straw Donor to write checks in favor of certain campaigns, the Foreign National would reimburse him.”
That indictment also describes a “war room” created by Singh, Cortes and another coconspirator within the campaign offices of an unidentified mayoral candidate, “for the purpose of making unreporterd inkind contributions financed by the Foreign National.”
The straw donor and candidates are not identified because they have not been charged as members of the conspiracy.
DEFENDANT Case Number: 14cr388MMAJose Susumo Azano Matsura
Age: 48 Coronado, CA SUMMARY OF CHARGESCount 1: Campaign Contribution by a Foreign National – Title 2, U.S.C., Sections 437g (d) (1) (A) (i) and 441e (A) (1).
INVESTIGATING AGENCIES
Maximum Penalties: Up to five years in prison and $250,000 fineFederal 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.
Trust Administrator Pleads Guilty to Embezzlement of over $1 MillionRead the Press Release
San Diego, CA - United States Attorney Laura E. Duffy announced that Brian Lee of San Diego County pleaded guilty today to participating in a scheme he created to obtain over $1 million from accounts he had opened on behalf of any elderly couple. Lee entered his guilty plea to one count of wire fraud before Magistrate Judge Jan M. Adler, and is scheduled to appear before U.S. District Court Judge Barry Ted Moskowitz on May 16, 2014 for sentencing.
In approximately June 2004, a San Diego couple hired Lee to create trusts and corporations on their behalf, and to control bank accounts he opened in the name of the various entities. As Lee admitted in today’s hearing and in court documents, between 2004 and 2012, he made unauthorized transfers of the couple’s funds, through interstate transactions, into other bank accounts over which he had exclusive control. He systematically withdrew funds for his personal use from various accounts, including one opened as a trust for the couple’s grandchildren. In total, Lee siphoned over $1 million from the couple.
United States Attorney Duffy added, “In order to have confidence in the financial service professionals, all consumers – and especially our senior citizens – must be able to trust that their hardearned money is safe from those they hire to help administer their estates. With the continued diligence of our partners in the FBI, we will continue to investigate allegations of embezzlement in order to deter such unscrupulous practices.”
DEFENDANT Case Number: 14cr0385BTMBrian P. Lee
Age: 44 SUMMARY OF CHARGECount 1: Title 18, United States Code, Section 1343 (Wire Fraud) Maximum penalty: 20 years of custody; $250,000 Fine
AGENCYFederal Bureau of Investigation
Conspirator in Multi-Million Dollar Mortgage Fraud Scheme Sentenced to 20 MonthsRead the Press Release
San Diego, CA - United States Attorney Laura E. Duffy announced that Claudia Montes was sentenced today by U.S. District Court Judge Janis L. Sammartino to 20 months in custody for her role in a multi-million dollar mortgage fraud scheme between 2005 and 2008
. Montes and her co-conspirators obtained proceeds from approximately 80 mortgage loans by making false representations on the loan applications regarding their respective salaries and assets, among other things. The conspirators’ failure to pay back the loans resulted in defaults and the foreclosure of approximately 28 properties in San Diego and Orange Counties. At one time, the properties included approximately 25 residences in the Talmadge neighborhood of San Diego.
Montes also acknowledged that she and other straw buyers falsely claimed ownership of a co-conspirator’s bank account in order to falsely represent their assets and obtain loans for which they would not otherwise be eligible. Among the straw buyers was Montes’ sister, who she recruited to participate in the scheme. Montes admitted she also obtained home equity proceeds after securing the initial fraudulent loans, and sharing the funds among co-conspirators for personal expenses. Montes was sentenced to concurrent terms for wire fraud and conspiracy and ordered to pay over $1 million in restitution for the losses resulting from the fraudulent loans she allowed to default.
Montes worked closely with co-conspirator Kathryn Sylvester (Case No. 13CR1355-CAB), who pleaded guilty to one count of wire fraud and one count of conspiracy to commit wire fraud on January 16, 2014. Sylvester admitted she had recruited the “straw buyers” to submit the falsified mortgage loan applications for the purchase of local properties and home equity loans. She also admitted she provided false documents to support the straw buyers’ misrepresentations regarding their income and employment. Sylvester also acknowledged that she made similar misrepresentations to obtain loans from private individuals. Although Sylvester often promised she would “flip” a number of the properties for a profit, she systematically drained equity from the properties for her own benefit, resulting in over $5 million in losses to institutional and private lenders. Sylvester is scheduled to appear before U.S. District Court Judge Cathy Ann Bencivengo on April 1, 2014 for sentencing.
Other co-conspirators included Tad Lent, Roderick Michener, and Timothy Shannahan who are all residents of San Diego. Michener pleaded guilty on April 4, 2013, to conspiring with Sylvester to commit bank fraud (Case No. 13CR1130-CAB). Michener admitted that he permitted co-conspirators to claim an ownership interest in his bank account in order to include the account as an asset on their respective mortgage loan applications. He also admitted transferring fraud proceeds to Sylvester. Michener is scheduled to be sentenced before District Court Judge Cathy A. Bencivengo on March 14, 2014.
Lent pled guilty to conspiring with Sylvester to submit falsified loan applications to mortgage lenders by misrepresenting the amount of his assets (Case No. 12CR3744-L). Lent entered his guilty plea on January 28, 2013, and is scheduled to be sentenced before District Court Judge M. James Lorenz on March 3, 2014.
Shannahan admitted conspiring with Sylvester between January 2007 and May 9, 2008, to fraudulently induce lenders to fund mortgage loans (Case No. 13CR1650-L). Among other things, Shannahan falsely claimed on a mortgage loan application that he earned $50,000 per month in order to obtain mortgages for a residence in La Jolla. Shannahan entered his guilty plea on May 18, 2013 and is scheduled to be sentenced before Judge Lorenz on March 10, 2014.
United States Attorney Duffy said, “Crimes like this helped contribute to the housing crisis in 2008, from which we are only now beginning to recover. Sentences such as the one imposed today will hopefully deter others from playing games with the home loan industry and prevent further financial crises.”
DEFENDANT Case No. 13CR1313-JLSClaudia Montes
Age: 41 CHARGESCount 1: Title 18, United States Code, Section 1349 (conspiracy to commit wire fraud and bank fraud); Maximum penalty: 30 years of custody; $1,000,000 fine
Count 2: Title 18, United States Code, Section 1343 (wire fraud); Maximum penalty: 20 years of custody; $250,000 Fine
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.
Former Nurse’s Assistant Sentenced to 50 Years in Prison for Sexual Exploitation of Minors and Child PornographyRead the Press Release
United States Attorney Laura E. Duffy announced that today Hector Manuel Carreon, a former nurse’s assistant in San Diego, was sentenced by United States District Judge John A. Houston to serve 50 years in federal prison based on Carreon’s convictions for sexual exploitation of a child, attempted sexual exploitation of a child, and receipt and possession of child pornography. Carreon was convicted after a trial by the Court in July 2013. Judge Houston also ordered a lifetime of supervised release and mandatory sex offender registration. Carreon has been in custody since his arrest by Special Agents with the Homeland Security Investigations in June 2012.
According to court documents, on June 26, 2012, Homeland Security Investigations executed a federal search warrant where they found Carreon in bed with his underwear pulled down to his ankles with a family member under the age of 10. Agents located multiple computers with child pornography – over 500 images and 900 videos of minors engaged in sexually explicit conduct - in the residence. Several videos contained minors under the age of 12. Agents also located three videos of Carreon sexually molesting two family members who appeared to be drugged in the videos. At sentencing today, Judge Houston stated that it was “apparent” that Carreon had drugged the minors before engaging in the video recording of the sexual molestation.
This case stems from an investigation by Homeland Security Investigations.
DEFENDANT Case Number: 12CR3149-JAHHector Manuel Carreon
Age: 47 San Diego, California SUMMARY OF CHARGESTitle 18, United States Code, Section 2251 (a) and (e) - Sexual Exploitation of a Child and Attempted Sexual Exploitation of a Child
INVESTIGATING AGENCY
Title 18, United States Code, Section 2252(a)(2) and (4) – Receipt and Possession of Child PornographyHomeland Security Investigations
Defendant Sentenced to 30 Years in Prison for First Degree MurderRead the Press Release
SAN DIEGO, CA - Manuel Osorio-Arellanes, age 37, was sentenced to 30 years in prison today in United States District Court in Tucson, AZ, for the first degree murder of United States Border Patrol Agent Brian Terry, announced Laura E. Duffy, United States Attorney for the Southern District of California. Agent Terry was shot and killed on December 14, 2010, when the defendant and four others engaged in a firefight with Border Patrol agents.
According to the plea agreement entered in October 2012, Manuel Osorio-Arellanes admitted that during the evening of December 14, 2010, he and others were in the United States for the purpose of robbing drug traffickers of their contraband. While Agent Terry was engaged in the performance of his official duties, members of the defendant’s group exchanged gun fire with agents and one of the shots fired by a member of the defendant’s group killed Agent Terry.
U.S. Attorney for the Southern District of California Laura E. Duffy said, “Nothing can bring back Agent Terry, who gave his life protecting our country. Our hope is that, starting today with this significant sentence, justice will give some modicum of relief to grieving family members. We will continue our unrelenting pursuit of those responsible for the tragic attack against Agent Terry.”
FBI Special Agent in Charge Douglas G. Price, Phoenix Division, stated, “Today’s sentencing is another step forward in getting justice in the case involving the murder of U.S. Border Patrol Agent Brian Terry and his family. The FBI remains steadfast in our constant pursuit of those responsible for the death of Agent Terry and we will utilize all available resources to apprehend those responsible for this heinous murder”.
“The sentencing of another individual responsible for the murder of Border Patrol Agent Brian A. Terry is critically important to the men and women of our agency,” said Manuel Padilla Jr., Chief Patrol Agent, Tucson Sector, U.S. Border Patrol. “We are extremely grateful for the effort and tireless dedication to this case from the U.S. Attorney’s Office, the Federal Bureau of Investigation and the Government of Mexico.While we will continue to be relentless in our commitment to securing our Nation’s borders, we will forever remember all of the men and women who have made the ultimate sacrifice.”
On July 20, 2012, in order to seek the public’s assistance, Department of Justice officials announced a reward of up to $1 million dollars for information leading to the arrest of four fugitives: Jesus Rosario Favela-Astorga, Ivan Soto-Barraza, Heraclio Osorio-Arellanes, and Lionel Portillo-Meza.
Lionel Portillo-Meza and Ivan Soto-Barraza have been captured in Mexico. These defendants are charged with crimes including 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, assault on a federal officer and possession of a firearm by a prohibited person. In addition to the murder of Agent Terry, the indictment also alleges that the defendants assaulted Border Patrol Agents William Castano, Gabriel Fragoza, and Timothy Keller, who were with Agent Terry during the firefight.
A sixth defendant, Rito Osorio-Arellanes, pled guilty to conspiracy to interfere with commerce by robbery and was sentenced to eight years in prison in January 2013. Rito Osorio- Arellanes was not present at the incident that resulted in Agent Terry’s murder.
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 Federal Bureau of Investigation.
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.
Three Men, Including San Diego Father and Son, Indicted in Multi-million Dollar Conspiracy to Evade U.S. Sanctions on IranRead the Press Release
United States Attorney Laura E. Duffy announced that Hassan Rafiee and his son, Idin Rafiee, were arraigned today before United States Magistrate Judge Barbara L. Major in federal court in San Diego on an indictment charging them and a third man, Majid Nouri, with conspiracy to evade U.S. economic sanctions against Iran.
Under the International Emergency Economic Powers Act ("IEEPA"), and a series of Presidential Executive Orders, the United States has imposed economic sanctions against Iran. With limited exceptions, the sanctions generally prohibit U.S. persons from exporting, selling, and supplying goods, technology or services to Iran, or even facilitating such transactions.
According to the indictment, the Rafiees and Majid Nouri are U.S. citizens originally from Iran. The indictment alleges that the Rafiees – with Nouri’s assistance – operated two companies, Pasha International aka Surnyx, based in San Diego, and Pasha Tak, based in Iran. The defendants used these companies to carry out a multi-year conspiracy to evade the trade sanctions against Iran. Specifically, the indictment alleges that the defendants unlawfully procured more than $8 million in goods – primarily cooling equipment – for customers in Iran, without obtaining any approval from the United States Department of Treasury, Office of Foreign Assets Control.
In January 2014, Department of Homeland Security, Homeland Security Investigation (HSI) agents arrested Hassan and Idin Rafiee in San Diego and arrested Majid Nouri in Katy, Texas. The Rafiees have each been released on a $100,000 bond secured by property, home detention and GPS monitoring, and are scheduled to make their next appearance on March 7, 2014 before the Hon. Janis L. Sammartino for a motion hearing. Nouri is expected to make his initial appearance in federal court in San Diego on February 11, 2014.
DEFENDANT Case Number: 14CR0240-JLSHassan Rafiee
San Diego, California
Majid Nouri
Idin Rafiee
Katy, Texas
San Diego, California
Age 58
Age 41
Age 24 SUMMARY OF CHARGESTitle 50, U.S.C., Sections 1702 and 1705, and Title 31, C.F.R., Part 560 – Conspiracy to Export to Embargoed Country
INVESTIGATING AGENCY
Maximum penalties: 20 years in prison and a $1,000,000 fine.Department of Homeland Security, Homeland Security Investigations
An indictment itself is not evidence that the defendants committed the crimes charged. The defendants are presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.
Officials Take Down Gang-affiliated Drug Traffickers; Take Dozens of Guns Off the StreetRead the Press Release
San Diego – Forty-five people with links to six criminal street gangs have been charged with gun and methamphetamine-trafficking crimes in indictments unsealed this week.
Following a yearlong investigation and a three-day gang sweep that concluded this morning, 40 defendants were in custody and 52 weapons were taken off the streets. A coalition of local, state and federal agents also conducted searches at eight locations – including sites in Linda Vista, Midtown, City Heights, Mid City, Clairemont Mesa and Oak Park.
Many of these locations are homes where drugs and guns were stored or sold – including an apartment across the street from Hoover High School. Agents and detectives seized $47,600 in cash at a house in Oak Park this morning, bringing the total of cash seized to almost $60,000.
Among the guns found during the investigation, dubbed Crystal Palace II: Numerous assault rifles; AR-15 magazine-fed, semi-automatic rifles; high-powered rifles, an SWD M11 9mm (Tec 9) with high capacity magazine and a couple Norinco Mak 90 7.62mm (AK-47) with high capacity magazines.
The 10 indictments describe five different conspiracies with overlapping players, including individuals with ties to the Oriental Killer Boys, the Oriental Mob Crips, the Viet Boys, the Tiny Oriental Crips, the Logan Heights Calle Treinta (KIE-yay TRAIN-tuh) and Linda Vista Crips.
According to indictments and search warrant affidavits, most defendants were drug traffickers selling methamphetamine. Some were felons in possession of firearms.
“We are absolutely committed to making our neighborhoods safe from violent gang activity and drug trafficking,” said U.S. Attorney Laura Duffy. “We will not allow our neighborhoods to become headquarters for drug-pushing, gun-toting gangsters.”
“HSI and our law enforcement partners have struck a serious blow to violent gang organizations in San Diego,” said Derek Benner, special agent in charge for HSI in San Diego. “The focus of Crystal Palace Part ll was on disrupting criminal gang activity in Southern California based on previously gathered intelligence. Today’s arrests, which included a number of high-level gang members who were taken off the streets, will immediately improve community safety.”
“This is exactly the type of criminal activity that DEA and its law enforcement partners want to ensure is not afflicting the streets of San Diego,” said Special Agent in Charge William R. Sherman of the San Diego Drug Enforcement Administration.
"Combating violent crime to make our communities safer is our first goal,” said John D'Angelo, Acting Special Agent in Charge of the ATF Los Angeles Field Division. “We best achieve that through effective partnerships and innovative enforcement. In this investigation, our agencies worked together, but uniquely applied our respective resources and enforcement jurisdictions to the overall effort. As a result, we made a far greater impact together than any of us could have alone.”
According to court documents, some of the defendants were distributing methamphetamine far beyond the borders of California – from Hawaii to Guam, and from central California to Minnesota.
This case is the latest in a series of federally-charged, large-scale multi-agency crackdowns on street gang activity in San Diego County neighborhoods. Including today’s indictments, almost 300 people have been charged in a number of major federal gang prosecutions since January 2012, with scores of guilty pleas entered.
What most of these cases have in common is methamphetamine. It’s the perfect commodity for gangs because there is no shortage of customers. It’s cheap, pure and so addictive you can get hooked after just one use. It’s prevalent among the young and old, rich and poor.
Federal prosecutions of methamphetamine drug crimes in the Southern District of California, which includes San Diego and Imperial counties, have increased more than 500 percent in the last five years, from 144 cases in FY 2008 to 910 cases in FY 2013.
While San Diego County was once known for its proliferation of meth labs, the supply of meth has shifted to “superlabs” operated by drug cartels in Mexico. As a result, meth seizures at U.S. ports of entry along the California-Mexico border have almost doubled. In fiscal 2013, nearly 12,000 pounds of meth were seized at the ports, compared to almost 6,700 pounds two years earlier, according to U.S. Customs and Border Protection stats.
“Meth abuse and trafficking are tremendous problems in our country and our county – and they urgently require more resources and attention,” U.S. Attorney Duffy said. “For all of these reasons, in 2014-2015, my office will be taking a harder look at our role in attacking these problems.”
Many of the defendants are scheduled to make their initial appearances in federal court at 2 p.m. today before U.S. Magistrate Judge Karen S. Crawford.
DEFENDANTS Criminal Case No: 14-CR-0216-MMAName
Age HometownChien Van Nguyen, aka “Chino”
32 San Diego, CAIsrael Soto, aka “Izzy/EZ”
30 El Cajon, CAChristian Lomeli, aka “Chente”
23 Chula Vista, CALori Ann Rodriguez
43 San Diego, CAEric Allan Guffin, aka “White Boy”
50 San Diego, CAHa Thi Ngoc Nguyen, aka “Holly”
38 San Diego, CALorenzo Orozco, aka “Tony Baloney”
33 San Diego, CAAnthony Adam Cruz, aka “Tony”
37 San Diego, CAEric Hanesana, aka “Slim/Sleepy”
30 San Diego, CAJohn Van Trinh, aka “Ngo / Little John”
23 San Diego, CASomxay Souphalak, aka “Hay”
38 San Diego, CAThalina Perry,
32 San Diego, CAThomas Ai Sommay, aka “T-Black”
33 San Diego, CALeo Paschal,
32 El Cajon, CATheng Sonepaseuth Theimthath, aka “Theng / Baby Blue
36 San Diego, CA SUMMARY OF CHARGESConspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846; Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1); Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2) Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine.
DEFENDANTS Criminal Case No: 14-CR-0224-MMAName
Age Hometown Israel Soto, aka “Izzy/EZ” 30 El Cajon, CA *Aziel Viveros-Navarro, aka “Pariente” 56 Tijuana, Mexico Jessica Quezada, 23 El Cajon, CA *Nathan Derek Gardner, aka “Nick” 34 Chula Vista, CA Gale Mason, 42 San Diego, CA SUMMARY OF CHARGESConspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846; Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1); Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2)
Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine.
DEFENDANTS Criminal Case No: 14-CR-0219-MMAName
Age HometownMario Alberto Miranda-Verdugo
32 San Diego, CAIsrael Soto, aka “Izzy/EZ”
30 El Cajon, CA*Chad Namoc
29 Pahoa, HI SUMMARY OF CHARGESConspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846; Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine.
DEFENDANTS Criminal Case No: 14-CR-0225-MMAName
Age Hometown Tam Minh Ta, aka “Tom” 30 San Diego, CA Trinh Bang Le, aka “Tyson” 42 San Diego, CA Jesus Efren Guzman, 33 San Diego, CA Giang Van Doan, aka “Shorty” 37 San Diego, CA *Christopher Sutphin Ibanez, 49 San Diego, CA Bounpheng Soryadvongsa, aka “Bulldog” 41 San Diego, CA Rick Minh Ta, aka “Ricky” 27 San Diego, CA Billy Minh Ta, 29 San Diego, CA Vong Vongdara, aka “Thigh” 33 San Diego, CA Jasmine Marie Cross, aka “Kitty” 19 San Diego, CA SUMMARY OF CHARGESConspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846; Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1); Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2) Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine.
DEFENDANTS Criminal Case No: 14-CR-0221-MMAName
Age Hometown Dung Van NGUYEN aka “Du” 36 San Diego, CA Israel Soto, aka “Izzy/EZ” 30 El Cajon, CA Javier Chavez 48 Riverside, CA Veovanh Insixengmay aka “Baby” 32 San Diego, CA Eric Allan Guffin, aka “White Boy” 50 San Diego, CA Dien Phong Vo 36 San Diego, CA Louie James Roberts 26 San Diego, CA Thuy Thu Tu 45 San Diego, CA *Sengnguen Koulavongsa aka “Nguen” 40 San Diego, CA Erin Lindsay Connelly 32 El Cajon, CA *Suzana Vera 39 San Diego, CA SUMMARY OF CHARGESConspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846; Conspiracy to Import Methamphetamine in violation of Title 21, U.S.C. Secs. 952, 960 and 963; Importation of Methamphetamine in violation of Title 21, U.S.C., Secs. 952 and 960; Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1); Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2)
Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine.
DEFENDANT Criminal Case No: 14-CR-0223-MMAName
Age Hometown Vincent Rubio 36 San Diego, CA SUMMARY OF CHARGESPossession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1); Maximum Penalties: 40 years in prison with a mandatory minimum sentence of 5 years and a 5 million dollar fine.
DEFENDANT Criminal Case No: 14-CR-0220-MMAName
Age Hometown Dat Minh To aka “Tony” 33 San Diego, CA SUMMARY OF CHARGESPossession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1); Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2) Maximum Penalties: 40 years in prison with a mandatory minimum sentence of 5 years and a 5 million dollar fine.
DEFENDANT Criminal Case No: 14-CR-0218-MMAName
Age Hometown Vinh Van Phan aka “Crack Baby” 33 San Diego, CA SUMMARY OF CHARGESFelon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2) Maximum Penalties: 10 years in prison and a $ 250,000 dollar fine.
DEFENDANT Criminal Case No: 14-CR-0217-MMAName
Age Hometown Khamsouk Inthavong aka “Speedy”” 35 San Diego, CA SUMMARY OF CHARGESFelon in Possession of Ammunition in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2) Maximum Penalties: 10 years in prison and a $ 250,000 dollar fine.
DEFENDANT Criminal Case No: 14-CR-0222-MMAName
Age Hometown Cu Van Huynh aka “Ku Van Huynh/ Van Cu Huynh” 31 San Diego, CA SUMMARY OF CHARGESFelon in Possession of Ammunition in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2) Maximum Penalties: 10 years in prison and a $ 250,000 dollar fine.
*Fugitives
AGENCIESImmigration and Customs Enforcement, Homeland Security Investigations
San Diego Police Department
San Diego County Sheriff’s Department
Drug Enforcement Agency
Bureau of Alcohol, Tobacco, Firearms and ExplosivesAn indictment or complaint itself is not evidence that the defendants committed the crimes charged. The defendants are presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.
Three Plead Guilty in Scheme to Smuggle Aliens via Private PlanesRead the Press Release
SAN DIEGO – United States Attorney Laura E. Duffy announced that Philip Kubeck, Roselia Kubeck, and Earl Allen pleaded guilty Friday morning in federal court in San Diego to conspiracy to bring in illegal aliens for financial gain, harbor illegal aliens, and transport illegal aliens. All three entered their guilty pleas before U.S. Magistrate Judge David H. Bartick.
As described in their plea agreements, Philip Kubeck, Roselia Kubeck, and Earl Allen were involved in a smuggling scheme in which illegal aliens were smuggled into the United States through a hole in the International boundary fence, were harbored at a house located on North 8th Street, in El Centro, California, and then transported further into the United States via private airplane in order to bypass Border Patrol checkpoints.
According to his plea agreement, Earl Allen operated the alien stash house located on North 8th Street, where the aliens were taken after illegally entering the United States through the hole in the fence. Earl Allen also drove the aliens to the Imperial County airport.
Philip Kubeck admitted that he served as the pilot, and flew the aliens from El Centro, California, past all of the Border Patrol checkpoints, to the Los Angeles area. According to her plea agreement, Roselia Kubeck served as the communications link between Philip Kubeck and Earl Allen coordinating flight times for the illegal aliens staying at the stash house, and drop off times for those aliens at the airport. Illegal aliens involved in this scheme paid as much as $10,000 to be brought into the United States and transported in this way.
All three are set for sentencing on April 21, 2014 before U.S. District Judge Larry Alan Burns.
DEFENDANTS Criminal Case No. 13CR4226-LABPhilip Kubeck
SUMMARY OF CHARGES
Roselia Kubeck
Earl AllenConspiracy in violation of of Title 18, United States Code, Section 371- Maximum penalties per count: 5 years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment.
INVESTIGATING AGENCIESUnited States Border Patrol
Somali Immigrant Sentenced for Providing Support to Foreign TerroristsRead the Press Release
SAN DIEGO – Ahmed Nasir Taalil Mohamud, a cabdriver from Anaheim, was sentenced today to six years in prison for his part in a San Diego-based conspiracy to provide material support to the terrorist group al-Shabaab.
Nasir is the last of four defendants to be sentenced by U.S. District Judge Jeffrey T. Miller. The others were sentenced in November 2013, including San Diego cabdriver Basaaly Saeed Moalin to 18 years in prison; Mohamed Mohamed Mohamud, the imam at a popular mosque frequented by the city’s immigrant Somali community, to 13 years in prison; and Issa Doreh, who worked at a money transmitting business that was the conduit for moving the illicit funds, to 10 years in prison.
Nasir and his co-conspirators were found guilty during a three-week trial in February. The United States presented evidence that Nasir, Moalin, Mohamud and Doreh conspired to provide money to al-Shabaab, a violent and brutal militia group that engages in suicide bombings, targets civilians for assassination, and uses improvised explosive devices. In February, 2008, the U.S. Department of State formally designated al-Shabaab as a foreign terrorist organization.
During the trial, the government contended that Nasir conspired to collect money from donors in Orange County as part of the conspiracy to support al-Shabaab.
During today’s sentencing hearing, Judge Miller acknowledged that Nasir was the least culpable member of the conspiracy and he noted the defendant’s background as a refugee from war-torn Somalia. Still, the judge said, “These offenses were very serious.”
This case was prosecuted in federal court in San Diego by Assistant U.S. Attorneys William Cole and Caroline Han and Department of Justice Trial Attorney Steven Ward. This case was investigated by the San Diego Joint Terrorism Task Force; the Federal Bureau of Investigation; the Department of Homeland Security, Immigration and Customs Enforcement; and the Department of Homeland Security, Customs and Border Protection.
DEFENDANTS Criminal Case No. 10CR4246-JMAhmed Nasir Taalil Mohamud Basaaly Saeed Moalin Mohamed Mohamed Mohamud Issa Doreh
SUMMARY OF CHARGESCount 1 (all defendants) : Title 18, United States Code, Section 2339A(a)(1) - Conspiracy to provide material support to terrorists; Maximum penalties: 15 years in prison
Count 2 (all defendants): Title 18, United States Code, Section 2339B(a)(1) – Conspiracy to provide material support to foreign terrorist organization; terrorists; Maximum penalties: 15 years in prison
Count 3 (all defendants): Title 18, United States Code, Section 1956(h) – Conspiracy to launder monetary instruments; Maximum penalties: 15 years in prison
Count 4 (Basaaly Moalin) Title 18, United States Code, Section 2339A(a) – Providing material support to terrorists; Maximum penalties: 15 years in prison
Count 5 (defendants Basaaly Moalin, Mohamed Mohamed Mohamud and Issa Doreh) Title 18, United States Code, Section 2339B(a)(1) – Providing material support to foreign terrorist organization; Maximum penalties 15 years in prison
INVESTIGATING AGENCIESSan Diego Joint Terrorism Task Force
Federal Bureau of Investigation
Homeland Security Investigations, Immigration and Customs Enforcement
Homeland Security Investigations, Customs and Border ProtectionSeven Plead Guilty in Widening Bribery and Kickback CaseRead the Press Release
Six former government contractors and a former Defense Department employee who called himself the “Godfather of Camp Pendleton” have entered guilty pleas in federal court in connection with a scheme involving bribery and kickbacks at federal facilities.
The guilty pleas, which also include two corporations, took place over a span of 10 days, culminating with the admissions today of subcontractors Paul Dana Kay of PK Excavation and Manuel Ramirez of MRN Construction, Inc., before U.S. Magistrate Judge David H. Bartick to Anti-Kickback Act violations.
Likewise, on Tuesday of this week, subcontractors Gerardo Mercado and Raul Mercado of Blue Ocean Construction, Inc., entered guilty pleas before Judge Bartick. Last week, former U.S. Department of Defense employee Natividad “Nate” Lara Cervantes, the self-described “Godfather,” as well as government prime contractors Hugo Hernandez Alonso and Bayani Yabut Abueg, Jr., and their companies, Hugo Alonso, Inc. (“HAI”) and MBR Associates, Inc. (“MBRA”) admitted crimes as well.
According to court records, Cervantes used his position at Camp Pendleton to solicit bribes from construction companies HAI and MBRA seeking to do business on the base, and referred to himself as the “Godfather of Camp Pendleton.” At least as early as September 2008, Cervantes admitted using his position supervising construction and service contracts to seek bribes from Alonso and Abueg, on behalf of either HAI or MBRA, to do business at Camp Pendleton. In return for these contracts, Cervantes received cash payments from Alonso and Abueg and remodeling work on a condominium that was paid for by HAI.
As part of his plea agreement, Cervantes admitted that as early as 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 at least $74,000 in bribes between 2008 and 2011. Cervantes and Abueg, acting on behalf of HAI, also admitted exchanging an additional $20,000 in bribes during this time, all of which was approved by 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 Abueg, who agreed to pay Cervantes a $40,000 bribe in exchange for assistance in obtaining a new $4 million contract at Camp Pendleton for MBRA. 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, Abueg 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, Abueg handed Cervantes an envelope containing $10,000 cash. At that point, federal agents intervened.
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 employee. Abueg’s and Alonso’s companies, MBRA and HAI, respectively, also entered guilty pleas regarding the solicitation and acceptance of kickbacks.
The four subcontractors who pleaded guilty this week admitted paying tens of thousands of dollars in kickbacks for favorable treatment in their subcontracts with HAI or MBRA. For example, Kay admitted to paying Abueg at least $50,000 in kickbacks, and the Mercados admitted to paying Abueg over $44,000 in kickbacks.
“The public confidence of citizens in their government is seriously undermined when federal employees and contractors engage in deceitful, corrupt practices for personal gain,” said U.S. Attorney Laura Duffy. “Corruption exacts a price, and those costs are ultimately born by honest taxpayers and forthright vendors. This office will continue to vigorously prosecute and hold accountable all those who seek personal enrichment at the public’s expense.”
FBI Special Agent in Charge Daphne Hearn commented, “The FBI is committed to working with our law enforcement partners in rooting out fraudulent schemes that defraud the Department of Defense and ultimately American taxpayers. Today’s guilty pleas are an example of that continued commitment to the American public to protect our precious tax dollars from waste, fraud, and abuse.”
Acting Special Agent in Charge of Internal Revenue Service (IRS) Criminal Investigation for the Los Angeles Field Office, Joel P. Garland stated, “Today’s court action reaffirms IRS Criminal Investigation’s role in combating tax and other financial crimes stemming from bribery of public officials.”
Small Business Administration Inspector General Peggy E. Gustafson said: “There is zero tolerance for corruption in SBA’s set-aside contracting programs. We will aggressively pursue allegations of fraud and corruption in these programs and seek justice on behalf of taxpayers. I want to thank the U.S Attorney’s Office and our law enforcement partners for their dedication and hard work throughout this investigation.”
“The special agents in my office work hard to fight fraud and protect taxpayer dollars,” said Inspector General Brian D. Miller of the General Services Administration. “We will continue to actively investigate GSA contractors whose ‘business as usual’ involves bribes and kickbacks.”
Special Agent in Charge Chris Hendrickson of the Defense Criminal Investigative Service (DCIS) Western Field Office commented, “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.” Special Agent in Charge Susan M. Simon of the Naval Criminal Investigative Service (NCIS) Southwest Field Office observed, “This investigation once again highlights the excellent cooperation between multiple investigative agencies working together in the pursuit of justice. Combating procurement fraud perpetrated by U.S. Navy and U.S. Marine Corps contract companies and government contracting personnel remains a top priority for the Naval Criminal Investigative Service. It has been a pleasure for NCIS to have worked so closely with our federal partners, including the United States Attorney's Office, in the successful resolution of this case. We look forward to building on the excellent relationships forged throughout the course of this investigation.”
Cervantes, Alonso and Abueg are scheduled to next appear in court for sentencing before U.S. District Judge Anthony J. Battaglia on April 18, 2014. Kay, Ramirez, Gerardo Mercado, and Raul Mercado are all scheduled to appear for sentencing before Judge Battaglia on April 25, 2014.
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 contacting the Department of Defense Hotline at (800) 424-9098 or email: [email protected].
DEFENDANT Case Number: 13cr1345AJBLara Cervantes Natividad
DEFENDANT Case Number: 14cr0120-AJBHugo Hernandez Alonso
DEFENDANT Case Number: 14cr0144-AJBBayani Yabut Abueg, Jr.
DEFENDANT Criminal Case No. 14cr0180-AJBGerardo Ricardo Mercado
DEFENDANT Criminal Case No. 14cr0181-AJBRaul Mercado
DEFENDANT Criminal Case No. 14cr0187-AJBPaul Dana Kay
DEFENDANTS Criminal Case No. 14cr0213-AJBManuel Ramirez
CORPORATE DEFENDANT Case Number: 14cr0120-AJBHugo Alonso, Inc.
CORPORATE DEFENDANT Case Number: 14cr0144-AJBMBR Associates, Inc.
SUMMARY OF 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 bribe (Defendant Cervantes only)
Title 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 Cervantes, 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, MBR Associates, Inc., Gerardo Mercado, Raul Mercado, Kay, Ramirez)
Title 26 United States Code, Section 7206(1) – Filing a False Tax Return Maximum penalties: 3 years imprisonment, $250,000 fine, or twice the gross amount of the tax loss from the offense (Defendant Abueg only)
INVESTIGATING AGENCIESFederal 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 GeneralMarine Police Commander Sentenced to Prison in Miramar Bribery SchemeRead the Press Release
This morning in federal court in San Diego, former Marine watch commander Luis Gilbert Menchaca was sentenced to prison for his role in a fraud and bribery scheme at Marine Corp Air Station (MCAS) Miramar. As part of the scheme, Menchaca – while serving as a watch commander for the military police at Miramar – paid thousands of dollars in bribes to another Marine in order to obtain tens of thousands of dollars in fraudulent lodging reimbursements. U.S. District Judge Dana M. Sabraw sentenced Menchaca to two years in prison followed by three years of supervised release, and ordered him to pay restitution to the Marine Corps in the amount of $37,632.
On July 16, 2013, Menchaca was found guilty by a federal jury of one count of conspiracy to commit bribery and three counts of making false claims. The trial evidence demonstrated that Menchaca first joined the Marine Corps in 1998, and after an initial four-year term in which he attained the rank of Sergeant, was discharged and entered the Marine Corps Reserve. From time to time thereafter, Menchaca received orders placing him on active duty. In connection with his mobilization orders, Menchaca became eligible to receive certain travel payments, including lodging reimbursement and a per diem allowance, for the entire duration of his active duty service. These travel payments were in addition to the compensation and basic housing allowance (“BAH”) that he, like other Marines, received.
In May 2007, after being placed on active duty at Miramar, Menchaca entered into a conspiracy with another Miramar Marine, Manuel Ramos-Padilla. Ramos worked in an administrative office at Miramar that processed travel claims for reservists like Menchaca. In connection with the scheme, Menchaca and Ramos agreed to submit falsely completed forms – called “travel vouchers” – that claimed reimbursement for thousands of dollars in lodging expenses that Menchaca had not incurred or paid. In addition to submitting these false travel vouchers, the conspirators submitted a fake rental receipt, for a nonexistent address on Mission Village Drive in San Diego.
Menchaca and Ramos repeated the scheme month after month, for a period of ten months. In total, Menchaca submitted approximately $38,000 in false lodging claims. The proceeds of the scheme were deposited directly into Menchaca’s bank account every month. In exchange for his role processing the false travel vouchers, Menchaca paid Ramos up to $1,000 per month in cash. On occasion, Menchaca also paid bribes to Ramos in the form of personal checks.
While on active duty with the Marine Corps, Menchaca spent over four years in the military police. During the time period of the fraud, Menchaca served as a watch commander within the military police. In that role, he supervised patrol supervisors, who in turn supervised lower-ranking military police officers. Menchaca had responsibilities for overseeing the enforcement of federal laws, including the Uniform Code of Military Justice; as well as for enforcing the California Vehicle Code and Miramar regulations.
United States Attorney Duffy stated, “Investigating and prosecuting bribery is one of our top priorities. With our nation’s military budget already strained, public corruption draining needed U. S. Marine Corps resources will not be tolerated.”
Menchaca’s co-defendant, Manuel Ramos-Padilla, previously pled guilty to conspiring to commit bribery and make false claims. On November 8, 2013, Ramos was sentenced by Judge Sabraw to 24 months in prison.
"The Special Agent in Charge of the NCIS Field Office at Camp Pendleton, Charles Warmuth, says "Misusing trust for personal gain is not a "victimless" crime; it siphons money that could otherwise be used to maintain the readiness of the nation's war fighters and NCIS is committed to bringing to justice those who commit such fraud."
DEFENDANT Case Number: 12cr5099-DMSLuis Gilbert Menchaca
CO-DEFENDANT Manuel Ramos-Padilla SUMMARY OF CHARGESConspiracy to commit bribery and false claims, in violation of Title 18, United States Code, Section 371 - Maximum penalties: 5 years in prison, $250,000 fine, term of supervised release of three years, restitution, forfeiture, and $100 special assessment.
Three counts of false claims, in violation of Title 18, United States Code, Section 287 - Maximum penalties (per count): Five years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment.
INVESTIGATING AGENCYNaval Criminal Investigative Service
Local Biotech Firm and Employees Admit Concealing Toxic Nature of Product from the FDARead the Press Release
UPDATE
On March 20, 2014, the charges against Alan Donald were dismissed without prejudice on the motion of the government.
San Diego biomedical device manufacturer Valor Medical, Inc, (“Valor”) and four of its employees admitted today that they failed to provide the Food and Drug Administration (“FDA”) with required information that would have cast doubt on the safety of Neucrylate, a product intended to treat aneurysms.
According to court documents, in 2007, Valor commissioned two preclinical tests on Neucrylate, a mouse lymphoma assay (MLA) and a chromosomal assay (CAA), both of which contained unfavorable results. Although Valor acknowledged receiving the reports, the company failed to include the results of the MLA and CAA testing when it submitted an application to the FDA for an investigational device exemption in September 2010. This failure represents a violation of the federal criminal statutes as all defendants admitted that the report was required to have been included with Valor’s application under the Food, Drug and Cosmetic ACT (“FDCA”).
According to court records, Valor created two separate products, one intended for use in blood vessels in the brain (Neucrylate AN) and one intended for use in blood vessels near the heart (Neucrylate AVM). 2 Because both products are considered to be Class III medical devices under the FDCA, premarket approval from the FDA is required before they can be sold in the United States. In order to perform clinical trials on humans to obtain the data needed to support an application for premarket approval, Valor needed to first obtain an investigational device exemption (“IDE”) from the FDA. The regulations relating to such exemptions require applicants to submit “reports of all prior clinical, animal and laboratory testing of the device.”
As the Valor devices are intended to be permanently implanted in the body, biocompatibility is very important. The FDA evaluates the biocompatibility of medical devices pursuant to ISO-10993, an international standard, which requires a series of at least three tests. Two of the three tests typically performed to satisfy these requirements are the MLA and CAA tests.
According to sentencing documents, after Valor sent the samples of Neucrylate to be tested, the lab reported to Alan Donald, a consultant hired by Valor, that all the chromosomes in the CAA test had been destroyed by initial contact with the Neucrylate. The lab asked if Valor wanted the lab to follow the standard protocol, which called for diluting the samples of Neucrylate and retesting. Rather than follow the standard protocol, Donald told the lab that no further testing should be performed. The lab’s final report indicated that “no chromosomes were present to be scored” – indicating that the Neucrylate was cytotoxic (i.e., toxic to cells). The official conclusion to the report indicated that the testing had not been completed pursuant to the testing protocol.1
At about the same time, the laboratory sent an email to Valor’s Chief Scientist, Peter Friedman, attaching the preliminary results of the MLA test, which advised Valor that “all testing has been completed and the test article is considered to be mutagenic” (i.e., an agent that changes the genetic material of a cell, usually DNA, thereby increasing the frequency of mutations). Friedman forwarded the email later that same day, with the attached preliminary results, to Valor’s then-CEO Charles Kerber, Board Member H. Clark Adams, and Alan Donald. Adams replied to all, saying, “Let’s huddle and determine how we overcome this obstacle. I have confidence that we can find an answer.”
Following this huddle, the company provided neither the CAA test results nor the MLA test results to the FDA, even though they filed two separate IDE applications and responded to several additional requests for information (virtually all of which specifically requested that the CAA and/or MLA tests be performed).
At the time that defendant Cathy Bacquet, Clinical Affairs Manager, compiled and submitted the IDE application to the FDA, the CAA test report was filed as Test Report #27 in the Valor Medical Technical Report Log. According to a Valor employee, Adams, Kerber, and Bacquet made the decision not to provide the CAA test to the FDA.
The MLA report was not in the Technical Report Log at the time Valor’s IDE was submitted in 2010 because Adams specifically prohibited its inclusion. However, a copy of the MLA test report was found on both Friedman’s and Bacquet’s computers during the execution of a search warrant. The file, created in 2007 on Friedman’s computer and in 2009 on Bacquet’s computer, was identified as “mouse lymphoma-failed.” In an email two months after the submission of the IDE, Bacquet wrote, “We have already done Mouse Lymphoma and do not want to repeat it.” Fortunately, the FDA rejected all of Valor’s IDEs for Neucrylate despite not having the failed test results.
After a December 2010 inspection of Valor uncovered the CAA test, the FDA sent a Warning Letter to Adams at Valor. The letter referenced Valor’s failure to disclose as a violation of the regulations requiring an applicant to submit all preclinical testing to the FDA. Bacquet, responding on behalf of Valor, claimed that Valor “inadvertently” left out the CAA and MLA tests in the application for the IDE. Valor blamed this “unintentional violation” on Alan Donald, who had separated from the company nearly a year before that IDE was filed. Bacquet falsely wrote in the letter, “Prior to February 10, 2011, the existence of this report [the MLA] was not known to VM management or Quality/Regulatory staff,” which is clearly contradicted by the series of emails between Friedman, Kerber, Adams, and Donald when the MLA results were received by Valor in 2007, and the presence of copies of the MLA report on the computers of Friedman and Bacquet.
The American people depend on the FDA to determine that there is sufficient scientific basis to believe that a proffered medical device is safe and effective before permitting clinical trials on human beings. The FDA, in turn, depends on the full and truthful disclosure of all pre-clinical testing by device manufacturers to make an educated determination. When information is withheld from the FDA, the decision-making process is corrupted. Here, the FDA did not approve the proffered medical device for clinical trials on humans, so no Americans were endangered by the defendants’ failure to provide the testing data to the FDA.
“Our nation’s system of evaluating medical device safety and effectiveness depends upon the submission of truthful data to the FDA,” said U.S. Attorney Laura Duffy. “When manufacturers like these defendants place their profits above their duty to honestly report the results of product testing, they place the American public’s health and safety in jeopardy. This office will continue to vigorously enforce laws designed to protect the health and safety of our citizens through cases like this.”
The company pled guilty to Failure to Provide Required Information in violation of Title 21, United States Code, Section 331(q)(1)(B) and 333(a)(1) (a felony). Former Valor CEO and current member of the Board of Directors H. Clark Adams, and Valor Regulatory and Clinical Affairs Manager Cathy Bacquet also pled guilty to the same crime but as misdemeanor. Valor founder Dr. Charles Kerber and Chief Scientist Peter Friedman entered into Deferred Prosecution Agreements in which they admitted that they knew the required information was omitted in the FDA Application. Finally, former Valor consultant, Alan Donald, pled guilty in a related criminal case for his role in failing to submit the CAA and MLA test results to the FDA with the 2008 IDE application. At the time, Donald was a member of the Board of Directors of Valor Medical, and was paid as a regulatory consultant.
"The FDA's regulatory decisions must be based on sound and truthful scientific evidence," said Lisa Malinowski, Special Agent in Charge, Office of Criminal Investigations, Los Angeles Field Office. "We will continue to protect the Agency's public health mission against this type of deliberate deception and aggressively pursue the prosecution of those who may endanger the public’s health. We commend the U.S. Attorney’s Office for their diligence in pursuing this investigation.”
United States Magistrate Judge David H. Bartick sentenced former Valor CEO H. Clark Adams to one year of probation, and a $5,000 fine, and sentenced Regulatory and Clinical Manager Cathy Bacquet to one year of probation and a $2500 fine. The sentencing for Valor Medical, Inc. is scheduled for February 19, 2014, at 9:30 a.m. before U.S. District Judge Dana Sabraw. A status hearing has been set for February 3, 2015, at 1:30 p.m. with respect to defendants Kerber and Friedman.
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1The lab’s internal Quality Event Details Form noted that the samples for the CAA test were “cytotoxic,” and the results were valid, but the sponsor was “choosing to cancel the study rather than perform dilutions” so a “full conclusion as to the genotoxicity of the sample will not be made.”
DEFENDANT Criminal Case No. 14cr0196-DMSValor Medical, Inc. San Diego, California
H. Clark Adams
San Diego, CaliforniaCathy Bacquet
San Diego, CaliforniaCharles Kerber
San Diego, CaliforniaPeter Friedman
San Diego, CaliforniaDate of Incorporation: 2007
Age: 77
Age: 49
SUMMARY OF CHARGESCount 1 (Defendant Valor Medical)
Failure to Provide Required Information, a felony, in violation of Title 21, United States Code, Section 331(q)(1)(B) and 333(a)(2)
Maximum Penalty for a corporation: 5 years probation, a $500,000 fine, $400 special assessmentCount 2 (remaining defendants)
Failure to Provide Required Information, a misdemeanor, in violation of Title 21, United States Code, Section 331(q)(1)(B) and 333(a)(1)
AGENCY
Maximum Penalty: 1 year in custody and/or $100,000 fine, $25 special assessment.U.S Food and Drug Administration, Office of Criminal Investigations
Former Westin San Diego Executive Pleads Guilty to Elaborate EmbezzlementRead the Press Release
United States Attorney Laura E. Duffy announced that Kevin Kelso pled guilty today in federal court before Magistrate Judge William V. Gallo to charges of wire fraud stemming from his employment as a senior finance executive at the Westin San Diego, from which he stole more than a half a million dollars.
According to court records, Kelso was an employee of Interstate Hotels & Resorts and worked as Westin San Diego’s Director of Finance between December 2010 and September 2012. Kelso utilized this position to embezzle funds from the Westin to pay for his own personal expenses. He admitted stealing the money using a variety of means, including abusing the hotel’s change order process (the process by which a hotel exchanges large denomination bills for smaller bills to keep in the hotel safe), obtaining an unauthorized corporate American Express card (which he paid using Westin San Diego’s bank account), and writing checks from Westin San Diego’s bank account to pay himself and third parties for personal expenses. In his plea, Kelso also admitted to concealing the fact that he was taking cash from the hotel’s safe and not making a corresponding deposit during the change order process and making false entries in Westin San Diego’s general ledger.
Kelso further admitted to defrauding his prior employer, the Ann Arbor Marriot Ypsilanti in Michigan, using similar machinations. The total amount of embezzled funds from the two hotels was over $800,000.
The defendant has been released on bond pending sentencing. The guilty plea is not final until it has been accepted by the district court. Kelso is scheduled to be sentenced April 18, 2014 at 9 a.m. before U.S. District Judge Dana Sabraw.
DEFENDANT Case Number: 13CR3017-DMSKevin Kelso
SUMMARY OF CHARGESCounts 1-6: Title 18, United States Code, Section 1343 – Wire Fraud
Forfeiture: Title 18, United States Code, Sections 981(a)(1)(C) and Title 28, United States Code, Section 246
INVESTIGATING AGENCIESUnited States Secret Service
Former DMV Employee Pleads Guilty to Conspiracy to Commit Bribery and Document Fraud, Bribery and Witness Tampering in A Widespread Corruption Case at the DMV in Southern CaliforniaRead the Press Release
United States Attorney Laura E. Duffy announced that Jeffrey Bednarek, a former employee at the California Department of Motor Vehicles (“DMV”) in El Cajon, California, pleaded guilty late yesterday to his aggravated role in a conspiracy to commit bribery and identification document fraud, bribery, and witness tampering. Bednarek entered his guilty plea before U.S. Magistrate Judge William V. Gallo.
According to the plea agreement, Bednarek was a Licensing Registration Examiner at the El Cajon DMV who was responsible for conducting driving tests for driver’s license applicants. Bednarek admitted that, beginning in at least April 2009, and continuing up to at least April 26, 2012, he conspired with his co-defendants to commit federal program bribery and identification document fraud.
Bednarek admitted that he falsely entered “passing” scores for both written and behind-the-wheel tests for applicants who applied for regular (Class C) and commercial (Class A) driver’s licenses in exchange for bribes. Bednarek also acknowledged that he directed others to enter false “passing” test scores and that he created false driving test score sheets to create the appearance that the applicant had completed the test. Bednarek said in his plea agreement that during the conspiracy, he produced more than 100 fraudulent driver’s permits and licenses, and that applicants paid more than $50,000 in total bribes for permits and licenses that he fraudulently produced.
While awaiting an upcoming trial that was scheduled for December 2, 2013, Bednarek tampered with one of the Government’s witnesses, the plea agreement said. According to court documents, Bednarek was arrested on November 13, 2013 a complaint for witness tampering. On November 22, 2013, U.S. District Judge Cathy A. Bencivengo ordered that Bednarek be detained pending trial. Bednarek admitted in his plea agreement that between January 26, 2013 and November 4, 2013, he knowingly attempted to corruptly persuade a Government witness to alter his testimony, namely, to provide false testimony regarding cash bribes that Bednarek had received for his aggravating role in the conspiracy. Bednarek admitted that he intended to prevent and influence the Government witness’s testimony in the trial that was scheduled for December 2, 2013.
Of the 30 defendants charged in this widespread corruption scheme (related Criminal Case Nos. 12CR1852-CAB and 13CR0592-CAB), all 30 of the defendants, including Bednarek, have pleaded guilty to felony conduct, namely, conspiracy to commit bribery and identification document fraud. Many of these defendants have been sentenced, and several others are currently awaiting sentencing. Bednarek is next scheduled to be in court before United States District Judge Cathy A. Bencivengo for sentencing on April 25, 2014, at 9:00 a.m.
These cases are the result of an active, ongoing criminal investigation. Anyone with information about corruption at the DMV is asked to contact the Federal Bureau of Investigation at 1-877-NO-BRIBE (662-7423), or the DMV’s Investigations Branch-Office of Internal Affairs at 626-851-0173.
DEFENDANT Criminal Case No. 12CR1852-CABJeffrey T. Bednarek
SUMMARY OF CHARGESCount 1: Title 18, United States Code, Section 371 -- Conspiracy to Commit Bribery and to Produce Unauthorized Identification Documents -- statutory maximum sentence of 5 years’ custody, a maximum fine of $250,000, special assessment of $100, and a maximum term of supervised release of 3 years.
Count 2: Title 18, United States Code, Section 666(a)(1)(B) -- Bribery -- statutory maximum sentence of 10 years’ custody, special assessment of $100, and a maximum term of supervised release of 3 years.
Count 7: Title 18, United States Code, Section 1512(b)(1) -- Witness Tampering -- statutory maximum sentence of 20 years’ custody, a maximum fine of $250,000, special assessment of $100, and a maximum term of supervised release of 3 years.
INVESTIGATING AGENCIESFederal Bureau of Investigation
Department of Motor Vehicles B Investigations Division“Ho-Hum Bandit” Pleads Guilty to the Not so Ho-Hum Total of Seven Bank RobberiesRead the Press Release
United States Attorney Laura E. Duffy announced that Adam Lynch pled guilty this afternoon in federal court in San Diego to 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. Lynch entered his guilty plea before U.S. Magistrate Judge David H. Bartick.
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. He robbed the same bank branch twice within the space of a week. Typically, Lynch would commit the robbery by walking up to the counter, passing a note to the teller, identifying himself as being armed, and demanding cash. 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.
Lynch has been in custody since his arrest on April 21, 2011, and is set for sentencing on April 28, 2014 before U.S. District Judge Roger T. Benitez.
DEFENDANT Case Number: 14-CR-0182-BENAdam Lynch
SUMMARY OF 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
Life Insurance Companies Find There’s No Insurance Against $80 Million FraudRead the Press Release
San Diego, CA – United States Attorney Laura E. Duffy announced today that insurance broker Jeffrey B. Keller appeared in federal court before United States Magistrate Judge William V. Gallo and admitted deceiving life insurance companies so that they would issue more than $80 million worth of policies to unqualified applicants who had no intention of paying the policy premium. In return, Keller obtained over $3 million in commissions.
As set forth in the Plea Agreement, Keller employed multiple means to deceive the life insurance companies. Initially, he recruited elderly individuals to apply for “free” life insurance policies with death benefits ranging from $2 million to $10 million. Keller then submitted fraudulent applications to the insurance companies by intentionally omitting or falsifying the applicant’s net worth, income, or source of premium payments. Further, Keller concealed that, in some cases, he secretly rebated to some applicants funds representing part of the commission payments fraudulently obtained from the life insurance carriers.
In addition to deceiving the life insurance companies, Keller inflated business expenses paid to his coconspirators in order to reduce his income and thus evade the payment of taxes that were lawfully due and owing. For example, Keller would issue checks in inflated amounts payable to a variety of companies controlled by individuals who assisted Keller in committing tax evasion. These coconspirators were paid for work related to the life insurance fraud (e.g., setting up life insurance trusts) and then kicked-back the inflated amount to Keller. In order to settle his tax liability, Keller agreed to pay $1 million to the IRS in connection with the inflated invoices.
Keller is scheduled to be sentenced on April 11, 2014, at 9:00 a.m. before U.S. District Court Judge Janis L. Sammartino.
DEFENDANTJEFFREY B. KELLER
SUMMARY OF CHARGESTitle 18, United States Code, Section 371 – Conspiracy to Commit Mail Fraud and Wire Fraud and to Defraud the United States by Impairing and Impeding the Lawful Functioning of the Internal Revenue Service. Maximum penalties: 5 years in prison, $250,000 fine, term of supervised release of three years, restitution, forfeiture, and $100 special assessment.
AGENCIESInternal Revenue Service – Criminal Investigation
Federal Bureau of InvestigationSan Diego Lobbyist Makes Initial Appearance for Role in Campaign Finance CrimesRead the Press Release
San Diego, CA – Marco Polo Cortes, a San Diego-based lobbyist, made an initial appearance in federal district court today on charges that he conspired to finance political campaigns using money from an illegal foreign source.
Cortes was arrested by FBI Agents on Tuesday, January 21, 2014 in the Little Italy section of San Diego, pursuant to an arrest warrant. According to the complaint, filed by an FBI Special Agent and unsealed by U.S. Magistrate Judge William V. Gallo, Cortes conspired with Ravneet Singh and Ernesto Encinas—each of whom were named in a similar complaint unsealed yesterday—to funnel more than $500,000 of illegal foreign money into San Diego municipal and federal campaigns, primarily in 2012 and 2013. The source of the illegal foreign money, the complaint stated, was a person referred to as “the Foreign National.”
As set forth in the complaint, Cortes has lobbied San Diego Police Department officials, city council members and mayoral staff. In 2012, Cortes and a coconspirator approached a representative of a person running for federal elective office during the 2012 general election cycle. But one of the candidate’s representatives informed Cortes that the Foreign National would need to at least show proof of a green card, and emailed Cortes a link to the Federal Election Commission’s rules on foreign contributions. Despite this, Cortes and a coconspirator helped the Foreign National contribute in the Straw Donor’s name instead.
Later, Cortes joined together with Singh and other coconspirators to facilitate illegal in-kind contributions to a candidate for the office of mayor during the 2012 general election cycle. Finally, in September 2013, Cortes met with a confidential informant to discuss the possibility of arranging additional contributions from the Foreign National to a candidate for the office of mayor during the 2013 special election.
Acting United States Attorney Cindy M. Cipriani praised the continuing efforts of 3 the FBI and IRS, noting “we will not tolerate fraud in our elections at any level, and we will root out the influence of foreign money in our electoral processes and on our elected leaders.”
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 Case Number:Marco Polo Cortes
14MJ0171 SUMMARY OF CHARGES AND MAXIMUM PENALTIES
Age: 44
San Diego, CACount 1: Conspiracy to Commit Offenses against the United States – 18 U.S.C. § 371.
INVESTIGATING AGENCIES
Maximum penalties: 5 years in prison, 3 years of supervised release, $250,000 fine and a $100 special assessmentFederal Bureau of Investigation
Internal Revenue Service
San Diego Police DepartmentFormer Inmate Turned Pastor Barry Minkow Pleads Guilty to Bilking CongregationRead the Press Release
United States Attorney Laura E. Duffy announced today that former convict, turned fraud investigator and pastor, Barry Minkow, admitted embezzling and defrauding the San Diego Community Bible Church (“SDCBC”) and its congregation out of more than $3 million. Minkow, who is currently in custody after his conviction on unrelated securities fraud charges, entered a guilty plea today in federal court in San Diego before the Honorable William Gallo, United States Magistrate Judge.
As part of his guilty plea, Minkow admitted to a litany of improper conduct, including opening unauthorized bank accounts on behalf of the SDCBC, forging signatures on SDCBC checks, using funds drawn on legitimate church accounts for his personal benefit, and charging unauthorized personal expenses on church credit cards. In addition, Minkow confessed to diverting SDCBC member donations for his own benefit and embezzling money intended as church donations. In all, Minkow admitted purloining – and concealing from the IRS – at least $3 million from SDCBC’s parishioners and lenders. As described in court documents, Minkow’s conduct continued for over a decade.
U.S. Attorney Laura E. Duffy remarked: “Barry Minkow is again convicted of fraud, this time for stealing money from the parishioners of San Diego Community Bible Church. With our law enforcement partners, we stand vigilant against those who cheat and steal without regard to the consequences wrought on their victims and their communities.” The U.S. Attorney observed that in the course of each fraudulent transaction, Minkow abused the position of trust bestowed upon him by SDCBC and its congregation.
Acting Special Agent in Charge of Internal Revenue Service Criminal Investigation for the Los Angeles Field Office, Joel P. Garland stated, "Barry Minkow pled guilty today to embezzling over $3.0 million in money intended as church donations (while employed as a pastor) and concealing it all from the IRS. Barry Minkow has admitted not only his fraud, but his omission of over $890,000 in unreported income and over $250,000 in tax. Today's court action reaffirms IRS Criminal Investigation's commitment to investigating crimes involving tax and other financial crimes."
The fraud on SDCBC is just the latest fraud perpetrated by Minkow. In December 1988, Minkow was convicted of running a 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, Minkow became the pastor at SDCBC and 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 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, Minow 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 at the Federal Medical Center in Lexington, Kentucky.
After pleading guilty today, Minkow faces a maximum of five years in prison, a fine of up to $250,000, and the payment of restitution to his victims. Sentencing is scheduled for April 7, 2014 before U.S. District Court Judge Michael Anello.
U.S. Attorney Laura E. Duffy praised the exacting effort and close cooperation of the Federal Bureau of Investigation and IRS Criminal Investigations -- the investigative agencies on this case.
DEFENDANT Case Number:Barry Minkow
14CR0153-MMA SUMMARY OF 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 - Maximum penalties: Five years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment.
INVESTIGATING AGENCYFederal Bureau of Investigation
IRS Criminal InvestigationsCampaign Services Professional Arraigned for Role in Campaign Finance CrimesRead the Press Release
As part of conspiracy, Former SDPD Detective Ernesto Encinas Allegedly Sought to Fire the SD Chief of Police and Pick His Replacement
SAN DIEGO, CA - Ravneet Singh, the proprietor of Washington, D.C.-based ElectionMall, Inc., was arraigned today on charges that he conspired to finance political campaigns using money from an illegal foreign source. Singh was arrested by FBI Agents on Friday, January 17, 2014, pursuant to an arrest warrant. According to the complaint, filed by an FBI Special Agent, unsealed by U.S. Magistrate Judge William V. Gallo, Singh conspired with former San Diego Police detective Ernesto Encinas and others to funnel more than $500,000 of illegal foreign money into San Diego municipal and federal campaigns, primarily in 2012 and 2013. Singh’s company, ElectionMall, Inc., was also charged as a defendant.
According to the complaint, Singh, who styled himself the “campaign guru,” was the President, Chief Executive Officer and founder of ElectionMall, Inc., a company that provided social media services and other campaign and election products to political candidates throughout the world. Encinas was the owner of a private security and consulting business in San Diego who oversaw the protection detail of a person identified in the complaint only as “the Foreign National.” Between approximately 2011 and 2013, Singh and Encinas helped the Foreign National donate hundreds of thousands of dollars to a series of candidates for elective office—including during the 2012 San Diego mayoral election, a 2012 Congressional campaign and the 2013 San Diego special mayoral election (up to, but not after, December 2013).
Despite the Foreign National’s willingness to contribute funds, he could not legally donate to any of these campaigns. Under federal law, “foreign nationals” are prohibited from making any contributions or expenditures in connection with any American electoral campaign—whether at the federal, state or local level. Knowing this, Singh and Encinas allegedly used a series of increasingly complex techniques to hide the fact that the Foreign National was the true source of these illicit campaign funds.
According to the complaint, Encinas—among other devices—helped mask the Foreign National’s contributions through the use of shell companies.
Similarly, Singh used his expertise to facilitate the donation of social media services to political candidates that the Foreign National favored. The complaint alleges that these contributions—sometimes classified as “in-kind contributions”—were not reported in any campaign filings and totaled nearly $300,000.
According to the complaint, the Foreign National’s illegal contributions included:
A $100,000 contribution to a SuperPAC
$100,000 in unreported compensation for campaign services
A $30,000 contribution to a political party committee
Another $190,000 in unreported compensation for campaign services
A $150,000 contribution to another SuperPAC
A $30,000 contribution to another political party committee
The promise of a “mill” in additional contributionsAccording to the complaint, Encinas wanted the next mayor to fire the Chief of Police and replace him with a person of Encinas’s choosing in exchange for the Foreign National’s financial help.
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 Case Number: 14MJ0201Ravneet Singh
Age: 41
Washington, D.C.ElectionMall, Inc.
Ernesto Encinas
SUMMARY OF CHARGES AND MAXIMUM PENALTIES
Age: 57
San Diego, CACount 1: Conspiracy to Commit Offenses against the United States – 18 U.S.C. § 371. Maximum penalties: 5 years in prison, 3 years of supervised release, $250,000 fine and a $100 special assessment
INVESTIGATING AGENCIESFederal Bureau of Investigation
Internal Revenue Service Criminal Investigation
San Diego Police DepartmentTwin Brothers Head to Jail for Defrauding Sports FansRead the Press Release
SAN DIEGO, CA - United States Attorney Laura E. Duffy announced that Judge John A. Houston imposed custodial sentences on twin brothers Anthony Donald Casias and Leo Ronald Casias, Jr. for defrauding local sports fans through their company, “L & T Sports Events, Inc.” Anthony Casias received a sentence of 36 months in custody and 3 years of Supervised Release. Leo Casias was sentenced to 33 months in custody and 3 years of Supervised Release.
According to court documents, clients of L&T Sports paid in advance for travel, lodging, transportation, and game tickets to out-of-town sporting events, such as San Diego Chargers “away” games, other NFL games, and collegiate sporting events. The brothers told sports fans that in return for their payments to L&T Sports, the company would purchase flights, game tickets and hotel accommodations. The defendants even promised clients that L&T Sports obtained tickets in specific seating areas (for example, “lower level corner end zone” or “club level” seating), accommodations at specified hotels, and seats on specific airline flights, to reassure clients that the services clients paid for would be provided when the clients arrived at the game destinations.
For example, the brother’s victims included over a dozen local fans who arranged to watch the San Diego Chargers play the Chicago Bears in Chicago, Illinois in November 2011. These clients paid in advance for flights, hotels, and football game tickets. Although L&T Sports provided the airline tickets to Chicago; they provided little else. As a result, their customers showed up in Chicago without hotel rooms or game tickets for which they had already paid for in advance. Fortunately, some committed fans were able to find hotel accommodations and purchase tickets from local ticket brokers so they could watch the Chargers play.
Similar disappointments befell other customers. For example, one fan paid the Casias brothers in advance so that he could take his son to watch the Chargers play the Oakland Raiders at the Coliseum. Once again, L&T Sports provided a one-way flight but nothing else. Stranded in the Bay Area on New Year’s Eve 2011 with no hotel room, no game tickets, and no flight home, the two disappointed fans ended up driving back down to San Diego in a rental car and watching the game on TV.
Tony and Leo Casias did not limit their fraud to local sports fans. Residents of South Dakota, Philadelphia, and Colorado also arranged trips to see football games, only to find their money taken and no hotels, game tickets, and/or flights home provided. The Casias brothers even arranged trips to the annual NFL game in London, England, offering special extensions to Paris and Rome. Some clients were stranded overseas with no hotel rooms, game tickets, or flight home. What is worse, according to sentencing documents, the Casias brothers used those clients’ credit cards to rack up other charges while those clients were overseas in Europe.
For example, the United States provided evidence in court hearings that Tony and Leo Casias made unauthorized credit card charges on at least 4 individuals’ credit cards. They typically got authorization from the credit card holder to make limited charges – say, to pay the costs of a client’s trip, or a $400.00 loan – but then used those credit cards without authorization to pay for travel services for other clients, or, in some cases, to make their own car payments, pay their cell phone bills, and, adding insult to injury, pay for their own delinquent Chargers season tickets.
Public records indicate that the Casias brothers were convicted in the early 1990’s for a similar scheme involving travel services to middle school students. In that case, the brothers offered educational trips to the East coast, and required students to pay in advance. Defendants collected over $275,000 in advance payment from schools, students, and parents, but used the funds to pay for prior business and personal debts instead of paying for the trips. One parent chaperone from that memorable trip informed the sentencing court in a letter that she accompanied 193 junior-high aged children on a trip to Washington D.C. The students held multiple fundraisers and had to complete projects, research, and presentations before they could go on the trip. She called it “craven” that Leo and Tony Casias accompanied the group to the airport to see them off, knowing that the students would soon be stranded on the east coast thousands of miles from home, with no hotel rooms, local transportation, or return flights home. She recalls that the students ended up staying on cots in military barracks.
In addressing the defendants, Judge Houston chastised them for what he described as their “continuous fraud and manipulation to people you thought were less than you...You are not Madoff. This was not a sophisticated scheme. This was an old fashioned, salt of the earth swindle. [These were] good people [including] your mother's rosary group . . . You were heartless. You just didn't care."
The defendants will next appear in court on February 8, 2014, before Judge Houston for a hearing to determine the amount of restitution they will owe to victims.
DEFENDANT Criminal Case No. 12CR4966-JAHAnthony “Tony” Donald Casias
36 months in custodyLeo Ronald Casias, Jr.
33 months in custodySan Diego, California
San Diego, California
SUMMARY OF CHARGECount 1: Title 18, United States Code, Section 1349 - Conspiracy to Commit Wire Fraud. Maximum
INVESTIGATING AGENCY
penalties: 20 years’ imprisonment, $250,000 fine, $100 special assessment, 3 years of supervised release, mandatory restitution to victims.Federal Bureau of Investigation
Manager of Multi-Million Dollar Mortgage Fraud Conspiracy Pleads Guilty Defendant’s Scheme Caused Losses of over $6 MillonRead the Press Release
SAN DIEGO, CA - United States Attorney Laura E. Duffy announced that Kathryn Sylvester of San Diego pleaded guilty today to participating in a mortgage fraud conspiracy in which she and several co-conspirators caused over $6 million in losses associated with various properties in San Diego County and elsewhere. Sylvester entered her guilty plea to one count of wire fraud and one count of conspiracy to commit wire fraud before Magistrate Judge William V. Gallo, and is scheduled to appear before U.S. District Court Judge Cathy Ann Bencivengo on April 1, 2014 for sentencing.
As defendant admitted in today’s hearing and in court documents, between June 2005 and May 2008, she recruited “straw buyers” to submit falsified mortgage loan applications to purchase properties and obtain home equity loans. Sylvester herself provided false documents to support the straw buyers’ misrepresentations regarding their income and employment, and added straw buyers to unrelated bank accounts so they could inflate the value of their assets on loan applications. Sylvester helped convince lending institutions to fund loans for which Sylvester and the straw buyers would not otherwise qualify. Although Sylvester promised some straw buyers that she would “flip” a number of the properties for a 2 profit, she systematically drained equity from the properties for her own benefit. The straw buyers included Claudia Montes, Tad Lent, and Roderick Michener, all residents of San Diego.
Montes, a former notary public, notarized the signatures of other straw buyers on the loan applications. On April 12, 2013, Montes pleaded guilty to a two-count information (13CR1313-JLS) before Magistrate Judge William McCurine, Jr. She admitted conspiring with Sylvester to submit false loan applications to lenders to obtain the properties and transferring proceeds to Sylvester. She is scheduled to be sentenced before U.S. District Court Judge Janis L. Sammartino on February 14, 2014.
Michener pleaded guilty before Magistrate Judge Barbara L. Major on April 4, 2013, to conspiring with Sylvester to commit bank fraud (13CR1130-CAB). Michener admitted that he permitted co-conspirators to claim an ownership interest in his bank account in order to include the account as an asset on their respective mortgage loan applications. He also admitted transferring fraud proceeds to Sylvester. Michener is scheduled to be sentenced before District Court Judge Cathy A. Bencivengo on March 14, 2014.
Lent pled guilty to conspiring with Sylvester to submit falsified loan applications to mortgage lenders by misrepresenting the amount of his assets (12CR3744-L). Lent entered his guilty plea on January 28, 2013, before District Court Judge M. James Lorenz, and is scheduled to be sentenced on January 21, 2014.
United States Attorney Duffy added, “As our economy slowly improves, it is important for us to address criminal conduct that helped spawn the financial crisis. These mortgage fraud cases are further evidence of our dedication to investigating and prosecuting the fraud that plagued the mortgage loan processes for too long.”
DEFENDANT Case Number: 13CR1355-CAB Kathryn Sylvester Age: 44 SUMMARY OF CHARGESCount 1: Title 18, United States Code, Section 1349 (conspiracy to commit wire fraud and
bank fraud)
Maximum penalty: 30 years of custody; $1,000,000 fineCount 5: Title 18, United States Code, Section 1343 (wire fraud)
AGENCY
Maximum penalty: 20 years of custody; $250,000 FineFederal Bureau of Investigation
San Diego Company Admits to Defrauding Defense Department of MillionsRead the Press Release
United States Attorney Laura E. Duffy announced today that San Diego-based Vector Planning & Services, Inc. (“Vector”) entered into an agreement with the United States Attorney’s Office in which it admits to criminally defrauding the Defense Department, and in which it agrees to pay restitution. Vector, which also has offices in Chantilly, Virginia, entered the agreement this afternoon in federal court in San Diego before U.S. Magistrate Judge William McCurine, Jr.
As part of the agreement, referred to as a deferred prosecution agreement, Vector admitted that its former CEO and majority owner submitted five years’ worth of false cost claims to the Defense Department, resulting in losses to the Defense Department of over $3.6 million.
The case concerns Vector’s accounting practices in connection with certain cost-reimbursement contracts that it held with the Defense Department. Under a cost-reimbursement contract, a contractor is entitled to reimbursement for both its direct allowable costs, such as the cost of labor on that contract, and a prorated portion of its indirect allowable costs, such as the cost of rent for the contractor’s office space. Because indirect costs must be pro-rated across multiple contracts, they cannot be precisely determined until the end of the fiscal year. Accordingly, under a cost-reimbursement contract, a contractor initially submits claims for indirect costs based on “provisional” or estimated rates, and later submits its actual indirect costs to the government for review, reconciliation, and approval. This later submission, known as an “Incurred Cost Submission” or “Incurred Cost Proposal,” reflects what the contractor certifies were its actual allowable costs for the prior fiscal year.
In this case, Vector admits that after claiming and being paid for direct costs in connection with other, firm-fixed-price and time-and-materials contracts, Vector systematically reclassified these same costs in its accounting system to make it appear as if the costs were indirect costs that were incurred in connection with its cost-reimbursement contracts, thereby inflating its indirect cost rates. These inflated rates were then used by Vector to justify the rates claimed in its Incurred Cost Proposals submitted to the Navy. The effect of these fraudulent submissions was, in essence, to pay Vector twice for the same expenses, amounting to “double dipping” or “double billing” at government expense.
Vector admits to submitting these false Incurred Cost Proposals for costs incurred in 2005 through 2009, with a total loss to the Defense Department of $3,672,756. As described in Vector’s agreement, Vector made these false submissions in 2010, 2011, and 2012.
When faced with a Defense Department audit in late 2011, Vector falsified its electronic accounting entries, and prepared and backdated fake invoices in order to support those falsified accounting entries. Vector admits that the direction for the fraud came from its then-CEO, who is now deceased.
As part of the agreement, Vector agrees to make payments in the amount of $6.5 million, which includes restitution to the Defense Department for losses Vector caused. Vector also agrees to maintain a 3 compliance and ethics program. In exchange, the United States Attorney’s Office has agreed to postpone a prosecution for felony false claims against Vector for a period of three years; in the event Vector complies with all the terms of the agreement, the criminal case will be dismissed at the end of that period.
In addition to the criminal deferred prosecution agreement, Vector is entering into a civil settlement with the Civil Division of U.S. Attorney’s Office and the Justice Department’s Civil Division. In all, Vector will pay $6.5 million to resolve its criminal and civil cases. These criminal and civil settlements are the result of a coordinated effort involving, as investigative agencies, the Federal Bureau of Investigation, the Defense Criminal Investigative Service, the Defense Contract Audit Agency, and the Naval Criminal Investigative Service.
U.S. Attorney Laura E. Duffy stated, “Those companies that choose to defraud our nation’s armed services will be found and held accountable.” Duffy praised the close cooperation of the investigative agencies on this case.
FBI Special Agent in Charge, Daphne Hearn, commented, “This case involved several complex fraudulent schemes to defraud the Department of Defense and ultimately American taxpayers. If not for the outstanding investigative efforts by agents and prosecutors in this matter, these schemes would have gone undetected and millions of dollars of taxpayer's dollars wasted. Today's settlement is an example of the FBI's continued commitment to working with our law enforcement partners to ensure our precious tax dollars are protected from waste, fraud and abuse.”
Chris Hendrickson, Special Agent in Charge, Defense Criminal Investigative Service, Western Field Office said, “We are extremely pleased at this outcome, which yet again sends the message that fraud will be vigorously investigated and violators held accountable. Whether it is a complicated manipulation of accounting rules or a straight theft of DoD funds, fraud of this nature harms our national security and erodes public confidence. The Defense Criminal Investigative Service and our law enforcement partners will use all tools available to protect taxpayers' interests.”
DEFENDANT Vector Planning & Services, Inc. SUMMARY OF CHARGESFalse claims, in violation of Title 18, United States Code, Section 287 - Maximum penalties for corporate
INVESTIGATING AGENCY
defendant: Five years of probation, fine, restitution and $400 special assessment.Federal Bureau of Investigation
Defense Criminal Investigative Service
Defense Contract Audit Agency
Naval Criminal Investigative ServiceFormer San Ysidro School District Superintendent Sentenced for Extorting Political Contributions from Prospective Contractor by Threatening to Withhold WorkRead the Press Release
SAN DIEGO – Former San Ysidro School District Superintendent Manuel Paul was sentenced today to two months in custody, a $5,000 fine, one year of supervised release and 120 hours of community service for threatening to withhold the awarding of contracts unless he received political contributions.
U.S. Magistrate Judge William V. Gallo said he imposed a sentence that included jail time because Paul failed the children of his district. Judge Gallo stated, “Thousands of children relied on you for sound judgment.” He later added, “Abuse of trust is a mortal sin that is difficult to excuse.”
Paul was ordered to report to the federal Metropolitan Correctional Center downtown on January 27.
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, he served several duties as superintendent, including recommending contractors for consideration and approval by the SYSD Governing Board for SYSD construction projects.
In entering his plea, Paul admitted requesting that a contractor (“Contractor A”) make $3,600 in campaign contributions to three political candidates for the 2010 Board election, identified in charging documents 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.
In addition to his guilty plea, Paul has 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 has agreed to pay a $5,000 fine.
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 sentence is a stark reminder that illegal money in our elections – regardless of the amount – is a threat to the very fabric of 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 corruption.”
FBI Special Agent in Charge, Eric S. Birnbaum, commented, “The obligation to deal honestly and truthfully is the responsibility of all who serve the public. Today's sentencing holds Mr. Paul 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).
DEFENDANTS Case Number: 14CR2351-WVG Manuel Paul Age: 63 Bonita, CA CHARGESDeprivation of Benefit for Political Contribution – Title 18, U.S.C., Section 601
INVESTIGATING AGENCIES
Maximum penalty: 1 year imprisonment and $100,000 fineFederal Bureau of Investigation
U.S. Attorney’s Office Collects $15 Million in Civil and Criminal Actions for U.S. Taxpayers in Fiscal Year 2013Read the Press Release
SAN DIEGO - U.S. Attorney Laura E. Duffy announced today that the Southern District of California collected $15,576,798.02 in criminal and civil actions in Fiscal Year 2013. Of this amount, $11,799,803.27 was collected in criminal actions and $3,776,994.75 was collected in civil actions.
Additionally, the Southern District of California worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $12,727,907.87 in cases pursued jointly with these offices. This amount was collected in joint civil actions.
Attorney General Eric Holder also announced today that the Justice Department collected approximately $8.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2013. The more than $8 billion in collections in FY 2013 represents nearly three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“The department’s enforcement actions help to not only ensure justice is served, but also deliver a valuable return to the taxpayer,” said Attorney General Holder. “It is critical that Congress provide the 2 resources necessary to match the department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.”
U.S. Attorney Laura Duffy said, “Restitution to victims is justice in its simplest form. The Southern District of California strives to keep up with the rapidly increasing restitution debt and works hard to increase the amount collected each year.”
This past June, the Southern District of California recovered approximately $1.2 million in restitution and $500,000 in fines as part of the criminal case in U.S. v. Joel Bernstein, M.D., Inc., 13CR0119-CAB. In a related civil case, U.S. v. Joel Bernstein, M.D., Inc., 13CV0153-BEN, the United States recovered $2.2 million in a settlement agreement that was offset by the criminal restitution. Dr. Bernstein, a La Jolla, CA oncologist, defrauded Medicare by purchasing unapproved foreign cancer drugs and billing it to Medicare. In the related civil False Claims Act lawsuit filed by the United States, Dr. Bernstein was permitted to pay $2.2 million to settle the lawsuit and have that amount applied to criminal restitution owed to Medicare.
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.
Additionally, the U.S. Attorney’s office in Southern District of California, working with partner agencies and divisions, collected $11,968,370.00 in asset forfeiture actions in FY 2013. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
Twenty-two People Charged in Ongoing “Operation Corridor” Investigation of North County Gang ActivityRead the Press Release
SAN DIEGO – Twenty-two people, including suspected drug traffickers and associates of the Mexican Mafia prison gang, are charged in numerous indictments and complaints unsealed today with crimes ranging from racketeering conspiracy to heroin and methamphetamine dealing.
The indictments are the result of “Operation Corridor,” a continuing investigation involving a team of federal, state, and local agencies focusing on the activities of the Mexican Mafia operating in the Southern District of California. So far the investigation has resulted in the charging of 68 people since April 2012.
In all, five indictments and three complaints were unsealed today. The main indictment charges 11 people with participating in a racketeering conspiracy that involved the commission of both state and federal crimes, including conspiracy to commit murder, assault with a deadly weapon, extortion, money laundering and drug trafficking violations.
The indictments were handed up by a federal grand jury in San Diego on December 19, 2013. As of today, 18 of the twenty-two defendants are either in federal or state custody. Six were arrested today and yesterday; the rest were already in custody.
As set forth in the indictments, most of the defendants are associates of the Mexican Mafia operating primarily in Oceanside and Vista, California, and multiple San Diego Sheriff’s Office Detention Facilities and California State Prisons, including Donovan, Centinela and Ironwood.
Using electronic surveillance, intercepted phone lines and other sophisticated tools, this continuing investigation targeted a broad criminal conspiracy to extort money and control the illegal narcotics trade in both north San Diego County and various California State Prisons. The investigation is ongoing.
"We will continue to target gangs operating on the streets of our communities in conjunction with associates operating in jails and prisons,” said U.S. Attorney Laura Duffy. “Their criminal behavior will not be tolerated. Along with our state and local partners, we will continue to tirelessly pursue them at every level. I commend the efforts of all involved and appreciate their hard work and commitment to bringing these criminals to justice."
United States Attorney Duffy praised the North County Regional Gang Task Force (NCRGTF) for the coordinated team effort in the culmination of this investigation. Agents and officers from the Federal Bureau of Investigation, San Diego County Sheriff's Office, Oceanside Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, the California Department of Corrections and Rehabilitation, Bureau of Prisons, Homeland Security Investigations. U.S. Marshals Service, California Highway Patrol, and the Escondido and Carlsbad Police Departments collaborated on this investigation.
The investigation was conducted in conjunction with the Organized Crime Drug Enforcement Task Force. The OCDETF program was created to consolidate and utilize all law enforcement resources in this country's battle against organized crime and major drug trafficking organizations.
“The collaboration between federal and local law enforcement in San Diego is unparalleled, and Operation Corridor is a fine example of utilizing our strategic law enforcement partnerships to combat an increasingly dangerous fusion of violent gangs and organized crime,” said Derek Benner, special agent in charge for ICE’s Homeland Security Investigations in San Diego. “With dozens of violent street gang members and associates off the streets, we have delivered on our commitment to public safety so that the law abiding people living and working in our neighborhoods are safe.”
DEFENDANTS
Criminal Case No. 13CR4514-BEN Leonard Delgado, aka Spanky
Steven Amador, aka Insane
Isaac Ballesteros, aka Lazy
Julio Rodriguez, aka Sniper
Roberto Sotelo, aka PoPo, Top Hat
Ruben Savala, aka Boxer
Robert Collazao, aka Weasel
George Garibay, aka Scooby
Rachel Morales, aka Rachel Ruvalcaba
Margaret Cano
Angelica Ibanez SUMMARY OF CHARGESConspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, in violation of Title 18, United States Code, Section 1962(d) ; Conspiracy to Distribute Methamphetamine and Heroin, in violation of Title 21, United States Code, Sections 841 and 846. Maximum Penalties: Life in prison.
In addition to the RICO portion of “Operation Corridor,” 11 defendants were charged in six related cases for various drug trafficking and firearm offenses. Those cases and defendants include:
DEFENDANTS
Criminal Case No. 13CR4512-BEN Luis Cuevas, aka Youngster
Helen Robles SUMMARY OF CHARGESConspiracy to Possess with Intent to Distribute Heroin. Maximum Penalties: 20 years in Custody and $1
DEFENDANTS
million fine.
Criminal Case No. 13CR4513-BEN Priscilla Lopez, aka Gata
Eva Madueno, aka Shady SUMMARY OF CHARGESConspiracy to Possess with Intent to Distribute Methamphetamine and Heroin
DEFENDANTS
Maximum Penalties: 40 years in Custody and $5 million Fine
Criminal Case No. 13CR4515-BEN Juan Ybarra, aka Listo
Sherri Pelayo
Michael Vaughn SUMMARY OF CHARGESConspiracy to Distribute Methamphetamine; Conspiracy to Launder Money. Maximum Penalties: Life in
DEFENDANT
Custody and $10 million fine.
Criminal Case No. 13CR4511-JLS Hector Aguilar, aka Flaco SUMMARY OF CHARGES Felon in Possession of a Firearm
Maximum Penalties: 10 years in Custody and $250,000 fine DEFENDANT
Criminal Case No. 14MJ0038 Kenneth Coleman, aka Lucky Age: 35 SUMMARY OF CHARGESConspiracy to Possess with Intent to Distribute Methamphetamine and Heroin
DEFENDANT
Maximum Penalties: 20 years in Custody and $1 million fine.
Criminal Case No. 14MJ0039 Ricardo Chavez, aka Droopy SUMMARY OF CHARGES Possession of Methamphetamine with Intent to Distribute
Maximum Penalties: 20 years in Custody and $1 million fine. DEFENDANT
Criminal Case No. 14MJ0038 Chayo Moreno SUMMARY OF CHARGESConspiracy to Distribute Methamphetamine; Maximum Penalties: 20 years in Custody and $1 million Fine.
INVESTIGATING AGENCIESNorth County Regional Gang Task Force, which includes agents and investigators from:
Federal Bureau of Investigation
San Diego County Sheriff’s Office
Oceanside Police Department
Bureau of Alcohol, Tobacco, Firearms and Explosives
California Department of Corrections and Rehabilitation
Bureau of Prisons, Homeland Security Investigations
U.S. Marshals Service
California Highway Patrol
Escondido Police Department
Carlsbad Police Department*An indictment or complaint itself is not evidence that the defendants committed the crimes charged. The defendants are presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.
North Park Gang Members Indicted in Racketeering ConspiracyRead the Press Release
SAN DIEGO – Twenty-four alleged North Park gang members and associates are charged in an indictment unsealed today as members of a racketeering conspiracy that involved cross-country sex trafficking of underage girls and women plus murder, kidnapping, robbery and drug-related crimes.
Early this morning detectives and agents from the San Diego Police Department and the FBI, with assistance from other agencies, made 17 arrests in San Diego, Arizona and New Jersey and served 11 search warrants in San Diego and Arizona. Four defendants were already in custody on other charges. The local defendants are scheduled to make their first court appearances tomorrow at 1:30 p.m. before U.S. Magistrate Judge Barbara Major. Three defendants are fugitives.
According to the federal grand jury indictment, the primary business of the gang was sex trafficking in 46 cities across 23 states. The organization was known as “BMS,” which is a combination of “Black MOB” and “Skanless” gangs, and these members are also allegedly aligned with other streets gangs, including Neighborhood Crips, Lincoln Park and West Coast Crips, among others.
The BMS gang was formed as a result of cooperation between these gangs and the members took on different responsibilities within the criminal enterprise, according to the indictment. Some managed the prostitutes and transported them all over the country; some forcefully coerced these women into prostitution and maintained their obedience and loyalty through acts of violence; some handled the money; some placed advertisements to generate business or booked motel rooms in which acts of prostitution took place; and others distributed drugs.
The defendants are charged with racketeering conspiracy - the statute traditionally used for organized-crime syndicates and mobsters. But as criminal street gangs such as these join forces and become more sophisticated and prolific in their illicit business pursuits, this statute is an effective tool to address all aspects of the criminal conduct.
This is the second time the U.S. Attorney’s office in this district has used the racketeering statute to charge dozens of gang members with operating a criminal enterprise that included drugs, human trafficking and violence. In the first case, 39 Oceanside gang members and associates were charged with racketeering, and to date, 34 have pleaded guilty.
“Together with our law enforcement partners, we have rescued scores of sex trafficking victims from the grips of gangsters and we have restored a higher level of safety to the gang’s operational base – the community of North Park - and beyond,” said U.S. Attorney Laura Duffy.
“The kind of sex trafficking described in this indictment is nothing less than modern-day slavery,” Duffy said. “Unfortunately, more gangs are expanding from traditional pursuits like drug dealing into this lucrative business. These gangsters are preying upon our youth, and we are using every law enforcement resource to keep our children and our communities safe from these predators.”
“This RICO investigation was truly a joint effort between the San Diego Police Department, the U.S. Attorney’s Office and the FBI,” said San Diego Police Chief William Lansdowne. “I am extremely proud of the detectives and the investigative personnel who worked tirelessly on this case which has increased the safety of our community. Thousands of hours were spent on intelligence gathering, undercover operations, and interviews of victims and witnesses. Due to the investigative efforts of all involved, girls and women were rescued from a life they were being forced into. In addition, numerous gang members and associates of this criminal organization have been indicted and/or arrested.”
FBI Special Agent in Charge Daphne Hearn, commented, "Today's arrests are the result of a long term multi-agency investigation conducted under the FBI's Innocence Lost National Initiative (ILNI). One of the goals of the FBI's ILNI is to disrupt and dismantle criminal enterprises responsible for the victimization of children through prostitution. Through the efforts of the ILNI, more than 2,300 children that were forced into prostitution have been located and recovered, and more than 1,200 subjects have been convicted. Today's arrest in San Diego and federal racketeering charges filed in this case exemplifies the FBI's continued effort to work with our law enforcement partners to disrupt and dismantle criminal enterprises that seek to profit from the sexual exploitation of our nation's children.
“The collaboration between federal and local law enforcement in San Diego is unparalleled, and this case is another fine example of utilizing our strategic law enforcement partnerships to combat an 3 increasingly dangerous fusion of violent gangs and organized crime, said Derek Benner, special agent in charge for ICE’s Homeland Security Investigations in San Diego. “ With this group of violent street gang members, drug dealers, sex traffickers, and other criminals off the streets, we have delivered on our commitment to public safety so that the law abiding people living and working in our neighborhoods are safe.”
The indictment alleges that these defendants recruited girls and women from El Cajon Boulevard and elsewhere to work as prostitutes. And they also used social media like Instagram, Facebook, YouTube and Twitter to lure unwitting young girls into the lifestyle with rap videos and promises of a glamorous life. Many of these videos are posted on YouTube.
The gang members allegedly forced many of the trafficking victims into prostitution through threats or actual violence. According to the indictment, they branded their prostitutes as if they were property - with tattoos of gang monikers, bar codes, or a pimp’s name. Members of BMS sold, traded and gifted these girls and women among each other.
All of the 60 female sex trafficking victims, including 11 minors, were offered resources to help them start a new life.
U.S. Attorney Duffy urged parents and school administrators to be vigilant in tracking the online activities and academic performance of girls who could fall prey to gang members who would manipulate them.
According to court documents, some defendants attended parties known as “Players’ Balls,” which are invitation-only gatherings for pimps held in San Diego and around the country glorifying gang life, prostitution and pimping. One of the defendants in this indictment, Robert Banks, received an award at a national "Players’ Ball" function.
After a “Players Ball” last month in Las Vegas, a photo was posted on Facebook of Banks posing with a “Pimp Cup” and a “Pimp stick” and a woman on each arm – including a known prostitute. According to court documents, it is common for pimps to have chalices and scepters, known as Pimp Cups and sticks, made to symbolize their status as a pimp. These items are typically worth thousands of dollars, as they are commonly made of gold, decorated with jewels, and designed with the pimp’s moniker, gang name or gang number.
Pimps often have dental “grills” made that can be permanently affixed or removable. Typically, they are made of gold and can cost thousands of dollars.
According to the indictment, the government is seeking forfeiture of these items and others purchased with illicit proceeds generated from the enterprise’s alleged criminal activities.
During today’s searches, law enforcement officials seized two firearms; 20 to 30 marijuana plants; six luxury cars; flat screen televisions; several thousand dollars in cash; numerous pimp paraphernalia such as cups, sticks and hats; more than 50 pairs of Air Jordan shoes.
DEFENDANTS Criminal Case No. 13CR4510-JAH Aaron Dwayne Pittman
Alvin Bernard Mitchell
Robert Banks III
Hakeem Tayari Dunn
Marcus Anthony Stevenson
Labarron Carnell Coker
Malik Hassan Kelly
Harold Randolph Martin
Anthony Dwayne Edmond
Tony Brown
Jakari Deandrez Blake
Dante Levell Grant*
Ronald Ledon Jackson*
Jonathan Devon Price
Bradley West Reynolds
Akili Lynn Cobb
Antwon Ruason Hollingsworth*
Christopher Michael Wall
Everett Burdette Williams
Marcus John Anthony Griffin
Edward Reynolds
Nicole Lee Rice
Yasenia Armentaro
Nadine Davis *Fugitive
**The following defendants face the possibility of life in prison due to special allegations in the
indictment, which increase the maximum penalty: Tony Brown, Robert Banks, Hakeen Dun, Everette
Williams, Dante Grant, Chris Wall, Aaron Pittman, Nicole Rice, Malik Kelly, Harold Martin, Ronal
Jackson, Marcus Stevenson, Alvin Mitchell, Labarren Coker. The special allegations are that these
defendants committed conduct that formed the basis of (1) sex trafficking of a minor, (2) sex trafficking
by force, or (3) transportation of minors for prostitution. SUMMARY OF CHARGESTitle 18, United States Code, Section 1962(d)—Conspiracy to Conduct Enterprise Affairs Through a
INVESTIGATING AGENCIES
Pattern of Racketeering Activity; Title 18, United States Code, Section 1963—Criminal Forfeiture.
Maximum Penalties: 20 years’ incarceration, a fine of $250,000, three years of supervised release.San Diego Police Department
Federal Bureau of Investigation
Homeland Security Investigations*An indictment itself is not evidence that the defendants committed the crimes charged. The defendants are presumed innocent until the government meets its burden in court of proving guilt beyond a reasonable doubt.
Ramona Real Estate Agent Who Arranged Fraudulent Real Estate Sales Sentenced to 15 MonthsRead the Press Release
SAN DIEGO – Real estate agent Teresa Rose, of Ramona, California, was sentenced today to 15 months in custody by U.S. District Judge John A. Houston for her role in an investment and mortgage loan fraud scheme that generated tens of millions of dollars in fraudulent loans and millions in illegal kickbacks to the participants. In addition, Rose was ordered to pay more than half a million dollars in restitution to victims of the offense.
Rose was charged with participating in the scheme along with five others: Mary Armstrong, an unlicensed mortgage broker who orchestrated the scheme; William Fountain, Armstrong’s assistant; John Allen, a mortgage loan processor from Laguna Hills; Justin Mensen, a straw buyer who later recruited others and helped launder the funds; and Audrey Yeboah, a Los Angeles-based tax preparer who generated fake paperwork to support the loans.
Rose’s coconspirators, including Mary Armstrong, recruited real estate “investors” through advertisements in the Los Angeles Times, Monster.com, and elsewhere. They offered these “investors” the opportunity to purchase homes using their good credit with no money down. In order to get these “investors” to participate in the loan fraud, the participants in the fraud promised to make the mortgage payments on their behalf using rental income from the properties.
In reality, these so-called investors were nothing more than straw buyers who were promised $10,000 for each property purchased as part of the scheme. Rose helped secure mortgages on the properties by falsifying loan applications for the straw buyers. Among other things, the loan applications she helped to falsify claimed that the borrowers had exorbitant income from fake employers, and assets that they did not own. Rose and others used sham employers in order to verify the borrowers’ fabricated employment histories. In addition, Armstrong arranged for the borrowers to obtain 100% financing – and thus avoided having to make any down payment on the properties.
Rose acted as both the buyers’ and sellers’ real estate agent on a number of these sales, and convinced the sellers of each property to inflate the purchase price by $100,000 or more. These inflated amounts were allegedly for construction to improve the properties. In fact, no construction work was performed and the funds were diverted (or “kicked back”) to bank accounts controlled by Rose’s coconspirators. In this way, the conspirators pocketed nearly $15 million in kickbacks, made few if any mortgage payments, and allowed nearly all of the properties to swiftly fall into foreclosure. Rose earned real estate sales commissions from both the sellers and buyers on each transaction, and took home more than $200,000 for arranging the sales of nine properties in Ramona. In total, Armstrong arranged the purchase of approximately $100 million in loans through this scheme, resulting in estimated losses between $7 million and $20 million to the mortgage lenders and secondary purchasers Fannie Mae and Freddie Mac.
All of the defendants pled guilty to participating in the scheme and were sentenced by Judge Houston. Armstrong was sentenced to 100 months in custody. Fountain and Allen were sentenced to 42 months and 12 months in custody, respectively. Mensen and Yeboah were each sentenced to probation with terms of home detention or house arrest.
United States Attorney Laura Duffy said the American public is the actual victim of this type of widespread mortgage fraud, which played such a significant role in destabilizing the country’s financial situation and neighborhoods rocked by foreclosures and abandoned homes. She emphasized that her office would aggressively prosecute such crimes and urged anyone in the community who has information relating to these charges to contact the San Diego branch of the Federal Bureau of Investigation at (858) 565-1255 or the Federal Housing Finance Agency - Office of Inspector General hotline at (800) 793-7724.
This matter was investigated jointly by agents from the FBI and FHFA-OIG. The case is being prosecuted by FHFA-OIG Investigative Counsel and Special Assistant U.S. Attorney Emily W. Allen and Assistant U.S. Attorney Valerie Chu of the Southern District of California.
DEFENDANTS Criminal Case No. 12CR1848-JAH Mary Armstrong
Teresa Rose
William Fountain
John Allen DEFENDANT Criminal Case No. 12CR1458-JAH Justin Mensen DEFENDANT Criminal Case No. 12CR4322-JAH Audrey Yeboah SUMMARY OF CHARGESMary Armstrong, Teresa Rose, and William Fountain
Count 1: Title 18, United States Code, Section 371 -- Conspiracy to Commit Wire Fraud and to
Launder Money -- statutory maximum sentence of 5 years custody, a maximum fine of
$250,000 or twice the gain derived from or loss caused by the offense, and $100
special assessment.Mary Armstrong
Count 2: Title 18, United States Code, Section 1343 -- Wire Fraud -- statutory maximum
sentence of 20 years custody, a maximum fine of $250,000 or twice the gain derived
from or loss caused by the offense, and $100 special assessment.Counts 3-5: Title 18, United States Code, Section 1956(a)(1)(B)(I) -- Money Laundering --
statutory maximum sentence of 15 years’ custody, a maximum fine of $500,000 or
twice the value of the property involved in the transaction, and $100 special
assessment.Justin Mensen
Information: Title 18, United States Code, Section 371 -- Conspiracy to Commit Wire Fraud
and to Launder Money -- statutory maximum sentence of 5 years custody, a maximum
fine of $250,000 or twice the gain derived from or loss caused by the offense, and
$100 special assessment.Audrey Yeboah
Information: Title 18, United States Code, Section 1343 -- Wire Fraud -- statutory maximum
AGENCIES
sentence of 20 years custody, a maximum fine of $250,000 or twice the gain derived
from or loss caused by the offense, and $100 special assessment.Federal Bureau of Investigation
Federal Housing Finance Agency - Office of Inspector GeneralAlleged Sinaloa Drug Cartel Leader ArrestedRead the Press Release
SAN DIEGO –Jose Rodrigo Arechiga-Gamboa, also known as “Chino Antrax” and “Norberto Sicairos-Garcia,” was arrested Monday, December 30, 2013, at the Schiphol Airport in Amsterdam, Netherlands at the request of the United States.
A federal grand jury in San Diego returned a sealed 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. The indictment was unsealed today.
Archiga-Gamboa was taken into custody at the airport under a fraudulent name as he deplaned from KLM Flight 686 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 United States Attorney is currently seeking his extradition to face charges in the Southern District of California.
DEFENDANT Criminal Case No. 13-CR-4517-DMS Jose Rodrigo Arechiga-Gamboa, aka “Chino Antrax,” aka “Norberto Sicairos-Garcia” SUMMARY OF CHARGESCount 1: Title 21, United States Code, Sections 959, 960 and 963 - Conspiracy to Distribute Controlled
Substances Intended for ImportationCount 2: Title 21, United States Code, Sections 952, 960 and 963 - Conspiracy to Import Controlled
INVESTIGATING AGENCIES
SubstancesDrug 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
InterpolThird Defendant Sentenced in Murder of U.S. Border Patrol Agent Robert RosasRead the Press Release
SAN DIEGO – Jose Luis Ramirez-Dorantes was sentenced today to 55 years in prison for his participation in the July 2009 robbery and murder of United States Border Patrol Agent Robert Rosas, Jr.
Ramirez, a 46-year-old Mexican national, pleaded guilty on January 10, 2013, admitting he was one of five armed individuals who conspired to rob a Border Patrol agent of his night vision device, which resulted in Agent Rosas being fatally shot during a struggle. He pleaded guilty to conspiracy to commit robbery and kidnaping and use and carrying of a firearm during the commission of a crime of violence.
Court filings indicate that in July 2009, Ramirez and four others plotted to rob a Border Patrol agent of his night vision device. On July 23, 2009, the group, bearing firearms, traveled by car and foot to the international border near Campo, California. Ramirez stood watch on the Mexican side of the border while three co-conspirators sneaked into the United States at night and waited for a Border Patrol agent to arrive in the area. After Agent Rosas arrived in the area and exited his vehicle, he was detained at gunpoint. Agent Rosas resisted and, during the ensuing struggle, Ramirez’s co-conspirators shot Agent Rosas multiple times, killing him. The coconspirators then stole the agent’s firearm, night vision device, and other equipment and fled back to Mexico.
In June 2010, Mexican officials arrested Ramirez in Naucalpan, Mexico, near Mexico City, at the request of the United States. Ramirez was extradited to the United States in December 2010.
Ramirez is the third defendant to be sentenced for Agent Rosas’s murder. In April 2010, United States District Judge M. James Lorenz sentenced Christian Daniel Castro-Alvarez to 40 years of imprisonment. On November 14, 2013, he sentenced Marcos Rodriguez-Perez to 56 years to run consecutive to a two-year sentence Rodriguez is currently serving for violating his supervised release from a prior alien smuggling conviction. One other defendant, Emilio Samyn Gonzales- Arenazas, has pleaded guilty to participating in the murder and is scheduled to be sentenced on January 23, 2014. The last defendant, Jose Juan Chacon-Morales, remains a fugitive, and there is a reward of up to $100,000 for information leading to his arrest or location.
After Ramirez’s sentencing, United States Attorney Laura E. Duffy expressed her condolences to Agent Rosas’s family and colleagues at the Border Patrol: “We hope that in some small way, these successful prosecutions can make a difference to members of the Rosas family who have suffered such a tragic, irreparable loss. Ramirez and the others will pay a high price for their unconscionable actions that terrible night.”
Duffy also expressed her gratitude to the Federal Bureau of Investigation and Homeland Security Investigations who conducted the investigation. “Since July 2009, the investigating agents have displayed exceptional diligence and tenacity to bring these four men to justice, despite the length and complexity of this cross-border investigation. The expertise and resolve of the agents in this case, demonstrate that if a law enforcement officer is harmed in any way, the United States will dedicate its full resources to catching the perpetrators and bringing them to justice.”
Chief Patrol Agent Paul A. Beeson of the U.S. Border Patrol’s San Diego Sector said, “On behalf of all Border Patrol agents, we extend our deepest appreciation for the resolve and professionalism of the U.S. Attorney’s Office for their work on the prior convictions and this sentencing. We will always remember Border Patrol Agent Robert Rosas as a good father, loving husband, and a patriot to his country.”
FBI Special Agent in Charge, Daphne Hearn, commented, "Today's sentencing sends a message that the FBI is committed to bringing to justice those responsible for the death of U.S. Border Patrol Agent, Robert Rosas. Agent Rosas served his country with dedication, honor and courage and was killed while protecting our nation's borders. The FBI recognizes that no punishment will lessen Agent Rosas' death, but we hope today's sentencing will help bring some closure to the family.”
DEFENDANT Criminal Case No. 10CR1793-L Jose Luis Ramirez-Dorantes SUMMARY OF CHARGESCount 1: Title 18, United States Code, Section 371: Conspiracy to commit robbery and kidnaping
Count 5: Title 18, United States Code, Section 924(c)(1): Discharging firearms during and in relation to a crime of violence
INVESTIGATING AGENCIESFederal Bureau of Investigation
Homeland Security InvestigationsNcis Agent Pleads Guilty in International Navy Bribery Scandal; Admits Acting as Mole for Foreign Defense Contractor in Asia PacificRead the Press Release
SAN DIEGO, CA – A special agent with the Naval Criminal Investigative Service (NCIS) pleaded guilty today to participating in a massive international fraud and bribery scheme, admitting he shared with a foreign Navy contractor confidential information about ongoing criminal probes into the contractor’s billing practices in exchange for prostitutes, cash and luxury travel.
U.S. Attorney Laura E. Duffy of the Southern District of California and Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division made the announcement after the plea was entered before U.S. Magistrate Judge Jan Adler. The plea is subject to acceptance by U.S. District Judge Janis Sammartino. Sentencing was set for March 7 at 9 a.m. before Judge Sammartino.
In his plea agreement, Supervisory Special Agent John Bertrand Beliveau Jr., 44, pleaded guilty to conspiracy to commit bribery, which carries a maximum penalty of five years in prison, and bribery, which carries a maximum penalty of 15 years in prison. In his plea agreement, Beliveau acknowledged that he regularly searched confidential NCIS databases for reports of investigations related to the contractor, Leonard Glenn Francis, chief executive of Singapore-based Glenn Defense Marine Asia (GDMA). Beliveau admitted that, over the course of years, he helped Francis dodge multiple criminal investigations by providing copies of these reports plus advice and counsel on how to respond to, stall, and thwart the NCIS probes.
Beliveau is one of five Navy officials and civilian contractors who are implicated so far in the widening corruption case involving hundreds of millions of dollars of Navy contracts. In addition to Beliveau and Francis, also charged are U.S. Navy Commanders Michael Vannak Khem Misiewicz and Jose Luis Sanchez and GDMA executive Alex Wisidagama. The charges against Francis, Misiewicz, Sanchez and Wisidagama are merely allegations, and the defendants are presumed innocent until and unless proven guilty.
“Instead of doing his job, John Beliveau was leaking confidential details of investigations to the target himself,” said U.S. Attorney Laura Duffy. “This is an audacious violation of law for a decorated federal agent who valued personal pleasure over loyalty to his colleagues, the U.S. Navy and ultimately his own country. His admissions are a troubling reminder that corruption may exist even among those entrusted with protecting our citizens and upholding our laws.”
U.S. Attorney Duffy praised law enforcement partners, and in particular she acknowledged Defense Criminal Investigative Service, NCIS and the Navy for taking extraordinary measures to weed out corruption from its ranks. “The Navy has extended enormous cooperation and assistance in this investigation, and we have worked closely to achieve justice, to protect national security and to safeguard American defense dollars.”
“Today, John Beliveau has admitted to accepting lavish gifts in exchange for revealing sensitive law enforcement information to a primary target of this massive bribery investigation," said Acting Assistant Attorney General Raman. “For nearly two years, Beliveau deliberately leaked the names of cooperating witnesses, reports of witness interviews, and plans for future investigative steps. Through his corrupt conduct, Beliveau helped the target of the investigation evade the reach of law enforcement, and cost the U.S. Navy millions of dollars. Thanks to the Navy's extensive cooperation and assistance, and the hard work of the NCIS and DCIS agents assigned to this ongoing investigation, we have now been able to hold him to account.”
“John Beliveau's reprehensible actions, providing sensitive information to the targets of ongoing fraud investigations and accepting bribes, tragically tarnished his NCIS badge,” said NCIS Director Andrew Traver. “Nevertheless, the tireless and dedicated work of NCIS and DCIS effectively brought this to a halt, and these agencies continue to vigilantly protect Department of Navy personnel and resources.”
“Today's guilty plea of former NCIS Special Agent John Beliveau is part of an ongoing joint effort by the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and our enforcement partners to identify, investigate and bring to justice those seeking to enrich themselves at the expense of U.S. taxpayers,” said James B. Burch, Deputy Inspector General for Investigations, Office of the Inspector General, Department of Defense. “While the conduct of a vast majority of those in the U.S. Navy and law enforcement community is beyond reproach, we will vigorously pursue those individuals who put the safety and security of U.S. Navy personnel at risk. The conduct of former Special Agent Beliveau is reprehensible and today's guilty plea demonstrates the Defense Criminal Investigative Service will continue to pursue allegations of fraud and corruption that puts the Warfighter at risk.”
According to the plea agreement, Beliveau’s criminal conduct began in January of 2011 when he was stationed in Singapore, and continued for more than two years, even after Beliveau returned to the NCIS office in Quantico, Virginia, in April of 2012.
Among the law enforcement-sensitive information provided by Beliveau to Francis were the identities of the subjects of the investigations; information about witnesses, including identifying information about cooperating witnesses and their testimony; the particular aspects of GDMA’s billings that were of concern to the investigations; the fact that the investigations had obtained numerous email accounts and the identities of those accounts; the particulars about bank records and financial information sought by the investigations; the reports to prosecutors and their interactions with the investigations; and planned future investigative activities.
According to information provided in court, when authorities became aware of Beliveau’s duplicity, they began planting bogus reports in the system, including one that falsely indicated the investigations of Francis were going to be closed. Soon after that, an emboldened Francis came to San Diego from Singapore for a meeting with Navy brass, and Francis was arrested. Beliveau was taken into custody the same day in Virginia.
All told, Beliveau leaked information to Francis about criminal investigations into GDMA’s overbilling scheme that cost the Navy at least $7 million in fraudulent overpayments for “husbanding” services such as food, fuel and other supplies and services to the ships, according to the plea agreement.
In return for leaks of internal NCIS information and advice from Beliveau, Francis allegedly provided the agent with envelopes containing cash on at least five occasions, along with luxury travel from Virginia to Singapore, the Philippines and Thailand, the plea agreement stated. On many occasions, beginning in 2008 and continuing through 2012 while Beliveau was posted in Singapore, Francis allegedly provided the NCIS agent with prostitutes, lavish dinners, entertainment and alcohol at high-end nightclubs. The tab for each of these outings routinely ran into the thousands of dollars.
According to court records, in April of 2012 Beliveau complained to Francis, saying, “You give whores more money than you give me,” and, “I can be your best friend or worst enemy.”
Beliveau admitted that he and Francis tried to hide their illicit activity by employing techniques that Beliveau had learned from his specialized training as a law enforcement agent. These steps included deleting emails, changing email accounts, creating covert email accounts shared by Beliveau and Francis, not transferring funds through the normal banking channels, and using Skype chat and calls to transmit information.
This ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service (DCIS) and the Defense Contract Audit Agency. Significant assistance was provided by the Drug Enforcement Administration, Homeland Security Investigations and the DOJ Criminal Division’s Office of International Affairs, the Royal Thai Police and the Corrupt Practices Investigation Bureau Singapore. This case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California and Director of Procurement Fraud Catherine Votaw and Trial Attorney Brian Young of the Criminal Division’s Fraud Section, as well as Special Trial Attorney Wade Weems on detail to the Fraud Section.
Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tipline at www.ncis.navy.mil, or the DoD Hotline at www.dodig.mil/hotline or should call (800) 424-9098.
DEFENDANT Case Number: 13-MJ-3456
John Bertrand Beliveau II SUMMARY OF CHARGESConspiracy to Commit Bribery in violation of 18 U.S.C. § 371
Maximum of 5 years in prison; a maximum $250,000 fine, or twice the gross gain or loss from the
offense, whichever is greaterBribery in violation of 18 U.S.C. § 201
INVESTIGATING AGENCIES
Maximum of 15 years in prison; a maximum fine of $250,000, twice the gross gain or loss from the
offense, or three times the monetary equivalent of the thing of value, whichever is greater.Defense Criminal Investigative Service
Naval Criminal Investigative Service
Homeland Security InvestigationsTop Lieutenant in Fernando Sanchez Arellano Cartel SentencedRead the Press Release
SAN DIEGO - Armando Villareal Heredia, who was extradited to the United States from Mexico last year to face federal racketeering and drug charges, was sentenced today to 30 years in prison for his role as a leader in the Fernando Sanchez Arellano (FSO) drug trafficking organization and his participation in cartel activities such as murder, kidnapping and the importation and sale of methamphetamine.
Villareal, who was sentenced by U.S. District Judge William Q. Hayes, pleaded guilty in September to Conspiracy to Conduct Enterprise Affairs through a Pattern of Racketeering Activity (RICO conspiracy) and Conspiracy to Distribute Controlled Substances.
“This sentence is a major blow to the Fernando Sanchez Arellano organization,” said U.S. Attorney Laura Duffy. “We and our law enforcement partners are committed to keeping cartel violence out of our communities.”
Villareal acknowledged in his plea agreement that the FSO’s activities included assaults on law enforcement officers attempting to arrest FSO members, bribing public officials to release FSO members from prison, and payments to public officials for confidential law enforcement information.
According to the plea agreement, Villareal also admitted that the cartel attempted to keep rival traffickers, potential informants, witnesses against the cartel, law enforcement, the media and the public in fear through intimidation, threats of violence, assaults and murders, and the organization “taxed” other criminals who operated within FSO territory, which includes Tijuana and parts of San Diego.
Villareal, aka “El Gordo,” was arrested in Sonora, Mexico in July of 2011 and extradited to the U.S. in May of 2012. Villareal is the lead defendant in a 43-defendant prosecution which has been ongoing in the Southern District of California since July 2010. Villareal was arrested by Mexican law enforcement officers at the request of the United States.
To date, 40 of 42 defendants have entered guilty pleas in the case. Like Villareal, those defendants admitted to participating in a violent transnational racketeering enterprise controlled by Fernando Sanchez-Arellano, and to committing murders, kidnappings, robberies, assaults, money laundering and a wide range of drug trafficking offenses. Among those who have pleaded guilty is Jesús Quiñónez Màrquez, then- international liaison officer with the Baja California Attorney General’s Office.
Two defendants remain fugitives.
The indictment in this case resulted from a long-term investigation conducted by the multi-agency San Diego Cross Border Violence Task Force (CBVTF). The CBVTF was formulated to target those individuals involved in organized crime-related violent activities affecting both the United States and Mexico. Law enforcement personnel assigned to the CBVTF made extensive use of court-authorized wiretaps and other sophisticated investigative techniques to develop the significant evidence which led to the charges in this case.
United States Attorney Duffy praised the Mexican government for their assistance in the extradition of Villareal. She also commended the Organized Crime Drug Enforcement Task Force (OCDETF) for the coordinated team effort in handling this investigation, “Operation Luz Verde.” Agents and officers from the Federal Bureau of Investigation, San Diego Police Department, Drug Enforcement Administration, San Diego Sheriff’s Office, Chula Vista Police Department, U.S. Marshals Service, Bureau of Alcohol, Tobacco and Firearms, San Diego District Attorney’s Office, and California Department of Justice participated in this OCDETF investigation. The OCDETF program was created to consolidate and utilize all law enforcement resources in this country’s battle against organized crime and major drug trafficking organizations.
DEFENDANT Case Number 10CR3044-WQH Armando Villareal Heredia SUMMARY OF CHARGESTitle 18, United States Code, Section 1962(d) - Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity
Maximum penalties: Life in prison, Maximum $250,000 fine, 5 years of supervised release
Title 21, United States Code, Sections 846 and 841(a)(1) - Conspiracy to Distribute Methamphetamine
Maximum penalties: Mandatory Minimum of 10 years in prison; Maximum of Life in prison; Maximum
AGENCIES
$10 million fine; 5 years of supervised releaseFederal Bureau of Investigation
San Diego Police Department
Drug Enforcement Administration
San Diego Sheriff's Office
Chula Vista Police Department
U.S. Marshals Service
Bureau of Alcohol Tobacco and Firearms
California Department of Justice
San Diego District Attorney's OfficeLeader of San Diego Mortgage Company Sentenced to 41 Months in Prison and Ordered to Pay over Half A Million Dollars in RestitutionRead the Press Release
Today United States Attorney Laura E. Duffy announced the sentencing of Brian Nels Peterson, the head of a mortgage company called Terra Finance in San Diego, California, for originating millions of dollars in fraudulent mortgage applications generated between 2005 and 2007, many for properties in two neighborhoods in San Diego County. District Court Judge John A. Houston sentenced Peterson today to 41 months in custody, ordered him to pay a $50,000 fine, and ordered restitution in the amount of $542,075 to Citi Mortgage.
Peterson admitted that he devised a scheme to procure mortgage funds through deceptive means, including falsifying income on applications to qualify borrowers for loans. Terra Finance facilitated loans in several San Diego neighborhoods, including the expensive then-new “Ivy Gate” housing development in North County’s 4S Ranch, and the “Rolling Hills” development in southern San Diego County. Court documents indicate that in its heyday, Terra Finance generated between $80 million and $100 million worth of residential mortgage loans. Peterson, who held a broker’s license with the California Department of Real Estate, personally signed most of the fraudulent loan applications containing false income, employment, asset, and liability information submitted under his license number.
Peterson earned over $1 million from his fraudulent loan business through broker’s fees, kickbacks from cash-out refinances, and other sources in 2006 alone. He admitted that he failed to report his over $1 million income in 2006, and that he evaded paying taxes by arranging to be paid in cash, and other means.
According to court documents, Peterson orchestrated the fraudulent conduct of employees, borrowers, and industry professionals as the head of Terra Finance. Peterson recruited a cadre of loan officers, loan processors, office staff, real estate “investors” and other industry professionals to participate in his scheme, including appraisers, tax preparers, and lender representatives. These knowing participants included people who made up job titles and income figures so borrowers would appear to qualify for a loan, added borrowers to another person’s bank account and then had the borrowers falsely claim the funds in the account as assets, fabricated false “verifications” of phony information in the loan applications, and prepared appraisals “to order” based on the property value Peterson sought. Borrowers used a succession of fake loan applications to purchase multiple properties that they could not afford. The initial loans were often re-financed – through fraudulent loan applications -- to fund additional purchases, in an upward spiral of home ownership built on a foundation of fraud.
Peterson’s real estate empire eventually crumbled, resulting in millions of dollars of losses, dozens of foreclosures, numerous neighborhoods depressed – and the indictment of 26 loan officers, loan processors, appraisers, borrowers, and a lender representative, all who participated in loans with Terra Finance. In a related case, United States v. Berkenfield, case number 11CR3486-JAH, 13 out of 25 arrested defendants have pled guilty and have been sentenced to penalties ranging from probation and home confinement to 5 months in custody. Twelve defendants remain pending in that case. (One defendant remains a fugitive.)
DEFENDANT Criminal Case No. 11CR3486-JAH Brian Nels PetersonCount 1- Wire Fraud (Title 18, United States Code, § 1343): 41 months custody; 3 years of supervised release; $50,000 fine; $542,075 restitution; $100 special assessment.
Count 2 – Willful Failure to File Tax Return (Title 26, United States Code, § 7203): 12 months custody; 1 year of supervised release, $10 special assessment, all to run concurrently with Count 1.
PARTICIPATING AGENCIESDepartment of Homeland Security, Immigration and Customs Enforcement, Office of Professional Responsibility
Internal Revenue Service – Criminal Investigations
Federal Bureau of InvestigationCeo Sentenced to 30 Months in $2.5 Million Securities Fraud Involving Florida Software CompanyRead the Press Release
San Diego, CA - United States Attorney Laura E. Duffy announced that John G. Rizzo, the CEO of iTrackr Systems, was sentenced to 30 months in prison by U.S. District Judge Larry Alan Burns for illegally manipulating the stock market in connection with millions of shares of his Florida-based company. Judge Burns also sentenced Rizzo to pay restitution to the victims in the amount of $2,669,353.
As set forth in his Plea Agreement, in early 2006, Rizzo agreed to raise money for a Florida software company called iTrackr, which developed software to track inventory of electronics, such as the Xbox or other gaming systems, at retail stores. Beginning in late 2008, Rizzo and his co-conspirators used the services of offshore “boiler rooms” to solicit investments for the company’s “penny stock.” Unknown to investors, the boiler rooms failed to disclose that only 20% of each investment would go to iTrackr, with the rest being paid to the boiler rooms as commission.
As part of that scheme, Rizzo used a shell company in the British Virgin Islands (“BVI”), and a bank account in Belize. Rizzo sold millions of shares of iTrackr stock through his BVI company in order to avoid U.S. securities registration requirements and disguise the fact that almost all the investor funds were being diverted to the boiler rooms. In addition, Rizzo used a complex array of different entities to conceal the fact that he was the one selling the shares, rather than the shares being sold by independent third party investors. One of the business entities used by Rizzo to transfer funds in furtherance of the scheme was located in San Diego.
During 2009 alone, approximately 120 victims in the United Kingdom invested a total of approximately $2.5 million in iTrackr through Rizzo’s scheme.
Also sentenced today in a related case was Maureen Marant, who worked as Rizzo’s administrative assistant at iTrackr. Marant pleaded guilty to conspiring with Rizzo to commit wire fraud. In her Plea Agreement, she admitted to posing as the director of a fictitious escrow company; and interacting with the victim investors by sending them stock purchase agreements, wiring instructions, and other paperwork. For her role in the scheme, Marant was sentenced to five years of probation, and ordered to pay restitution in the amount of $333,755.
On October 15, 2013, in another related case, Judge Burns imposed sentence on David Bahr, a Rancho Santa Fe consultant who conspired to fraudulently manipulate and artificially inflate iTrackr’s stock. In his Plea Agreement, Bahr admitted that he arranged for the sale to a broker of $2.5 million in shares of iTrackr, and agreed to pay that broker a secret kickback of $750,000. The purpose of the arrangement was to artificially inflate iTrackr stock as part of a “pump and dump” scheme. After pleading guilty to conspiring to commit securities fraud, Bahr was sentenced by Judge Burns to 18 months in prison, and ordered to pay a fine of $65,000.
United States Attorney Laura E. Duffy once again cautioned the public that they need to be vigilant against all forms of illegal stock manipulation, especially in the penny stock markets. Duffy praised the hard work of the agents from the Federal Bureau of Investigation and the Internal Revenue Service for their efforts, and the continuing support of the Securities and Exchange Commission for their expertise and guidance.
FBI Special Agent in Charge Daphne Hearn, commented, “Today's sentencing sends a clear message to those who would defraud the public through deceit and false claims. The FBI and our law enforcement partners will aggressively pursue you and stop you from lining your pockets at the expense of others.” The public can contact the FBI at telephone number (858) 320-1800, to report investment fraud scams and other criminal activity.
DEFENDANT Case No. 13-CR-2823-LAB John G. RizzoConvicted of violating Title 18, United States Code, Section 1349 - Conspiracy to Commit Wire Fraud. Sentenced to 30 months in prison; three years of supervised release; restitution of $2,669,353; special assessment of $100.
RELATED CASES Case No. 13-CR-2861-LAB Maureen Marant Age: 47 Lantana, FloridaConvicted of violating Title 18, United States Code, Section 1349 - Conspiracy to Commit Securities fraud. Sentenced to five years of probation; restitution of $333,755; special assessment of $100.
Case No. 13-CR-2198-LAB David Bahr Age: 54 Rancho Santa Fe, CaliforniaConvicted of violating Title 18, United States Code, Section 1349 - Conspiracy to Commit Securities fraud. Sentenced to 18 months in prison; three years of supervised release; fine of $65,000; special assessment of $100.
PARTICIPATING AGENCIESFederal Bureau of Investigation
Internal Revenue ServiceThree Mexican Drug Cartel Members Sentenced for Plot to Kidnap Drug DebtorsRead the Press Release
SAN DIEGO – Three Mexican drug cartel members were sentenced today by U.S. District Judge William Q. Hayes for their roles in a conspiracy to kidnap San Diego drug dealers and spirit them away to Mexico for violent revenge over unpaid drug debts.
Carlos Alberto Andrade-De La Cruz was sentenced to 130 months in prison plus five years of supervised release; Luis Miguel Salas-Rodriguez and Antonio Zermeno-Garcia were sentenced 92 months each plus five years of supervised release.
According to sentencing documents, the defendants suspected other drug dealers in San Diego of stealing their methamphetamine. The trio plotted to kidnap their targets from the United States, take them back to Mexico, and use violence to collect on their debts. The defendants were arrested in San Diego after the leader of this plot, defendant Andrade-De La Cruz, illegally crossed into the United States from Mexico and met the others in front of the home of the first intended victim.
The investigation began in March 2012 when the Cross-Border Violence Group of the Federal Bureau of Investigation learned of a plot to kidnap and extort three unidentified drug debtors in San Diego. Acting on this information, the FBI sought and obtained judicial authorization to wiretap the telephone of one of the leaders of this plot.
Based on the intercepts, the FBI learned that the defendants blamed three San Diego-based drug dealers for stealing their methamphetamine. As a result, one of the enforcers was initially ordered either to extort money from these debtors or to take high-end, luxury vehicles from the debtors by force. Wiretap conversations revealed that as the defendants discussed various plans to collect on the debt, defendant Andrade-De La Cruz became frustrated with delay. He ultimately gave the “green light” for co-defendant Zermeno-Garcia to kidnap the first of the drug debtors. Wiretaps revealed that Zermeno-Garcia told his conspirators that a debtor could be turned into “pozole” – a term used by drug cartels to describe a “soup” made by dissolving a human body in acid.
On March 14, 2012, the defendants intended to carry out the kidnapping. Andrade-De La Cruz illegally crossed into the United States from Mexico with fraudulent documents and met up with Salas-Rodriguez and Zermeno-Garcia. The FBI tracked each of the three defendants to a location near the residence of the first intended victim. Because of an imminent threat to life, the FBI’s SWAT Team immediately arrested all three defendants. The FBI located the intended victim who told agents that he would have ended up in the trunk of a vehicle if the FBI had not intervened.
At the sentencing hearing, Judge Hayes described the defendants’ plan as “cold blooded.” In imposing the lengthy terms of incarceration, Judge Hayes stated that he believed that the defendants had every intention to take the victims to Mexico to exact violence.
This case was investigated by the Federal Bureau of Investigation’s Cross-Border Violence Group and highlights the close connection between narcotics trafficking and violence. The Cross-Border Violence Group is a FBI-led task force comprised of federal and local law enforcement from the FBI, DEA, Border Patrol, San Diego Sheriff’s Department, San Diego District Attorney’s Office Bureau of Investigation and the Chula Vista Police Department. Created in 2009, this task force was designed to respond to immediate threats posed by transnational criminal organizations. The Cross-Border Violence Group responds to numerous kidnapping events each year, which are complicated by the fact that threats often arise outside of the United States.
DEFENDANTS Criminal Case No. 12-CR-1244-WQH Carlos Alberto Andrade-De La Cruz
Luis Miguel Salas Rodriguez
Antonio Zermeno Garcia SUMMARY OF CHARGESCount 1: Title 18, United States Code, Section 1201(c) - Conspiracy to Commit Kidnapping; Maximum
INVESTIGATING AGENCIES
penalty: Life ImprisonmentFederal Bureau of Investigation’s Cross-Border Violence Group
Retired San Diego Unified School District Educator Sentenced to 84 Months for Receipt of Child PornographyRead the Press Release
SAN DIEGO - James Rick Mitchell, a retired teacher and counselor in the San Diego Unified School District, was sentenced today by U.S. District Judge Janis L. Sammartino to 84 months in prison, followed by five years of supervised release, for a child pornography offense. He is expected to self-surrender to serve his sentence by February 7, 2014.
According to documents filed in court, Mitchell collected 947,542 images and 4,751 videos depicting minors engaged in sexually explicit conduct. Mitchell was identified as a collector of child pornography in an investigation conducted by the United States Postal Service into a commercial distributor of child pornography images and videos.
The investigation revealed that Mitchell had purchased videos and images from the company over an approximately 5 year period between 2006 and 2011, spending approximately $4,300 to purchase dozens of illicit images and videos. Based on that information, United States Postal Inspectors executed a search 2 warrant at Mitchell’s residence, where they uncovered the trove of child pornography that Mitchell had collected.
Mitchell was employed by the San Diego Unified School District for 34 years between 1969 and 2003. He worked as a physical education teacher and counselor at Einstein Junior High School; as a math teacher and track coach at Point Loma High School; and for 24 years between 1979 and 2003 at University City High School as a math teacher, counselor and track coach. Judge Sammartino told Mitchell that he had cast a “pallor” on his career as an educator with his actions and noted that possession of child pornography results in acute harm to the children depicted in the images.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
DEFENDANT Criminal Case No. 13-cr-667-JLS James Rick Mitchell SUMMARY OF CHARGESReceipt of Images of Minors Engaged in Sexually Explicit Conduct, in violation of Title 18, United States
Code, Section 2252(a)(2)Maximum Penalties: 5 year mandatory minimum, 20 year maximum; 5 years of supervised release
AGENCIESUnited States Postal Service
San Diego Internet Crimes Against Children Task ForceJudge Throws Out Lawsuit by Cynthia Sommers; Finds the United States Was Not Negligent in Investigation of Her Husband’s Suspicious DeathRead the Press Release
SAN DIEGO, CA – A federal judge today dismissed a lawsuit against the federal government filed by Cynthia Sommer, widow of U.S. Marine Sgt. Todd Sommer, rejecting claims that Naval Criminal Investigative Service agents acted with negligence and malice in the investigation that eventually resulted in her conviction for his murder.
A jury in state court convicted Sommer of first-degree murder in 2007, but the trial judge overturned the verdict, ruling that prosecutors' description of her party "lifestyle" following her husband’s death in 2002 was so inflammatory that it deprived Sommer of a fair trial. In preparation for a retrial, additional tissue samples were tested, and experts found no arsenic. The District Attorney ultimately dismissed the murder case without prejudice.
Sommer filed a lawsuit in federal court in 2009, alleging in part that NCIS agents intentionally inflicted emotional distress upon her and failed to conduct a proper investigation because they disapproved of her partying lifestyle. Sommer also claimed that agents improperly arrested her, withheld key evidence and failed to disclose relevant facts that could have benefitted Sommer’s defense.
In a ruling issued today, U.S. District Judge Cathy Ann Bencivengo rejected all of Sommer’s claims. “The evidence does not support plaintiff’s theory that NCIS agents fabricated evidence or knowingly withheld evidence that they understood to be exculpatory,” the judge wrote in her ruling.
The judge later added: “Plaintiff argues that NCIS agents investigated her because they wanted to punish her for her lifestyle choices. However, because…there is no evidence showing NCIS willfully acted in a wrongful manner (e.g., that it fabricated evidence), Plaintiff’s abuse of process claim fails.”
Judge Bencivengo noted in her ruling that the parties do not dispute the validity of results of the tests conducted by the Armed Forces Institute of Pathology lab (AFIP), which found evidence of arsenic; rather, the plaintiff argued that the federal lab should have performed additional testing to rule out contamination given the extremely high levels of arsenic found.
“The evidence shows they were valid,” the judge wrote, later adding: “There is no actual evidence of contamination that the AFIP disregarded.”
Judge Bencivengo said the scientists in the government lab were well qualified and had the knowledge and experience to test human tissue for trace elements of metals and metalloids, and they followed standard procedures and maintained the chain of custody.
“There is evidence before the Court showing that the AFIP met its standard of care for producing reliable test results...Based on the record before the Court, there is and was no evidence of contamination that the AFIP ignored.”
NCIS agents were involved in the investigation because the death occurred in Navy housing at Marine Corps Air Station Miramar and Sommer was an active-duty Marine.
Alvarado Pharmacy and Owner Plead Guilty to Importing Unapproved Oncology Drugs and Fraudulently Billing MedicareRead the Press Release
United States Attorney Laura E. Duffy announced today that Alvarado Medical Plaza Pharmacy, Inc. (“Alvarado Pharmacy”) and its owner, William Burdine, pleaded guilty to healthcare fraud charges involving the illegal importation and sale of unapproved cancer drugs to Medicare patients in San Diego.
Alvarado Pharmacy and Burdine entered the pleas before U.S. Magistrate Judge Nita L. Stormes, and are scheduled to return to court on February 21, 2014, for a sentencing hearing before U.S. District Judge Janis L. Sammartino. The guilty pleas must be accepted by Judge Sammartino before becoming final.
In pleading guilty to a charge of Health Care Fraud, Alvarado Pharmacy admitted that between May 2010 and June 2011, it ordered $752,688.00 of unapproved prescription oncology drugs from a Canadian distributor, Quality Specialty Products (“QSP”). The drugs ordered from QSP were unapproved versions of drugs sold in the United States as Avastin, Eloxatin, Gemzar, Neupogen, Rituxin, Taxotere, and Zometa, and were shipped from Canada to Alvarado Pharmacy in San Diego. The pharmacy admitted that it was aware that the drugs were not intended for sale in the United States because (a) the packaging and shipping documents indicated that the drugs were shipped from outside the United States; (b) many of the invoices identified the origin of the drugs and intended markets for the drugs as countries other than the United States; (c) the labels did not bear the “RX Only” language required by the Food and Drug Administration (“FDA”); (d) the labels did not bear the National Drug Code numbers found on the labels of the drugs intended for the U.S. market; (e) many of the labels had information in foreign languages; (f) the drugs were purchased at a substantial discount; and (g) the packing slips indicated that the drugs came from Canada.
Alvarado Pharmacy further admitted that it supplied the unapproved foreign oncology drugs purchased from QSP to doctors pre-mixed, in an infusion bag, without advising the doctors that the drugs came from abroad and were not approved for use in the United States. The pharmacy admitted that it was aware that some of these drugs from QSP would be administered to Medicare patients, and doctors would bill Medicare for those drugs using the reimbursement code for the FDA-approved drugs. As Medicare provides reimbursement only for drugs approved for use in the United States, Alvarado Pharmacy caused scores of such false claims for Medicare reimbursement to be submitted by doctors. Indeed, between May 2010 and June 2011, Alvarado Pharmacy caused Medicare to be defrauded out of $1,004,284.04 in unapproved foreign drugs.
William Burdine, the owner of Alvarado Pharmacy and a pharmacist licensed in the State of California, also pleaded guilty today to unlawfully importing the unapproved oncology drugs into the United States. Burdine admitted that he ordered the unapproved oncology drugs from QSP in Canada, knowing that it was unlawful to import into the United States drugs that have not been approved by the FDA for use and sale in this country.
Individuals who are concerned about oncology drugs they may have received from Alvarado Pharmacy or William Burdine are encouraged to contact their treating physician.
DEFENDANTS Criminal Case No. 13cr4295-JLS Alvarado Medical Plaza Pharmacy, Inc.
William Burdine SUMMARY OF CHARGESAlvarado Medical Plaza Pharmacy Inc.
Health Care Fraud, in violation of Title 18, United States Code, Section 1347.
Maximum Penalty for a corporation: 5 years’ probation, a $500,000 fine and $400 special assessment.William Burdine
Importation Contrary to Law, in violation of Title 18, United States Code, Section 545.
AGENCY
Maximum Penalty: 10 years in custody, $250,000 fine and a $100 special assessmentU.S. Food and Drug Administration, Office of Criminal Investigations
Sewage Dumper Sentenced to Six Months in PrisonRead the Press Release
United States Attorney Laura E. Duffy announced today that Las Vegas resident Eric Russell was sentenced by the Honorable Roger T. Benitez to time served (approximately six months) in custody for dumping thousands of gallons of raw sewage on Bureau of Land Management (BLM) land in Imperial County. Russell, who has been in custody since June 2013 after absconding from authorities, was also ordered to pay $21,244.19 in restitution.
Russell had been a driver for All-in-One Environmental Services of Havasu, Arizona. On January 3, 2012, Russell was driving an All-in-One waste disposal truck along Highway 72 in Imperial County. In order to save the time it would take to drive to a lawful disposal site and properly dispose of his cargo, Russell illegally dumped approximately 1,500-2,000 gallons of domestic sewage onto BLM land alongside Highway 72. BLM rangers responded to the scene, and saw Russell’s sewage tanker truck stuck in a wash along Highway 78 (SR 78), near mile post 66 in Imperial County, and smelled a strong stench of sewage. Russell, the driver of the truck, told the ranger that the trunk contained nothing but water, but he declined to take a sip of the “water” himself. The passenger in the sewage truck advised the ranger that they had ended up in the wash after pumping out the holding tanks at a commercial center in the Imperial Sand Dune Recreation Area. But the passenger also indicated that Russell’s stepfather directed him to dump the sewage, and it was their practice to drive 10-15 miles outside of Blythe and dump waste on Red Cloud Road. BLM had to send a team to remediate the dump site, at a cost to the taxpayers of $21,244.19
Another All-in-One Environmental Services driver, Dennis Johnson (Russell’s stepfather) previously pleaded guilty to dumping sewage on the ground in Imperial County and was sentenced to probation and a fine (12-cr-05096).
“Dumping sewage in the middle of nowhere is not only disgusting and harmful to the environment but it is a federal crime that is worthy of time in custody,” said U.S. Attorney Duffy. “These defendants couldn’t be bothered to do the right thing, and now they are paying a price.”
“Untreated sewage contains bacteria and other pathogens that can cause a wide variety of acute illnesses, which is why sewage disposal is a regulated activity that must be done legally and safely,” said Jay M. Green, Special Agent-in-Charge of EPA’s criminal enforcement program in California. “Rather than abide by the law, the defendants in these cases devised a scheme to indiscriminately and dangerously dump untreated sewage onto federal lands located in Imperial County, California - saving them money and time. Today’s sentencing is a reminder that those who try to profit by committing environmental crimes will be held responsible for their actions.”
The BLM manages public lands -- many of which are remote areas that attract illegal dumping. Every year, California BLM Field Offices spend thousands of dollars to reverse the damage caused by abandoned automobiles, dumping and littering. In the California Desert District around 100-tons of solid waste was removed from public lands in 2013 according to Sterling White, Hazardous Materials Program Specialist. Illegally dumped wastes found on BLM lands are primarily nonhazardous materials that are dumped to avoid either disposal fees or the time and effort required for proper disposal. These materials typically include: (1) construction and demolition waste such as drywall, roofing shingles, lumber, bricks, concrete, and siding, (2) abandoned automobiles, auto parts, and scrap tires, (3) appliances or "white goods," (4) furniture, (5) yard waste, (6) household trash, and (7) tires. Such wastes end up being illegally dumped because they are banned from certain landfills, or because it costs money to properly dispose of them. BLM reminded the public that if they see anyone dumping these or other prohibited waste on public lands, please contact the nearest BLM Field Office or contact BLM through its web site, www.blm.gov.
DEFENDANT Criminal Case No. 13cr1273-BEN Eric Russell SUMMARY OF CHARGESUnlawful Disposal of Sewage, in Violation of Title 33, United States Code, Sections 1319 and 1345.
Maximum Penalties: 3 years in custody and $50,000 fine/day of violation, a minimum fine of $5,000/day of violation, $100 special assessment.
AGENCIESBureau of Land Management
U.S. Environmental Protection Agency, Criminal Investigations DivisionLa Jolla Resident Sentenced for Bankruptcy FraudRead the Press Release
United States Attorney Laura E. Duffy announced today that United States District Court Judge M. James Lorenz sentenced La Jolla resident Mark Hagen to serve six months in prison for bankruptcy fraud.
Hagen pleaded guilty to fraudulently concealing assets in bankruptcy proceedings, in violation of Title 18, United States Code, Section 152(1), on September 12, 2013. According to Mr. Hagen’s plea agreement, Hagen admitted to knowingly and fraudulently defrauding the Bankruptcy Court and his creditors by hiding and lying about more than $45,000 in federal tax refunds. Specifically, in April 2008, Hagen filed a voluntary Chapter 11 petition that was then converted to a Chapter 7 petition in the United States Bankruptcy Court for the Southern District of California. Despite instructions to turn over his tax refunds and questions about their whereabouts, Hagen repeatedly concealed more than $45,000 of tax refunds that he had received from the United States – stating falsely that he had not received any tax refunds during bankruptcy proceedings in May 2009, July 2009, October 2009, and July 2010. In truth, the United States had issued the tax refunds to Hagen in February 2009, and Hagen had endorsed and arranged for the tax refunds to be deposited into a bank account that he controlled in February 2010.
United States Attorney Duffy observed that bankruptcy protection is a privilege afforded to honest individuals who have suffered financial setbacks and not a means to allow the unscrupulous to get out of paying their debts. The United States Attorney=s Office will not turn a blind eye simply because the fraudulently concealed assets are not valued in the millions of dollars. United States Attorney Duffy stated, “Individuals should be put on notice that the bankruptcy process cannot be used to lie to, cheat, and steal from legitimate creditors.”
FBI Special Agent in Charge, Daphne Hearn, commented, "The bankruptcy process is based on the honor system and when used appropriately allows many debtors to get a fresh start. However, when this trust is abused by debtors intentionally making false statements to the bankruptcy court, the FBI will work with the U.S. Attorney's Office and Bankruptcy Trustee to hold them accountable to ensure the public's continued trust in the bankruptcy process."
The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. Acting U.S. Trustee Tiffany L. Carroll stated: “Concealing assets in a bankruptcy proceeding is a crime that threatens the integrity of the bankruptcy process and public confidence in that process. We are grateful to the U.S. Attorney’s Office and the Federal Bureau of Investigation for their commitment to combating bankruptcy fraud and abuse.”
CASE NUMBER: 13-CR-3345-L DEFENDANT Mark Hagen SUMMARY OF CHARGESCharge: Concealment of Assets in Bankruptcy,
in violation of Title 18, United States Code, Section 152(1)Max. penalties: 5 years in prison,
INVESTIGATING AGENCY
3 years of supervised release,
a $250,000 fine, and
a $100 special assessment.Federal Bureau of Investigation