Western District of Washington
Press releases recorded for this federal judicial district.
Former CFO of Vancouver Business Management Company Indicted for Certifying False Financial ReportsRead the Press Release
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
Bothell Man Pleads Guilty to Sex Crimes Involving 14-Year-Old ChildRead the Press Release
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 North Sound Men Indicted for Trafficking FentanylRead the Press Release
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.
Seattle Man Pleads Guilty to Cyberstalking CampaignRead the Press Release
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 Charged in Separate Incidents of Sexual Assault Aboard Aircraft Destined for Sea-Tac Airport.Read the Press Release
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 Charged in Separate Incidents of Sexual Assault Aboard Aircraft Destined for Sea-Tac AirportRead the Press Release
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.
CEO of Two Bellevue Information Technology Companies Arrested on Visa Fraud ChargeRead the Press Release
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.
Prominent Southwest Washington Fishing Guide Sentenced to One Year in Prison for Disability Fraud SchemeRead the Press Release
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.
Canadian Sentenced to 3+ Years in Prison for Conspiracy to Export Restricted Goods and Technology to IranRead the Press Release
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.
Montesano Man who Crashed Head-On into Forks Couple while High on Meth Sentenced to 18 Months in PrisonRead the Press Release
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.
Kirkland, Washington Tax Defier Convicted of Two Decade Scheme to Avoid Paying Income TaxesRead the Press Release
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.
Burien, Washington Felon Sentenced to Prison for Trading Guns and DrugsRead the Press Release
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.
Owner of Now-Defunct Real Estate Escrow Company Sentenced to 24 Months in Prison for Bank FraudRead the Press Release
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.
Former Federal Way, Washington Tax Preparer Sentenced to Prison in Repeat Case of Filing Fraudulent Tax ReturnsRead the Press Release
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.
Two Marine Maintenance Companies Pay $2.8 Million to Settle False Claims Act InvestigationRead the Press Release
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.
Tukwila Man Sentenced to 20 Years in Prison for Production of Images of Child RapeRead the Press Release
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.
Three Members of Notorious International Cybercrime Group “Fin7” in Custody for Role in Attacking over 100 U.S. CompaniesRead the Press Release
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.pdfThree Members of Notorious International Cybercrime Group “Fin7” in Custody for Role in Attacking over 100 U.S. companiesRead the Press Release
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.
Former Schoolteacher Sentenced to 18 Months in Prison for Possession of Child PornographyRead the Press Release
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
Former Maple Valley, Washington Resident Sentenced to 22 Years in Prison for Production and Possession of Images of Child MolestationRead the Press Release
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.
Registered Sex Offender Sentenced to 20 Years in Prison for Receipt and Possession of Images of Child RapeRead the Press Release
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.
Indictments Target North Sound Drug Trafficking RingRead the Press Release
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.
Repeat Offender Sentenced to 7 Years in Prison for Illegal Firearms Possession and Conspiracy to Obstruct JusticeRead the Press Release
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.
Man who Impersonated FBI Agent to Steal from Area Businesses Pleads Guilty to Robbery, Attempted Robbery and Impersonating a Federal OfficerRead the Press Release
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.
Former Vancouver, Washington, Tax Return Preparer Sentenced to Prison for Assisting in Filing False Tax DocumentsRead the Press Release
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.
Repeat Bank Fraudster Sentenced to 5+ Years in Prison for Theft SchemeRead the Press Release
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 Sentenced to One Year in Prison for Fraud, Tax and False Statement Crimes Committed while Serving in Washington LegislatureRead the Press Release
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.
Canadian Who Arranged Drug Smuggling Helicopter Flights Across Northern Border Sentenced to 7 Years in PrisonRead the Press Release
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.
Former Costco Employee Pleads Guilty to Embezzling Nearly $290,000 by Making False Entries in Customer AccountsRead the Press Release
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.
More than 2,300 Suspected Online Child Sex Offenders Arrested Nationwide During Operation “Broken Heart”Read the Press Release
The Department of Justice today announced the arrest of more than 2,300 suspected online child sex offenders during a three-month, nationwide, operation conducted by Internet Crimes Against Children (ICAC) task forces. The task forces identified 195 offenders who either produced child pornography or committed child sexual abuse, and 383 children who suffered recent, ongoing, or historical sexual abuse or production of child pornography. In Washington State 47 offenders who were sharing images of child sexual abuse over peer-to-peer networks were identified and arrested.
The 61 ICAC task forces, located in all 50 states and comprised of more than 4,500 federal, state, local and tribal law enforcement agencies, led the coordinated operation known as “Broken Heart” during the months of March, April, and May 2018. During the course of the operation, the task forces investigated more than 25,200 complaints of technology-facilitated crimes against children and delivered more than 3,700 presentations on Internet safety to over 390,000 youth and adults.
"No child should ever have to endure sexual abuse," Attorney General Jeff Sessions said. "And yet, in recent years, certain forms of modern technology have facilitated the spread of child pornography and created greater incentives for its production. We at the Department of Justice are determined to strike back against these repugnant crimes. It is shocking and very sad that in this one operation, we have arrested more than 2,300 alleged child predators and investigated some 25,200 sexual abuse complaints. Any would-be criminal should be warned: this Department will remain relentless in hunting down those who victimize our children."
“Sadly, Washington State consistently ranks among the top states for the sharing of images of child rape and molestation across peer-to-peer file sharing networks,” said U.S. Attorney Annette L. Hayes. “I commend the investigators who do the difficult work of investigating those who create and share these horrific images. Their work puts predators behind bars where they cannot continue to hurt children.”
In Washington State the leads for peer-to-peer sharing of child pornography average 18,000-24,000 annually, putting the state in the top five with California, New York, Texas and Florida. The Washington ICAC focused specifically on the problem of peer-to-peer file sharing during Operation Broken Hearts.
The operation targeted suspects who: (1) produce, distribute, receive and possess child pornography; (2) engage in online enticement of children for sexual purposes; (3) engage in the sex trafficking of children; and (4) travel across state lines or to foreign countries and sexually abuse children.
The ICAC Program is funded through the Department’s Office of Juvenile Justice and Delinquency Prevention (OJJDP). In 1998, OJJDP launched the ICAC Task Force Program to help federal, state, and local law enforcement agencies enhance their investigative responses to offenders who use the Internet, online communication systems or computer technology to exploit children. To date, ICAC Task Forces have reviewed more than 775,000 complaints of child exploitation, which resulted in the arrest of more than 83,000 individuals. In addition, since the ICAC program's inception, more than 629,400 law enforcement officers, prosecutors and other professionals have been trained on techniques to investigate and prosecute ICAC-related cases.
For more information, visit the ICAC Task Force webpage at: https://www.icactaskforce.org/. For state-level Operation Broken Heart results, please contact the appropriate state ICAC task force commander. Contact information for task force commanders are available online at: https://www.icactaskforce.org/Pages/ContactsTaskForce.aspx.
DOJ Reaches Settlement with Washington Health Care Authority to Improve Services to Patients Who are Deaf or Hard of HearingRead the Press Release
The U.S. Department of Justice, working through the U.S. Attorney’s Office, and the Washington Health Care Authority (HCA) today entered into a settlement designed to improve important interpreter services for low income patients with hearing disabilities, announced U.S. Attorney Annette L. Hayes. The settlement calls for HCA to vastly increase the number of sign language interpreters it has available to attend Apple Health Plan (Medicaid) medical appointments and interpret for patients who are hearing impaired and/or their companions. Under the terms of the settlement, the number of interpreters under contract statewide will be increased from fewer than ten to more than 100.
“The ability of people with hearing disabilities to fully understand and thus participate in their medical care is a fundamental right protected by federal law,” said U.S. Attorney Annette L. Hayes. “Healthcare providers, and state agencies involved in healthcare, must ensure that their services are provided in a manner that does not exclude people with disabilities.”
An investigation by the U.S. Department of Justice, led by the U.S. Attorney’s Office for the Western District of Washington, revealed that since 2012, HCA’s Interpreter Services Program has contracted with CTS LanguageLink to provide interpreter services for medical appointments. However, during the term of that five year contract, CTS LanguageLink only had between zero and eight sign language interpreters available for Apple Health appointments state-wide, with no sign language interpreters available in most counties. This resulted in fewer than 30% of all requests for interpreter services being fulfilled. As a result, appointments with medical professionals were often cancelled or rescheduled when no interpreter was available. In some instances the appointments went forward with inferior means of communicating with the patient or their caregiver. The investigation concluded that HCA was violating the Americans with Disabilities Act because it failed to ensure that the Medicaid benefits of the Apple Health program were being provided equally to qualified individuals with disabilities.
Under the terms of the settlement, by July 1, 2018, HCA will contract with an interpreter service provider that has at least 100 sign language interpreters statewide. By April 2019, HCA will need to show an appointment fulfillment rate of at least 90 percent. If any region of the state falls short of that requirement, the settlement calls for HCA to take specific steps to recruit additional sign language interpreters.
The settlement also calls for immediate relief for the interpreter shortfalls by requiring HCA to permit healthcare providers to immediately obtain their own ASL interpreter for healthcare appointments outside of the HCA system and receive reimbursement by HCA for those services. The settlement also calls for HCA to use the Apple Health website and other communications tools to inform patients of their rights to interpreter services along with a grievance procedure if they believe their rights have been violated.
The agreement will be in force for three years and during that time the HCA will collect data on requests and fulfillment for sign language interpreting. The data will be provided to the U.S. Attorney’s Office, Western District of Washington on a quarterly basis so that the Department of Justice can ensure services are being provided as required.
Assistant United States Attorney Christina Fogg led the investigation and negotiated the settlement.
Joint Federal State and Local Operation Across Puget Sound Targets Violent Drug Trafficking OrganizationRead the Press Release
In the fourth major drug trafficking ring takedown in as many months, federal, state and local law enforcement officers fanned out across King, Pierce, Snohomish, Skagit and Thurston Counties to execute search warrants and arrest more than 35 members of a drug trafficking organization, announced U.S. Attorney Annette L. Hayes. Today’s arrests are the fourth takedown in a series of cases aimed at reducing drug and gang violence in Seattle, South King and North Pierce Counties. Those taken into custody today will appear at 2:00 in U.S. District Court in Seattle.
“Over the last four months, more than 80 drug dealing conspirators moving meth, heroin, cocaine and fentanyl have been taken off our streets where they preyed on destructive addictions and used gun crime to further their trade,” said U.S. Attorney Annette Hayes. “For more than a year, local police worked with federal partners to build these cases, with the goal of addressing the shifting crime problems in South Sound communities.”
U.S. Attorney General Jeff Sessions has directed U.S. Attorneys to deploy their resources to identify and address ‘hot spots’ of violent crime. Working with local law enforcement across the South Sound, federal law enforcement identified Seattle, the Rainier and Kent Valleys and North Pierce County as an area of concern for drug and gun crime. Today’s takedown comes on the heels of three other law enforcement efforts involving wire-taps and surveillance to dismantle sophisticated drug trafficking rings linked to violence in those areas. The first takedown involved five defendants trafficking crack cocaine in Seattle’s Pioneer Square neighborhood; the second, in March resulted in twenty arrests of heroin and meth traffickers operating primarily in South King County and the Tacoma area; and in May, a third takedown dismantled two criminal groups trafficking methamphetamine in south King County.
“DEA is in a race to save lives,” said Keith Weis the Special Agent in Charge for the Pacific Northwest. “These strategic operations have stopped some of the most violent criminal groups operating throughout the Puget Sound Region from pushing dangerous drugs onto our communities most vulnerable members facing life or death struggles against addiction.”
“The FBI is committed to holding violent gang members accountable for their actions,” said Special Agent in Charge Jay S. Tabb Jr., of the FBI’s Seattle Field Office. “The level of violence committed by these individuals has been detrimental to the South Sound community for years. Today’s arrests mark a major step toward addressing this problem.”
According to records filed in the case, conspirators trafficked cocaine, heroin, oxycodone, illegal marijuana and fentanyl. Associates of some of the traffickers arrested today were shot and some killed in various shooting incidents in both Seattle and south King County. On the wiretap law enforcement heard conspirators talk about various shootings after they occurred, including the September 4, 2017 shooting outside a Renton hookah lounge. Among other things, conspirators discussed getting firearms after being shot at by rival gangs.
Taken together, these four operations resulted in the seizure of 75 guns, more than 95 pounds of methamphetamine, more than 32 pounds of heroin, more than 7 pounds of cocaine (both crack and powder) as well as ecstasy and fentanyl. More than $327,000 in cash and 22 vehicles also were seized.
In addition, today alone law enforcement seized 12 pounds of heroin, more than 2 kilos of cocaine, a pound of methamphetamine, 124 pounds of marijuana, 41 firearms and hundreds of thousands of dollars in cash.
“Today, hundreds of law enforcement professionals came together to make our neighborhoods safer, taking criminals and drugs off the street and possibly saving lives,” said Seattle Police Chief Carmen Best. “As a former Narcotics commander, I recognize the tireless work that goes into these investigations. Together with our federal and local partners, we have orchestrated one of the largest investigations in recent memory. A special thanks to the FBI, DEA and the US Attorney’s Office. This level of collaboration is unprecedented.”
“The U.S. Marshals have always believed in the power of collaboration, and the effectiveness of combining the resources and expertise of our federal, state, and local law enforcement partners for the common good. Today, that tradition of collaboration continues and we are proud to be a part of it”, said Acting U.S. Marshal Jacob Green.
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 defendants in these cases face a variety of drug and gun charges. The penalties range from five years in prison to a maximum of life in prison depending on the pertinent charge.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. Attorney General Jeff Sessions reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved. This investigation was led by the Seattle Police Department Gang and Narcotics Units, FBI Seattle Safe Streets Task Force, and the Drug Enforcement Administration (DEA). Other agencies providing investigative assistance include ATF, USMS, and the U.S Bureau of Prisons.
Today’s searches and arrests involved agents and officers from: DEA, FBI, ATF, HSI, USMS, SPD, Auburn Police Department, Bellevue Police Department, Bothell Police Department, Clark County Sheriff’s Office, Des Moines Police Department, Everett Police Department, Fife Police Department, Kent Police Department, King County Sheriff’s Office (KCSO), Kirkland Police Department, Lakewood Police Department, Lewis County Sheriff’s Office, Marysville Police Department, Monroe Police Department, Mount Vernon Police Department, Mukilteo Police Department, Pierce County Sheriff’s Office (PCSO), Renton Police Department, Snohomish County Sheriff’s Office, Snohomish County Drug and Gang Task Force, Tacoma Police Department, Thurston County Narcotics Task Force, Tukwila Police Department, U.S Customs and Border Protection, U.S. Border Patrol, U.S. Postal Inspection Service, Washington Department of Corrections, Washington State Patrol, and the Yakima Police Department, and the following regional SWAT teams, SPD SWAT, Valley SWAT, North Sound Metro SWAT, Region 1 SWAT, Pierce County Metro SWAT, King County Sheriff’s Office TAC-30, Washington State Patrol SWAT, Pierce County Sheriff’s Office SWAT, and Bellevue SWAT.
In addition, the operations were conducted with the support of the FBI’s Critical Incident Response Group (CIRG) and SWAT teams from the FBI’s Salt Lake City, Portland, San Francisco, Sacramento, and Denver field offices. DEA’s Special Response Team’s (SRT) from Seattle, Los Angeles, Denver, and San Diego assisted in today’s operations. This investigation was supported by Northwest High Intensity Drug Trafficking Area (HIDTA) and the Special Operations Division (SOD).
The indictments returned today are being prosecuted by Assistant United States Attorneys Vince Lombardi, Erin Becker and Nicholas Manheim.
Lummi Tribal Member Sentenced to Six Years in Prison for Sexual Abuse of a MinorRead the Press Release
A 20-year-old member of the Lummi Tribe was sentenced Monday June 4, 2018 to six years in prison and 20 years of supervised release for sexual abuse of a minor, announced U.S. Attorney Annette L. Hayes. JASON LITTLE SKY JAMES JR, of Bellingham, Washington, was indicted in November 2017, and pleaded guilty in March 2018. U.S. District Judge James L. Robart noted the need to protect the public from JAMES JR., who will be required to register as a sex offender following his release from prison.
According to records filed in the case, between December 2016 and September 2017, JAMES, JR engaged in sexual acts with a minor female who was 13 or 14 years old. At the time of the sex acts, JAMES JR was a registered sex offender, having been convicted in Whatcom County Superior Court of indecent liberties in 2015. In the 2015 case, JAMES JR was convicted of engaging in sexual acts with a minor female who was then 13-years-old.
The cases came to light when the minor female reported the sex acts to a trusted adult, and the investigation revealed that JAMES JR. was aware of the victims’ young age at the time he engaged in sexual acts.
The case was investigated by the Lummi Police Department and the FBI. The case is being prosecuted by Assistant United States Attorneys J. Tate London and Chantelle D. Dial. Mr. London is a Tribal Liaison for the U.S. Attorney’s Office. Ms. Dial is an Indian Country Fellow, part of the Attorney General’s Honors Program.
Five People Indicted for Compromising Target’s Gift Card System and Defrauding Victims Out of Nearly $800,000Read the Press Release
Five members of a fraud ring charged with compromising the internal gift card system of major national retailer, Target Corporation, and defrauding the retailer and its legitimate customers of almost $800,000 have been indicted on wire fraud charges by a federal grand jury in Seattle, announced U.S. Attorney Annette L. Hayes. JEFFERY DOUGLAS MANN, 29, of Marysville, Washington, and JOSHUA NEWMAN, 33, of Kirkland, Washington will appear in U.S. District Court in Seattle at 2:00 today.
A third defendant, COREY MOSEY, 30, of Lynnwood, Washington is in Washington state custody on unrelated charges. The two remaining defendants KENNADY WESTON, 22, and DERRICK QUINTANA, 26, both of Everett, Washington, are being sought by law enforcement.
According to the indictment unsealed today, between May 2017 and December 2017, the ring allegedly stole gift card balances worth more than $785,000, and often sold illegally purchased goods or store gift cards for bitcoin on an internet marketplace. The co-conspirators allegedly used a special algorithm to reverse-engineer and identify unique bar code numbers of thousands of authentic gift cards sold by Target to legitimate customers. Members of the scheme then used the retailer’s automated customer service telephone system to verify balances linked to the various stolen gift card numbers. They then loaded active gift card numbers onto a mobile or electronic wallet app on their phones, which the co-conspirators used to purchase merchandise and legitimate gift cards at various Target store locations across at least five states: Washington, Oregon, California, Nevada and Colorado. For example, on one occasion in November 2017, JEFFERY DOUGLAS MANN, KENNADY WESTON, DERRICK QUINTANA, and others used roughly 180 compromised gift card numbers to make $6,900 in purchases at the Southcenter Mall Target store in Tukwila, Washington.
When the actual cardholders later tried to use their gift cards, they discovered that they had zero balance. In December 2017, Target modified its gift card system in response to the fraud, putting an end to the scheme.
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.
Wire fraud is punishable by up to 20 years in prison.
The case is being investigated by the U.S. Secret Service, with assistance from the Kirkland, Lynnwood, and West Linn (OR) Police Departments, and is being prosecuted by Assistant United States Attorney Steven Masada 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.
Former Seattle Resident Sentenced to Prison for use of ‘Molotov Cocktail’ at May Day 2016 ProtestRead the Press Release
A former Seattle resident was sentenced today in U.S. District Court in Seattle to 37 months in prison for unlawful possession of a destructive device, in particular, for making and throwing bottles filled with gasoline at police officers on May 1, 2016, announced U.S. Attorney Annette L. Hayes. WIL CASEY FLOYD, 33, of Elkhart Lake, Wisconsin, was arrested in April 2017, after a lengthy investigation that linked him to a so-called ‘Black Bloc’ of protestors who threw unlit incendiary devices at Seattle Police during a May Day protest. At the sentencing hearing Chief U.S. District Judge Ricardo S. Martinez said it was an extremely serious crime. “Throwing gasoline filled bottles during a protest – there are all sorts of people out there, old people, young people … it could have caused serious injury or death.”
“This prosecution sends a clear message – we will not tolerate attacks on the women and men in law enforcement who do the hard work of keeping us all safe,” said U.S. Attorney Annette L. Hayes. “After all, the SPD officer who was injured by the defendant was protecting our cherished First Amendment rights. No matter the disguise – black bloc or otherwise – we will identify and hold to account those who cross the line from peaceful protest to criminal assault.”
According to the plea agreement and other records in the case, FLOYD went online to research building Molotov cocktails. He purchased the necessary supplies and constructed six of the explosive devices using beer bottles. He placed the bottles filled with gasoline in a black bag. FLOYD dressed in black, wore a black hood and a gas mask and joined the protest on the evening of May 1, 2016. FLOYD threw five of the unlit destructive devices at Seattle Police Officers. One of the Molotov cocktails thrown at police shattered at the feet of an officer and ignited his trousers when a flash-bang grenade went off. The officer suffered burns to his leg. FLOYD dropped the bag containing one remaining bottle of gasoline and changed his clothes and appearance before police could arrest him.
The investigation into FLOYD’s communications revealed that nearly two months prior to May Day, on March 8, 2016, Floyd sent a text message stating, “Kill them all with fire,” referring to SPD officers. Following the May Day attack FLOYD posted remarks online, ridiculing images of injured Seattle Police who were treated for injuries caused by “black bloc’ protestors.
In court today, FLOYD said that he had gone along with a group of people, and “realized it was a mistake, but there was no turning back… I never intended anyone to get hurt…. I’ll never do anything like this again.”
Chief Judge Martinez told FLOYD that “this country was founded by protest, it’s as American as apple pie… but there are limits, there are rules of law.” In addition to the prison time, Chief Judge Martinez imposed three years of supervised release following prison with 100 hours of community service to be completed during the first year of his release.
The case was investigated by the FBI’s Joint Terrorism Task Force and the Seattle Police Department, both through its membership on the JTTF and with additional investigative groups.
The case is being prosecuted by Assistant United States Attorneys Todd Greenberg and Tom Woods.
Mississippi Man Pleads Guilty to Fraud Scheme Involving the Reselling of Food Products that were to be DestroyedRead the Press Release
A Belmont, Mississippi man who conspired with others to resell food products that were supposed to become animal feed or be used for agricultural purposes, pleaded guilty today in U.S. District Court in Seattle to conspiracy to transport property taken by fraud in interstate commerce, announced U.S. Attorney Annette L. Hayes. RANDY SPARKS, 60, admits he purchased various food and drink products from a middleman who had agreed to destroy the goods. SPARKS then resold the products from his own grocery outlet, Silver Dollar Sales, or sold them to other discount grocery chains. The investigation did not uncover any illnesses resulting from the sales. The Court will determine any restitution owed to the victims, up to an amount of $103,709 at the time of sentencing, currently set before U.S. District Judge Robert S. Lasnik on September 7, 2018.
According to records filed in the case, the scheme involved as many as 180 truckloads of food and beverage products from ten different food producers. The plea agreement details how SPARKS and a co-conspirator defrauded a Massachusetts-based company that arranged for the disposal and destruction of unsaleable food products. Specifically between July 2014 and October 2016, SPARKS and a co-conspirator represented that the commodities would be shipped to a South Dakota based business for destruction. The co-schemers produced fraudulent paperwork regarding the shipping and destruction of the goods. In fact, they were shipped to SPARKS who then sold them from his own grocery outlet or to other discount grocery chains.
The plea agreement describes how in May 2015, a juice producer in Selah, Washington, wanted 22 truckloads of apple juice destroyed because it did not meet their production standards. The producer arranged for the juice to be shipped to South Dakota to be recycled into animal feed. Instead, SPARKS shipped the juice through Seattle to Mississippi, and then sold it to outlets in Mississippi and California. The conspirators then presented the brokerage company with false documents about the destruction of the juice and the shipping history, which were ultimately provided to the manufacturer. The scheme was uncovered when some of the product was discovered on a store shelf in Maryland.
Approximately ten producers of food and beverage products had paid a combined $107,256 to have their products destroyed, which, in fact, were not destroyed, but instead resold to or by SPARKS.
The case was investigated by the Food and Drug Administration (FDA). The case is being prosecuted by Assistant United States Attorney Matthew Diggs.
Longview Woman who Purchased Guns for Violent Felon Sentenced to a Year in PrisonRead the Press Release
A Longview, Washington woman was sentenced today in U.S. District Court in Tacoma to one year in prison and three years of supervised release for abetting a felon in possession of a firearm and making a false statement during the purchase of firearm, announced U.S. Attorney Annette L. Hayes. ANDREA SIBLEY, 29, lied on federal forms and purchased at least nine firearms for her boyfriend, Brent Luyster. Luyster, is an avowed violent white supremacist who shot and killed three people, and shot a fourth woman in the face in Woodland, Washington in July 2016. SIBLEY was convicted in state court of rendering criminal assistance in connection with those murders. At the sentencing hearing today U.S. District Judge Benjamin H. Settle said, “Guns are being used to take lives of innocent people at an alarming rate. So it is a serious crime when a person is helping someone who shouldn't have guns get guns…. [You] had to know someone was going to get hurt by these firearms but that did not deter you.”
“This defendant lied repeatedly to provide multiple powerful firearms to a man with a horrible history of violence,” said U.S. Attorney Annette L. Hayes. “Each time she walked into a gun store and lied she let herself become part of a terrible crime. We will hold accountable all those who fail to comply with the laws meant to keep guns out of the hands of prohibited and dangerous persons.”
According to records filed in the case, in May 2016, Luyster and SIBLEY invited Luyster’s ex-girlfriend to visit their Longview home. Luyster assaulted the ex-girlfriend, pistol whipping her and firing shots at her as she ran from the home. The ex-girlfriend escaped, and SIBLEY left the home with her son and the ex-girlfriend’s son in her car. When stopped by police, SIBLEY denied knowing about any gunshots or violence. When deputies arrived at the home they heard gunshots from the wooded area behind the house and ultimately got Luyster to surrender. The deputies found three firearms near where Luyster had been – a semi-automatic rifle, a .40 handgun and a shotgun. Six more firearms were inside the home. ATF agents determined that SIBLEY had purchased all of the firearms using her parent’s address, making false statements on the purchase forms.
Luyster was charged with assault, reckless endangerment and unlawful possession of a firearm. On June 7, 2016, his bail was reduced and he was released based in part on a letter SIBLEY wrote on his behalf. Just over a month later, on July 15, 2016, Luyster killed three people and injured a fourth at the home in Woodland. The firearm used in those murders has never been found.
“Andrea Sibley’s criminal conduct during which she purchased the firearms for a convicted felon and white supremacist led directly to three tragic murders,” said ATF Seattle Field Division Special Agent in Charge Darek Pleasants. “While our heartfelt condolences go out to the families of those lost due to this criminal conduct, ATF is proud to have been able to work alongside our partner agencies to identify and bring Sibley to justice.”
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the Federal Bureau of Investigation (FBI), and the Cowlitz County Sheriff’s Office. The case is being prosecuted by Assistant United States Attorney Bruce Miyake.
Raids on Multiple Illegal Grow Houses in Investigation of International Money Laundering and Interstate Marijuana TraffickingRead the Press Release
Over the last few days investigators executed search warrants at 17 different Puget Sound area locations, and a commercial property in New Jersey, in connection with an internationally funded drug trafficking organization sending thousands of pounds of marijuana grown in Washington to the New York City area, announced U.S. Attorney Annette L. Hayes. One defendant, 37-year-old XIAMIN HUANG of Seattle, is in custody and her husband and his brother are being sought by law enforcement. All three are charged in a criminal complaint with conspiracy to manufacture and distribute marijuana.
“The defendants are charged with growing thousands of pounds of marijuana in Western Washington and then shipping it to the East Coast to take advantage of black market prices,” said U.S. Attorney Annette L, Hayes. “As prosecutors made clear in court hearings today, hundreds of thousands of dollars have flowed in from China to pay for grow houses and the massive electric bills associated with them. In the meantime, the communities where these grow houses are located are dealing with a host of negative impacts including distortion of real estate markets with criminals making all cash payments at inflated prices.”
According to records filed in the case, in 2016 and 2017 investigators identified several homes in King and Pierce Counties being used for indoor marijuana production. The homes, such as one on S. 124th Street in Burien had unusually high electrical bills – as much as $2,500 in one two-month billing period. On another property, members of the conspiracy made cash payments of more than $37,000 for electricity in a three month period. On May 16, 2018, law enforcement served search warrants on locations in Seattle, Burien, Kent, Tacoma, and Renton. More than 3,000 marijuana plants were seized as well as business records and equipment associated with the marijuana trafficking.
At the detention hearing today, prosecutors revealed that some of the homes had been purchased with large wire transfers of funds from the People’s Republic of China (PRC). The source of the money is still under investigation. An analysis of the email accounts and bank accounts utilized by the criminal group show efforts to structure cash deposits in order of avoid bank reporting requirements on suspicious transactions. HUANG was determined to be a flight risk and was detained pending trial.
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 Homeland Security Investigation (HSI). Significant investigative assistance was also provided by the Seattle Police Department and FBI.
The case is being prosecuted by Special Assistant United States Attorney Joe Silvio and Assistant United States Attorney Marie Dalton. Mr. Silvio is an attorney with Homeland Security Investigations, specially designated to prosecute cases in federal court.
Florida Man Who Assaulted Airline Flight Crew and Passengers Sentenced to Two Years in PrisonRead the Press Release
A Tampa, Florida, man who assaulted crew and passengers on a Delta Airlines flight bound for China was sentenced today in U.S. District Court in Seattle to two years in prison for four federal felonies in connection with the July 16, 2017 incident, announced U.S. Attorney Annette L. Hayes. JOSEPH DANIEL HUDEK IV, 24, pleaded guilty in February 2018. HUDEK claimed he suffered a psychotic episode with hallucinations after consuming marijuana edibles. In imposing the prison sentence U.S. District Judge John C. Coughenour said he could not ignore the violence to the flight attendants and passengers and the fear HUDEK caused to all of the people on the flight.
“Assaulting flight attendants and passengers, and threatening the safety of everyone on a commercial airliner will not be tolerated,” said U.S. Attorney Annette L. Hayes. “We take very seriously our responsibility to hold accountable those who victimize the flying public and airline employees. I commend the FBI for their work to ensure the victims in this case were heard and the evidence of this crime was made available for all concerned.”
According to records in the case, HUDEK was seated in first class on the Delta flight. The aircraft had 210 passengers on board and 11 crew members. The plane had just passed over Vancouver Island and was over the Pacific Ocean when HUDEK came out of the first class bathroom and in an agitated state attempted to raise the lever of the exit door of the aircraft. Two flight attendants attempted to stop HUDEK, he threw one to the floor and punched the other. When a passenger attempted to assist the flight attendants, HUDEK hit him over the head with a wine bottle. Ultimately, multiple passengers were required to restrain HUDEK, and one lowered the exit handle of the door as the aircraft returned to Seattle.
Speaking to the court, passenger Lon Arnold described how he suffered permanent injury to his vision when HUDEK punched him in the eye. HUDEK also hit Arnold over the head with a wine bottle causing a concussion. Arnold said “the violence was incredible… I was afraid he was going to kill the flight attendant.”
In addition to the two year prison sentence, Judge Coughenour ordered HUDEK to pay $67,841 in restitution to the victims and imposed three years of supervised release to follow prison. During supervised release HUDEK is not allowed to fly on a commercial aircraft.
HUDEK remains out of custody on bond. The Bureau of Prisons will determine his prison placement and will order him to report to a federal prison in the next four to six weeks.
The case was investigated by the FBI. The case is being prosecuted by Assistant United States Attorney Stephen Hobbs.
Repeat Investment Fraudster Sentenced to 8 Years in Prison for Wire Fraud, Securities Fraud and Aggravated Identity TheftRead the Press Release
A 48-year old Renton man who falsely presented himself as a legitimate investment advisor was sentenced today in U.S. District Court in Seattle to eight years in prison for eight federal felonies, announced U.S. Attorney Annette L. Hayes. RICHARD THOMAS ZIESKE was previously convicted of federal fraud charges for defrauding members of his church and others out of over $1.2 million by posing as an investment advisor. Last February ZIESKE was convicted of a similar scheme to defraud victims he met through a Renton martial arts studio. At sentencing, U.S. District Judge James L. Robart said ZIESKE has no respect for the law. “We’re talking about someone who is a serial predator in the financial markets,” the judge said. Turning to ZIESKE he added, “You take people you know and who try to help you, and then you use them in your scheme.”
ZIESKE was convicted of five counts of wire fraud, one count of securities fraud and two counts of aggravated identity theft. According to records filed in the case and testimony at trial, in 2013, ZIESKE overheard a member of his Renton martial arts studio talking about his 401k account. The victim had been forced to retire and limit his martial arts due to a degenerative neck condition. ZIESKE convinced the victim to allow him to manage more than $95,000 in retirement funds, promising big returns. Instead, ZIESKE used the money to purchase a limited edition Harley Davidson motorcycle, pay for liposuction surgery, and finance a luxury SUV. ZIESKE attempted to recruit other ‘investors,’ and convinced the founder of the martial arts studio to invest $50,000 with him.
In 2005, ZIESKE pleaded guilty to mail fraud, securities fraud and wire fraud for a scheme in which he solicited nearly $2 million from members of his church and others, fraudulently promising big returns on investments. ZIESKE was sentenced to 41 months in prison and ordered to pay more than $1.3 million in restitution. The Washington Department of Financial Institutions also entered a cease and desist order against him. The prior conduct caused a brokerage firm to close ZIESKE’s trading account during the more recent scheme after its check revealed ZIESKE’s previous conviction. ZIESKE then opened another brokerage account using the identity of another member of the martial arts studio.
Prosecutors asked that ZIESKE be ordered to pay $84,915 to his victims. Judge Robart will set the restitution amount at a later date. He ordered ZIESKE to be subject to federal supervision for three years following his prison term.
The case was investigated by the FBI. The case was prosecuted by Assistant United States Attorneys Seth Wilkinson and Michael Dion.
Attorney General Sessions and U.S. Attorney Hayes Recognize Law Enforcement Service and Sacrifice During National Police WeekRead the Press Release
Seattle – Attorney General Sessions and U.S. Attorney Annette L. Hayes for the Western District of Washington honor the service and sacrifice of federal, state, local, and tribal police officers on the occasion of National Police Week, and issuance of the FBI's 2017 Law Enforcement Officers Killed and Assaulted report.
Kalama, Washington Police Chief Randall Scott Gibson is listed in the Roll Call of Heroes as an officer who died in the line of duty in 2017. Chief Gibson went into respiratory distress while performing a high stress arrest on January 10, 2017. He was treated at a hospital, but died later that night at his home. He had been with the Kalama Police Department for six years, following a twenty-year career with the Greene County Sheriff’s Office in Missouri.
“One officer death is too many,” Attorney General Sessions said. “While we are inexpressibly grateful to have had a decrease in the number of officers killed in the line-of-duty last year, the number is still far too high. At the Department of Justice, we honor the memories of the fallen and we pray for their families. We are also following President Trump's Executive Orders to back the women and men in blue, to enhance law enforcement safety, and to reduce violent crime in America. Those priorities will help keep every American safe, including those who risk their lives for us. As always, we have their backs and they have our thanks.”
“We remember and honor Chief Gibson and his service to the citizens of Kalama, and all of us in Western Washington,” said U.S. Attorney Annette L. Hayes. Chief Gibson will be one of the officers who will be honored for their many sacrifices at the National Peace Officer Memorial Service tomorrow in Washington D.C. Sadly, 2018 began with the line of duty death of Pierce County Sheriff’s Deputy Daniel A. McCartney, 34, of Yelm, who was shot and killed while responding to a home invasion robbery. He will be honored for his ultimate sacrifice at next year’s service.”
According to statistics collected by the FBI, 93 law enforcement officers were killed in line-of-duty incidents in 2017 – a 21 percent decrease from 2016 when 118 law enforcement officers were killed in line-of-duty incidents.
Additionally, in 2017 there were 46 law enforcement officers killed in line-of-duty incidents as a result of felonious acts – this is a 30 percent decrease from 2016, when 66 law enforcement officer were killed in line-of-duty incidents as a result of felonious acts.
For the full comprehensive data tables about these incidents and brief narratives describing the fatal attacks and selected assaults resulting in injury, please see the 2017 edition of Law Enforcement Officers Killed and Assaulted report, released today.
In October 1962, Congress passed and President Kennedy signed a joint resolution declaring May 15th as National Peace Officers Memorial Day to honor law enforcement officers killed or disabled in the line of duty. The resolution also created National Police Week as an annual tribute to law enforcement service and sacrifice.
During Police Week, which is observed from Sunday, May 13 to Saturday, May 19, 2018, our nation celebrates the contributions of police officers from around the country, recognizing their hard work, dedication, loyalty and commitment in keeping our communities safe.
The names of all 93 fallen officers nationwide were formally dedicated on the National Law Enforcement Officers Memorial in Washington, DC, during the 30th Annual Candlelight Vigil on the evening of May 13, 2018.
The Candlelight Vigil is one of many commemorative events taking place in the nation’s capital during National Police Week 2018.
For more information about other National Police Week events, please visit www.policeweek.org.
To access the FBI's 2017 Law Enforcement Officers Killed and Assaulted report, please visit www.fbi.gov.
Canadian Who Operated Unlicensed Bitcoin Trading Business SentencedRead the Press Release
A Vancouver, British Columbia man was sentenced today in U.S. District Court in Seattle to 20 days of incarceration and more than $1 million in forfeitures for Operating an Unlicensed Money Transmission Business, announced U.S. Attorney Annette L. Hayes. LOUIS ONG, 37, was arrested in July 2017, after a series of bitcoin for cash sales with an undercover agent with Homeland Security Investigations. ONG repeatedly told the agent, who was posing as a member of a drug trafficking group, that he did not want to know the source of the cash so that he would have ‘plausible deniability.’ Even after ONG registered as a money transmitter, he made little effort to comply with regulations about reporting suspicious transactions. At the sentencing hearing, U.S. District Judge Robert S. Lasnik imposed three years of supervised release and noted that ONG will likely be unable to return to the U.S. from Canada.
“The dark web is not a free pass for crime and mayhem,” said U.S. Attorney Annette L. Hayes. “As this defendant knew full well, the laws and rules apply to crypto currency dealings just as they do to other types of financial transactions. I commend Homeland Security Investigations for their ongoing work to police the Internet – including the Dark Web -- to root out those who undermine public safety for all of us.”
According to records filed in the case, in December 2016, federal law enforcement responded to an ad ONG had placed regarding buying and selling bitcoin – a cryptocurrency that can be used for purchases on the dark web and elsewhere. Later in December, and again in February and March 2017, ONG traveled to the Seattle area to exchange cash for bitcoin. At various times the undercover agents specifically told ONG that the funds they were exchanging for bitcoin came from drug trafficking. ONG repeatedly told them he did not want to hear that so that he had ‘plausible deniability.’
In May 2017, ONG was observed by other HSI agents in Blaine, Washington running cash through a bill counter while sitting in his car. The agents informed him he needed to register as a money remitter with FinCEN, a bureau of the U.S. Treasury whose mission is to safeguard the financial system from illicit use and money laundering. ONG registered with FinCEN, and informed Homeland Security that he had done so. However, even after registering he failed to follow FinCEN regulations requiring the reporting of suspicious transactions – including three more with undercover agents.
ONG was arrested in the midst of his sixth financial transaction with undercover law enforcement agents. After each of the exchanges for bitcoin, law enforcement used licensed cryptocurrency exchanges to return the government funds to cash. As part of his plea agreement, ONG is forfeiting both cash and bitcoin now valued at more than $1 million.
ONG was indicted on August 16, 2017 and pleaded guilty on February 15, 2018. He was released on bond to reside with his sister in Los Angeles, California after being held for 20 days at the Federal Detention Center at SeaTac.
While on home restrictions in Los Angeles, ONG volunteered with a variety of homeless organizations and today tearfully told the court he now realizes “how his actions (as an illegal money transmitter) facilitated more people being exposed to addictive substances.”
The case was investigated by Homeland Security Investigations and is being prosecuted by Special Assistant United States Attorney Joe Silvio. Mr. Silvio is an attorney with Homeland Security Investigations who is specially designated to prosecute cases in federal court.
Gunsmith Charged with Converting Firearm to Illegal MachinegunRead the Press Release
The owner of ‘Joe’s Guns and Stuff,’ a business in Shoreline, Washington was charged today in U.S. District Court in Seattle with two counts of illegal possession of a machinegun, announced U.S. Attorney Annette L. Hayes. DANIEL JOSEPH HUNGERFORD, 73, allegedly modified and sold two illegal firearms to an undercover ATF agent. The firearms were made to fire in rapid bursts of ammunition – as a machine gun. Possession of machine guns by private citizens is illegal under federal law. HUNGERFORD will make his initial appearance in U.S. District Court in Seattle at 2:00 today.
According to the criminal complaint, on April 10, 2018, HUNGERFORD sold an undercover agent with the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) a .300 Blackout rifle where the lower receiver had been modified to accept an M16 automatic sear. The modifications made the firearm a three round burst machinegun. When making the sale, HUNGERFORD did not complete any of the required paperwork or conduct a background check as required by federal law.
On a second visit a few days later, the undercover agent again purchased gun parts that had been modified to create a machinegun. HUNGERFORD discussed his firearms work with the agent and showed him parts where the serial numbers used to identify the gun manufacturer and registration had been removed.
Illegal possession of a machinegun 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 ATF and is being prosecuted by Assistant United States Attorney Bruce Miyake.
Members of Two Different Methamphetamine Trafficking Rings Arrested in South Sound Law Enforcement ActionRead the Press Release
Coordinated teams of more than 150 law enforcement officers and agents fanned out across the Puget Sound region early today to dismantle two drug trafficking organizations, announced U.S. Attorney Annette L. Hayes. A dozen people are in custody, arrested on two different grand jury indictments charging trafficking of both methamphetamine and heroin. The arrests follow two wire-tap investigations and grew out of an earlier investigation that resulted in more than twenty arrests in March 2018. The defendants will make their initial appearances in U.S. District Court in Tacoma at 2:30 today.
“Once again, federal, state and local law enforcement partners have come together to address the drug and gun crime plaguing communities in the South Sound,” said U.S. Attorney Annette L. Hayes. “The two groups arrested today have been charged with serious crimes involving methamphetamine, heroin and guns. Today they appear in court to hear the charges against them – the beginning of the process to hold them to account and keep our communities safe. “
Today law enforcement searched a dozen homes and multiple vehicles in connection with the two drug rings. During the searches law enforcement seized 22 pounds of meth, one pound of heroin, $48,000 cash and more than 40 firearms.
“These highly coordinated operations are purposely designed to disrupt the controlling elements who are responsible for importing dangerous amounts of methamphetamine and heroin into Western Washington,” said DEA Special Agent in Charge Keith R. Weis.
As part of this investigation, prior to today, more than 65 pounds of meth was seized from one of the drug organizations during traffic stops along the I-5 corridor. In March 2017, law enforcement stopped a car with 25 pounds of meth. In three other stops in January and August of 2017 and in March of 2018, officers seized as much as 14 pounds of meth from hidden compartments in “load cars.” Law enforcement searched five homes in connection with this group: two in Federal Way, and homes in Auburn, Des Moines, and Kent. Four people are charged in connection with that drug trafficking group:
JAIME ASTORGA VEGA, 31, of Federal Way, Washington
JOSE ALVAREZ SANCHEZ, 25, of Kent, Washington
JAVIER GARCIA RODRIGUEZ, 34, of Auburn, Washington
YAJAIRA ANDRADE DIAZ, 30, of Des Moines, Washington
In the second indictment, eight people are charged with trafficking both methamphetamine and heroin:
PRISCILIANO PASCACIO PACHECO, 28, of Kent, Washington
DANNY AVILA, 28, of Enumclaw, Washington
JEFFREY A. ANONSON, 47, of Kent, Washington
MARGARITO TORRES VALDOVINOS, 24, of Seattle, Washington
FREDERICK CLAYTON BAILEY, 63, of Ravensdale, Washinbgton
ALICIA LEE ROBERTSON, 43, of Lakewood, Washington
TRINIDAD RAMIREZ RAMIREZ, 27, of Black Diamond, Washington
ISMAEL GARCIA VALENZUELA, 24, of Thermal, California
In connection with this second group, law enforcement searched three homes in Kent, as well as homes in Marysville, Seattle, Enumclaw, and Lakewood.
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.
This investigation was conducted by DEA Tacoma, the Tahoma Narcotics Enforcement Team (TNET), and the Kent Police Department, with significant assistance from the Auburn and Bonney Lake Police Departments. TNET is comprised of agents and officers from DEA, Washington State Department of Corrections, the Pierce County Sheriff’s Office and the Auburn, Tacoma, Puyallup, Bonney Lake, and Lakewood Police Departments.
The case is being prosecuted by Assistant United States Attorneys Marci L. Ellsworth and C. Andrew Colasurdo.
‘Incorrigible’ Defendant Responsible for $7.5 Million Bank Fraud Scheme Sentenced to more than 16 Years in PrisonRead the Press Release
A Seattle man with a lengthy history of bank fraud was sentenced today in U.S. District Court in Seattle to 196 months in prison and five years of supervised release for a $7.5 million bank fraud scheme, announced U.S. Attorney Annette L. Hayes. LONNIE EUGENE LILLARD, 42, pleaded guilty to conspiracy to commit bank fraud in January 2017. At a subsequent hearing, the court determined that the scheme involved attempts—most of which were successful—to steal more than $7.5 million over a period of about 18 months. At the sentencing hearing Chief Judge Ricardo S. Martinez noted that LILLARD had 12 felony convictions by the age of 20. “You’ve spent your entire life trying to defraud other people . . . . Time spent in prison has not been a deterrent to get you to stop criminal activity.”
According to records filed in the case, LILLARD was the leader of a large group of conspirators who stole point-of-sale terminals, then reprogrammed them with stolen merchant identification numbers to make it appear that the conspirators were in fact the merchants. They used the stolen point-of-sale terminals to process unauthorized return and refund transactions, and applied those credits to thousands of prepaid credit cards, prepaid debit cards, and gift cards. The conspirators then quickly spent the fraudulent proceeds—withdrawing cash from ATMs, buying merchandise they returned for cash, purchasing money orders and other negotiable instruments, transferring the funds to other gift cards or bank accounts, and buying precious metals—before the fraud was detected and the transactions reversed. The co-conspirators hid their fraud in part by setting up their operations first in hotel rooms, then in rented office space, and sometimes spoofing phone numbers, so that the transactions could not easily be traced to them. When search warrants were served on the homes of LILLARD and two of his co-conspirators, as well as a storage locker, law enforcement located more than 1,000 access devices, about 15 point-of-sale terminals, notebooks filled with used and unused merchant identification numbers, and thousands of receipts documenting the fraud. The victims in this case include payment processors (some owned by banks such as Chase) and dozens of merchants such as Old Country Buffet, See’s Candies, Michaels, Quiznos, and many more.
LILLARD was the leader of the scheme, and has a long history of fraud convictions in both state and federal court. In 2006, when LILLARD was sentenced in Nevada to nearly nine years in prison, the prosecutor called him ‘incorrigible’ – something LILLARD denied, claiming he planned to turn his life around upon release from prison. Evidence indicates he began planning the current fraud even before he completed his last prison sentence. Within weeks of his release, LILLARD had the new fraud scheme up and running.
A co-defendant, Nathaniel Wells, who also participated in leading the implementation of the scheme, was sentenced to just over 11 years in prison in March 2018. The defendants are responsible for $5,816,938 in restitution.
The case was investigated by the FBI Cyber Task Force. The case was prosecuted by Assistant United States Attorney Erin H. Becker and Special Assistant United States Attorney Benjamin Diggs.
Ecuadoran Leader of Heroin Distribution and Money Laundering Ring Sentenced to PrisonRead the Press Release
The leader of a heroin distribution ring who laundered the proceeds back to his native Ecuador was sentenced today in U.S. District Court in Seattle to 57 months in prison, announced U.S. Attorney Annette L. Hayes. FREDY RAMON GUTAMA-GUTAMA, 26, who resided in Lynnwood, Washington, conspired with his brother and others to make drug sales in various parks in north Seattle and hide their drug supply in various publicly accessible locations. At the sentencing hearing U.S District Judge Thomas S. Zilly said “Heroin is a terrible epidemic in our country…. This defendant was participating in the distribution of a significant amount of heroin…. He sold 500 doses in one sale, and left heroin in places where there was access to everyone, including children.”
“This defendant and his heroin dealing contributed to the opioid crisis affecting our neighborhoods and communities,” said U.S. Attorney Hayes. “In addition, in an effort to avoid getting caught, he and his co-conspirators stashed their drugs in publicly accessible places, often near public parks, thus putting kids and others at unnecessary risk.”
According to records filed in the case, the defendants repeatedly sold heroin to a person working with law enforcement and sent the cash proceeds both across the country and to Ecuador. While under law enforcement surveillance, the conspirators stashed some of their drugs in a rockery in the Roosevelt neighborhood of north Seattle that was very near the park and children’s playground at the Ravenna-Eckstein Community Center. Law enforcement seized the drugs. The conspirators were also observed making drug sales at Green Lake Park and in Northacres Park. The men hid their drugs in a public place to reduce their risk of being caught by law enforcement with significant quantities of heroin in their possession.
FREDY RAMON GUTAMA-GUTAMA was indicted in March 2017, and pleaded guilty in January 2018 to conspiracy to distribute heroin and conspiracy to commit money laundering. His brother, Fabian Martin Gutama-Gutama, 20, pleaded guilty and was sentenced last month to 18 months in prison. Both men will likely be deported following their prison terms.
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 the Drug Enforcement Administration and is being prosecuted by Assistant United States Attorneys Sarah Vogel and Kate Vaughan.
If you, or someone you know, would like information about resources for those suffering from a heroin or other substance abuse addiction, you can call the 24 hour Washington Recovery Helpline at 1 866-789-1511, or go to the University of Washington Alcohol and Drug Institute website . If you are between 13 and 20 years old you can also call Teen Link at 1866TEENLINK (1 866 833 6546) to talk to a teen volunteer.
Two Guatemalan Nationals Sentenced in Connection with Labor Trafficking Scheme and Forced Labor of Other Guatemalan NationalsRead the Press Release
WASHINGTON – Two Guatemalan nationals were today sentenced in U.S. District Court in Tacoma, Washington, for their scheme to exploit other Guatemalan nationals for their own financial gain, announced Acting Assistant Attorney General John Gore of the Civil Rights Division and U.S. Attorney Annette L. Hayes of the Western District of Washington. Antonio Francisco-Pablo, 60, residing in Forks, Washington, was sentenced to 3 years in prison for one count of forced labor. Antonia Marcos Diego, 42, also residing in Forks, Washington, was sentenced to one year of probation for one count of document servitude in furtherance of forced labor. At the sentencing hearing, U.S. District Judge Ronald B. Leighton described their crimes as a “despicable offense” and a “serious degree of exploitation.”
According to documents filed in court, defendant Antonia Marcos Diego and her husband, Antonio Francisco-Pablo, lured Diego’s sister to enter the United States from Guatemala, falsely promising that they would provide her with a home, a job earning a lot of money, and a good life. Contrary to these promises, however, the defendants saddled the victim with significant debt upon arrival in the United States, and informed her that she would work off the debt by picking salal, a plant commonly used by florists. The defendants retained all of the victim’s earnings and increased her debt by imposing additional charges on her for food, housing, transportation, and utilities. The defendants also kept the victim’s identification documents and threatened her with deportation if she ever tried to leave them. According to court documents, the defendants similarly lured another relative to the United States from Guatemala, and also imposed a significant debt upon him after his arrival.
“The defendants forced their own family members to work for no pay after luring them to the United States on false promises of a better life,” said Acting Assistant Attorney General John Gore. “The Department of Justice will continue to prosecute labor traffickers, who exploit vulnerable individuals for their own greed and erode the American ideals of freedom, opportunity, and the rule of law.”
“What these defendants did to their victims amounts to modern day slavery and will not be tolerated,” said U.S. Attorney Annette L. Hayes. “All of us in law enforcement are committed to addressing the needs of victims and holding perpetrators to account. I encourage anyone with information about this kind of forced labor victimization to go to law enforcement and be part of the solution.”
Both defendants will pay $18,950 in restitution to the victims. Francisco-Pablo was in the U.S. unlawfully, and it is virtually certain that he will be deported following his prison term. Antonia Marcos Diego will be on probation for one year.
The case was investigated by the Department of Homeland Security’s Homeland Security Investigations and the Federal Bureau of Investigation, with assistance from the Clallam County Sheriff’s Office, Port Angeles Police Department, and Washington State Patrol Crime Laboratory.
The case is being prosecuted by Assistant United States Attorney Bruce F. Miyake and Trial Attorney Matthew T. Grady of the Civil Rights Division’s Human Trafficking Prosecution.
DEA aims for record removal of unused pills through its 15th National Prescription Drug Take Back Day InitiativeRead the Press Release
This weekend DEA and its partners will host one of the most popular DEA community programs: National Prescription Drug Take Back Day. On Saturday April 28th, 2018, between 10 a.m. and 2 p.m., the public can dispose of their unused and unwanted prescription medications at one of the 182 collection sites in the Pacific Northwest (PNW), operated by 153 local law enforcement agencies and other community partners.
This initiative addresses a vital public safety and public health issue. Medicines that languish in home cabinets are highly susceptible to diversion, misuse and abuse. Rates of prescription drug abuse in the U.S. are alarmingly high, as are the number of accidental poisonings and overdoses due to these drugs. DEA launched its prescription drug take back program when both the Environmental Protection Agency and the Food and Drug Administration advised the public that flushing these drugs down the toilet or throwing them in the trash posed potential safety and health hazards.
When the results of the 14 DEA Take Back Days for the PNW are combined, DEA and its state, local, and tribal law-enforcement and community partners removed over 402,928 pounds (201.4 tons) of medication from circulation. Since the program began eight years ago, over 9 million pounds – more than 4,500 tons of prescription medications have been collected nationwide
The public can find a nearby collection site by visiting www.DEATakeBack.com or by calling 800-882-9539. Only pills and other solids, like patches, can be brought to the collection sites—liquids and needles or other sharps will not be accepted.
The service is free and anonymous.
Former Postal Worker Indicted for Stealing Electronics from Priority Mail Processing FacilityRead the Press Release
A former postal worker has been charged with federal crimes for stealing mail, announced U.S. Attorney Annette L. Hayes. JAMIE GUHLKE, 55, of Federal Way, Washington pleaded not guilty to three counts of theft of mail by an officer or employee at her initial appearance on the indictment on April 16, 2018. Trial on the charges is scheduled in front of Judge James L. Robart on June 25, 2018.
According to records filed in the case, in 2015, while still employed as a mail handler at the United States Postal Service Priority Mail Annex in Kent, Washington, GUHLKE stole as many as 44 packages mailed by an online electronics distributor to customers across the country. The packages contained digital devices, including Apple iPads and Samsung Galaxy tablets. The thefts interfered with operations at the Priority Mail Annex, which is responsible for processing the vast majority of Priority Mail that originates in Washington State. Law enforcement traced two of the devices to a local pawn shop, and determined that other items were sold via the online marketplace ‘OfferUp’. One additional device was found in GUHLKE’s possession. When GUHLKE left work on August 27, 2015, her car was stopped by Special Agents of the United States Postal Service – Office of Inspector General. Visible inside the car on the front passenger seat was the stolen device. Following the traffic stop, GUHLKE was barred from postal service property and her employment was terminated.
The case was investigated by the U.S. Postal Service - Office of Inspector General (USPS-OIG) and is being prosecuted by Assistant United States Attorney Siddharth Velamoor.
Owner of Sports Memorabilia Stores Pleads Guilty to Failing to Pay Employment TaxesRead the Press Release
The owner of two Pierce County sports memorabilia and card gaming shops pleaded guilty today in U.S. District Court in Tacoma to 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. In his plea agreement, KNUTSEN admits 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. KNUTSEN agreed to pay the taxes and any interest imposed by the IRS. KNUTSEN faces up to five years in prison when sentenced by U.S. District Judge Robert J. Bryan on July 20, 2018.
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.
Because KNUTSEN was not filing tax forms or paying taxes to the IRS, the employees working at the shops failed to accrue individual Social Security benefits.
The case is being investigated by the Internal Revenue Service Criminal Investigation. The case is being prosecuted by Assistant United States Attorney Steven Masada.