Southern District of California
Press releases recorded for this federal judicial district.
Owner of Medical Supply Company Sentenced to Prison for His Role in Million-dollar Power Wheelchair ScamsRead the Press Release
United States Attorney Laura E. Duffy announced that Jose Melendez, the owner and operator of Oceanside Medical Services, was sentenced to 18 months in prison today for his involvement in a health care fraud conspiracy that resulted in over $1 million in false claims to the Medicare trust fund. Melendez was also ordered to pay $593,429.81 in restitution, and will be on supervised release for three years after completing his custodial sentence.
The scheme involved the sale of fraudulent power wheelchair prescriptions in order to fraudulently obtain Medicare reimbursement for power wheelchairs that patients did not need and, in some cases, did not want. Two of Melendez’s co-conspirators, Dr. Irving Schwartz and Gloria Hernandez, traveled to El Centro, California in search of elderly Medicare patients. Dr. Schwartz wrote fraudulent prescriptions for the patients to obtain power wheelchairs, even though the patients did not need the equipment and could walk without assistance, and collected a $300 cash kickback in exchange for each power wheelchair prescription. Hernandez then sold the fraudulent power wheelchair prescriptions to Melendez, charging him $1,000 per fraudulent prescription.
Melendez, in turn, sold some of the power wheelchair prescriptions to other co-conspirators, charging an additional mark-up on each prescription. As the last step in the scheme, Melendez and his co-conspirators submitted the fraudulent prescriptions to Medicare for reimbursement, billing up to $5,865 for each power wheelchair. All told, Dr. Schwartz wrote at least 186 fraudulent power wheelchair prescriptions for Medicare beneficiaries in exchange for more than $55,000 in bribes and kickbacks. Melendez, the owner and operator of Oceanside Medical Services, purchased these 186 fraudulent prescriptions and used them to submit over $830,000 in false claims to Medicare. Co-conspirators Aristeo and Laura Tavares, who were charged in a separate case, submitted more than $250,000 in false Medicare claims based on Dr. Schwartz’s fraudulent prescriptions.
United States Attorney Duffy reiterated that combating health care fraud is a top priority of the Department of Justice. “Anyone attempting to defraud Medicare – whether a doctor, medical equipment supplier, or patient recruiter – will be prosecuted to the fullest extent of the law, and should understand that the prognosis includes a substantial prison sentence, like the one imposed today.” United States Attorney Duffy thanked the Federal Bureau of Investigation and Department of Health and Human Services, Office of Inspector General, for their diligence and perseverance in breaking up this health care fraud conspiracy.
Dr. Schwartz is scheduled to be sentenced on August 19, 2013, before Judge Huff. On March 27, 2013, Aristeo and Laura Tavares were sentenced to time served (1 day in custody), and ordered to pay $182,860.77 in restitution to the Medicare trust fund. Hernandez was sentenced today to 6 months home confinement, and ordered to pay $160,000 in restitution to Medicare.
DEFENDANT CRIMINAL CASE NO. 12cr2599-H Jose Melendez SUMMARY OF CHARGESCount 1: Conspiracy to Pay and Receive Health Care Kickbacks and Defraud -Title 18, United States Code, Section 371; Maximum Penalty: Five years in custody; $250,000 fine; 3 year of supervised release; and mandatory restitution.
INVESTIGATING AGENCIESFederal Bureau of Investigation
Department of Health and Human Services, Office of Inspector GeneralMan Pleads Guilty to Embezzling over $1 Million from San Diego Company to Fund Fledgling Professional Football LeagueRead the Press Release
Jaime Cuadra, the former chief financial officer of Oceanic Enterprises, Inc. pled guilty today to wire fraud and filing a false federal income tax return in connection with his embezzlement of $1,089,813.26 from Oceanic and its parent company, Umami Sustainable Seafood, Inc., a San Diego-based, publically traded company.
As set forth in his plea agreement, Cuadra admitted that he embezzled the money over a two-and-a-half-year period from 2010 until his termination from Oceanic in February 2013. Cuadra took advantage of his position as CFO to access Oceanic's accounts and withdraw money for his personal benefit. Cuadra primarily used the money to fund a fledgling professional football league of which Cuadra served as the president and chief executive officer during the period of his fraud.
According to court documents, Cuadra admitted that he used embezzled funds to develop the league and attract investors by paying league executives, as well as the league's marketing, consulting, and public relations fees. Cuadra resigned as the president and CEO of the professional football league in February 2013. Cuadra admitted he used embezzled funds for other purposes as well, such as to: 1) financially support other outside business ventures (including a T-shirt business); 2) lease a Porsche Cayenne; 3) pay for personal travel, hotels, and meals; 4) purchase a variety of miscellaneous items, including artwork, designer clothing, computers and entertainment systems, and tickets to sporting events; and 5) deposit funds into his personal accounts and obtain cash from automated teller machines. Cuadra admitted that he hid his embezzlement from Oceanic and Umami by falsifying Oceanic's financial records in part by coding his illicit transfers as legitimate business expenses.
Cuadra also filed false tax returns for the years in which he carried out his scheme to defraud Oceanic and Umami. Specifically, he admitted that he failed to report his embezzled income on his 2010-2012 tax returns and, in one instance, wrote off an expense he paid with embezzled funds as a "partnership loss," which further reduced his adjusted gross income. In all, Cuadra admitted that his false tax returns resulted in unpaid taxes of $387,347.58. As a condition of his plea, Cuadra must pay back the full amount of his unpaid taxes as well as the more than $1 million he stole from Umami.
United States Attorney Laura E. Duffy praised the hard work of the agents from the Federal Bureau of Investigation and the Internal Revenue Service and reiterated her support of financial-crime prosecutions: "Today's guilty plea is yet another example of our office's commitment to investigate and prosecute those who illegally take advantage of positions of trust for their own personal gain."
FBI Special Agent in Charge, Daphne Hearn, commented: “At its most basic level, this case is about greed and the abuse of trust. I commend the efforts of the FBI Agents and Financial Analysts who worked tirelessly to uncover this sophisticated embezzlement scheme. I also want to thank the IRS and the U.S. Attorney's Office for their important roles in this investigation.”
“Jaime Cuadra used his position of trust as Chief Financial Officer to defraud over $1 million dollars from two San Diego based companies, Oceanic Enterprises and Umami Sustainable Seafood Inc.,” said Jose A. Gonzalez, Special Agent in Charge of IRS Criminal Investigation’s Los Angeles Field Office. “Cuadra’s failure to pay federal income taxes of $387,347.58 on his embezzled funds further confirms that his methodical greed and criminal activity was for his personal benefit. Today’s guilty plea entered by Cuadra reaffirms IRS CI’s commitment to investigate and prosecute those who misuse their position of trust to conduct criminal activity.”
Cuadra is scheduled to be sentenced Sept. 23 at 9 a.m. before Judge Huff.
DEFENDANT Criminal Case No. 13cr2298-H Jaime Cuadra SUMMARY OF CHARGESCount 1: Title 18, United States Code, Section 1343 B Wire Fraud
Maximum penalties: 20 years custody; $250,000 fine; 3 years supervised release.Count 2: Title 26, United States Code, Section 7206(1) B Filing a False Federal Income Tax Return
INVESTIGATING AGENCIES
Maximum penalties: 3 years custody; $250,000 fine; 1 year supervised release.Federal Bureau of Investigation
Internal Revenue ServiceLast of the Arellano-Felix Brothers SentencedRead the Press Release
SAN DIEGO, CA - Eduardo Arellano-Felix, who acted as the chief financial officer of the notorious Mexican drug cartel that bears his family name, was sentenced today in federal court to 15 years in prison for laundering tens of millions of dollars in illicit drug proceeds.
Arellano-Felix is the last of four brothers to be targeted by U.S. prosecutors for leading what was once among the world’s most violent and powerful multi-national drug trafficking organizations. He pleaded guilty in May to money laundering and conspiracy charges.
In handing down the sentence, U.S. District Judge Larry A. Burns told the defendant that even though he was less involved in the unsavory aspects of the drug business than his brothers, nevertheless he was “still an integral part” and “fully aware of the methods” of the cartel and “should be ashamed” of his actions, which have had “terrible and longlasting effects” on this community and the relationship between the U.S. and Mexico.
According to court documents, the AFO moved hundreds of tons of cocaine and marijuana from Mexico and Colombia into the U.S. and made hundreds of millions of dollars in the process. The cartel terrorized the Southwest border and beyond with executions, torture, beheadings, kidnappings and bribes to law enforcement, military personnel and government officials.
In a sentencing memorandum, prosecutors wrote that Arellano-Felix was a major force within the cartel leadership. “In his position, Defendant advised his brothers as they orchestrated the importation of hundreds of tons of cocaine and marijuana into the United States, ordered the kidnap and murder of numerous people, and directed the widespread corruption of law enforcement and military personnel in Mexico. Defendant also personally laundered at least tens of millions of dollars in illicit proceeds, and purchased large numbers of firearms for use by the AFO. Defendant’s actions resulted in destroyed lives and untold suffering on both sides of the border.”
U.S. Attorney Laura Duffy said: “The three living Arellano Felix brothers, who for decades lived as multi-millionaires while terrorizing the Southwest border, ordering assassinations and corrupting countless public officials - are now confined to maximumsecurity prison cells for a very long time. I urge others who aspire to take their place to take note.”
Duffy praised the dedicated team of prosecutors and federal agents from the DEA, FBI and IRS for overcoming the extreme challenges of building successful cases against the highest-ranking leaders of a major trafficking organization, who are typically insulated and difficult to prosecute. “It was an audacious goal to take this cartel down, and I’m extremely satisfied with the outcome.”
“The sentence that Eduardo Arellano-Felix received today marks the end of an era in cartel history. The AFO is finished, others have moved in and are attempting to take their place,” says Special Agent in Charge of the DEA San Diego William R. Sherman. “Our warning to those who emulate the members of that once powerful cartel, take a good look at your future. Our commitment to hunting down and arresting those people trafficking drugs across the US/Mexico border has not wavered but has only grown stronger. DEA and our law enforcement partners are already actively pursuing all those who dare attempt to fill the void left by the demise of the AFO.”
San Diego FBI Special Agent in Charge Daphne Hearn said, “Today's sentencing demonstrates the unwavering commitment of the FBI to continue working with our domestic and international law enforcement partners to disrupt and dismantle violent criminal enterprises such as the Arellano-Felix Organization that instill fear and threaten the safety of our citizens.”
Jose A. Gonzalez, Special Agent in Charge for IRS Criminal Investigation’s Los Angeles Field Office commented: “Today’s sentencing of Eduardo Arellano- Félix, the last brother and a former leader who ran Arellano- Félix Organization’s (AFO), is a significant contribution to the end of a brutally violent, multi-national drug cartel. Today is a triumph for prosecutors and federal agents who have worked for years to dismantle and bring key leaders to justice. Ill-gotten gains derived by the AFO were the essential backbone of this organization and IRS Criminal Investigation, working with our law enforcement partners, leveraged our financial expertise to assist in the dismantling of this dangerous and deadly drug cartel.”
It’s been a long road to get to this point.
Arellano-Felix was first indicted in 1998, along with his brothers, on drug conspiracy charges. Then in 2002, prosecutors added charges of racketeering, money laundering and conspiracy to distribute and import marijuana and cocaine in a subsequent indictment. He was arrested by Mexican authorities in Tijuana, Baja California, Mexico on October 25, 2008. A final order of extradition to the United States was granted in 2010.
After two years of unsuccessful appeals, Arellano-Felix was extradited by the government of Mexico to the United States on August 31, 2012, to face charges in the Southern District of California. He entered his guilty plea nine months later.
Two brothers and former leaders of the Arellano-Felix Organization (AFO) - Benjamin Arellano-Felix and Francisco Javier Arellano Felix - were captured in 2002 and 2006, respectively, and are currently serving sentences in the United States following their convictions for racketeering, drug trafficking, and money laundering charges. Benjamin was sentenced to 25 years in prison; Javier is serving a life term. Ramon Arellano-Felix, the cartel's enforcer, was killed in a shootout with police in 2002.
In his plea agreement, Arellano-Felix – a medical doctor nicknamed “El Doctor” - admitted he was a senior member of the AFO. He also admitted that he laundered hundreds of millions of dollars in drug trafficking proceeds and used some of the income to pay AFO members to commit crimes; to buy firearms, ammunition and vehicles; to travel on AFO-related business; to pay bribes; and to purchase drugs. He signed his plea agreement, “Dr. Eduardo Arellano Felix.”
In connection with his plea, Arellano-Felix will also forfeit $50 million. Before he was extradited, Arellano-Felix spent almost four years in custody in Mexico, from October 25, 2008 to August 31, 2012.
In addition to the brothers, this office has convicted a long line of top AFO lieutenants, including, in part, Arturo Paez-Martinez in 2002, Ismael and Gilberto Higuera-Guerrero in 2007 and Jesus Labra-Aviles in 2010.
This case (Case Number: 97cr2520-LAB) was investigated by agents from the Drug Enforcement Administration, the Federal Bureau of Investigation, and the Internal Revenue Service-Criminal Investigation and prosecuted in the Southern District of California by Assistant United States Attorneys Joseph S. Green, James P. Melendres, and Daniel E. Zipp.
The Criminal Division’s Office of International Affairs provided significant assistance in the extradition. The investigation of Eduardo Arellano-Felix was coordinated by an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was created to consolidate and coordinate all law enforcement resources in this country's battle against major drug trafficking rings, drug kingpins, and money launderers.
SUMMARY OF CHARGES IN GUILTY PLEASCount 1
Count 2
Title 18, United States Code, Sections 371 (Conspiracy to launder monetary instruments) Maximum penalty: 5 years of custody.
Title 21, United States Code, Sections 854(a) and 846 (Conspiracy to use and invest illicit drug profits) Maximum penalty: 10 years of custody.
Two Former Border Patrol Agents Sentenced for Alien Smuggling, Bribery and Money LaunderingRead the Press Release
Former U.S. Border Patrol Agents Raul and Fidel Villarreal, brothers who smuggled at least 1,000 illegal immigrants into the United States in exchange for more than $1 million in bribes, were sentenced today to 35 and 30 years in prison, respectively.
The brothers were convicted by a federal jury on August 10, 2012, of conspiracy to bring in illegal aliens for financial gain, multiple counts of bringing in illegal aliens for financial gain, conspiracy to launder money and receiving bribes. The brothers smuggled their customers while on duty, in uniform and in their Border Patrol vehicles and were assisted by a Tijuana police chief.
In handing down the sentences and $250,000 fines for each, U.S. District Judge John A. Houston told the brothers he was “disgusted” by their actions. The judge also noted that ignoring their duty to protect the border “impacted national security,” and that he wanted the lengthy sentences to send a message that such a serious violation of the public’s trust would not be tolerated.
At the hearing, Assistant U.S. Attorney Tim Salel urged the judge to impose the harshest sentence, primarily because the brothers abused the sacred trust of the public and neglected to protect the border. But he also noted that as law enforcement closed in, the brothers planned to kill co-conspirators to prevent them from testifying. And he argued the brothers deserved a long sentence because they had no regard for the safety of the illegal border crossers who were recklessly jammed into Border Patrol vehicles and transported at high speeds over treacherous terrain, just to maximize profits.
“This is a case of unmitigated greed and betrayal by two senior Border Patrol agents who smuggled aliens while on duty instead of patrolling the border,” Salel told the court. “The defendants are experienced agents, 10-year veterans. This was not a case of misguided rookies who got involved with the wrong crowd. They knew they had pledged to defend the border. Yet these guys set up their own organization to line their pockets.”
U.S. Attorney Laura Duffy said she was very pleased with the outcome of the case.
“The audacious way these brothers so easily tossed aside their loyalty to their country and to fellow agents,who put their lives on the line every day protecting our borders, is appalling,” Duffy said. “This sentence provides justice for a public betrayed, and reflects that this was, by far, among the most egregious violations of the public’s trust we’ve seen by federal officials in many years.”
“Today’s sentencing sends a clear message: DHS will not tolerate any type of employee misconduct, especially criminal activity that undermines the core values of our organization and the thousands of DHS employees who uphold those values in their mission to protect the American public,” said Joe Jeronimo, special agent in charge for the Office of Professional Responsibility, Western Region. “I commend the integrity and perseverance of all the investigators and prosecutors who worked tirelessly to ensure that justice was fully served in a criminal case that unfortunately involved a very egregious breach of public trust.”
Dennis M. McGunagle, special agent in charge of the Office of Inspector General, Department of Homeland Security, said, “The DHS Office of Inspector General has no tolerance for acts of corruption committed by DHS employees. We commend the efforts of the U.S. Attorney’s office for bringing these individuals to justice.”
While working as agents, the brothers formed a smuggling organization with what seemed to be the perfect cover: Many of their customers were shuttled in squad cars by a Tijuana police chief to the border. The customers would be transported down rugged Otay Mountain trails or through remote areas near Imperial Beach by the Villarreals in Border Patrol vehicles on the way to remote drop-off locations. If anyone were to question them, they could claim the passengers were being arrested. It’s what they referred to as the “guaranteed method.”
“The Villarreals used their specialized training and knowledge of the border – particularly the vulnerable smuggling routes near Imperial Beach and Otay Mountain – to smuggle aliens,” Salel wrote in court documents. “By pretending to arrest the aliens and transporting them in their assigned Border Patrol vehicles, the Villarreals could ‘hide in plain sight’ and maintain plausible deniability if another law enforcement agent was watching them.”
Raul Villarreal, the younger brother who was hired by the Border Patrol in 1995 to work at the Imperial Beach station, eventually became a public information officer and once made a public service announcement warning the Mexican people about the dangers of alien smugglers who take advantage of illegal border crossers. Ironically, for the announcement Raul played the part of an unscrupulous smuggler who showed callous indifference to the welfare of crossers. Judge Houston said his sentence was longer because he was the organizer and ring leader.
Fidel Villarreal, who was hired in 1998, also rose through the ranks to become a mountain supervisor for the Brown Field Border Patrol station. He was the supervisor and manager of the smuggling operation.
The brothers operated the smuggling business for 14 months in 2005 and 2006, conspiring with partners in Tijuana – including Claudia Gonzalez, Armando Garcia and even a Tijuana police chief.
Gonzalez would leave envelopes containing cash – usually around $10,000 to $13,000 per smuggling trip, three or four times a week and sometimes multiple times a day - under the front seat of the Villarreals’ luxury vehicles, which were usually parked at a shopping mall in Tijuana. Fidel had a BMW and Raul had a Mercedes SUV.
During the investigation, agents used multiple confidential informants to infiltrate the criminal organization, and installed cameras on poles in areas where migrants were dropped off. They planted undercover recording devices, put tracking instruments on Border Patrol vehicles and even followed a smuggling load by airplane.
In June of 2006, the Villarreals were tipped off about the investigation, abruptly resigned and fled to Guadalajara along with other coconspirators. While living in Mexico, they kept tabs on the investigation and warned members of the organization not to cooperate with authorities. The brothers’ desperation piqued and they made plans to have coconspirators murdered in Mexico. The murders never took place.
In one instance, they held a gun to the head of a coconspirator, who supervised some of the drivers who the Villarreals suspected of cooperating with U.S. officials, but he was able to escape. Unbeknownst to the Villarreals, The coconspirator met with another coconspirator in a graveyard in Tijuana, warning her of the plot to kill her and urging her to go to San Diego.
In April of 2008, the brothers were indicted, along with Garcia and Gonzalez. They were arrested in Tijuana in October of 2008 and eventually extradited to the U.S. to face trial. Garcia was convicted along with the Villarreal brothers; Gonzalez pled guilty on December 10, 2009 to conspiracy to bring in illegal aliens for financial gain, bribery, and money laundering. Garcia is scheduled for sentencing on July 22. Gonzalez was sentenced in August 2012 to time served, which was three years, 10 months.
DEFENDANTS Case Number: 08CR1332-JAH Raul Villarreal
Fidel Villarreal
Armando Garcia
Claudia Gonzalez SUMMARY OF CHARGESConspiracy to Bring in Illegal Aliens for Financial Gain - Title 18, United States Code, 371
Maximum penalties: 5 years' imprisonment and $250,000 fineBringing in illegal aliens for financial gain - Title 8, United States Code, Sections 1324(a)(2)(B)(ii)
Maximum penalties: 10 years' imprisonment and $250,000 fineBribery - Title 18, United States Code, Sections 201(b)(2)(A) and (C)
Maximum penalties: 15 years' imprisonment and greater of $250,000 fine or three times the amount of the bribeConspiracy To Launder Money - Title 18, United States Code, Sections 1956(a)(2)(A) and (h)
AGENCIES
Maximum penalties: 20 years' imprisonment and greater of $500,000 fine or twice the value of the fundsImmigration and Customs Enforcement’s Homeland Security Investigations
Department of Homeland Security, Office of Inspector General
ICE Office of Professional Responsibility
U.S. Border PatrolTrafficker of Endangered Wildlife Pleads GuiltyRead the Press Release
United States Attorney Laura E. Duffy announced today that Jason Xie, a resident of Sacramento, California, tendered his guilty plea yesterday before United States Magistrate Judge William McCurine, Jr., to the charge of conspiring to smuggled endangered Totoaba fish swim bladders into the United States.
In his plea, Jason Xie admitted that he conspired with his codefendant, Anthony Bueno, and others to smuggle the Totoaba swim bladders into the United States from Mexico. Xie acknowledged that he intended to sell the swim bladders to the Asian market, both in the United States and abroad. Xie admitted that in February 2013 he received two coolers containing the swim bladders of 100 Totoaba smuggled into the United States, and again on March 30, 2013, he accepted delivery of three coolers containing the swim bladders of 170 endangered Totoaba (about 225 pounds), concealed under layers of fish and ice.
As part of his plea, Xie agreed to forfeit the 170 Totoaba swim bladders and also a $350,000 residence he purchased in Seattle, Washington, which he admitted he purchased with the proceeds of the sale of endangered Totoaba.
Xie further admitted that he paid $1500 per swim bladder in Mexico for the Totoaba. Xie acknowledged as part of his guilty plea that he knew it was unlawful to take, possess, transport and sell Totoaba in Mexico and the United States. The Totoaba smuggled by Xie and his co-conspirators in February and March was valued at over $400,000.
Totoaba macdonaldi, also known as Cynoscion macdonaldi, is the largest species within the scaienidae family. It can grow to more than 62 feet in length, weigh up to 220 pounds, and live up to 25 years. They are endemic only to the Gulf of California, the narrow inlet between Baja California and Mexico's mainland (also called the Sea of Cortez). This fish can be identified by its dusky silver color, elongated body, sharp snout, a projecting lower jaw, and a slightly convex tail.
During their winter migration, schools of adult Totoaba travel northward along the east coast of the Gulf of California to the Colorado River delta, where they remain for weeks before spawning in the spring. The Totoaba's spawning season runs from approximately March to May each year. During this time, Totoaba travel to the shallower waters at the mouth of the Colorado River, making them vulnerable to commercial and sport fishermen.
The Totoaba macdonaldi's large swim bladders are highly prized for use in Chinese soups. These bladders are removed from the fish, dried, and often exported from Mexico to other countries. In some instances, the fish are taken from the Colorado River, carved open so their swim bladders can be removed, and left to die on the shores. The U.S./Mexico ports of entry closest to the Sea of Cortez are in Calexico, California and San Luis, Texas.
While the Totoaba were once abundant in the Gulf of California, and even at one point constituted the second most important commercial fish for Mexico, their populations have declined drastically due to overfishing, pollution, and diversion of waters from the Colorado River.
The Totoaba was included in the most protected list of species covered by the Convention on International Trade in Endangered Species (CITES, Appendix I) in 1976, and was listed as endangered under the Endangered Species Act in 1979. Mexico included it on its list of species "In Danger of Extinction" in 1994. Both Mexico and the United States are signatories to CITES. It is a violation of law in both countries to trade in Totoaba or any part of a Totoaba.
Despite the protection, the species has shown minimal recovery. Unique biological traits, such as its limited geographic range and vulnerability during spawning, along with external pressures of habitat degradation and over-fishing, have pushed the species to the brink of extinction. The nearest Port of Entry in California to the Sea of Cortez is the Port of Entry at Calexico, California. During the period from February to May, 2013, border inspectors in Calexico seized approximately 700 pounds of Totoaba, representing the swim bladders of over 500 endangered fish.
Sentencing for Xie is scheduled for September 13, 2013, at 9:00 a.m. before the Honorable Cathy Ann Bencivengo, United States District Judge.
DEFENDANT Criminal Case No. 13cr1311-CAB Jason Jin Shun Xie SUMMARY OF CHARGESConspiracy, in Violation of Title 18, United States Code, Section 371.
AGENCy
Maximum Penalties: 5 years in custody and/or $250,000 fine, $100 special assessment.U.S. Fish and Wildlife Service
Department of Homeland Security, ICE's Homeland Security InvestigationsInternational Sports Gambling Ring Charged with Racketeering and ExtortionRead the Press Release
United States Attorney Laura E. Duffy and Federal Bureau of Investigation Special Agent in Charge Daphne Hearn announced that 18 members of a violent gambling ring located principally in California and Peru were indicted for operating “Macho Sports”—an illegal Internet and telephone gambling business.
Participants in the scheme were charged with taking millions of dollars in illegal sports wagers over the last decade in the San Diego and Los Angeles areas. Earlier today, FBI agents arrested 15 of the defendants on a sealed indictment in coordinated actions in San Diego and Los Angeles, as well as Oslo, Norway, and Lima, Peru. FBI agents also executed seizure warrants seeking the forfeiture of more than $5 million in property associated with Macho Sports, including a La Jolla property obtained by conspirators with proceeds from the illegal gambling conspiracy. The FBI investigation, which started in 2011, employed wiretaps and undercover agents to infiltrate the organization and uncover the defendants’ illegal gambling activities and extortionate debt collection.
According to the indictment, Jan Harald Portocarrero and Erik Portocarrero ran Macho Sports from Lima, Peru, using the Internet and toll-free telephone lines to accept bets from customers in California. The organization ensured the prompt payment of gambling debts through the use of intimidation, threats, and violence, as well as fostering a violent reputation as to its treatment of delinquent customers. The co-conspirators avoided detection by laundering their illegal proceeds and maintaining a company headquarters and the physical platform for its Internet operations outside the United States. Although originally from California, the Portocarrero brothers set up Macho Sports in Peru after suffering previous gambling arrests or convictions in the United States.
The Portocarreros employed managers in Peru, such as defendant Young Hee Koh, to oversee the enterprise’s telephone and internet operations, resolve disputes, and adjust customers’ lines of credit. The organization also used teams of bookies—such as Amir Mokayef (operating primarily in the San Diego area) and Joseph Barrios (operating primarily in the Los Angeles area)—who were responsible for recruiting customers, paying off winning bets, and collecting on losing bets.
Macho Sports’ bookies often managed their own network of “sub-bookies,” who both recruited customers and delivered payments to the managing bookie. For example, San Diego- -area bookie Mokayef managed the sub-bookies Michael Christopher Iaco, Howard Alan Blum, Michael John Massey, Salvatore Giacomo Groppo, Nilesh Kumar Ambubhai Patel, and Benjamin John William Weber. Los Angeles-area bookie Barrios managed the sub-bookies Charles Edward Sullivan, Emed G. Sidaros, aka Action Ed, Isaac Pete Gharibeh, Dunzmy June Nguyen, and Todd Michael Heflin.
Macho Sports supplied their customers with an account number and password for accessing their gambling accounts on its websites. Bookies instructed their customers that they could place bets with their bookmaker, or by calling Macho Sports’ toll-free numbers, or through their online accounts on the Macho Sports websites. Typically, Macho Sports would extend credit to new customers, so they could begin sports betting without pre-funding their accounts. Macho Sports also provided further extensions of credit to existing customers, so that those customers could wager larger amounts of money than their prior extensions of credit allowed.
The enterprise also used “runners,” such as Randall Lee Irwin and Larry Neil Gold, who dealt directly with customers on behalf of its various bookies. These runners handled customer payments and collections. To ensure prompt payment, Macho Sports fostered a violent reputation about its treatment of delinquent customers. To this end, and because Macho Sports could not rely on the legal system for debt collection, the enterprise used intimidation, threats, and violence against its customers, especially when customers were late in paying their gambling debts.
United States Attorney Duffy observed that billions of dollars are being made outside the law now that technology has made illegal gambling more accessible: “Illegal gambling is a thriving illegal business hiding in plain sight. The Department is committed to combating this crime, which too often is characterized by organized criminals, shady bookies, serious violence and lives in shambles because of gambling addiction.”
Some defendants are expected to be arraigned on the indictment this afternoon before U.S. Magistrate Judge William McCurine, Jr.
DEFENDANTS Case Number: 13CR2196-JLS Jan Harald Portocarrero
Erik Portocarrero
Amir Mokayef
Joseph Barrios
Young Hee Koh
Randall Lee Irwin
Larry Neil Gold
Charles Edward Sullivan
Michael Christopher Iaco
Emed G. Sidaros
Isaac Pete Gharibeh
Dunzmy June Nguyen
Todd Michael Heflin
Howard Alan Blum
Michael John Massey
Salvatore Giacomo Groppo
Nilesh Kumar Ambubhai Patel
Benjamin John William Weber CORPORATE DEFENDANT Macho Sports International Corp. Panama and Peru SUMMARY OF CHARGESCount 1: Racketeering Conspiracy to Conduct Enterprise Affairs (RICO Conspiracy), in
violation of Title 18, United States Code, Sections 1962(c)&(d)Maximum penalties: 20 years in prison, 3 years supervised release; and a $250,000 fine
Count 2: Illegal Gambling Business, in violation of Title 18, United States Code, Section 1955
INVESTIGATING AGENCIES
Maximum penalties: 5 years in prison, 3 years supervised release; and a $250,000 fineFederal Bureau of Investigation
Internal Revenue Service – Criminal InvestigationAn indictment itself is not evidence that the defendants committed the crimes charged. The defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
Rancho Santa Fe Consultant Pleads Guilty to Securities FraudRead the Press Release
David Bahr, a self-employed Rancho Santa Fe consultant, pleaded guilty today to conspiracy to commit securities fraud in connection with the Florida-based penny stock company “iTrackr.”
As set forth in his Plea Agreement, Bahr admitted that he agreed with others to fraudulently manipulate and artificially inflate the price of iTrackr shares in order to make money for himself and his client-investors whom he advised. Bahr admitted that he had bought shares of iTrackr, and advised others to do so, in order to keep up the price of iTrackr stock, and had arranged for the dissemination of promotional material that overstated the likelihood of iTrackr’s success and future profits.
The guilty plea coincides with charges filed today by the Securities and Exchange Commission in connection with the same conduct.
In late November, Bahr spoke on the telephone with an undercover FBI agent posing as a businessman who could arrange for stockbrokers to secretly invest their clients’ money in iTrackr in return for a 30% kickback. The undercover officer told Bahr that the kickback would not be disclosed to the brokers’ clients, and that he could ensure that the shares would be held for approximately one year, thus keeping the shares off the market and avoiding any sales that would decrease the price.
Bahr agreed to the plan, and agreed to pay the kickback. Bahr told the undercover officer that in order to reach his desired share price, he wanted the brokers to buy 10 million shares of iTrackr at an average price of 25 cents per share, for a total investment of $2.5 million. Bahr agreed to pay a total kickback of $750,000.
Bahr and the undercover officer agreed to do a test run. On various days in December 2012, the undercover officer, using FBI funds, made an initial purchase of iTrackr stock, and Bahr purchased a total of 135,000 shares of iTrackr stock. Bahr was satisfied with the purchases, and wired a $3,000 kickback to the undercover officer’s bank account. Days later, federal agents searched his Rancho Santa Fe home and seized documents and electronic evidence.
United States Attorney Duffy reiterated her continuing support for the stiff enforcement of federal securities laws, and cautioned the public to be vigilant against stock manipulators, 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 in this fraud investigation, and the continuing support of the Securities and Exchange Commission for their expertise and guidance.
Sentencing was set for September 3, 2013 before U.S. District Judge Larry A. Burns. Bahr was released on bond.
DEFENDANT CASE NUMBER 13cr2198-LAB David Bahr SUMMARY OF CHARGETitle 18, United States Code, Section 1349 - Conspiracy to Commit Securities fraud. Maximum penalty: 25 years imprisonment and $250,000 fine.
PARTICIPATING AGENCIESFederal Bureau of Investigation
Internal Revenue ServiceLos Angeles-Based Businessman Convicted in Scheme to Evade Customs Duties on $30 Million of Chinese-Made TextilesRead the Press Release
A federal jury today convicted Sunil Jiwat Mirwani and his corporation, M Trade, Inc., in connection with a scheme to evade customs duties on more than $30 million in Chinese-made jeans, skirts, shorts and other wearing apparel.
Both Mirwani and his corporation were charged with one count of conspiring to defraud the United States, two counts of importing goods by means of false statements, and one count of conspiring to launder money. The case was tried before a jury beginning on June 4, 2013. This afternoon, after less than a day of deliberations, the jury returned guilty verdicts on all four counts for both defendants.
The evidence presented at trial showed that as part of the conspiracy, Mirwani hired a group of San Diego-based businessmen and logistics professionals to initiate shipments of Mirwani’s merchandise from ports in China to the Port of Long Beach, California. When the goods arrived, Mirwani and his conspirators would ensure that the merchandise was classified as “in bond”—meaning it would not enter the commerce of the United States, but instead be transshipped through the territory of the United States to Mexico. Rather than complete the transshipment to Mexico, however, Mirwani and his conspirators would divert the merchandise to Mirwani’s El Monte, California-based warehouse, as well as to other warehouses in the Los Angeles-area. Having imported this merchandise effectively duty-free, Mirwani would then sell his jeans, shorts and skirts within the United States at an advantage over his law-abiding competitors—including domestic American manufacturers of similar goods and foreign manufacturers who had paid the applicable duties on their imports. As part of the scheme, Mirwani and his conspirators falsified customs documentation and database entries, even going so far as to forge special perforation marks found on particular customs filings.
The evidence showed that Mirwani also conspired to launder money, transmitting nearly $10 million from M Trade, Inc.’s bank account to the account of Mirvana International, a Hong Kong-based company that Mirwani shares with his twin brother. In addition, Mirwani transmitted similar sums to the Mirvana International account through other intermediary accounts in the United States and Mexico. Finally, Mirwani also transmitted money through M Trade Inc.’s account directly to mainland China. The international wire transfers served to conceal proceeds of the fraud as well as to help fund future fraudulent shipments.
U.S. Attorney Duffy said she was pleased with the verdict: “Not only does this type of fraud deplete our public treasury, but it also deprives domestic manufacturers and law-abiding importers of a level playing field. This prosecution and today’s convictions underscore our commitment to protecting the economic health of the United States and ensuring that no one exploits American and international markets for their personal gain.”
“Today’s verdict shows that the jury refused to believe that Mr. Mirwani was a confused dupe, but rather through his own crafty, deceitful means, wittingly conspired to pocket over $500,000 by evading the proper customs taxes and laundered the proceeds to avoid detection by the authorities,” said Jose A. Gonzalez, Special Agent in Charge for Internal Revenue Service Criminal Investigation (IRS CI). “Evasion of any type of tax, income tax or otherwise, is a crime and IRS CI will prosecute known perpetrators to the fullest extent of the law.”
A sentencing hearing is scheduled for September 9, 2013, at 9:00 a.m. before United States District Judge Michael M. Anello.
DEFENDANT Case Number: 12CR3137-MMA Sunil Jiwat Mirwani
M Trade, Inc SUMMARY OF CHARGES AND MAXIMUM PENALTIESCount 1: Conspiracy to Defraud 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
Counts 2 and 4: Entry of Goods by Means of False Statements – 18 U.S.C. § 542. Maximum penalties: 2 years in prison, 1 year of supervised release, $250,000 fine and a $100 special assessment
Count 57: Conspiracy to Launder Monetary Instruments – 18 U.S.C. § 1956(a)(2)(A) and (h). Maximum penalties: 20 years in prison, 3 years of supervised release, $500,000 fine (or a fine worth twice the amount of the laundered money) and a $100 special assessment.
INVESTIGATING AGENCIESImmigration and Customs Enforcement – Homeland Security Investigations
Internal Revenue Service – Criminal Investigations
United States Food and Drug AdministrationFederal Officials Reach Out to Somali Community to Build Partnerships; Event Scheduled for Saturday, June 8, at Colina Del Sol Park and Recreation Center in City HeightsRead the Press Release
In December, 2010, U.S. Attorney Laura Duffy took the highly unusual step of appearing at a community meeting to field questions from Somali immigrants who were troubled by the arrests of four men suspected of sending money to the terrorist group al-Shabaab. One of the four was a popular leader of a local mosque.
While the meeting felt tense at times, that dialogue paved the way for Duffy and counterparts at the FBI to create a more formal partnership with community activists, social service providers and spiritual leaders to improve communication, break down misunderstandings and build trust between law enforcement and the San Diego Somali community.
The group of about 24 people calls itself the San Diego Somali Community-Law Enforcement Roundtable. And while community outreach is a cornerstone of President Obama’s counterterrorism strategy, the San Diego partnership has focused first and foremost on building relationships and creating good will.
Law enforcement officials are trying to show members of the community – who are typically leery of authorities in part because of traumatic experiences in their war-torn homeland – that they can be trusted to protect civil rights, vigorously respond to hate crimes and offer support should community members suffer backlash or threats in the wake of events like the Boston Marathon bombings.
“We are trying to create strong, positive relationships between the community and law enforcement so that victims are more likely to report crimes and community members are more likely to come forward when they observe signs of gang-involvement, radicalization or other behaviors that threaten the safety of the community,” Duffy said.
“We also hope this partnership will help us prevent vulnerable youth – many of whom are new residents that experience culture shock and language barriers and difficulty assimilating - from being bullied, recruited by gangs or even drafted into extremism,” Duffy said.
The group holds bi-monthly meetings to discuss issues facing the Somali community and to plan community engagement projects. The U.S. Attorney’s office is also working with local mosques to provide presentations about a variety of public safety topics, such as constitutional rights, what to expect when interacting with law enforcement, an overview of the criminal justice system, Transportation Security Administration screenings at airports, and resources for people reentering the community after incarceration.
The Roundtable has three standing subcommittees. The Law Enforcement Cultural Programs Subcommittee is developing training materials on Somali customs, practices and culture for members of law enforcement. The Youth Subcommittee focuses on health and safety issues for youth. The Young Adult/Re-entry Subcommittee is looking at eliminating some of the barriers impeding the successful transition of Somali youth and young adults who are returning to the community after incarceration.
“We want all sectors in our district to understand that while we are certainly concerned with investigating and prosecuting crimes, we are equally concerned with protecting constitutional rights,” Duffy said. “This is another example of how we are trying to expand the definition of traditional law enforcement by engaging in non-traditional activities such as outreach, which is linked to prevention.”
The partners will hold a Youth Athletic and Resource Fair on Saturday June 8, 2013, from 10 a.m. to 2 p.m. at Colina Del Sol Park and Recreation Center, 5319 Orange Avenue, in City Heights. The Youth Athletic Event will include a soccer clinic for girls and a basketball tournament for boys, and will also offer a variety of safety-themed resource booths and activities. The FBI and FBI Citizens Academy Alumni Association will host a booth to distribute Child ID Kits and online safety information for children.
“We are very excited to host an event which will bring families out to share in athletic competition, promote public safety education, and encourage the youth in our community to get involved in positive activities such as organized athletics,” Duffy said.
In recent years, Somali youth in the U.S. have been especially vulnerable to recruitment efforts by the Somalia-based terrorist group al-Shabab. The U.S. government has designated al-Shabaab a foreign terrorist organization for its links to al-Qaeda and its tactics that include suicide bombings, beheadings and assassinations.
More than 20 young men have left Minnesota – home to the nation’s largest concentration of Somali immigrants – for Somalia since 2007 in what has been described as one of the largest recruiting efforts of U.S. fighters by a foreign terrorist organization.
In San Diego, the four Somali immigrants whose arrests inspired the initial meeting between law enforcement and the community were convicted by a federal jury of conspiring to provide material support to al-Shabaab. They are scheduled to be sentenced June 27.
The Roundtable, meanwhile, continues to meet, expand, and pursue its mission.
For further information about the Roundtable, please contact the U.S. Attorney’s Office or Erin McKinnon at the FBI at (858) 499-7464.
Kelly Thornton
Public Affairs Coordinator
Office of the United States Attorney
Southern District of California
619.546.9726
[email protected]Doctor Arrested and Charged with Selling Oxycodone Prescriptions for Cash, Wine and Designer HandbagsRead the Press Release
SAN DIEGO – Physician William Joseph Watson was arrested and charged today with selling prescriptions for thousands of Oxycodone pills and other highly addictive painkillers without any legitimate medical purpose. Watson allegedly sold the prescriptions to addicts, who then used them recreationally, sold them on the street, or traded them for heroin.
According to a complaint filed in federal court today, Watson accepted thousands of dollars in cash or luxury goods, such as designer handbags, jewelry and fine wines, in exchange for the Oxycodone prescriptions.
“Prescription drug abuse and overdoses have reached alarming levels,” said U.S. Attorney Laura Duffy. “We are going after those who traffick pharmaceuticals with the same passion we have shown for dismantling the ruthless cartels that deal in cocaine, heroin and methamphetamine.”
“Knowing that prescription drug abuse is a national epidemic, DEA takes the illegal diversion of prescription drugs very seriously,” says DEA San Diego Special Agent in Charge William Sherman.
Oxycodone has become one of the preferred opioid drugs of choice by pharmaceutical drug addicts, the tablets can be crushed, snorted, injected or smoked for a quick, intense high. To prevent abuse, one manufacturer reformulated the 80 milligram pill in 2010, creating a version that could no longer be or smoked. Other versions of the pill, however—including the 30 milligram pill—can still be abused by addicts.
According to the complaint, Watson’s prescription-writing habits raised the suspicions of Drug Enforcement Administration agents, who monitor the type and quantity of medications prescribed through a state tracking system. The complaint alleges that Watson wrote a high volume of prescriptions for Oxycodone, Hydrocodone and Xanax, three of the most highly-abused medications on the market. Most of his patients were young and less likely to need large quantities of these medications. And, Watson routinely prescribed 80 milligram tablets of Oxycodone until they were reformulated. Then he switched to the 30 milligram version.
The complaint alleges that during medical appointments with confidential informants and an undercover DEA agent, Watson demonstrated that he would write a prescription for Oxycodone even though there was no legitimate medical purpose for doing so.
During one medical visit on June 25, 2012 that is described in the complaint, a confidential informant introduced an undercover DEA agent as his girlfriend, saying she was “hurting” and needed some treatment. Watson introduced himself to the so-called girlfriend and said he heard that she needed to come in for some treatment, winking at her while he said the word “treatment,” according to the complaint. During the appointment, Watson never asked to review the DEA agent’s medical records, nor did he inquire about any tests, x-rays or other diagnoses. To the contrary, Watson simply wrote her a prescription for 120 Oxycodone pills.
Under Title 21, United States Code, Section 841, and Title 21, United States Code of Federal Regulations, Section 1306.04(a), a medical doctor may not prescribe a controlled substance unless there is a legitimate medical purpose.
DEFENDANT CRIMINAL CASE NO. 13mj2172 William Joseph Watson Age: 58 Del Mar, CA SUMMARY OF CHARGESCounts 1-21 Title 21, United States Code, Sections 841(a)(1) and (b)(1)(C) – Dispensing
AGENCIES
Controlled Substances Without a Legitimate Medical Purpose. Maximum
penalties: 20 years of custody, $1 million fine, life-term of supervised release.U.S. Drug Enforcement Administration
Bank Robber Known as the “Insistent Bandit” Pleads Guilty to Six Counts of Bank RobberyRead the Press Release
Steve Edward Ruby, the serial bank robber known as the “Insistent Bandit,” pleaded guilty today before U.S. District Court Judge William Q. Hayes to six counts of bank robbery and one count of attempted bank robbery.
In one of the robberies, Ruby was seen riding a woman’s red mountain bike and wearing a long-sleeve T-shirt with the logo, “Bite Me.” He was known for approaching tellers with a loud and demanding tone, often lifting his shirt to reveal a gun tucked inside his waistband and insisting, “I am armed. I have a gun. Give me all your money.”
In his plea agreement, Ruby admitted he robbed the same bank - Pacific Western Bank located at 9955 Mission Gorge Road in Santee – two times in January, taking a total of $3,103. When he attempted to rob the same bank a third time on February 14, 2012, tellers recognized him and refused to let him in.
In the first robbery, Ruby admitted he told the teller: “This is a robbery. I am not kidding. I have a gun. I’ll shoot (use) it. Give me all your loose money.” When he returned the second time, the plea agreement said, he terrorized the same teller, saying in a loud voice: “We’re going to do this again! Give me all your loose bills starting with your third drawer and no bait!”
Ruby also admitted to robbing four additional banks in February, including the Home Bank of California located at 875 Garnet Avenue in San Diego, taking a total of $607; US Bank at 9643 Mission Gorge Road in San Diego, taking a total of $1,211; a different branch of the Pacific Western Bank located at 368 Broadway in El Cajon, taking a total of $1,432; and the Wells Fargo bank located at 6670 Montezuma Road, in San Diego, taking a total of $9,903. The grand total was $16,246.
Ruby is scheduled to appear for sentencing before Judge Hayes on September 3, 2013 at 9:00 a.m.
Ruby had an accomplice, Spiros Romensas, who acted as Ruby’s getaway driver during two of the February bank robberies. Romensas was convicted of two counts of aiding and abetting bank robbery on April 18, 2013, after a jury trial. Romensas is scheduled to appear for sentencing before Judge Hayes on July 15, 2013 at 9:00 a.m.
Ruby was caught after FBI agents issued an alert for a maroon truck seen leaving the banks after a number of the robberies. A sheriff’s deputy conducting other business at the A-American Storage facility on Greenfield Drive in El Cajon saw what he believed to be the maroon truck parked at the storage facility and contacted the managers of the business to determine the truck’s owner.
The managers identified Romensas as the owner of the truck and identified Romensas’ friend, Steve Ruby, as a frequent passenger in the truck.
The driver’s license photo of Ruby matched the bank surveillance photos of the robber. Surveillance footage taken on February 21, 2012 from A-American Storage depicts Ruby loading a red bicycle into the back of Romensas’ truck while wearing a white shirt with the words “Bite Me” on it in big red lettering. Ten minutes later, Ruby is captured on surveillance footage from the Pacific Western Bank riding a red bike up to the bank, wearing the “Bite Me” shirt.
DEFENDANTS Case Number: 12CR01073-WQH Steve Ruby
Spiros Romensas Age: 54
Age: 53 El Cajon, CA
La Mesa, CA SUMMARY OF CHARGESCounts 1-7 – Title 18, United States Code, Section 2113(a) – Bank Robbery and Attempted Bank Robbery; Maximum Penalties - 20 years imprisonment and $250,000 fine
INVESTIGATING AGENCIESFederal Bureau of Investigation Violent Crimes Task Force
San Diego Psychologist Sent to Prison in $1.5 Million Dollar Fraud SchemeRead the Press Release
United States Attorney Laura E. Duffy announced that Roberto J. Velasquez, a San Diego area clinical psychologist, was sentenced today for perpetrating a multi-year fraud scheme to falsify medical certifications to the federal government. In today’s court hearing, Chief District Judge Barry Ted Moskowitz sentenced Velasquez to serve 21 months in federal prison, followed by two years of supervised release and ordered Velasquez to pay more than $1.5 million in restitution to the Social Security Administration.
According to court documents, Velasquez masterminded a scheme whereby he falsely certified that dozens of patients were disabled, when in fact they were not. To further the fraud, Velasquez made up patient histories, fabricated test results, suggested symptoms and complaints that did not exist, intentionally underestimated patient scores on standardized tests, and lied about the length of time he had been seeing the patients. In exchange for each false report, Velasquez charged his patients a $200 kickback.
In his plea agreement, Velasquez admitted that he falsified two different types of disability reports. First, Velasquez falsified Medical Certification for Disability Exception Forms (Forms N-648), which are used by the Department of Homeland Security during the naturalization process. Velasquez’s false certifications allowed certain immigrants to avoid taking the English language and Civics portions of the U.S. citizenship exam. Based on the fraudulent N-648 forms, the Department of Homeland Security granted disability exemptions to approximately 50 immigrants who were not actually disabled.
Velasquez also admitted that he submitted fraudulent medical reports to the Social Security Administration, falsely certifying that certain patients were eligible for disability benefits when he knew they were not. Beginning in 2006, and continuing up to the date of Velasquez’s arrest in April 2012, the Social Security Administration paid out at least $1.5 million in unwarranted disability benefits based on Velasquez’s false certifications. Velasquez also admitted that approximately 33% of his patient files contained fabrications, false statements, and false certifications of disability.
The fraud was uncovered through an undercover operation conducted jointly by the Department of Homeland Security, Immigration and Customs Enforcement/Homeland Security Investigations, and the Office of Inspector General, Social Security Administration. The investigation revealed Velasquez’s disregard for federal disability requirements. He coached his patients who were attempting to skirt the citizenship requirements, instructing them to use poor English during their interviews and not mention that they had a college education. Velasquez also lied about the length of time he had been treating his patients, in order to create a “track record” that would satisfy reviewers at the Social Security Administration, where he had previously worked as a consultant.
This prosecution is a part of the United States Attorney’s Health Care Fraud initiative. United States Attorney Duffy noted, “Combating health care fraud is a top priority of the Department of Justice. Rather than exercising his professional medical judgment to help his patients, this Defendant corrupted the integrity of the system in order to line his own pockets.”
“This investigation uncovered a multi-year fraudulent scheme that exploited the naturalization process for an illicit gain,” said Derek Benner, special agent in charge for HSI San Diego. “HSI is committed to working closely with our counterparts at USCIS to aggressively pursue those who seek their own enrichment by perpetuating immigration benefit fraud that undermines the integrity of America’s legal immigration system.”
Social Security Administration, Office of Inspector General Special Agent in Charge David F. Butler added, “The egregious nature of this crime, facilitated by a trained, qualified clinical practitioner who was entrusted to certify his patients’ disabilities to the federal government for purposes of determining their eligibility for Social Security benefits, cannot and will not be tolerated by the Social Security Administration’s Office of the Inspector General. When brought to our attention, we will aggressively investigate all individuals who are paid and trusted by the government to provide material information concerning an individual’s benefit eligibility.”
DEFENDANT CRIMINAL CASE NO. 12cr1750-BTM Roberto J. Velasquez SUMMARY OF CHARGESCount One - Title 18, United States Code, Section 1546 – False Statements in Immigration
INVESTIGATING AGENCIES
Documents
Count Two - Title 42, United States Code, Section 1383a(a)(2) - False Statements in Applications
for SSI Disability BenefitsUnited States Immigration and Customs Enforcement’s Homeland Security Investigations
Office of Inspector General, Social Security AdministrationMexican Mafia Member Sentenced for Racketeering Conspiracysan Diego Man Led Extortion & Drug Trafficking EnterpriseRead the Press Release
United States Attorney Laura E. Duffy announced that Mexican Mafia member Salvador Nicola Colabella was sentenced today by United States District Judge Anthony J. Battaglia to serve 262 months in federal prison based on his August 9, 2012 plea to RICO conspiracy charges, in violation of Title 18, United States Code, Section 1962(d). Colabella has been in custody since his arrest on January 25, 2012.
According to court documents, Colabella’s role in the RICO conspiracy related to his participation in the Mexican Mafia, a violent, prison-based gang that controls the criminal conduct of thousands of Hispanic, street-gang members in Southern California. As revealed in his plea, Colabella controlled a significant portion of the criminal activity of Hispanic street-gang members in the San Diego area. Court records noted that while the Mexican Mafia has thousands of associates, membership is rare; in fact, law enforcement estimates that there are only about 150-200 Mexican Mafia members in the United States.
In his guilty plea, Colabella admitted to personally engaging in drug trafficking and extortion, as well as profiting from the criminal activity of those gang members who worked under his command. The extortion payments, or “taxes” in Mexican Mafia parlance, are collected by associates at the behest of members through violence and/or the threat of violence. In exchange for such “taxes,” Mexican Mafia members essentially grant gang members and other associates the right to conduct criminal activity within their respective areas of influence. In fact, Colabella admitted in his plea agreement that he had authority over several Mexican Mafia associates who collected taxes on his behalf. Drug dealers who paid Colabella taxes were responsible for distributing hundreds of pounds of methamphetamine and other drugs worth millions of dollars on the streets of San Diego. In all, Colabella collected tens of thousands of dollars in “taxes,” through the extortion of cash, cars, and other items of value. Colabella admitted in his plea agreement that his associates resorted to violence in the course of extorting others. For example, one of Colabella’s top associates stabbed a drug dealer over a dispute related to the drug dealer’s payment of taxes. According to court records, while Colabella did not directly order the assault, the associate was only able to carry out the stabbing because of the authority granted to him by Colabella.
This case was the result of “Operation Carnalismo,” a long-term investigation conducted by the Violent Crime Task Force - Gang Group (VCTF-GG), a group of federal, state, and local law enforcement agents led by the Federal Bureau of Investigation. In total, Operation Carnalismo resulted in charges against 36 individuals across five indictments. The indictments charged RICO conspiracy, violent crime in aid of racketeering, conspiracy to distribute drugs, and the distribution of drugs.
United States Attorney Duffy praised the work of the VCTF-GG in marshaling the evidence related to Colabella’s activities. Duffy added, “Today’s sentencing marks another significant step toward our office’s effort to combat the dangerous criminal activity of gangs and, in particular, the Mexican Mafia. Gang members should take note: their organized criminal activity will not be tolerated, and we will continue to use the full resources of our office and our law enforcement partners to investigate and prosecute organized gang crime.”
FBI Special Agent in Charge, Daphne Hearn stated, “Today's sentencing should send a message to all gang members that the FBI and our law enforcement partners will aggressively pursue you and hold you accountable for your criminal activities. San Diego is safer today because of the cooperative efforts between the public and law enforcement.”
Chula Vista Police Chief David Bejarano said, “The Chula Vista Police Department appreciates the collective efforts made by our detective and members of the Violent Crimes Task Force to remove this dangerous individual from our community. The success of this investigation underscores the strength and benefits of the partnership that exists among Federal, State and local law enforcement agencies throughout the San Diego region.”
National City Police Chief Manuel Rodriguez stated, “This operation spotlights the collaborative efforts of local, state, and federal agencies to combat violence in our community.”
DEFENDANT Case Number: 12CR0290AJB Salvadore Nicola Colabella SUMMARY OF CHARGES AGAINST COLABELLATitle 18, United States Code, Section 1962(d) – Conspiracy to conduct enterprise affairs through a pattern of racketeering activity
INVESTIGATING AGENCIESFederal Bureau of Investigation
Chula Vista Police Department
San Diego Police Department
National City Police Department
San Diego County Sheriff's Department
San Diego County District Attorney's Office
U.S. Bureau of Prisons
California Department of Corrections and Rehabilitation
San Diego County Probation
Immigration and Customs Enforcement's Homeland Security Investigations
Internal Revenue Service-Criminal InvestigationsPROGRESS OF CASES CHARGED AS PART OF OPERATION CARNALISMO –
CONVICTIONS AND SENTENCES12CR290-AJB
Salvadore Colabella – RICO conspiracy – 262 Months
Jose Luis Mercado – RICO conspiracy - Sentencing June 28, 2013
Robert Mercado – Violent Crime in Aid of Racketeering - 168 Months
Maria De Jesus Claudia Ochoa– RICO conspiracy - Sentencing July 26, 2013
Silvano Hernandez – RICO conspiracy - 210 Months
Jose Briseno-Contreras – RICO conspiracy - 46 Months12CR291-AJB
Ramon Agredano – Conspiracy to distribute methamphetamine - 84 Months
Richard Cornejo – Conspiracy to distribute methamphetamine - 135 Months
David York – Conspiracy to distribute methamphetamine - 120 Months
Guillermo Chaidez – Conspiracy to distribute methamphetamine - 120 Months
David Garcia – Conspiracy to distribute methamphetamine - 120 Months
Adrian Dominguez – Conspiracy to distribute methamphetamine - 108 Months
Charles Smith – Conspiracy to distribute methamphetamine - 120 Months
Anna Sheneman – Conspiracy to distribute methamphetamine - 93 Months
Esteban Rodriguez – Conspiracy to distribute methamphetamine - 60 Months12CR292-AJB
Juan Guerrero – Conspiracy to distribute methamphetamine - 135 Months
Jorge Moreno – Conspiracy to distribute methamphetamine - Sentencing June 28, 2013
Edward Moreno – Conspiracy to distribute methamphetamine - 120 Months
Allen Mundell – Conspiracy to distribute methamphetamine - 120 Months
Brett Youkel – Conspiracy to distribute methamphetamine - 120 Months
Lacy McElroy – Conspiracy to distribute methamphetamine - 100 Months12CR293-AJB
Alfredo Bazurto – Conspiracy to distribute methamphetamine - Sentencing June 7, 2012
Charles Monroe – Conspiracy to distribute methamphetamine - 120 Months
Jose Pedro Covarrubias – Conspiracy to distribute methamphetamine - 120 Months
George Chavez – Conspiracy to distribute methamphetamine - 120 Months
Jose Esparza – Conspiracy to distribute methamphetamine - 130 Months
John Atkinson – Conspiracy to distribute methamphetamine - 120 Months
Annabel Vasquez – Conspiracy to distribute methamphetamine - 72 Months
Fantajamarie Cajmere Deleal – Conspiracy to distribute methamphetamine - 77 MonthsNorth County Mexican Mafia Member Pleads Guilty to ConspiracyRead the Press Release
United States Attorney Laura E. Duffy announced that Rudy Espudo pled guilty today before United States District Judge Irma E. Gonzalez to three counts of a superseding indictment including:
conspiracy to conduct enterprise affairs through a pattern of racketeering activity (commonly known as RICO conspiracy);
conspiracy to distribute methamphetamine; and
knowingly and intentionally brandishing a firearm during and in relation to a crime of violence and a drug-trafficking crime.According to the superseding indictment handed up on August 2, 2012, Espudo is a validated member of the Mexican Mafia who oversaw their activities throughout much of northern San Diego County.
In his guilty plea, Espudo admitted to engaging in drug trafficking and extortion, as well as profiting from the criminal activity of those gang members who worked under his so-called protection. Espudo pledged to “protect” these criminals as long as they paid their “taxes” to the Mexican Mafia. Such taxes are essentially extortion payments made by gang members and drug dealers to a Mexican Mafia member for the right to conduct their illegal activity free from interference from the Mexican Mafia. In one example of a drug dealer who refused to make tax payments, Espudo admitted that he ordered the robbery of that person, which was committed with the use of a shotgun. Espudo also admitted that he had authority over several Mexican Mafia associates who assisted by collecting taxes on his behalf. Drug dealers who paid him taxes in this manner were responsible for distributing methamphetamine, cocaine, heroin and other drugs on the streets of San Diego County.
This case is part of "Operation Notorious County," an investigation led by the North County Regional Gang Task Force, a group of federal, state, and local law enforcement agents led by the San Diego County Sheriff’s Department and the Federal Bureau of Investigation. Operation Notorious County resulted in eight indictments in January 2012, charging fifty-one individuals with participating in a federal racketeering influenced and corrupt organization (RICO) conspiracy. United States Attorney Duffy praised the North County Regional Gang Task Force for the coordinated team effort in this investigation.
Espudo has been in custody since his arrest in January 2012. Judge Gonzalez set a sentencing hearing for Espudo for October 7, 2013.
DEFENDANT Case Number: 12CR0236IEG Rudy Espudo, aka Crazy SUMMARY OF CHARGESTitle 18, United States Code, Section 1962(d) – Conspiracy to conduct enterprise affairs through a pattern of racketeering activity; Title 21, United States Code, Section 841 -Conspiracy to distribute methamphetamine; and Title 18, United States Code, Section 924(c) -Brandishing of a firearm in the commission of a crime of violence and a drug trafficking offense. Maximum penalties: Life in prison
INVESTIGATING AGENCIESSan Diego County Sheriff's Department
Federal Bureau of Investigation
Chula Vista Police Department
National City Police Department
San Diego Police Department
San Diego County District Attorney's Office
U.S. Bureau of Prisons
California Department of Corrections and Rehabilitation
San Diego County Probation
Department, Immigration and Customs Enforcement's Homeland Security Investigations Internal Revenue Service-Criminal InvestigationsTax Preparer Sentenced in Elaborate Fraud Case Involving Stolen Identities and Bogus Tax ReturnsRead the Press Release
Tax Preparer Neil Thomsen was sentenced by U.S. District Judge Roger T. Benitez today to 15 years in prison for a massive fraud that involved stealing hundreds of identities and filing false claims with the IRS for more than half a million dollars in bogus tax refunds.
Thomsen was convicted by a federal jury in December 2011 of 32 counts of mail fraud, Social Security fraud, passport card fraud and aggravated identity theft.
According to evidence presented at trial, Thomsen used 292 stolen identities in a two-year crime spree and defrauded the IRS out of more than $515,000 in tax refunds that he was not entitled to receive. The judge ordered Thomsen to pay that amount in restitution.
“Mr. Thomsen thought he could outsmart the IRS at every turn, but he got caught,” Assistant U.S. Attorney Joseph Orabona told the court during today’s hearing. “This is astronomical – 292 people were victimized.”
In arguing for a lengthy sentence, Orabona told the court that Thomsen had shown no remorse, and given the opportunity would likely continue to be an economic danger to the community.
Judge Benitez noted that identity theft is a very serious crime that “can take years - if not a lifetime - to undo” and results in “incredible pain and suffering” for victims. He said he was increasing the sentence in part because Thomsen offered “patently false” testimony in his own defense that amounted to obstruction of justice.
“Tax fraud results in an increasing burden on honest taxpayers and negatively impacts honest citizens’ confidence in our tax system,” said U.S. Attorney Laura Duffy. “Identity theft not only has a long-lasting financial impact on the victims, but also has an emotional impact affecting the stability of victims and their families. Today’s 15-year sentence for Mr. Thomsen sends a message to tax preparers and others who engage in refund schemes and identity theft that the government will prosecute you to the fullest extent of the law and that the punishment will be severe.”
“Neil A. Thomsen is a tax preparer, turned identity and tax thief, who attempted to steal over $515,000 in false tax refunds from the Internal Revenue Service (IRS) ,” said Jose A. Gonzalez, Special Agent in Charge for IRS Criminal Investigation (CI) Los Angeles Field Office. “As evidenced by victim testimony at trial, Thomsen’s identity theft and tax crimes significantly altered people’s financial lives. The investigation, prosecution and today’s sentencing of Neil Thomsen is a model of IRS CI’s strategy to combat criminals stealing identities to file false claims for tax refunds with the Internal Revenue Service (IRS).”
“As a tax preparer, Neil A. Thomsen violated his legal duty to protect the integrity of tax administration and his clients from the heinous crime of identity theft,” said Special Agent in Charge, Julie Parodi, Treasury Inspector General for Tax Administration. “Our agency will continue to work vigilantly to protect taxpayers from unscrupulous tax preparers who are engaged in identity theft.”
According to evidence presented by the government during trial, Thomsen is a tax preparer who turned into an identity thief by electronically filing false and fraudulent 2008 individual tax returns between January and March 2009 using the stolen identities of his former clients, clients of his former employers, and his former co-workers. He received more than $425,000 in false tax refunds from the IRS and earned thousands of dollars in false tax preparation fees to which he was not entitled.
In June 2009, Thomsen fled the United States and moved to Mexico to avoid capture. Instead of staying in Mexico, Thomsen hatched another plan to defraud taxpayers and the IRS in 2010. According to court records and trial evidence, Thomsen, Sean McNaughton, Louie Torres Arias, and Keith Smith conspired to commit fraud by assuming the identities of other persons and filing false tax returns in California, Texas, Nevada, and Arizona.
Court records indicate that Thomsen and his co-conspirators – all of whom have pleaded guilty - submitted false tax returns seeking tax refunds totaling more than $500,000. Thomsen believed he had a fool-proof plan to defraud the taxpayers and the IRS, until, he was arrested on June 17, 2010, ending his crime spree.
The evidence showed that in order to execute his scheme to defraud, Mr. Thomsen used his IRS electronic filing number to set up accounts with two banks in order to facilitate the receipt of tax preparation fees and tax refunds. The banks then mailed refund checks and debit cards to Mr. Thomsen, which facilitated his access to the proceeds of the false tax returns. The evidence showed that Mr. Thomsen deposited refund checks into his bank accounts and cashed debit cards at multiple ATM machines throughout Southern California.
The evidence further showed that Mr. Thomsen used several identities to lease office space, establish mail accounts, obtain telephone numbers, obtain a wireless card, purchase a car, and purchase computer equipment, including a laptop computer, external hard drive, and cell phone. The evidence also showed that Mr. Thomsen had several false identification documents in his possession in the names of other persons on June 17, 2010, which was the day he was arrested attempting to enter the United States from Mexico at the San Ysidro Port of Entry.
This case was investigated by Special Agents with the Treasury Inspector General for Tax Administration, and the Internal Revenue Service, Criminal Investigation.
DEFENDANT Criminal Case No. 10CR2810-BEN Neil A. Thomsen SUMMARY OF CHARGESCounts 1 through 4: Title 18, United States Code, Section 1341 – Mail Fraud
PARTICIPATING AGENCIES
Maximum Penalties: 20 years of imprisonment and $250,000 fine per count
Counts 7 through 16: Title 18, United States Code, Section 287 – False, Fictitious, and Fraudulent Claims
Maximum Penalties: 5 years of imprisonment and $250,000 fine per count
Counts 17 through 24: Title 42, United States Code, Section 408(a)(8) – Social Security Fraud
Maximum Penalties: 5 years of imprisonment and $250,000 fine per count
Counts 25 through 32: Title 18, United States Code, Section 1028A – Aggravated Identity Theft
Maximum Penalties: At least one term of imprisonment of 2 years consecutive to any other sentence
Count 33: Title 18, United States Code, Section 1546(a) – Passport Card Fraud
Maximum Penalties: 25 years of imprisonment and $250,000 fine
Count 34: Title 18, United States Code, Section 1028A – Aggravated Identity Theft
Maximum Penalties: At least one term of imprisonment of 2 years consecutive to any other sentenceTreasury Inspector General for Tax Administration
Internal Revenue Service, Criminal InvestigationThree Admit Conspiracy to Commit KidnappingRead the Press Release
United States Attorney Laura E. Duffy announced that Antonio Zermeno Garcia entered a guilty plea in federal court in San Diego today to count one of an indictment charging him and co-defendants Luis Miguel Salas Rodriguez and Carlos Alberto Andrade-De La Cruz with conspiracy to commit kidnapping, in violation of Title 18, United States Code, Section 1201(c). Co-defendants Luis Miguel Salas Rodriguez and Carlos Alberto Andrade-De La Cruz previously entered guilty pleas to the same charge on April 26, 2013.
In connection with the entry of their guilty pleas, the defendants admitted that, in March 2012, they devised a plan to kidnap three individuals who owed them money for narcotics trafficking. They further admitted they planned to kidnap the individuals in San Diego, California and transport them to Tijuana, Mexico. Defendant Andrade-De La Cruz further admitted that he was an organizer and leader of this kidnapping conspiracy and that he illegally crossed into the United States on March 14, 2012 in 2 order to locate the first victim with the assistance of Defendants Salas Rodriguez and Zermeno Garcia.
Defendants Luis Miguel Salas Rodriguez and Carlos Alberto Andrade-De La Cruz are scheduled to appear before United States District Judge William Q. Hayes for sentencing on July 29, 2013, at 9:00 a.m.
Defendant Antonio Zermeno Garcia’s plea is subject to final acceptance by Judge Hayes at or before sentencing on August 12, 2013, at 9:00 a.m.
DEFENDANTS Criminal Case No. 12CR1244WQH Antonio Zermeno Garcia
Luis Miguel Salas Rodriguez
Carlos Alberto Andrade-De La Cruz SUMMARY OF CHARGESConspiracy to Commit Kidnapping, in violation of Title 18 United States Code, Section 1201(c) Maximum penalties: Life in Prison, $250,000 fine, $100 Special Assessment, 5 years of Supervised Release
INVESTIGATING AGENCYFederal Bureau of Investigation – Cross Border Violence Task Force
Man Sentenced to 57 Months for Loan Modification Scam Causing Scores to Lose Their HomesRead the Press Release
United States Attorney Laura E. Duffy announced that Christian Hidalgo of Chula Vista was sentenced today to 57 months of custody by District Court Judge William Q. Hayes for a mortgage loan-modification scheme that cheated over 120 people out of over $670,000, and resulted in the loss of many homes to foreclosure. Hidalgo was also ordered to pay full restitution to all of his victims.
Between approximately March 2009 and October 2011, Hidalgo falsely told victims facing foreclosure that he could lower their mortgage payments. Hildalgo made these false claims through a variety of business entities based in San Diego and Chula Vista, California, including: "Expo Enterprises," "United Housing," "Community Housing Agency," "National Resource Services," "Retro Management," "My Community Outreach," and "Nuestra Communidad Services."
In order to carry out his fraud, Hidalgo sent hundreds of solicitation letters in which he falsely represented that these businesses were affiliated with the U.S. Department of Housing and Urban Development ("HUD"), and its Home Affordable Modification Program ("HAMP"). The letters would direct the recipients to contact one of Hidalgo's business entities by telephone, or obtain information from one of the websites he had created to advertise his services. Hidalgo targeted low-income persons in Southern California with Hispanic surnames by obtaining marketing leads with this specific criteria.
When the victims responded to the solicitation letters, Hidalgo or one of his employees would promise to provide relief under the HAMP program, despite having no connection with this government program. Hidalgo and his employees would then falsely represent that they would negotiate a modified mortgage payment on behalf of the victims with the victims' respective lenders. In exchange, the victims were instructed to send mortgage payments directly to one of Hidalgo's business entities instead of their lenders.
Although Hidalgo and his employees promised the victims that their payments would be held untouched in an impound account, and ultimately sent to the victims' lenders at the end of negotiations, none of the money was forwarded. Sadly, this often resulted in the foreclosure of the victims' homes as a result of the lenders' failure to receive mortgage payments. For his part, Hidalgo spent the victim funds in a variety of ways, including purchasing a BMW, diamond rings, a large-screen television, and firearms. All of these items, were seized by the United States and forfeited as part of Hidalgo's sentence. The items will be sold at auction, with proceeds going to the victims.
Hidalgo's scheme was discovered after Special Agents from the United States Postal Inspection Service of the Downtown San Diego Station received over 750 undeliverable solicitation letters in April 2011 sent by Hidalgo and associates. The solicitation letters appeared to offer loan modification services and a free consultation regarding HAMP, or another HUD home-loan restructure program. Because the letters bore non-existent or incorrect return addresses, Postal Inspection agents began investigating the legitimacy of the offered services. In conjunction with the HUD Office of the Inspector General, agents interviewed hundreds of victims, conducted various searches, and seized property purchased with proceeds obtained pursuant to Hidalgo's fraudulent scheme.
United States Attorney Duffy added, "We are grateful for he vigilant efforts of the U.S. Postal Inspection Service and HUD-OIG in discovering this dreadful practice of targeting vulnerable victims in the Latino community who merely sought assistance to maintain their homes. Although many have suffered economically in the last few years, those in dire straits should not be targeted in their time of need. We hope that the sentence imposed in this case, and the restitution ordered, can bring some relief to the victims and serve as a strong deterrent to others conducting fraudulent home-loan modification scams that the consequences of your illegal conduct will be severe."
DEFENDANT Case Number: 12CR1658-WQH Christian Hidalgo SUMMARY OF CHARGES
Count 2Counts 7
Title 18, United States Code, Section 1341, 2 (mail fraud, aiding
and abetting) Maximum penalty: 20 years of custody; $1,000,000
Fine
AGENCIES
Title 18, United States Code, Section 1957 (money laundering)
Maximum penalty: 10 years of custody; $250,000 FineUnited States Postal Inspection Service ("USPIS")
United States Department of Housing and Urban Development, Office of the Inspector
General ("HUD-OIG")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.
Defense Contractors Sentenced in North Island Bribery CaseRead the Press Release
United States Attorney Laura E. Duffy announced today that two individuals and a corporation were sentenced by U. S. District Judge Larry Alan Burns in federal court in San Diego, in connection with their participation in a fraud and corruption scheme at Naval Air Station (NAS) North Island, in Coronado, California. The three defendants were Robert Ehnow, the owner and President of Poway defense contractor L&N Industrial Tool & Supply Inc. (“L&N”); Joanne Loehr, the owner and President of Poway defense contractor Centerline Industrial Inc. (“Centerline”); and Centerline itself, a California corporation.
According to court records, during the course of the conspiracy, the Department of Defense paid Ehnow’s company, L&N, over $3 million. Centerline obtained over $1.8 million in payments from the Defense Department during the conspiracy. A third defense contractor, X&D Supply, Inc. (“X&D”), located in Carlsbad, California, was paid over $2 million during the conspiracy.
For his role in the corruption scheme, Ehnow was sentenced to serve 36 months in federal prison and was ordered to pay $759,937 in restitution to the United States Department of the Navy. Loehr was sentenced to serve 36 months in federal prison and was ordered to pay $300,000 in restitution to the Navy. Centerline was sentenced to a term of five years of probation and was ordered to forfeit $1,809,257 as proceeds of the scheme. Ehnow and Loehr were also sentenced to serve, upon their release from prison, three years of supervised release.
The three defendants were charged in an indictment with one count of engaging in a conspiracy to commit wire fraud, bribery, and money laundering, and with additional counts of bribery. The case was tried before a San Diego jury beginning on February 20, 2013. On March 4, 2013, after two days of deliberations, the jury returned guilty verdicts for each defendant as to the conspiracy count, and as to one or more bribery counts. The jury also acquitted each defendant on one or more bribery counts.
The evidence presented at trial showed that as part of the conspiracy, defense contractors provided Navy officials with a wide range of personal benefits, including cash, checks, retail gift cards, flat screen television sets, luxury massage chairs, bicycles costing thousands of dollars, model airplanes, and other items. In return, the Navy officials placed millions of dollars in government orders with the defense contractors.
Additionally, the defense contractors prepared and submitted fraudulent invoices to the Department of Defense, making it appear that they were billing the Department for goods and services within the scope of legitimate government contracts. In fact, the Defense Department was unknowingly paying for, among other things, the cost of bribes provided to the Navy officials. Compounding the cost of the fraud, the defense contractors also routinely charged a markup on the fraudulent invoices.
The defendants also engaged in money laundering by using L&N’s government contract to fraudulently bill the Navy for items that were never supplied. Then, at the request of Navy co-conspirators, Ehnow wrote checks passing along the criminal proceeds to Centerline and Loehr, keeping a portion for itself as compensation for serving as a conduit for the criminal proceeds.
L&N, also known as Mardoc Corporation, filed for Chapter 7 bankruptcy in June 2011. Centerline remains in business.
Today’s sentences bring to eleven the total number of defendants sentenced in connection with this scheme. Of the eight individuals previously convicted, five were Navy officials: Donald Vangundy, Kiet Luc, David Lindsay, Brian Delaney - all four of whom worked in the Navy's "E2/C2" aircraft program, which is dedicated to maintaining the tactical readiness of the Navy’s E-2 and C-2 aircrafts – and Kenneth Ramos, who worked in North Island’s Industrial Business Operations Department. These five former Navy officials admitted to receiving a total of more than $1 million in cash, goods, and services for their personal use, all fraudulently charged to and paid for by the Department of Defense in connection with this fraud and bribery scheme.
The other four defendants previously convicted were owners or sales managers of San Diego-area defense contracting firms: John Newman was the sales manager of L&N, Paul Grubiss was the sales manager of Centerline, Michael Graven was the owner and operator of X&D, and Jesse Denome was the owner and operator of JD Machine Tech Inc.
According to United States Attorney Duffy, the investigation into possible corruption at Naval Air Station North Island was initiated on the basis of citizen complaints. These complaints followed the July 2009 indictment of six individuals on fraud and corruption charges centered at the Space and Naval Warfare Systems Command (SPAWAR). As part of the SPAWAR corruption case, the government publicized a hotline dedicated to the reporting of possible waste, fraud, and abuse related to government and military contracts. U.S. Attorney Duffy noted that the investigation is ongoing and anyone with information relating to waste, fraud, and abuse in government contracting is urged to contact the Procurement Fraud Working Group hotline at: [email protected] or call 1-877-NOBRIBE.
U.S. Attorney Duffy stated, “These defense contractors told lies, and gave bribes, to get millions of dollars in business from the United States Navy. The sentences handed down today send a message that this corruption will not be tolerated.”
Chris D. Hendrickson, Special Agent in Charge for the Defense Criminal Investigative Service, Western Field Office added, “DCIS and our law enforcement partners will continue to aggressively pursue corruption investigations involving the operations of the DoD. Abusing the public trust has serious consequences and severe punishment is appropriate for stealing resources from our soldiers, sailors, airmen, marines and the American taxpayer.”
Jose A. Gonzalez, Special Agent in Charge of IRS Criminal Investigation’s (CI) Los Angeles Field Office commented, “Robert Ehnow’s and Joanne Loehr’s bribery of trusted naval officials of more than $1 Million in cash and other gifts, had the potential to erode the public’s basic trust in our economic system. Instead, the initial citizen complaint which led to the investigation and Ehnow’s and Loehr’s subsequent conviction, confirm the public’s refusal to tolerate criminal corruption by our public officials. Today’s sentencing brings Robert Ehnow and Joanne Loehr to justice and confirms IRS CI’s assurance to investigate fraud, corruption and money laundering crime by public officials.”
David House, Special Agent in Charge, Pacific Rim Region Office of Investigations for the General Services Administration Office of Inspector General, said, “The General Services Administration is the gateway for Federal procurement and is committed to promoting fair and honest competition among contractors. The GSAIG is committed to preserving the integrity of the Federal procurement process; bribery and kickbacks corrupt that process and will not be tolerated.”
DEFENDANTS Case Number: 12cr3320H Robert Ehnow
Joanne Loehr
Centerline Industrial Inc., a California corporation SUMMARY OF CHARGES IN CASE NO. 12CR3320-LABCount 1: Conspiracy to commit bribery, in violation of Title 18, United States Code, Section 371 (all
defendants) - Maximum penalties: 5 years in prison, $250,000 fine, term of supervised release of three years, restitution, forfeiture, and $100 special assessment. (All defendants found guilty on Count One.)Counts 2 to 7: Bribery, in violation of Title 18, United States Code, Section 201 (defendant Ehnow) - Maximum penalties (per count): 15 years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment. (Defendant Ehnow found guilty on Count Seven, not guilty on Counts Two through Six)
Counts 8 to 12: Bribery, in violation of Title 18, United States Code, Section 201 (defendants Loehr and Centerline) - Maximum penalties (per count): 15 years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment. (Defendants Loehr and Centerline found guilty on Counts Ninth through Twelve, not guilty on Count Eight)
Case Number: 12-CR-4071-LAB Sentenced on March 4, 2012 Kenneth Paul Ramos Case Number: 12-CR-1055-LAB Sentenced on September 10, 2012 Donald Vangundy
Kiet Luc
Brian Delaney
David Lindsay
John Newman
Michael Graven
Paul Grubiss Case Number: 10-CR-3737-LAB Sentenced on October 12, 2011 Jesse Denome INVESTIGATING AGENCIESFederal Bureau of Investigation
Defense Criminal Investigative Service
Internal Revenue Service - Criminal Investigation
General Services Administration - Office of Inspector General
Naval Criminal Investigative ServiceDefense Contractor Sentenced for Stealing Medical Equipment Intended for Deployed MarinesRead the Press Release
United States Attorney Laura E. Duffy announced that a Camp Pendleton defense contractor was sentenced today for his role in a scheme involving the theft of costly medical equipment that the military had planned to ship overseas to treat injured Marines.
In today’s court hearing, U.S. District Judge Cathy Ann Bencivengo sentenced Michael Tuisee to serve 6 months in prison, followed by 6 months of house arrest with GPS monitoring, and 3 years of supervised release. Judge Bencivengo also ordered Tuisee to forfeit $8,250 in illegal proceeds and pay $179,698.50 in restitution to the U.S. Marine Corps.
According to court records, Tuisee and his two co-conspirators worked in warehouses run by 1st Medical Logistics Company (“1st MEDLOG”) aboard Camp Pendleton. 1st MEDLOG is the unit responsible for maintaining medical equipment and shipping necessary medical items to combat forces throughout the world. By virtue of his employment as a civilian defense contractor, Tuisee had unfettered access to sophisticated medical equipment stored at 1st MEDLOG warehouses. Prior to sentencing, Tuisee admitted that he conspired to steal expensive medical equipment from 1st MEDLOG, including ventilators, autoclaves, defibrillators, headlights, and laryngoscopes. Tuisee repeatedly stole these costly medical items, loaded them into his personal vehicle, and surreptitiously sold them to medical equipment resellers – often meeting with buyers during nighttime rendezvous in secluded parking lots.
During today’s sentencing, Judge Bencivengo told Tuisee he abused his position and breached the Government’s trust when he stole military medical equipment and sold it for personal profit. U.S. Attorney Duffy echoed those sentiments, noting that she will continue to “vigorously investigate and prosecute those who seek profit at the expense our men and women in uniform.” Duffy reminded the public that these charges were the result of ongoing efforts to root out corruption among our area defense contractors. She encouraged the public to contact the Naval Criminal Investigative Service (NCIS) at 1- 800-264-6485 or www.ncis.navy.mil if they have any information relevant to the ongoing investigation into theft of medical equipment at Camp Pendleton.
DEFENDANT Case Number: 13cr0338-CAB Michael Tuisee SUMMARY OF CHARGESCount 1: Conspiracy to Engage in Theft of Government Property, Title 18, United States Code, Section 371 (all defendants)
INVESTIGATING AGENCYNaval Criminal Investigative Service
Local Middle School Teacher Pleads Guilty to Receipt and Possession of Child PornographyRead the Press Release
United States Attorney Laura E. Duffy announced today that Timothy James Hensley, a local middle school teacher at Bell Middle School, pled guilty today in federal court in San Diego to a five count indictment charging him with receipt and possession of child pornography. Hensley entered his guilty plea before United States Magistrate Judge Bernard G. Skomal, subject to final acceptance of the plea by United States District Court Judge Irma E. Gonzalez, at or before the time of sentencing.
As part of his guilty plea, Hensley admitted to receiving images of a minor female approximately 10 years of age engaged in sexually explicit conduct as well as to possessing an IMac computer and computer disks containing images depicting minors engaged in sexually explicit conduct, in violation of Title 18, United States Code, Section 2252(a)(2) and (4)(B). According to court records, several of these images depicted prepubescent minors engaged in sexually explicit conduct. The defendant was arrested by special agents with Homeland Security Investigations on January 15, 2013, following the execution of a federal search warrant at Hensley’s residence.
Hensley is scheduled to appear for sentencing before Judge Gonzalez on August 12, 2013, at 9:00 a.m.
This case stems from an investigation by the Department of Homeland Security, Immigration and Customs Enforcement's Homeland Security Investigations.
This case was brought as part of the Department of Justice’s Project Safe Childhood, and ICE's Operation Predator, both are nationwide initiatives launched to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources." For more information about on Operation Predator, please visit www.ice.gov
DEFENDANT Criminal Case No. 13cr0393-IEG Timothy James Hensley SUMMARY OF CHARGESThree Counts: Title 18, United States Code, Section 2252(a)(2) (Receipt of Child Pornography) Maximum Penalties: Mandatory minimum 5 years’ incarceration to 20 years per count, mandatory minimum of 5 years’ incarceration, $250,000 fine, a minimum of 5 years and up to a lifetime of supervised release and registration as a sex offender
Two Counts: Title 18, United States Code, Section 2252(a)(4)(B) - Possession of Child Pornography Maximum penalties: 20 years in prison; a $250,000 fine; and a minimum of 5 years and up to a lifetime of supervised release and registration as a sex offender.
INVESTIGATING AGENCYImmigration and Customs Enforcement’s Homeland Security Investigations
Masterminds of Tax Fraud Scheme Exploiting the Homeless and Drug Addicts Sent to PrisonRead the Press Release
United States Attorney Laura E. Duffy announced that two San Diego men were sentenced today for their roles in a long-running tax fraud that exploited both homeless and drug-addicted “customers” to defraud the United States out of hundreds of thousands of dollars.
In today’s court hearing, United States District Judge Anthony J. Battaglia sentenced Isaiah Konkus to serve 10 months in prison and his codefendant Justin Petersen to serve 10 months in prison. Judge Battaglia also ordered both defendants to pay $268,832 in restitution to the Internal Revenue Service.
According to court records, between 2008 and 2011, Konkus and Petersen masterminded a scheme to defraud the IRS by exploiting its “Earned Income Credit” program, also known as the “EIC.” The EIC is designed to help working families by offsetting social security taxes and by providing an incentive for individuals to find and keep work. As part of their fraud, Konkus and Petersen sought out low-income “customers,” including the homeless, single mothers and addicts by soliciting them at trolley stations, homeless shelters and other places in downtown San Diego.
Purporting to act on behalf of their business—variously named “Street Angels” or “SoCal Tax Consultants”—Konkus and Peterson approached potential “customers” and asked whether they wanted “free money from the government.” They then instructed eligible candidates who gave a positive response to sign a blank tax return. Konkus and Petersen then filled in largely false information about income, occupation and dependents on these signed returns in an attempt to qualify their “customers” for the highest possible EIC payment. They then filed these false returns with the IRS, seeking as much as $8,000 in fraudulent payments at a time.
Court filings further show that despite the fact that their work consisted entirely of faking and filing a simple (and false) tax return, Konkus and Petersen charged exorbitant rates to their mostly unsophisticated customers by skimming up to $2,500 of their tax credit. Konkus and Petersen filed more than 1,000 tax returns, spending their ill-gotten gains on luxuries including illegal drugs, a Humvee, a sport fishing trip and a stay in the most expensive suite at a luxury hotel in the Gaslamp District of San Diego on New Year’s Eve.
Konkus and Petersen were charged on October 11, 2012, and pled guilty the same day. As part of their plea agreements, Konkus and Petersen both admitted to violating one count of conspiracy to defraud the United States with respect to false claims and one count each of filing a false tax return. Also as part of their plea agreements, Konkus and Petersen admitted to falsifying their own tax returns, evading more than $35,000 each in internal revenue taxes.
United States Attorney Duffy noted that, “Not only did these defendants cheat the IRS out of hundreds of thousands of dollars, they also exploited some of our community’s most vulnerable— including the homeless and the working poor—for their illegal gain. The IRS’s tireless efforts in this case show that tax fraud is neither a victimless crime nor a crime that our office will tolerate.”
“Isaiah Konkus and Justin Peterson conspired to defraud the US Government by preying on the vulnerable in our society and utilizing their identities to file false tax returns and claiming an Earned Income Tax Credit,” said Jose A. Gonzalez, Special Agent in Charge for IRS Criminal Investigation (CI) Los Angeles Field Office. “The Earned Income Tax Credit Program was created to help the low income working citizens and those who fraudulently abuse the program will be investigated and prosecuted.”
DEFENDANTS Case Number: 12CR4070-AJB Isaiah Konkus
Justin Petersen SUMMARY OF CHARGES AND MAXIMUM PENALTIESCount 1 (both defendants): Conspiracy to Defraud the United States with Respect to Claims – Title 18, United States Code, Section 286. Maximum penalties: 10 years in prison, 3 years of supervised release, $250,000 fine and a $100 special assessment
Count 2 (Konkus only): False Tax Return – Title 26, United States Code, Section 7206(1). Maximum penalties: 3 years in prison, 1 year of supervised release, $250,000 fine and a $100 special assessment.
Count 3 (Petersen only): False Tax Return – Title 26, United States Code, Section 7206(1). Maximum penalties: 3 years in prison, 1 year of supervised release, $250,000 fine and a $100 special assessment.
INVESTIGATING AGENCYInternal Revenue Service – Criminal Investigation
Former Local Businessman Sentenced to Serve 12 Months and One Day in Prison for Defrauding Victims Who Provided His Business with FinancingRead the Press Release
Vincent Carlos, a self-employed business owner who purchases discount food and other products at wholesale prices and sells them for a profit to discount stores, such as Big Lots, was sentenced today in U.S. District Court in San Diego by United States District Judge Anthony J. Battaglia to serve two concurrent sentences of 12 months' and one day in prison and a three-year term of supervised release, announced United States Attorney Laura E. Duffy. The sentence was based upon his December 6, 2012 guilty plea to two felony counts of wire fraud. In addition, Judge Battaglia ordered Mr. Carlos to pay restitution to the victims in the total amount of $335,106.80.
According to court records, Mr. Carlos, the owner and operator of L.J. Trading, LLC, obtained financing for the purchase of wholesale products from one victim in Illinois and another victim in California. In exchange for their financing, Mr. Carlos paid them a return on their investment. As part of the fraud, Mr. Carlos fabricated a series of deals, emailed and faxed the bogus contracts to the two victims, and promised a return on their investments. Mr. Carlos received more than $335,000 from the two victims in order to finance the fabricated deals. In reality, Mr. Carlos simply used the money to repay both victims for prior deals for which he owed them investment returns. Mr. Carlos used one victim's money to repay the other victim, and vice versa. Eventually, the scheme collapsed when Mr. Carlos was unable to pay the victims the returns he owed them. Before Mr. Carlos could defraud these victims out of more money, the U.S. Secret Service uncovered the fraud and swiftly put an end to it.
Judge Battaglia ordered Mr. Carlos to self-surrender to his designated penal institution not later than June 28, 2013, in order to begin serving his sentence of 12 months and one day.
DEFENDANT Criminal Case No. 12CR3559-AJB Vincent Carlos SUMMARY OF CHARGESTitle 18, United States Code, Section 1343 - Wire Fraud
AGENCYUnited States Secret Service
"straw Buyer" Admits Involvement in $5 Million San Diego-based Mortgage FraudRead the Press Release
United States Attorney Laura E. Duffy announced today that Timothy E. Shannahan pled guilty to conspiring to commit mortgage fraud by acting as a "straw buyer" in a $5 million mortgage fraud scheme.
In pleading guilty before Magistrate Judge Nita L. Stormes, Shannahan became the fourth person to admit conspiring with Kathryn Sylvester, the former CEO of Sylvester Financial, Inc. According to court records, Sylvester was responsible for recruiting straw buyers – who she directed to submit false mortgage loan applications in order to purchase properties throughout Southern California between 2005 and 2008.
In entering his plea, Shannahan admitted conspiring with Sylvester between January 2007 and May 9, 2008, to fraudulently induce lenders to fund mortgage loans. Among other things, Shannahan falsely claimed on a mortgage loan application that he earned $50,000 per month as the Vice President and Director of Marketing for Real Realty Solutions, in order to obtain mortgages for a residence located on Nautilus Street in La Jolla. In total, Shannahan admitted that the loans obtained in his name resulted in losses of $400,000 to $1 million. For her part, Sylvester - according to her indictment - is alleged to have played a role in approximately 80 fraudulent loans on 28 foreclosed properties resulting in losses in excess of $5 million. Her case is pending.
Other straw buyers who have entered guilty pleas to date include Claudia Montes, Roderick Michener and Tad Lent. Montes, a former notary public, pled guilty on April 12, 2013, to a two-count information charging her with conspiring with Sylvester to submit false loan applications and transferring proceeds from the fraudulent loans to Sylvester.
Michener pled guilty on April 4, 2013, to conspiring with Sylvester to commit bank fraud. In doing so, Michener allowed his co-conspirators to claim an ownership interest in his bank account in order to falsely inflate their assets on fraudulent mortgage loan applications. Michener also admitted transferring fraud proceeds to Sylvester. He is scheduled to be sentenced before District Court Judge Cathy A. Bencivengo on June 28, 2013.
Lent pled guilty on January 28, 2013 to conspiring with Sylvester to submit falsified loan applications to mortgage lenders by misrepresenting the amount of his assets. He is scheduled to be sentenced on September 16, 2013 before District Court Judge M. James Lorenz.
United States Attorney Duffy added, "The tireless efforts of our partners in the FBI has continued to result in successful prosecutions of persons who have tried to game the system by manipulating the mortgage loan industry. We will continue our joint efforts to deter further mortgage fraud crimes by pursuing such prosecutions with all available resources."
Shannahan is scheduled to appear before District Judge Lorenz on July 29, 2013 for sentencing.
DEFENDANT Case Number: 13CR1650-L Timothy E. Shannahan SUMMARY OF CHARGETitle 18, United States Code, Section 1349 (conspiracy to commit wire fraud)
DEFENDANT Case Number: 13CR1355-JLS Kathryn Sylvester Age: 43 SUMMARY OF CHARGES
Maximum penalty: 20 years of custody; $250,000 FineCount 1 Title 18, United States Code, Section 1349 (conspiracy to commit
wire fraud and bank fraud)
Maximum penalty: 20-30 years of custody; $150,000-$250,000 FineCounts 2-11 Title 18, United States Code, Section 1343 (wire fraud)
Maximum penalty: 20 years of custody; $250,000 FineCounts 12-13 Title 18, United States Code, Section 1344 (bank fraud)
DEFENDANT Case Number: 13CR1313-JLS Claudia Montes Age: 41 SUMMARY OF CHARGES
Maximum penalty: 30 years of custody; $150,000 FineCount 1 Title 18, United States Code, Section 1349 (conspiracy to commit
wire fraud)
Maximum penalty: 20 years of custody; $250,000 FineCount 2 Title 18, United States Code, Section 1343 (wire fraud)
DEFENDANT Case Number: 13CR1130-CAB Roderick Michener Age: 51 SUMMARY OF CHARGES
Maximum penalty: 20 years of custody; $250,000 FineCount 1 Title 18, United States Code, Section 1349 (conspiracy to commit
wire fraud)
Maximum penalty: 20 years of custody; $250,000 FineCount 2 Title 18, United States Code, Section 1343 (wire fraud)
DEFENDANT Case Number: 12CR3744-L Tad A. Lent Age: 46 SUMMARY OF CHARGE
Maximum penalty: 20 years of custody; $250,000 FineTitle 18, United States Code, Section 1349 (conspiracy to commit wire fraud)
AGENCY
Maximum penalty: 20 years of custody; $250,000 FineFederal Bureau of Investigation
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.Retired Customs and Border Protection Supervisor Sentenced to 10 Years in Child Pornography CaseRead the Press Release
A retired United States Customs and Border Protection supervisor was sentenced today by U.S. District Judge Marilyn L. Huff to 10 years in prison, followed by five years of supervised release, for downloading child pornography.
Former Supervisory Special Agent Lawson Hardrick, Jr., who was the assistant director for the Calexico ports of entry, was found guilty by a federal jury in January of two counts of receipt of images of minors engaged in sexually explicit conduct, each a felony. The verdicts followed a two-day trial before Judge Huff.
According to the evidence presented at trial, agents with Immigration and Customs Enforcement’s Homeland Security Investigations conducted an investigation of persons using peer to peer file-sharing programs to make child pornography available to others. According to the forensic evidence introduced at trial, the defendant received videos of children as young as four and nine years old through a file-sharing program in 2008 through 2010. The indictment was handed up by a federal grand jury sitting in San Diego in July 2012.
Upon release, Hardrick will be required to register as a sex offender.
DEFENDANT Case Number: 12cr3061-H Lawson Hardrick SUMMARY OF CHARGESCounts: 2
Receipt of Images of Minors Engaged in Sexually Explicit Conduct- Title 18, United States Code, 2252(a) (2)
INVESTIGATING AGENCY
Maximum Penalties: 20 years incarceration with a five year mandatory minimum sentence, $250,000 fine, a
minimum of 5 years and up to a lifetime of supervised release and registration as a sex offender.Immigration and Customs Enforcement’s Homeland Security Investigations
Former Executive Director of Indian Human Resource Center Indicted for Embezzling Non-profit’s MoneyRead the Press Release
San Diego, CA - United States Attorney Laura E. Duffy announced that David Hedley, a former Executive Director of the Indian Human Resource Center (“IHRC”), was arraigned yesterday on an indictment charging him with eight felony counts of theft from the San Diegobased non-profit that received federal funds. The defendant was arrested by Federal Bureau of Investigation (“FBI”) agents on April 25, 2013, in Riverside, California.
According to the indictment, Hedley served as the Executive Director of IHRC between approximately September 10 and December 11, 2012. During that time, Hedley is believed to have stolen approximately $140,000 from the non-profit.
According to information disclosed at Hedley’s arraignment, on numerous days when Hedley was improperly withdrawing money from IHRC’s bank account, he was spending comparable sums gambling at a local Indian casino. For example, on October 9, 2012, Hedley withdrew $15,000 in cash from the IHRC bank account at the North Island Credit Union (“NICU”) located in La Mesa, California. On that same day, Hedley purchased $15,000 worth of chips, tokens or gaming instruments at the Viejas Casino. Similarly, on the October 12, 2012, Hedley improperly withdrew $20,000 in cash from IHRC’s bank account at the NICU branch in Imperial Beach, California and purchased over $20,000 in chips, tokens or gaming instruments the same day from Pala Casino.
The IHRC was established to train and assist Native Americans with finding employment outside the tribal setting and was awarded over a half million dollars in federal funding from the U.S. Department of Labor over the past two years as part of the Workforce Investment Act (“WIA”). The Workforce Investment Act of 1998 (“WIA”) established a national workforce preparation and employment system to meet the needs of persons seeking employment, including new entrants to the workforce, in order to increase the employment, job retention, earnings and occupational skills of participants, improve the quality of the workforce, reduce welfare dependency, and improve the productivity and competitiveness of the United States.
United States Attorney Laura E. Duffy commented that, “The taxpayer resources provided to IHRC were intended to help create jobs by assisting the Native American community. I commend the FBI for its investigative work leading to these charges.”
FBI Special Agent in Charge Daphne Hearn commented, “At the most basic level this case is about one individual’s greed and the abuse of trust. The FBI will hold those accountable who line their own pockets at the expense of the American taxpayer.”
Hedley was arraigned on the indictment in the Central District of California before Magistrate Judge David Bristow; Hedley pleaded not guilty. Magistrate Judge Bristow set bail at $100,000 and ordered the defendant to appear in the Southern District of California on May 9, 2013.
The public is reminded that an indictment is not evidence that the defendant committed the crime charged. The defendant is presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
DEFENDANT Criminal Case No. 13CR1129-WQH David M. Hedley SUMMARY OF CHARGESCounts 1-8: Title 18, United States Code, Section 666(a)(1)(A) – Theft from Program Receiving Federal Funds
Forfeiture: Title 18, United States Code, Sections 981(a)(1)(C) and Title 28, United States Code, Section 2461(c)
INVESTIGATING AGENCIESFederal Bureau of Investigation
California Department of Justice, Bureau of Gambling ControlMortgage Broker Pleads Guilty to $100 Million Loan Origination Fraudfourth Defendant to Plead Guilty in Scheme That Led to $14.5 Million in KickbacksRead the Press Release
United States Attorney Laura E. Duffy and Federal Housing Finance Agency Inspector General Steve A. Linick announced today that Mary Armstrong, an unlicensed mortgage broker who operated a nationwide loan origination fraud and kickback scheme from San Diego, pled guilty today before United States District Judge John A. Houston to all five counts of an indictment charging her with wire fraud, money laundering, and conspiracy. Armstrong was indicted on May 10, 2012, and apprehended in Las Vegas, Nevada, in July 2012; she has been held in custody since her arrest.
As part of today's guilty plea, Armstrong admitted that she defrauded mortgage lenders by arranging for the sale of $100 million worth of real estate at inflated prices, and then siphoned the overpayments to bank accounts she controlled. She created false loan applications on behalf of straw buyers, then arranged for her co-conspirators to create fake documents in support of those applications, including W-2 forms, pay stubs, bank statements, and other records. According to Armstrong's accountant and tax preparer, Audrey Yeboah, who pled guilty in October 2012 to participating in the same scheme, Armstrong collected over $14.5 million in kickbacks from the fraudulently-obtained mortgage loans.
Armstrong joins defendants Teresa Rose, a Ramona real estate agent; Seattle businessman Justin Mensen; and Yeboah; each of whom has pled guilty to participating in the scheme. These defendants admitted that they carried out their scheme by recruiting "investors" through the Internet and advertisements in the LA Times, and offering them the opportunity to purchase homes located in Southern California, Washington state, and elsewhere. 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. The defendants were able to secure mortgages for the properties by falsifying loan applications for the straw buyers, falsely claiming exorbitant income from fake employers and using fake W-2s and pay stubs to support the claims. The defendants submitted these fraudulent loan applications to mortgage lenders to obtain 100% financing - and thus avoided having to make any down payment on the properties.
According to the defendants' plea agreements, they profited on these fraudulently-acquired mortgage loans by inflating the purchase price of the properties by $100,000 (or more), and having the straw borrowers kick-back to them the illicit proceeds. Although the conspirators claimed to lenders that the extra money would be used for construction improvements, in fact, the conspirators funneled the money to sham "construction" companies that they controlled, thereby concealing their kick-backs.
Armstrong admitted that after the conspirators collected the overpayments, the straw buyers defaulted on the mortgage loans, resulting in mortgage lenders and secondary purchasers, including Fannie Mae and Freddie Mac, suffering losses of up to $20 million.
Two additional defendants charged as part of the scheme, John Allen and William Fountain, are scheduled to begin trial on November 5, 2013. The public is reminded that an indictment 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.
United States Attorney Duffy commented, “Armstrong's fraudulent conspiracy endangered not only the particular lenders ensnared in her scheme, but every American who subsequently suffered from the destabilization of the housing and financial sectors. And the country's taxpayers were ultimately left 'holding the bag' when forced to bail out Fannie Mae and Freddie Mac. Today's guilty plea is another important step in this Office's aggressive prosecution of such financial frauds, and the vindication of all Americans who have suffered in the recent financial crisis.”
FBI Special Agent in Charge Daphne Hearn commented, “Mortgage fraud losses cost taxpayers billions of dollars every year and is a threat to our national economy. The FBI will continue to dedicate substantial amount of expert resources to investigate these crimes.”
United States Attorney Duffy reminded the community that anyone with information relating to these charges should 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.
A sentencing hearing is scheduled for Armstrong before Judge Houston on August 12, 2013, at 8:30 a.m.
DEFENDANTS Criminal Case No. 12CR1848-JAH Mary Armstrong
Teresa Rose
William Fountain
John Allen SUMMARY OF CHARGESCount 1: Title 18, U.S.C., Section 371 -- Conspiracy to Commit Wire Fraud and to Launder
Money; Maximum Penalty: 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. (All Defendants)Count 2: Title 18, U.S.C., Section 1343 -- Wire Fraud; Maximum Penalty: 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. (Mary Armstrong)
Counts 3-5: Title 18, U.S.C., Section 1956 (a)(1)(B)(I) -- Money Laundering; Maximum
DEFENDANT Criminal Case No. 12CR1458-JAH Justin Mensen SUMMARY OF CHARGES Title 18, U.S.C., Section 371 -- Conspiracy to Commit Wire Fraud and to Launder Money;
Penalty: 15 years' custody, a maximum fine of $500,000 or twice the value of the
property involved in the transaction, and $100 special assessment. (Mary Armstrong)
Maximum Penalty: 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. DEFENDANT Criminal Case No. 12CR4322 -JAH Audrey Yeboah SUMMARY OF CHARGES Title 18, U.S.C., Section 1343 -- Wire Fraud; Maximum Penalty: 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. INVESTIGATING AGENCIESFederal Bureau of Investigation
Federal Housing Finance Agency-Office of Inspector GeneralFormer Wells Fargo Banker Charged with 80 Felony Counts for Fleecing $750,000 from CustomersRead the Press Release
United States Attorney Laura E. Duffy announced today that former Chula Vista Wells Fargo banker Ricardo Adolfo Benavente, III was charged with defrauding Wells Fargo and several of its customers by stealing and laundering approximately $750,000 from Wells Fargo customer accounts. According to an indictment unsealed in federal court today, Benavente used his access privileges at Wells Fargo to move hundreds of thousands of dollars from the accounts of Wells Fargo customers into accounts controlled by Benavente himself. The indictment further alleges that in many instances Benavente laundered the stolen funds in order to disguise the fact that he had stolen them.
According to the indictment, from April-October 2009, Benavente, a banker at a Wells Fargo branch office in Chula Vista, stole the funds from accounts belonging to four Wells Fargo customers. He then funneled the stolen funds through various Wells Fargo accounts that he created and controlled, and which he had opened in the name of fictitious customers expressly for the purpose of conducting his scheme to defraud. In one case, Benavente also funneled stolen funds through a PayPal account that he set up in the name of one of his victims, in order to disguise the fact that the money had been stolen. Benavente then used this PayPal account to direct the funds to his own bank and for his own benefit. The indictment alleges that in furtherance of his fraud scheme, Benavente stole and used the names and account numbers of his various victims in order to create the appearance that the transactions were being conducted by the customers themselves. He also created a trail of fraudulent bank instruments, such as withdrawal slips and cashier’s checks, which he used to steal money from his victims’ accounts and direct those funds to accounts that he controlled.
The indictment charges Benavente with counts of bank fraud, embezzlement, aggravated identity theft, and money laundering in connection with the scheme. In addition, he is charged with one count of filing a false tax return for his failure to disclose to the Internal Revenue Service that he had acquired hundreds of thousands of dollars of income from his scheme to defraud Wells Fargo and its customers.
United States Attorney Duffy thanked the agents from the United States Secret Service and Internal Revenue Service-Criminal Investigations for their work in uncovering the alleged crimes.
Benavente was arraigned on the indictment today and pleaded not guilty. A motion hearing is scheduled in the case for June 3, 2013 at 2:00 p.m., before United States District Court Judge Larry Alan Burns.
DEFENDANT Case Number: 13CR1513-LAB Ricardo Adolfo Benavente, III Age: 27 Chula Vista, CA SUMMARY OF CHARGESCounts 1-28: Bank fraud in violation of Title 18, United States Code, Section 1344
Maximum penalties: 30 years’ imprisonment, $1,000,000 fineCounts 29-56: Embezzlement in violation of Title 18, United States Code, Section 656
Maximum penalties: 30 years’ imprisonment, $1,000,000 fineCounts 57-63: Aggravated Identity Theft, in violation of Title 18, United States Code, Section 1028A
Maximum penalties: Mandatory 2-year consecutive sentenceCounts 64-79: Money Laundering, in violation of Title 18, United States Code, Section 1956(a)(1)(B)(i)
Maximum penalties: 20 years’ imprisonment, $500,000 fineCount 80: Filing a False Tax Return, in violation of Title 26, United States Code, Section 7206(1)
INVESTIGATING AGENCIES
Maximum penalties: 3 years’ imprisonment, $250,000 fine, costs of prosecutionUnited States Secret Service
Internal Revenue Service – Criminal InvestigationsAn indictment itself is not evidence that the defendant committed the crimes charged.
The defendant is presumed innocent until the Government meets its burden in court
of proving guilt beyond a reasonable doubt.Massive Trade in Endangered Species Uncovered; U.S. Attorney Charges 7 with Smuggling Swim Bladders of Endangered Fish Worth Millions on Black Market; Officials See TrendRead the Press Release
Assistant U.S. Attorneys Valerie Chu (619) 546-6750 and Melanie Pierson (619) 546-7976Press Conference Photos click HERE
Complaints:
Castaneda Complaint
Chung Complaint
Xie Complaint
Zhen ComplaintIndictments:
Xie Indictment
When Song Shen Zhen came through a border crossing in Calexico recently, an officer noticed something under the floor mats in the back seat. But the plastic grocery bags he found weren’t filled with typical border contraband.They contained 27 dried swim bladders taken from the endangered Totoaba macdonaldi fish. The Totoaba’s large swim bladder – which is an internal gas-filled organ that helps a fish control its buoyancy - is highly prized for use in Chinese soups and is considered a very expensive delicacy. But because the species is federally-protected in both the U.S. and Mexico, it’s illegal to take, possess, transport or sell Totoaba.
On Friday, Zhen became the seventh person charged by the U.S. Attorney’s Office with Totoaba smuggling since February, when border officers first started noticing the rare fish under floor mats and concealed in coolers in the vehicles of border crossers.
The Southwestern border is most often associated with the highly lucrative drug- and people-smuggling trades. But there is another smuggling category of increasing concern to authorities – trafficking of endangered wildlife, with a black market that is potentially valued in the millions of dollars.
In the Zhen case, Customs and Border Protection officials seized 27 bladders and turned them over to a U.S. Fish and Wildlife Service agent (FWS), and the rest were returned to Zhen, who was allowed to leave. But unknown to Zhen, agents kept him under surveillance and followed him to his home in Calexico. Once they obtained a search warrant, they discovered that the house was sparsely furnished and appeared to be set up as a Totoaba factory.
In the hallways and rooms of the house, Totoaba swim bladders were laid out in rows to dry, with fans positioned to blow air over them. There was were ledgers, packing materials and other evidence consistent with the shipment of Totoaba swim bladders overseas.
Agents found an additional 214 swim bladders at the house, bringing Zhen’s total to 241, according to court documents. Agents estimated that if sold into foreign markets, the 241 Totoaba bladders could conservatively be worth more than $3.6 million. Black market value in the U.S. is about $5,000 per bladder and $10,000-plus in certain foreign Asian markets.
In the Chinese culture, the fish swim bladder is referred to as “fish maw” and may also come from a variety of non-endangered fish. Totoaba fish maw is valued for its high collagen content and some people believe the Totoaba swim bladders can boost fertility and improve circulation and skin vitality. Besides the soup, Totoaba meat is also used for food.
Zhen is the most recent example of Totoaba smuggling cases. In all, federal officials have charged seven defendants in what are currently believed to be unrelated cases, and have seized 529 bladders since February, and the season is only halfway over. The bladders were tested by the U.S. Fish and Wildlife Service’s (FWS) forensic lab to confirm species identification through DNA analysis.
In recent years, prosecutors have brought cases involving everything from endangered iguana meat to shark fins.
“Earth Week reminds us all of the importance of protecting our precious resources,” said U.S. Attorney Laura Duffy. “Our nation’s laws prevent plundering and poaching for financial gain. We intend to enforce those laws with passion.”
“One of the highest priorities of the USFWS Office of Law Enforcement is to investigate individuals and companies that are involved in the unlawful commercial trafficking and smuggling of protected animals and plants here and around the world. Many species, including Totoaba, are teetering on the brink of extinction due to poaching to supply the illegal wildlife trade. While we may never know how many Totoaba bladders were harvested illegally, such disregard for the protections that were put in place to benefit this endangered species could have a disastrous effect on the fish population,” said Deputy Chief Edward Grace.
“HSI agents are committed to using our investigative authorities and resources to combat all forms of illegitimate cross border trade,” said Derek Benner, special agent in charge for HSI San Diego. “Not only did this investigation stop the exploitation of an endangered species for financial gain, but it exposed the illicit smuggling pathways and networks used to bring these specimens into the country and beyond.”
“This is a great example of the continued diligence of CBP officers and agriculture specialists at ports of entry in California,” said Pete Flores, CBP director of field operations for the San Diego and Imperial Counties. “In addition to protecting our country from narcotics and stopping violators of immigration law, CBP officers and agriculture specialists have disrupted this criminal enterprise’s attempts to profit from the illicit trade of this endangered species.”
Totoaba macdonaldi is the largest species in its genus, which includes California white sea bass and corvina. It can grow to more than 6 feet in length, weigh up to 220 pounds, and can live up to 25 years. Totoaba – pronounced Toe-TWAH-bah - are endemic only to the Gulf of California, the narrow inlet between Baja California and Mexico’s mainland (also called the Sea of Cortez). This fish can be identified by its dusky silver color, elongated body, sharp snout, a projecting lower jaw, and a slightly convex tail.
During their winter migration, schools of adult Totoaba travel northward along the east coast of the Gulf of California to the Colorado River delta, where they remain for weeks before spawning in the spring. The Totoaba’s spawning season runs from approximately March to May each year. During this time, Totoaba travel to the shallower waters at the mouth of the Colorado River, making them vulnerable to commercial and sport fishermen.
While the Totoaba were once abundant in the Gulf of California, and even at one point constituted the second most important commercial fish for Mexico, their populations have declined drastically due to overfishing, pollution and diversion of waters from the Colorado River.
The bladders are removed from the fish, dried, and often exported from Mexico to other countries. In some instances, the fish are taken from the Colorado River, carved open so their swim bladders can be removed, and discarded on the shores.
The Totoaba was included in the most protected list of species covered by the Convention on International Trade in Endangered Species (CITES, Appendix I) in 1977, and was listed as endangered under the Endangered Species Act in 1979. Mexico included it on its list of species In Danger of Extinction in 1994. Both Mexico and the United States are signatories to CITES. It is a violation of law in both countries to trade in Totoaba or any part of a Totoaba.
Despite the protection, the species has shown minimal recovery. Unique biological traits, such as its limited geographic range and vulnerability during spawning, along with external pressures of habitat degradation and overfishing, have pushed the species to the brink of extinction.
The U.S./Mexico ports of entry closest to the Sea of Cortez are in Calexico and Andrade, California and San Luis, Arizona. During the period from February 16 to April 13, 2013, border inspectors in Calexico have seized approximately 483 pounds of Totoaba, representing the swim bladders of over 500 endangered fish.
Other Totoaba smuggling cases since February:
-Defendant Oi “Sean” Chung is charged with smuggling 11 swim bladders into the U.S. on February 27th and 30th.
-According to a complaint, defendant Anthony Sanchez Bueno drove into the United States from Mexico on March 30 with three coolers which contained a top layer of fish fillets, concealing 170 Totoaba swim bladders (225 lbs). Only the fish fillets were declared. The swim bladders measured approximately 18 inches in length, which corresponds to a fish size of at least four feet in length. The complaint alleged that undercover agents delivered the coolers to defendant Jason Xie, who was waiting in a hotel parking lot in Calexico. At the time of delivery, Xie acknowledged that the swim bladders were Totoaba. After advisement of his Constitutional rights, Xie stated that he had purchased an earlier load of swim bladders from the same individual in February, and paid $1,500-$1,800 per swim bladder, and there were approximately 100. A subsequent indictment of Xie and Sanchez seeks to forfeit $350,000 in proceeds from the sale of Totoaba.
-On April 1, a defendant in another unrelated case, Raquel Castaneda, attempted to smuggle 28 Totoaba swim bladders into the U.S., but was thwarted by inspectors, according to court documents.
-Two defendants whose names are not being released because they are still at large.
Criminal Case No. 13MJ1556
DEFENDANTS
Song Shen ZhenSUMMARY OF CHARGES
Smuggling, in Violation of Title 18, United States Code, Section 545. Maximum Penalties: 20 years in custody, $250,000 fine, supervised release of up to 3 years, $100 special assessment.Unlawful Importation of Wildlife, in Violation of Title 16, United States Code, Sections 3372 and 3373 Maximum Penalties: 5 years in custody and $250,000 fine, $100 special assessment.
Criminal Case No. 13MJ1482
DEFENDANTS
Oi “Sean” ChungSUMARY OF CHARGES
Smuggling, in Violation of Title 18, United States Code, Section 545. Maximum Penalties: 20 years in custody, $250,000 fine, supervised release of up to 3 years, $100 special assessment.Unlawful Importation of Wildlife, in Violation of Title 16, United States Code, Sections 3372 and 3373 Maximum Penalties: 5 years in custody and $250,000 fine, $100 special assessment.
Criminal Case No. 13CR1311-CAB
DEFENDANTS
Jason Jin Shun Xie
Anthony Sanchez BuenoSUMMARY OF CHARGES
Conspiracy, in Violation of Title 18, United States Code, Section 371. Maximum Penalties: 5 years in custody and/or $250,000 fine, $100 special assessment.Smuggling, in Violation of Title 18, United States Code, Section 545. Maximum Penalties: 20 years in custody, $250,000 fine, supervised release of up to 3 years, $100 special assessment.
Unlawful Importation of Wildlife, in Violation of Title 16, United States Code, Sections 3372 and 3373 Maximum Penalties: 5 years in custody and/or $250,000 fine, $100 special assessment.
Forfeiture, in Violation of Title 18, United States Code, Section 982.
Criminal Case No. 13mj8242
DEFENDANTS
Raquel CastanedaSUMARY OF CHARGES
Smuggling, in Violation of Title 18, United States Code, Section 545. Maximum Penalties: 20 years in custody, $250,000 fine, supervised release of up to 3 years, $100 special assessment.Unlawful Importation of Wildlife, in Violation of Title 16, United States Code, Sections 3372 and 3373 Maximum Penalties: 5 years in custody and $250,000 fine, $100 special assessment.
AGENCIES
U.S. Fish and Wildlife Service
Homeland Security Investigations
U.S. Customs and Border ProtectionOther Recent Cases of Environmental Significance in the Southern District of California:
-On August 5, 2012, Alberto SIERRA-Ochoa entered the U.S. through the Otay Mesa Port of Entry with approximately 77 pounds of raw iguana meat that was undeclared when he entered from Mexico. The U.S. Attorney’s Office of the Southern District charged Sierra-Ochoa with one count of smuggling. Sierra-Ochoa pled guilty to that charge.
-On June 6, 2011, Eliodor SORIA-Fonseca illegally imported approximately 159 pounds of iguana meat from Mexico through the Otay Mesa Port of Entry. The iguana meat was found hidden inside coolers that SORIA-Fonseca declared to Customs and Border Protection officers as fish. SORIA-Fonseca was indicted for one count of smuggling and one count of violation of the Endangered Species Act. SORIA-Fonseca pled guilty to one count of smuggling on September 27, 2011 and was sentenced to two years of imprisonment, followed by three years of supervised release.
-On December 21, 2011, a 54-year-old female Mexican citizen entered the San Ysidro port of entry as a pedestrian and was asked to place her belongings through an x-ray machine. An agriculture specialist noticed that two of the woman’s bags had what appeared to be shark fins. A special agent with the National Oceanic and Atmospheric Administration (NOAA) responded to the port, took custody of 29 pounds of shark fins, and issued a citation to the woman for violation of the Lacey Act. Customs and Border Protection cancelled the woman’s visa and she was returned to Mexico.
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.
Imperial County Man Charged with Possession of Child PornographyRead the Press Release
El Centro, CA - United States Attorney Laura E. Duffy announced the arraignment this afternoon of Damian C. Mora on an indictment charging him with one count of possession of images of minors engaged in sexually explicit conduct, in violation of Title 18, United States Code, Section 2252(a)(4)(b), a felony.
According to the criminal complaint filed earlier in the case, the defendant posted about collecting photographs of minors engaged in sexually explicit conduct on a website relating to the sexual exploitation of children and also posted about his sexual interest in children. According to the complaint, the defendant’s collection included depictions of children, as young as one to two years of age, sexually exploited by adults.
The defendant was arrested by Immigration and Customs Enforcement, Homeland Security Investigations agents on April 9, 2013, in El Centro, California. Anyone with information relating to the charges against this defendant is urged to call 760 335 5389 and leave a confidential message, which will be returned by special agents investigating this case.
The public is reminded that an indictment is not evidence that the defendant committed the crime charged. The defendant is presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.
This case stems from an investigation by the Department of Homeland Security, Immigration and Customs Enforcement’s Homeland Security Investigations.
DEFENDANT Case Number: 13cr1471JM Damian C. Mora SUMMARY OF CHARGESTitle 18, United States Code, Section 2252(a) (4) (Possession of Child Pornography)
INVESTIGATING AGENCY
Maximum Penalties: 10 years’ incarceration, $250,000 fine, a minimum of 5 years and up to a lifetime of supervised release and registration as a sex offender.Immigration and Customs Enforcement’s Homeland Security Investigations
Wildlife Researcher Pleads Guilty to Unlawful Taking of Golden EagleRead the Press Release
United States Attorney Laura E. Duffy announced that a Julian resident pled guilty today to the unlawful taking of a golden eagle, in violation of the Bald and Golden Eagle Protection Act, before the Honorable David H. Bartick, United States Magistrate Judge. “Take” in this instance involved collection of the bird for banding without the required permit.
At the time of the plea, wildlife researcher John David Bittner acknowledged that he makes his living conducting studies of birds and wildlife. His work includes the capture and banding of eagles and other migratory birds, and the tracking of their movements. Bittner had possessed a federal bird banding permit, which expired on January 31, 2010. In mid-February, 2010, he asked the USGS Bird Banding Laboratory to renew his permit. The Bird Banding Lab advised Bittner that he was not in compliance with his permit as he had not reported any data for the birds he had banded since October 31, 2006 and thus, his permit would not be renewed until he submitted the delinquent data. These data provide the USGS and the U.S. Fish and Wildlife Service valuable information about the health and distribution of the eagle population in the United States. For the period from January 31, 2010, through August 12, 2010, Bittner possessed no permit to capture and band eagles or any other migratory bird. In pleading guilty, Bittner admitted that during this period, he captured and banded 144 migratory birds in southern California, including at least one female golden eagle, knowing that he had no permit to do so.
Historically, the breeding range of the golden eagle included most of North America, but today the species occurs primarily in the Western United States where it nests and winters from Alaska south to central Mexico. In some western states, golden eagles are year-round residents in breeding territories.
The golden eagle is a Bird of Conservation Concern throughout most of its western range. In the early 1970s, the estimated North American population was approximately 100,000. The current population estimate for the United States and Canada is 80,000, with documented declines in western states. Golden eagle populations are primarily impacted by habitat loss, collisions with transmission lines and increasingly with wind turbines, ingestion of lead and other contaminants, and disturbance of nest and brooding sites.
The Bald and Golden Eagle Protection Act prohibits anyone from taking, possessing, or transporting a bald eagle or golden eagle, or the parts, nests, or eggs of such birds without prior authorization. Take means to pursue, shoot, shoot at, poison, wound, kill, capture, trap, collect, destroy, molest, or disturb. Activities that directly or indirectly lead to take are prohibited without a permit. Such restrictions help ensure the future viability of eagles in the wild.
United States Attorney Laura E. Duffy said, "It is a sacred trust to preserve our natural heritage for future generations. This trust mandates that we observe both the spirit and letter of laws designed to protect the environment."
Bittner is scheduled to be sentenced on July 11, 2013 at 1:30 a.m. before Judge Bartick.
Case Number: 13cr1391-W DEFENDANT John David Bittner SUMMARY OF CHARGESUnlawful Taking of a Golden Eagle, in Violation of Title 16, United States Code, Section 668(a).
AGENCY
Maximum Penalties: 1 year in custody and/or $100,000 fine, $25 special assessment.U.S. Fish and Wildlife Service
San Diego Man Who Stole Identities of Deceased Children Charged with Passport FraudRead the Press Release
United States Attorney Laura E. Duffy announced that Lloyd Irvin Taylor was arraigned in federal court today on an indictment charging him with three counts of making false statements on passport applications.
According to the indictment, Taylor made a host of false statements on each passport application, including: his true name, place of birth, date of birth, social security number, father's name, father's birthplace, father's birth date, mother's maiden name, mother's birthplace, mother's birth date, and applicant's signature. This false information was derived from over a half dozen identities that Taylor stole from other people. These stolen identities included children who died in the early 1950's.
During Taylor's bond hearing, Assistant U.S. Attorney Peter J. Mazza informed Magistrate Judge Barbara L. Major that Taylor had traveled extensively on the fraudulent passports at issue in the present case. Among other things, Mazza told the Magistrate Judge that Taylor maintained nearly two dozen bank accounts in the names of his various aliases. In addition, Mazza discussed how Taylor also maintained bank accounts in the names of purported religious entities with either himself or one of his aliases as the signatory on the church accounts. Finally, he added that the government had recently seized approximately $1.8 million in gold.
In ordering Taylor detained without bond, Magistrate Judge Major noted the numerous different stolen identities from deceased children, the number of bank accounts under various names, and the defendant's considerable assets. The Magistrate Judge concluded that Taylor was a flight risk.
United States Attorney Laura E. Duffy praised the work of investigators who diligently pieced together Taylor's criminal activities. "Our office remains committed to protecting the sensitive personal information of our citizens. As today's indictment makes clear, stolen identity information can be misused in a variety of ways, including to do things like obtain fraudulent passports, which is a matter of national security."
“Identity theft is a serious crime, whether committed electronically or by deliberately provided false information,” said Gregory Meyer, Special Agent in Charge of the United States Secret Service in San Diego. “Through the San Diego Regional Fraud Task Force, the Secret Service and its partners combine the resources of local, state and federal agencies with the private sector to combat a wide range of financial and identity crimes. The success of this investigation is an example of how well our partnerships work.”
“The success of this investigation and enforcement operation demonstrates that the Department of State and the Diplomatic Security Service are committed to protecting the integrity of U.S. passports and visas, the most sought after travel documents in the world,” said Gregory B. Starr, Director of the Diplomatic Security Service.
The defendant is due next in court on May 20, 2013, before Judge Michael M. Anello for a motion hearing.
DEFENDANT Criminal Case No. 13CR1390-MMA Lloyd Taylor SUMMARY OF CHARGESCounts 1-3: Title 18, United States Code, Section 1542 B Making a False Statement on a United States Passport Application. Maximum penalties (per count): 10 years custody;
INVESTIGATING AGENCIES
$250,000 fine; $100 Special Assessment; 3 year supervised release.San Diego Regional Fraud Task Force:
- United States Secret Service
- San Diego Police Department
- San Diego District Attorney's Office
Internal Revenue Service
United States Department of State, Bureau of Diplomatic SecurityAn indictment or a complaint is not evidence that the defendant committed the crime charged. The defendant is presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.
Reserve Deputy Sheriff of Imperial County Charged with Smuggling Illegal Aliens in TrunkRead the Press Release
El Centro – A reserve Imperial County Sheriff’s Deputy was charged today with smuggling illegal aliens in the trunk of her car as she drove through a checkpoint wearing her uniform and department-issued firearm.
Elizabeth Hernandez, a reserve Deputy Sheriff of Imperial County, and Edna Yanie Calderon, were arrested yesterday and charged with transportation of illegal aliens and aiding and abetting. Court records said Hernandez wore her uniform because she expected to be waived through the Highway 86 checkpoint by Border Patrol.
The complaint charges that on April 17, 2013, Calderon picked up three illegal aliens at a local fast food restaurant in Calexico, California. Border Patrol agents in the area became suspicious of the vehicle and began following at a distance.
The agents observed as Calderon drove the suspected illegal aliens to Hernandez’s home. Hernandez – a reserve deputy for three years - instructed the three aliens to hide in the trunk of her car, the complaint said. After the meeting at Hernandez’s home, Border Patrol had Hernandez and Calderon under surveillance.
After clearing the checkpoint, Hernandez drove to a nearby gas station, where she met with Calderon and transferred two of the three illegal aliens to Calderon’s car.
According to the complaint, as Hernandez began to leave the gas station, Border Patrol agents initiated lights and sirens and stopped her vehicle. Border Patrol agents also approached Calderon’s vehicle. The agents confirmed that the two individuals in Calderon’s vehicle and the other individual in the trunk of Hernandez’s vehicle were citizens and nationals of Mexico without immigration documents allowing them to remain, work, or reside in the United States legally. Hernandez and Calderon were then arrested.
The defendants were arraigned this afternoon before U.S. Magistrate Judge Peter C. Lewis. The government moved to detain both defendants based on risk of flight and danger to the community. A detention hearing was scheduled for Tuesday, April 23. A preliminary hearing was scheduled for May 2, 2013, at 1:30 p.m., before Judge Lewis.
DEFENDANTS Magistrate Case No. 13MJ8293 Elizabeth Hernandez
Edna Yanie Calderon SUMMARY OF CHARGESTitle 8, United States Code, Section 1324(a)(1)(A)(ii) B Transportation of Illegal Aliens
AGENCY
Maximum Penalties: 10 years of imprisonment and $250,000 fineUnited States Border Patrol-El Centro Sector
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.Illegal Sports Bookmaker Sentenced for Conspiring to Commit Sports BriberyRead the Press Release
United States Attorney Laura E. Duffy announced that Richard Francis Garmo was sentenced today in federal court in San Diego by the Honorable Anthony J. Battaglia to serve 24 months in custody, followed by three years supervised release, for his role in a criminal conspiracy. Garmo is the eighth and final defendant to be sentenced in the FBI investigation known as “Operation Hook Shot.”
In April 2011, Garmo and others were charged in an indictment for illegally enriching themselves from the operation of an illegal sports gambling business and the distribution of marijuana. The indictment also charged that by using proceeds from those crimes, the conspiracy influenced the outcome of basketball games at the University of San Diego (USD) during the 2009-2010 season, and then attempted to recruit players to do the same during the 2010-2011 season.
Garmo pleaded guilty to the indictment in August 2012. According to court documents and admissions made by Garmo and his co-defendants, the conspiracy bribed co-defendant Brandon Johnson to influence the outcome of basketball games during the 2009-2010 season while Johnson was a member of USD’s basketball team. Garmo and his co-conspirators then profited by placing bets at Las Vegas casinos on games Johnson influenced. Based on admissions by co-defendant Steve Goria, the conspiracy profited in excess of $120,000 from their sports bribery scheme. Johnson was sentenced to 6 months imprisonment in March 2013 for his role. Thaddeus Brown, a former USD assistant coach and the co-conspirator who recruited Johnson into the conspiracy, was sentenced to 12 months imprisonment in April 2013.
In addition to the 2009-2010 season, the conspiracy attempted to recruit current college basketball players at USD and elsewhere to influence the outcome of basketball games for bribe money during the 2010-2011 season as well. One particular recruiting attempt of a USD player in February 2011 took place at a Pacific Beach convenience store owned and operated by Garmo. At the meeting, the USD player was provided thousands of dollars cash as a bribe, which he later returned after deciding not to accept the bribe.
Judge Battaglia ordered the defendant to report on July 5, 2013 to begin serving his sentence.
DEFENDANT Criminal Case No. 11CR1345-AJB Richard Francis Garmo SUMMARY OF CHARGESCount 1: Title 18, United States Code, Section 371 - Conspiracy
INVESTIGATING AGENCYFederal Bureau of Investigation
Almost Four Dozen Suspected Meth and Heroin Traffickers Indicted; Officials Make Arrests in North County SweepRead the Press Release
Eighteen suspected methamphetamine and heroin traffickers were arrested during pre-dawn raids around the North County today.
More than 200 agents and detectives from the multi-agency North County Regional Gang Task Force made the arrests in Oceanside, Vista, Escondido and elsewhere in the North County. Task force members confiscated 35 weapons during the course of the investigation. Among the weapons seized were hand guns, semi-automatic rifles and shotguns, including a 12-gauge Street Sweeper semiautomatic.
These arrests are associated with the unsealing of 15 grand jury indictments today charging 46 defendants with various narcotics trafficking crimes, including conspiracy plus importation, distribution and possession of methamphetamine. A few defendants were charged with heroin trafficking.
“The number and types of weapons seized in this investigation are troubling,” said U.S. Attorney Laura Duffy. “We will to continue to target these well-armed drug traffickers who operate in our neighborhoods and put all of us at risk – especially our children.”
The North County Regional Gang Task Force is a multi-agency group including the FBI, ATF, the San Diego County Sheriff’s Department, Homeland Security Investigations and police departments in Oceanside and Carlsbad, with assistance from other federal and local law enforcement agencies as well.
Daphne Hearn, FBI Special Agent in Charge, said: “Today's arrests by the North County Regional Gang Task Force are the result of a long-term multi-agency investigation by federal, state and local law enforcement agencies working together. The FBI will continue to work with our law enforcement partners to make our communities a safer place.”
"It is only by the extremely hard work, commitment, and passion from the collaborative North County Gang Task Force that made Operation Corridor such a tremendous success,” said Oceanside police Chief Frank S. McCoy. “This operation is a great example of local and federal law enforcement agencies from all over San Diego joining together to combat drug traffickers in our community who threaten the safety and security of our citizens."
“ATF considers the North County Gang Task Force a critical partner in its long-term mission of combating violent crime and removing criminals from our communities as was shown in Operation Corridor,” said Steven J. Bogdalek, Special Agent in Charge ATF Los Angeles Field Division. “ATF will continue to dedicate federal resources and work with our local agencies in the pursuit of eradicating illegal firearm trafficking and criminal activity.”
“Operation Corridor exemplifies the good work done by multiple agencies in San Diego County,” said San Diego County Sheriff Bill Gore. “This is a multi-faceted approach to reducing violent crime, and those who perpetrate it. This investigation is a prime example of how effective Intelligence Led Policing can be with respect to targeting prolific, criminal offenders and managing law enforcement resources. Operation Corridor has been extremely effective in restoring quality of life to our residents in the North County along the 78 corridor.”
“I commend all of the law enforcement professionals in the San Diego area who worked tirelessly in this coordinated effort to combat the threats that violence and fear tactics pose to public safety in our communities,” said Derek Benner, special agent in charge for Homeland Security Investigations San Diego.
DEFENDANTS Case Number: 13cr1128-BEN LAURA CRUZ
RAUL ALVARADO
ROBERT RODRIGUEZ
CARRIE BROWN-RODRIGUEZ ANTHONY PALAFOX
JESSICA HOLGUIN
ROBERT AGUILAR
CHRISTIAN GARDUNO
ERICK GARCIA-MARTINEZ JOSHUA SANCHEZ
TRAVIS JOB
BRIAN RAMIREZ
ANDY ESPINOZA
LORI STORY
ANGEL OLMOS
BRAD WOOLARD
JOSE ANTONIO
EMILY BAKER
MONORIN PHIAKEO
JESSICA KISNER
HECTOR MEDRANO
FRANKIE KING Already in custody
Already in custody
Already in custody
Arrested 4/15/13 Arrested 4/17/13 Arrested 4/17/13
At Large
Already in custody
At Large
Arrested 4/17/13 Arrested 4/17/13 Arrested 4/17/13 Arrested 4/17/13 Arrested 4/17/13
At Large
Arrested 4/17/13
Already in custody
At Large
Arrested 4/17/13
At Large
Arrested 4/17/13 Arrested 4/17/13 Summary of ChargesTitle 21, United States Code, Sections 841(a)(1) and 846 - Conspiracy to Distribute Methamphetamine; Title 21, United States Code, Sections 952, 960 (b) (1) (H) and 963 – Conspiracy to Import Methamphetamine; Title 21, United States Code, Section 841 (a) (1) – Possession of Methamphetamine with Intent to Distribute
Case Number: 13cr1238BEN LYDIA LUCIO
DAVID GAMEZ
ANA ALVIZOVITAL
ERROL WHITE
RUDOLPH FIGUEROAArrested 4/17/13
Summary of Charges Title 21, United States Code, Sections 952, 960 (b) (2) (A) - Conspiracy to Import Heroin; Title 21, United States Code Sections 952, 960 and 963 – Conspiracy to Import Heroin Case Number: 1232BEN ALEXANDRA AGUIRRE Arrested 4/17/13 Summary of Charges Title 21, United States Code, Sections 952, 960 – Importation of Heroin Case Number: 13cr1239MMA THOMAS MEDINA
Arrested 4/17/13
Already in Custody
Arrested 4/17/13
Arrested 4/17/13
PABLO DIAZArrested 4/17/13
Summary of Charges Title 21, United States Code, Sections 841(a)(1) and 846 - Conspiracy to Distribute Methamphetamine; Title 21, United States Code, Section 841 (a) (1) – Possession of Methamphetamine with Intent to Distribute Case Number: 13cr1237L STEVEN HERNANDEZ
Arrested 4/17/13
JUAN URIBE Arrested 4/17/13
Already in Custody Summary of Charges Title 21, United States Code, Sections 841(a)(1) and 846 - Conspiracy to Distribute Methamphetamine; Title 21, United States Code, Section 841 (a) (1) – Possession of Methamphetamine with Intent to Distribute Case Number: 13cr1243BEN ROBERT SARMIENTO Arrested 4/17/13 Summary of Charges Title 21, United States Code, Section 841 (a) (1) – Possession of Methamphetamine with Intent to Distribute; Title 18, United States Code, Section 922 (g) (1) - Felon in possession of a firearm Case Number: 13cr1242AJB CARLOS RIVERA Arrested 4/17/13 Summary of Charges Title 21, United States Code, Sections 841(a)(1) and 846 - Conspiracy to Distribute Methamphetamine; Title 18, United States Code, Section 922 (g) (1) - Felon in possession of a firearm Case Number: 13cr1241BEN STEVEN NORTH
ROBERT AGUILAR Arrested 4/17/13
At Large Summary of Charges Title 21, United States Code, Sections 841(a)(1) and (b)(1)(B) - Distribution of Methamphetamine; Title 18, United States Code, Section 922 (g) (1) - Felon in possession of a firearm Case Number: 13cr1231JAH JAVIER ALVAREZ Already in custody Summary of Charges Title 21, United States Code, Sections 841(a)(1) - Distribution of Methamphetamine Case Number: 13cr1244W PAUL WOODS At Large Summary of Charges Title 21, United States Code, Sections 841(a)(1) - Distribution of Methamphetamine Case Number: 13cr1233BEN ARMANDO ARELLANO Already in Custody Summary of Charges Title 21, United States Code, Sections 841(a)(1) - Distribution of Methamphetamine Case Number: 13cr1234WQH RUDY BLANCO
AMANDA KOPP Arrested 4/17/13 Arrested 4/17/13 Summary of Charges Title 21, United States Code, Sections 841(a)(1) and 846 - Conspiracy to Distribute Methamphetamine; Title 21, United States Code, Section 841 (a) (1) and (b) (1) (B) (viii) – Distribution of Methamphetamine Case Number: 13cr1240L GEORGE MOLINA
ULYSSES RAMOS Already in Custody
Already in Custody Summary of Charges Title 21, United States Code, Sections 841(a)(1) and 846 - Conspiracy to Distribute Methamphetamine; Title 21, United States Code, Section 841 (a) (1) and (b) (1) (B) (viii) – Possession of Methamphetamine with intent to distribute Case Number: 13cr1235JAH ROUANNE DIAZ
DEANDRA COX Arrested 4/17/13
Already in custody Summary of Charges Title 21, United States Code, Sections 841(a)(1) and 846 - Conspiracy to Distribute Methamphetamine; Title 21, United States Code, Section 841 (a) (1) and (b) (1) (B) (viii) – Distribution of Methamphetamine Case Number: 13cr1236GPC ADAM ESPINO Arrested 4/17/13 Summary of Charges Title 21, United States Code, Sections 841(a) (1) - Distribution of Methamphetamine AGENCIESFederal Bureau of Investigation
Oceanside Police Department
Bureau of Alcohol, Tobacco and Firearms
San Diego County Sheriff's Department
Homeland Security Investigations
Carlsbad Police DepartmentAn 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.
Tax Preparer Charged with Aggravated Identity Theft and Million Dollar Tax FraudRead the Press Release
Cynthia Lozano, a tax preparer from Lemon Grove, was arrested today and an indictment was unsealed in connection with a scheme to steal Social Security numbers, file false tax returns, and defraud the Internal Revenue Service ("IRS"). She was taken into custody by IRS agents in Phoenix, Arizona, where she will make her first appearance in U.S. District Court tomorrow.
According to a federal grand jury indictment, Lozano owned and operated the tax preparation business, "CLozano Income Tax," in Spring Valley, California. From 2010 to the present, Lozano used her business to submit fraudulent federal income tax returns seeking bogus refunds. In carrying out this scheme, Lozano made false statements which caused the IRS to issue refunds under the EIC provisions. An EIC is a refundable federal income tax credit for low- to moderate-income working individuals and families that is intended to offset the burden of social security taxes and to provide an incentive to work. If a taxpayer's EIC exceeds the amount of taxes actually owed, it results in the IRS paying a refund to the taxpayers who claim and qualify for the credit.
As reflected in charging documents, Lozano targeted over 200 victims by filing fraudulent IRS Forms 1040 in the taxpayers' names. Frequently, the taxpayers were unaware that Lozano used their Social Security numbers thus also becoming victims of aggravated identity theft. As a result, Lozano improperly received over $1 million from the IRS in fraudulent refunds which she laundered through a bewildering maze of bank accounts.
Using the proceeds of this fraud, Lozano, among other things, purchased 20 properties in and near Phoenix, Arizona. Her indictment seeks forfeiture of these properties to recompense the government from the loss of her fraud and to prevent Lozano from reaping a financial benefit from her crimes.
United States Attorney Laura Duffy said, "In these times of financial hardship, tax fraud is essentially a theft from each and every citizen who shoulders their rightful share of the tax burden." She added that the U.S. Attorney's Office is committed to stopping the recent increase in theft of personal identification information and its use in a variety of criminal offenses."
N. Dawn Mertz, Special Agent in Charge for IRS Criminal Investigation, said, “The IRS takes particular interest in cases where someone, for their own personal benefit, steals the identity of others to file false tax returns with the IRS. Taxpayers deserve our unwavering vigilance in the investigation and prosecution of allegations of identity theft and tax fraud by unscrupulous tax professionals who victimize others.”
DEFENDANT Case Number: 13cr1354AJB Cynthia Lozano SUMMARY OF CHARGESCounts 1-13 Title 18, United States Code, Section 287 (false claims) Maximum penalty: 5 years of custody; $250,000 Fine
Counts 14-25 Title 18, United States Code, Section 1343 (wire fraud) Maximum penalty: 20 years of custody; $250,000 Fine
Count 26 Title 18, United States Code, Section 1341 (mail fraud) Maximum penalty: 20 years of custody; $250,000 Fine
Counts 27-33 Title 18, United States Code, Section 1028A (aggravated identity theft) Minimum penalty: 2 years of custody, consecutive to sentence for other crimes; No Probation; Fine same as for underlying offense
AGENCIESInternal Revenue Service - Criminal Investigations ("IRS-CI")
Department of Treasury, Inspector General for Tax Administration ("TIGTA")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.San Diego College Pays $700,000 and Former Financial Aid Director Pleads Guilty to Resolve Allegations of Financial Aid FraudRead the Press Release
United States Attorney Laura E. Duffy announced today that United States University, a for-profit college located in San Diego, has agreed to pay a civil settlement in the amount of $686,720 and that the school’s former Financial Aid Director has pled guilty, resolving allegations that between December 2008 and February 2011, the school submitted falsified financial aid applications to the U.S. Department of Education in order to obtain Pell Grant funds for which students were not eligible.
The civil settlement was paid by Educacion Significativa, LLC, and IAC Funding, LLC, doing business as United States University. The school, which has campuses in Chula Vista and Cypress, California, was known as InterAmerican University from 1997 to 2010, when it changed its name to United States University. United States University offers courses of study in nursing and other programs.
The school’s former Financial Aid Director, Christina Miller, pled guilty in federal court (Case Number 13cr1157MMA) to criminal financial aid fraud, in violation of Title 20, United States Code, Section 1097(b), admitting that she knowingly and willfully falsified student financial aid applications, resulting in the improper awarding of federal Pell Grants to ineligible students. Under federal law, students already holding Bachelor’s degrees are generally not eligible for Pell Grant funds, but Miller admitted changing student degree status in order to allow the school to improperly receive Pell Grant funds from the U.S. Department of Education. Miller is scheduled to be sentenced on June 27, 2013.
“We all benefit from successful students’ economic and professional contributions to our country,” said United States Attorney Duffy. “Financial aid fraud not only harms the American taxpayer, but robs our community of that investment. This resolution should send a strong message to those who would choose to fraudulently obtain monies from taxpayer-funded financial aid programs. We will continue to work closely with our investigative partners in taking both criminal and civil measures to combat fraud against government programs.”
“Federal student aid exists so that individuals can pursue and make their dream of a higher education a reality. As the law enforcement arm of the U.S. Department of Education, the Office of Inspector General is committed to fighting student aid fraud and we will continue to aggressively pursue those that participate in these types of crimes,” said Natalie Forbort, Special Agent in Charge of the U.S. Department of Education Office of Inspector General Western Regional Office.
FBI Special Agent in Charge, Daphne Hearn stated, “Fraud and abuse of educational taxpayer-funded programs deprives those who are eligible and most deserving of this financial aid. The FBI and our partners will pursue those who would seek to undermine these programs, so that this important block of financial aid is available for those who need it most.”
The investigation arises from a lawsuit that was brought under the qui tam, or whistleblower, provisions of the federal False Claims Act, which permit private citizens with knowledge of fraud against the government to bring an action on behalf of the United States. As provided by the False Claims Act, the whistleblower in this case, Veronica Glaser, a former student and employee at the school, will receive a share of the recovery.
The investigation and prosecution of this matter was the result of the collaborative effort of the United States Attorney’s Office for the Southern District of California; the Department of Education, Office of Inspector General; and the Federal Bureau of Investigation. Assistant U.S. Attorney Christopher Tenorio is handling the criminal prosecution of Christina Miller. Assistant U.S. Attorneys Joseph Price and Douglas Keehn handled the civil False Claims Act matter brought against United States University.
DEFENDANT Criminal Case Number: 13CR1157-MMA Christina Miller SUMMARY OF CHARGESFinancial Aid Fraud-Title 20, United States Code, Section 1097(b)
INVESTIGATING AGENCIESDepartment of Education, Office of Inspector General
Federal Bureau of InvestigationRamona Tax Preparer Sentenced for Murder-For-Hire, Witness Tampering, Filing False Tax Returns with the IRS, Identity Theft, Money Laundering, and FraudRead the Press Release
San Diego - Former Internal Revenue Service agent-turned-tax preparer Steven Martinez was sentenced today by U.S. District Court Judge William Q. Hayes to almost 24 years in prison for defrauding clients out of more than $11 million and then plotting their murders to prevent them from testifying about the theft.
In addition to a 286-month sentence, the judge ordered Martinez to pay more than $14 million in restitution to the victims, the IRS and the California Franchise Tax Board. Judge Hayes also entered a preliminary order of forfeiture as to certain real and personal property, including an $11 million money judgment. Following Martinez’s service of his sentence, Judge Hayes placed him on five years of supervised release.
In comments at today’s hearing, Assistant U.S. Attorney Joseph Orabona argued for a significant sentence in part because Martinez meticulously planned the murders by giving a would-be assassin – who was a cooperating witness for the FBI - detailed instructions and information about each of the four victims contained in “packets.” One of the exchanges between Martinez and the cooperating witness was captured on video.
“These victims were surveilled. They were watched. Their habits were documented. It’s disturbing,” Orabona said. “This was a cool and calculating individual. He knew how the victims lived. He’s explaining it to the hit man on the video.”
Before imposing a sentence, Judge Hayes noted that the defendant did not make a heat-of-the moment decision to commit a crime. Rather, it was a long-term fraud spanning years and culminating with the carefully planned murder-for-hire plots. “Mr. Martinez in my view had some time to think about what he was doing.” He called the defendant’s actions “cold blooded.”
U.S. Attorney Laura Duffy said she was pleased with the outcome of the prosecution. “This is a case of greed so extreme that what began as serious – but not violent - white-collar crimes almost escalated to the murders of four people. Fortunately FBI intervention prevented the violence and today justice was served with a decades-long sentence. As tax day quickly approaches, this is a reminder that anyone who chooses to undermine the integrity of our tax system risks prosecution.”
FBI Special Agent in Charge, Daphne Hearn, commented, “Once the FBI became aware of Mr. Martinez’s murder-for-hire plot, FBI agents took immediate steps to disrupt this plot. In doing so, the FBI ensured that no harm would come to potential witnesses or others. I commend the efforts of the agents and prosecutors who worked tirelessly in this investigation.”
N. Dawn Mertz, Special Agent in Charge of IRS Criminal Investigation’s Los Angeles Field Office, commented: “The activities of Steven Martinez are an example whereby tax crimes, malicious financial greed and a blatant disregard for the law can turn into potential violent criminal activity. Today’s sentencing reinforces IRS Criminal Investigation’s commitment to pursue those committing tax and financial crimes and to partner with our law enforcement community to bring justice to those who behave as if they are above the law.”
Martinez pleaded guilty on August 10, 2012, to criminal charges including murder-for-hire, witness tampering involving attempted murder, solicitation of a crime of violence, mail fraud, filing false tax returns, Social Security fraud, aggravated identity theft, and money laundering. Martinez pleaded guilty to 12-counts in a superseding indictment.
As part of his guilty plea, Martinez admitted that in late February 2012, he solicited a third party to murder four witnesses with the intent to prevent their testimony in his pending criminal tax case.
The third party contacted the San Diego division of the FBI on February 28, 2012 to report the murder-for-hire plot by Martinez and agreed to cooperate with the FBI in the investigation. According to the complaint, a subsequent meeting between the FBI’s cooperating witness and Martinez was recorded and videotaped by the FBI.
In reference to two of the murder targets, Martinez told the would-be assassin “he could make him rich for the rest of his life, $100,000 cash, if he eliminated the lady in Rancho Santa Fe and the lady in La Jolla,” according to court records. The cooperating witness said Martinez “suggested that the former employee use two different pistols for the murders and that he acquire a silencer.”
Martinez admitted in court that he tried to prevent the former clients’ testimony by offering the FBI’s cooperating witness $100,000 to murder them. He admitted he provided the third party with four written packets of detailed information about the former clients, including photos of the soon-to-be murder victims, their homes and personal information. Martinez admitted that once the murders took place, he would pay the perpetrator $40,000 in cash, followed by the remaining $60,000 in cash within 72 hours of the murders.
In addition, Martinez admitted that he filed false tax returns and defrauded his clients by stealing over $11 million in tax payments. Martinez admitted that he presented his clients with completed tax returns indicating that they owed a significant amount of tax. He requested that his clients write checks payable for the amount of taxes due and owing to an alleged client trust account (instead of directly to the IRS or the California Franchise Tax Board).
Martinez also convinced these same clients to write checks during the tax year for estimated tax payments to the same alleged client trust accounts. Rather than deposit these checks into a true trust account, Martinez admitted that he took the checks and deposited them into several nominee bank accounts. In an attempt to conceal his fraud, Martinez admitted that he filed a different set of false tax returns indicating that his clients owed little or no income tax.
Martinez admitted that he converted approximately $11 million in stolen taxpayer funds for his own personal benefit, and used them to make home improvements, purchase real estate, purchase a beach home in Mexico, pay for the use of a private airplane, make investments of more than $2 million in other entities, and make payments of more than $2 million for his personal use credit cards and loans.
As part of his fraudulent tax scheme, Martinez admitted that he committed Social Security fraud and aggravated identity theft by using the Social Security numbers of his clients without authorization when he filed the false tax returns with the IRS. Martinez admitted he committed mail fraud by mailing the false tax returns to the IRS. Martinez also admitted that he laundered approximately $2 million through nominee bank accounts for his own business and personal use.
Finally, Martinez admitted that he knowingly and intentionally filed false personal income tax returns for tax years 2004, 2005, 2006, and 2007.
DEFENDANT Criminal Case No. 11CR1445WQH Steven Martinez Age: 51 Ramona, California CHARGES THAT DEFENDANT PLED GUILTY TO:Count 4: Title 18, United States Code, Section 1341 - Mail Fraud
Maximum Penalties: 20 years of imprisonment and a fine equal to twice the gross loss caused to persons by the offenseCount7: Title 26, United States Code, Section 7206(2) - Procuring False Tax Returns
Maximum Penalties: 3 years of imprisonment and $250,000 fineCounts 21: Title 42, United States Code, Section 408(a)(8) - Social Security Fraud
Maximum Penalties: 5 years of imprisonment and $250,000 fineCounts 33: Title 18, United States Code, Section 1028A - Aggravated Identity Theft
Maximum Penalties: 2 years of imprisonment, consecutive to any other sentenceCount 47: Title 26, United States Code, Section 7206(2) - Making False Tax Returns
Maximum Penalties: 3 years of imprisonment and $250,000 fineCount 49: Title 18, United States Code, Section 1957 - Money Laundering
Maximum Penalties: 10 years of imprisonment and $250,000 fineCounts 50 through 53: Title 18, United States Code, Section 1512(a)(1)(A) - Witness Tampering
Maximum Penalties: 30 years of imprisonment and $250,000 fine per countCount 54: Title 18, United States Code, Section 1958 - Use of a Facility of Interstate Commerce in Commission of Murder-For-Hire
Maximum Penalties: 10 years of imprisonment and $250,000 fineCount 55: Title 18, United States Code, Section 373 - Solicitation of a Crime of Violence
AGENCIES
Maximum Penalties: 15 years of imprisonment and $250,000 fineInternal Revenue Service, Criminal Investigation
Federal Bureau of InvestigationIllegal Sports Bookmaker Sentenced for Conspiring to Commit Sports BriberyRead the Press Release
United States Attorney Laura E. Duffy announced that Paul Joseph Thweni was sentenced today by the Honorable Anthony J. Battaglia to serve 30 months in custody, followed by three years supervised release, for his role in a criminal conspiracy.
The indictment charged that Thweni and nine others enriched themselves by operating an illegal sports gambling business and by distributing marijuana. Using proceeds from those crimes, Thweni and his co-conspirators influenced the outcome of basketball games at the University of San Diego (USD) during the 2009-2010 season, and then attempted to recruit players to do the same during the 2010-2011 season. Thweni pleaded guilty to the indictment on August 2, 2012.
According to court documents and other admissions, Thweni and his co-conspirators bribed co-defendant Brandon Johnson to influence the outcome of basketball games during the 2009-2010 season while Johnson was a member of USD’s basketball team. The co-conspirators then profited by placing bets at Las Vegas casinos on games Johnson influenced. Co-defendant Steve Goria, who was sentenced to 30 months imprisonment in October 2012, admitted that the conspiracy made more than $120,000 from the game-fixing scheme. Thweni previously admitted that during the 2010-2011 season, the co-conspirators attempted to recruit current college basketball players at USD and other schools to influence the outcome of basketball games in exchange for cash.
Judge Battaglia ordered the defendant to report on April 19, 2013 to begin serving his sentence.
DEFENDANT Criminal Case No. 11CR1345-AJB Paul Joseph Thweni SUMMARY OF CHARGESCount 1: Title 18, United States Code, Section 371 - Conspiracy
INVESTIGATING AGENCYFederal Bureau of Investigation
Criminal Case Number: 11cr1345AJB: Convictions:
Steve Warda Goria
Richard Francis Garmo
Thaddeus James Brown
Brandon Johnson
Richard Thweni
David Gates
Jake SalterFormer Usd Assistant Basketball Coach Thaddeus Brown Sentenced for Conspiring to Commit Sports BriberyRead the Press Release
United States Attorney Laura E. Duffy announced that Thaddeus Brown was sentenced today in federal court in San Diego by the Honorable Anthony J. Battaglia to serve 12 months in custody, followed by three years supervised release, for his role in a conspiracy to commit sports bribery. The indictment charged that Brown and others influenced the outcome of basketball games at the University of San Diego during the 2009-2010 season, and then attempted to recruit players to do the same during the 2010-2011 season. Brown pleaded guilty to the indictment on November 13, 2012. To date, eight of the ten defendants indicted have pled guilty.
According to court documents and admissions from co-defendants’ guilty pleas, Brown, who was an assistant coach at USD during the 2006-2007 season, bribed co-defendant Brandon Johnson to influence the outcome of basketball games during the 2009-2010 season while Johnson was a member of USD’s basketball team. Brown and his co-conspirators then profited by placing bets at Las Vegas casinos on games Johnson influenced. Co-defendant Steve Goria, who was sentenced to 30 months imprisonment in October 2012, admitted that the conspiracy profited more than $120,000 from the game-fixing scheme. Brown admitted in his guilty plea that during the 2010-2011 season, he solicited a current USD basketball player to influence the outcome of basketball games for bribe money.
Judge Battaglia ordered the defendant to report on June 5, 2013 to begin serving his sentence.
DEFENDANT Criminal Case No. 11CR1345-AJB Thaddeus Brown SUMMARY OF CHARGESCount 1: Title 18, United States Code, Section 371 - Conspiracy
INVESTIGATING AGENCYFederal Bureau of Investigation
Former Customs and Border Protection Officer Admits to Receiving Bribes to Allow Aliens to Enter the U.S. IllegallyRead the Press Release
United States Attorney Laura E. Duffy announced that Hector Rodriguez, a former Customs and Border Protection Officer, and Gerardo Rodriguez pled guilty today in front of Magistrate Judge David Bartick to conspiracy to bring in aliens for financial gain and to receive bribes, bringing in aliens for financial gain, and bribery.
According to court records, defendant Hector Rodriguez agreed that from around 2010 until his arrest on July 13, 2012, he received bribes from codefendants Gerardo Rodriguez and Maria Guerrero, in the form of cash money, use of luxury vehicles, and use of an apartment, in return for failing to enforce U.S. immigration laws by admitting illegal aliens into the U.S. through his inspection lane at the San Ysidro Port-of-Entry. Defendant Hector Rodriguez provided his lane assignment information to codefendants who would then drive vehicles containing illegal aliens from Mexico to the United States 2 through his assigned inspection lane. On their date of arrest, July 13, 2012, codefendant Gerardo Rodriguez drove a vehicle containing 8 illegal aliens and codefendant Vanessa Moya drove a vehicle containing 6 illegal aliens through defendant Hector Rodriguez’s inspection lane. To conceal the smuggling, defendant Hector Rodriguez would enter into the government database false information about who was driving the vehicle and the number of occupants, thereby concealing the fact that the vehicles contained illegal aliens. As part of his guilty plea, Defendant Hector Rodriguez has agreed to forfeit a 2009 Jaguar, 12 luxury watches (5 Rolexes), jewelry, televisions, and computers that were obtained as a result of his criminal activity. Codefendant Gerardo Rodriguez has agreed to forfeit a 2005 Mercedes, 2006 Harley Davidson, $60,000, televisions, and computers that were obtained as a result of his criminal activity.
The defendants are scheduled to appear for sentencing before U.S. District Judge Roger T. Benitez on July 1, 2013, at 9 a.m.
DEFENDANTS Case Number: 12cr2997-BEN/12cr4462-BEN Hector Rodriguez
Gerardo Rodriguez
Vanessa Moya
Maria Guerrero SUMMARY OF CHARGESCount 1 - Title 8, United States Code, Section 371- Conspiracy to Bring In Aliens For Financial Gain and Bribery; Maximum Penalties - 5 years' imprisonment and $250,000 fine
Counts 2-4 & 9 - Title 8, United States Code, Section 1324(a)(2)(B)(ii)- Bringing In Illegal Aliens For Financial Gain; Mandatory Minimum Penalty of 5 years' imprisonment; Maximum Penalties - 15 years' imprisonment, and $250,000 fine
Counts 16-17 - Title 18, United States Code, Sections 201(b)(1), 201(b)(2) - Bribery; Maximum
INVESTIGATING AGENCIES
Penalties - 15 years' imprisonment, and a $250,000 fine or three times the amount of bribe, whichever is greaterThe Border Corruption Task Force is composed of the Federal Bureau of Investigation, Customs and Border Protection - Internal Affairs, Customs and Border Protection - Field Operations, Border Patrol, Transportation Security Administration, and Drug Enforcement Administration.
Drug Trafficker Linked to Hells Angels Sentenced to 21 YearsRead the Press Release
United States Attorney Laura E. Duffy announced that David Raymond Garcia, a methamphetamine dealer and associate of the Hells Angels motorcycle gang, was sentenced today in U.S. District Court to serve 262 months in prison for conspiracy to distribute methamphetamine. At today's hearing, U.S. District Judge Marilyn L. Huff also sentenced Jason Scanlon, another methamphetamine supplier charged in the case, to serve 188 months in custody. These two defendants were prosecuted as part of an FBI Violent Crimes Task Force investigation that ultimately resulted in 36 defendants being charged with conspiracy to distribute methamphetamine.
According to court documents and information provided at the sentencing hearing by Assistant U.S. Attorney Andrew G. Schopler, Garcia supplied drugs to or employed at least 20 codefendants (and Scanlon at least four codefendants) during the course of the investigation into methamphetamine-trafficking and violent crimes committed by the San Diego Chapter of the Hells Angels and their criminal partners. Court documents also show that Garcia and codefendant Michael 2 Ottinger, Jr., the Sergeant-at-Arms for the Hells Angels, used violent force and intimidation to control the methamphetamine trade in San Diego. On December 3, 2012, Judge Huff sentenced Ottinger for his role in the methamphetamine conspiracy to serve 262 months in federal prison. Ottinger still faces murder charges in state court relating to the 2010 murder of a rival member of the Mongols motorcycle gang.
U.S. District Judge Marilyn L. Huff found both Garcia and Scanlon to be career offenders under federal law. This offense is Garcia's ninth felony conviction, including eight drug felonies and one felony for forging an access card to commit fraud. Scanlon now has ten felony convictions, including eight drug felonies, one felony for receiving stolen property, and one felony for evading a peace officer.
United States Attorney Duffy stated, "Individuals involved in the drug trade not only proliferate the spread of dangerous narcotics in our society, but they also destabilize our communities with violence and related criminal activities. Our federal, state and local law enforcement partners on the Task Force have done the San Diego community a great service by taking these dangerous offenders off the street."
DEFENDANT Case Number: 10CR5016-H David Raymond Garcia
Jason Alex Scanlon Age: 43
Age: 42 SUMMARY OF CHARGESConspiracy to Distribute MethamphetamineCTitle 21, United States Code, Sections 841(a)(1) and 846
AGENCIESFederal Bureau of Investigation
San Diego Police Department
San Diego County Probation Department
Oceanside Police Department
National City Police Department
Chula Vista Police Department
San Diego County Sheriff's Department
San Diego County District Attorney's OfficeSummary of Sentences in Criminal Case: 10cr5016-H
Conspiracy to Distribute Methamphetamine-Title 21, United States Code, Sections 841(a)(1) and 846
Michael Edward Ottinger, Jr.
David Raymond Garcia
Martin Francisco Moreno
Hugo Gomez Flores
Rory Cruz Flanigan
Jason Alex Scanlon
Eduardo Andres Sarquiz
Juan Antonio Mendez
William Manuel Castellano
Daniel Joseph Seiler
Cynthia Marie Stephan
Matthew Joseph Mooney
Darrel Lee Cooper
Robert Blaine Hodges
Mercedes Ciara Nina Cornejo
Bruce Kevin Lambert
Jason Michael Bradford
Douglas Edward Witcher
Phalen Farber
Derek Ralph Low
Mary Elizabeth Saber
Anthony James Medvec
Andre Guy Almeraz 262 Months
262 Months
120 Months
120 Months
70 Months
188 Months
41 Months
115 Months
92 Months
87 Months
78 Months
84 Months
60 Months
48 Months
77 Months
70 Months
60 Months
63 Months
40 Months
77 Months
92 Months
30 Months
46 Months
Summary of Sentences for Illegal Use of a Communication Facility to Facilitate Meth Trafficking – Title 21, United States Code, Section 843(b): Martin Thomas Forschner
Patrick James Haggerty
30 Months
46 Months Law enforcement continues to seek the public’s assistance in locating fugitive defendant Ernesto Verdugo, Jr. Anyone with information regarding this fugitive may contact the FBI at 858-565-1255.Calexico Resident Sentenced to 216 Months in Federal Prison for Conspiracy to Distribute MethamphetamineRead the Press Release
United States Attorney Laura E. Duffy announced that Alejandro Avilla-Soto was sentenced on Monday, March 11, 2013 before the Honorable Judge Roger T. Benitez, United States District Court Judge to serve 216 months in federal prison based on his guilty plea to conspiracy to distribute 50 grams of methamphetamine, a Schedule II Controlled Substance, in violation of Title 21, United States Code, Sections 841(a)(1) and 846.
In his guilty plea, Avilla-Soto admitted to engaging in a conspiracy to distribute methamphetamine from his residence in Calexico, CA. According to court documents, the defendant’s source of supply fronted the methamphetamine and allowed the defendant to pay for a portion of the drugs and the rest after it was sold.
The defendant entered his guilty plea on July 2, 2012, and has been in custody since his arrest by FBI agents on January 20, 2012.
This case is the result of an investigation conducted by the FBI Imperial County Safe Streets Task Force, a group of federal, state, and local law enforcement agents led by the FBI, investigating narcotics distribution and gang investigations.
DEFENDANT Case Number: 12CR0542BEN Alejandro Avila-Soto SUMMARY OF CHARGESTitle 21, United States Code, Sections 841(a)(1) and 846 – Conspiracy to distribute a controlled substance (Methamphetamine)
INVESTIGATING AGENCIESFederal Bureau of Investigation
United States Border Patrol
Immigrations and Customs Enforcement’s Homeland Security InvestigationsOwner of Leading San Diego Catering Service Sentenced for Role in Tax Evasion SchemeRead the Press Release
United States Attorney Laura E. Duffy announced that today Robert Peltier, one of the two principal owners and operators of Ranch Catering (dba "Ranch Events"), was ordered to pay $222,822 in restitution for committing tax evasion stemming from the operation of his business. United States District Judge Janis L. Sammartino also sentenced the defendant to serve six months home incarceration and six months home detention.
According to its website, Ranch Catering is one of San Diego’s "leading catering specialists, managing many exciting and unique venues and some of the largest Special Events in America." As detailed in charging documents, Peltier - while operating the catering business in 2003 - deposited proceeds from the business into accounts located at two different banks. When it came time to prepare his tax returns, Peltier provided his tax preparer with the deposits from only one of the two banks. As a result, he failed to declare $419,000 in catering income to the IRS. By concealing this income, Peltier caused Ranch Catering to evade paying $112,824 in taxes due and owing.
As revealed during his sentencing hearing, Robert Peltier was ordered to pay $221,792 in back taxes, penalties and interest on the taxes evaded. In addition, his son Jason Peltier (who is a co-owner of the business) entered into a separate civil settlement with the IRS requiring him to pay an additional $505,435 in back taxes, penalties and interest.
United States Attorney Duffy commented: “Given the difficult economic situation facing this country, it is imperative that we do not allow individuals to evade their duty to shoulder a fair share of the tax burden. Otherwise, honest citizens end up paying more than their rightful share."
“As hard-working citizens are sitting down to prepare their tax returns, it is imperative that IRS Criminal Investigation (CI) remain vigilant in our pursuit of those taxpayers who fail to report all of their income,” commented N. Dawn Mertz, Acting Special Agent in Charge for IRS CI Los Angeles Field Office. “Today’s sentencing of Robert Peltier should serve as a deterrent to those contemplating filing a false tax return.”
DEFENDANT Criminal Case No. 12cr3126-JLS Robert Peltier Jamul, California SUMMARY OF CHARGESCount 1: Title 26, United States Code, Section 7201 - Tax Evasion
INVESTIGATING AGENCYInternal Revenue Service - Criminal Investigation
Driver of “chubby Bandit” Bank Robber ConvictedRead the Press Release
United States Attorney Laura E. Duffy announced that Vahid Edrisi was found guilty by a federal jury earlier today in San Diego of six counts of bank robbery and one count of robbing a pharmacy. The verdicts follow a two-day trial before United States District Judge Larry A. Burns.
The evidence presented at trial showed Edrisi accessing cellular towers in the vicinity of six of the seven robberies committed by Aaron Hyman, dubbed the “Chubby Bandit,” in October 2012. Edrisi himself was captured by video surveillance just prior to one of the robberies, and Edrisi’s black 2011 Chevrolet Camaro Convertible was captured on video surveillance at three of the seven robberies. Hyman entered guilty pleas to seven counts of robbery on January 24, 2013.
The evidence further showed that Edrisi twice fled law enforcement at high rates of speed to avoid capture. Edrisi abandoned the car following the second chase. Inside the car, officers found a hat worn during one of the seven “Chubby Bandit” robberies. Edrisi was arrested when he went to the tow yard to attempt to retrieve his car.
The defendants were convicted of robbing:
$369.00
2 Bottles of Oxycontin
$2,307.00
Attempted
$309.00
$1,590.00
$830.00
U.S. Bank, 12265 Scripps Poway Parkway, Poway, CA
CVS Pharmacy, 191 Woodland Parkway, San Marcos, CA
Chase Bank, 7176 Avenida Encinitas, Carlsbad, CA
Chase Bank, 607 Lomas Santa Fe Dr., Solana Beach, CA
Wells Fargo, 276 N. El Camino Real, Encinitas, CA
U.S. Bank, 770 Carlsbad Village Dr., Carlsbad, CA
Wells Fargo, 11986 Bernardo Plaza Dr., San Diego, CA
Judge Burns set a sentencing hearing for Edrisi on June 10, 2012 at 9:30 a.m. Hyman is scheduled
DEFENDANTS Case Number: 12cr5098-LAB Aaron Alan Hyman
for sentencing on April 8, 2012 at 9:30 a.m.
Vahid Edrisi SUMMARY OF CHARGESTitle 18, United States Code, Section 2113(a) Bank Robbery
INVESTIGATING AGENCIES
Title 18, United States Code, Section 1951(a) – Obstruction of Interstate Commerce by Force (Hobbs Act)
Maximum Penalties: 20 years for each countFederal Bureau of Investigation
Carlsbad Police Department
San Diego County Sheriff’s Department
San Diego Police DepartmentLast of the Arellano Felix Brothers Enters Guilty PleaRead the Press Release
SAN DIEGO, CA - Eduardo Arellano-Felix, 56, the last of four brothers to be targeted by U.S. prosecutors for leading one of the world’s most notorious multi-national drug trafficking organizations, pleaded guilty today in federal court in San Diego to money laundering and conspiracy charges.
The plea marks the conclusion of the U.S. government’s 20-year legal battle to dismantle the Arellano Felix Organization (AFO), which moved hundreds of tons of cocaine and marijuana from Mexico and Colombia into the U.S. and made hundreds of millions of dollars in the process. The cartel terrorized the Southwest border and beyond with executions, torture, beheadings, kidnappings and bribes to law enforcement, military personnel and government officials.
“I’m proud to say this is the end of an era,” said U.S. Attorney Laura Duffy. “When this ruthless cartel was thriving in the 1990s, we made what some considered an audacious and impossible commitment to wipe out the organization. Today, we can say we have done just that.”
“This plea agreement pounds the final nail in the coffin of what used to be the Arellano- Felix Organization,” says DEA San Diego Special Agent in Charge William R. Sherman. “The AFO, once a brutally violent cartel, now becomes a footnote in history books, while DEA and our partners focus on dismantling the drug trafficking organizations that have moved in since the AFO’s demise. We will be just as relentless in our pursuit of these new trafficking organizations and they will be brought to justice in the same manner as the AFO.”
In his plea agreement, Arellano-Felix – a medical doctor nicknamed “El Doctor” - admitted he was a senior member of the AFO. He also admitted that he laundered hundreds of millions of dollars in drug trafficking proceeds and used some of the income to pay AFO members to commit crimes; to buy firearms, ammunition and vehicles; to travel on AFO-related business; to pay bribes; and to purchase drugs. He signed his plea agreement, “Dr. Eduardo Arellano Felix.”
In connection with his plea, Arellano-Felix will also forfeit $50 million and the parties will jointly recommend that he be sentenced to serve 15 years in prison. Before he was extradited, Arellano-Felix spent almost four years in custody in Mexico, from October 25, 2008 to August 31, 2012. Sentencing was set for August 19, 2013 at 9:30 a.m., before U.S. District Judge Larry A. Burns.
“We have effectively dismantled the leadership of a notorious cartel that operated with impunity for more than a decade,” Duffy said. “Given the mission’s overall success and the prosecution challenges of building a case against the highest-ranking members of a major trafficking organization, this resolution is a very favorable disposition for the United States.”
“Today’s guilty plea by Eduardo Arellano-Felix is the final major blow to this powerful and vicious drug trafficking organization whose criminal enterprise included an elaborate money laundering scheme,” said Special Agent in Charge Jose A. Gonzalez, IRS Criminal Investigation, Los Angeles Field Office. “IRS Criminal Investigators can and will unravel sophisticated money laundering schemes, working side-by-side with our law enforcement partners, in the dismantling of these dangerous and deadly drug cartels.”
San Diego FBI Special Agent in Charge Daphne Hearn said, “Todays guilty plea demonstrates the unwavering commitment of the FBI to continue working with our domestic and international law enforcement partners to disrupt and dismantle violent criminal enterprises such as the Arellano-Felix Organization, that instill fear and threaten the safety of our citizens.”
The resolution of this case was a long time in coming.
Arellano-Felix was first indicted in 1998, along with his brothers, on drug conspiracy charges. Then in 2002, prosecutors added charges of racketeering, money laundering and conspiracy to distribute and import marijuana and cocaine in a subsequent indictment. He was arrested by Mexican authorities in Tijuana, Baja California, Mexico on October 25, 2008, following a gun battle with a Mexican Special Tactical Team. A final order of extradition to the United States was granted in 2010.
After two years of unsuccessful appeals, Arellano-Felix was extradited by the government of Mexico to the United States on August 31, 2012, to face charges in the Southern District of California.
Brothers and former leaders of the AFO, Benjamin Arellano-Felix and Francisco Javier Arellano Felix, were captured in 2002 and 2006, respectively, and are currently serving sentences in the United States following their convictions for racketeering, drug trafficking, and money laundering charges. Ramon Arellano-Felix, the cartel's enforcer, was killed in a shootout with police in 2002.
In addition to the brothers, this office has convicted a long line of top AFO lieutenants, including, in part, Arturo Paez-Martinez in 2002, Ismael and Gilberto Higuera-Guerrero in 2007 and Jesus Labra-Aviles in 2010.
This case (Case Number: 97cr2520-LAB) was investigated by agents from the Drug Enforcement Administration, the Federal Bureau of Investigation, and the Internal Revenue Service-Criminal Investigation and prosecuted in the Southern District of California by Assistant United States Attorneys Joseph S. Green, James P. Melendres, and Daniel E. Zipp.
The Criminal Division’s Office of International Affairs provided significant assistance in the extradition. The investigation of Eduardo Arellano-Felix was coordinated by an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was created to consolidate and coordinate all law enforcement resources in this country's battle against major drug trafficking rings, drug kingpins, and money launderers.
SUMMARY OF CHARGES IN GUILTY PLEASCount 1
Count 2
Title 18, United States Code, Sections 371 (Conspiracy to
launder monetary instruments) Maximum penalty: 5 years of custody.Title 21, United States Code, Sections 854(a) and 846 (Conspiracy to use and invest illicit drug profits) Maximum penalty: 10 years of custody.
Former Executive Director of La Posta Gaming Commission Admits Embezzling Funds from TribeRead the Press Release
United States Attorney Laura E. Duffy announced that Troy Teague, former Executive Director of the La Posta Gaming Commission ("Commission") pled guilty today in front of Magistrate Judge Jan Adler to embezzling $57,000 from the La Posta Band of Mission Indians.
According to court records, Teague served as Executive Director of the Commission from 2006 to 2011. In that capacity, he was responsible for: (1) creating the Commission's budget and maintaining the Commission's books and records; (2) issuing checks on behalf of the Commission; and (3) monitoring, reviewing and making payments on all Commission credit cards. Teague understood that any and all checks he issued B and all credit card charges B on the Commission account could only lawfully be used for legitimate La Posta business.
Despite the fact that Teague recognized that he could not use the Commission credit card or bank account for personal expenses, he used both the credit card and checking account for personal business, including: (i) membership dues at a gun club; (ii) Home Depot charges; (iii) car audio/video components; (iv) vacation expenses; (v) legal fees; (vi) a grain mill; (vii) restaurant expenses, (viii) car rentals; and (ix) entertainment (e.g, comedy club bill). Teague admitted that (between June 2009 and April 2011) he embezzled a total of $57,000 from La Posta. Thereafter, he paid the tribe's credit card bills and concealed from the Commission that they included his personal expenses.
"The United States Attorney's Office is committed to doing its part to enhance security in Indian Country,” said Assistant U.S. Attorney Jill Burkhardt, community outreach director and tribal liaison. “The diligent prosecution of federal crimes committed on reservations is an important complement to State and Tribal law enforcement efforts.
" U.S. Attorney Duffy praised the enforcement work by the FBI agents who diligently pieced together the full scope of the fraud.
"Today's conviction proves that Mr. Teague exploited and violated his position of trust as the Executive Director with the La Posta Band of Mission Indians and unjustly enriched himself at the expense of the tribe," said Daphne Hearn, Special Agent in Charge of the San Diego FBI Field Office. “The FBI is committed to ensuring those in positions of trust are held to the highest standards and anything less will be vigorously pursued and investigated.”
DEFENDANT Criminal Case No. 13cr0852-MMA Troy Teague Age: 38 El Cajon, California SUMMARY OF CHARGESOffense: Title 18, United States Code, Section 1163 - Embezzlement and Theft from
INVESTIGATING AGENCY
an Indian Tribal Organization
Maximum penalties: 5 years custody; $250,000 fine; 3 year supervised release.Federal Bureau of Investigation
Tijuana Cartel Leader Extradited to U.S.Read the Press Release
Cesar Alfredo Meza-Garcia, a leader within the powerful Tijuana Cartel, was extradited from Mexico to the United States today to face drug charges in the Southern District of California. Meza- Garcia was arrested by Mexican law enforcement officers on September 26, 2012, at the request of the United States. Since his arrest in Mexico, Meza-Garcia has remained in custody pending extradition to the United States.
According to court documents, Meza-Garcia is the lead defendant in a 19-defendant indictment charging him with conspiracy to distribute cocaine and methamphetamine. He was a leader within the Tijuana Cartel, responsible for directing the movement of narcotics from Mexico into the United States. The indictment was handed up by a federal grand jury on June 15, 2012.
The charges stem from an Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) led investigation known as Operation Jackhammer II. Operation Jackhammer II focused on members of Meza-Garcia’s importation cell, which was responsible for smuggling methamphetamine, cocaine and marijuana into Chula Vista and San Diego for distribution throughout the state of California.
United States Attorney Duffy praised the Mexican government for its assistance in the extradition of Meza-Garcia and noted that violent drug cartels continue to menace both countries. “Drug trafficking is one of the most serious national security threats the United States faces. This is one more step toward securing the communities on both sides of the border.”
Duffy also commended the Organized Crime Drug Enforcement Task Force (OCDETF) for the coordinated team effort in handling this investigation. Agents and officers from HSI and the Chula Vista Police Department participated in this OCDETF investigation. The Criminal Division’s Office of International Affairs provided significant assistance in the extradition. 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.
“This extradition serves as a stern warning to other fugitives who think they can evade U.S. law enforcement by hiding out in Mexico,” said Derek Benner, special agent in charge for HSI in San Diego. “I commend our Mexican law enforcement partners for their hard work, which helped us immensely in our effort to dismantle a dangerous criminal enterprise that not only controlled a major drug smuggling corridor in Tijuana, but operated a large meth trafficking organization on both sides of the border.”
The defendant is expected to be in federal court in San Diego tomorrow, March 8, 2013, at 10:30 a.m., before United States Magistrate Judge Jan Adler.
Law enforcement continues to seek the public's assistance in locating fugitive defendants Salvador Alcala-Gonzales, aka Chava, Miguel Angel Bravo-Pena, and Jose Luis Casillas, all of whom are believed to be in Mexico. Anyone with information regarding these fugitives may contact HSI at 1-866-DHS-2- ICE.
DEFENDANT Case Number 12CR2414-WQH Cesar Alfredo Meza-Garcia SUMMARY OF CHARGESTitle 21, United States Code, Sections 841(a)(1) and 846 - Conspiracy to Distribute Controlled Substances
INVESTIGATING AGENCIES
Maximum penalties: Life in prison, a $10,000,000 fine and 5 years of supervised releaseU.S. Immigration and Customs Enforcement’s Homeland Security Investigations
Chula Vista Police DepartmentAn indictment itself is not evidence that the defendant committed the crimes charged.
The defendant is presumed innocent until the Government meets its burden in court
of proving guilt beyond a reasonable doubt.Three Camp Pendleton Contractors Plead Guilty to Pilfering over $3 Million in Medical EquipmentRead the Press Release
United States Attorney Laura E. Duffy announced that three civilian contractors who until recently worked at Camp Pendleton appeared today in federal court, and pled guilty to charges stemming from their theft of expensive medical equipment that the military had planned to ship overseas to treat injured Marines.
According to the Indictment, defendants Henry Bonilla, Richard Navarro and Michael Tuisee worked in warehouses run by 1st Medical Logistics Company (“1st MEDLOG”) aboard Camp Pendleton -- the United States Marine Corps’ largest West Coast expeditionary force training facility. 1st MEDLOG is the unit responsible for maintaining medical equipment and shipping necessary medical items to combat forces throughout the world. By virtue of their employment as defense contractors, the defendants had access to sophisticated, expensive medical equipment stored at 1st MEDLOG warehouses. In their plea agreements and at today’s hearing, each defendant admitted to participating in a conspiracy to steal medical equipment from 1st MEDLOG, including ultrasound machines, ventilators, hydroclaves, defibulators, headlights, and laryngoscopes. The defendants repeatedly stole these costly medical items, loaded them into their personal vehicles, and surreptitiously sold them to medical equipment resellers – often meeting with customers during nighttime rendezvous in secluded parking lots. The defendants admitted that the combined value of the stolen medical equipment exceeded $3 million.
The defendants pled guilty today at a hearing held before Magistrate Judge William McCurine, Jr., and their guilty pleas are subject to final acceptance by District Court Judge Cathy A. Bencivengo. All three defendants are scheduled to be sentenced on May 24, 2013 at 9 a.m. by Judge Bencivengo.
United States Attorney Duffy commented: “The defendants stole medical equipment that was meant to be shipped to our troops, secretly transported it off of Camp Pendleton, and sold it for their own personal gain. Today’s guilty pleas advance the goals of rooting out corruption among our area defense contractors, and sending a strong message that the Department of Justice will vigorously investigate and prosecute those who seek to profit at the expense of our men and women in uniform.” Duffy reminded the public that these charges were the result of an ongoing investigation into theft of valuable property aboard Camp Pendleton, and asked the public to contact the Naval Criminal Investigative Service (NCIS) at 1-800-264-6485 or www.ncis.navy.mil if they have any information relevant to that investigation.asdf
DEFENDANTS Case Number: 13cr0338-CAB Henry Bonilla
Richard Navarro
Michael Tuisee SUMMARY OF CHARGESCount 1: Conspiracy to Engage in Theft of Government Property, Title 18, United States Code, Section 371 (all defendants)
INVESTIGATING AGENCY
Maximum penalties: 5 years in prison, $250,000 fine, term of supervised release of 3 years, restitution, and $100 special assessment.Naval Criminal Investigative Service
San Diego Man Sentenced for Sex Trafficking of Children; Trafficking Cases up SignificantlyRead the Press Release
San Diego - Carlos Alberto Garcia, who made thousands of dollars pimping out underage girls using internet ads, was sentenced in federal court this morning to 12 years in prison plus 10 years supervised release for sex trafficking of children. Garcia pleaded guilty in August and has been in custody since his arrest on June 26, 2012.
The case began as a result of investigations by San Diego Police Department vice detectives in November 2011 and January 2012. Detectives searched online advertisements for escorts, set up dates and discovered the underage girls working as prostitutes. Garcia was eventually identified as their pimp.
According to court documents, one of the girls, age 17, described Garcia as “ruthless” and “crazy” and said he physically assaulted her for hiding $300. Garcia beat her, stripped her, forced her into a cold shower, poured ice on her, and made her stand in front of an air conditioner.
He then he took her to the Fashion Valley shopping mall and, using the money she’d earned from prostitution, bought himself $685 sneakers at the Gucci store, according to court records.
Human trafficking is the fastest growing criminal industry in the world today. It is second only to drug trafficking on the list of the biggest and most lucrative illicit enterprises.
Last year, the Department of Justice set a new record in the number of defendants charged in human trafficking cases in a single year. And over the last three years, there has been a 30 percent increase in the number of human trafficking cases charged. Human trafficking cases primarily involve sexual slavery or forced labor.
In the Southern District of California, which includes San Diego and Imperial counties, the U.S. Attorney’s office has seen a 600 percent increase in human trafficking cases in the last five years – from just a few to a couple dozen, with scores of defendants charged. Many of these cases involve the sex trafficking of children.
San Diego is a hot spot for these crimes. According to the FBI, this city is among the 13 most active child sex trafficking areas in the nation. Also on the list are Los Angeles and San Francisco.
Here are a few trafficking trends:
-The victims are getting younger. The average entry age of American minors into the sex trade is 12-14 years old. They’re not all runaways from broken homes - they’re plucked from malls and schools and through the internet via social media sites such as Facebook and Twitter.
-Gang members are increasingly dealing in the very lucrative crime of trafficking of young girls, and prosecutors around the country are using the RICO statute against them. Federal prosecutors in San Diego have one case in which a federal grand jury indicted 38 defendants and one LLC on a RICO charge. The indictment also included the criminal forfeiture of a hotel where many of the illegal acts took place.
According to court records, three Oceanside Crips gangs teamed up to operate an elaborate sex trafficking ring using the characteristics of a business enterprise - including deals with hotels and motels. Recruitment efforts focused on vulnerable underage girls. They were manipulated with promises of a luxurious lifestyle, intimidation and actual or threatened violence. A prostitute who broke the “rules” would be beaten or subjected to other humiliating punishments. They were traded to other pimps and transported to other states as if they were someone’s property.
Of the 39 defendants charged, 35 defendants pled guilty, three were dismissed, one was murdered in a gang related shooting. The defendants who pled guilty received sentences as high as 14 years in prison.
“These prosecutions, here and around the country, are yielding sentences that send an unmistakable message that human traffickers who prey on the most vulnerable among us will be brought to justice,” said U.S. Attorney Laura Duffy. “We have a lot of work to do. But together with our law enforcement partners, our work has saved lives and restored dignity to scores of victims. We’ve secured long prison sentences against individual traffickers and dismantled organized criminal enterprises, and we will keep on fighting to obliterate this great human rights tragedy.”
A few other examples of similar cases:
-Maurice Lerome Smith was sentenced in December 2011 to 30 years in prison for sex trafficking of children and by force, fraud and coercion. He was indicted in February, 2011, and was convicted by a jury in May 2011. According to court records, Smith picked up his victim on University Avenue: “Defendant ordered her into the car. (The 17-year-old victim) stated that Defendant told her to get in or she would be ‘in pieces in the trunk.’ Defendant drove (victim) to his residence in Oceanside, physically assaulted her with a belt, and had sex with her. The next morning, Defendant drove her down to the Motel 6 on Clairemont to work as a prostitute. Defendant told her to make $600.00. Defendant booked the room and left her. (The victim) stated she was afraid of Defendant.” Please see 11-cr-0471-BEN-1.
-Jonathan Jamar Sanders was sentenced to 19 years in prison in May 2012 after pleading guilty to sex trafficking of children, aiding and abetting, in January 2012. According to court documents, Sanders met a 15-year-old girl on the street in National City. At first he took her out on dates and started a sexual relationship with her. Then he forced her into prostitution. The girl would later tell federal agents that he’d threatened to beat her if she didn’t do it. She believed him, because she’d seen him violently attack another girl – hitting and kicking her so hard while she was on the ground that her body lifted up from the force. Because of our efforts, that gang member was convicted of sex trafficking of children. Please see 11cr1896-DMS.
-Randy Martell Ballard was sentenced to 12.5 years in prison after pleading guilty in November 2012 to sex trafficking of children. According to court documents, Ballard met a fourteen-year-old girl in El Paso, Texas and transported her to San Diego for the purpose of engaging her in prostitution. He purchased a bus ticket for her using a false name. Court documents further show that Ballard posted online prostitution ads on the Internet with a phone number that the minor had in her possession and provided the minor with false identification documents. Please see 12cr2259-BEN.
-Ralph Darnell Redd was sentenced in February 2012 to 15 years in prison after he was convicted by a jury in July 2011 of sex trafficking of children, sexual exploitation of a minor, and distribution of child pornography. According to court records, he also used internet ads to sell the sexual services of a 16-yearold girl who was tattooed with his moniker. Redd penned an autobiography in which he mentions his gang membership, past crimes and convictions and how “spending the whole 90's in and out of incarceration delayed my process of being successful as a rap artist.” Please see 10cr2740-W.
DEFENDANT Case Number: 12cr2999 Carlos Alberto Garcia SUMMARY OF CHARGETitle 18, United States Code, Sections 1591(a) and (b) - Sex Trafficking of Children
INVESTIGATING AGENCIESSan Diego Police Department
San Diego Jury Finds Defense Contractors Guilty in North Island Bribery CaseRead the Press Release
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DEFENDANTS Case Number: 12cr3320H Robert Ehnow
Joanne Loehr
Age: 46
Age: 52
Coronado, California
La Jolla, CaliforniaCenterline Industrial Inc., a California corporation
SUMMARY OF CHARGES IN CASE NO. 12cr3320HCount 1: Conspiracy to commit bribery, in violation of Title 18, United States Code, Section 371 (all defendants) - Maximum penalties: 5 years in prison, $250,000 fine, term of supervised release of three years, restitution, forfeiture, and $100 special assessment. (All defendants found guilty on Count One.)
Counts 2 to 7: Bribery, in violation of Title 18, United States Code, Section 201 (defendant Ehnow) - Maximum penalties (per count): Fifteen years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment. (Defendant Ehnow found guilty on Count Seven, not guilty on Counts Two through Six)
Counts 8 to 12: Bribery, in violation of Title 18, United States Code, Section 201 (defendants Loehr and Centerline) - Maximum penalties (per count): Fifteen years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment. (Defendants Loehr and Centerline found guilty on Counts Ninth through Twelve, not guilty on Count Eight)
Case Number: 12-CR-4071-LAB Sentencing Date: March 4, 2012Kenneth Paul Ramos
Case Number: 12-CR-1055-LAB Sentencing Date: September 10, 2012 Donald Vangundy
Kiet Luc
Brian Delaney
David Lindsay
John Newman
Michael Graven
Paul Grubiss Case Number: 10-CR-3737-LABJesse Denome
INVESTIGATING AGENCIESFederal Bureau of Investigation
Defense Criminal Investigative Service
Internal Revenue Service - Criminal Investigation
General Services Administration - Office of Inspector General
Naval Criminal Investigative Service