Western District of Washington

A Longview, Washington man who was convicted last year of a triple homicide in Vancouver, was convicted today in U.S. District Court in Tacoma of federal felonies for illegal weapons possession, announced U.S. Attorney Annette L. Hayes.  BRENT LUYSTER, 37, was convicted following a three day trial of being a felon in possession of a firearm and being a felon in possession of ammunition.   When sentenced by U.S. District Judge Benjamin H. Settle on February 25, 2019, LUYSTER faces up to twenty years in federal prison.  LUYSTER is currently serving a state sentence of life in prison with no chance of parole.

According to the evidence at trial in the case, Cowlitz County Sheriff’s deputies were called to a Longview home in May 2016, after a woman fled to a neighbor’s home saying she had been assaulted and her child was missing.  The woman told responding officers that LUYSTER had hit her in the head with a gun.  Another neighbor reported hearing gunshots.  Ultimately, officers located LUYSTER on a hillside behind the house and convinced him to surrender.  He had ammunition in his pockets and  at the location where he had been concealed on the hillside, officers recovered three firearms: a Bushmaster rifle, a Glock .40 caliber handgun and a Keltec .12 gauge shotgun.  Additional ammunition was also discovered on the hillside.  Inside the house where LUYSTER lived, law enforcement found five additional rifles and a handgun.  The investigation revealed that LUYSTER’s live-in girlfriend had purchased the weapons for LUYSTER.  LUYSTER was prohibited from possessing firearms due to multiple felony convictions including convictions for assault, burglary, theft, malicious harassment and riot with a deadly weapon.

Following the May 16 assault, while charges were pending, LUYSTER shot and killed three people and critically injured a fourth on July 15, 2016 at a home near Woodland, Washington.  He was convicted of three counts of aggravated first degree murder in November 2017. 

The case was investigated by the Cowlitz County Sheriff’s Office, Longview Police Department, the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), and the Federal Bureau of Investigation (FBI).  The case is being prosecuted by Assistant United States Attorneys Bruce Miyake and Ye-Ting Woo.

            United States Attorney Annette L. Hayes announced today that Assistant United States Attorney Arlen Storm will lead the Office’s work in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 6, 2018, general election.  AUSA Storm is the District Election Officer (DEO) for the Western District of Washington, and in that capacity is responsible for overseeing the District’s handling of complaints of election fraud and voting rights abuses in consultation with the Justice Department in Washington D.C.

            “It is imperative that anyone who has specific information about discrimination or election fraud provide that information in a timely manner to the U.S. Attorney’s Office, the FBI, or the Civil Rights Division,” said United States Attorney Annette L. Hayes. “Every citizen must be able to vote without interference or discrimination and to have that vote counted without fraud in the election process.  The Department of Justice will act promptly and aggressively to protect the integrity of the election process.”

            The Department of Justice has an important role in deterring election fraud and discrimination, and combating these violations whenever and wherever they occur.  The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the election is ongoing.

            Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.  It also contains special protections for the rights of voters, and provides that they can vote free from acts that intimidate or harass them.  For example, actions of persons designed to interrupt or intimidate voters by questioning or challenging them, or by photographing or videotaping them in the voting process, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law.  Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice where voters need assistance because of disability or illiteracy.

            The right to vote is the cornerstone of American democracy.  We all must ensure that those who are entitled to the franchise are able to exercise it if they choose, and that those who seek to corrupt it are brought to justice.  In order to respond to complaints of election fraud or voting rights abuses, including on November 6, 2018, and to ensure that such complaints are directed to the appropriate authorities, United States Attorney Annette L. Hayes stated that AUSA/DEO Storm is on duty while voting is ongoing in Western Washington.  He can be reached by the public at the following telephone number: 206-553-7970.

            In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses while voting is ongoing, including on November 6, 2018.  The local FBI field office can be reached by the public at 206 622-0460.

            Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington, DC by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to [email protected] or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.

 

SEATTLE – Today, in accordance with the Court-approved plan for demonstrating sustained compliance for two years, the City of Seattle filed self-assessments of its ongoing work under the police reform consent decree it entered into with the Department of Justice (DOJ). The filings in U.S. District Court included a quarterly report on data and activities during the months of August-October, two audits relating to use of force investigations and internal supervision, an outcome report on its crisis intervention activities, and a review of the Seattle Police Department’s (SPD’s) stops and detentions policy. 

For each of the areas assessed by the City under the consent decree, both the DOJ and the Court’s independent monitor, Merrick Bobb, concluded that the City has sustained compliance with the Consent Decree.

“These Phase II assessments are important opportunities for SPD to demonstrate critical self-analysis with continued oversight from the Court, Monitor, DOJ and the community,” said Annette L. Hayes, U.S. Attorney for the Western District of Washington.  “This two-year period of sustained compliance is designed to be thorough, transparent and ensure all concerned that the work of police reform continues in all areas covered by the consent decree. DOJ continues to work with the City, Monitor and community to develop methodologies, examine data, and validate results so that everyone can have confidence that hard-won reforms will not slip. Today’s filings demonstrate that thus far, the City of Seattle remains on the right track.”

In January 2018, the Court found the City of Seattle in “full and effective compliance” with reforms required by the consent decree signed in 2012.  This finding triggered Phase II of police reform in Seattle – a two-year “sustainment period” during which the City and SPD must maintain compliance with the consent decree. 

During this sustainment period, the City must demonstrate its ongoing compliance through seven quarterly reports and three types of self-assessments: audits of its practices, reviews of SPD’s policies, and outcome reports that summarize policing data for the public.  Quarterly reports must include recent data on use-of-force and crisis intervention practices, an update on the activities of SPD’s Force Review Board and Unit, and a discussion of relevant activities of the accountability organizations — the Office of Police Accountability (OPA), the Office of the Inspector General (OIG), and the Community Police Commission (CPC).  The first quarterly report was filed on July 31, 2018.

Quarterly Report. During the third quarter of 2018, the report filed today showed that 513 (84.79%) of the reported applications of force involved no greater than low-level, Type I force, 87 (14.38%) involved Type II force, and five (less than 1%) involved Type III force. There were no officer-involved shootings.  In the context of overall encounters, force is rarely used. Between January and July 2018, there were 103,553 unique events to which officers were called by a dispatcher or observed or were alerted to while on patrol. Three hundred eighty-three (383) – or slightly more than one third of one percent of all of these events – involved one or more reportable uses of force. Fifty-three (five one-hundredths of one percent) of all events ultimately involved a more serious use of force (Type II or Type III). These rates generally are consistent with previous reporting periods, like, for example, when the City’s use of force report for 2017 showed that Type I uses of force constituted nearly 77% of all uses of force.  Contacts with those experiencing crisis are discussed more fully below. 

The internal mechanisms established to examine the most serious uses of force – the Force Review Unit and Force Review Board – continue to evaluate incidents, make disciplinary referrals, and recommend policy changes in accordance with their mandates.  And, as demonstrated by the audit of the investigation and review of Type I (low-level force that may involve transitory pain) and Type II (causes or is reasonably expected to cause physical injury greater than transitory pain, but not substantial bodily harm) levels of force, SPD continues to comply with its reporting and investigation obligations under the consent decree.  

Use of Force Investigations and Reporting Audit. According to the City’s audit – and validated by both DOJ and the Monitor – SPD officers continue to comply with reporting, review, and investigation obligations set forth by the consent decree for Types I and II uses of force. In particular, the audit revealed that officers consistently wrote complete and thorough reports of their uses of force and their chain of command consistently conducted high quality reviews, including thorough documentation of relevant evidence. Further, the audit found that supervisors addressed shortcomings in a timely and appropriate manner, ensuring that the quality of reporting and investigation will continue to improve. 

Supervision Audit.  Although aspects of supervision are covered by a number of other audits in Phase II, this “general” supervision audit specifically examined the adequacy of the numbers of supervisors to perform requirements under the consent decree, “unity of command,” and training for long-term acting sergeants.  The audit found – and DOJ and the Monitor concur – that SPD has demonstrated compliance with its ongoing requirements, including that:

• SPD deploys an adequate number of qualified first-line supervisors/sergeants to ensure the provisions of the consent decree are implemented, including responding to the scene when force is used, investigating uses of force, documenting uses of force, and providing direction to officers who use force as needed;
• Operational field officers are assigned to a single, consistent, clearly identified first line supervisor who works the same days and hours as the officers they supervise; and
• Personnel assigned to a planned assignment of acting sergeant for longer than 60 days receive training as an acting sergeant in a timely manner.

Crisis Intervention Outcome Report. In the 18-month period between January 1, 2017 and June 30, 2018, SPD made 15,995 contacts with persons believed experiencing a behavioral crisis (of which 92% were responses to calls from the public reporting an incident).  This analysis of crisis contacts shows that in the first six months of 2018, dispatched crisis contacts increased by 26% compared to the same period last year and on-viewed crisis contact (i.e., those initiated by an officer) were up almost 30% compared to the first six months of 2017.  Despite the increase in crisis contacts, use of force against persons in behavioral crisis remains low and resolutions that result in a connection to services remains high.  Of the 15,995 crisis contacts reported, 277 - fewer than 2% - involved any use of reportable force and in three-quarters of cases no greater than the lowest level of force (Type I) was used and just five (0.9%) were Type III uses of force. 

All officers receive at least eight hours of annual crisis intervention training (CIT) and an additional 118 officers became “CIT certified” officers in 2017 by receiving 40 hours of training. In nearly 80% of crisis calls, a CIT-certified officer was on-scene.

Voluntary Contacts, Terry Stops, and Detentions Policy Review.  Following a systematic and inclusive review process that included multiple parts of SPD, the Monitor, DOJ, OPA, OIG and the CPC, the City has submitted revisions to SPD’s Voluntary Contacts, Terry Stops, and Detentions Policy. Agreed-to changes include clarifying provisions that SPD and other stakeholders identified as “confusing, ambiguous, or legalistic in a way that limited practical usefulness.”  For example, the revised policy is more explicit that frisks must be based on articulable and reasonable safety concerns that a person is armed and presently dangerous and also now reflects officers cannot act based on pretext under Washington state law, even if an objectively reasonable basis for the stop exists.  The goal in ongoing policy reviews is to assess current applications of the policies and to identify best police practices and incorporate those findings into SPD policies.

The next round of filings, including the quarterly report and crisis intervention audit, will be filed in December 2018.

WASHINGTON – Attorney General Jeff Sessions recognized 244 department employees for their distinguished public service today at the 66th Annual Attorney General’s Awards Ceremony.  Thirty-six other individuals outside of the department were also honored for their work.  This annual ceremony recognizes employees and other individuals who have demonstrated exceptional achievements, leadership, and service to the Department of Justice and the American people.  This year’s award includes an award for exceptional heroism to U.S. Marshal Senior Inspector Basilio S. Perez, Jr., for his courageous actions to protect and aid victims of the October 1, 2017, mass shooting in Las Vegas, Nevada.                                                  

“Service in the Department of Justice is more than a normal job; it is a calling to the highest standards of professionalism,” Attorney General Jeff Sessions said. “That is true for all of the 115,000 Department of Justice employees.  But it is especially true for these award winners. And so I want to thank them and their families for their exemplary service to this Department and to the American people. They have made this Department proud.”

“For more than 17 years Gretchen Courtney has worked tirelessly for justice for Tom Wales, the Wales family and all of us who knew and loved this talented and dedicated Assistant United States Attorney,” said U.S. Attorney Annette L. Hayes.  “She has managed what is now the largest case file at the FBI, and provided support to the joint Federal and State team working to bring a killer to justice.”

This year’s program honors individuals across the department and our federal, state, local, and tribal partners for their self-less efforts, protecting our national security and our civil rights, addressing rising violent crime in our communities, going after gangs and those trafficking in dangerous narcotics and human beings.  The awards also honor the work of civil and environmental litigation, which enforces the rule of law and upholds our Constitution.  They also recognize employees whose ideas and efforts save taxpayer dollars and help our government operate more effectively and efficiently, among other contributions to public safety and good governance.

In making the award to Paralegal Specialist Gretchen Courtney, the Attorney General noted that she had spent a significant portion of her professional life supporting the investigation of the October 11, 2001 shooting death of Assistant United States Attorney Thomas Crane Wales.  Mr. Wales was shot and killed at his home by an unknown assailant who stood outside a backyard window.   If, as investigators believe, Wales was killed in connection with his work, he would be the first Assistant United States Attorney killed in the line of duty.

The award to Paralegal Specialist Gretchen Courtney notes her “unwavering commitment” to the investigation, and “invaluable contributions have included managing the collection, analysis, and maintenance of the largest case file in the Federal Bureau of Investigation… Her service is a tribute to the U.S. Department of Justice’s fierce determination to ensure those responsible for the murder are held accountable for the crime.”

          Two men are under arrest and charged with second degree murder for the homicide of 34-year-old Jessica Shaunti Jackson, a single-mother whose body was found on Joint Base Lewis-McChord in September 2018, announced U.S. Attorney Annette L. Hayes.  BOBBIE ANSON PEASE, 49, of Tacoma and JEREMY JAY WARREN, 30, of Forks, Washington, are charged in a criminal complaint with killing Jackson on September 4, 2018.  WARREN will appear in U.S. District Court in Tacoma at 2:30 today.  PEASE will make his appearance in U.S. District Court in Tacoma in the near future.

            According to the complaint, Jackson was reported missing on September 8, 2018.  The Tacoma Police Department investigation revealed she was last seen on September 4, 2018, at a convenience store in Tacoma with the defendants.  Jackson’s body was discovered on September 13, 2018, in a wooded area near Spanaway, Washington that is part of Joint Base Lewis-McChord.  Because the victim was killed on federal land where there is exclusive federal jurisdiction, the FBI is the lead investigative agency and jurisdiction is in federal court.

            Information in the complaint reveals that surveillance video shows PEASE’ car driving to and from the general area of the murder scene at the approximate time Jackson was killed.  A firearm believed used in the killing was recovered from the Puyallup River.  The investigation into the murder continues.

          The charges contained in the complaint are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

          The investigation is being led by the FBI with assistance from the Tacoma Police Department.  The case is being prosecuted by Assistant United Sates Attorneys Grady Leupold and Ye-Ting Woo.

WASHINGTON— U.S. Attorney Annette L. Hayes joined the Department of Justice and the Department of the Interior in announcing a significant expansion of the federal government’s key program that provides tribes with access to national crime information databases, the Justice Department’s Tribal Access Program for National Crime Information (TAP).  The expansion includes the Chehalis, Swinomish, Lower Elwha, Quinault, and Port Gamble S'Klallam Tribes.

“With the addition of five more, we will have a total of nine tribes in Western Washington participating in the Tribal Access Program – ensuring better data sharing across law enforcement and thus more public safety in the communities we serve,” said U.S. Attorney Annette L. Hayes.  “The TAP program has already resulted in some significant successes.  The Suquamish Tribal Police were among the first ten tribes to join the system in 2015, and were able to use the system to locate and rescue an elderly tribal member who had been taken from his home.  The information obtained via TAP provided key clues that allowed the matter to be safely resolved.”

TAP provides federally recognized tribes the ability to access and exchange data with national crime information databases for both civil and criminal purposes.  This allows tribes to more effectively serve and protect their communities by ensuring the exchange of critical data.  By the end of 2019, the Justice Department will expand the number of TAP participating tribes by more than 50 percent—from 47 tribes to 72.  The Department of the Interior (DOI) will fund the instillation of TAP Kiosks at three locations where the BIA-Office of Indian Services (BIA-OIS) deliver direct social services by the end of 2019 and DOI aims to expand TAP access at all 28 BIA-Office of Justice Services (BIA-OJS) operated law enforcement agencies and detention service centers.  These BIA locations will provide some degree of access to TAP for services delivered to more than 50 tribal communities that currently do not have any direct access. 

“Access to information is vital to effective law enforcement,” said Trent Shores, U.S. Attorney for the Northern District of Oklahoma and the Chairman of the Attorney General’s Advisory Subcommittee on Native American Issues.  “The Tribal Access Program will enhance and improve the ability of tribal law enforcement officers to serve their communities. The Native American Issues Subcommittee is proud to support the continued expansion of this tool throughout Indian Country.”

The Native American Issues Subcommittee (NAIS) is comprised of United States Attorneys with Indian Country in their federal districts. They advise the Attorney General regarding the development and implementation of policies pertaining to justice in Indian Country. The NAIS identified ‘increased law enforcement resources’ as one of four priority areas to improve justice services in Indian Country. Support for and increased dissemination of the TAP was unanimously supported by the US Attorneys at a recent NAIS meeting in Indian Country in Tulsa, Oklahoma.

TAP, offered in two versions, TAP-FULL and TAP-LIGHT, allows tribes to more effectively serve and protect their communities by fostering the exchange of critical data through several national databases via the FBI’s Criminal Justice Information Systems (CJIS) network, including the National Crime Information Center (NCIC), Next Generation Identification (NGI), National Data Exchange (N-DEx), National Instant Criminal Background Check System (NICS), Law Enforcement Enterprise Portal (LEEP) as well as other national systems such as the International Justice and Public Safety Network (Nlets).   TAP enhances tribal efforts to register sex offenders pursuant to the Sex Offender Registration and Notification Act (SORNA); have orders of protection enforced nationwide; protect children; keep firearms away from persons who are disqualified from receiving them; improve the safety of public housing, and allow tribes to enter their arrests and convictions into national databases so they can be recognized by law enforcement across the country.

The following tribes have been selected for the next phase of TAP FULL:

Absentee-Shawnee Tribe of Indians of Oklahoma

Blackfeet Tribe of the Blackfeet Indian Reservation of Montana

Confederated Tribes of the Chehalis Reservation (Washington)

Cheyenne and Arapahoe Tribes, Oklahoma

Cheyenne River Sioux Tribe of the Cheyenne River Reservation, South Dakota

Eastern Shoshone Tribe of the Wind River Reservation, Wyoming

Fort McDowell Yavapai Nation, Arizona

Hopi Tribe of Arizona

Lower Elwha Tribal Community (Washington)

Northern Arapahoe Tribe of the Wind River Reservation, Wyoming

Penobscot Nation (Maine)

Quinault Indian Nation (Washington)

Rosebud Sioux Tribe of the Rosebud Indian Reservation, South Dakota

Salt River Pima-Maricopa Indian Community of the Salt River Reservation, Arizona

Sault Ste. Marie Tribe of Chippewa Indians, Michigan

The Seminole Nation of Oklahoma

Swinomish Indian Tribal Community (Washington)

Turtle Mountain Band of Chippewa Indians of North Dakota

The following tribes have been selected for the next phase of TAP LIGHT:

Bishop Paiute Tribe (California)

La Jolla Band of Luiseno Indians, California

Lac Vieux Desert Band of Lake Superior Chippewa Indians of Michigan

Mashpee Wampanoag Tribe (Massachusetts)

Morongo Band of Mission Indians, California

Port Gamble S'Klallam Tribe (Washington)

San Pasqual Band of the Diegueno Mission Indians of California

For more information on TAP, visit www.justice.gov/tribal/tribal-access-program-tap

For more information about the Justice Department’s work on tribal justice and public safety issues, visit:  www.justice.gov/tribal

 

# # #

Universal American Mortgage Company, LLC (UAMC) has agreed to pay the United States $13.2 million to resolve allegations that it violated the False Claims Act by falsely certifying that it complied with Federal Housing Administration (FHA) mortgage insurance requirements in connection with certain mortgages, announced U.S. Attorney Annette L. Hayes.  UAMC is a mortgage lender headquartered in Miami, Florida, doing business across the country, including in the Western District of Washington.

The United States alleged that between January 1, 2006, and December 31, 2011, UAMC knowingly submitted loans for FHA insurance that did not qualify.  The United States further alleged that UAMC improperly incentivized underwriters and knowingly failed to perform quality control reviews, which violated HUD requirements and contributed to UAMC’s submission of defective loans.

“Mortgage lenders may not ignore material FHA requirements designed to reduce the risk that borrowers will be unable to afford their homes and federal funds will be wasted,” said Assistant Attorney General Joseph H. Hunt for the Justice Department’s Civil Division.  “We will hold accountable entities that knowingly fail to follow important federal program requirements.”

“In a quest for profits, mortgage companies have ignored important lending standards” said U.S. Attorney for the Western District of Washington, Annette L. Hayes.  “Not only does this harm the borrowers leaving them over their heads in debt and underwater on their mortgages, it harms taxpayers because the mortgages are backed by government insurance.  This settlement should serve as a warning to other lenders to diligently follow the rules.”

During the period covered by the settlement, UAMC participated as a direct endorsement lender (DEL) in the U.S Department of Housing and Urban Development’s (HUD’s) FHA insurance program.  A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance.  If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan.  Under the DEL program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance.  DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance and to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices. 

United States Attorney Joseph Harrington for the Eastern District of Washington said, “FHA mortgages are vital to first-time homebuyers and to families whose credit and assets were damaged by the 2008 economic crisis.  FHA underwriting and other requirements are critical to safeguarding the integrity of the public money used to operate this important program.  We will continue to work with our law enforcement partners to ensure that mortgage lenders and others who profit from this program, while ignoring its rules, will be held accountable.”

“One of our principle responsibilities is to protect and ensure the integrity of federal housing programs for the benefit of all Americans,” said Jeremy M. Kirkland, Acting Deputy Inspector General, U.S. Department of Housing and Urban Development, Office of Inspector General.  “This settlement demonstrates our resolve and should signal to irresponsible lenders that this conduct will not be tolerated.”  

“FHA depends upon the lenders we do business with to apply our standards and to truthfully certify that they’ve done so,” said David Woll, HUD’s Deputy General Counsel for Enforcement.  “Working with our federal partners, HUD will enforce these lending standards so we can protect families from preventable foreclosure and to protect FHA from unnecessary losses.”

The settlement resolves allegations originally brought by Kat Nguyen-Seligman, a former employee of a related UAMC entity, in a lawsuit filed under the whistleblower provisions of the False Claims Act, which allows private parties to bring suit on behalf of the federal government and to share in any recovery.  The whistleblower will receive $1,980,000 as her share of the federal government’s recovery in this case.

This matter was handled on behalf of the government by the Justice Department’s Civil Division, the U.S. Attorney’s Offices for the Eastern District of Washington and Western District of Washington, the Department of Housing and Urban Development, and the Department of Housing and Urban Development’s Office of the Inspector General.  case is captioned United States ex rel. Kat Nguyen-Selgiman v. Lennar Corporation, Universal American Mortgage Company, LLC, and Eagle Home Mortgage of California, Inc., 14-cv-1435 (W.D. Wash.).  The claims resolved by this settlement are allegations only, and there has been no admission of liability.

The settlement agreement is being handled by Assistant United States Attorney Kayla Stahman.

          An engineer employed with technology manufacturing companies in the Vancouver, Washington area was indicted today by a federal grand jury for a scheme to collect disability benefits under his own identity while working under a false identity, announced U.S. Attorney Annette L. Hayes.   STEVEN LYNN ROSS, 67, is accused of stealing more than $360,000 in government benefits.  ROSS possessed identity documents he had fraudulently obtained in the names of children who died in the 1950s and 1960s.  ROSS was arrested earlier this month and will be arraigned on the indictment in U.S. District Court in Tacoma on October 29, 2018.

            According to records filed in the case, in 1987 ROSS assumed the identities of at least two deceased children in order to open Social Security accounts in their names.  One of the children had died in a car accident as a toddler, the other died in a plane crash in 1968 at age thirteen.  ROSS used these identities in various ways, obtaining drivers licenses, bank accounts and passports in various names.  In 2001, ROSS began collecting Social Security Disability payments in his true name, saying he was unable to work due to physical ailments.  In fact, at the same time that he was collecting disability payments, ROSS continued to work under one of the identities he had stolen.  In this way, ROSS collected more than $360,000 in disability payments even though he was not disabled under program rules.

            The Washington State Department of Licensing began investigating when facial recognition software flagged that ROSS’s image appeared in more than one driver’s license photo.  The case was turned over to the Social Security Office of Inspector General (SSA-OIG) and U.S. State Department Diplomatic Security Service (DSS).  The DSS determined that ROSS had obtained passports in his own name as well as the names of the two deceased children, and that all three passports contain ROSS’ picture.  Between 1998 and 2011, ROSS traveled out of the country 22 times with one of the stolen identities, even as he also traveled internationally using his own name and passport as well.

            ROSS is charged with two counts of wire fraud, five counts of theft of public funds, one count of access device fraud and one count of aggravated identity theft.

            Wire fraud is punishable by up to 20 years in prison.  The other federal felonies are punishable by up to ten years in prison.  Aggravated identity theft is punishable by a mandatory two-year term to run consecutive to any sentence imposed on the other counts of conviction.

          The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

          The case was investigated by the Social Security Office of Inspector General (SSA-OIG), the U.S. Department of State Diplomatic Security Service (DSS), and the Washington State Department of Licensing License Integrity Unit (DOL/LIU).

          The case is being prosecuted by Special Assistant United States Attorney Benjamin Diggs.  Mr. Diggs is an attorney with the Social Security Administration specially designated to prosecute benefit fraud cases in federal court.

            The former Director of Sports Marketing and Alliances at Microsoft was indicted today by a federal grand jury for five counts of wire fraud for his scheme to profit by stealing from Microsoft, announced U.S. Attorney Annette L. Hayes.  JEFF TRAN, a/k/a TRUNG TRAN, 45 of Seattle, is alleged to have used his position at Microsoft to attempt to steal more than $1.5 million through the creation and submission of fraudulent invoices and the unauthorized use of other Microsoft assets.  TRAN will be arraigned on the charges in U.S. District Court in Seattle in the next ten days.

            According to the allegations in the indictment, TRAN oversaw Microsoft’s promotional relationship with the National Football League (NFL).  The indictment alleges that in March 2017, TRAN caused a fraudulent $775,000 invoice to be issued to Microsoft, supposedly for services related to the 2017 Super Bowl.  Tran caused the $775,000 payment from Microsoft to be routed through two Microsoft vendors and then to Tran’s personal bank account.  Tran then attempted to cause Microsoft to make a second payment for $670,000, based on another fraudulent invoice.  Tran intended to route that payment to a company Tran controlled.  When Microsoft vendors became suspicious of Tran’s activity and reported the conduct to Microsoft, Tran destroyed electronic communications and told the vendors to lie to Microsoft about the $775,000 payment.  After Microsoft confronted Tran, Tran returned the $775,000. 

          The indictment also alleges that Tran stole blocks of Super Bowl tickets belonging to Microsoft.  Because of his position, Tran was responsible for determining which Microsoft employees would receive Microsoft Super Bowl tickets.  However, instead of distributing all of the tickets to Microsoft employees, TRAN sold over 60 of the tickets through a ticket broker and pocketed more than $200,000.            

            Wire Fraud is punishable by up to 20 years in prison.

            The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

            The case was investigated by the FBI.  The case is being prosecuted by Assistant United States Attorney Seth Wilkinson.

          The owner of two Pierce County sports memorabilia and card gaming shops was sentenced  today in U.S. District Court in Tacoma to 30 days in prison, ten months of home detention with electronic monitoring, three years of supervised release and $234,769 in restitution for failing to pay employment taxes on more than 50 employees, announced U.S. Attorney Annette L. Hayes.  DONALD A. KNUTSEN, 54, owned Northwest Sportscards, which had locations in Tacoma and University Place, Washington.  KNUTSEN pleaded guilty in April 2018, admitting that between 2008 and 2016 he withheld a total of $234,769 in income, Social Security, and Medicare taxes from the paychecks of at least 51 different employees, but failed to accurately report and pay the tax withholdings and an additional $122,350 in employer-owed taxes to the Internal Revenue Service.  At sentencing U.S. District Judge Robert J. Bryan said, “Our whole government system is based upon citizens voluntarily completing their paperwork and paying taxes.  Our system, the very foundation of our liberties, is dependent on citizens doing this civic duty.”

                “This defendant not only failed to pay his own taxes, he stole funds he was supposed to pay for Social Security and Medicare taxes for his employees,” said U.S. Attorney Annette L. Hayes.  “Employees rely on their employers complying with the law and protecting their hard earned retirement benefits, not succumbing to naked greed.  As a result of this prosecution, not only is the defendant spending time in prison, he is required to pay restitution so that his victims can be made whole.”

          According to records filed in the case, KNUTSEN operated the two sports cards and memorabilia stores for more than 27 years.  The investigation revealed that as early as 2002, KNUTSEN stopped paying employment taxes, including Social Security and Medicare taxes on his employees.  KNUTSEN withheld the money from the employee paychecks but never paid it to the IRS or filed the required forms accounting for the payments.  Instead, KNUTSEN used the money to acquire inventory and promote his business.  In addition, KNUTSEN failed to file any personal income tax returns after 2000.

            Before today’s hearing KNUTSEN delivered a check to the court for $82,500 as a partial payment for his $234,769 restitution obligation.  In addition, after the IRS calculates his civil tax liability and interest, KNUTSEN will pay that amount as well.  

          Because KNUTSEN was not filing tax forms or paying taxes to the IRS, the employees working at his shops did not accrue individual Social Security benefits during the relevant years.  Under the terms of his plea agreement, KNUTSEN will work with the IRS to correct those past tax records. 

          The case is being investigated by the Internal Revenue Service Criminal Investigation.  The case is being prosecuted by Assistant United States Attorney Steven Masada.

          An enrolled member of the Lower Elwha Klallam Tribe was sentenced today in U.S. District Court in Tacoma to 5 years in prison for Domestic Assault by a Habitual Offender, announced U.S. Attorney Annette L. Hayes.  MATTHEW TYLER CHARLES, 31, of Port Angeles, pleaded guilty in March 2018, following one day of testimony about his history of assaults on an intimate partner.  CHARLES was indicted federally following the October 21, 2017 assault of a woman with whom he had a long-term relationship.  At sentencing, U.S. District Judge Ronald B. Leighton said  CHARLES “has to pay for what he has done, the havoc he perpetrated in this community.”

            “This defendant repeatedly and viciously attacked those he professed to care most about,” said U.S. Attorney Annette L. Hayes.  “And when law enforcement stepped in, the defendant  tried to pressure the victim to stop co-operating with investigators and prosecutors.  But the victim persevered and today justice is served.  We will continue to use all available tools to protect the victims of crime in our tribal communities.”

            According to records filed in the case and testimony at trial, in the early morning hours of October 21, 2017, the victim arrived at the Lower Elwha Casino.  Shortly after her car pulled into the parking lot, the surveillance video shows CHARLES arriving in another vehicle.  The video shows CHARLES assaulting the victim, violently shoving her back into the car and physically restraining her when she tried to flee.  At one point during the incident, CHARLES brandished a knife.  Two witnesses who were in the parking lot alerted casino security.  CHARLES left the scene, but was later taken into custody.

            CHARLES has four previous convictions related to domestic violence in either state or Tribal court.  Two of these convictions arose from assaults in 2006 and 2014 with respect to this same victim that were prosecuted in Clallam County District Court and Superior Court, respectively, and two convictions in Lower Elwha Klallam Tribal court for 2004 and 2010 assaults with respect to this victim and a second victim.  Those convictions subject him to prosecution in federal court as a habitual offender.

            The case was investigated by the FBI and the Lower Elwha Klallam Tribal Police.  The case was prosecuted by Assistant United States Attorneys Rebecca S. Cohen and J. Tate London. 

          SUNG HONG, 47, and HYUN JOO HONG, 42, of Clyde Hill, Washington were sentenced today in U.S. District Court in Seattle to lengthy prison terms for defrauding more than 55 clients out of $12.7 million, announced U.S. Attorney Annette L. Hayes. SUNG HONG, aka LAURENCE HONG or LAWRENCE HONG, was sentenced to 15 years in prison.  His wife, HYUN JOO HONG, aka GRACE HONG, was sentenced to six years in prison.  From 2010 until their arrest in June 2017, the couple held themselves out as experienced investment advisors with a track record of performance in order to solicit investor funds for their hedge fund, Pishon Holdings, and for management through separately managed accounts.   In fact, SUNG HONG had just completed a 33 month sentence for committing investment fraud when he launched this new scheme in 2010.  At the sentencing hearing U.S. District Judge Thomas S. Zilly said, “This scheme was a serious, complex fraud over seven years.  You targeted religious victims.  You used God as a way to gain trust…. You have emotionally and spiritually damaged these victims and most of them will never recover.”

            “Using faith and fraud, this couple stole millions from people whose dreams of a better life have now been shattered,” said U.S. Attorney Annette L. Hayes.  “Both repeatedly lied to their investors, all while spending their hard earned money on high-end shopping sprees, luxurious vacations, a yacht and an expensive rental home. Their victims now live paycheck to paycheck with college and retirement funds depleted and a very different financial future than they expected.”         

           According to records filed in the case, the HONGs recruited investors using religious organizations and shared religious beliefs. The couple claimed that LAURENCE HONG privately invested billions of dollars for wealthy Korean families and that GRACE HONG held a Series 65 securities license and previously worked for a large international investment firm. None of these statements were true.  Likewise, the defendants did not disclose LAURENCE HONG’s past criminal conviction for investment fraud. The couple sent potential investors misleading and false investment prospectuses that contained an inaccurate record of their past investment performance and other plagiarized investment outlooks.

          Throughout their fraudulent scheme, the HONGs used stolen investor funds for their own benefit, including payments for a 9,000 square foot rental home in Clyde Hill; a 45-foot yacht; multiple high-end vehicles, such as BMWs, a Maserati, an Aston Martin, and a Lamborghini; and numerous expensive vacations to locations such as the Bahamas and Beverly Hills. 

          One church in California invested $1 million with the HONGs and lost about $300,000 on a single trade. Still, despite the steep losses and a fee arrangement based on investment gains, the HONGs withdrew almost $150,000, ostensibly as advisor fees, from the church’s account. Another couple allowed the HONGs to manage their $180,000 in retirement funds only to lose $100,000 within less than a year. After meeting with the HONGs, that couple then invested their remaining retirement funds in the HONGs’ hedge fund, only for those funds to be redirected into GRACE HONG’s personal account. The HONGs used those funds to pay credit card bills and other personal expenses, including a $16,000 payment to a resort in the Bahamas for a HONG family vacation.

          Speaking to LAWRENCE HONG, Judge Zilly noted his prior conviction for a similar fraud:  “You clearly did not learn anything from the fact you were convicted and sentenced to prison…. You are one of those con men who will never be able to stop conning people.”  Judge Zilly noted that GRACE HONG played “an intricate and important role in the entire scheme.  She misrepresented her credentials… she took God’s name – she used that to entice investors to put money in their pockets.”

          Judge Zilly ordered the pair to pay more than $12.7 million in restitution. The losses for certain investors represented their entire life or retirement savings. 

            The case was investigated by the FBI.  The United States Attorney’s Office thanks the Commodity Futures Trading Commission (CFTC) for its assistance in the investigation.

          The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Steven Masada.

 

          The U.S. Department of Justice National Institute of Justice has awarded grants worth more than $3.5 million to improve forensic science and address DNA testing backlogs in Washington State, announced U.S. Attorney Annette L. Hayes.  The grants will help the Washington State Patrol keep up with an increasing number of referrals for DNA testing, and will improve toxicology testing related to the opioid epidemic.

            “We are seeing how advanced DNA testing is leading to major breaks in long unsolved criminal investigations,” said U.S. Attorney Annette L. Hayes.  “These Department of Justice grants will increase the capacity of WSP and will assist individual counties as they complete investigations.  In addition, the funding for quicker turnaround of toxicology screening is critical to all of our efforts to address the impact that fentanyl and other dangerous drugs are having on Washington communities.”

            The Washington State Patrol Crime Labs will receive a total of $2,347,180 to enhance their capacity to analyze DNA and reduce a backlog of samples waiting for analysis.  There are five casework DNA laboratories in Washington: Seattle, Tacoma, Marysville, Vancouver and Spokane.  The grant monies will pay for new equipment and space renovation in the Vancouver lab to increase capacity, and will pay additional staff to work there. The grant will also pay for training for workers on the latest DNA advances and will pay for overtime to keep up with cases.

            Despite an increase in productivity, the backlog of cases waiting for analysis continues to increase.  In 2017, the backlog of cases waiting for analysis increased from 3,168 to 4,562 and the number of new cases sent to the lab was 5,197.  The number of new cases was just slightly below the number of new cases submitted in 2016.  The turnaround time for requests increased from 83 days to 208 days.

            Legislation in 2015 and 2016 increased the number of sexual assault kits that must be analyzed for DNA with the resulting data entered into the FBI’s Combined DNA Index System (CODIS) database. The DOJ funding is critical for the WSP labs to keep up with the increased caseload.           

            A second $500,125 grant is aimed at post-conviction testing of DNA for cases where such testing may exonerate a wrongfully convicted individual.

            Finally, a $250,000 grant will pay for additional staff and equipment for the WSP Toxicology Laboratory.  The lab currently has a backlog of more than 2,650 cases with a turnaround of 75 days.  The opioid crisis has increased requests for analysis 45 percent over the last five years.  The lab is critical to identifying new synthetic opioids that are being trafficked in our communities.

            Additional information about the grant and WSP forensic laboratories please contact WSP’s Phil Hodge (206) 262-6020 or Mary Keller (206) 262-6005.

            The owner of Blue Moon Coins in Vancouver, Washington was indicted by the grand jury on 11 counts of wire fraud and five counts of mail fraud for his scheme to defraud customers of more than $1.3 million, announced U.S. Attorney Annette L. Hayes.  AARON MICHAEL SCOTT, 40, a resident of Portland, Oregon, is scheduled to be arraigned on the indictment in U.S. District Court in Tacoma at 10:30 on Thursday October 4, 2018.

            According to the indictment, between October 2013 and April 2014, SCOTT repeatedly accepted customer money for the purchase of precious metals and coins, and then used the money for his personal and company expenses.  SCOTT represented to customers that the money would be used to immediately purchase the coins and metals but instead it was used for expenses or to fulfill earlier customer orders in the form of a Ponzi scheme. When customers complained about the delay in receiving their items, SCOTT used a plethora of excuses such as: weather delays; a supplier had gone bankrupt; a corporate buyout; ice and snow; delayed armored truck delivery; and a bad flu season.

            In all more than 139 customers were defrauded of more than $1.3 million.  Losses to individual investors range from just over $2,000 to more than $154,000.

            Wire fraud and mail fraud are punishable by up to 20 years in prison.

            The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

          The case is being investigated by the FBI, Vancouver Police Department and the U.S. Commodities Futures Trading Commission (CFTC).   The CFTC has filed a civil enforcement action against SCOTT and Blue Moon Coins seeking restitution for the victims and a permanent registration and trading ban.

          The case is being prosecuted by Assistant United States Attorney David Reese Jennings.

            The former coach of a South King County bowling team pleaded guilty today in U.S. District Court in Seattle to production and possession of child pornography, announced U.S. Attorney Annette L. Hayes.  TY LEE TREDDENBARGER, 54, of Burien, Washington, admits he photographed and saved images of his molestation of minor victims between the ages of 13 and 16.  When sentenced by U.S. District Judge John C. Coughenour on January 15, 2019, TREDDENBARGER faces a mandatory minimum 15 years in prison and up to 30 years in prison.

            According to records filed in the case, in March 2017, a young victim disclosed the abuse to a parent.  The Des Moines Police Department and King County Prosecutor’s Office requested assistance from Homeland Security Investigations.  HSI and the Seattle Police Department executed court authorized search warrants at TREDDENBARGER’s residence, seizing electronic devices that contained images of the sexual abuse of children.  Law enforcement was able to identify two additional victims.  TREDDENBARGER is charged with three counts of production of child pornography -- one count for each of the victims -- and possession of child pornography.

          Some of those victimized by TREDDENBARGER have not been identified.  Authorities are asking anyone who has information to contact HSI Seattle at (206) 442-1469 or email information to [email protected]  

          The case is being investigated by Homeland Security Investigations with assistance from the Des Moines Police Department and the Seattle Police Department.

          The case is being prosecuted by Special Assistant United States Attorney Cecelia Gregson.  Ms. Gregson is a Senior Deputy King County Prosecutor specially designated to prosecute child exploitation cases in federal court.

          Three Washington State school districts, an Educational Service District and the Washington Superintendent of Public Instruction will receive more than $1.5 million in grants from the U.S. Department of Justice to combat school violence, announced U.S. Attorney Annette L. Hayes.  The largest grant, nearly $1,000,000 for the Superintendent of Public Instruction, will fund efforts to provide teachers and students with the tools they need to recognize and respond quickly to prevent acts of violence.  Smaller grants to individual school districts will support students, teachers and law enforcement partnering to prevent school violence.

          “These federal funds support all-important state and local efforts to keep kids safe in our schools,” said U.S. Attorney Annette L. Hayes. “The Department of Justice is committed to supporting all involved – including parents, administrators, teachers, students and school safety officers -- in finding ways to address the root causes of violence in our schools.”

            The grant to the Superintendent of Public Instruction office will assist in developing threat assessment and crisis intervention teams, and anonymous reporting systems designed to identify threats before they materialize.  Funding is provided for training students, school personnel and local law enforcement so they can prevent violence in schools. 

          Individual school districts are also receiving funding to enhance school security. The Ellensburg School District is receiving two grants totaling $300,000 for anti-violence programs.  The Monroe School District will receive $150,000.  The Quillayute Valley School District will receive $25,000 and the Northeast Washington Education Service District will receive $49,750.  The grants are targeted at developing programs to recognize and assess threats including issues of mental health.

          Under the terms of the grant, no funds can be used to purchase and provide firearms or training in the use of firearms to any personnel.

          This funding is provided under the Bureau of Justice Assistance, STOP School Violence Prevention and Mental Health Training Program.

The Department of Justice is awarding more than $5.6 million to agencies in the State of Washington to address the opioid epidemic through increased treatment, prescription monitoring, emergency services and drug courts, announced U.S. Attorney Annette L. Hayes.  The two largest grants – a total of $1.7 million will fund efforts by the state Department of Health to link prescription monitoring data with various public health databases to help medical professionals and others make data-informed decisions on treatment and prevention of prescription drug abuse.

“From large cities to rural areas and tribal communities, the Department of Justice is dedicating resources to support local efforts to combat opioid abuse,” said U.S. Attorney Annette L. Hayes.  “These funds support a range of services including drug treatment, prescription monitoring, overdose mitigation and housing support which in turn will reduce demand for opioids and the terrible damage from addiction.”

The Seattle Police Department in partnership with the Department of Corrections is receiving a $900,000 grant to provide treatment services to those in custody or re-entering society after prison.  Services include counseling and stable housing to prevent a return to prison.  With a $498,180 grant, the North Mason Regional Fire Authority in Belfair, Washington will partner with Peninsula Community Health Services to establish a Quick Response Team.   The team composed of first responders and law enforcement works to reduce opioid abuse and overdose fatalities.  The Makah Indian Tribe received a $458,285 grant to establish a team approach to provide services as an alternative path to cycling in and out of the judicial system.  Finally, the Puyallup Tribe will receive $875,048 to provide community reentry services such as treatment and vouchers for housing, and transportation for those reentering the community from prison or from inpatient treatment.

Two drug courts received funding.  The City of Lakewood received $550,000 for a drug court focused on the needs of veterans.  Clark County received a $399,074 grant for its juvenile drug court program focusing on youth with substance abuse disorder.

The Washington State Patrol received a $250,000 grant for its crime lab program designed to reduce the backlog of cases waiting for toxicology and forensic testing.  Laboratories have been overwhelmed with drug seizure testing requests as well as analysis related to opiate related deaths.

The Comprehensive Addiction and Recovery Act (CARA) Program is the first major federal substance use disorder treatment and recovery legislation in 40 years and the most comprehensive effort to address the opioid epidemic. CARA establishes a comprehensive, coordinated, and balanced strategy through enhanced grant programs that expand prevention and education efforts while also promoting treatment and recovery. The Comprehensive Opioid Abuse Site-based program was developed as part of the CARA legislation signed into law on July 22, 2016.

          The Captain of a Seattle tourist sailboat was sentenced today in U.S. District Court in Seattle to 9 months in prison, two years of supervised release, a $5,500 fine and $324,738 in restitution and civil penalty, announced U.S. Attorney Annette L. Hayes. PAUL D. LAMARCHE, 67, pleaded guilty to wire fraud and theft of government property in March 2018, admitting he collected more than $177,000 in disability payments from the Railroad Retirement Board while operating Emerald City Charters – a tourist attraction running sailing ships on the Seattle waterfront.  At the sentencing hearing U.S. District Judge James L. Robart said LAMARCHE was “…stealing from the government and lying about it….  He’s obviously made a lot of money, but he’s stealing every year… He’s a thief.”

            According to records filed in the case, in June 1988, LAMARCHE claimed he could no longer work as a Burlington Northern Brakeman/Conductor due to a back injury.  In August 1993, he began receiving a disability annuity from the Railroad Retirement Board.  In connection with those payments, he certified annually that his medical condition had not improved, that he was unable to work and had limited earnings.  In fact, from 1984 to the present, LAMARCHE owned and operated Emerald City Charters, which operates two large sea-going sailboats on Elliott Bay.  While claiming disability, LAMARCHE submitted multiple forms to the U.S. Coast Guard certifying that he had no impairments that limit his physical activities or ability to pilot the sailboats.

            On multiple occasions in various settings, LAMARCHE appeared in promotional videos actively sailing the boats.  He made statements that he had missed “only a couple days of work in 23 years,” and he appeared in a television feature story doing yoga on a stand-up paddleboard.  Even as the Railroad Board began investigating his disability claim in 2015, he continued to submit false reports claiming he was not able to “lift, pull or carry heavy items” was “unable to run or jump,” and had “debilitating headaches daily.” He now admits all those statements were false.

            In addition to the $177,369 in restitution, LAMARCHE agreed to pay an additional $177,369 as a civil penalty for violating the False Claims Act.  The U.S. Coast Guard has a pending action to address LAMARCHE’s Captain’s license.  LAMARCHE was ordered to report to prison October 2, 2018.

            The case was investigated by Special Agents of the Railroad Retirement Board Office of Inspector General (RRB-OIG) and U.S. Coast Guard Investigative Service. 

            The case was prosecuted by Assistant United States Attorney Stephen Hobbs and the civil investigation and settlement were handled by Assistant United States Attorney Kayla Stahman and Investigator Judy Swem.

          The owner of Orient Seafood Production of Fife, Washington, was sentenced today in U.S. District Court in Seattle to two years in prison, three years of supervised release and nearly $1.5 million in restitution for his scheme to overharvest and profit on illegally taken sea cucumbers, announced U.S. Attorney Annette L. Hayes. HOON NAMKOONG, 62, pleaded guilty in April 2018, admitting that between August 2014, and November 2016, he conspired with others to underreport the amount of sea cucumbers purchased for processing by approximately 250,000 pounds.  The post-processing market value of the stolen sea cucumbers is nearly $1.5 million.  At sentencing Chief U.S. District Judge Ricardo S. Martinez said, by creating the market for illegal harvesters NAMKOONG did “significant damage to sea cucumber populations and habitat that may take years to repair.” 

            “This defendant lined his pockets by purchasing and selling illegally harvested sea cucumbers equal to as much as 20 percent of the total allowed state-wide harvest,” said U.S. Attorney Hayes.  “This illegal activity damages the health of the Puget Sound ecosystem by endangering the sustainability of the sea cucumber population.  Illegal harvesting undermines quotas designed to protect the resource and keep the Sound healthy for our children and generations to come.”

            According to records filed in the case, over portions of three harvesting seasons, HOON NAMKOONG purchased sea cucumbers from both tribal and non-tribal fishers in the Puget Sound region.  Sea cucumbers are classified as shellfish, and harvests are regulated by both Washington State and Tribal authorities.  To protect the resource, the harvests are tracked by fish tickets signed by both the fisher and the purchaser.  HOON NAMKOONG admits that he falsified fish tickets, failed to prepare fish tickets or retain confirmation of fish tickets submitted by third parties, and frequently paid fishers in cash for their sea cucumbers so there would be no financial record of the total amount of sea cucumbers taken.  Falsifying fish tickets, and processing and selling in interstate or foreign commerce illegally obtained shellfish are violations of the Lacey Act, the federal law that prohibits illegal trafficking in wildlife, fish, and plants. 

                HOON NAMKOONG’s company processed the sea cucumbers and sold and transported them to wholesale seafood buyers in both the U.S. and Asia, for a gain of nearly $1.5 million.  NAMKOONG was ordered to pay $1,499,999 in restitution to the state and Tribal entities.

            The case was investigated by the NOAA Office of Law Enforcement and the Washington State Department of Fish and Wildlife.

            The case is being prosecuted by Assistant United States Attorneys Matthew Diggs and Seth Wilkinson.

          The U.S. Department of Justice and a Bellevue, Washington foreclosure services company today settled allegations that Northwest Trustee Services, Inc. (“Northwest”) violated the Servicemembers Civil Relief Act (“SCRA”), announced U.S. Attorney Annette L. Hayes.  The complaint filed in November 2017, alleged that Northwest completed foreclosures on homes owned by servicemembers without obtaining the required court orders.    Under the terms of the settlement, servicemembers who had their homes illegally foreclosed on may receive compensation for the unlawful foreclosures of up to $125,000, with a total payout to servicemembers of up to $750,000.  Northwest ceased operations in December 2017 and is now being liquidated in state court receivership proceedings.  This is the Department’s first SCRA lawsuit against a foreclosure trustee company.

          The SCRA protects the rights of servicemembers on active duty by suspending or modifying certain civil obligations.  The law prohibits foreclosing on the home of a servicemember during active military service and one year thereafter without a court order if the mortgage originated prior to the servicemember’s period of active military service.

            “The Civil Rights Division will never waver in our commitment to vindicating the rights of those who devote themselves to the service of our country,” said Acting Assistant Attorney General John Gore of the Civil Rights Division. “We hope this case sends a strong message to foreclosure trustee companies and others that all foreclosures must comply with the Servicemembers Civil Relief Act.”

                “Those who serve in our military deserve zealous representation of their rights,” said U.S. Attorney Annette L. Hayes.  “We are working to ensure that servicemembers whose homes were illegally foreclosed on by Northwest Trustee receive up to $125,000 in compensation. Northwest Trustee may have shuttered its foreclosure business, but that does not end its obligation to do right by servicemembers.” 

            The Department of Justice launched an investigation into Northwest’s practices after United States Marine Corps veteran Jacob McGreevey of Vancouver, Washington submitted a complaint to the Department’s Servicemembers and Veterans Initiative in May 2016.  Northwest had foreclosed on McGreevey’s home in August 2010, less than two months after he was released from active duty in Operation Iraqi Freedom.  McGreevey sued both PHH Mortgage (his mortgage servicer) and Northwest in 2016, but a U.S. District Court Judge accepted PHH and Northwest’s argument that McGreevy had waited too long to file his case, and dismissed the case on that basis.  The Department’s investigation revealed that, in addition to McGreevey, Northwest had unlawfully foreclosed on other homes of SCRA-protected servicemembers since 2010.

             Before entering into receivership, Northwest described itself as a full-service trustee company providing foreclosure services to mortgage lenders in the Western United States.  On March 28, Northwest was placed into a General Receivership under Washington State law.  The company no longer provides foreclosure services.  If it were to reenter the business of providing foreclosure services, the settlement requires the company to implement Department-approved policies, procedures, and training to prevent further SCRA violations.

          This case was jointly handled by Assistant U.S. Attorneys Christina Fogg and Kyle Forsyth of the United States Attorney’s Office for the Western District of Washington and Trial Attorneys Alan Martinson and Nicole Siegel of the Civil Rights Division for the U.S. Department of Justice.

          The Department’s enforcement of the SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section, often in partnership with local United States Attorney’s Offices.  Since 2011, the Department has obtained over $467 million in monetary relief for servicemembers through its enforcement of the SCRA.  The SCRA provides protections for servicemembers in areas such as evictions, rental agreements, security deposits, prepaid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments.  For more information about the department’s SCRA enforcement, please visit www.servicemembers.gov.

          Servicemembers and their dependents who believe that their rights under the SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office.  Office locations may be found at http://legalassistance.law.af.mil/content/locator.php.

 

The U.S. Department of Justice’s Office of Violence against Women has awarded a three- year $600,000 grant to provide legal assistance to victims of domestic violence and sexual assault in Skagit County, Washington announced U.S. Attorney Annette L. Hayes.  The grant was awarded to the Northwest Justice Project, headquartered in Seattle, in partnership with Skagit Domestic Violence and Sexual Assault Services.

“These funds will support victims of crime and enhance the ability of local organizations to reach out to victims who may be isolated geographically or have limited English-speaking skills,” said U.S. Attorney Annette L. Hayes. “The work supported by thee grants is important to ensuring justice reaches everyone in our Western Washington communities.”

According to the grant award, the funding will increase civil and criminal legal assistance programs for victims of domestic violence, dating violence, sexual assault and stalking.  The funds provide legal services, at minimal or no cost, to victims who are seeking relief through the courts arising out of domestic abuse or violence. Some of the services include assisting with protection orders and victim impact statements; attending court in support of victims; and providing culturally relevant education programs about domestic abuse and sexual violence to immigrant, Native American and limited English-speaking populations.

For more information on this grant, please contact the Northwest Justice Project or DOJ’s Office on Violence Against Women.

The former Chief Financial Officer of a Vancouver, Washington business management company was indicted yesterday in connection with his false certifications of the company’s periodic filings with the U.S. Securities and Exchange Commission, announced U.S. Attorney Annette L. Hayes.  JAMES DOUGLAS MILLER, 54, of Washougal, Washington, served as the CFO of Barrett Business Services, Inc. (BBSI) from 2008 to 2016.  MILLER was fired in 2016 when he disclosed to the company that he had falsified entries in the company’s books to improperly report workers’ compensation expenses as payroll taxes and fees.  As a result of MILLER’S accounting improprieties, BBSI underreported approximately $12 million in workman’s compensation expenses in 2013.  At the same time as he falsified BBSI’s books and falsely certified the periodic reports filed with the U.S. Securities and Exchange Commission, MILLER profited on BBSI stock, by exercising stock options worth 35,300 shares for $467,261 and selling it for more than $2.4 million.

MILLER is scheduled to appear in U.S. District Court in Tacoma at 2:30 this afternoon.

According to records filed in the case, on four different occasions in 2013 and 2014, MILLER falsely certified periodic reports filed with the SEC.  MILLER’s certifications contained a number of false statements, including, among others, statements that BBSI’s periodic reports fairly presented, in all material respects, the results of BBSI’s operations, that BBSI had designed and maintained effective internal controls over its financial reporting to ensure that BBSI’s financial statements complied with generally accepted accounting principles, and that MILLER had reported any fraud, whether or not material, that involved management who had a significant role in BBSI’s internal control over financial reporting.  Contrary to his representations, MILLER knew that during each calendar quarter of 2013, he had circumvented BBSI’s internal controls and created a number of accounting entries that improperly classified workers’ compensation expenses as payroll and payroll tax expenses in violation of generally accepted accounting procedures.

The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The U.S. Securities and Exchange Commission today filed a civil complaint following their separate investigation.

Willful certification of a false periodic report is punishable by up to 20 years in prison and a fine of up to $5,000,000.

The case is being investigated by the FBI and is being prosecuted by Assistant United States Attorneys Justin Arnold and Francis Franze-Nakamura

          A 24-year-old Bothell, Washington man pleaded guilty today in U.S. District Court in Seattle to two federal charges related to his sexual molestation of a 14-year-old child, announced U.S. Attorney Annette L. Hayes.  THOMAS MAHONEY faces a mandatory minimum sentence of 10 years in prison when sentenced by U.S. District Judge John C. Coughenour on December 18, 2018.  MAHONEY was arrested in October 2017.  Today he pleaded guilty to travel with intent to engage in a sexual act with a minor and enticement of a minor.

            According to records filed in the case, Facebook notified the National Center for Missing and Exploited Children (NCMEC) about sexual conversations and photos being exchanged between an adult and child over its network.  The information was provided to law enforcement in California where the young victim was located, and to the Seattle Internet Crimes against Children Task Force (ICAC) which traced the internet address to MAHONEY.  Law enforcement served a court authorized search warrant on MAHONEY’s residence and obtained his electronic devices for analysis.  Travel records confirm information from the victim that MAHONEY traveled to California three times in 2016 and 2017 to have sex with the victim.  The victim was approximately 13- years-old when MAHONEY ‘friended’ the victim on Facebook and was 14 years-old when MAHONEY initiated sex.   MAHONEY made videos of the sexual contact, thereby producing child pornography.

            Under the terms of the plea agreement, both the prosecution and defense will recommend a ten-year prison term.  The recommendation does not bind Judge Coughenour.  The maximum penalty is life in prison.  MAHONEY will be required to register as a sex offender.

            The case is being investigated by Homeland Security Investigations (HSI) in coordination with the Seattle Police Department and the Internet Crimes Against Children Task Force (ICAC). The Contra Costa County California District Attorney’s Office, the U.S. Attorney’s Office in the Northern District of California, and the Snohomish County Sheriff’s Department are key partners in the investigation.

            The case is being prosecuted by Special Assistant United States Attorney Cecelia Gregson, with assistance from Assistant United States Attorney Christina McCall of the Northern District of California.  Ms. Gregson is a Senior King County Deputy Prosecutor specially designated to prosecute child exploitation crimes in federal court.

          Two men were charged today in a multi-count indictment for their scheme to traffic fentanyl disguised as fake oxycodone pills in Snohomish, Skagit and Whatcom Counties, announced U.S. Attorney Annette L. Hayes.  BRADLEY WOOLARD, 39, of Arlington is charged in all five counts of the indictment alleging drug distribution and illegal firearms possession.  GRIFFIN THOMPSON, 30, of Bellingham is charged in two of the counts: conspiracy and possession of fentanyl with intent to distribute.  THOMPSON was arrested last night and will appear in U.S. District Court at 2:00 today.  WOOLARD was arrested as he attempted to cross into the U.S. from Mexico on September 1, 2018.  He remains in custody in San Diego and will likely make his appearance in the Western District of Washington later this month.

          “Fentanyl is an incredibly potent and dangerous drug that has been linked to overdose deaths across the country,” said U.S. Attorney Annette L. Hayes.   “To make matters worse, the fentanyl in this case has been pressed into pills meant to look like the prescription drug oxycodone.  Along with all the usual and terrible risks associated with illegal drugs, these pose the added problem of appearing to be one thing – oxycodone – when they are something altogether different, and even more dangerous.”

            According to records filed in the case, on July 27, 2018, acting on a tip, law enforcement observed THOMPSON as he traveled from Bellingham to WOOLARD’s Arlington home.  After THOMPSON spent a short time at the house, he began the return drive to Bellingham.  After a traffic stop, a drug detection dog alerted to THOMPSON’s car and investigators found three bags each containing 1,000 fake oxycodone pills.  THOMPSON also had more than $8,000 in cash.

            Law enforcement obtained multiple court-authorized search warrants for WOOLARD’s home.  On July 28, 2018, they found more than 10,000 fentanyl pills designed to look like 30 mg oxycodone prescription narcotic.  The pills ultimately tested positive for fentanyl.  The pills are pale blue in color and have “M” printed on one side and “30” on the other side.  Over the course of multiple searches law enforcement seized $400,000 in cash from two safes, another $270,000 from behind the water heater and tool chest in the shop area, and an additional $200,000 hidden in the dishwasher.  Additional searches turned up $110,000 in cash that had been hidden behind drywall in the house, along with jars of gold coins.  Investigators also discovered a hidden room containing 29 firearms ranging from handguns to assault rifles, including three silencers.  The room also contained a large amount of ammunition.

            Based on the seized firearms, WOOLARD is charged with being a felon in possession of firearms due to his 2004 felony conviction in Island County for use of a building for unlawful drug activity.  He is also charged with possession of firearms in furtherance of drug trafficking.

            Conspiracy and possession of fentanyl with intent to distribute is punishable by a mandatory minimum ten years in prison and up to life in prison.  Being a felon in possession of a firearm is punishable by up to ten years in prison.  Possession of a firearm in furtherance of a drug trafficking crime is punishable by a mandatory minimum five- year prison sentence that is in addition to the sentence for the drug trafficking activity.

            The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

          This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved.  The investigation is being led by the Drug Enforcement Administration (DEA) with assistance from the Snohomish Regional Drug and Gang Task Force (SRDGTF) and the Whatcom County Drug and Gang Task Force.

          The case is being prosecuted by Assistant United States Attorneys Kate Vaughan and Karyn Johnson. 

WASHINGTON - A Seattle, Washington man pleaded guilty in U.S. District Court in the Western District of Washington for conducting cyberstalking and threat campaigns against multiple Washington residents. The victims’ names are being withheld to protect their privacy. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Annette L. Hayes of the Western District of Washington made the announcement.  

“Joel Kurzynski’s guilty plea demonstrates that conduct occurring online can cause victims serious harm and anguish offline,” said Assistant Attorney General Benczkowski. “While this prosecution cannot undo the damage this defendant inflicted, it sends a clear message that the Criminal Division and our law enforcement partners are firmly committed to protecting the public and aggressively pursuing malicious actors who hide behind the anonymity of the Internet.”

“This defendant thought he could use a computer keyboard to stalk and harass others with remarkable cruelty -- all while hiding in the shadows.  He could not have been more wrong,” said U.S. Attorney Hayes.  “Conduct that we all know is wrong in the real world, is just as wrong in cyberspace and will be punished accordingly.”

Joel Kurzynski, 38, of Seattle, Washington, a former Information Technology professional, was charged in a felony information with two counts of cyberstalking.  Kurzynski had his initial appearance and pleaded guilty today before Chief U.S. Magistrate Judge Brian A. Tsuchida of the Western District of Washington.  The Court scheduled the sentencing hearing for Dec. 7 before Senior U.S. District Judge Robert S. Lasnik.   

According to admissions made in connection with his plea, Kurzynski engaged in an extensive and rapidly escalating cyberstalking campaign that targeted two individuals known to him. The online campaign involved -- among other things -- death threats, body shaming, and hate speech. Beginning in March 2017, Kurzynski orchestrated numerous spam phone calls to Victim 1. The conduct soon escalated to fake dating profiles wherein Kurzynski portrayed Victim 1 as seeking sadomasochistic or underage relationships. These profiles contained photographs of Victim 1 and his contact information, resulting in solicitations and harassing messages directed toward Victim 1 from multiple strangers. Kurzynski then sent several anonymous death threats to Victim 1, including the threat, “faggot. Time to die.” At one point, Kurzynski impersonated a journalist and contacted Victim 1, claiming that an upcoming article would levy sexual misconduct allegations against Victim 1 related to Victim 1’s work with a non-profit youth organization. 

Kurzysnki also admitted that in November 2017, he began registering Victim 2 for numerous weight loss and suicide prevention programs, resulting in a wave of calls and emails from entities such as Overeaters Anonymous, Weight Watchers, Yellow Ribbon Suicide Prevention, and others. Within weeks, Kurzynski started sending anonymous death threats to Victim 2, many of which referenced Victim 2’s work address. One threat claimed that he was waiting for her in the lobby, and another that said, “Looking forward to seeing you today and how much you bleed. Don’t go to the bathroom alone.” 

The U.S. Secret Service’s Seattle Field Office investigated the case with substantial assistance from the Seattle Police Department and King County Prosecutor’s Office. Trial Attorney Frank Lin of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Francis Franze-Nakamura of the Western District of Washington are prosecuting the case. 

Victims of cyberstalking campaigns such as this often may be hesitant to come forward.  The Justice Department encourages individuals who may be the victims of similar schemes to contact their local law enforcement agencies to report this conduct.

Two men, residents of Alaska and Southern California respectively, were arrested in the last 24 hours on the charge of abusive sexual contact aboard an aircraft, announced U.S. Attorney Annette L. Hayes.  The assaults occurred on aircraft bound for Seattle-Tacoma International airport and were investigated by the FBI and Port of Seattle Police.  BABAK REZAPOUR. 41, of Van Nuys, California will make his initial appearance in U.S. District Court in Los Angeles today.  NICHOLAS MATTHEW STEVENS, 37, of Anchorage, Alaska will make his initial appearance in U.S. District Court in Anchorage tomorrow.  Both men will appear in U.S. District Court in Seattle at a later date.

          “Reports of sexual assaults on aircraft are increasing, and we want the public to know these assaults are federal crimes and will be investigated and prosecuted consistent with the law,” said U.S. Attorney Annette L. Hayes.  “We urge the flying public to report assaults to airline personnel and law enforcement and assist victims who need help. The skies will be safer for all of us.”

          According to records filed in the case, REZAPOUR is accused of sexually assaulting another passenger while she slept on a Norwegian Air flight from London to Seattle on January 10, 2018.  The victim had taken a prescribed anti-anxiety medication and drank a glass of wine.  The victim then accepted a second glass of wine purchased for her by REZAPOUR.  After drinking the second glass, the victim became unusually sleepy.  She awoke to find REZAPOUR sexually assaulting her.  REZAPOUR used his jacket to shield the activity from other passengers.  The victim fled to the back of the plane and reported the assault to flight attendants. 

          In the second incident, STEVENS assaulted a victim on an Alaska Airlines flight from Anchorage to Seattle.  STEVENS was originally in an aisle seat with a vacant seat between him and the victim.  STEVENS moved into the middle seat and began harassing the victim with personal questions and attempting to hold her hand, and rest his head on her shoulder.  At various times, while pretending to be asleep, he grabbed her thigh and her breast.  Another passenger assisted the victim with getting away from STEVENS when the flight arrived in Seattle.  She and another passenger encouraged the victim to report the assault to law enforcement.  The victim contacted an Alaska employee who immediately contacted Port of Seattle Police. 

“These arrests demonstrate the consequences for those who commit the federal crime of sexual assault aboard an aircraft,” said Special Agent in Charge Jay S. Tabb, Jr., of the FBI’s Seattle Field Office. “The FBI investigates reports of these incidents and urges victims to contact us so that we may hold accountable the individuals responsible.”

“The Port of Seattle police department is here to ensure that Sea-Tac Airport is a safe and welcoming place,” said Mike Villa, Deputy Chief, Port of Seattle Police Department. “Sexual assault on a flight is a federal crime and we work with federal prosecutors to bring perpetrators to justice. If you feel that you are the victim of a crime, let the flight crew know or call 911 the moment you land anywhere in the country.  If you land at our airport, a Port of Seattle Police Officer will be there to help you the moment you get off the plane.”  

            The charges contained in the complaints are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

          Abusive Sexual Contact on an Aircraft is punishable by up to two years in prison.

         These cases highlight law enforcement’s concern about the increasing reports of sexual assault on aircraft.  In an awareness campaign the FBI is urging passengers to be vigilant.  Among some of the suggestions:

• Offenders will often test their victims, sometimes pretending to brush against them to see how they react or if they wake up.  If such behavior occurs, reprimand the person immediately, and consider asking to be moved to another seat.
• If your seatmate is a stranger, no matter how polite he or she may seem, keep the armrest between you down.
• If you are arranging for a child to fly unaccompanied, try to reserve an aisle seat so flight attendants can keep a closer watch on them.
• If an incident happens, report it immediately to the flight crew and ask that they record the attacker’s identity and report the incident. The flight crew can also put the offender on notice, which can prevent further problems.
  The King County Sexual Assault Resource Center (KCSARC) connects victims with services:
• In Greater Seattle: 888.99.VOICE (888-998-6423)
  If you have experienced sexual assault and need support, or if you would like more information about sexual violence, call King County Sexual Assault Resource Center’s 24-hour Resource Line at 888.99.VOICE (888-998-6423 or visit www.kcsarc.org<http://www.kcsarc.org/>/gethelp<http://www.kcsarc.org/gethelp>.
   
• National Sexual Assault Hotline: 800.656.HOPE (4673)
  When you call 800.656.HOPE (4673), you’ll be routed to a local RAINN affiliate organization based on the first six digits of your phone number. Visit https://www.rainn.org/about-national-sexual-assault-telephone-hotline for more information.

          These cases were investigated by the FBI, Port of Seattle Police and the Seattle Police Department as part of the FBI Safe Streets Task Force.

            The cases are being prosecuted by Assistant United States Attorneys Katheryn Kim Frierson and Marie Dalton.

          Two men, residents of Alaska and Southern California respectively, were arrested in the last 24 hours on the charge of abusive sexual contact aboard an aircraft, announced U.S. Attorney Annette L. Hayes.  The assaults occurred on aircraft bound for Seattle-Tacoma International airport and were investigated by the FBI and Port of Seattle Police.  BABAK REZAPOUR. 41, of Van Nuys, California will make his initial appearance in U.S. District Court in Los Angeles today.  NICHOLAS MATTHEW STEVENS, 37, of Anchorage, Alaska will make his initial appearance in U.S. District Court in Anchorage tomorrow.  Both men will appear in U.S. District Court in Seattle at a later date.

          “Reports of sexual assaults on aircraft are increasing, and we want the public to know these assaults are federal crimes and will be investigated and prosecuted consistent with the law,” said U.S. Attorney Annette L. Hayes.  “We urge the flying public to report assaults to airline personnel and law enforcement and assist victims who need help. The skies will be safer for all of us.”

          According to records filed in the case, REZAPOUR is accused of sexually assaulting another passenger while she slept on a Norwegian Air flight from London to Seattle on January 10, 2018.  The victim had taken a prescribed anti-anxiety medication and drank a glass of wine.  The victim then accepted a second glass of wine purchased for her by REZAPOUR.  After drinking the second glass, the victim became unusually sleepy.  She awoke to find REZAPOUR sexually assaulting her.  REZAPOUR used his jacket to shield the activity from other passengers.  The victim fled to the back of the plane and reported the assault to flight attendants. 

          In the second incident, STEVENS assaulted a victim on an Alaska Airlines flight from Anchorage to Seattle.  STEVENS was originally in an aisle seat with a vacant seat between him and the victim.  STEVENS moved into the middle seat and began harassing the victim with personal questions and attempting to hold her hand, and rest his head on her shoulder.  At various times, while pretending to be asleep, he grabbed her thigh and her breast.  Another passenger assisted the victim with getting away from STEVENS when the flight arrived in Seattle.  She and another passenger encouraged the victim to report the assault to law enforcement.  The victim contacted an Alaska employee who immediately contacted Port of Seattle Police. 

          “These arrests demonstrate the consequences for those who commit the federal crime of sexual assault aboard an aircraft,” said Special Agent in Charge Jay S. Tabb, Jr., of the FBI’s Seattle Field Office. “The FBI investigates reports of these incidents and urges victims to contact us so that we may hold accountable the individuals responsible.”

          “The Port of Seattle police department is here to ensure that Sea-Tac Airport is a safe and welcoming place,” said Mike Villa, Deputy Chief, Port of Seattle Police Department. “Sexual assault on a flight is a federal crime and we work with federal prosecutors to bring perpetrators to justice. If you feel that you are the victim of a crime, let the flight crew know or call 911 the moment you land anywhere in the country.  If you land at our airport, a Port of Seattle Police Officer will be there to help you the moment you get off the plane.”  

            The charges contained in the complaints are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

          Abusive Sexual Contact on an Aircraft is punishable by up to two years in prison.

         These cases highlight law enforcement’s concern about the increasing reports of sexual assault on aircraft.  In an awareness campaign the FBI is urging passengers to be vigilant.  Among some of the suggestions:

• Offenders will often test their victims, sometimes pretending to brush against them to see how they react or if they wake up.  If such behavior occurs, reprimand the person immediately, and consider asking to be moved to another seat.
• If your seatmate is a stranger, no matter how polite he or she may seem, keep the armrest between you down.
• If you are arranging for a child to fly unaccompanied, try to reserve an aisle seat so flight attendants can keep a closer watch on them.

If an incident happens, report it immediately to the flight crew and ask that they record the attacker’s identity and report the incident. The flight crew can also put the offender on notice, which can prevent further problems.

The King County Sexual Assault Resource Center (KCSARC) connects victims with services:

• In Greater Seattle: 888.99.VOICE (888-998-6423)
  If you have experienced sexual assault and need support, or if you would like more information about sexual violence, call King County Sexual Assault Resource Center’s 24-hour Resource Line at 888.99.VOICE (888-998-6423 or visit www.kcsarc.org<http://www.kcsarc.org/>/gethelp<http://www.kcsarc.org/gethelp>.
   

National Sexual Assault Hotline: 800.656.HOPE (4673)
When you call 800.656.HOPE (4673), you’ll be routed to a local RAINN affiliate organization based on the first six digits of your phone number. Visit https://www.rainn.org/about-national-sexual-assault-telephone-hotline for more information.

          These cases were investigated by the FBI, Port of Seattle Police and the Seattle Police Department as part of the FBI Safe Streets Task Force.

            The cases are being prosecuted by Assistant United States Attorneys Katheryn Kim Frierson and Marie Dalton.

 

The CEO of two Bellevue, Washington information-technology firms was arrested yesterday afternoon at Sea-Tac Airport on a charge relating to a multi-year visa-fraud scheme, announced U.S. Attorney Annette L. Hayes.  PRADYUMNA KUMAR SAMAL, 49, a citizen of India, was taken into custody as he arrived from an international flight.  The criminal complaint describing the visa-fraud scheme was filed under seal in April 2018, soon after SAMAL fled the United States while the investigation was ongoing.  SAMAL remained out of the country until yesterday when he was arrested by law enforcement.  SAMAL will make his initial appearance on the charges in U.S. District Court in Seattle at 2:00 PM today.

The criminal complaint describes how two companies incorporated by SAMAL in 2010 and 2011, engaged in a scheme sometimes referred to as a “bench-and-switch” scheme, to exploit foreign-national workers, compete unlawfully in the market, and defraud the U.S. government.  According to the investigation that began in 2015, SAMAL served as the Chief Executive Officer of ‘Divensi’ and ‘Azimetry.’  Both companies were in the business of providing information-technology workers, such as Software Development Engineers, to major corporate clients.  The complaint alleges that SAMAL submitted, and directed his employees to submit, forged and false application materials to the United States government, making it appear as if two corporate clients already had agreed to use several foreign-national employees named in the applications.  In fact, neither client had agreed to do so.  The forged documents included forged letters and fraudulent statements of work, which appeared as if they had been signed by senior executives at the two clients.  After USCIS relied on the false representations and approved the applications, SAMAL’s companies “benched” the foreign nationals – i.e., the companies left those foreign nationals unpaid – until and unless they were able to place those employees at actual end clients. 

Nearly 200 workers may have been brought in under the phony applications.  The employees were forced to pay SAMAL’s companies a partially-refundable “security deposit” of as much as $5,000 for the visa filings, regardless of whether they were assigned to any projects that provided them with income.

Visa Fraud is punishable by up to ten years in prison and a $250,000 fine.

The charges contained in the complaint are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by the U.S. State Department’s Diplomatic Security Service (DSS).  The case is being prosecuted by Assistant United States Attorney Siddharth Velamoor.

          A prominent Southwest Washington fishing guide was sentenced today in U.S. District court in Tacoma to twelve months and one day in prison for a long running disability fraud scheme, announced U.S. Attorney Annette L. Hayes.  BILLY JIM SWANN, 53, was convicted on March 29, 2018, following a three-day trial before U.S. District Judge Robert J. Bryan.  Judge Bryan found SWANN guilty of perjury, wire fraud, and Social Security fraud for his 8-year scheme to obtain disability benefits to which he was not entitled.  At the sentencing hearing, Judge Bryan said described SWANN’s activity as a “nefarious scheme” to “lie to get money from the federal government.”

          According to records filed in the case and testimony at trial, SWANN applied for Social Security disability benefits in 2006, claiming that he had been disabled and unable to work since 2003.  When Social Security denied his claim, SWANN appealed and swore before an administrative law judge that his only work activity was as a volunteer for a few weeks in the summer at an Alaska fishing camp.  When SWANN’s claims for disability benefits were again denied, SWANN filed an appeal in U.S. District Court, again with numerous false claims about his alleged disabilities.  SWANN claimed his disability interfered with his ability to walk, climb stairs and use his hands, and that he needed a cane to walk.  SWANN claimed that the accident that caused his disability in 2003, also caused cognitive problems, limiting his ability to carry on a conversation.

          Contrary to his claims, between 2006 and 2014, SWANN had a busy and successful business known as Swanny’s Guided Fishing.  SWANN offered guided fishing trips in Washington, Oregon, Idaho and Alaska.  SWANN was featured on the cover of Northwest Sportsman Magazine, was sponsored by numerous outdoor equipment brands, and was a regular guest on fishing shows carried on the radio.  In 2012, the year he told an administrative law judge that he had not worked at all, SWANN earned $92,503 via his fishing guide business.  Investigators also found that, throughout this period, SWANN failed to pay any state or federal taxes on his income from his fishing guide business.

             SWANN’s applications for benefits were repeatedly denied by the Social Security Administration.  Had SWANN been successful in his scheme, he and his family would have collected more than $200,000 in benefits.

            The fraud scheme was uncovered following a 2016 investigation of SWANN’s illegal conduct on the Cowlitz River.  On October 1, 2014, SWANN led a promotional fishing trip on the Cowlitz River. The trip was broadcast over the internet.  SWANN encouraged his clients to catch two native Coho salmon protected by the Endangered Species Act and Washington law. After his clients landed the fish, SWANN clubbed both of them and then cut off the adipose fins to make it appear they were hatchery fish and therefore legal to catch and keep.  However, evidence of the catching and clubbing of the wild and protected fish was caught on the web broadcast, and the illegal conduct was reported to the Washington State Department of Fish and Wildlife.  SWANN entered a guilty plea to violating the Endangered Species Act.  In March 2017, SWANN was fined $7,500 for the federal misdemeanor conviction.

            This case was investigated by the Social Security Administration Office of Inspector General (SSA-OIG) and NOAA Fisheries Office of Law Enforcement.

            The case is being prosecuted by Assistant United States Attorney Seth Wilkinson and Special Assistant United States Attorney Benjamin Diggs.  Mr. Diggs is an attorney with the Social Security Administration specially designated to prosecute fraud cases in federal court.

WASHINGTON – Ghobad Ghasempour, 38, a Canadian national, was sentenced on Aug. 20, in U.S. District Court in Seattle to 42 months in prison for conspiracy to unlawfully export U.S. goods to Iran.

Assistant Attorney General for National Security John C. Demers, U.S. Attorney Jessie K. Liu for the District of Columbia and U.S. Attorney Annette L. Hayes for the Western District of Washington made the announcement. 

“This sentencing exemplifies the outstanding investigative work by HSI special agents in conjunction with other law enforcement and government partners locally and abroad,” said HSI San Diego Special Agent in Charge Dave Shaw. “The illegal export of U.S.-origin items to prohibited countries is harmful to U.S. national security and will not be tolerated. HSI will continue to aggressively pursue those that seek to violate these laws and jeopardize our nation’s safety.”

Ghasempour was arrested on March 28, 2017 as he entered the United States at Blaine, Washington.  An investigation led by Homeland Security Investigations in San Diego, California, revealed that Ghasempour had used front companies in China and co-conspirators in Iran, Turkey and Portugal to illegally export restricted technology products to Iran.

At the sentencing hearing U.S. District Judge James L. Robart noted that Ghasempour was solely motivated by greed and money, and that the unlawful export of goods and technology was to the “the Department of Defense for Iran -- the very group that would be the most harmful to the United States.”

According to records filed in the case, between 2011 and 2017, Ghasempour and his co-conspirators illegally exported and attempted to export goods and technology to Iran that have both military and non-military uses.  Ghasempour exported a thin film measurement system, manufactured by a California company, that is essentially a microscopic tape measure for liquid coatings and parts that are used in cell phones and missiles; he attempted to export an inertial guidance system test table, manufactured by a North Dakota company, used to test the accuracy of gyroscopes that assist in flying commercial and military airplanes; and the conspirators exported two types of thermal imaging cameras, manufactured by an Oregon company, that can be used in commercial security systems and military drones.  Some of the items Ghasempour sought to export were intercepted by law enforcement.  The conspirators falsified shipping documents and lied to U.S. manufacturers by claiming that the restricted items were being shipped to customers in Turkey and Portugal, knowing that the true destination of these goods was Iran. The Iranian customers paid the Chinese front companies owned by Ghasempour and a co-conspirator.

Ghasempour pleaded guilty in April 2018.

The case was investigated by Homeland Security Investigations.  The criminal case was originally filed in the District of Columbia in Washington D.C., but was resolved in the Western District of Washington.  The case was prosecuted by Assistant U.S. Attorney Frederick Yette for the District of Columbia, Assistant U.S. Attorney Marie Dalton for the Western District of Washington, and Trial Attorney Amy Larson, of the National Security Division’s Counterintelligence and Export Control Section.

          A 51-year-old Montesano, Washington, man was sentenced today in U.S. District Court in Tacoma to 18 months in prison and three years of supervised release for vehicular assault, announced U.S. Attorney Annette L. Hayes.  KELLY L. LANDRY, was driving his employer’s work truck while impaired with methamphetamine and marijuana on September 6, 2017, when he crashed head-on into another car on Highway 101 near Lake Crescent.  At the sentencing hearing, U.S. District Judge Ronald B. Leighton said “When drugs come into your life your honesty, integrity and life go out the door.”

            According to records filed in the case, LANDRY was driving east on Highway 101 and crossed the centerline, slamming head-on into a Taurus sedan driven by an 80-year-old Forks resident. The driver’s 70-year-old wife was in the passenger seat.  Both suffered severe injuries, including a broken ankle, broken nose, fractured ribs, and fractured wrist.  LANDRY was also injured in the crash.  First responders to the scene found both a meth pipe and a marijuana pipe in the cab of LANDRY’s truck – a vehicle that was owned by his employer.  A blood screen taken following the crash showed LANDRY had high levels of methamphetamine and some THC in his blood.

            While both victims survived, their lives have been permanently changed because of lasting physical impacts from their injuries. They are no longer able to participate in many of the activities they enjoyed before the crash. An avid gardener, the 70-year-old is no longer able to work in her garden and must use a walker for mobility. 

            LANDRY had been identified in two prior incidents where he struck parked cars: In July 2016, he struck a parked car in Hoquiam and drove away.  In February 2017, he drove his work truck into a parked car in Montesano and drove off.  His employer contacted the victim, and Montesano Police were then able to identify LANDRY as the driver.  

            Because the September 2017 crash occurred on National Park Service land, the case was prosecuted in federal court.  At a hearing on November 9, 2018, Judge Leighton will set a restitution amount to pay for the victims medical bills, towing fees and other expenses.

            The case was investigated by the National Park Service Investigative Services Branch and was prosecuted by Assistant United States Attorney André M. Peñalver.

          The owner of a Kirkland, Washington interior design business was convicted August 10, 2018 in U.S. District Court in Seattle of 25 counts related to a nearly twenty-year scheme to avoid paying more than $560,000 in income taxes, announced U.S. Attorney Annette L. Hayes. Following a four-day jury trial DANIEL NIX, 58, was convicted of thirteen counts of tax evasion, eleven counts of providing fictitious financial obligations, and one count of corrupt interference with the administration of the Internal Revenue Code. The jury deliberated for a day. U.S. District Judge Robert S. Lasnik scheduled sentencing for November 9, 2018.

          According to the indictment and testimony at trial, NIX operates Dannix Design, an interior design firm for medical offices. As early as 1998 and from 2000 to 2013, NIX refused to pay his taxes on $3.9 million in gross income, and $1.9 million in net profit.   NIX sought to avoid more than $560,000 in federal income and self-employment taxes by setting up shell companies to hide his income and assets, by filing false bankruptcy claims, and by filing false claims against the government. For tax years 2010-2013, NIX continued to use a variety of strategies to hide his income and avoid any tax assessments.  He set up sham religious entities and transferred assets into the names of those sham religious entities, in order to frustrate IRS efforts to put liens on his assets.  

            NIX enjoyed a lavish lifestyle with the proceeds of his crime. He owns a Kirkland home assessed for more than $1 million. He bought and owned at least 16 luxury vehicles over the years, including a Porsche, a Jaguar, a BMW, a Ford F-150, multiple Mercedes-Benz, Harley Davidsons, and other imported motorcycles. 

            In February 2013, NIX sent eleven fake money orders to the IRS to make it appear he was paying his tax obligations. The total face value of the eleven fake money orders exceeded a million dollars.  On several occasions, NIX harassed IRS and Department of Revenue agents, filing fraudulent liens against them.  He also called other unrelated individuals who were subject to IRS liens and falsely claimed the liens filed by the government were invalid.

          The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI). The case is being prosecuted by Assistant United States Attorney Seungjae Lee and Mark Parrent.

A Burien, Washington felon was sentenced today in U.S. District Court in Seattle to seven years in prison and five years of supervised release for three drug and firearm related crimes, announced U.S. Attorney Annette L. Hayes. JERMAINE HICKLES, 46, pleaded guilty in May 2018 to being a felon in possession of firearms, possession of methamphetamine with intent to distribute and possession of a firearm in furtherance of a drug trafficking crime.  When King County Sheriff’s Detectives executed a court-authorized search warrant on HICKLES’ Burien apartment and storage locker, they found 17 firearms, most of them stolen, and nearly two pounds of methamphetamine.  HICKLES is prohibited from possessing firearms due to prior felony convictions.  At the sentencing hearing, U.S. District Judge John C. Coughenour said HICKLES, “was in possession of one of the largest collections of dangerous weapons that I’ve seen in my three or four decades on the bench.”

           “This defendant was prosecuted because he was a convicted felon who possessed 17 firearms, most of them stolen, all while dealing dangerous drugs, said U.S. Attorney Annette L. Hayes.  The combination of illegal drugs and guns is a ticking time bomb that risks the lives of real people and the safety of our communities.  I commend the King County Sheriff’s Office and ATF’s Violent Crime Task Force for their diligent work to ensure this defendant is held to account and can no longer sow harm in our neighborhoods.” 

          According to records filed in the case, in summer 2017, a person working with law enforcement purchased heroin from HICKLES on multiple occasions.  On September 30, 2017, officers served a search warrant on HICKLES two-bedroom apartment.  One bedroom was filled with more than 200 bottles of stolen liquor – many with the store security tags still attached.  In the apartment were 16 firearms – eight of them were loaded and hidden under the mattress in HICKLES main bedroom and one was loaded and in the drawer of the bedside table.  Officers also found nearly $50,000 in cash and approximately two pounds of methamphetamine.  In a storage unit HICKLES rented, they found a 17th firearm.  Evidence from the apartment and from HICKLES’ electronic devices demonstrate he was trading drugs for cash and a variety of stolen goods, including firearms and alcohol. 

          This case was brought as part of Project Safe Neighborhoods (PSN), a program that has been historically successful in bringing together all levels of law enforcement to reduce violent crime and make our neighborhoods safer for everyone.   Attorney General Jeff Sessions has made turning the tide of rising violent crime in a America a top priority.   In October 2017, as part of a series of actions to address this crime trend, Attorney General Sessions announced the reinvigoration of PSN and directed all U.S. Attorney’s Offices to develop a district crime reduction strategy that incorporates the lessons learned since PSN launched in 2001.  

          The case was investigated by the King County Sheriff’s Office, with assistance from members of ATF’s Violent Crime Task Force.  The case is being prosecuted by Special Assistant United States Attorney Jessica Manca.  Ms. Manca is a Senior King County Deputy Prosecutor specially designated to prosecute firearms cases in federal court.

The owner of a former real estate escrow firm was sentenced today in U.S. District Court in Seattle to 24 months in prison for bank fraud, announced U.S. Attorney Annette L. Hayes. LORI LYNN ANDREW, 49, of Cashmere, Washington, the owner of Hartman Escrow, Inc., pleaded guilty to one count of bank fraud.  ANDREW stole more than $2.1 million through a variety of techniques, including making false entries in escrow closing documents, altering accounting records, and depositing checks into the general account instead of the trust account.  At the sentencing hearing, U.S. District Judge Richard A. Jones said, “Every single time you had an opportunity to change your mind and say ‘this is wrong,’ you kept doing it.”

“This defendant chose to victimize people when they were buying or selling a home–often the most important financial transaction of their lives,” said U.S. Attorney Annette L. Hayes.  “Like all real estate escrow agents, the defendant was responsible for ensuring large amounts of money went where they belonged.  When she decided to line her own pockets rather than do her job, she crossed the line and earned the prison sentence that the court imposed today.”

According to records in the case, beginning in about January 2011, and continuing until July 2012, ANDREW used a variety of means to defraud financial institutions and individual home buyers and sellers who were involved in various real estate transactions.  ANDREW made, or had others make, false settlement statements on closing transactions listing false or inflated fees and charges.  ANDREW forged signatures on various statements and created false invoices, statements, and bills; she altered and deposited checks to her company account that should have gone to others; and she took client funds from her trust account and transferred them to her personal account for her own use.  ANDREW used the money for casino payments, credit card bills, and other personal expenses.  ANDREW defrauded individual customers, as well as Bank of America, Wells Fargo, Citi Bank, Chase, and GMAC.

In all ANDREW defrauded the financial institutions and other customers of $2.185 million.  In July 2012, the Washington State Department of Financial Institutions arranged for a receiver to take over the Tukwila, Washington, escrow company after finding evidence of fraud.  ANDREW had her license to act as an escrow agent suspended in 2013, and her license has since been revoked. The receiver was able to recover some funds for unsecured claimants, but just over $1 million is still owed to defrauded clients.

The case was investigated by the Washington State Department of Financial Institutions, the FBI, the Postal Inspection Service (USPIS), and the Housing and Urban Development Office of Inspector General (HUD-OIG).

The case is being prosecuted by Special Assistant United States Attorney Hugo Torres. Mr. Torres is a King County Senior Deputy Prosecutor specially designated to prosecute financial fraud cases in federal court.

A former tax return preparer is now facing a second 37-month prison term, followed by three years of supervised release, for preparing false tax returns, after serving more than two years in prison for her first conviction, announced U.S. Attorney Annette L. Hayes.  KWANGBAE P. KIM, 63, operated “Tea and Tax” in Federal Way, Washington.  From 2011 to 2016, KIM engaged in a scheme to file false income tax returns–mirroring the scheme that had resulted in a 27-month prison term in 2003.  At sentencing, Chief U.S. District Judge Ricardo S. Martinez said, “The Court’s largest concern is that she failed to learn from her prior time in prison.”

           

            “Instead of learning from her past crimes, this defendant chose to go right back to abusing our tax system,” said U.S. Attorney Annette L. Hayes. “Along the way, she betrayed her clients and a family member.  I commend the work of the Internal Revenue Service, Criminal Investigations special agents in this case, and so many others, to ensure our tax system serves our country and is fairly enforced.” 

 

            According to records filed in the case, in 2003, KIM prepared tax returns for customers with false and fraudulent business expenses.  After the IRS investigation began and agents contacted some of KIM’s clients, she orchestrated “cover stories,” had clients rehearse their stories, and gave them falsified documentation to try to make the fraudulent expense deductions look legitimate.  The tax loss in the 2003 case was $430,000.

 

           After the prison sentence, KIM returned to tax preparation and again prepared returns with false and fictitious expense deductions.  Between 2011 and 2016, KIM prepared more than 30 false tax returns resulting in a tax loss of at least $113,000.  In order to try to hide her conduct, KIM used other people’s Preparer Tax Identification Numbers (PTIN).  These numbers are assigned by the IRS so it can identify who prepared the return.  KIM applied for a PTIN in the name of a relative who did not prepare taxes and did not know about the PTIN.  She also used the PTINs of two other people.  As in the 2003 case, when the IRS started asking clients about their deductions, KIM encouraged them to lie to the IRS and provide false and misleading documents.

 

              While KIM did not directly profit from the increased tax refunds enjoyed by her clients, the refunds may have increased her profit by encouraging others to use her business.  Of the $113,000 tax loss, KIM’s clients have paid most of the loss after their returns were audited.  Chief Judge Martinez ordered KIM to pay restitution of the remaining $29,478.

 

              The case was investigated by Internal Revenue Service Criminal Investigations (IRS‑CI).  The case is being prosecuted by Assistant United States Attorneys Michael Dion and Matthew Diggs.

          A marine maintenance company based in Alabama, and a rental company owned by the marine maintenance company executives, will pay the government more than $2.8 million to settle claims they improperly billed the Navy for rental equipment, announced U.S. Attorney Annette L. Hayes.  International Marine and Industrial Applicators, LLC (IMIA) and Marine Equipment Supply, LLC (MES) were involved in maintenance work on the USS Reagan at the Puget Sound Naval Shipyard in Bremerton, Washington.

            According to the settlement agreement, between February 2012 and October 2012, IMIA billed the government for equipment rented from MES, through a subcontractor that was used for hull preservation work on the USS Reagan.  Under the Federal Acquisition Regulations (FARs), companies like IMIA and MES that are under “common control” are not allowed to bill the government for rental costs, except under limited circumstances that the government contends were not present here.  Rather, the FARs treat such equipment as if it were owned directly by IMIA and thus limit compensation to the costs of ownership.  IMIA did not disclose its relationship with MES to the Navy while it was presenting invoices for the USS Reagan project, which the government contends resulted in overbillings to the Navy in excess of $1.4 million.  The government further contends that IMIA, with MES, knowingly presented such claims for unallowable costs to the Navy in violation of the False Claims Act.

            “Government contracting regulations ensure a level playing field and the wise expenditure of taxpayer funds,” said U.S. Attorney Annette L. Hayes.  “When we learn of evidence that a company has not been operating consistent with those requirements, we will investigate and prosecute as the facts require.  I commend the military investigative agencies who put this case together and worked with my office to resolve it.”

            The settlement agreement calls for the two companies to pay $2,860,948 to the government.  Of that amount $1,430.474, or half the payment, represents restitution to the Navy for improperly billed costs.  The claims resolved by this agreement are allegations only, and there has been no determination or admission of liability.

            The matter was investigated by the Defense Criminal Investigative Service, the Naval Criminal Investigative Service, and the Defense Contract Audit Agency.

            The settlement agreement is being handled by Assistant United States Attorney David East.

          A 40-yearold Tukwila, Washington resident was sentenced today in U.S. District Court in Seattle to 20 years in prison and 25 years of supervised release for production and possession of child pornography, announced U.S. Attorney Annette L. Hayes. JESSE LEE ALLEN, was arrested in November 2016, after a witness reported that she had seen videos of the molestation of a young child on ALLEN’s cell phone.  The witness made a report to Tukwila Police in October 2016 and ALLEN was located and arrested a few weeks later.  At the sentencing hearing, U.S. District Judge Thomas S. Zilly called child pornography a “plague on our community,” saying,” this was an incredibly terrible crime that was committed against a little girl.”

            According to records filed in the case, the witness was involved in a romantic relationship with ALLEN and at one point checked his phone to see if there were images of other women ALLEN might be dating.  The witness instead discovered three videos that showed the sexual molestation of a 6-year-old child.  The witness immediately went to police.

            ALLEN pleaded guilty to the charges March 8, 2018.

            The case was investigated by the Tukwila Police Department and U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI). 

          The case is being prosecuted by Special Assistant United States Attorney Cecelia Gregson. Ms. Gregson is a Senior Deputy King County Prosecutor specially designated to prosecute child exploitation cases in federal court.

SEATTLE – Three high-ranking members of a sophisticated international cybercrime group operating out of Eastern Europe have been arrested and are currently in custody facing charges filed in U.S. District Court in Seattle, announced U.S. Attorney Annette L. Hayes, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Special Agent in Charge Jay S. Tabb Jr. of the FBI’s Seattle Field Office.

            According to three federal indictments unsealed today, Ukrainian nationals Dmytro Fedorov, 44, Fedir Hladyr, 33, and Andrii Kolpakov, 30, are members of a prolific hacking group widely known as FIN7 (also referred to as the Carbanak Group and the Navigator Group, among other names).  Since at least 2015, FIN7 members engaged in a highly sophisticated malware campaign to attack more than 100 U.S. companies, predominantly in the restaurant, gaming, and hospitality industries.  As set forth in the indictments, FIN7 hacked into thousands of computer systems and stole millions of customer credit and debit card numbers which were used or sold for profit. 

          In the United States alone, FIN7 successfully breached the computer networks of businesses in 47 states and the District of Columbia, stealing more than 15 million customer card records from over 6,500 individual point-of-sale terminals at more than 3,600 separate business locations.  Additional intrusions occurred abroad, including in the United Kingdom, Australia, and France.  Companies that have publicly disclosed hacks attributable to FIN7 include such familiar chains as Chipotle Mexican Grill, Chili’s, Arby’s, Red Robin and Jason’s Deli.  Additionally here in Western Washington FIN7 targeted the Emerald Queen Casino (EQC) and other local businesses.  The Emerald Queen Casino was able to stop the intrusion and no customer data was stolen.

           “Protecting consumers and companies who use the internet to conduct business – both large chains and small ‘mom and pop’ stores -- is a top priority for all of us in the Department of Justice,” said U.S. Attorney Annette L. Hayes.  “Cyber criminals who believe that they can hide in faraway countries and operate from behind keyboards without getting caught are just plain wrong.  We will continue our longstanding work with partners around the world to ensure cyber criminals are identified and held to account for the harm that they do – both to our pocketbooks and our ability to rely on the cyber networks we use.”

           “The three Ukrainian nationals indicted today allegedly were part of a prolific hacking group that targeted American companies and citizens by stealing valuable consumer data, including personal credit card information, that they then sold on the Darknet,” said Assistant Attorney General Benczkowski.  “Because hackers are committed to finding new ways to harm the American public and our economy, the Department of Justice remains steadfast in its commitment to working with our law enforcement partners to identify, interdict, and prosecute those responsible for these threats.” 

          “The naming of these FIN7 leaders marks a major step towards dismantling this sophisticated criminal enterprise," said Special Agent in Charge Jay S. Tabb Jr., of the FBI's Seattle Field Office.  “As the lead federal agency for cyber-attack investigations, the FBI will continue to work with its law enforcement partners worldwide to pursue the members of this devious group, and hold them accountable for stealing from American businesses and individuals.”

           Each of the three FIN7 conspirators is charged with 26 felony counts alleging conspiracy, wire fraud, computer hacking, access device fraud, and aggravated identity theft. 

           In January 2018, at the request of U.S. officials, foreign authorities separately arrested Ukrainian Fedir Hladyr and a second FIN7 member, Dmytro Fedorov.  Hladyr was arrested in Dresden, Germany, and is currently detained in Seattle pending trial.  Hladyr allegedly served as FIN7’s systems administrator who, among other things, maintained servers and communication channels used by the organization and held a managerial role by delegating tasks and by providing instruction to other members of the scheme.  Hladyr’s trial is currently scheduled for October 22, 2018.

          Fedorov, a high-level hacker and manager who allegedly supervised other hackers tasked with breaching the security of victims’ computer systems, was arrested in Bielsko-Biala, Poland.  Fedorov remains detained in Poland pending his extradition to the United States.

           In late June 2018, foreign authorities arrested a third FIN7 member, Ukrainian Andrii Kolpakov in Lepe, Spain.  Kolpakov, also is alleged to be a supervisor of a group of hackers, remains detained in Spain pending the United States’ request for extradition.

           According to the indictments, FIN7, through its dozens of members, launched numerous waves of malicious cyberattacks on numerous businesses operating in the United States and abroad.  FIN7 carefully crafted email messages that would appear legitimate to a business’ employee, and accompanied emails with telephone calls intended to further legitimize the email. Once an attached file was opened and activated, FIN7 would use an adapted version of the notorious Carbanak malware in addition to an arsenal of other tools to ultimately access and steal payment card data for the business’ customers. Since 2015, many of the stolen payment card numbers have been offered for sale through online underground marketplaces. (Supplemental document “How FIN7 Attacked and Stole Data” explains the scheme in greater detail.)

          FIN7 used a front company, Combi Security, purportedly headquartered in Russia and Israel, to provide a guise of legitimacy and to recruit hackers to join the criminal enterprise.  Combi Security’s website indicated that it provided a number of security services such as penetration testing.  Ironically, the sham company’s website listed multiple U.S. victims among its purported clients.

 

          The charges in the indictments are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

          The indictments are the result of an investigation conducted by the Seattle Cyber Task Force of the FBI and the U.S. Attorney’s Office for the Western District of Washington, with the assistance of the Justice Department’s Computer Crime and Intellectual Property Section and Office of International Affairs, the National Cyber-Forensics and Training Alliance, numerous computer security firms and financial institutions, FBI offices across the nation and globe, as well as numerous international agencies. Arrests overseas were executed in Poland by the "Shadow Hunters" from CBŚP (Polish Central Bureau of Investigation); in Germany by LKA Sachsen - Dezernat 33, (German State Criminal Police Office) and the Polizeidirektion Dresden (Dresden Police); and in Spain by the Grupo de Seguridad Logica within the Unidad de Investigación Technologica of the Cuerpo Nacional de Policía (Spanish National Police).

          This case is being prosecuted by Assistant U.S. Attorneys Francis Franze-Nakamura and Steven Masada of the Western District of Washington, and Trial Attorney Anthony Teelucksingh of the Justice Department’s Computer Crime and Intellectual Property Section.

how_fin7_attacked_and_stole_data.pdf

Three high-ranking members of a sophisticated international cybercrime group operating out of Eastern Europe have been arrested and are currently in custody facing charges filed in U.S. District Court in Seattle, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Annette L. Hayes for the Western District of Washington and Special Agent in Charge Jay S. Tabb Jr. of the FBI Seattle Field Office.

According to three federal indictments unsealed today, Ukrainian nationals Dmytro Fedorov, 44, Fedir Hladyr, 33, and Andrii Kolpakov, 30, are members of a prolific hacking group widely known as FIN7 (also referred to as the Carbanak Group and the Navigator Group, among other names).  Since at least 2015, FIN7 members engaged in a highly sophisticated malware campaign targeting more than 100 U.S. companies, predominantly in the restaurant, gaming, and hospitality industries.  As set forth in indictments, FIN7 hacked into thousands of computer systems and stole millions of customer credit and debit card numbers, which the group used or sold for profit. 

In the United States alone, FIN7 successfully breached the computer networks of companies in 47 states and the District of Columbia, stealing more than 15 million customer card records from over 6,500 individual point-of-sale terminals at more than 3,600 separate business locations.  Additional intrusions occurred abroad, including in the United Kingdom, Australia, and France.  Companies that have publicly disclosed hacks attributable to FIN7 include such familiar chains as Chipotle Mexican Grill, Chili’s, Arby’s, Red Robin and Jason’s Deli.  Additionally in Western Washington, FIN7 targeted other local businesses. 

“The three Ukrainian nationals indicted today allegedly were part of a prolific hacking group that targeted American companies and citizens by stealing valuable consumer data, including personal credit card information, that they then sold on the Darknet,” said Assistant Attorney General Benczkowski.  “Because hackers are committed to finding new ways to harm the American public and our economy, the Department of Justice remains steadfast in its commitment to working with our law enforcement partners to identify, interdict, and prosecute those responsible for these threats.”

“Protecting consumers and companies who use the internet to conduct business – both large chains and small ‘mom and pop’ stores -- is a top priority for all of us in the Department of Justice,” said U.S. Attorney Hayes.  “Cyber criminals who believe that they can hide in faraway countries and operate from behind keyboards without getting caught are just plain wrong.  We will continue our longstanding work with partners around the world to ensure cyber criminals are identified and held to account for the harm that they do – both to our pocketbooks and our ability to rely on the cyber networks we use.”

“The naming of these FIN7 leaders marks a major step towards dismantling this sophisticated criminal enterprise,” said Special Agent in Charge Tabb.  “As the lead federal agency for cyber-attack investigations, the FBI will continue to work with its law enforcement partners worldwide to pursue the members of this devious group, and hold them accountable for stealing from American businesses and individuals.”

Each of the three FIN7 conspirators is charged with 26 felony counts alleging conspiracy, wire fraud, computer hacking, access device fraud, and aggravated identity theft. 

In January 2018, at the request of U.S. officials, foreign authorities separately arrested Ukrainian Fedir Hladyr and a second FIN7 member, Dmytro Fedorov.  Hladyr was arrested in Dresden, Germany, and is currently detained in Seattle pending trial.  Hladyr allegedly served as FIN7’s systems administrator who, among other things, maintained servers and communication channels used by the organization and held a managerial role by delegating tasks and by providing instruction to other members of the scheme.  Hladyr’s trial is currently scheduled for Oct. 22.

Fedorov, a high-level hacker and manager who allegedly supervised other hackers tasked with breaching the security of victims’ computer systems, was arrested in Bielsko-Biala, Poland.  Fedorov remains detained in Poland pending his extradition to the United States.

In late June 2018, foreign authorities arrested a third FIN7 member, Ukrainian Andrii Kolpakov in Lepe, Spain.  Kolpakov, also alleged to be a supervisor of a group of hackers, remains detained in Spain pending the United States’ request for extradition.

According to the indictments, FIN7, through its dozens of members, launched numerous waves of malicious cyberattacks on numerous businesses operating in the United States and abroad.  FIN7 carefully crafted email messages that would appear legitimate to a business’ employee, and accompanied emails with telephone calls intended to further legitimize the email. Once an attached file was opened and activated, FIN7 would use an adapted version of the notorious Carbanak malware in addition to an arsenal of other tools to ultimately access and steal payment card data for the business’ customers. Since 2015, FIN7 sold the data in online underground marketplaces. (Supplemental document “How FIN7 Attacked and Stole Data” explains the scheme in greater detail.)

FIN7 used a front company, Combi Security, purportedly headquartered in Russia and Israel, to provide a guise of legitimacy and to recruit hackers to join the criminal enterprise.  Combi Security’s website indicated that it provided a number of security services such as penetration testing.  Ironically, the sham company’s website listed multiple U.S. victims among its purported clients. 

The charges in the indictments are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The indictments are the result of an investigation conducted by the Seattle Cyber Task Force of the FBI and the U.S. Attorney’s Office for the Western District of Washington, with the assistance of the Justice Department’s Computer Crime and Intellectual Property Section and Office of International Affairs, the National Cyber-Forensics and Training Alliance, numerous computer security firms and financial institutions, FBI offices across the nation and globe, as well as numerous international agencies. Arrests overseas were executed in Poland by the “Shadow Hunters” from CBŚP (Polish Central Bureau of Investigation); in Germany by the LKA Sachsen - Dezernat 33, (German State Criminal Police Office) and the Polizeidirektion Dresden (Dresden Police); and in Spain the Grupo de Seguridad Logica within the Unidad de Investigación Technologica of the Cuerpo Nacional de Policía (Spanish National Police)..

This case is being prosecuted by Assistant U.S. Attorneys Francis Franze-Nakamura and Steven Masada of the Western District of Washington with assistance from Trial Attorney Anthony Teelucksingh of the Justice Department’s Computer Crime and Intellectual Property Section.

 

          A former Seattle schoolteacher was sentenced today in U.S. District Court in Seattle to 18 months in prison and ten years of supervised release, announced First Assistant United States Attorney Helen M. Brunner. GABRIEL CRONIN, 42, a former teacher and robotics coach at Seattle Academy was arrested in November 2017, following a tip to the National Center for Missing and Exploited Children (NCMEC). When questioned by Seattle Police CRONIN admitted he had viewed child pornography on his school provided laptop. At today’s sentencing hearing Chief U.S. District Judge Ricardo S. Martinez said CRONIN is “a highly educated and highly intelligent man who understands the damage that occurs to these victims, especially in the internet age… His actions contribute to that ongoing market that creates new sex abuse victims all around the world.”

          According to records filed in the case, a relative of CRONIN called NCMEC when she learned that he was in therapy for an addiction to child pornography. Because of his employment as a teacher, the relative was concerned CRONIN was a risk to children. The investigation revealed CRONIN possessed 117 images of teens engaged in sexually explicit conduct. The images were downloaded from the internet. The investigation did not reveal any instances where CRONIN pursued sexual interactions with minors.

          Speaking to the court CRONIN said what he did was “extremely perverted and reprehensible…. My actions contributed to ongoing harm to kids…. I should have left teaching. My actions were sick and selfish.”

          CRONIN was fired from his employment following his arrest and will be required to register as a sex offender following his release from prison. CRONIN also must pay a $5,000 fine.

           Chief Judge Martinez reiterated that CRONIN had tried to do “everything possible to take the right steps” following his arrest, and noted that there was “no evidence of any kind that he had any hands-on contact with any children at the school or in his neighborhood.”

          The case was investigated by the Seattle Police Department and Homeland Security Investigations. The case was prosecuted by Special Assistant United States Attorney Cecelia Gregson. Ms. Gregson is a Senior Deputy King County Prosecutor specially designated to prosecute child exploitation cases in federal court

          A former resident of Maple Valley, Washington was sentenced today in U.S. District Court in Seattle to 22 years in prison for production and possession of child pornography, announced U.S. Attorney Annette L. Hayes. STEPHEN SCHMIDT, 45, pleaded guilty in April 2018, admitting that he raped and molested two young children. SCHMIDT made photographic evidence of the molestation of a 7-year old child and kept the images on his electronic devices. He also molested a 13-year-old and a young child in Lewis County, Washington. When the two Maple Valley children disclosed the sexual abuse, their mother immediately reported the case to police. At the sentencing hearing, Chief Judge Ricardo S. Martinez said “His history is concerning, his repeated decisions to molest these children…. This defendant is precisely the type of offender congress had in mind when it increased the penalties.”

          “This defendant stole the innocence of three children, betraying them and their families,” said U.S. Attorney Annette L. Hayes. “Congress provided for long sentences for those who produce child pornography because of the significant harm they do. I commend the work of the King County Sheriff’s Office and Homeland Security Investigations. Their joint efforts have made our district safer for everyone.”

          “Schmidt’s acts are unthinkable. He robbed multiple children of their innocence and then documented his horrific actions,” said Brad Bench, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI). “King County and HSI worked together to gather all relevant evidence to prevent him from harming anyone else. While we can’t undo Schmidt’s actions, I hope today’s sentence brings his victims and their families’ closure.”

          According to records filed in the case, in early May 2017, the Maple Valley woman reported to Child Protective Services, and later to local law enforcement that her two minor children had disclosed sexual abuse by SCHMIDT. A few days after the victim’s mother alerted law enforcement, SCHMIDT contacted a King County Sheriff’s Deputy and disclosed a lengthy history of child sexual abuse, including the two Maple Valley children, and the sexual molestation of the child in Lewis County. SCHMIDT was taken into custody and has been incarcerated ever since. A search of electronic devices belonging to SCHMIDT revealed images of one of the children he molested, as well as a collection of sexually explicit images of other young victims obtained from other sources.

          The federal sentence imposed today is part of a global resolution of child molestation charges in King and Lewis Counties as well as the federal charges. Under the resolution, SCHMIDT will plead guilty and be sentenced in state court to 26 years to life in prison. Chief Judge Martinez ordered the federal sentence to run concurrent to the state sentence. Chief Judge Martinez ordered that SCHMIDT be on federal probation following prison for the rest of his life.

          The case was investigated by the King County Sheriff’s Office and HSI. The case was prosecuted by Special Assistant United States Attorney Cecelia Gregson. Ms. Gregson is a Senior Deputy King County Prosecutor specially designated to prosecute child exploitation cases in federal court.

          A registered sex offender with prior convictions for raping a 12-year-old girl he met via the internet, was sentenced today in U.S. District Court in Seattle to 20 years in prison for two federal felonies involving his receipt and possession of images of child pornography, announced U.S. Attorney Annette L. Hayes.  RICHARD DAVID BLICK, 65, formerly of Edmonds, Washington was indicted in September 2017, following an investigation by the King County Sheriff’s Office and Homeland Security Investigations (HSI).  BLICK was convicted in March 2018 following a two-day trial.  U.S. District Judge John C. Coughenour ordered BLICK to be supervised by federal probation for the rest of his life following the prison sentence.

          “Despite incarceration, treatment, supervision, and sex offender registration, this defendant remains a predator, using the internet to seek out children that he can exploit,” said U.S. Attorney Annette L. Hayes.  “He has proved time and again that he poses an ongoing and substantial threat to community safety.  As a result, this long prison sentence is the only way to protect our kids from his crimes.”

            According to records in the case and testimony at trial, the electronic service provider Dropbox made a report to the National Center for Missing and Exploited Children (NCMEC) that an account later linked to BLICK was uploading pictures of child pornography.  The subsequent law enforcement investigation revealed BLICK owned the Dropbox account and that he was a Level 3 registered sex offender with a 2001 conviction for raping a 12-year-old girl.  In August 2017, law enforcement served search warrants on BLICK’s residence, an RV in Edmonds.  On BLICK’s various electronic devices were thousands of images of child pornography as well as chats and videos with a 14-year-old California child whom BLICK convinced to send him sexually explicit images.  BLICK has been in federal custody since his arrest in August 2017.

            “Each time an image of child exploitation is shared online, the child in that image is victimized all over again.  Law enforcement discovered thousands of images on Blick’s electronic media, including the fact that he convinced a minor to send him sexually explicit images.  He represents the worst kind of criminal, one who preys on innocent children.  Let today’s sentencing be a warning to other child predators; law enforcement officers are actively looking for you and will ensure you are prosecuted to the fullest extent of the law,” said Brad Bench, special agent in charge of ICE’s Homeland Security Investigations Seattle.

          This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice.  Led by United States Attorneys' Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.justice.gov/psc

            The case was investigated by the King County Sheriff’s Office and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

            The case was prosecuted by Assistant United States Attorney Matthew Hampton and Special Assistant United States Attorney Cecilia Gregson.  Ms. Gregson is a Senior King County Deputy Prosecutor specially designated to prosecute child exploitation cases in federal court.

          A 6-month investigation of significant heroin and methamphetamine trafficking in the north Puget Sound region culminated in eleven federal arrests today and the serving of search warrants on thirty locations, announced U.S. Attorney Annette L. Hayes.  The local leader of the drug trafficking ring, JOSE VERDUZCO URIAS, 40, was arrested along with seven other defendants named in the ten-person indictment.   Three people were arrested and charged by federal criminal complaint.  Additionally, a dozen people were arrested on state and local charges. Those arrested on federal charges will appear in U.S. District Court in Seattle at 2:00 today. 

            “The people we charged today were moving up to 2 kilos of heroin a week into our neighborhoods, feeding addictions whose terrible impacts we see all around us,” said U.S. Attorney Annette L. Hayes.  “They distributed in urban centers, small towns, and tribal communities, demonstrating yet again the sad fact that no place is immune from the scourge of opioid addiction.”

             JOSE VERDUZCO URIAS has homes in both Snohomish, Washington and in Sedro Wooley, Washington.  He had crossed the radar of law enforcement in previous investigations, and thus became the target of increased investigation in late 2017.  Members of the VERDUZCO URIAS distribution group named in the indictment include: 

             BELINDA CRUZ, 40, Sedro Wooley, Washington 

             ALBERTO CRUZ REYES, 52, Phoenix, Arizona    

             FERNANDO SANTACRUZ, 27, Mount Vernon, Washington

             RIGOBERTO PONCE SANCHEZ, 28, Sedro Wooley, Washington

             JOSE URENA VERDUZCO, 32, Kirkland, Washington

             JULIAN ZAMORA GARCIA, 34, Seattle

            JULIO CESAR FIERRO-VEGA, 33, Mount Vernon, Washington

            IVAN VALDEZ SOTO, 34, Salem, Oregon

            VICTOR MARTINEZ, 23, Mount Vernon, Washington            

           Over the course of the investigation, law enforcement utilized information from a number of people working with law enforcement some of whom made drug buys from members of the organization.              

          During today’s searches law enforcement seized 18 firearms, ten pounds of heroin, twenty pounds of methamphetamine and more than $500,000 in cash. 

            DEA Special Agent in Charge Keith Weis of the Pacific Northwest region said, “This north sound criminal enterprise has been on our radar for a very long time and the surgical removal of this group will thwart the flow of foreign sourced heroin endangering our communities.” 

          “The FBI worked side-by-side with the DEA and other federal, state, and local partners to execute today's arrests, which significantly impact this drug trafficking organization's ability to operate in the north Puget Sound region,” said Special Agent in Charge Jay S. Tabb Jr., of the FBI's Seattle Field Office." 

            The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law. 

          This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved.    

          The investigation was led by DEA and FBI with significant participation from Homeland Security Investigations (HSI), Whatcom Gang and Drug Task Force (WGDTF), Skagit County Interlocal Drug Enforcement Unit (SCIDEU), Snohomish Regional Drug and Gang Task Force (SRDGTF), ATF, U.S. Border Patrol, Washington State Patrol, Everett Police, North Sound SWAT, Seattle Police, U.S. Immigration and Customs Enforcement (ICE), U.S. Customs and Border Protection (CBP), and NW High Intensity Drug Trafficking Area (NW HIDTA).          

        The case is being prosecuted by Assistant United States Attorneys Kate Vaughan and Nicholas Manheim.

          A repeat offender who used his wife to repeatedly illegally purchase firearms, was sentenced  today in U.S. District Court in Seattle to 7 years in prison for four federal felonies, announced U.S. Attorney Annette L. Hayes.  ROBERT A. STANARD, 42, of Stanwood, Washington was convicted in January 2018 of illegally possessing two firearms, illegal possession of ammunition, illegal possession of an unregistered silencer and conspiracy to obstruct justice.  At the sentencing hearing Chief U.S. District Judge Ricardo S. Martinez stated that STANARD had a violent felony history and had lied repeatedly at his trial. “You don’t get to take the stand and perjure yourself.  That is offensive to our entire system of justice…His false denials went to essential elements of his case.”

            “Federal felons with violent criminal histories are prohibited from possessing firearms because they have shown what a danger they pose in our community,” said U.S. Attorney Annette L. Hayes.  “This defendant has repeatedly demonstrated his danger, not only to his family but to law enforcement tasked with public safety.  Keeping firearms out of the hands of felons in a top priority for the Department of Justice.”

            According to records in the case and testimony at trial, STANARD repeatedly directed his wife in person and via text message to purchase firearms for his use.  The weapons included an AR-15 assault rifle and a Ruger .380 handgun.  STANARD ordered more than 1,000 rounds of ammunition from online sources, as well as gun parts.  He directed his wife to purchase ammunition as well.  His wife was confused at the gun stores and in a series of text messages and pictures consulted STANARD about every purchase.  STANARD used items he ordered online to construct a silencer for one of the weapons.  STANARD was arrested in October 2016, following reports of domestic violence.  While incarcerated at Snohomish County Jail and later at the Federal Detention Center, STANARD sent coded emails and spoke in code on telephone calls to get a family member to retrieve a third pistol that was hidden in his pick-up truck.  The conspirators called the gun a “CD player” and the family member confirmed in the emails and telephone calls that he had retrieved it and was secreting it from law enforcement.

            STANARD is prohibited from possessing firearms due to multiple prior convictions including two federal cases.  In 2004, STANARD was sentenced to ten years in prison for two unrelated crimes.  In March of 2001 in Utah, STANARD illegally possessed an unregistered firearm and, while in an argument with his cousin, he fired the gun with the bullet passing through the wall of a neighboring apartment.  While on pretrial release for that crime, STANARD traveled to Washington, where he first pistol whipped a man in Port Angeles, and then plotted to use a pipe bomb to kill the man by blowing-up the man’s long stay motel.  But for the work of an alert Sequim Police officer who stopped STANARD’s car due to a broken tail light, the bombing could have killed many innocent people.

            The case was investigated by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the Snohomish County Sheriff’s Office and the Washington State Patrol.

            The case was prosecuted by Assistant United States Attorneys Andrew Friedman and Joshua Ferrentino.

          A Lake Stevens, Washington man who used fake credentials in the names of fictional characters or famous fraudsters to commit crimes pleaded guilty this week to seven federal felonies, announced U.S. Attorney Annette L. Hayes.  STEVEN W. FISHER, 44, was charged federally in October 2017 with one count of robbery, five counts of impersonation of a federal officer, and one count of attempted robbery.  Sentencing in front of U.S. District Judge James L. Robart is scheduled for October 1, 2018.

            According to records filed in the case, on January 25, 2017, FISHER gained access to the secure area of a small money transmitting business in Seattle’s Central District by claiming he was a federal agent investigating a suspicious transaction.  FISHER flashed a badge, and handed the owner a ‘search warrant’ signed by ‘Frank Abagnale’ -- a famous serial fraudster portrayed in the movie “Catch me if you can.”  The warrant was purchased via the website Legalfakes.com.  FISHER then pulled a weapon on the owner, demanded he open the safe and locked the owner in a back room.  FISHER left with a large amount of cash and took computer equipment which contained surveillance photographs from the security system.

            FISHER was identified as the suspect following a series of incidents in July and August, 2017 at a different money transmitting business in the Rainer Valley.  In that incident, FISHER used the name “Jack Ryan,” a character in Tom Clancy novels.  FISHER asked the manager of the money transmitting business to meet him at a nearby parking lot to discuss information that someone was planning on robbing his business.  FISHER tried to get the manager to describe the surveillance cameras at the business and suggested he remove cash from the business.  The manager instead called 9-1-1 and reported the suspicious conduct to police.  One month later, when FISHER showed up at the money transmitting business, again claiming to be an FBI Agent, the manager hit the panic alarm and Seattle Police officers arrived to question FISHER.  FISHER was taken into custody and court authorized searches of his car, storage locker, and briefcase turned up fake federal credentials, a realistic appearing airsoft pistol with silencer, and paperwork tying him to the earlier robbery.

           In the plea agreement, FISHER admits that in June 2017, he went to two SeaTac businesses posing as a federal agent.  One of the small businesses offers money transmitting services.  The ‘agent’ claimed he was looking for surveillance footage because of a crime in the area.  Because the store owner was suspicious about whether FISHER was actually an FBI agent, he simply said the surveillance cameras were not working.  In the early morning hours following that encounter the store was burglarized and $2000 in cash, checks and phones were stolen.  Some of the stolen items were later found in FISHER’s possession.

            Robbery and attempted robbery are punishable by up to 20 years in prison.  Impersonating a federal official is punishable by up to three years in prison.

            The case was investigated by the FBI and the Seattle Police Department. The case is being prosecuted by Assistant United States Attorney Rebecca Cohen.

          A Camas, Washington, tax preparer, who now lives in Vancouver, Washington, was sentenced today in U.S. District Court in Tacoma to a month in prison for assisting in filing false tax documents, announced U.S. Attorney Annette L. Hayes.  PAULA ODIA, 44, prepared nearly 80 fraudulent tax returns, resulting in a tax loss to the U.S. that the government estimates is $254,191. Most of ODIA’s clients were unaware she had falsified their tax returns or that she directed a portion of their tax refund to her bank account or to accounts belonging to members of her family.  At sentencing U.S. District Judge Robert J. Bryan said “This went on for a long time…. Theft is theft – You can’t steal from the government any more than you can from anybody else.”

            “Many of the people who were betrayed by this defendant were undocumented-immigrants who paid taxes on their income despite their illegal status,” said U.S. Attorney Annette L. Hayes.  “Ms. Odia thought she had the perfect fraud – steal from those who she believed would never go to the police to report the crime.  I commend the IRS for its diligent efforts to ensure this defendant is held accountable for her actions.”

            According to records filed in the case, between 2011 and 2016, ODIA prepared federal income taxes for customers from her Camas home.  Clients would bring ODIA their records, and she would prepare and file their taxes. In 2011, ODIA began claiming illegitimate deductions and credits in her clients’ tax returns.  These false deductions and credits reduced the clients’ tax obligations and increased the tax refund.  ODIA then diverted a portion of that refund to bank accounts that she or members of her family controlled.  When ODIA provided copies of the tax returns to clients, these copies did not reflect what ODIA actually filed with the IRS so that the clients would not see that some of the refund had been directed to ODIA’s accounts.

            ODIA pleaded guilty in October 2017.  She agreed to pay restitution to the U.S. Treasury of $254,191.  Judge Bryan ordered one year of supervised release to follow the prison term.

            The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).  The case was prosecuted by Assistant United States Attorney Sidharth Velamoor.

          A repeat offender who pledged to end his criminal ways in 2009, was sentenced July 2, 2018, to 65 months in prison for his return to bank fraud, announced U.S. Attorney Annette L. Hayes. DERICO MONTEREY FULLER, 38, stole more than $287,000 from banks and businesses.  In 2009, FULLER was sentenced to 75 months in prison for a fraud totaling more than $564,000.  At the time of that sentencing FULLER pledged to turn his life around.  Instead, while on federal supervision, FULLER was arrested three times for driving under the influence and in 2016 returned to bank fraud.  In addition to the 65-month prison sentence, U.S. District Judge James L. Robart imposed five years of supervised release to follow the prison term.     

           According to records filed in the case, FULLER pleaded guilty to bank fraud and aggravated identity theft in January 2018.  In the current scheme, FULLER and his coconspirators stole personally identifying information and created fake IDs in the victim names.  The also stole business checking account numbers.  Using the fake IDs and phony checks they would make bank deposits and withdraw cash before the financial institution discovered the fraud.  The conspirators also purchased cell phones and opened lines of credit in the stolen identities.            

           The case was investigated by the King County Sheriff’s Office and the U.S. Secret Service.  The case was prosecuted by Assistant United States Attorney Andrew Friedman.

          Former Washington State Auditor TROY X. KELLEY was sentenced today in U.S. District Court in Tacoma to one year in prison for possession of stolen property, making false declarations in a court proceeding, and tax fraud, announced U.S. Attorney Annette L. Hayes.  KELLEY was convicted of eight federal felonies in December 2017, following a five-week trial. 

          The charges stem from a business KELLEY operated while also serving in the Washington state legislature.  KELLEY used some of the stolen money to fund his 2012 campaign for State Auditor.  At the sentencing hearing, U.S. District Judge Ronald B. Leighton said, “There was overwhelming evidence of guilt… He wanted money, he found a vehicle to acquire wealth and what he did was known by him to be wrong…. Somebody who has done nothing wrong does not forge documents.  He is guilty of this crime.”

            “This case stands out because of Mr. Kelley’s calculated efforts to steal nearly $3 million dollars from thousands of homeowners when he thought no one was looking,” said U.S. Attorney Annette L. Hayes.  “What’s worse, he did this while serving as a state legislator and then used part of his ill-gotten gains to fund his campaign for state auditor.  We rightly expect our public servants to comply with the law and truly serve.  I commend the prosecutors and investigators who put this case together and thus ensured Mr. Kelley’s lies and deceit were exposed for all to see.”

            According to the evidence at trial, between 2003 and 2008, KELLEY operated a business that monitored real estate filings on county websites.  KELLEY agreed with escrow companies that his business would charge a flat fee of $15 or $20 for each real estate transaction it monitored for the escrow companies’ customers.  In addition to the flat fee, the escrow companies also gave Kelley $100-$150 of customer money for each transaction, which KELLEY agreed to use to pay expenses if necessary.  KELLEY agreed to refund the money to the homeowners if there were no expenses.  However, beginning in 2005, in virtually every case he handled, KELLEY kept the entire amount withheld on each transaction, thereby stealing nearly $3 million.  

          In 2008, class action lawsuits were filed against escrow companies, claiming that homeowners had been charged excessive fees in real estate transactions.  After the lawsuits were filed, KELLEY falsified a letter to the plaintiff in one lawsuit to make it appear that KELLEY had refunded the plaintiff’s money, when in fact he had not.  Concerned that the lawsuits would lead to his downfall, KELLEY transferred millions of dollars of stolen money through a series of bank accounts, ultimately placing the funds in an investment account for a company controlled by a Central American trust controlled by KELLEY.   One of the escrow companies sued KELLEY to retrieve the stolen money.  KELLEY testified falsely under oath in the lawsuit that he had only kept money he had earned for services provided.  One of KELLEY’s convictions for making false declarations in a court proceeding is based on that testimony.

          Beginning in 2011, KELLEY spent the stolen money on personal expenses and his campaign for State Auditor.  To hide the fact that this was money he had stolen years earlier, KELLEY claimed on his tax returns that he was continuing to perform real estate services, and to earn income through his business, when in fact he had not operated the business for years.  In the same tax returns, KELLEY claimed tens of thousands of dollars of business deductions for personal items like spa treatments, a family trip, and household purchases such as sheets and toys.  KELLEY’s tax fraud convictions are based on this conduct.

          In December 2017, a unanimous jury convicted KELLEY of possession of stolen property, two counts of making false declarations under oath, and six counts of tax fraud.  Following the trial, an unrelated U.S. Supreme Court ruling resulted in the dismissal of one of the tax fraud counts.

         “During the years he ran his business Mr. Kelley stole $2.9 million from thousands of his customers.  He attempted to further conceal his misdeeds by failing to report the monies to the IRS,” said Darrell Waldon, Special Agent in Charge, IRS Criminal Investigation.  “Today’s sentence demonstrates the government’s determination to protect consumers and ensure that everyone, including elected officials, are playing by the rules and paying the taxes they owe on income received from legal and illegal sources.”

          “The vast majority of public officials are honest in their work.  Unfortunately, a small percentage abuse the trust placed in them," said Special Agent in Charge Jay S. Tabb, of the FBI's Seattle Field Division.  “Identifying and investigating those corrupt public officials is the FBI’s top criminal investigative priority.  Citizens have the right to nothing less than fair and honest government.  Mr. Kelley violated the public's confidence through criminal actions he undertook while in office to conceal his previous illegal activity. The citizens of Washington rightfully demand high ethical standards from public servants.”

            The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI) and the FBI.

            The case was prosecuted by Assistant United States Attorneys Arlen Storm, Andrew Friedman, Seth Wilkinson, Katheryn Frierson, and Michelle Jensen.  Appellate attorney Michael Morgan provided significant assistance.

          A Canadian national who was extradited in January 2018 in connection with a 2008-2009 international drug smuggling scheme, was sentenced today in U.S. District Court in Seattle to seven years in prison for conspiracy to possess with intent to distribute controlled substances, announced U.S. Attorney Annette L. Hayes.  COLIN HUGH MARTIN, 46, from British Columbia, Canada, was indicted in 2010 and pleaded guilty in March 2018.  MARTIN, the leader of the drug smuggling ring, used the code name “Rolex,” and recruited others to fly cocaine, MDMA and marijuana across the rugged northern border.  A number of his conspirators were arrested, convicted and imprisoned on related charges. MARTIN remained in Canada until his extradition on 2018.  At the sentencing hearing U.S. District Judge Robert S. Lasnik said it was, “a very significant crime.”

           “Mr. Martin directed the smuggling of large quantities of drugs from what seemed like a safe perch in Canada – never expecting to face the music back here in the United States,” said U.S. Attorney Annette L. Hayes. “This case demonstrates our dogged determination to find those responsible for significant drug crimes and work with our international partners to hold them to account.” 

            According to records filed in the case, MARTIN conspired with others to transport cocaine north across the Canadian border via helicopter.  The cargo coming south was ecstasy or BC Bud marijuana.  MARTIN gained a prominent role in the cross-border smuggling conspiracy following a March 2008 seizure of MDMA in Tukwila, and cocaine in California.  MARTIN purchased and leased various helicopters and recruited pilots to fly the illegal drugs across the border.  MARTIN also recruited others to load and off load the helicopters. MARTIN and his coconspirators used encrypted Blackberry phones and code names to communicate.  

            MARTIN’s plea agreement connects him to the following drug seizures: 83 kilos of cocaine that was seized in Utah in February 2009, on its way to a helicopter transport site in rural northeastern Washington; 190 kilos of marijuana flown into eastern Washington; 20 kilos of cocaine seized in Ontario, California in February 2009; and 79 kilograms of marijuana from Canada that was seized by agents from a helicopter that landed in Idaho on March 5, 2009.

            Co-defendant Sean William Doak was sentenced in 2016 to seven years in prison. Other co-conspirators received sentences ranging from 18 months to ten years in prison based on their level of involvement in the drug ring.

            The case was investigated by the Drug Enforcement Administration (DEA) with assistance from the Royal Canadian Mounted Police (RCMP) and the Utah Highway Patrol.

            The case is being prosecuted by Assistant United States Attorney Sarah Vogel with assistance from the Department of Justice Office of International Affairs.

            A 20-year Costco employee pleaded guilty today in U.S. District Court in Tacoma to wire fraud in connection with her five-year scheme to steal nearly $290,000 from her employer, announced U.S. Attorney Annette L. Hayes.  ROBIN G. CLINE, 54, of Puyallup, Washington, was employed as an Accounts Receivable Clerk at Costco’s Fife, Washington facility from 1996 until she resigned in 2016.  CLINE was indicted in January 2018, following an investigation that revealed that between 2011 and 2016, she had manipulated entries in business customer accounts to steal from both Costco and its customers.  U.S. District Judge Benjamin H. Settle scheduled sentencing for September 17, 2018.           

            According to records filed in the case, as a Clerk in Accounts Receivables CLINE had authority to process payments, refunds and other credits for Costco business customers.  Beginning in 2011, the investigation revealed that CLINE made false entries into customer accounts such as credits, refunds or charges.  CLINE then used these false entries to funnel money from Costco and Costco business customers into her bank accounts and a bank account associated with her son.  CLINE used false entries to steal money in multiple ways.  She made false entries indicating a customer had returned an item or disputed a purchase resulting in a credit balance on the customer account.  CLINE then funneled the credit balance to her bank account, not back to the business customer.  Another way CLINE embezzled was to double bill customers for merchandise, and then ‘correct’ the double billing by refunding money to the customer – however, CLINE arranged for the refund to be funneled into her bank accounts or her son’s bank account.         

           In all, CLINE posted more than 290 false entries involving more than 100 customer accounts.  CLINE has agreed to pay restitution of $289,975.            

           Prosecutors will recommend a two year prison term for CLINE.  The ultimate sentence will be determined by Judge Settle based on a number of sentencing factors set forth in federal law.             

          The case was investigated by the FBI.  The case is being prosecuted by Assistant United States Attorney Stephen P. Hobbs.