Central District of California

Today, the Department of Justice, and its Joint Criminal Opioid and Darknet Enforcement (JCODE) team and international partners, announced the results of Operation SpecTor, which included 288 arrests – the most ever for any JCODE operation and nearly double that of the prior operation. Law enforcement also conducted more seizures than any prior operation, including 117 firearms, 850 kilograms of drugs that include 64 kilograms of fentanyl or fentanyl-laced narcotics, and $53.4 million in cash and virtual currencies.

Operation SpecTor was a coordinated international effort spanning three continents to disrupt fentanyl and opioid trafficking on the darknet, or dark web. The operation was conducted across the United States, Europe, and South America, and was a result of the continued partnership between JCODE and foreign law enforcement against the illegal sale of drugs and other illicit goods and services on the darknet. Operation SpecTor builds on the successes of prior years’ operations and takedowns of marketplaces, which result in the seizure of darknet infrastructure providing investigators across the world with investigative leads and evidence. JCODE and Europol’s European Cybercrime Centre (EC3) continue to compile intelligence packages to identify entities of interest. These leads allow U.S. and international law enforcement agencies to identify darknet drug vendors and buyers, resulting in a series of coordinated, but separate, law enforcement investigations, resulting in the statistics announced today.

This year’s law enforcement operation was accompanied by a public awareness campaign called Operation ProtecTor aimed to promote public safety and spread awareness of resources for those struggling with substance abuse and who go through extreme lengths to obtain opioids. JCODE has worked with every FBI field office in the country to facilitate outreach to households that have purchased individual amounts of opioids from the darknet. The interagency efforts are aimed to both identify those who use anonymizing technologies to purchase illicit narcotics and direct them to available resources.

“Operation SpecTor was a coordinated international law enforcement effort, spanning three continents, to disrupt drug trafficking on the dark web and represents the most funds seized and the highest number of arrests in any coordinated international action led by the Justice Department against drug traffickers on the dark web,” said Attorney General Merrick B. Garland. “Our message to criminals on the dark web is this: You can try to hide in the furthest reaches of the internet, but the Justice Department will find you and hold you accountable for your crimes.”

“The availability of dangerous substances like fentanyl on dark net marketplaces is helping to fuel the crisis that has claimed far too many American lives,” said FBI Director Christopher Wray. “That's why we will continue to join forces with our law enforcement partners around the globe to attack this problem together. The FBI is proud to stand with our domestic and foreign partners as we continue to shine that light into the deepest corners of the dark net and hold those accountable who continue to peddle this poison around the world.”

“The Sinaloa and Jalisco drug cartels, and the global networks they operate are killing Americans by sending fentanyl into the United States. Their associates distribute this fentanyl into communities across America by every means possible, including the dark web,” said DEA Administrator Anne Milgram. “The DEA is committed to shutting down the fentanyl supply chain from beginning to end, and we will relentlessly pursue the associates of these cartels wherever they hide, even in the dark corners of the internet.”

“Our coalition of law enforcement authorities across three continents proves that we all do better when we work together,” said Executive Director Catherine De Bolle of Europol. “This operation sends a strong message to criminals on the dark web: international law enforcement has the means and the ability to identify and hold you accountable for your illegal activities, even on the dark web.”

“Collaboration with our law enforcement partners is key to combatting fentanyl and opioid trafficking,” said Chief Jim Lee of the IRS Criminal Investigation (IRS-CI). “Under the JCODE umbrella, law enforcement agencies across the globe have joined forces to take down criminals who use the darknet to buy and sell narcotics. Our team at IRS-CI plays an integral role in these investigations by following the money trail, whether it’s in fiat currency or digital assets on the blockchain.”

“The illicit movement of opioids poses a significant threat to public health and safety – whether by known transnational criminal gang members across international borders or anonymously through darknet spaces,” said Senior Official Performing the Duties of Deputy Director P.J. Lechleitner of Homeland Security Investigations (HSI). “Our HSI special agents, alongside federal and international partners, continue to aggressively investigate, disrupt, and dismantle networks responsible for trafficking dangerous, deadly narcotics and other contraband across global communities we are charged with protecting. We will continue to pursue bad actors engaged in these crimes to ensure they face justice, while protecting victims from these lethal substances.”

“The U.S. Postal Inspection Service leverages our specialized knowledge of the postal system as part of sophisticated dark web investigations such as Operation SpecTor with great results,” said Chief Postal Inspector Gary R. Barksdale of the U.S. Postal Inspection Service. “We are committed to taking all necessary actions to combat illicit drugs in the mail. And we thank our law enforcement partners for working with us to achieve this; removing dangerous illicit substances from the mail and American communities saves lives.”

“Addressing our nation’s drug overdose crisis and epidemic of substance use disorders is an issue of great concern and remains a top public health priority for the U.S. Food and Drug Administration (FDA),” said Commissioner Robert M. Califf, M.D., of the FDA. “The FDA has undertaken strategic and impactful actions to prevent drug overdoses and reduce deaths and is committed to using all of our cyber-resources to shed light on the darkest corners of illicit medical supply chains for the health and safety of all Americans.”

Operation SpecTor resulted in over 100 federal operations and prosecutions, including:

• On Dec. 1, 2022, Anton Peck, 29, of Boca Raton, Florida, was sentenced to 16 years in prison for conspiring to possess with the intent to distribute controlled substances, including fentanyl, methamphetamine, and heroin. According to court documents, between May 2021 and May 2022, Peck distributed narcotics from various darknet markets using the vendor profile “Syntropy.” After the transactions were carried out using cryptocurrency, Peck and co-conspirators Kevin Fusco and Vincent Banner mailed parcels containing fentanyl, heroin, and methamphetamine to cities around the country using the U.S. Postal Service (USPS). Fusco, 35, of West Palm Beach, Florida, was sentenced to 11 years in prison for conspiring to distribute fentanyl, heroin, and methamphetamine. Banner, 31, of Boynton Beach, Florida, is scheduled to be sentenced on June 8 after pleading guilty to one count of conspiracy to possess with intent to distribute fentanyl, methamphetamine, and heroin. Law enforcement recovered kilogram quantities of fentanyl, cocaine, methamphetamine, and heroin from business and storage locations in West Palm Beach, Boca Raton, and New York City. Peck possessed a list of more than 6,000 customers living across the United States. The DEA, FBI, USPS Office of Inspector General (USPS-OIG), U.S. Postal Inspection Service (USPIS) and the Palm Beach County Sheriff’s Office investigated the case. The U.S. Attorney’s Office for the Southern District of Florida is prosecuting the case.
• On Nov. 18, 2022, a federal grand jury returned an indictment charging Christopher Hampton, 36, of Cerritos, California, with heading an organization that obtained bulk fentanyl, operated labs in California that used high-speed pill presses to create fake pills containing fentanyl and methamphetamine, and sold millions of pills to thousands of customers on the darknet. Hampton was named in an 11-count indictment that charges him with various narcotics and weapons offenses that could result in a sentence of life in prison. According to court documents, he was active on at least nine darknet marketplaces where he typically used the moniker “Narco710.” Hampton allegedly sold nearly $2 million worth of narcotics on two of these darknet marketplaces alone. He was arrested on Nov. 2, 2022, at which time federal law enforcement executed search warrants that led to the discovery and seizure of 450 pounds of suspected narcotics; six pill press machines, some of which were capable of producing thousands of pills per hour; and illegal firearms that included assault rifles and a machine gun. Agents later located a storage unit linked to the drug conspiracy and seized over 80 pounds of pressed fentanyl pills, eight guns, and precursor materials to press additional pills. The FBI JCODE and DEA HIDTA Tactical Diversion Squad investigated the case. The U.S. Attorney’s Office for the Central District of California is prosecuting the case.
• On May 12, 2022, a federal grand jury returned a two-count indictment charging Holly Adams, 31, and Devlin Hosner, 33, of Indio, California, with conspiracy to distribute and possess with intent to distribute fentanyl and methamphetamine, and with conspiracy to launder money. According to court documents, Adams and Hosner operated the vendor accounts “igogrrawwr” and “its4real” on the darknet marketplaces ToRReZ and Darkode, respectively, through which they sold tens of thousands of counterfeit oxycodone pills containing fentanyl in exchange for cryptocurrency. Adams and Hosner shipped these fentanyl pills to buyers throughout the United States, using the USPS, UPS, and other means of delivery. In the course of their conspiracy, Adams and Hosner finalized over 1,100 transactions of narcotics and other contraband and received more than $800,000 in cryptocurrency. Federal law enforcement officers executed a search warrant at a hotel in Riverside county where Adams and Hosner were residing and recovered more than 10,000 counterfeit oxycodone pills as well as approximately 60 grams of methamphetamine. The IRS-CI, HSI, FBI, USPIS, and USPS-OIG investigated the case. The U.S. Attorney’s Office for the Eastern District of California is prosecuting the case.

Operation SpecTor was a collaborative initiative across JCODE members, including the Department of Justice, FBI, DEA, USPIS, HSI, IRS-CI, ATF, Naval Criminal Investigative Service (NCIS), and the FDA’s Office of Criminal Investigations. This operation was aided by non-operational supporting participation from the Financial Crimes Enforcement Network (FinCEN) and U.S. Customs and Border Protection (CBP). Local, state, and other federal agencies also contributed to Operation SpecTor investigations through task force participation and regional partnerships. The investigations leading to Operation SpecTor were significantly aided by support and coordination by the Justice Department’s Organized Crime Drug Enforcement Task Forces (OCDETF); multi-agency Special Operations Division; the Criminal Division’s Computer Crime and Intellectual Property Section, Money Laundering and Asset Recovery Section’s Digital Currency Initiative, Narcotic and Dangerous Drug Section, and Fraud Section; the Justice Department’s Office of International Affairs; Europol and its Dark Web team; and international partners. The international partners include Eurojust; Austria’s Federal Criminal Police Office (Bundeskriminalamt); France’s Directorate-General of Customs and Indirect Taxes (Douane); Germany’s Federal Criminal Police Office (Bundeskriminalamt), Central Criminal Investigation Department of Oldenburg (Zentrale KriminaIinspektion Oldenburg), General Prosecutor’s Office in Frankfurt/Main - Cybercrime Center (Generalstaatsanwaltschaft Frankfurt/Main, Zentralstelle zur Bekämpfung der Internetkriminalität), Berlin Police (Polizei Berlin), various police departments (Dienststellen der Länderpolizeien), German Customs Investigation (Zollfahndungsämter); the Netherland’s National Police (Politie); Poland’s Central Cybercrime Bureau (Centralne Biuro Zwalczania Cyberprzestępczości); Brazil’s Civil Police of the State of Piauí (Polícia Civil do Estado do Piauí), Civil Police of the Federal District (Polícia Civil do Distrito Federal), National Secretariat of Public Security - Directorate of Integrated Operations and Intelligence - Cyber Operations Laboratory (Laboratório de Operações Cibernéticas da Diretoria de Operações Integradas e de Inteligência - Secretaria Nacional de Segurança Pública); Switzerland’s Zurich Cantonal Police (Kantonspolizei Zürich) and Public Prosecutor’s Office II of the Canton of Zurich (Staatsanwaltschaft II); and the United Kingdom’s National Crime Agency (NCA) and National Police Chief’s Council (NPCC).

Federal investigations and prosecutions are being conducted in more than 30 federal districts, including the District of Arizona, the Central District of California, the Eastern District of California, the Northern District of California, the Southern District of California, the District of Colorado, the District of Connecticut, the District of Columbia, the District of Delaware, the Southern District of Florida, the Northern District of Georgia, the Southern District of Indiana, the Eastern District of Kentucky, the District of Maryland, the District of Massachusetts, the Eastern District of Michigan, the Western District of Michigan, the Eastern District of Missouri, the Western District of Missouri, the District of Nebraska, the District of Nevada, the District of New Jersey, the Eastern District of New York, the Southern District of New York, the Western District of North Carolina, the Northern District of Ohio, the Southern District of Ohio, the Eastern District of Pennsylvania, the Middle District of Pennsylvania, the District of South Dakota, the Eastern District of Tennessee, the Eastern District of Texas, the Northern District of Texas, the Southern District of Texas, the District of Vermont, the Eastern District of Virginia, and the Western District of Washington.

The Justice Department established the FBI-led JCODE team to lead and coordinate government efforts to detect, disrupt, and dismantle major criminal enterprises reliant on the darknet for trafficking opioids and other illicit narcotics, along with identifying and dismantling their supply chains.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

LOS ANGELES – A plastic surgeon in Beverly Hills, along with his son, medical practices and billing company, have agreed to pay $23.9 million to resolve allegations that they violated the False Claims Act by submitting or causing the submission of false claims to both Medicare and Medicaid.

The settlement announced today resolves allegations that Dr. Joel Aronowitz; Daniel Aronowitz; Joel A. Aronowitz, M.D., a medical corporation; Tower Multi-Specialty Medical Group; Tower Wound Care Center of Santa Monica, Inc.; Tower Outpatient Surgery Center, Inc.; and Tower Medical Billing Solutions (the Settling Parties) falsified the place of service for skin grafts and billed multiple times for single-use skin substitute products.

The United States contends that the settling parties manipulated the place of service code on claims for skin grafts to fraudulently maximize reimbursement from Medicare and Medicaid. The United States further contends that Dr. Aronowitz failed to properly dispose of unused portions of single-use skin graft materials and, instead, used them in later procedures involving other Medicare and Medicaid beneficiaries, resulting in thousands of instances of double billing. 

“Our investigation revealed a long-running practice to illegally maximize profits, ultimately costing public health programs millions of dollars,” said United States Attorney Martin Estrada. “The Medicare and Medicaid programs are taxpayer-funded programs, and we are committed to wiping out abuses that line the pockets of unscrupulous providers.”

“When health care providers violate federal health care program requirements, they undermine the integrity of these programs and waste taxpayer dollars,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This settlement demonstrates the Department’s commitment to preventing providers from misappropriating public funds for their own private gain.”

In connection with the settlement, the United States Department of Health and Human Services, Office of Inspector General (HHS OIG), negotiated the voluntary exclusion of Dr. Aronowitz and Tower Multi-Specialty Medical Group from Medicare, Medicaid, and all other federal health care programs for a period of 15 years. Daniel Aronowitz will be excluded for three years.

“HHS-OIG, along with our law enforcement partners, is committed to holding providers accountable for defrauding federal health care programs,” said Special Agent in Charge Timothy B. DeFrancesca of HHS-OIG. “Those who egregiously exploit Medicare and Medicaid put their personal financial gain before patients’ needs and safety.”

Medicaid is funded jointly by the states and the federal government. The state of California paid for a portion of the Medicaid claims at issue and will receive a total of approximately $497,619 from the settlement.

The civil settlement includes the resolution of claims brought under the qui tam, or whistleblower, provisions of the False Claims Act by parties that worked for Dr. Aronowitz and his associated medical practices and businesses: TDP, a billing company; Dr. Jason Morris, a podiatrist; and Harold Bautista, a billing department employee. Under the qui tam provisions, a private party can file an action on behalf of the government and receive a portion of any recovery. The civil lawsuits, all of which were filed in federal court in Los Angeles, are captioned: United States ex rel. TDP RCM Servs., LLC v. Aronowitz, et al., United States ex rel. Morris, et al. v. Tower Wound Care Ctr. of Santa Monica, Inc., et al., and United States ex rel. Bautista et al. v. Tower Outpatient Surgery Center, Inc., et al.. The amount to be recovered by the private parties has not been determined.

The resolution obtained in this matter was the result of a coordinated effort between the United States Attorney’s Office in Los Angeles and the United States Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section. HHS OIG assisted in the investigation.

The matter was handled by Assistant United States Attorney Aaron Ezroj of the Civil Fraud Section and Trial Attorney Lyle Gruby of the Justice Department’s Civil Division. The exclusions of the individuals and entity were negotiated by Senior Counsel Patrice Drew for HHS OIG. 

The investigation and resolution of this matter illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The claims resolved by the settlement are allegations only and there has been no determination of liability.

LOS ANGELES – A former pediatrician pleaded guilty today to possessing child sexual abuse material (CSAM) on dozens of DVDs and to possessing hundreds of such images on his personal computing devices.

Gary David Goulin, 62, of the Beverly Grove neighborhood of Los Angeles, pleaded guilty to one count of possession of child pornography.

According to his plea agreement, Goulin in November 2021 knowingly possessed four DVDs that contained sexually explicit material involving minors who were under the age of 12 years old. Goulin further admitted in his plea agreement to knowingly possessing an additional 57 DVDs that contained CSAM. The average run time on these DVDs was three hours and 21 minutes.

Goulin admitted that in August 2021 he used his cellphone to knowingly receive a video of CSAM. In total, Goulin possessed more than 600 images that he knew constituted child pornography, some of which showed children engaging in sadistic or masochistic conduct.

As part of his plea agreement, Goulin has agreed to register as a sex offender.

United States District Judge Maame Ewusi-Mensah Frimpong scheduled an October 13 sentencing hearing, at which time Goulin will face a statutory maximum sentence of 20 years in federal prison.

Goulin was charged in Los Angeles Superior Court with possession of child pornography and sexual exploitation of a child. That case was dismissed considering the federal charges against Goulin, which a grand jury brought via indictment in October 2022.

In November 2021, the Medical Board of California prohibited Goulin from practicing medicine.

The FBI and the Los Angeles Police Department investigated this matter.

Assistant United States Attorney Sarah S. Lee of the General Crimes Section is prosecuting this case.

LOS ANGELES – The final defendant in a conspiracy – led by a woman serving a life sentence for murder – that used stolen identities of California prison inmates and others to fraudulently obtain at least $993,181 in state unemployment insurance (UI) benefits pleaded guilty today to a federal criminal charge.

Mykara Destiny Robinson, 24, of Los Angeles, who was charged under the incorrect name of “Mykara Destiny Robertson,” pleaded guilty today to one count of bank fraud. 

Robinson is the 13th and final defendant to plead guilty in this case, whose lead defendants are Natalie Le Demola, 38, originally of Corona and who currently is serving a life prison sentence after she was convicted in 2005 of first-degree murder, and Carleisha Neosha Plummer, 33, of Los Angeles, a close prison associate of Demola’s until her parole in July 2020. 

The case’s other defendants are:

• Khanshanda Eugenea King, 32, of Los Angeles;
• Cleshay Johnson, II, 29, of Los Angeles;
• James Antonio Johnson, 32, of Los Angeles;
• Felicite Aleisha King, 42, of Los Angeles;
• Shafequah Lynete Mitchell, 34, of Los Angeles;
• Loresha Shamone Davis, 32, of Moreno Valley;
• Porsha Latrice Johnson, 33, of Lynwood;
• Donisha Lashawn Pace, 39, of South Los Angeles;
• Dominique Charmone Martin, 38, of Yucaipa; and
• Amber Jane Wade, 35 of Palmdale.

Demola, Plummer, and other co-conspirators “would acquire the personal identifying information (PII), such as the names, dates of birth, and Social Security numbers, of individuals, including identity theft victims, who were not eligible for UI benefits, including pandemic benefits, because they were employed, retired, or incarcerated,” according to a 39-count indictment returned in May 2022.

Members of the conspiracy then used the information to make fraudulent online applications for UI benefits from the California Employment Development Department (EDD). Once the applications were approved, members of the conspiracy received EDD-funded debit cards that allowed them to withdraw money from ATMs across Southern California.

According to Robinson’s plea agreement, the conspiracy began in June 2020 and Robinson joined it two months later. Robinson and other members of the conspiracy assumed the identities of California prison inmates and used EDD debit cards issued in their names to make fraudulent cash withdrawals of UI benefits, including pandemic benefits, from Bank of America ATMs in Los Angeles County.

As to Robinson specifically, from August 2020 to October 2020, Robinson and her co-conspirators used 10 debit cards to withdraw a total of approximately $68,742 in fraudulently obtained EDD funds from ATMs in Southern California. But, in total during the scheme, Robinson and other co-conspirators withdrew at least $993,181 in EDD funds from approximately 151 fraudulent accounts.

United States District Judge John F. Walter scheduled a July 3 sentencing hearing for Robinson, at which time she will face a statutory maximum sentence of 30 years in federal prison.

Demola pleaded guilty on March 7 to one count of conspiracy to commit wire fraud and bank fraud, three counts of bank fraud, and one count of aggravated identity theft. She faces a statutory maximum sentence of 30 years on the conspiracy and bank fraud counts, and a mandatory two-year consecutive sentence for the aggravated identity theft count, at her July 10 sentencing hearing.

Plummer pleaded guilty on April 17 to one count of conspiracy to commit wire fraud and bank fraud, and one count of aggravated identity theft. She faces up to 32 years in federal prison at her July 14 sentencing hearing.

The case’s other defendants have pleaded guilty to conspiracy to commit wire and bank fraud, bank fraud, and/or aggravated identity theft based on their respective roles within the scheme. Most defendants will face a statutory maximum sentence of 30 years in federal prison. 

The investigation into this scheme was conducted by the Los Angeles El Camino Real Financial Crimes Task Force, a multi-agency task force led by Homeland Security Investigations that includes federal and state investigators who are focused on financial crimes in Southern California. The California Employment Development Department, the California Department of Corrections and Rehabilitation, the United States Department of Labor – Office of Inspector General, the Inglewood Police Department, and the United States Marshals Service participated in this investigation.

Assistant United States Attorney David C. Lachman of the Terrorism and Export Crimes Section and Assistant United States Attorney Nisha Chandran of the Cyber and Intellectual Property Crimes Section are prosecuting this case.

Anyone with information about allegations of fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

Two federal indictments were unsealed today in the District of Columbia charging a North Korean Foreign Trade Bank (FTB) representative for his role in separate money laundering conspiracies designed to generate revenue for the Democratic People’s Republic of Korea through the use of cryptocurrency.

“The charges announced today respond to innovative attempts by North Korean operatives to evade sanctions by exploiting the technological features of virtual assets to facilitate payments and profits, and targeting virtual currency companies for theft,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “We will continue to work to disrupt and deter North Korean actors and those who aid them by following the money on the blockchain and shining a light on their conduct.”

According to court documents, Sim Hyon Sop (Sim), 39, is charged with allegedly conspiring with over-the-counter (OTC) cryptocurrency traders to use stolen funds to buy goods for North Korea and for conspiring with North Korean IT workers to generate revenue through illegal employment at blockchain development companies in the United States.

The first indictment involves a conspiracy between Sim and three OTC traders to launder stolen funds from virtual currency exchange hacks to make payments in U.S. dollars for goods on behalf of the North Korean government. The second involves a conspiracy between Sim and various North Korean IT workers to launder proceeds of illegal IT development work, where the IT workers gained employment at U.S. blockchain development companies using fake identities, and then laundered their ill-gotten gains through Sim for the benefit of the North Korean regime, and in contravention of sanctions imposed against North Korea by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the United Nations. Those sanctions were imposed to impede the development of North Korea’s ballistic missiles, weapons production, and research and development programs.

“Today’s indictments reveal North Korea’s continued use of various means to circumvent U.S. sanctions,” said U.S. Attorney Matthew M. Graves for the District of Columbia. “We can and will ‘follow the money,’ be it through cryptocurrency or the traditional banking system, to bring appropriate charges against those who would help to fund this corrupt regime.” 

According to court documents, North Korean national Sim, Chinese national Wu Huihu (Wu), Hong Kong British National (Overseas) Cheng Hung Man (Cheng), and the user of the online moniker live:jammychen0150 (“Jammy Chen”) conspired to launder stolen cryptocurrency and then used those funds to purchase goods through Hong Kong-based front companies on behalf of North Korea. Sim directed these payments, which were made in U.S. dollars, through “Jammy Chen.” “Jammy Chen” then recruited Wu and Cheng, both of whom were OTC traders, to find sham front companies and facilitate the payments to avoid U.S. sanctions against North Korea.

“As criminals engage in new methods of exploiting and laundering cryptocurrency, the FBI will continue to relentlessly pursue them and bring them to justice,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “These individuals used their illicit criminal activity to aid the Democratic People's Republic of Korea. Today’s indictment demonstrates the power of strong investigative work and collaboration amongst partners in holding state operatives accountable.” 

Sim also allegedly conspired to launder funds generated by North Korean IT workers who obtained illegal employment in the tech and crypto industry. These IT workers used fake personas to get jobs, including jobs at U.S.-based companies, and then asked to be paid in cryptocurrencies, such as stablecoins like USD Tether (USDT) and USD Coin (USDC), which are pegged to the U.S. dollar. After receiving payment, they funneled their earnings back to North Korea through Sim.

According to court documents, the Reconnaissance General Bureau (RGB) is North Korea’s primary intelligence and clandestine operations unit, known to have a cyber capability that has come to be known within the cybersecurity community as both Lazarus Group and Advanced Persistent Threat 38 (APT38). APT38 is a financially motivated North Korean regime-backed group responsible for conducting destructive cyber-attacks since at least 2014 to generate revenue for its ballistic missile and WMD programs. Specifically, these North Korean hackers have worked in concert to conduct cyber-attacks against victims located in the United States and around the world, including hacks against financial institutions and virtual asset service providers. North Korean actors have gained unauthorized access to these victim networks as part of their fraudulent scheme through a variety of means, including through spear-phishing messages designed to induce victims to download and execute malicious software developed by the hackers.  

Since 2017, as part of its cyber campaign, North Korean hackers have also executed virtual currency-related thefts to generate revenue for the regime, including through the hacking of virtual asset services providers, such as virtual currency exchanges. A portion of the proceeds from those virtual currency theft and fraud schemes was sent to virtual currency address 1G3Qj4Y4trA8S64zHFsaD5GtiSwX19qwFv, which Sim and his OTC trader coconspirators used to fund payments for goods for North Korea.

To generate revenue for the regime, North Korea also deploys IT workers to obtain illegal employment in the cryptocurrency industry. According to court documents, North Koreans apply for jobs in remote IT development work without disclosing that they are North Korean. These IT workers bypass security and due diligence checks through the false or fraudulent use of identity documents and other obfuscation strategies, such as virtual private networks to hide their true location from online payment facilitators and hiring platforms. The IT workers request payment for their services in virtual currency and then send their earnings back to North Korea via, among other methods, FTB representatives such as Sim.

A third indictment also unsealed today in the District of Columbia separately charges Wu with operating an unlicensed money transmitting business. According to court documents, Wu operated as an OTC trader on a U.S.-based virtual currency exchange and conducted over 1,500 trades for U.S. customers without obtaining the necessary licenses.

The FBI Chicago Field Office and FBI’s Virtual Assets Unit (VAU) are investigating the cases.

The charge of conspiring to launder monetary instruments is punishable by a maximum of 20 years in prison. The charge of operating an unlicensed money transmitting business is punishable by a maximum of five years in prison.

Trial Attorney Jessica Peck of the Justice Department’s National Cryptocurrency Enforcement Team (NCET) and Computer Crime and Intellectual Property Section, Assistant U.S. Attorneys Steven Wasserman and Christopher Tortorice for the District of Columbia, and Trial Attorney Emma Ellenrieder of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the cases. Paralegal Specialists Brian Rickers and Angela De Falco and Legal Assistant Jessica McCormick provided valuable assistance. Significant assistance was also provided by the U.S. Attorney’s Office for the Central District of California, FBI Los Angeles Field Office, Criminal Division’s Money Laundering and Asset Recovery Section, former Special Agent Chris Janczewski of the IRS Criminal Investigation, and former FBI analyst Nick Carlsen.

The NCET was created in October 2021 to combat the growing illicit use of cryptocurrencies and digital assets. Under the supervision of the Criminal Division, the NCET conducts and supports investigations into individuals and entities that enable the use of digital assets to commit and facilitate a variety of crimes, with a particular focus on virtual currency exchanges, mixing and tumbling services, and infrastructure providers. The NCET also sets strategic priorities regarding digital asset technologies, identifies areas for increased investigative and prosecutorial focus, and leads the department’s efforts to collaborate with domestic and foreign government agencies as well as the private sector to aggressively investigate and prosecute crimes involving cryptocurrency and digital assets.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

LOS ANGELES – The City of Industry-based subsidiary of a Chinese appliance company was sentenced today to pay a $500,000 criminal fine after pleading guilty to failing to notify the U.S. Consumer Product Safety Commission (CPSC) that millions of dehumidifiers it sold to domestic consumers were defective and could catch fire.

Gree USA Inc. was sentenced this morning after pleading guilty in January to a felony violation of the Consumer Product Safety Act (CPSA). The fine, along with provisions to pay restitution to victims, was part of a $91 million resolution with three related Gree companies that represents the first corporate criminal enforcement action ever brought under the CPSA.

Gree USA, a U.S. subsidiary of Hong Kong Gree Electric Appliances Sales Co., Ltd. (Gree Hong Kong), entered into a plea agreement in connection with a criminal information filed in 2021. Gree USA pleaded guilty to one felony count under the CPSA of willfully failing to report consumer product safety information to the CPSC.

Gree Electric Appliances, Inc. of Zhuhai (Gree Zhuhai), a global appliance manufacturer headquartered in Zhuhai, China, and Gree Hong Kong entered into a deferred prosecution agreement (DPA) in connection with the same case. Under the terms of the DPA, Gree Zhuhai and Gree Hong Kong agreed to a total monetary penalty of $91 million and also agreed to provide restitution for any uncompensated victims of fires caused by the companies’ defective dehumidifiers. Consistent with Justice Department policy, the DPA with Gree Zhuhai and Gree Hong Kong credits the Gree Companies’ earlier payment of $15.45 million in civil penalties to the CPSC against the agreed-upon $91 million total monetary penalty.

According to court filings, Gree Zhuhai, Gree Hong Kong and Gree USA (collectively, the Gree Companies) knew their dehumidifiers were defective, failed to meet applicable safety standards, and could catch fire, but the companies failed to report that information to the CPSC for months. The companies reported and recalled the dehumidifiers only after consumer complaints of fires and resulting harm continued to mount.

“This corporation endangered the safety of American consumers by failing to promptly report a known problem with their defective humidifiers,” said United States Attorney Martin Estrada. “Fortunately, authorities were able to stop this practice before Gree USA could cause greater harm. This historic case underscores our commitment to protect the public from dangerous products that could cause consumers real harm and to hold accountable corporate entities who knowing violate our laws in promotion of their greed.”

“Homeland Security Investigations (HSI) works tirelessly to protect the American consumer from health and safety risks posed by sub-standard products entering the United States,” said HSI Los Angeles Acting Special in Charge Eddy Wang. “HSI, the Department of Justice, and the Consumer Protection Safety Commission will continue to hold corporations accountable for placing profits above people.”

As part of the Gree USA plea agreement and the Gree Zhuhai and Gree Hong Kong DPA, the Gree Companies admitted that, between 2007 and 2013, they sold in the United States more than two million dehumidifiers manufactured by Gree Zhuhai and imported by Gree Hong Kong. In September 2012, employees of the Gree Companies, including high-level executives, learned that the Gree dehumidifiers had defects that could cause them to overheat and catch fire, and that consumers had reported fires caused by the dehumidifiers. Those same employees also knew of the obligation to report dangerous consumer products to the CPSC. Despite this knowledge, Gree USA continued to sell the defective dehumidifiers in the United States for at least another six months. The Gree Companies delayed reporting knowledge of the fires to the CPSC for approximately six months and did not report the defects in the dehumidifiers for approximately nine months. Ultimately, Gree Zhuhai recalled the defective dehumidifiers almost a year after learning about the products’ dangerous defects.

“Today’s sentencing of Gree USA is part of the Department of Justice’s ongoing efforts to hold accountable companies and executives that purposefully delay reporting dangerous consumer products to the CPSC,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department will continue to work closely with the CPSC to ensure consumers’ safety.”

“Today’s sentencing should serve as an example that companies will be held to account when they put profits before consumer safety,” said Chair Alex Hoehn-Saric of the CPSC. “The egregious behavior detailed in this case cannot be tolerated, and we are grateful for the support of the Department of Justice in bringing this company to justice and keeping consumers safe.”

The United States Attorney’s Office and the Consumer Protection Branch of the Justice Department’s Civil Division previously indicted Charley Loh, 64, of Arcadia, and Simon Chu, 67, of Chino Hills – respectively, the CEO and chief administrative officer of Gree USA – with felony CPSA and wire fraud charges for their alleged roles in the failure to report the defective dehumidifiers. Loh and Chu have pleaded not guilty and are scheduled for trial on November 7 in Los Angeles.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

HSI investigated this case.

This matter was prosecuted by Assistant U.S. Attorney Joseph Johns of the Environmental and Community Safety Crimes Section, along with Assistant Director Allan Gordus and Trial Attorneys Natalie Sanders and Maryann McGuire of the Justice Department’s Consumer Protection Branch. Patricia Vieira of the CPSC’s Office of General Counsel provided substantial assistance.

LOS ANGELES – A former United States Postal Service (USPS) mail carrier was sentenced today to 15 months in federal prison for her role in a scheme that defrauded banks out of more than $200,000 via the theft of debit cards containing unemployment insurance and other benefits from her mail route and giving them to a co-schemer in exchange for cash payments and gifts.

Toya Toshell Hunter, 45, of South Los Angeles, was sentenced by United States District Judge John F. Walter, who also ordered her to pay $206,212 in restitution.

Hunter pleaded guilty in December 2022 to one count of bank fraud.

From at least August 2015 to May 2020, Hunter schemed to defraud Bank of America by using her position as a USPS mail carrier to steal mail containing California Employment Development Department (EDD) debit cards that contained unemployment insurances benefits. Hunter also stole debit cards containing Economic Impact Payments for federally issued monetary relief because of the COVID-19 pandemic, United States Treasury checks, and other mail containing personal identifying information related to victims assigned to Hunter’s mail route.

Hunter would then give the stolen EDD and other cards to co-defendant Michalea Latise Barksdale, a.k.a. “Miichii Bee,” 34, of Corona, who then activated and fraudulently used them. Hunter provided Barksdale the stolen debit cards in exchange for future payments and gifts.

During the scheme, Hunter helped Barksdale make fraudulent and unauthorized cash withdrawals from 68 separate victims’ accounts and stole approximately $204,812 from Bank of America.

In July 2021, Hunter stole from the mail and fraudulently activated a stolen EIP card belonging to a victim. Hunter then used this card to make fraudulent purchases and cash withdrawals from ATMs and stole approximately $1,400 from Fiserv, a Wisconsin-based financial institution.

“[Hunter]…abused her position by stealing access devices, checks, and personal identifying information from mail assigned to her mail routes,” prosecutors argued in a sentencing memorandum. “These access devices were cards intended for people who were struggling financially: those that were unemployed or impacted by the COVID-19 pandemic.”

Barksdale pleaded guilty on March 6 to one count of bank fraud and one count of possession of 15 or more unauthorized access devices. She has agreed to forfeit her ill-gotten gains from the scheme, including 103 EDD debit cards, 78 EIP cards and four iPhones. Barksdale will face up to 40 years in federal prison at her July 10 sentencing hearing.

The United States Postal Inspection Service; United States Postal Service Office, of Inspector General; and the United States Treasury Inspector General for Tax Administration investigated this matter.

Assistant United States Attorney Kyle W. Kahan of the General Crimes Section is prosecuting this case.

LOS ANGELES – A federal grand jury today indicted a Houston man on federal charges for allegedly making a series of phone calls to the Hawthorne office of U.S. Rep. Maxine Waters and threatening her with violence and death.

Brian Michael Gaherty, 60, was charged in the indictment with four counts of making threats in interstate communications and four counts of threatening a United States official.

Gaherty was arrested in this case on April 13 after prosecutors filed a criminal complaint that outlined the series of threats to Rep. Waters and alleged Gaherty had threatened other elected officials and a news reporter in Houston.

The indictment filed today alleges that Gaherty called the congresswoman’s office four times last year – twice on August 8, 2022, once on November 8, 2022, and once on November 10. Gaherty allegedly left four voicemails, each of which contained a threat to Rep. Waters.

For example, in one of the August 8 calls to Rep. Waters, Gaherty allegedly threatened, to “cut your throat.”

The four counts of threatening a United States official allege that Gaherty “knowingly threatened to assault and kill” Rep. Waters “with the intent to impede, intimidate, and interfere with victim Congresswoman Waters” while she was engaged in the performance of her official duties, according to the indictment.

“Threats to harm and kill an elected official impact the intended victim, her entire staff and every constituent who is not receiving services because the elected official is dealing with the security threat,” said United States Attorney Martin Estrada. “The entire Justice Department is dedicated to protecting American democracy, which includes combating threats that terrorize officials who have been elected to serve the public.”

An indictment contains allegations that a defendant committed a crime. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

After Gaherty was arrested at his residence in Houston, he made a court appearance and on April 17 was ordered released on $100,000 bond.

Gaherty is expected to appear for an arraignment in United States District Court in Los Angeles in the coming weeks.

Each count of making a threat to a United States official carries a statutory maximum sentence of 10 years in federal prison. The charge of making threats in interstate communications carries a maximum penalty of five years in prison.

The United States Capitol Police and the FBI are investigating this matter.

Assistant United States Attorney Laura A. Alexander of the General Crimes Section is prosecuting this case.

LOS ANGELES – Following an investigation that found Los Angeles Union Station was not accessible to persons with disabilities, the Los Angeles County Metropolitan Transportation Authority (Metro) today entered into a settlement agreement that requires the transit agency to remedy violations of the Americans with Disabilities Act.

The United States Attorney’s Office announced the settlement agreement that resolves an investigation of Union Station under Title II of ADA. The investigation revealed that Metro, which is responsible for Union Station, failed to make the facility readily accessible to and usable by individuals with disabilities, including individuals who use wheelchairs. Station facilities include the station structure, the platform and any parking facility.

Title II of the ADA prohibits public entities from discriminating against any individual on the basis of disability, including by excluding such individual from participation in or denying such individual the benefits of the services, programs or activities of the public entity.

Los Angeles Union Station is the largest railroad passenger terminal in the Western United States. The station, which opened in 1939 and serves as a major transportation hub for Southern California, was found to have a series of accessibility issues, including wide gaps in walkways, a passenger loading zone that did not have a compliant curb ramp, various signage issues, and other ADA violations.

While the government’s investigation revealed certain ADA violations, the settlement agreement requires Metro to hire an independent licensed architect to conduct an initial survey and annual inspections of Union Station, provide the United States Attorney’s Office with a list of all the violations identified by the independent licensed architect, and remedy all the violations identified.

“The Union Station agreement caps a long list of rail station matters my office resolved over the past several years to ensure full access for every transit user,” said United States Attorney Martin Estrada. “Our office is committed to enforcing the rights of persons with disabilities, and I am pleased that the operators of the rail stations in this district have recognized the importance of complying with federal law and ensuring complete access. We thank the various entities, such as Metro, for fully cooperating in our investigations.”

With the Union Station agreement, the United States Attorney’s Office has resolved a total of 17 ADA investigations of rail stations in Southern California, including with cities and agencies responsible for stations in Anaheim, Barstow, Camarillo, Chatsworth, Fullerton, Glendale, Moorpark, Ontario, Oxnard, Palm Springs, Pomona, San Juan Capistrano, Santa Ana, Santa Barbara, Simi Valley and Van Nuys. 

The relief provided in the agreements includes the remediation of violations so that the rail stations are accessible to individuals with disabilities, including those who use wheelchairs. Some examples of violations include insufficient directional signage indicating the location of accessible entrances or paths of travel, paths that are inaccessible due to sloping issues and abrupt elevation changes, non-compliant accessible parking spaces and access aisles, and non-compliant elements in restrooms. 

These matters involving the rail stations were handled by Assistant United States Attorneys Katherine Hikida and Matthew Nickell of the Civil Division’s Civil Rights Section.

Information about the Civil Rights Section in the Civil Division of the United States Attorney’s Office is available on our website. Members of the public may report possible civil rights violations to our office via email to USACAC.CV-CivilRights@usdoj.gov.

LOS ANGELES – A San Gabriel Valley man was sentenced today to 120 months in federal prison for using dozens of fraudulently obtained debit and credit cards as part of a scheme to defraud the state’s unemployment insurance program out of nearly $1 million, and for possessing methamphetamine and ammunition.

Robert Sloan Mateer, 32, of Pasadena, was sentenced by United States District Judge Otis D. Wright II, who also ordered him to pay $937,173 in restitution.

Mateer pleaded guilty in November 2022 to one count of use of unauthorized access devices, one count of possession with intent to distribute methamphetamine, and one count of being a felon in possession of ammunition.

On October 1, 2020, Mateer – whose criminal history includes a felony conviction in Los Angeles Superior Court in March 2020 for driving or taking a vehicle without consent – and co-defendant Sarah Taylor Brown, 36, of Los Angeles, were stopped in Pasadena for a traffic violation and his vehicle was searched. The search of Mateer’s Maserati SUV revealed:

• approximately 85 grams of methamphetamine;
• two cellphones with debit and credit cards in names belonging to persons other than Mateer and Brown;
• a 9mm-caliber pistol with no serial number and loaded with two rounds of ammunition;
• an additional round of 9mm-caliber ammunition in the driver’s side pocket of the car;
• 17 California Employment Development Department (EDD) cards in the names of third parties;
• five credit and debit cards in other people’s names; and
• approximately $197,711 in cash.

Mateer admitted in his plea agreement that he fraudulently obtained EDD debit cards by applying for unemployment insurance benefits using another individual’s personal identifying information on the EDD website. On the website, Mateer would direct the EDD debit card to be sent to an address that did not belong to the individual whose identity he was using. Mateer, Brown, and other co-conspirators then would retrieve the debit cards from the Mateer-designated address and use the card at ATMs to withdraw cash benefits.

In total, the conspiracy caused actual losses to the EDD program of approximately $937,173. Brown was captured on ATM surveillance footage making at least $54,740 in withdrawals.

Judge Wright in November 2021 ordered the Maserati SUV and the $197,711 in cash forfeited to the United States.

Brown pleaded guilty in December 2022 to one count of use of unauthorized access devices. On February 7, Judge Wright sentenced Brown to time served, after she had served nearly 20 months, to be followed by supervised release for three years, and ordered her to pay $54,740 in restitution, to be held jointly and severally liable with Mateer.

The United States Postal Inspection Service investigated this matter.

Assistant United States Attorney Nisha Chandran of the Cyber and Intellectual Property Crimes Section prosecuted this case.

LOS ANGELES – The lead defendant in an indictment targeting an international drug trafficking organization pleaded guilty today to conspiring to smuggle tens of millions of dollars’ worth of cocaine by aircraft from Colombia to Mexico for distribution in the United States via the maintenance of secret airstrips and the bribery of air traffic controllers.

Jaison Dávila Amador, 56, a.k.a. “Costeño” and “María Angélica,” of Bogotá, Colombia, pleaded guilty to one count of conspiracy to distribute cocaine for the purpose of unlawful importation. Dávila has been in federal custody since September 2021 after his extradition from Colombia.

According to his plea agreement, from at least October 2017 to May 2019, Dávila participated in the cocaine trafficking conspiracy. Dávila and his accomplices carried out their plan by maintaining clandestine airstrips in Colombia where aircraft from Mexico would land to retrieve bulk quantities of cocaine.

To facilitate the scheme, members of the conspiracy bribed air traffic controllers and law enforcement officials to ensure the flights from Mexico could enter Colombian airspace undisturbed.

On November 5, 2017, an aircraft bound from Mexico entered Colombian airspace for the purpose of receiving a cocaine shipment, but it was intercepted and forced down by the Colombian Air Force and then destroyed it with machine gun fire. Near a clandestine airstrip and near the airplane’s wreckage, law enforcement found approximately 515 kilograms (1,135 pounds), which Dávila and his co-conspirators intended to traffic by aircraft. Investigators estimate that the seized cocaine, if sold in the United States, would have been valued at more than $13 million.

Dávila admitted in his plea agreement to coordinating various aspects of the conspiracy, including bribe payments to air traffic controllers, financing for the cocaine shipment, and logistical support for the aircraft that would transport the cocaine from Colombia to Mexico.

United States District Judge George H. Wu scheduled an August 28 sentencing hearing, at which time Dávila will face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life imprisonment.

All 13 defendants arrested and extradited to the United States in this case have pleaded guilty to participating in the international drug trafficking conspiracy. Those defendants include:

• Miguel Hadad Facusseh, 40, a Mexican national previously extradited from Canada, who procured financing for aircraft, pilots, and clandestine airstrips in Mexico to facilitate cocaine shipments;
• Marta Elizabeth Orozco Acevedo, 57, an air traffic controller in Colombia who used her position to monitor Colombian airspace during the anticipated arrival and exit of the plane from Mexico that would retrieve cocaine shipments; and
• José Alberto Cantillo Aponte, 58, a Colombian government worker who was employed to bribe or otherwise influence corrupt government officials to permit the aircraft from Mexico to enter Colombian airspace.

Two other defendants were also charged: Eduardo Antonio Bula Correa, a retired colonel in the Colombian National Police who died while awaiting his extradition to the United States, and Francisco Javier Ruelas Tejada, 61, who remains a fugitive and is believed to reside in Mexico.

The investigation into this drug trafficking organization was conducted by special agents with the Drug Enforcement Administration, which received substantial assistance from the Colombia National Police’s Dirección de Investigación Criminal e Interpol (DIJIN) and Colombia’s Fiscalía General de La Nación. This investigation was conducted with the support of the Organized Crime Drug Enforcement Task Force. The Justice Department’s Office of International Affairs provided substantial assistance in securing the defendants’ extradition from Colombia and Canada.

Assistant United States Attorneys Alexander B. Schwab of the Major Fraud Section, Chelsea Norell of the Violent and Organized Crime Section, and Elia Herrera of the International Narcotics, Money Laundering, and Racketeering Section are prosecuting this case.

The Department of Justice today announced criminal charges against 18 defendants in nine federal districts across the United States for their alleged participation in various fraud schemes involving health care services that exploited the COVID-19 pandemic and allegedly resulted in over $490 million in COVID-19 related false billings to federal programs and theft from federally funded pandemic programs.

In connection with the enforcement action, the department seized over $16 million in cash and other fraud proceeds. The Center for Program Integrity of the Centers for Medicare & Medicaid Services (CPI/CMS) separately announced today that it took adverse administrative actions in the last year against 28 medical providers for their alleged involvement in COVID-19 schemes.

“The Justice Department will not tolerate those who exploited the pandemic for personal gain and stole taxpayer dollars,” said Attorney General Merrick B. Garland. “This unprecedented enforcement action against defendants across the country makes clear that the Department is using every available resource to combat and prevent COVID-19 related fraud and safeguard the integrity of taxpayer-funded programs.”

“Today’s announcement marks the largest-ever coordinated law enforcement action in the United States targeting health care fraud schemes that exploit the COVID-19 pandemic,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “The Criminal Division’s Health Care Fraud Unit and our partners are committed to rooting out pandemic-related fraud and holding accountable anyone seeking to profit from a public health emergency.”

Today’s announcement builds on the successes of the April 2022 COVID-19 Enforcement Action and the May 2021 COVID-19 Enforcement Action and involves the prosecution of various COVID-19 health care fraud schemes.

“The charges announced today demonstrate the FBI’s, along with its partner’s, commitment to ensuring that COVID-19 health care fraud does not go unpunished,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “During the Covid pandemic, programs were put in place to help the American people, and we will continue to ensure that the individuals that took advantage of those programs face justice.”

In one of the most significant types of COVID-19 health care fraud schemes announced today, multiple defendants were charged with defrauding the Health Resources and Services Administration (HRSA) COVID-19 Uninsured Program. The Uninsured Program was designed to prevent the further spread of the pandemic by providing access to uninsured patients for testing and treatment. The Uninsured Program was also designed to provide financial support to health care providers fighting the COVID-19 pandemic by reimbursing them for services provided to uninsured individuals. The Uninsured Program ultimately ceased operating due to the exhaustion of funding.

“Exploiting the COVID-19 pandemic and viewing the public health emergency as an opportunity to steal money and resources from federal health care programs shows a clear disregard for the well-being and safety of those who rely on government-funded health care services,” said Inspector General Christi A. Grimm of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “As today’s enforcement action demonstrates, HHS-OIG and our partners remain steadfast in our commitment to protecting critical public health measures from fraud.” 

In the Central District of California, a lab owner was charged for allegedly submitting over $358 million in false and fraudulent claims to Medicare, HRSA, and a private insurance company for laboratory testing. The indictment alleges that the defendant’s lab performed COVID-19 screening testing for nursing homes and other facilities with vulnerable elderly populations, as well as primary and secondary schools. But to increase its reimbursements, the defendant allegedly fraudulently added claims for respiratory pathogen panel tests even though ordering providers and facility administrators did not want or need them. Also in the Central District of California, a medical doctor was charged for allegedly orchestrating an approximately $230 million fraud on the Uninsured Program. The doctor was the second highest biller in the country to the Uninsured Program, and he allegedly submitted fraudulent claims for treatment of patients who were insured, billed for services that were not rendered, and billed for services that were not medically necessary. He allegedly used over $100 million in fraud proceeds for high-risk options trading. The doctor is also charged with two other individuals for allegedly submitting over 70 fraudulent loan applications through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) Program and fraudulently obtaining over $3 million in loan funds.

“I am proud of the successful partnership of the CMS, the Department of Justice, and the U.S. Department of Health and Human Services Office of Inspector General to combat fraud, waste, and abuse in federal programs,” said CMS Administrator Chiquita Brooks-LaSure. “It is particularly offensive to discover individuals who took advantage of the pandemic to defraud the government. CMS will continue to aggressively investigate COVID-19-related fraud and has already taken actions against 28 providers to protect the sustainability of the Medicare program.”

The announcement also includes first-of-their-kind charges against suppliers of COVID-19 over-the-counter tests, which Medicare began to cover in April 2022 for beneficiaries who requested them. These kits were provided to the public to slow the spread of the deadly disease, but wrongdoers allegedly sought to exploit the program by repeatedly supplying patients or, in some instances, deceased patients, with dozens of COVID-19 tests that they did not want or need. In the Middle District of Florida, a doctor and a marketer were charged for allegedly unlawfully purchasing Medicare beneficiary identification numbers and shipping over-the-counter tests to beneficiaries throughout the country who did not request the tests, causing over $8.4 million in fraudulent claims to Medicare.

Charges were also brought under the Health Care Fraud Unit’s Provider Relief Fund (PRF) Initiative. The PRF is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted in March 2020 that provided financial assistance to medical providers to deliver needed medical care to Americans suffering from COVID-19. In the Eastern District of Louisiana, the operator of a primary care clinic and purported spa was charged with allegedly submitting fraudulent loan agreements, attestations, and other documentation from which she received over $1.1 million in PRF and EIDL funds that were used to purchase real estate, luxury vehicles, a boat, a trailer, a time share, and luxury vacations, among other expenditures. In total, 12 defendants have been charged with crimes related to misappropriating funds intended for frontline medical providers, and seven have pleaded guilty.

The law enforcement action also includes charges against manufacturers and distributors of fake COVID-19 vaccination record cards, who intentionally sought to obstruct the Department of Health and Human Services (HHS) and Centers for Disease Control and Prevention (CDC) in their efforts to administer the nationwide vaccination program and provide Americans with accurate proof of vaccination. In the Eastern District of New York, three medical professionals who worked at a small midwife practice were charged for allegedly distributing nearly 2,700 forged COVID-19 vaccination record cards to individuals who were not vaccinated. Instead of administering the COVID-19 vaccine, the defendants allegedly destroyed vials of COVID-19 vaccines that were intended to be used to inoculate patients. Despite being a small midwife practice, it was one of the busiest vaccination sites in New York State, outpacing large, state-run vaccination sites. In the District of Utah, two individuals were charged for allegedly manufacturing and selling online approximately 120,000 counterfeit COVID-19 vaccination record cards across the country, especially in areas that were subject to more stringent COVID-19 vaccine restrictions.

Today’s enforcement action was led and coordinated by Assistant Chiefs Justin M. Woodard and Debra Jaroslawicz and Trial Attorney D. Keith Clouser of the Criminal Division’s Fraud Section. The Health Care Fraud Unit’s Strike Forces in Brooklyn, the Gulf Coast, Los Angeles, and Tampa; the National Rapid Response Strike Force; and the U.S. Attorneys’ Offices for the Central District of California, Middle District of Florida, Eastern District of Louisiana, Middle District of Louisiana, Western District of Louisiana, Eastern District of New York, District of Puerto Rico, District of Utah, and Western District of Washington are prosecuting these cases, with assistance from the Health Care Fraud Unit’s Data Analytics Team. Descriptions of each case involved in today’s enforcement action are available on the department’s website at www.justice.gov/criminal-fraud/health-care-fraud-unit/2023-case-summaries.

In addition to the FBI and HHS-OIG, the Small Business Administration Office of Inspector General, Defense Criminal Investigative Service, Internal Revenue Service Criminal Investigation, Treasury Inspector General for Tax Administration, Homeland Security Investigations, Department of Homeland Security Office of Inspector General; Department of Defense Office of Inspector General, AMTRAK Office of Inspector General, California Department of Health Care Services, and other federal and state law enforcement agencies participated in the law enforcement action.

The Health Care Fraud Strike Force is part of a joint initiative between the Department of Justice and HHS to prevent and deter health care fraud and enforce current anti-fraud laws around the country. In the past three years, the Health Care Fraud Strike Force has rooted out health care fraud related to the COVID-19 pandemic. To date, 53 defendants have been charged in nationwide COVID-19 Health Care Fraud Enforcement Actions for causing over $784 million in loss associated with the pandemic, and 20 defendants have been convicted.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.

The Department of Justice needs the public’s assistance in remaining vigilant and reporting suspected fraudulent activity. To report suspected fraud, contact the National Center for Disaster Fraud (NCDF) at (866) 720-5721 or file an online complaint at www.justice.gov/disaster-fraud/webform/ncdf-disaster-complaint-form. Complaints filed will be reviewed at the NCDF and referred to federal, state, local, or international law enforcement or regulatory agencies for investigation.

An indictment, complaint, or information is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

LOS ANGELES – The Department of Justice today announced criminal charges against 18 defendants in nine federal districts across the United States for their alleged participation in various fraud schemes involving health care services that exploited the COVID-19 pandemic and allegedly resulted in over $490 million in COVID-19 related false billings to federal programs and theft from federally funded pandemic programs.

Two of the most significant criminal cases in this sweep were filed by federal prosecutors in the Central District of California.

In connection with the enforcement action, the department seized over $16 million in cash and other fraud proceeds. The Center for Program Integrity of the Centers for Medicare & Medicaid Services (CPI/CMS) separately announced today that it took adverse administrative actions in the last year against 28 medical providers for their alleged involvement in COVID-19 schemes.

“The Justice Department will not tolerate those who exploited the pandemic for personal gain and stole taxpayer dollars,” said Attorney General Merrick B. Garland. “This unprecedented enforcement action against defendants across the country makes clear that the Department is using every available resource to combat and prevent COVID-19 related fraud and safeguard the integrity of taxpayer-funded programs.”

Today’s announcement builds on the successes of the April 2022 COVID-19 Enforcement Action and the May 2021 COVID-19 Enforcement Action and involves the prosecution of various COVID-19 health care fraud schemes.

In one of the most significant types of COVID-19 health care fraud schemes announced today, multiple defendants were charged with defrauding the Health Resources and Services Administration (HRSA) COVID-19 Uninsured Program. The Uninsured Program was designed to prevent the further spread of the pandemic by providing access to uninsured patients for testing and treatment. The Uninsured Program was also designed to provide financial support to health care providers fighting the COVID-19 pandemic by reimbursing them for services provided to uninsured individuals. The Uninsured Program ultimately ceased operating due to the exhaustion of funding.

In the Central District of California, a medical doctor was charged for allegedly orchestrating an approximately $230 million fraud on the Uninsured Program.

Dr. Anthony Hao Dinh, 63, of Newport Coast, was the second highest biller in the country to the Uninsured Program. As a result of the scheme targeting the Uninsured Program, Dr. Dinh and his companies were paid more than $153 million, and he used fraud proceeds for high-risk options trading, losing over $100 million from November 2020 through February 2022, according to court documents.

Dr. Dinh allegedly submitted fraudulent claims for treatment of patients who were insured, billed for services that were not rendered, and billed for services that were not medically necessary, according to a criminal complaint filed on April 10.

After being arrested on April 12 and subsequently released on a $7 million bond, Dr. Dinh is scheduled to be arraigned in United States District Court on May 22. If he were to be convicted of the three charges, Dr. Dinh would face a statutory maximum sentence of 50 years in federal prison.

“Dr. Dinh is alleged to have stolen from a taxpayer-funded program meant to provide COVID-related health care to uninsured patients,” said United States Attorney Martin Estrada. “We will not tolerate stealing from the American people, and our prosecution of this large-scale scheme demonstrates our continued efforts to stop fraud of all sorts.”

Dr. Dinh is also charged with two other individuals for allegedly submitting over 70 fraudulent loan applications under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) Program and fraudulently obtaining over $3 million in loan funds. The other defendants named in this scheme are Dr. Dinh’s sister – Hang Trinh Dinh, 64, of Lake Forest, who is currently a fugitive being sought by federal authorities – and Matthew Hoang Ho, 65, of Melbourne, Florida, who also was arrested on April 12. Dr. Dinh is charged in the complaint with health care fraud and two counts of wire fraud. Hang Dinh and Matthew Ho are each charged with one count of wire fraud.

The case against Dr. Dinh and his codefendants is being investigated by the U.S. Department of Health and Human Services’ Office of the Inspector General, the FBI, IRS Criminal Investigation, the Department of Homeland Security, Office of Inspector General, the Defense Criminal Investigative Service, the AMTRAK Office of Inspector General, and the California Department of Health Care Services.

Assistant United States Attorney Roger A. Hsieh of the Major Frauds Section, and Justice Department Trial Attorneys Justin M. Woodard and Helen H. Lee of the Fraud Section are prosecuting this case.

In another case filed the Central District of California – this one by attorneys with the Justice Department’s Health Care Fraud Strike Force – a lab owner was charged for allegedly submitting over $358 million in false and fraudulent claims to Medicare, HRSA, and a private insurance company for laboratory testing. The indictment alleges that the defendant’s lab performed COVID-19 screening testing for nursing homes and other facilities with vulnerable elderly populations, as well as primary and secondary schools. But to increase its reimbursements, the defendant allegedly fraudulently added claims for respiratory pathogen panel tests even though ordering providers and facility administrators did not want or need them.

Lourdes Navarro, 64, of Glendale, was charged in a superseding indictment with conspiracy to commit health care fraud and wire fraud, health care fraud, conspiracy to commit money laundering, and making false statements, in connection with the operation of Matias Clinical Laboratory, Inc. (Matias), also known as Health Care Providers Laboratory, a laboratory she operated, controlled, and managed with her husband Imran Shams. Navarro was previously charged in an indictment returned in April 2022. The superseding indictment adds allegations that Navarro conspired with Shams and carried out a scheme to submit false and fraudulent claims to Medicare, the HRSA’s COVID-19 Uninsured Program, and an insurance company for respiratory pathogen panel (RPP) testing that was not ordered, medically unnecessary, procured through illegal kickbacks and bribes, and ineligible for reimbursement.

During the COVID-19 pandemic, Matias performed COVID-19 screening testing for a variety of clients, including nursing homes, rehabilitation facilities, assisted living facilities, and similar facilities with vulnerable elderly populations, as well as primary and secondary schools. It is alleged that, in order to increase its reimbursements, Matias fraudulently added claims for RPP tests even though medical providers and facility administrators did not order them, and such tests were not needed for the patient population Matias served. It is further alleged that Matias falsely represented to HRSA that patients had been diagnosed with COVID-19 in order to obtain payment on the RPP claims. The superseding indictment alleges additional loss to Medicare, HRSA, and the insurer of approximately $241 million in billed claims, and alleges that these payors reimbursed Matias an additional $39.9 million. The case is being prosecuted by Trial Attorneys Gary Winters and Ray Beckering of the National Rapid Response Strike Force.

Today’s announcement also includes first-of-their-kind charges against suppliers of COVID-19 over-the-counter tests, which Medicare began to cover in April 2022 for beneficiaries who requested them. These kits were provided to the public to slow the spread of the deadly disease, but wrongdoers allegedly sought to exploit the program by repeatedly supplying patients or, in some instances, deceased patients, with dozens of COVID-19 tests that they did not want or need. In the Middle District of Florida, a doctor and a marketer were charged for allegedly unlawfully purchasing Medicare beneficiary identification numbers and shipping over-the-counter tests to beneficiaries throughout the country who did not request the tests, causing over $8.4 million in fraudulent claims to Medicare.

Charges were also brought under the Health Care Fraud Unit’s Provider Relief Fund (PRF) Initiative. The PRF is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted in March 2020 that provided financial assistance to medical providers to deliver needed medical care to Americans suffering from COVID-19. In the Eastern District of Louisiana, the operator of a primary care clinic and purported spa was charged with allegedly submitting fraudulent loan agreements, attestations, and other documentation from which she received over $1.1 million in PRF and EIDL funds that were used to purchase real estate, luxury vehicles, a boat, a trailer, a time share, and luxury vacations, among other expenditures. In total, 12 defendants have been charged with crimes related to misappropriating funds intended for frontline medical providers, and seven have pleaded guilty.

The law enforcement action also includes charges against manufacturers and distributors of fake COVID-19 vaccination record cards, who intentionally sought to obstruct the Department of Health and Human Services (HHS) and Centers for Disease Control and Prevention (CDC) in their efforts to administer the nationwide vaccination program and provide Americans with accurate proof of vaccination. In the Eastern District of New York, three medical professionals who worked at a small midwife practice were charged for allegedly distributing nearly 2,700 forged COVID-19 vaccination record cards to individuals who were not vaccinated. Instead of administering the COVID-19 vaccine, the defendants allegedly destroyed vials of COVID-19 vaccines that were intended to be used to inoculate patients. Despite being a small midwife practice, it was one of the busiest vaccination sites in New York State, outpacing large, state-run vaccination sites. In the District of Utah, two individuals were charged for allegedly manufacturing and selling online approximately 120,000 counterfeit COVID-19 vaccination record cards across the country, especially in areas that were subject to more stringent COVID-19 vaccine restrictions.

Today’s enforcement action was led and coordinated by the Fraud Section in the Justice Department’s Criminal Division. The Health Care Fraud Unit’s Strike Forces in Brooklyn, the Gulf Coast, Los Angeles, and Tampa; the National Rapid Response Strike Force; and the U.S. Attorneys’ Offices for the Central District of California, Middle District of Florida, Eastern District of Louisiana, Middle District of Louisiana, Western District of Louisiana, Eastern District of New York, District of Puerto Rico, District of Utah, and Western District of Washington are prosecuting these cases, with assistance from the Health Care Fraud Unit’s Data Analytics Team. Descriptions of each case involved in today’s enforcement action are available on the department’s website at www.justice.gov/criminal-fraud/health-care-fraud-unit/2023-case-summaries.

In addition to the FBI and HHS-OIG, the Small Business Administration Office of Inspector General, Defense Criminal Investigative Service, Internal Revenue Service Criminal Investigation, Treasury Inspector General for Tax Administration, Homeland Security Investigations, Department of Homeland Security Office of Inspector General; Department of Defense Office of Inspector General, AMTRAK Office of Inspector General, California Department of Health Care Services, and other federal and state law enforcement agencies participated in the law enforcement action.

The Health Care Fraud Strike Force is part of a joint initiative between the Department of Justice and HHS to prevent and deter health care fraud and enforce current anti-fraud laws around the country. In the past three years, the Health Care Fraud Strike Force has rooted out health care fraud related to the COVID-19 pandemic. To date, 53 defendants have been charged in nationwide COVID-19 Health Care Fraud Enforcement Actions for causing over $784 million in loss associated with the pandemic, and 20 defendants have been convicted.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.

The Department of Justice needs the public’s assistance in remaining vigilant and reporting suspected fraudulent activity. To report suspected fraud, contact the National Center for Disaster Fraud (NCDF) at (866) 720-5721 or file an online complaint at www.justice.gov/disaster-fraud/webform/ncdf-disaster-complaint-form. Complaints filed will be reviewed at the NCDF and referred to federal, state, local, or international law enforcement or regulatory agencies for investigation.

An indictment, complaint, or information is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The Department of Justice today announced criminal charges against 18 defendants in nine federal districts across the United States for their alleged participation in various fraud schemes involving health care services that exploited the COVID-19 pandemic and allegedly resulted in over $490 million in COVID-19 related false billings to federal programs and theft from federally funded pandemic programs.

In connection with the enforcement action, the department seized over $16 million in cash and other fraud proceeds. The Center for Program Integrity of the Centers for Medicare & Medicaid Services (CPI/CMS) separately announced today that it took adverse administrative actions in the last year against 28 medical providers for their alleged involvement in COVID-19 schemes.

“The Justice Department will not tolerate those who exploited the pandemic for personal gain and stole taxpayer dollars,” said Attorney General Merrick B. Garland. “This unprecedented enforcement action against defendants across the country makes clear that the Department is using every available resource to combat and prevent COVID-19 related fraud and safeguard the integrity of taxpayer-funded programs.”

“Today’s announcement marks the largest-ever coordinated law enforcement action in the United States targeting health care fraud schemes that exploit the COVID-19 pandemic,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “The Criminal Division’s Health Care Fraud Unit and our partners are committed to rooting out pandemic-related fraud and holding accountable anyone seeking to profit from a public health emergency.”

Today’s announcement builds on the successes of the April 2022 COVID-19 Enforcement Action and the May 2021 COVID-19 Enforcement Action and involves the prosecution of various COVID-19 health care fraud schemes.

“The charges announced today demonstrate the FBI’s, along with its partner’s, commitment to ensuring that COVID-19 health care fraud does not go unpunished,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “During the Covid pandemic, programs were put in place to help the American people, and we will continue to ensure that the individuals that took advantage of those programs face justice.”

In one of the most significant types of COVID-19 health care fraud schemes announced today, multiple defendants were charged with defrauding the Health Resources and Services Administration (HRSA) COVID-19 Uninsured Program. The Uninsured Program was designed to prevent the further spread of the pandemic by providing access to uninsured patients for testing and treatment. The Uninsured Program was also designed to provide financial support to health care providers fighting the COVID-19 pandemic by reimbursing them for services provided to uninsured individuals. The Uninsured Program ultimately ceased operating due to the exhaustion of funding.

“Exploiting the COVID-19 pandemic and viewing the public health emergency as an opportunity to steal money and resources from federal health care programs shows a clear disregard for the well-being and safety of those who rely on government-funded health care services,” said Inspector General Christi A. Grimm of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “As today’s enforcement action demonstrates, HHS-OIG and our partners remain steadfast in our commitment to protecting critical public health measures from fraud.” 

In the Central District of California, a lab owner was charged for allegedly submitting over $358 million in false and fraudulent claims to Medicare, HRSA, and a private insurance company for laboratory testing. The indictment alleges that the defendant’s lab performed COVID-19 screening testing for nursing homes and other facilities with vulnerable elderly populations, as well as primary and secondary schools. But to increase its reimbursements, the defendant allegedly fraudulently added claims for respiratory pathogen panel tests even though ordering providers and facility administrators did not want or need them. Also in the Central District of California, a medical doctor was charged for allegedly orchestrating an approximately $230 million fraud on the Uninsured Program. The doctor was the second highest biller in the country to the Uninsured Program, and he allegedly submitted fraudulent claims for treatment of patients who were insured, billed for services that were not rendered, and billed for services that were not medically necessary. He allegedly used over $100 million in fraud proceeds for high-risk options trading. The doctor is also charged with two other individuals for allegedly submitting over 70 fraudulent loan applications through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) Program and fraudulently obtaining over $3 million in loan funds.

“I am proud of the successful partnership of the CMS, the Department of Justice, and the U.S. Department of Health and Human Services Office of Inspector General to combat fraud, waste, and abuse in federal programs,” said CMS Administrator Chiquita Brooks-LaSure. “It is particularly offensive to discover individuals who took advantage of the pandemic to defraud the government. CMS will continue to aggressively investigate COVID-19-related fraud and has already taken actions against 28 providers to protect the sustainability of the Medicare program.”

The announcement also includes first-of-their-kind charges against suppliers of COVID-19 over-the-counter tests, which Medicare began to cover in April 2022 for beneficiaries who requested them. These kits were provided to the public to slow the spread of the deadly disease, but wrongdoers allegedly sought to exploit the program by repeatedly supplying patients or, in some instances, deceased patients, with dozens of COVID-19 tests that they did not want or need. In the Middle District of Florida, a doctor and a marketer were charged for allegedly unlawfully purchasing Medicare beneficiary identification numbers and shipping over-the-counter tests to beneficiaries throughout the country who did not request the tests, causing over $8.4 million in fraudulent claims to Medicare.

Charges were also brought under the Health Care Fraud Unit’s Provider Relief Fund (PRF) Initiative. The PRF is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted in March 2020 that provided financial assistance to medical providers to deliver needed medical care to Americans suffering from COVID-19. In the Eastern District of Louisiana, the operator of a primary care clinic and purported spa was charged with allegedly submitting fraudulent loan agreements, attestations, and other documentation from which she received over $1.1 million in PRF and EIDL funds that were used to purchase real estate, luxury vehicles, a boat, a trailer, a time share, and luxury vacations, among other expenditures. In total, 12 defendants have been charged with crimes related to misappropriating funds intended for frontline medical providers, and seven have pleaded guilty.

The law enforcement action also includes charges against manufacturers and distributors of fake COVID-19 vaccination record cards, who intentionally sought to obstruct the Department of Health and Human Services (HHS) and Centers for Disease Control and Prevention (CDC) in their efforts to administer the nationwide vaccination program and provide Americans with accurate proof of vaccination. In the Eastern District of New York, three medical professionals who worked at a small midwife practice were charged for allegedly distributing nearly 2,700 forged COVID-19 vaccination record cards to individuals who were not vaccinated. Instead of administering the COVID-19 vaccine, the defendants allegedly destroyed vials of COVID-19 vaccines that were intended to be used to inoculate patients. Despite being a small midwife practice, it was one of the busiest vaccination sites in New York State, outpacing large, state-run vaccination sites. In the District of Utah, two individuals were charged for allegedly manufacturing and selling online approximately 120,000 counterfeit COVID-19 vaccination record cards across the country, especially in areas that were subject to more stringent COVID-19 vaccine restrictions.

Today’s enforcement action was led and coordinated by Assistant Chiefs Justin M. Woodard and Debra Jaroslawicz and Trial Attorney D. Keith Clouser of the Criminal Division’s Fraud Section. The Health Care Fraud Unit’s Strike Forces in Brooklyn, the Gulf Coast, Los Angeles, and Tampa; the National Rapid Response Strike Force; and the U.S. Attorneys’ Offices for the Central District of California, Middle District of Florida, Eastern District of Louisiana, Middle District of Louisiana, Western District of Louisiana, Eastern District of New York, District of Puerto Rico, District of Utah, and Western District of Washington are prosecuting these cases, with assistance from the Health Care Fraud Unit’s Data Analytics Team. Descriptions of each case involved in today’s enforcement action are available on the department’s website at www.justice.gov/criminal-fraud/health-care-fraud-unit/2023-case-summaries.

In addition to the FBI and HHS-OIG, the Small Business Administration Office of Inspector General, Defense Criminal Investigative Service, Internal Revenue Service Criminal Investigation, Treasury Inspector General for Tax Administration, Homeland Security Investigations, Department of Homeland Security Office of Inspector General; Department of Defense Office of Inspector General, AMTRAK Office of Inspector General, California Department of Health Care Services, and other federal and state law enforcement agencies participated in the law enforcement action.

The Health Care Fraud Strike Force is part of a joint initiative between the Department of Justice and HHS to prevent and deter health care fraud and enforce current anti-fraud laws around the country. In the past three years, the Health Care Fraud Strike Force has rooted out health care fraud related to the COVID-19 pandemic. To date, 53 defendants have been charged in nationwide COVID-19 Health Care Fraud Enforcement Actions for causing over $784 million in loss associated with the pandemic, and 20 defendants have been convicted.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.

The Department of Justice needs the public’s assistance in remaining vigilant and reporting suspected fraudulent activity. To report suspected fraud, contact the National Center for Disaster Fraud (NCDF) at (866) 720-5721 or file an online complaint at www.justice.gov/disaster-fraud/webform/ncdf-disaster-complaint-form. Complaints filed will be reviewed at the NCDF and referred to federal, state, local, or international law enforcement or regulatory agencies for investigation.

An indictment, complaint, or information is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

SANTA ANA, California – A San Juan Capistrano woman has been sentenced to 262 months in federal prison for her role in the October 2019 murder of a man whose body was found floating in the Pacific Ocean with bullet and blunt force trauma wounds, the Justice Department announced today.

Sheila Marie Ritze, 42, was sentenced late Monday afternoon by United States District Judge David O. Carter, who at the hearing described Ritze’s conduct as “horrific and horrendous” and noted its “callousness.”

At the conclusion of a 12-day trial in April 2022, a federal jury found Ritze guilty of one count of second-degree murder within in the special maritime and territorial jurisdiction of the United States, and one count of making false statements to federal investigators.

On October 15, 2019, Ritze went out on her boat – in what was described to the victim as a late-night lobster-fishing trip – with Hoang Xuan Le, 41, a.k.a. “Wayne,” and “Wangsta,” of Fountain Valley, and the victim, who owed Le a debt. Ritze’s boat was docked at Dana Point Harbor.

Around midnight, Ritze drove her boat out into the Pacific Ocean with Le and the victim on board. Le shot the victim on the boat, the victim went overboard, and Ritze and Le left the victim to die in the ocean, where he drowned. Le and Ritze then returned to Dana Point Harbor.

The victim’s body was recovered from the Pacific Ocean several miles northwest of Oceanside on October 16, 2019. The San Diego County Medical Examiner’s Office determined that he was a homicide victim who drowned after being shot and suffering blunt force trauma.

During a December 2019 interview with federal investigators, Ritze told a series of lies, including when she falsely said she had never met the victim prior to the fatal boat trip. Ritze and the victim had been in Las Vegas together 11 days prior to the murder.

“Ritze’s crime has left a grieving mother, grieving widow, grieving brothers, a grieving sister, and two fatherless small children,” prosecutors argued in a sentencing memorandum. “Ritze continued on with her life after murdering Dao as though nothing had happened, continuing to party with Le…and assisting Le with tracking [the victim’s] grieving widow with GPS trackers.”

At the conclusion of a 17-day trial in December 2021, a federal jury found Le guilty of first-degree murder within the special maritime and territorial jurisdiction of the United States, conspiracy to commit murder, and using a firearm in furtherance of a crime of violence. In February 2022, Le pleaded guilty to eight narcotics-related felonies, including distribution of cocaine and methamphetamine.

Le faces a mandatory sentence of life in federal prison at his July 17 sentencing hearing.

The Coast Guard Investigative Service and the FBI investigated this matter.

Assistant United States Attorneys Greg Scally and Gregory W. Staples of the Santa Ana Branch Office are prosecuting this case.

SANTA ANA, California – A Los Angeles man has been arrested on a federal criminal complaint alleging he committed armed robberies at Southern California convenience stores and gas stations during a 3½-week crime spree in which he also committed two carjackings, the Justice Department announced today.

Namir Malik Ali Greene, 23, was arrested Monday and is charged with interference with commerce by robbery (Hobbs Act). At a brief court appearance this afternoon in United States District Court in Santa Ana, Greene was ordered held in federal custody until a detention hearing scheduled for Thursday.

According to the complaint filed today, Greene committed 31 robberies or attempted robberies of gas stations and convenience stores and at least two carjackings in Los Angeles and Orange counties from March 21 to April 15. During the robberies, Greene allegedly brandished a firearm at the station and store employees, threatening to shoot them if they did not retrieve money for him from the cash register.

For example, the complaint affidavit alleges, on April 4, Greene robbed eight gas station convenience stores and attempted to rob one more. During each robbery, Greene allegedly pointed a black semi-automatic handgun at the store clerk and demanded money from the cash register. On that day, Greene stole at least $2,554 from gas station stores in Hermosa Beach, Marina del Rey, Long Beach, Pico Rivera, Whittier, Montebello, Santa Monica, and Los Angeles’ Mid-City neighborhood, according to the affidavit.

In total, Greene allegedly stole at least $15,360 in cash during his robbery spree and primarily targeted stores in Los Angeles County. He also allegedly carjacked a motorist at a Fullerton gas station on March 21 and he allegedly robbed an Anaheim gas station on April 15. Approximately 90 minutes prior to the Anaheim robbery, Greene allegedly carjacked a victim in Los Angeles and used the victim’s Honda Accord as his robbery getaway car.

Two days later, law enforcement located the stolen Honda Accord in Ontario and initiated a traffic stop. Greene instead tried to escape, and a vehicle pursuit ensued, with Greene eventually losing control of the car, colliding with a curb, and disabling the vehicle, according to the affidavit. Greene allegedly fled the disabled Honda Accord on foot and was apprehended shortly afterward by law enforcement, who took him into custody.

Greene was identified from security camera footage, eyewitness testimony, his tattoos, his jewelry, and photographs in his Instagram account, according to the affidavit.

A complaint contains allegations that a defendant committed a crime. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

If convicted of the Hobbs Act robbery charge, Greene would face a statutory maximum sentence of 20 years in federal prison.

The Bureau of Alcohol, Tobacco, Firearms and Explosives’ Orange County Violent Crime Task Force (OCVCTF) investigated this matter, with assistance from the Los Angeles Police Department’s Robbery Homicide Division and the Ontario Police Department. The OCVCTF is comprised of federal and local law enforcement agencies, including, but not limited to, the ATF, the Brea Police Department, the Santa Ana Police Department, the Orange County District Attorney’s Office, and the Fullerton Police Department.

Assistant United States Attorney Jeffrey M. Chemerinsky, Chief of the Violent and Organized Crime Section, is prosecuting this case.

LOS ANGELES – A former doctor has been sentenced to 84 months in federal prison for scheming to defraud private insurance companies and the Tricare health care program for U.S. military service members by fraudulently submitting nearly $120 million in claims related to the 1-800-GET-THIN Lap-Band surgery business, the Justice Department announced today.

Julian Omidi, 54, of West Hollywood, was sentenced Monday evening by United States District Judge Dolly M. Gee.

Judge Gee also sentenced Surgery Center Management LLC (SCM), an Omidi-controlled Beverly Hills-based company, to five years’ probation. A separate hearing on restitution and forfeiture in this case, along with SCM’s fine, is expected in the coming weeks. 

At the conclusion of a three-month trial, a federal jury in December 2021 found Omidi and SCM guilty of 28 counts of wire fraud and three counts of mail fraud. Omidi also was found guilty of two counts of making false statements relating to health care matters, one count of aggravated identity theft and two counts of money laundering. Omidi and SCM also were found guilty of conspiracy to commit money laundering.

“As found by the jury, the defendant Julian Omidi deliberately and repeatedly acted with an eye towards business and profits, rather than in the interest of GET THIN’s medical patients, by inducing patients to undergo medical treatment premised on fraud rather than medical necessity, including surgeries that carry significant risks and life-long health impacts,” said United States Attorney Martin Estrada. “Those who engage in fraud – to the detriment of vulnerable patients and the insurance companies – must always be held accountable.”

“Patients rely on medical providers to give them information that is truthful and accurate, so that the patients do not make inappropriate decisions about medical devices, which FDA oversees,” said Special Agent in Charge Robert M. Iwanicki, FDA Office of Criminal Investigations Los Angeles Field Office. “When providers give inaccurate information, we will investigate and bring to justice those who place profits over public health.”

“Mr. Omidi made millions at the expense of the multiple victim companies he defrauded, and he violated his oath to ‘do no harm’ by callously misleading patients about the need for a sleep study and subsequent weight loss surgery,” said Donald Alway, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This successful prosecution should send a clear warning to anyone in the medical profession who intends to falsify insurance claims for unnecessary procedures or provide faulty medical advice to patients seeking reliable care.”  

“Medical providers are in a position of great trust, and this former doctor broke that trust victimizing patients including military service members with medically unnecessary treatment to boost his own profits by hundreds of millions of dollars,” said Insurance Commissioner Ricardo Lara. “Medical provider fraud is a multi-billion-dollar problem that drives up health insurance premiums and creates a drain on our economy. My Department of Insurance and our law enforcement partners are committed to investigating fraud and protecting consumers and the health care system.”

Omidi is a former dermatologist whose medical license was revoked in 2009 after state authorities found he had engaged in dishonesty and unprofessional conduct related to his application for his California medical license.

He controlled, in part, the GET THIN network of entities, including SCM, that focused on the promotion and performance of Lap-Band weight-loss surgeries. Omidi established procedures requiring prospective Lap-Band patients – even those with insurance plans he knew would never cover Lap-Band surgery – to have at least one sleep study, and employees were incentivized with commissions to make sure the studies occurred.

Omidi used the sleep studies to find a reason – the “co-morbidity” of obstructive sleep apnea – that GET THIN would use to convince the patient’s insurance company to pre-approve the Lap-Band procedure.

After patients underwent sleep studies – irrespective of whether any doctor had ever determined the study was medically necessary – GET THIN employees, acting at Omidi’s direction, often falsified the results. Omidi then used the falsified sleep study results in support of GET THIN’s pre-authorization requests for Lap-Band surgery.

Relying on the false sleep studies – as well as other false information, including patients’ weights – insurance companies authorized payment for some of the proposed Lap-Band surgeries. Moreover, even if the insurance company did not authorize the surgery, GET THIN still was able to submit bills for approximately $15,000 for each sleep study. Prosecutors estimate that Omidi’s conduct caused insurers and Tricare to pay at least approximately $41 million for Lap-Band procedures, sleep studies, and CPAP devices and accessories tainted by this fraud.

The victim health care benefit programs include Tricare, Anthem Blue Cross, UnitedHealthcare, Aetna, Health Net, Operating Engineers Health and Welfare Trust Fund, and others.

“Today, marks the end of the appalling chapter of Julian Omidi and 1-800-GET-THIN. Omidi was well educated; he had every opportunity to be successful and make ethical decisions. However, driven by greed, he committed some of the most unconscionable and atrocious acts,” said Tyler Hatcher, Special Agent in Charge of IRS Criminal Investigation's Los Angeles Field Office. “There are no words strong enough to describe the actions taken by Omidi. We hope this sentencing brings some closure to all the victims affected by Omidi and 1-800-GET-THIN. IRS Criminal Investigations is committed to using our financial expertise to bring down people and organizations that take advantage of our community and cause irreparable harm.”

In 2014, the government seized more than $110 million in funds and securities from accounts held by individuals and entities involved in the criminal scheme, including Omidi. The government is seeking a money judgment order of forfeiture against defendants Omidi and SCM in the amount of $98,280,221 and is pursuing civil forfeiture of the seized property totaling $107,539,422.

The U.S. Food and Drug Administration Office of Criminal Investigations; the FBI; the Defense Criminal Investigative Service; IRS Criminal Investigation; and the California Department of Insurance investigated this matter.

Assistant United States Attorneys Kristen A. Williams, Ali Moghaddas, and David H. Chao of the Major Frauds Section, and Assistant United States Attorney David C. Lachman of the Terrorism and Export Crimes Section prosecuted this case. Assistant United States Attorney James E. Dochterman of the Asset Forfeiture and Recovery Section is handling the asset forfeiture portion of this case.

LOS ANGELES – A South Los Angeles man was found guilty by a jury today of nine felonies for recruiting and enticing teenage girls for whom he acted as a “pimp” and providing them for commercial sex work.

Donavin Dwayne Bradford, 31, was found guilty of one count of conspiracy to commit sex trafficking with a minor, three counts of sex trafficking of a minor, three counts of sexual exploitation of a minor for the purpose of producing a sexually explicit visual depiction, one count of possession of child pornography, and one count of sex trafficking through threats of force, fraud, or coercion.

According to evidence presented at a five-day trial, from the summer of 2021 to February 2022, Bradford conspired with Layla Kalani Valdivia, 23, of Ventura, to cause one of the minor victims – a then-15-year-old girl – to be used for commercial sex acts. Bradford recruited the victim to work for him as a commercial sex worker. As the victim’s “pimp,” Bradford expected the girl to earn him $1,000 per night.

Bradford and Valdivia advertised the girl for commercial sex work on various websites, and customers who responded to the ads were directed to various hotels and motels where they engaged in commercial sex acts with the victim. Sometimes the minor victim would be required to perform sex acts with Valdivia and a sex client together. Customers paid Bradford for “dates” with the victim or she would be required to give Bradford or Valdivia her earnings.

Bradford assaulted the minor victim when she tried to stop working for him on two separate occasions. Bradford also filmed himself engaging in sex acts on two separate occasions with her.

From March 2021 to November 2021, Bradford recruited and enticed two other girls – ages 16 and 17 – to engage in commercial sex activity.

From May 2021 to August 2022, Bradford also recruited and sex trafficked an adult victim through threats of force, fraud or coercion, including multiple instances of violence.   

Bradford and Valdivia have been in federal custody since August 2022.

United States District Judge John A. Kronstadt scheduled an August 17 sentencing hearing, at which time Bradford will face a mandatory minimum of 15 years in federal prison and a statutory maximum sentence of life in federal prison.

Valdivia pleaded guilty in December 2022 to one count of conspiracy to commit sex trafficking of a minor and one count of sex trafficking of a minor. Her sentencing hearing is scheduled for May 4, at which time she will face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life imprisonment.

The FBI Los Angeles Field Office and the FBI Los Angeles Child Exploitation and Human Trafficking Task Force coordinated with multiple law enforcement partners and thanks them for their participation and assistance, including: the Los Angeles Police Department; the Las Vegas Metropolitan Police Department; the Inglewood Police Department; the Pomona Police Department; the Los Angeles County Sheriff’s Department; the Ventura County Sheriff’s Office; the Santa Maria Police Department; the Los Angeles County Department of Children and Family Services; and the National Center for Missing and Exploited Children. 

Assistant United States Attorneys Chelsea Norell and Kathy Yu of the Violent and Organized Crime Section are prosecuting this case.

“Operation Cross Country,” an FBI-led nationwide effort which ran in August 2022, focused on identifying and locating victims of sex trafficking and investigating and arresting individuals and criminal enterprises involved in both child sex trafficking and human trafficking.

SANTA ANA, California – An Orange County woman who embezzled more than $3 million from two companies while she worked as their financial controller, cheated on her taxes, and fraudulently obtained a COVID-relief business loan was sentenced today to 63 months in federal prison.

Rosalba Meza, 48, a.k.a. “Rosalba Sceville,” of Dana Point, was sentenced by United States District Judge Cormac J. Carney, who also ordered her to pay $4,192,470 in restitution.

Meza pleaded guilty in December 2022 to one count of wire fraud and one count of subscribing to a false tax return.

From May 2017 through the end of 2019, Meza made unauthorized transfers – totaling approximately $3,071,880 – to her own bank accounts from accounts belonging to Trilogy Plumbing Inc. and a related back-office support company called Matrix Management LLC, both based in Anaheim.

Meza held various positions at these companies since 2003 and was entrusted with access to and control of the companies’ financial and banking information. In her role, Meza – whose annual salary was approximately $65,000 – oversaw and handled the companies’ daily financial activities, including banking, bookkeeping and preparation of financial statements. She also had the authority to access the companies’ bank accounts for the purpose of making authorized electronic payments on the companies’ behalf.

Meza used her knowledge of the companies’ accounting software to intentionally falsify their accounting records. She misrepresented the amounts in the companies’ various accounts to conceal the unauthorized transfers and falsely show the companies’ accounts were balanced. For example, Meza falsely recorded some unauthorized transfers as business expenses, when in fact these amounts were payments to herself.

In February 2019, Meza told executives their companies did not have funds to meet payroll obligations and failed to inform the executives that she had been embezzling from the companies. Several months later, while the companies were the subject of an IRS enforcement action because of unpaid payroll taxes, Meza falsely told the executives that she did not pay the quarterly payroll taxes because she instead had used those funds to pay employees.

Once Meza transferred the funds to her accounts, she used the stolen money on personal expenses, withdrew a large amount in cash, wired a significant amount to a family member-owned bank account in Mexico and made other transfers of the illicitly obtained funds to family and friends.

The scheme lasted until January 2020, when Trilogy and Matrix fired Meza.

“Particularly troubling is that in executing her embezzlement scheme, [Meza] took advantage of the responsibility she was entrusted with at the expense of her employers,” prosecutors argued in a sentencing memorandum. “[Meza’s] fraudulent schemes ran the course of several years and caused significant harm. This is not the case of defendant making one bad decision on one particular day, this is a pattern of bad decisions that spanned the course of several years.”

In addition to her embezzlement, for the tax years 2017, 2018 and 2019, Meza knowingly and willfully signed – under penalty of perjury – false personal federal income tax returns that vastly understated her annual income. For example, on her 2018 federal tax return Meza falsely reported that her income was $65,728, which did not include the $1,363,654 she obtained that year from stealing from her employers.

In total, Meza willfully failed to report $3,132,617 in income to the IRS, resulting in a total tax loss of $1,100,022 to the United States.

In her plea agreement, Meza admitted to submitting a false and fraudulent Paycheck Protection Program (PPP) loan application for $20,569 for Rosalba Meza, her eponymous business entity. In support of that loan application, Meza falsely listed monthly payroll and tax information. A bank approved the false application and disbursed her requested loan proceeds to the bank account she listed on the PPP paperwork, causing an actual loss of $20,569.

The FBI and IRS Criminal Investigation investigated this matter.

Special Assistant United States Attorney Ryan G. Adams of the Santa Ana Branch Office prosecuted this case.

Anyone with information about allegations of fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

LOS ANGELES – Two former Los Angeles County Sheriff’s Department deputies are scheduled to be arraigned this afternoon on federal charges alleging they violated the civil rights of a young man at a skatepark by falsely imprisoning him and then obstructing justice to cover up the illegal detention.

Miguel Angel Vega, 32, and Christopher Blair Hernandez, 37, both of whom were deputies assigned to LASD’s Compton Station, surrendered this morning to federal authorities after being named in a five-count indictment returned by a federal grand jury on March 21.

That indictment, which was unsealed this morning, charges both defendants with conspiracy, deprivation of rights under color of law, witness tampering, and falsification of records. Vega alone is charged with an additional count of falsification of records.

According to the indictment, Vega and Hernandez were on patrol on April 13, 2020, when they unlawfully detained and falsely imprisoned the then-23-year-old victim in the back of their patrol vehicle. The victim remained confined in the back of the vehicle during a subsequent chase, which ended when Vega crashed, injuring the victim. The indictment further alleges that the defendants obstructed justice in multiple ways to conceal and cover up their unlawful detention and false imprisonment of the victim.

“The indictment alleges that these two deputies violated a young person’s constitutional rights by willfully and illegally detaining him without just cause,” said United States Attorney Martin Estrada. “Officers who abuse their power must be held accountable, and my Office is committed to prosecuting violations of civil rights by those who violate their oaths and victimize those who they were sworn to protect.”

“Officers of the law are sworn to protect the communities they serve, not to create crimes and victimize residents,” said Donald Alway, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The civil rights violations alleged in the indictment – including false imprisonment, falsification of records and witness tampering – corrode trust in law enforcement and undermine efforts by the vast majority of law enforcement professionals who serve their communities honorably.”

The incident started at Wilson Park in Compton, where the victim – identified in court documents as “J.A.” – was in an enclosed skatepark when the deputies arrived and contacted two young African-American males outside the skatepark. After J.A. yelled at the deputies to stop bothering the young males, one or both defendants pulled J.A. through an opening in the skatepark fence and confined J.A. in the back of the patrol vehicle, according to the indictment.

“Vega and Hernandez did not handcuff J.A., did not secure J.A.’s seatbelt, did not tell J.A. that J.A. was under arrest, and did not inform J.A. of J.A.’s rights at any time,” the indictment alleges.

According to the indictment, after leaving the park, Vega, who was driving the LASD patrol vehicle with Hernandez in the front passenger seat and J.A. confined in the backseat, allegedly told J.A. that the deputies were going to set up J.A. and drop J.A. in gang territory, and Hernandez added that J.A. would be beaten.

Not far from the skatepark and while J.A. was still confined in the back of the patrol vehicle, Vega began pursuing a young male on a bicycle down an alley, where Vega crashed into a wall and another vehicle, causing J.A. to sustain a cut above his right eye. Following the collision, Vega removed J.A. from the patrol vehicle and told him to “get the [expletive] out of here,” or words to that effect, according to the indictment. J.A. then walked to a nearby residence that was unknown to J.A. to seek assistance.

According to the indictment, after the traffic collision, Vega reported over LASD radio that a person purportedly with a gun, whom Vega described as wearing clothes similar to J.A.’s clothing that day, had fled through the alley near 130th Street and Mona Boulevard. The indictment alleges that, even though Vega also reported the traffic collision, neither Vega during the radio calls, nor Vega or Hernandez during a subsequent conversation with their supervisor, disclosed that J.A. had been in the patrol vehicle during the collision in the alley.

It was only after J.A. had been independently detained on a neighboring street by other LASD deputies as the purported gun suspect that Vega informed his supervising sergeant that J.A. had been in Vega’s LASD patrol vehicle during the crash, falsely reporting to his supervisor that J.A. had been detained because he was suspected of being under the influence of a controlled substance, according to the indictment.

J.A. was transported to the hospital to receive treatment for the injury he sustained from the collision, and the indictment alleges that Hernandez directed a deputy at the hospital to issue J.A. a citation for being under the influence of methamphetamine.

The allegations stemming from the April 13, 2020 incident form the basis of the conspiracy, deprivation of civil rights, and witness tampering charges in the indictment. The falsification of records charges pertain to two incident reports prepared and filed with LASD in mid-April 2020.

The first report, which Vega prepared with Hernandez’s assistance, allegedly falsely stated that J.A. exhibited symptoms of a person under the influence of a stimulant; that J.A. had threatened to harm people in the skatepark, as well as Vega and Hernandez; that a crowd of people were moving toward the LASD patrol vehicle as the defendants drove away after unlawfully detaining J.A; and that, following the crash in the alley, Vega checked J.A. for injuries and J.A. was placed in another patrol vehicle of an assisting LASD unit until paramedics arrived.

Vega prepared a second report, according to the indictment, in which he falsely claimed to have transferred J.A. to the second patrol vehicle.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

The conspiracy count alleged in the indictment carries a statutory maximum penalty of five years in federal prison, while the civil rights offense carries a maximum sentence of 10 years. The offenses of witness tampering and falsification of records each carry a statutory maximum sentence of 20 years.

The FBI is conducting the investigation into this matter. The LASD’s Internal Criminal Investigations Bureau and Internal Affairs Bureau provided substantial assistance.

Assistant United States Attorneys J. Jamari Buxton and Brian R. Faerstein of the Public Corruption and Civil Rights Section are prosecuting this case.

LOS ANGELES – An Orange County man pleaded guilty today to defrauding companies who in mid-2020 paid for COVID-related medical protective equipment that was never delivered, causing more than $3 million in losses.

Christopher John Badsey, 62, of Lake Forest, pleaded guilty to four counts of wire fraud.

According to his plea agreement, in June and July of 2020, Badsey lied to three victim companies when he told them he had access to millions of boxes of nitrile gloves through his Irvine-based company, First Defense International Security Services Corp. (FDI). This type of personal protective equipment was in high demand and short supply during the early months of the COVID-19 pandemic.

Badsey agreed by contract to sell millions of boxes of gloves to each of the three companies.  But Badsey told the companies’ representatives that before they could inspect the gloves, which he claimed were stored in a warehouse in Los Angeles, the companies would be required to pay deposits of upwards of $1 million to FDI. In fact, Badsey did not have any gloves stored in any warehouse.

Badsey instructed the companies to wire the deposits to accounts controlled by himself, FDI or a co-schemer. Relying on Badsey’s false statements, the companies wired a total of $3,231,990 to these accounts.

As part of his plea agreement, Badsey has agreed to forfeit all title and interest in money or items derived from his crimes, including a yacht, a pontoon boat, two Mercedes-Benz automobiles, two Ford pickup trucks, an RV, a tractor, three ATVs, miscellaneous fishing equipment, and $58,923 in cash.

United States District Judge Josephine L. Staton scheduled a September 15 sentencing hearing, at which time Badsey will face a statutory maximum sentence of 20 years in federal prison for each wire fraud count.

The FBI investigated this matter.

Assistant United States Attorneys Melissa S. Rabbani and Kristin N. Spencer of the Santa Ana Branch Office are prosecuting this case.

LOS ANGELES – A one-time auctioneer has agreed to plead guilty to lying to FBI agents about the origins of paintings attributed to Jean-Michel Basquiat that were seized last year from the Orlando Museum of Art, admitting in court papers filed today that he and another man created the fake art and that he falsely attested to the paintings’ provenance.

Michael Barzman, 45, of North Hollywood, was charged today in federal court with making false statements to the FBI during an interview in August 2022. In a plea agreement also filed today, Barzman agreed to plead guilty to the felony offense and made a series of admissions about the fake paintings.

Barzman has agreed to surrender to federal authorities for a court appearance that has not yet been scheduled.

The plea agreement and a criminal information filed today outline how Barzman and a second man – identified in the court documents as “J.F.” – created the fake Basquiats in 2012 after hatching a plan to market the bogus artwork.

“J.F. spent a maximum of 30 minutes on each image and as little as five minutes on others, and then gave them to [Barzman] to sell on eBay,” according to the plea agreement. “[Barzman] and J.F. agreed to split the money that they made from selling the Fraudulent Paintings. J.F. and [Barzman] created approximately 20-30 artworks by using various art materials to create colorful images on cardboard.”

Barzman, who in 2012 ran an auction business focused on purchasing and reselling the contents from unpaid storage units, further admitted that he attempted to create a false provenance – or history of the ownership of a piece of art – for the purported Basquiats by claiming in a notarized document that the fraudulent paintings were found inside a storage unit that a well-known screenwriter had rented.

The bogus art was sold and made its way through the art market, forming the basis of an exhibition that opened in February 2022 at the Orlando Museum of Art. “Most of the featured works had, in fact, been created by [Barzman] and J.F.,” Barzman admitted in his plea agreement.

The FBI executed a search warrant at the Orlando Museum of Art in June 2022 and seized 25 pieces that Basquiat purportedly had created.

During an August 18, 2022 interview with special agents of the FBI, Barzman denied making the paintings himself.

“At the time of the interview, [Barzman] knew that he and J.F. had created the paintings and that his statements to the contrary were untruthful,” Barzman admitted in his plea agreement. “His statement that he did not make the paintings or have someone make them for him were material to the activities and decisions of the FBI and were capable of influencing the agency’s decisions and activities.”

In another FBI interview in October 2022, Barzman admitted “it was a lie” that the artwork had come from the storage locker, but he continued to deny making the fraudulent paintings – even after agents showed him the back of a painting on cardboard seized from the Orlando Museum of Art in which his name appears on a mailing label that had been painted over.

The crime of making false statements to a government agency carries a statutory maximum penalty of five years in federal prison.

The FBI’s Art Crime Team is investigating this matter.

Assistant United States Attorneys Mark A. Williams, Chief of the Environmental and Community Safety Crimes Section; Matthew W. O’Brien of the Environmental and Community Safety Crimes Section; and Alix L. McKenna of the General Crimes Section are prosecuting this case. Assistant United States Attorney Daniel Boyle of the Asset Forfeiture and Recovery Section is handling the forfeiture of seized artwork.

SANTA ANA, California – An Orange County tax preparer pleaded guilty today to a federal criminal charge for participating in schemes that caused nearly $3.8 million in losses to the United States government, including one orchestrated by a corrupt social worker who stole his clients’ identities to fraudulently obtain tax refunds, welfare benefits and credit cards.

Anton Nguyen, 54, of Fountain Valley, pleaded guilty to one count of conspiracy to defraud the United States.

According to his plea agreement, Nguyen operated a Westminster-based tax preparation company called Century Tax & Travel. From 2012 to June 2019, Nguyen and his co-conspirators filed hundreds of tax returns using personal identifying information (PII) belonging to other individuals without their permission to generate fraudulent tax refund payments from the United States.

One of Nguyen’s co-conspirators was John Tran, who is believed to be either 57 or 61 years old, of Fountain Valley, an Orange County Social Services Agency case worker from July 1994 to October 2018, who stole the Social Security numbers and other personal identifying information (PII) from his clients – many of them recent immigrants.

Tran and his co-conspirators used this stolen information to fraudulently obtain money from the federal government, the State of California, the County of Orange, and financial institutions. Nguyen used the stolen identities that Tran provided to create fraudulent Forms 1099-MISC that falsely showed payments made to the identity theft victims by companies, including those controlled by Tran and other accomplices.

Nguyen prepared and filed federal income tax returns using the Tran-provided stolen identities. Nguyen then used the purported payments on the fraudulent Forms 1099 as income to the identify theft victims, making them appear to qualify for tax credits, including the Earned Income Tax Credit and the Child Tax Credit.

In turn, the reported payments to the identity theft victims were used by Nguyen’s clients to offset business revenues and reduce the taxes they owed by making it appear that the identity theft victims worked for them. In exchange for the fabrication of the Forms 1099, Nguyen’s clients paid him a fee.

In total, Nguyen and his co-conspirators defrauded the United States out of at least $3,773,282.

United States District Judge James V. Selna scheduled a July 24 sentencing hearing, at which time Nguyen will face a statutory maximum sentence of five years in federal prison.

Federal prosecutors have secured a total of seven guilty pleas to criminal charges connected to this scheme.

Tran pleaded guilty in November 2019 to conspiracy to defraud the United States, mail fraud and aggravated identity theft. Tran is scheduled to be sentenced on June 5, at which time he will face a statutory maximum sentence of 72 years in federal prison and a mandatory minimum sentence of two years in federal prison.

Chau Nguyen, 69, of Garden Grove; Sophie Thuy Nguyen, 48, of Westminster; Kevin Le, 57, of Anaheim Hills; Van Quach, 43, of Monterey Park; and Peter Duc Nguyen, 63, of Garden Grove, each have pleaded guilty to evasion of assessment of taxes and are scheduled to be sentenced later this year, at which time they will each face a statutory maximum sentence of five years in federal prison.

Thomas Nguyen, 62, of Santa Ana, pleaded guilty in June 2021 to one count of tax evasion. He was fined $30,000 and ordered to pay $133,796 in restitution.

Rosemary Pham, 65, of Midway City, the owner and operator of Victory Tax Service in Westminster, has pleaded not guilty to one count of conspiracy to defraud the United States and 10 counts of aiding and advising the filing of false tax returns. Her trial date is scheduled for August 15.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

IRS Criminal Investigation, with assistance from the Orange County District Attorney’s Office, investigated this matter.

Assistant United States Attorney Bradley E. Marrett of the Santa Ana Branch Office is prosecuting this case.

LOS ANGELES – A former chef who pleaded guilty in 2018 to a heroin trafficking offense – and was a fugitive for more than four years before being arrested in Jamaica earlier this year – was sentenced today to 121 months in federal prison.

Devon Bennett, 54, who resided in Hawthorne when he absconded prior to a sentencing hearing in September 2018, was sentenced this morning by United States District Judge Dale S. Fischer. After his release from prison, Bennett will be subject to a five-year period of supervised release.

Following Bennett’s flight from justice, Judge Fischer imposed a sentence that was 51 months longer than the 70 months prosecutors had initially recommended in 2018.

Bennett pleaded guilty in May 2018 to one count of possession with intent to distribute heroin, admitting that he and others used his apartment to package and ship heroin and other drugs through the U.S. Mail.

While free on a $50,000 bond and shortly before his original sentencing hearing in September 2018, Bennett fled. Judge Fischer issued an arrest warrant and, soon after, an order forfeiting his bond. Bennett’s third-party surety has since paid the United States more than $40,000 as a result of Bennett’s decision to flee from justice.

In early February, law enforcement authorities in Jamaica located and arrested Bennett at the request of the United States. Bennett consented to extradition and was subsequently surrendered to the United States on March 8.

The United States Postal Inspection Service investigated this matter, with the assistance of the Drug Enforcement Administration and the Los Angeles Police Department.

The United States Marshals Service, the Jamaica Fugitive Apprehension Team, the Jamaica Constabulary Force – Counterterrorism and Organized Crime Branch, and the Justice Department’s Office of International Affairs provided substantial assistance in securing Bennett’s arrest and return to Los Angeles.

Assistant United States Attorney Benedetto L. Balding of the International Narcotics, Money Laundering, and Racketeering Section prosecuted this case. Assistant United States Attorney Robert I. Lester of the Asset Forfeiture and Recovery Section handled the bond forfeiture.

SANTA ANA, California – A Burbank man was arraigned today on a federal grand jury indictment alleging he embezzled approximately $2.2 million from a sizable estate left to an elderly man by the man’s late brother.

Jamal Nathan “Jimmy” Dawood, 52, is charged with six counts of wire fraud, nine counts of money laundering, and one count of aggravated identity theft.

At his arraignment in United States District Court in Santa Ana, Dawood pleaded not guilty to the charges against him. His bond was set at $50,000 and a June 6 trial date was scheduled.

According to the indictment returned on April 5, during the second half of 2019, Dawood offered to assist the victim with the management of real estate properties and retirement savings that the victim had inherited from the victim’s deceased brother. Specifically, Dawood allegedly helped the victim open a trust account at a bank for the purpose of managing the retirement savings.

Without the victim’s knowledge or authorization, Dawood then initiated wire and online banking transfers from the victim’s trust account to Dawood-controlled accounts, the indictment alleges. Without the victim’s knowledge or permission, Dawood allegedly also wired money from the victim’s trust account to people with whom Dawood had personal and business relationships.

Dawood allegedly convinced the victim to transfer ownership of his home and his late brother’s real estate holdings to various companies. Dawood falsely represented that the victim would retain an ownership interest in his residence and the inherited real estate through these companies. In fact, Dawood and other individuals close to him controlled these companies, according to the indictment.

In total, Dawood allegedly fraudulently obtained at least $2,202,688 in the victim’s money and property. The illicitly obtained funds allegedly were used to purchase real estate in La Crescenta and Fontana.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

If convicted, Dawood would face a statutory maximum sentence of 20 years in federal prison for each wire fraud count, up to 10 years in federal prison for each money laundering count, and a mandatory consecutive sentence of two years in federal prison for the aggravated identity theft count.

The FBI is investigating this matter.

Assistant United States Attorneys Kristin N. Spencer and Melissa S. Rabbani of the Santa Ana Branch Office are prosecuting this case.

If you or someone you know is age 60 or older and has been a victim of financial fraud, help is available at the National Elder Fraud Hotline: 1-833-FRAUD-11 (1-833-372-8311). This Department of Justice hotline, managed by the Office for Victims of Crime, is staffed by experienced professionals who provide personalized support to callers by assessing the needs of the victim and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies, and provide resources and referrals, on a case-by-case basis. Reporting is the first step. Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses. The hotline is staffed seven days a week from 3 a.m. to 8 p.m. Pacific Time. English, Spanish, and other languages are available.

Information about the Department of Justice’s Elder Fraud Initiative is available at www.justice.gov/elderjustice.

LOS ANGELES – A Kern County man charged with making threatening telephone calls last year, including to a Planned Parenthood office on the day the United States Supreme Court overturned its Roe v. Wade decision, has been arraigned in federal court, the Justice Department announced today.

Nishith Tharaka Vandebona, 34, currently of Bakersfield, but who lived in Camarillo during the alleged offenses, is charged with three misdemeanor counts of threatened forcible intimidation regarding the obtaining and provision of reproductive health services under the federal Freedom of Access to Clinic Entrances (FACE) Act. Vandebona also is charged with two felony counts of transmitting threatening communications in interstate commerce to another organization in Ventura County.

Vandebona pleaded not guilty late Wednesday afternoon to the charges against him and a May 30 trial date was scheduled. A federal magistrate judge ordered Vandebona jailed without bond.

“Death threats are never acceptable regardless of what a person believes,” said United States Attorney Martin Estrada. “No one should be threatened with death or bodily harm simply because they provide health services or work for a nonprofit. This indictment serves as a warning that there will be significant repercussions especially for anyone seeking to intimidate those seeking and providing reproductive health services.”

“The Constitution gives each of us broad free speech rights, but using death threats to bully individuals or attempt to terrorize others will lead to criminal charges, as evidenced in this indictment,” said Donald Alway, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The use of violence to intimidate an individual from exercising their rights cannot be tolerated in a free and civil society.” 

According to the indictment returned on March 29 and unsealed Wednesday, from February to June of 2022, Vandebona used an internet application to create anonymous telephone numbers to make the threatening calls.

During the spring of 2022, there was news coverage that the Supreme Court was considering overturning Roe, its 1973 decision that recognized a constitutional right to abortion, after an initial draft of the new opinion was leaked.

On June 24, 2022, the Supreme Court published a decision in Dobbs v. Jackson Women’s Health Organization, which overturned Roe and ruled that the Constitution does not confer a right to abortion.

That day, using an anonymous number, Vandebona left a voicemail message containing death threats with Planned Parenthood California Central Coast, a Santa Barbara-based reproductive health services organization, the indictment alleges.

On June 25, 2022, Vandebona allegedly called Planned Parenthood Los Angeles and spoke with a call center specialist. According to the indictment, Vandebona said, “I’m calling to let you know that I’m going to come in there and kill all of you, including your staff and your security. You got it? You’re overdue for an attack.”

Within an hour, Vandebona allegedly telephoned Planned Parenthood Los Angeles again and made several death threats, including “I’m gonna come in there and murder your staff.”

Prior to the alleged threats to the Planned Parenthood facilities, Vandebona allegedly called in a bomb threat in February 2022 to the office of Californians for Population Stabilization (CAPS), a Ventura-based non-profit organization that advocates for “zero population growth,” primarily through immigration restrictions.

Vandebona allegedly used anonymous numbers he obtained from the internet to make threatening phone calls to CAPS. In one of the calls, he said, “I’m gonna come in there and kill all of you, dude. Be careful.”

In another call to CAPS in February 2022, Vandebona said, “I’m gonna come in there, plant a bomb, and kill as many white Americans as possible. You understand that? Servicemen, families, everybody,” according to the indictment.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

If convicted, Vandebona would face a statutory maximum sentence of five years in federal prison for each count of transmitting threatening communications in interstate commerce, and a statutory maximum sentence of one year in federal prison for each FACE Act count.

The FBI is investigating this matter. The Santa Barbara Police Department, the Santa Monica Police Department, and the Ventura County Sheriff’s Office have assisted in this investigation.

Assistant United States Attorneys Frances S. Lewis and Julius J. Nam of the Public Corruption and Civil Rights Section are prosecuting this case.

Anyone who has information about incidents of violence, threats, and obstruction that target a patient or provider of reproductive health services or damage and destruction of reproductive health care facilities, should report that information to the FBI at https://tips.fbi.gov.

For more information about clinic violence, and the Department of Justice’s efforts to enforce FACE Act violations, please visit www.justice.gov/crt/national-task-force-violence-against-reproductive-health-care-providers.

A California man pleaded guilty today to submitting fraudulent claims to Medicare for prescription drugs that were never dispensed to patients.

According to court documents, Paul Mansour, 55, of Sierra Madre, was a pharmacist at a Sierra Madre-based pharmacy, Mansour Partners Inc., doing business as Best Buy Drugs, which he also co-owned. Mansour created fake patient profiles in the pharmacy’s digital filing system and added fraudulent prescription medication entries to these fictitious patient files that duplicated prescriptions for medications provided to real patients of the pharmacy. Mansour then submitted false and fraudulent claims for the drugs added in the fictitious patient files that had never been dispensed, billing Medicare for the fraudulent prescriptions in the names of real patients of the pharmacy. Between January 2017 and June 2022, Mansour caused Medicare to pay the pharmacy between approximately $600,000 and over $1 million as a result of the submission of false and fraudulent claims.

Mansour pleaded guilty to one count of health care fraud. He is scheduled to be sentenced on June 28 and faces a maximum penalty of 10 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Martin Estrada for the Central District of California, Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division, Assistant Director in Charge Donald Alway of the FBI Los Angeles Field Office, and Deputy Inspector General for Investigations Christian J. Schrank of the Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

The FBI Los Angeles Field Office and HHS-OIG investigated the case.

Trial Attorney Helen H. Lee of the Criminal Division’s Fraud Section is prosecuting the case.

The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, comprised of 15 strike forces operating in 25 federal districts, has charged more than 5,000 defendants who collectively have billed federal health care programs and private insurers more than $24 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at https://www.justice.gov/criminal-fraud/health-care-fraud-unit.

LOS ANGELES – A licensed Orange County pharmacist was sentenced today to 180 months in federal prison for her role in a health care fraud scheme in which more than 1,000 bogus prescriptions for compounded medications were filled, costing Tricare, the United States military’s health care plan, more than $11 million in losses.

Sandy Mai Trang Nguyen, 42, of Irvine, was sentenced by United States District Judge Otis D. Wright II, who also ordered her to pay $11,098,756 in restitution.

At the conclusion of a five-day trial in November 2022, a jury found Nguyen guilty of 21 counts of health care fraud, and one count of obstruction of a federal audit.

Nguyen was the pharmacist-in-charge of the now-defunct Irvine Wellness Pharmacy (IWP) in Irvine. From late 2014 to May 2015, Nguyen and others under her supervision filled approximately 1,150 compounded prescriptions for pain, scarring and migraines that Tricare reimbursed for tens of thousands of dollars per prescription. Nearly all the prescriptions were sent to the pharmacy by so-called marketers who were paid kickbacks of upwards of 50% of the Tricare reimbursements.

Compounded drugs are tailor-made products doctors may prescribe when the Food and Drug Administration-approved alternative does not meet the health needs of a patient.

The beneficiaries were solicited to provide their Tricare insurance information for medications they did not seek out or need, and most were never examined by a physician. The prescriptions were electronically sent from marketers or telemedicine businesses and submitted by the pharmacy for reimbursement even though Tricare rules excluded reimbursements for claims based on telemedicine visits and would not, in any event, have authorized reimbursements for prescriptions obtained through the payment of kickbacks.

Nguyen was aware that the prescriptions – purportedly tailored to individual patients’ needs – were purportedly written by physicians in states other than where the beneficiaries lived, multiple members of the same families received the same medications, and the same prescriptions were written for members of different patient populations, including a 13-year-old boy in Chicago who got the same prescription as a woman in Orange County who happened to be Nguyen’s grandmother.

The pharmacy invoiced the beneficiaries to pay hundreds of dollars in required co-payments, but the beneficiaries stated that they knew nothing about co-payments and understood that the medications were fully covered by Tricare, according to trial testimony. The total co-payments due during the scheme exceeded $16,000, but the pharmacy never collected them.

Nguyen also obstructed a federal audit by providing bogus, cut-and-pasted prescriptions to frustrate Tricare’s effort to validate millions of dollars paid for the same prescriptions.

During Nguyen’s tenure as pharmacist-in-charge, Tricare paid $11,098,756 on the fraudulently submitted claims.

“At [Nguyen’s] trial, the government proved that [Nguyen] knew that IWP was, essentially, a fraud factory that was churning out prescriptions solely to make a fast buck,” prosecutors argued in a sentencing memorandum. “She routinely ignored the numerous red flags that indicated that the prescriptions were fraudulent.”

On March 20, Judge Wright sentenced co-defendant Marcus Orlando Armstrong, 56, of Miami, to 9½ years in federal prison for his role in the scheme to defraud Tricare. Armstrong was IWP’s director of operations when the criminal activity occurred.

Co-defendants Leslie Andre Ezidore, 53, of West Los Angeles, and Alexander Michael Semenik, 51, of Las Vegas, have pleaded guilty to felony charges in this case and await sentencing.

The Department of Defense Office of Inspector General; the Defense Criminal investigative Service; the FBI; the Amtrak Office of Inspector General; IRS Criminal Investigation; the United States Department of Labor – Employee Benefits Security Administration; the California Department of Insurance; and the Office of Personnel Management Office of Inspector General investigated this matter.

Assistant United States Attorneys Mark R. Aveis and Ali Moghaddas of the Major Frauds Section are prosecuting this case.

A Southern California man pleaded guilty today to submitting false enrollment applications to Medicare that hid the real owners of a fraudulent hospice company, which then submitted over $3.1 million in false and fraudulent claims to Medicare.

According to court documents, Karen Sarkisyan, aka Kevin Sarkisyan, 44, of Glendale, submitted false and fraudulent Medicare enrollment forms for San Gabriel Hospice and Palliative Care Inc. (San Gabriel), falsely identifying a straw owner as the sole owner and manager, concealing the actual beneficial owners and managers. San Gabriel submitted approximately $3,668,050 in false and fraudulent claims to Medicare, of which $3,180,677 was paid after Sarkisyan submitted the false enrollment applications.

Sarkisyan pleaded guilty to one count of conspiracy to defraud the United States. He is scheduled to be sentenced on Sept. 11 and faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. 

Co-conspirator Gayk Akhsharumov previously pleaded guilty to health care fraud conspiracy and is scheduled to be sentenced on Aug. 14. A third co-conspirator was indicted for his role in the scheme but remains a fugitive.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Martin Estrada for the Central District of California, Assistant Director in Charge Donald Always of the FBI Los Angeles Field Office, and Special Agent in Charge Timothy B. DeFrancesca of the Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

The FBI Los Angeles Field Office and HHS-OIG are investigating the case.

Assistant Chief Niall M. O’Donnell and Trial Attorneys Patrick J. Queenan and Alexandra Michael of the Criminal Division’s Fraud Section are prosecuting the case.

The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, comprised of 15 strike forces operating in 25 federal districts, has charged more than 5,000 defendants who collectively have billed federal health care programs and private insurers more than $24 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with the Office of the Inspector General for the Department of Health and Human Services, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at https://www.justice.gov/criminal-fraud/health-care-fraud-unit.

LOS ANGELES – The Department of Justice announced today that it has seized virtual currency worth an estimated $112 million linked to cryptocurrency investment scams commonly called “pig butchering.”

Seizure warrants for six virtual currency accounts were authorized by judges in Los Angeles, the District of Arizona, and the District of Idaho. In the Los Angeles matter, a United States magistrate judge authorized the seizure of an account containing approximately $66.4 million in various cryptocurrencies after finding probable cause that the funds were derived from wire fraud schemes.

According to court documents, the six virtual currency accounts were used to launder proceeds of various cryptocurrency confidence scams. In these schemes, fraudsters cultivated long-term, online relationships with victims, eventually enticing them to make investments in fraudulent cryptocurrency trading platforms. In reality, the funds sent by victims for these purported investments were instead funneled to cryptocurrency addresses and accounts controlled by scammers and their co-conspirators.

“The victims in Pig Butchering schemes are referred to as ‘pigs’ by the scammers because the scammers will use elaborate storylines to ‘fatten up’ victims into believing they are in a romantic or otherwise close personal relationship,” according to the affidavit in support of the Los Angeles seizure warrant. “Once the victim places enough trust in the scammer, the scammer brings the victim into a cryptocurrency investment scheme.”

The scammer attempts to create the appearance of legitimacy by fabricating websites or mobile apps to display a bogus investment portfolio with large returns, the affidavit states. In relation to the Los Angeles-based account seizure, the FBI has identified at least 10 victims who were unable to withdraw funds they had invested, with the seized account containing some funds from all 10 victims.

Authorities executed the Los Angeles seizure warrant in December and received the last transfer of cryptocurrency on March 21.

“Using the methods of traditional con artists, high-tech fraudsters have taken advantage of the publicity and hype surrounding cryptocurrency to encourage an untold number of Americans to invest in get-rich-quick schemes,” said United States Attorney Martin Estrada. “We all know that investment scams are not new, but the use of digital currency to commit fraud presents new challenges to victims and to law enforcement trying to recover lost funds – which likely total billions of dollars in the so-called ‘pig butchering’ schemes. The major seizures announced today show that law enforcement is confronting the new challenges and taking strong measures to address this fraud, but the public should be extremely wary of investment scams that use cryptocurrency and promise unrealistic returns.”

The affidavit in the Los Angeles seizure warrant discussed a series of cryptocurrency investment scams, one of which targeted a professional woman who was contacted on LinkedIn by a man who used the name “Fei Kuang.” After learning that the victim already had a small cryptocurrency account, “Fei Kuang” offered to help the victim, eventually convincing her to invest more money and to move her funds to another, presumably fraudulent, trading exchange. When she tried to withdraw her funds, she was told she had to pay a 20% in “taxes.” When the trading platform continued to demand more money, the woman realized she was the victim of a scam which cost her approximately $2.5 million.

“Transnational criminal organizations are combining confidence scams with technological savvy to swindle Americans out of their hard-earned funds,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “These particularly vicious frauds – where scammers carefully cultivate relationships with their victims over time – have devastated families and cost individuals their life savings. Now that we have seized this virtual currency, we will seek to swiftly return it to victims. In addition to our tireless efforts to disrupt these schemes, we must also work to raise public awareness and help inform potential victims: be wary of people you meet online; seriously question investment advice, especially about cryptocurrency, from people you have not met in person; and remember, investments that seem too good to be true, usually are.”

In 2022, investment fraud caused the highest losses of any scam reported by the public to the FBI’s Internet Crimes Complaint Center (IC3), totaling $3.31 billion. Frauds involving cryptocurrency, including pig butchering, represented most of these scams, increasing 183% from 2021 to $2.57 billion in reported losses last year.

According to the FBI, the highest number of reports came from victims between the ages of 30 and 49. In these schemes, often called “Sha Zhu Pan,” a Chinese phrase that loosely translates to “pig butchering,” scammers often target their victims through social networking and online communications platforms, dating websites, and phone calls and text messages that are meant to appear to have been misdialed. After gaining the trust of their victims – sometimes over a period of months – scammers eventually introduce the idea of trading in cryptocurrency. They then direct victims to cryptocurrency investment platforms or to co-conspirators posing as investment advisors or customer service representatives. Scammers control websites that are built to look like legitimate trading platforms, applications that victims download onto their phones, or malicious smart contracts accessed through cryptocurrency wallet software.

Once victims make an initial “investment,” the platforms purport to show substantial gains. Sometimes, victims are even allowed to withdraw some of these initial gains to further engender trust in the scheme. It is not until a large investment is made that victims find that they are unable to withdraw their funds.

Even when a victim is denied access to their funds, the fraud is often not yet over. Scammers request additional investments, taxes or fees, promising that these payments will allow victims access to their accounts. These scam operations often continue to steal from their victims and do not stop until they have deprived victims of any remaining savings.

“Depriving scam organizations of their ill-gotten gains is an important part of our strategy to combat these ruthless schemes,” said Director Eun Young Choi of the Criminal Division’s National Cryptocurrency Enforcement Team (NCET). “We will continue to use all tools at our disposal to disrupt and deter cryptocurrency confidence schemes, including by following the money on the blockchain and seizing cryptocurrency to return funds to victims, and by targeting and taking down online infrastructure used by the scammers. Today’s announcements also demonstrate the value of early notification by victims to law enforcement; we thank those victims who came forward to notify the FBI when they were targeted by this scheme.”

The FBI Phoenix Division is investigating the matter that resulted in seizures announced today.

Assistant United States Attorney Daniel Boyle of the Asset Forfeiture and Recovery Section is handling the Los Angeles case. The other cases are being handled by the District of Arizona and the District of Idaho. The NCET and the Criminal Division’s Fraud Section provided substantial assistance and coordination.

If you or someone you know is a victim, visit www.fbi.gov/cryptoguard, contact your local FBI field office (the Los Angeles Field Office can be reached at 310-477-6565), call 1-800-CALL-FBI, or report it to  IC3.gov. In your complaint, please reference, “Pig Butchering PSA.” Include as much information as possible in your complaint including names of investment platforms, cryptocurrency addresses and transaction hashes, bank account information, and names and contact information of suspected scammers. Maintain copies of all communications with scammers and records of financial transactions.

RIVERSIDE, California – A former middle school mathematics teacher in San Bernardino was sentenced today to 120 months in federal prison for distributing an image of a child engaging in sexually explicit conduct.

Josue Gamaliel Vidal Quintanilla, 31, of Fontana, was sentenced by United States District Judge Jesus G. Bernal, who also ordered Vidal to pay $9,000 in restitution.

Vidal, who formerly taught mathematics at Shandin Hills Middle School in San Bernardino, pleaded guilty in October 2021 to one count of distribution of child pornography.

Vidal has been in federal custody since his arrest in this case in September 2020. He will be placed on supervised release for 20 years upon his release from prison.

In September 2019 and January 2020, law enforcement received information from the Kik and Snapchat internet messaging applications that one of their users had uploaded material that was suspected to show sexually explicit material involving children. The Internet Protocol (IP) address for the Kik and Snapchat accounts was assigned to Vidal’s residence in Fontana.

Law enforcement executed a search warrant at Vidal’s home in September 2020. Vidal agreed to speak with law enforcement and admitted to viewing child pornography since early 2019. He also admitted to sending people internet links to sexually explicit material involving children as young as infants.

In total, law enforcement recovered approximately 1,500 images and 724 videos of child pornography from Vidal’s Kik and Snapchat accounts and digital devices.

Vidal pleaded guilty to distributing to another Snapchat user in August 2020 a visual depiction of a minor engaged in sexually explicit conduct. Vidal was employed as a middle school teacher during this time, but his employment later was terminated.

“This conduct is abhorrent in and of itself, but it is especially disturbing and unacceptable considering defendant’s role in the community as a teacher,” prosecutors argued in a sentencing memorandum.

Homeland Security Investigations and the Fontana Police Department investigated this matter. The San Bernardino County Sheriff's Department provided assistance with this investigation.

Assistant United States Attorney Sonah Lee of the Riverside Branch Office prosecuted this case.

LOS ANGELES – Long-time politician Mark Ridley-Thomas was found guilty by a jury today of bribery in a scheme in which his son received substantial benefits from the University of Southern California in exchange for Ridley-Thomas’ political support for lucrative county contracts and contract amendments with the university while he served on the Los Angeles County Board of Supervisors.

Ridley-Thomas, 68, of Los Angeles, was found guilty of seven felonies: one count of conspiracy, one count of bribery, one count of honest services mail fraud, and four counts of honest services wire fraud.

Ridley-Thomas’ political career spans several decades, including in the California State Legislature and, most recently, in the Los Angeles City Council. He was suspended in October 2021 from the Los Angeles City Council after being indicted in this case.

“When elected leaders engage in acts of corruption, our community suffers immense damage. Ridley-Thomas engaged in a corrupt conspiracy with a university dean to steer taxpayer-funded contracts to the school in exchange for benefits for his son,” said United States Attorney Martin Estrada. “Today’s verdict sends a clear message to public officials that my office will vigorously investigate and prosecute those who abuse their power and thereby breach the public trust.”

“Public officials are elected to be a voice and a vote for the people they're paid to represent, not for their own personal gain,” said Donald Alway, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “Allegations of public malfeasance must and will be addressed by the FBI before further corrupt actions erode confidence in our public institutions.”

According to evidence presented at a 16-day trial, from May 2017 to August 2018, Ridley-Thomas engaged in a criminal conspiracy with Marilyn Louise Flynn, 84, of Los Feliz, formerly a tenured professor and the dean of USC’s School of Social Work.

In December 2017, citing health issues, Ridley-Thomas’ son abruptly resigned from the California State Assembly. At the time of his resignation, Ridley-Thomas’ son was the subject of a sexual harassment investigation in the Assembly, a fact not known by either USC or the public.  Emails and testimony at trial, prosecutors argued, showed that the reason given for the resignation was pretextual. Behind the scenes, Ridley-Thomas was orchestrating a public relations campaign to convince the public his son was ill, and a legal team was put in place to stall the Assembly’s investigation indefinitely. Prosecutors argued that the evidence at trial demonstrated that part of Ridley-Thomas’ public relations plan included finding his son prestigious degrees, titles, and paying jobs.

During the conspiracy’s course, Flynn ultimately provided Ridley-Thomas and his son benefits, including graduate school admission to pursue a dual master’s degree, a full-tuition scholarship, a paid professorship, and a mechanism for Ridley-Thomas to funnel $100,000 of his campaign funds through the university to a non-profit to be operated by the son – Policy, Research & Practice Initiative (PRPI).

In exchange, Ridley-Thomas supported contracts involving the Social Work School, including contracts to provide services to the Department of Children and Family Services (DCFS) and the Probation Department, as well as an amendment to a contract with the Department of Mental Health (DMH) that could help bring the school potentially millions of dollars in new revenue.

By funneling the payment through USC, Ridley-Thomas and Flynn attempted to disguise the true source of a $100,000 payment to make it appear as though USC, not Ridley-Thomas, was the generous benefactor supporting Ridley-Thomas’ son and PRPI. Had it known this fact, USC would not have approved the $100,000 payment.

For his part, Ridley-Thomas delivered on his end of the corrupt bargain. He voted on three county proposals that Flynn had sought to shore up her school’s shoddy financial situation – it faced a multimillion-dollar budget deficit – including a vote approving an amended Telehealth agreement with more lucrative terms for the Social Work School. He also sought to influence key county decisionmakers associated with these approvals and made sure Flynn knew of his efforts.

United States District Judge Dale S. Fischer scheduled an August 14 sentencing hearing, at which time Ridley-Thomas will face a statutory maximum sentence of five years in federal prison on the conspiracy count, up to 10 years in federal prison for the bribery count, and up to 20 years in federal prison for each honest services fraud count. 

Ridley-Thomas was found not guilty of one count of honest services mail fraud and 11 counts of honest services wire fraud.

Flynn pleaded guilty in September 2022 to one count of bribery. Her sentencing hearing is scheduled for June 26. Flynn faces a statutory maximum sentence of 10 years in federal prison. Prosecutors have agreed to recommend she satisfy her custodial term by way of home confinement and have agreed to seek a fine against her of no more than $150,000.

The FBI investigated this matter.

Assistant United States Attorney Lindsey Greer Dotson, Chief of the Public Corruption and Civil Rights Section, and Assistant United States Attorneys Thomas F. Rybarczyk and Michael J. Morse, also of the Public Corruption and Civil Rights Section, are prosecuting this case.

LOS ANGELES – A former Redondo Beach resident was sentenced today to 324 months in federal prison for targeting girls on the internet and enticing them to engage in masochistic abuse for his sexual gratification.

Matthew Christian Locher, 32, was sentenced by United States District Judge Dolly M. Gee, who at today’s hearing said, Locher was “a parent’s worst nightmare” and was an individual who committed “monstrous acts.” Judge Gee also ordered Locher to pay $25,209 in restitution to his victims and ordered him placed on lifetime supervised release once he is released from prison.

Locher pleaded guilty in August 2022 to one count of sexual exploitation and attempted sexual exploitation of a child for the purpose of producing a sexually explicit visual depiction.

From November 2020 to May 2021, Locher targeted girls suffering from mental health issues, including depression, suicidal thoughts, and eating disorders. During internet conversations, Locher groomed his victims to engage in self-mutilation and instructed a victim struggling with an eating disorder to starve herself, ordering her to film herself cutting her body when she disobeyed him.

Locher enticed two of the minor victims to send Locher images and videos of themselves committing acts of self-harm, which included cutting their breasts with razor blades.

Locher enticed a third victim, who was 12 years old, to run away from her home in Ohio and travel to California to engage in illegal sexual activity with him. Specifically, Locher encouraged the victim to kill her parents and set her family’s house on fire, at which point he would pick her up, bring her to California, and make her his “slave.” This victim began a trip to California after setting a fire in her family’s home in an unsuccessful attempt to kill her parents.

Soon after federal authorities executed a search warrant at his residence, Locher relocated to Indiana in the summer of 2021. Following his arrest in Indianapolis in January 2022, federal authorities transported Locher to California. He has been in federal custody since then.

“[Locher’s] victims are real people – real girls who turned to the internet to seek help with their struggles with anorexia, schizophrenia, and depression, and tragically fell into [Locher’s] hands,” prosecutors argued in a sentencing memorandum. “[Locher] knew he was talking to kids, wanted to be talking to kids, and knew kids were, in fact, harming themselves at his urging.”

The FBI, Homeland Security Investigations, the Los Angeles Police Department, the Springfield (Ohio) Police Department, the Shelby County (Tennessee) Sheriff’s Office, and the New York City Police Department investigated this matter.

Assistant United States Attorney Chelsea Norell of the Violent and Organized Crime Section prosecuted this case.

LOS ANGELES – A San Bernardino County man has been sentenced to 120 months in federal prison for defrauding eight women – some of whom he developed romantic relationships with – and nine businesses and then laundering the proceeds of his scheme, the Justice Department announced today.

Ze’Shawn Stanley Campbell, 35, formerly of Irvine but who now resides in Fontana, was sentenced late Monday afternoon by United States District Judge Mark C. Scarsi, who said at the hearing that Campbell’s conduct showed a “shocking level of disrespect for the law” as well as a lack of contrition.

Campbell pleaded guilty in October 2022 to one count of wire fraud and one count of money laundering.

From April 2014 to April 2020, Campbell convinced his victims that he was reliable by befriending them and starting romantic relationships with them. To enhance his purported creditworthiness in their eyes, he told them lies, such as falsely saying that he had millions of dollars and operated successful businesses, including McDonald’s franchises, a security company, and a chain of gyms in Texas.

Campbell also boosted his stature with the victims by falsely telling them he was a successful investor in real estate and Bitcoin, as well as claiming he had served as a Navy SEAL in the Iraq and Afghanistan wars.

Once he convinced his victims of his bona fides, Campbell would induce them to provide money and property to him, claiming that he would use the victims’ money and property to support his businesses, fund investments made on the victims’ behalf and pay his purported medical bills. Rather than using the victims’ money as he promised he would, he instead used it to pay personal expenses and to buy luxury items for himself.

For example, in December 2017, one victim wrote Campbell a check for $61,452, which Campbell deposited via interstate wires into a Wells Fargo bank account he controlled. Campbell promised the victim that the money would be used for an investment in Bitcoin on the victim’s behalf. Instead, Campbell spent the money on himself, including by making payments on a BMW and a Mercedes-Benz that he had leased in a different victim’s name.

Campbell caused 17 different victims, including eight individuals and nine companies to suffer significant financial losses.

Judge Scarsi found that the losses caused by Campbell’s criminal conduct exceeded $550,000. He will set a hearing to determine the exact amount of restitution that will be owed to the victims.

“[Campbell] is a con man and a predator,” prosecutors argued in a sentencing memorandum. “He develops romantic relationships with his victims and then, exploiting the intimacy and trust he cultivates, lies to them to get their money…But the harms [Campbell] caused go further than these significant financial losses. The harms include the serious emotional damage…which [Campbell] inflicted on his victims. Most of [Campbell’s] individual victims were women he began dating, encouraging their affection only to exploit it and leave their self-esteem, as well as their finances, in tatters.”

The FBI investigated this matter.

Assistant United States Attorney Ranee A. Katzenstein, Chief of the Major Frauds Section, prosecuted this case.

LOS ANGELES – A Diamond Bar man was sentenced today to 24 months in federal prison for deliberately failing to pay more than $200,000 for one three-month period’s payroll taxes owed by his San Gabriel Valley employment staffing company.

Robinson Rin Yang, 54, a.k.a. “Robert Mora,” a.k.a. “David Lee,” was sentenced by United States District Judge George H. Wu, who also ordered Yang to pay $2,791,783 in restitution.

Yang pleaded guilty in December 2022 to one count of willful failure to pay over employment taxes.

From March 2016 to March 2020, Yang operated B&S Staffing, a Covina-based staffing service business. From mid-2017 until the end of 2019, B&S accrued large unpaid employment tax liabilities, failed to make timely employment tax deposits, and repeatedly failed to timely file quarterly employment tax returns with the IRS. Notably, B&S did not file – until February 2019 – employment tax returns for the periods ending June 30, 2017 through December 31, 2018.

After these tax returns were filed, B&S again fell into non-compliance with its reporting obligations. B&S did not file – until September 2020 – employment tax returns for the quarterly tax periods ending March 31, 2019, through December 31, 2019.

Yang was aware of B&S’s tax situation, but willfully failed to pay over to the IRS all the employment taxes due and owing, including income taxes and Social Security and Medicare taxes withheld from employee wages. Instead, Yang repeatedly used his control over B&S to direct payments from the corporate bank account, which he controlled, for his personal benefit.

For example, in July 2018, for the quarterly tax period ending on June 30, 2018, Yang willfully failed to account for and pay over approximately $221,108 in B&S payroll taxes.

In total, B&S accrued approximately $2,791,783 in unpaid employment taxes during this 2½-year period. Yang has agreed to pay this amount in restitution to the IRS.

Also, from 2017 to 2019, to frustrate IRS collection actions against him regarding his personal income taxes – and to conceal the true extent of how much money he made – Yang did not pay himself a salary from B&S. Instead, Yang caused weekly checks to be issued from B&S’s corporate bank account to a business named “Advanced Business Konsulting,” and deposited these checks into an account held in the same name and which he controlled.

In addition, Yang used B&S funds for the down payment and monthly mortgage payments on his purchase of a home, but kept the property titled in the name of another person to conceal Yang’s ownership of the property. Yang also directed payments from the corporate bank accounts of B&S to pay for personal expenses, including a portion of his daughter’s college tuition, and funding for Yang’s other business interests, including a failed construction business and a failed restaurant.

Despite the fact Yang earned hundreds of thousands of dollars from his operation of B&S during each of the calendar years 2017 through 2019, he failed to timely file federal income tax returns for those years.

“Under [Yang’s] management, B&S engaged in a long running pattern of failing to pay federal employment taxes and timely file federal employment tax returns,” prosecutors argued in a sentencing memorandum. “Despite knowing of the company’s expanding tax debts, [Yang] repeatedly used his control over B&S to direct payments from the corporate bank account for his personal benefit and for the payment of other expenses.”

IRS Criminal Investigation investigated this matter.

Assistant United States Attorney James C. Hughes of the Major Frauds Section prosecuted this case.

RIVERSIDE, California – The last two defendants in an Inland Empire-based scheme in which eight people fraudulently obtained $2.1 million in pandemic-related unemployment insurance (UI) benefits by claiming, among other things, that they were salon and barbershop workers rendered jobless by the COVID-19 pandemic pleaded guilty today to conspiracy and mail fraud charges.

All eight defendants charged by a federal grand jury in June 2022 now have admitted to participating in a scheme to submit fraudulent applications in the names of relatives, prisoners, and identity theft victims.

Keith Burns, 39, of Houston, Texas, and Regjinay Tate, 29, of Corona, each pleaded guilty today to one count of conspiracy to commit mail fraud in relation to benefits connected to a presidentially declared emergency and one count of mail fraud in relation to benefits connected to a presidentially declared emergency. The other six defendants in this case pleaded guilty over the past several weeks to the same conspiracy count and the same or similar mail fraud charges.

According to court documents, from March 2020 through July 2021, lead defendant Robert Campbell Jr., 29, of Corona, orchestrated the scheme to use the federal government’s response to the COVID-19 pandemic to steal UI benefits. Campbell and his co-conspirators used the personally identifiable information (PII) of others – including names, dates of birth, and Social Security numbers – to file fraudulent UI applications with the California Employment Development Department (EDD), which administers the state’s unemployment insurance program.

The fraudulent UI claims were federally funded through programs authorized by Congress in response to the pandemic, including the Pandemic Unemployment Assistance and Lost Wage Assistance programs.

Many of the fraudulent claims were made on behalf of ineligible out-of-state claimants and on behalf of people ineligible for benefits because they were imprisoned, including one claimant in Texas.

The fraudulent applications falsely stated the claimants had prior annual incomes of $42,000 and they were self-employed individuals whose jobs were adversely impacted when salons and barbershop closed during the COVID-19 pandemic. The fraudulent applications listed mailing addresses with locations chosen and controlled by Campbell and his accomplices. Once the fraudulent applications were approved, debit cards were mailed to those addresses.

One defendant – Dillon Roberts, 31, of Eagle Point, Oregon – recruited Texas residents ineligible for California EDD benefits, including co-defendant Burns, to provide their PII to generate fraudulent EDD claims and payments in their names.

In total, Campbell and others caused 174 fraudulent applications to be filed with EDD, resulting in 125 fraudulent claims to be paid and resulting in total losses of approximately $2,113,966.

Campbell, who pleaded guilty on March 6, is scheduled to be sentenced on June 5 by United States District Judge Jesus G. Bernal. The other seven defendants are scheduled to be sentenced in the coming months, including sentencing hearings scheduled for June 26 for Burns and Tate.

As a result of their guilty pleas, each of the eight defendants faces statutory maximum sentences of 30 years in federal prison for the conspiracy count and 30 years in federal prison for the mail fraud charges.

The United States Department of Labor – Office of Inspector General and the California Employment Development Department – Investigation Division are investigating this matter. Homeland Security Investigations, the United States Postal Inspection Service, the California Department of Corrections and Rehabilitation’s Special Services Unit, and the United States Secret Service provided substantial assistance.

Assistant United States Attorney Adam P. Schleifer of the Major Frauds Section is prosecuting this case.

Anyone with information about allegations of fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at (866) 720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

LOS ANGELES – A former member of the United States military pleaded guilty today to conspiring to unlawfully export to Russia defense articles – including thermal imaging riflescopes and night vision goggles – without a license in violation of the Arms Export Control Act.

Igor Panchernikov, 41, a former Corona resident who once served in the United States Air Force Reserves, pleaded guilty to one count of conspiracy to violate the Arms Export Control Act. He has been in federal custody since July 2022 after being extradited to the United States from Israel.

According to his plea agreement, from December 2016 to May 2018, Panchernikov conspired with other individuals to knowingly export from the United States to Russia defense articles without obtaining from the State Department a valid license or other approval for such exports.

Panchernikov’s accomplices purchased defense articles – including thermal riflescopes, weapons sights, monoculars, and night vision googles – from various online sellers located in the United States and directed the sellers to mail those items to Panchernikov’s residence in Corona.

At his Corona residence, Panchernikov received at least 19 defense articles that his co-conspirators purchased from online sellers. After receiving these items, Panchernikov inspected the items to ensure that they were undamaged and operational. Pursuant to his co-conspirators’ instructions, Panchernikov then mailed two of the items to accomplices in Russia and mailed 17 defense articles to Elena Shifrin, 61, of Mundelein, Illinois, who then mailed these items to Russia.

To conceal his unlawful activities, when Panchernikov exported the two defense articles to Russia, he listed fictitious sender names on the packages containing the items. He also falsely identified the items in the packages as non-export-controlled items, such as clothing. Finally, he concealed the defense articles in other items, including a drill press.

United States District Judge André Birotte Jr. scheduled a June 23 sentencing hearing, at which time Panchernikov will face a statutory maximum sentence of 20 years in federal prison.

Shifrin pleaded guilty in February 2022 to one count of conspiracy to violate the Arms Export Control Act. Her sentencing hearing is expected in the coming months.

Vladimir Pridacha, 57, of Volo, Illinois, has pleaded not guilty to criminal charges in this case and has an August 29 trial date scheduled.

Two other defendants charged in this case – Boris Polosin, of Russia, and Vladimir Gohman, of Israel – are fugitives.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

The FBI’s Los Angeles and Chicago field offices investigated this matter, with substantial assistance from the United States Postal Inspection Service and Homeland Security Investigations.

Assistant United States Attorney David T. Ryan, Chief of the Terrorism and Export Crimes Section, and Assistant United States Attorney Wilson Park of the Terrorism and Export Crimes Section are prosecuting this case.        

LOS ANGELES – An Orange County man pleaded guilty today to knowingly preparing nearly 400 fraudulent federal income tax returns that caused a loss of more than $750,000 to the IRS by inflating his clients’ tax refunds without their knowledge and then pocketing the difference between the clients’ true refunds and the inflated ones.

Raudel Sandoval, 48, of Placentia, pleaded guilty to two counts of aiding and assisting in the preparation of false and fraudulent tax returns.

According to his plea agreement, Sandoval is a licensed tax preparer and owns RSE Sandoval España Inc., a Downey-based tax preparation company. Sandoval willfully prepared hundreds of false federal and state income tax returns for clients for the tax years 2015 through 2018. On these returns, he claimed false or inflated amounts of the child tax credit, business losses, short-term capital losses and other items to which the taxpayer clients were not entitled.

Sandoval falsified the tax returns with deductions and credits that his clients did not incur or had not informed him about. He also inflated the amounts of deductions and credits that his clients were entitled to claim.

When he finished preparing a tax return, Sandoval gave his clients copies of their returns that were true and correct, but falsely told them that he would file their true-and-correct copies with the IRS on their behalf.

Then, Sandoval inflated his clients’ returns with false and fraudulent deductions and credits and filed these false tax returns with the IRS. The false returns showed a larger refund than on the true-and-correct copies Sandoval had given to his clients.

Sandoval then directed the inflated refunds to himself. He did so by changing the bank account and routing numbers on the filed returns to a bank account he controlled. Sandoval controlled more than 100 bank accounts with several different banks and opened many of the accounts in his clients’ names. But he was the accounts’ only authorized signor. Several of the Sandoval-owned bank accounts had the name “Federal Tax Refund Processing.”

Sandoval directed the IRS to send the inflated refunds through a third-party refund processor to be deposited into an account he controlled. Other times, he caused the IRS to mail a check of the inflated refund to his business address. He then would deposit the check into one of his accounts.

After receiving the inflated refund, Sandoval transferred a portion of it – the amount his clients were expecting to receive based on the true-and-correct tax return copies – to one of his “Federal Tax Refund Processing” accounts. Sandoval then transferred that money to his clients’ bank accounts, causing them to believe their refunds were from a legitimate government source.

Sandoval kept the difference between the true refund and the inflated refund.

For the tax years 2015 through 2018, Sandoval willfully understated his clients’ tax liabilities and caused a loss of $758,550 to the IRS, caused by the filing of at least 389 fraudulent income tax returns.

United States District Judge Sherilyn Peace Garnett scheduled a September 6 sentencing hearing, at which time Sandoval will face a statutory maximum sentence of three years in federal prison for each count.

IRS Criminal Investigation investigated this matter.

Assistant United States Attorney Valerie L. Makarewicz of the Major Frauds Section is prosecuting this case.

As the 2023 tax season continues, taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers. The IRS offers tips on how to accurately file returns and how to choose a tax return preparer, as well as steps taxpayers can take to get a jumpstart on filing.

Taxpayers seeking assistance can access the IRS’s free directory of federal tax preparers. The IRS also has programs offering free basic return preparation for qualifying seniors and individuals with low to moderate income. In addition, IRS Free File, a public-private partnership, offers free online tax preparation and filing options on IRS partner websites for individuals whose adjusted gross income is under $72,000. For individuals whose income is over that threshold, IRS Free File offers electronical federal tax forms that can be filled out and filed online for free.

LOS ANGELES – United States Attorney Martin Estrada today announced that he has created a new executive position to address ethics and post-conviction issues. In conjunction with this, the United States Attorney’s Office is establishing a new committee to review innocence claims brought by defendants convicted in the Central District of California.

The Chief of Ethics and Post-Conviction Review will, among other things, oversee the work of the office’s ethics and professional responsibility officers, coordinate the investigation of claims of prosecutorial misconduct, lead the office’s training and development program, and review the office’s responses to requests for pardons and commutations. This position will report directly to the United States Attorney.

 The Conviction Integrity Committee will review and consider claims of factual innocence brought by defendants who were convicted in the Central District of California. The Chief of Ethics and Post-Conviction Review will chair the committee, the other members of which will include the United States Attorney, the First Assistant United States Attorney, and the Executive Assistant United States Attorney. The new process to review claims of factual innocence is partly modeled on other committees that have been formed the United States Attorney’s Office for the Southern District of New York and other prosecutorial agencies around the country.

“Our foremost duty as federal prosecutors is to achieve justice. Therefore, while we will continue to do everything in our power to protect the public and uphold the rule of law, we will also do all we can to ensure the integrity of our convictions, as well as the fairness of sentences,” Mr. Estrada said. “Transparency in the criminal justice system is important. While wrongful convictions are rare, we will carefully review – and, when appropriate, fully investigate – any claim that the facts of a case do not support a conviction. We are committed to obtaining fair and just outcomes in each and every case we prosecute.

“The work of the Conviction Integrity Committee also will serve as an opportunity for my office to continually review our work as prosecutors and will buttress all of the policies and procedures designed to prevent wrongful convictions.”

An application to submit innocence claims to the Committee has been placed on the United States Attorney’s Office website.

The position of Chief of Ethics and Post-Conviction Review will be held by Assistant United States Attorney Allison L. Westfahl Kong, who will also chair the Conviction Integrity Committee. Ms. Westfahl Kong has been an Assistant United States Attorney for 10 years, most recently serving as the Chief of Trials, Integrity, and Professionalism. This new role will expand her work to include post-conviction review, which is aimed at promoting fairness and integrity at every stage of a criminal prosecution.

“Allison is an experienced prosecutor, a respected legal thinker, and a consummate professional,” Mr. Estrada said. “Her experience and judgment will ensure success in her new role.”

LOS ANGELES – A Florida man who once was the director of operations at a now-shuttered Irvine pharmacy was sentenced today to 114 months in federal prison for his role in a scheme in which kickbacks were paid for prescriptions for “compounded” medications – a scam that cost Tricare, the United States military’s health care plan, more than $3 million in losses.

Marcus Orlando Armstrong, 56, of Miami, was sentenced by United States District Judge Otis D. Wright II, who also ordered Armstrong to pay $3,070,091 in restitution.

Armstrong pleaded guilty in October 2022 to two counts of paying illegal kickbacks for health care referrals.

Armstrong was the director of operations for the now-defunct Irvine Wellness Pharmacy, which made compounded medications. Compounded drugs are tailor-made products doctors may prescribe when the Food and Drug Administration-approved alternative does not meet the health needs of a patient.

In mid-2014, Armstrong agreed to pay a physician, identified in court documents as “N.G.,” kickbacks in exchange for prescriptions bearing N.G.’s name and credentials. Armstrong intended that Irvine Wellness Pharmacy would fill the prescriptions and Tricare would pay to reimburse them. Armstrong further intended to receive a portion of the reimbursements and then, out of those funds, Armstrong intended to pay kickbacks to N.G.

In February 2015, Armstrong wrote two checks – one for $16,418 and the other for approximately $10,000 – to N.G. that were noted as being for “marketing.” In fact, the checks were illegal kickback payments to N.G. in exchange for prescriptions that were not medically necessary.

A co-defendant, Sandy Mai Trang Nguyen, 42, of Irvine, was found guilty by a jury in November 2022 of 21 counts of health care fraud and one count of obstruction of a federal audit. Nguyen was the pharmacist-in-charge at Irvine Wellness Pharmacy.

According to evidence presented at Nguyen’s trial, from late 2014 to May 2015, Nguyen and others under her supervision filled approximately 1,150 compounded prescriptions for pain, scarring and migraines that Tricare reimbursed for tens of thousands of dollars per prescription. Nearly all the prescriptions were sent to the pharmacy by so-called marketers who were paid kickbacks of nearly half of the Tricare reimbursements paid to the pharmacy.

The beneficiaries were solicited to provide their Tricare insurance information for medications they did not seek out or need, and most were never examined by a physician. The prescriptions were electronically sent from marketers or telemedicine businesses and submitted by the pharmacy for reimbursement even though Tricare rules excluded reimbursements for claims based on telemedicine visits and would not, in any event, have been authorized had Tricare known the prescriptions originated based upon the payment of kickbacks.

Nguyen’s sentencing hearing is scheduled for April 3.

Co-defendants Leslie Andre Ezidore, 53, of West Los Angeles, and Alexander Michael Semenik, 51, of Las Vegas, have pleaded guilty to felony charges in this case and await sentencing.

The Department of Defense Office of Inspector General; the Defense Criminal investigative Service; the FBI; the Amtrak Office of Inspector General; IRS Criminal Investigation; the United States Department of Labor – Employee Benefits Security Administration; the California Department of Insurance; and the Office of Personnel Management Office of Inspector General investigated this matter.

Assistant United States Attorneys Mark Aveis and Ali Moghaddas of the Major Frauds Section prosecuted this case.

LOS ANGELES – A former corrections officer with the Federal Bureau of Prisons (BOP) who sexually assaulted a woman in custody was sentenced today to 120 months in federal prison.

Jose Viera, 49, of Monterey Park, was sentenced by United States District Judge Otis D. Wright II, who ordered Viera immediately remanded into custody. Judge Wright also scheduled a June 20 restitution hearing in this case.

Viera pleaded guilty in May 2022 to one count of deprivation of rights under color of law.

Viera was a BOP corrections officer assigned to work at Metropolitan Detention Center-Los Angeles (MDC-LA), a federal prison which holds male and female pre-trial detainees and persons serving custodial sentences. In his role as corrections officer, Viera was required to uphold the Constitution and ensure the safety and security of persons housed at MDC-LA.

In December 2020, Viera was assigned to supervise incarcerated women who were quarantined due to COVID-19 exposure and infection. During the morning of December 20, 2020, Viera entered the cell of the victim, who was in COVID-19 isolation, as he had done on previous occasions to bring her breakfast. Instead, Viera laid down next to the victim in her bed, sandwiching her between his body and the wall. Then, he sexually assaulted her. Viera committed this assault despite knowing that the victim did not consent and that his actions violated her constitutional rights.

When the FBI and the Department of Justice’s Office of the Inspector General (DOJ-OIG) conducted a voluntary interview of Viera about the sexual assault allegations, Viera lied to federal agents about his misconduct.

“By breaching his duty of trust, Viera harmed not only the victim, but also the system of justice he was entrusted to serve,” said United States Attorney Martin Estrada. “My office will continue in its mission to ensure that no one is above the law, regardless of their position, and that victims receive justice.”

“A corrections officer’s job is to ensure the safety and security of those in custody,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Instead, the defendant’s actions did just the opposite, destroying this woman’s sense of peace and trust in law enforcement. We hope this sentence provides a measure of justice to the victim and a reminder to would-be offenders that the Justice Department is committed to ensuring that those who work in federal prisons and abuse their positions of authority by sexually assaulting people in their care will be held accountable.”

“Mr. Viera abdicated his duty and obligation to treat the prisoners in his care with dignity,” said Donald Alway, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The FBI prioritizes cases involving abuse under the color of law and works with our partners to bring justice to those who deny others their Constitutionally protected rights.”

“Viera abused his power and sexually assaulted the inmate in her cell while she was extremely vulnerable in COVID-19 isolation,” said Special Agent in Charge Zachary Shroyer for the Justice Department’s Office of the Inspector General, Los Angeles Field Office. “Today’s sentencing shows that Correctional Officers that abuse inmates will be brought to justice.”

The FBI and DOJ-OIG investigated this matter.

Assistant United States Attorney Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section, and Special Litigation Counsel Fara Gold and Trial Attorney Nikhil Ramnaney of the Criminal Section of the Justice Department’s Civil Rights Division prosecuted this case.

A former corrections officer with the Federal Bureau of Prisons (BOP), was sentenced to 120 months and three years of supervised release today in federal court in the Central District of California for sexually assaulting a woman in custody.

Jose Viera, 49, was sentenced for one felony count of deprivation of rights under color of law for sexually assaulting a woman in custody in December 2020. He entered his guilty plea on May 24, 2022.

According to court documents, at the time of the assault, Viera was a BOP corrections officer assigned to work at Metropolitan Detention Center-Los Angeles (MDC-LA), a federal prison that holds male and female pre-trial detainees and persons serving custodial sentences. In his role as corrections officer, Viera was required to uphold the U.S. Constitution and ensure the safety and security of persons housed at MDC-LA. In March 2022, Viera was placed on administrative leave.

In December 2020, Viera was assigned to supervise incarcerated women who were quarantined due to COVID-19 exposure and infection. During the morning of Dec. 20, Viera entered the cell of the victim, who was in COVID-19 isolation, as he had done on previous occasions to bring her breakfast. On that morning, Viera laid down next to the victim in her bed, sandwiching her between his body and the wall. Then, he sexually assaulted the victim. Viera committed this assault despite knowing that his actions violated her constitutional rights. When the Department of Justice, Office of the Inspector General (DOJ-OIG), and the FBI conducted a voluntary interview with Viera about the sexual assault allegations, Viera lied to federal agents about his misconduct.

“Law enforcement officials must be held accountable when they abuse their authority and exploit their power to sexually assault the very people they are sworn to protect,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This defendant’s actions destroyed this woman’s sense of peace, caused incalculable pain, and shattered her trust in law enforcement. We hope this sentence stands as a reminder to would-be offenders that the Justice Department is committed to holding officials accountable when they sexually assault people held inside jails and prisons.”

“By breaching his duty of trust, Viera harmed not only the victim, but also the system of justice he was entrusted to serve,” said U.S. Attorney Martin Estrada for the Central District of California. “My office will continue in its mission to ensure that no one is above the law, regardless of their position, and that victims receive justice.”

“Viera abused his power and sexually assaulted the inmate in her cell while she was extremely vulnerable in COVID-19 isolation,” said Special Agent in Charge Zachary Shroyer for the DOJ-OIG, Los Angeles Field Office. “Today’s sentencing shows that Correctional Officers that abuse inmates will be brought to justice.”

“Law enforcement officers are charged with upholding civil rights. The defendant in this case completely abused his position of power,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The FBI is dedicated to protecting the American people and pursuing justice on behalf of victims in cases like this.”

The DOJ-OIG Los Angeles Field Office and the FBI Los Angeles Field Office are investigating the case.

Assistant U.S. Attorney Thomas Rybarczyk for the Central District of California and Trial Attorney Nikhil Ramnaney and former Special Litigation Counsel Fara Gold of the Civil Rights Division’s Criminal Section are prosecuting the case.

LOS ANGELES – A South Los Angeles man was sentenced today to 77 months in federal prison for committing six armed robberies of local businesses, mostly 7-Eleven stores, during a two-week crime spree in late 2021.

Colin Powell Lacey, 29, of the Hyde Park neighborhood of Los Angeles, was sentenced by United States District Judge Maame Ewusi-Mensah Frimpong.

Lacey pleaded guilty in August 2022 to one count of conspiracy to commit interference with commerce by robbery (Hobbs Act).

From November 13, 2021, to November 29, 2021, Lacey participated in the robbery of six businesses – five of which were 7-Eleven convenience stores. During the robberies, Lacey typically entered the stores, pointed a handgun at the store’s cashier and stole money – usually hundreds of dollars in cash belonging to the business.

For example, on November 29, 2021, Lacey and his co-conspirator, Kyle Richard Williams, 26, of Inglewood, traveled together to a smoke shop located in the Mid-City area of Los Angeles. Williams entered the store, pointed a handgun at the cashier and stole $442 while Lacey waited outside the store before fleeing with Williams.

That same night, Lacey and Williams robbed 7-Eleven stores in Hollywood and Mid-City, with Lacey pointing a handgun at the cashier at the Hollywood store and Williams pointing a handgun at the cashier at the Mid-City business, making off with $600 and $100, respectively. Lacey and Williams then fled in Lacey’s Hyundai.

On December 30, 2021, Lacey and Williams attempted to rob a 7-Eleven in El Segundo. Williams pointed a handgun at the store employee and demanded money. Lacey and Williams fled together after the employee showed Williams that the cash register was empty.

In total, Lacey participated in the armed robbery of six stores, including two other 7-Elevens in Hollywood and one 7-Eleven in West Hollywood. Lacey and Williams netted a total of $2,859 from the robberies.

Lacey and Williams have been in federal custody since March 2022.

Williams pleaded guilty in July 2022 to one count of conspiracy to commit Hobbs Act robbery, two counts of Hobbs Act robbery, and one count of attempted Hobbs Act robbery. In December 2022, Judge Frimpong sentenced Williams to six years in federal prison.

The FBI, the Los Angeles Police Department, and the Los Angeles County Sheriff's Department investigated this matter.

Assistant United States Attorney Jeremiah M. Levine of the Violent and Organized Crime Section and Assistant United States Attorney Jeffrey M. Chemerinsky, Chief of the Violent and Organized Crime Section, prosecuted this case.

LOS ANGELES – Authorities this morning arrested a Woodland Hills man on federal charges that allege he was extorting “protection” money from Koreatown businesses, sometimes using acts of violence against individuals who refused to pay.

Daekun Cho, 38, was arrested by special agents from Homeland Security Investigations (HSI) and officers from the Los Angeles Police Department pursuant to a federal criminal complaint filed last week. The complaint charges Cho with interference with commerce by threats or violence. Cho is expected to make his initial appearance this afternoon in United States District Court in downtown Los Angeles.

The federal investigation in this case began about a year ago and found that Cho was demanding protection money from karaoke businesses in Koreatown, as well as from “doumi” – or hostesses – employed by patrons of the karaoke establishments.

“To further his extortion scheme, Cho committed shootings, a carjacking, a kidnapping, and other acts of physical violence,” according to the complaint affidavit. “Cho made explicit threatening statements to the doumi drivers and karaoke bar owners to get them to pay a monthly fee.”

The affidavit outlines physical attacks of four victims over the past year and discusses another victim who was threatened. The first victim discussed in the affidavit was a doumi driver, who, after refusing to pay the protection money after a price increase, was subject to a baseball bat beating, allegedly by Cho and another individual, on May 8, 2021. The victim suffered a broken arm and multiple lacerations, the affidavit states.

In another incident on August 5, 2022, at a karaoke bar, Cho demanded that a doumi driver leave the location, and, as the driver and two doumis were driving away, they heard gunshots and one of the doumis suffered a gunshot wound to the neck, according to the affidavit, which notes this incident remains under investigation by the LAPD.

The fifth victim, who reported he had been paying Cho for approximately four years, told investigators that he had decided to stop paying Cho before Cho allegedly assaulted him and stole approximately $1,000 from him on January 24. The affidavit details how that victim, working with law enforcement, made an extortionate $500 payment to Cho on February 16.

A complaint contains allegations that a defendant committed a crime. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The charge of interference with commerce by threats or violence carries a statutory maximum sentence of 20 years in federal prison.

HSI and the LAPD are investigating this matter.

Assistant United States Attorney Jena MacCabe of the Violent and Organized Crime Section is prosecuting this case.

RIVERSIDE, California – An Inland Empire man was arrested this week after being named in a 47-count indictment alleging he prepared false tax returns for clients, the Justice Department announced today.

Salvador Gonzalez, of Corona, was arrested Monday afternoon by special agents with IRS Criminal Investigation after being charged last week by a federal grand jury. Gonzalez was arraigned on the indictment Tuesday afternoon in United States District Court, where he entered not guilty pleas. Gonzalez was ordered released on bond, and a trial in this case was scheduled for May 9.

The indictment charges Gonzalez with 47 counts of aiding and assisting in the preparation of false tax returns.

According to the indictment filed on March 8 and unsealed Tuesday, Gonzalez operated a tax preparation business called Grace’s Lighthouse Resource Center, Inc., in Corona.

For tax years 2016 through 2021, Gonzalez allegedly prepared income tax returns for individuals and corporate clients to submit to the IRS that claimed tens of thousands of dollars in bogus business losses. Gonzalez also allegedly falsified additional deductions on client returns, including medical and dental expenses, unreimbursed employee expenses, and charitable contributions, knowing that the clients were not entitled to the amounts claimed.

If convicted in this case, Gonzalez would face a statutory maximum penalty of three years in prison for each count alleged in the indictment. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

IRS Criminal Investigation is investigating the case.

Assistant United States Attorney Robert S. Trisotto of the Riverside Branch Office and Trial Attorney Lauren K. Pope of the Justice Department’s Tax Division are prosecuting the case.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

LOS ANGELES – The former head of Wells Fargo Bank’s retail banking division has agreed to plead guilty to obstructing a government examination into the bank’s widespread sales practices misconduct, which included opening millions of unauthorized accounts and other products, federal authorities announced today.

In a plea agreement filed today in United States District Court, Carrie L. Tolstedt, 63, of Scottsdale, Arizona, agreed to plead guilty to one count of obstruction of a bank examination. Tolstedt is expected to make her initial court appearance in Los Angeles in the coming weeks, with the parties requesting the court to set a hearing for April 7.

The Office of the Comptroller of the Currency (OCC), which investigated misconduct at Wells Fargo, also has reached a resolution with Tolstedt in a regulatory proceeding. As part of the consent order resolving that matter, Tolstedt agreed to a ban from working in the banking industry and to pay a $17 million civil penalty.

“The justice system and regulators rely on corporations and their executives to fully cooperate during investigations into potential wrongdoing. But, in this case, Ms. Tolstedt took steps to cover up misconduct at Wells Fargo,” said Acting United States Attorney Joseph T. McNally. “Obstructing an investigation compromises the mission of those seeking the truth, and we will hold accountable any individual who attempts to conceal wrongdoing.”

“The plea agreement filed today sends a clear message that bank executives who commit fraud and deliberately deceive regulators will be brought to justice for their actions. I commend our agents and their federal law enforcement partners for their hard work and persistence, which ultimately led to this outcome,” said Mark Bialek, Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau.

“Today’s plea agreement holds the defendant accountable for her role in obstructing the examination into the unlawful sales practices at Wells Fargo, which deceived millions of clients who placed their trust in the institution,” said Acting Inspector General Tyler Smith of the Federal Deposit Insurance Corporation, Office of Inspector General. “We remain committed to working with our law enforcement partners to investigate any individuals, including bank executives, who threaten to undermine the integrity of the banking sector.”

“Obstructing lawful governmental reviews of bank operations undermines the integrity of our financial institutions,” said Robert K. Tripp, the Special Agent in Charge of the FBI’s San Francisco Field Office. “The resolution of this case is the result of diligent work by the FBI and our law enforcement partners, who spent years uncovering corporate misconduct in this case. This investigation demonstrates our unwavering commitment to rooting out white-collar crimes, regardless of their complexity, and protecting our economy.”

From approximately 2007 to September 2016, Tolstedt was Wells Fargo’s senior executive vice president of community banking and was head of the Community Bank, which operated Well Fargo’s consumer and small business retail banking business. The Community Bank managed many of the products that Wells Fargo sold to individual customers and small businesses, including checking and savings accounts, CDs, debit cards, bill pay, and other products.

Wells Fargo previously admitted that, from 2002 to 2016, excessive sales goals led Community Bank employees to open millions of accounts and other financial products that were unauthorized or fraudulent. In the process, Wells Fargo collected millions of dollars in fees and interest to which it was not entitled, harmed customers’ credit ratings, and unlawfully misused customers’ sensitive personal information.

Many of these practices were referred to within Wells Fargo as “gaming.” Gaming strategies included using existing customers’ identities – without their consent – to open accounts. Gaming practices included forging customer signatures to open accounts without authorization, creating PINs to activate unauthorized debit cards, and moving money from millions of customer accounts to unauthorized accounts in a practice known internally as “simulated funding.”

Gaming also included opening credit cards and bill pay products without authorization, altering customers’ contact information to prevent customers from learning of unauthorized accounts and to prevent Wells Fargo employees from reaching customers to conduct customer satisfaction surveys, and encouraging customers to open accounts they neither wanted nor needed.

According to the plea agreement filed today, by no later than 2004, Tolstedt was aware of sales practices misconduct within the Community Bank and the fact that employees were terminated each year for gaming. By no later than 2006, Tolstedt was learning about the gaming practices from corporate investigations and, over time, learned that terminations for gaming in the Community Bank were steadily increasing, that the misconduct was linked in part to sales goals within the Community Bank, and that termination numbers likely underestimated the scope of the problem.

Although the Community Bank eventually took steps purportedly designed to proactively identify sales misconduct, the measures used by the bank flagged only a small portion of the potentially problematic activity for investigation. As of July 2014, only the most egregious .01 to .05 percent of employees engaging in activity considered a “red flag” for sales practices misconduct were investigated – with the remaining 99.95 to 99.99 percent left unexamined under this process. 

In May 2015, Tolstedt participated in the preparation of a memorandum, which she knew would be provided to the OCC in connection with its examination of sales practice issues at Wells Fargo. To minimize the scope of the sales practices misconduct within the Community Bank, Tolstedt corruptly obstructed the OCC’s examination by failing to disclose statistics on the number of employees who were terminated or resigned pending investigation for sales practices misconduct. She also failed to disclose that the Community Bank proactively investigated only a very small percentage of employees who engaged in activity flagged as potential sales practices misconduct.

“We are proud to work with our partner agencies to help bring justice to the many people who were harmed by the unscrupulous sales practices of Wells Fargo,” said Brian Tomney, Inspector General of the Federal Housing Finance Agency. “The results of this case should be a clear signal that FHFA-OIG and its partner agencies will hold accountable those who seek to put profits ahead of legal and fair banking practices.”

“This plea agreement demonstrates the determination and cooperation of Postal Inspectors and our federal law enforcement partners. Postal Inspectors are committed to investigating anyone holding a position of trust in the financial system that would engage in a fraud to deceive their customers,” said Rafael Nuñez, Inspector in Charge of the United States Postal Inspection Service, San Francisco Division.

Wells Fargo in 2020 acknowledged the widespread sales practices misconduct within the Community Bank and paid a $3 billion penalty in connection with agreements reached with the United States Attorneys’ Offices for the Central District of California and the Western District of North Carolina, the Justice Department’s Civil Division, and the Securities and Exchange Commission.

The statutory maximum sentence for obstruction of a bank examination is five years in federal prison. Tolstedt has entered into a plea agreement which calls for a prison sentence of up to 16 months in prison, which prosecutors believe is the high end of the sentencing guideline range for the obstruction offense. The plea agreement is “binding,” which means the court must accept or reject all aspects of it. Should the court reject the plea agreement, including the agreed-upon sentencing range, any party may withdraw from it.

The FBI; the Federal Deposit Insurance Corporation, Office of Inspector General; the Federal Housing Finance Agency, Office of Inspector General; the Office of Inspector General for the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau; and the United States Postal Inspection Service are investigating this matter. The OCC and the United States Securities and Exchange Commission provided substantial assistance.

This matter is being prosecuted by Assistant United States Attorneys Alexander B. Schwab and Carolyn S. Small of the Major Frauds Section, along with Special Attorney Benjamin S. Kingsley and Assistant United States Attorney Daniel S. Ryan of the Western District of North Carolina.

LOS ANGELES – Federal authorities today announced a series of child sexual exploitation cases alleging the victimization of minors – sometimes by convicted sex offenders – and charging a range of crimes that include sex trafficking, enticing a minor to engage in criminal sexual activity and producing child pornography.

United States Attorney Martin Estrada, FBI Assistant Director in Charge Donald Alway, and Homeland Security Investigations (HSI) Acting Special Agent in Charge Eddy Wang made the announcement.

In eight new cases filed in recent weeks – five resulting from FBI-led investigations, and three from investigations led by Homeland Security Investigations – nine defendants are accused of exploiting children in person and on the internet. There have been significant recent developments in other child exploitation cases being prosecuted by the United States Attorney’s Office, including a life sentence imposed on an offender who filmed his sexual assaults of disabled children.

The cases announced today are part of Project Safe Childhood, which is the Justice Department’s longstanding initiative to combat the ongoing epidemic of child exploitation crimes.

“Protecting our children from sexual exploitation is some of the most important work my office does,” said United States Attorney Estrada. “For years, we have vigorously prosecuted child sexual predators, and we have only increased those efforts in recent times. To those who would seek to victimize our youth, let me be clear: We will use every tool in our arsenal to bring you to justice and thereby stop you from causing further irreparable harm to others.”

“The various cases being announced today are a reminder of the constant threat of sexual extortion minors face, as well as the persistent demand for child pornography,” said FBI Assistant Director Alway, who runs the FBI’s Los Angeles Field Office. “Whether an offender sexually abuses a child in person or online, or continues to exploit children by producing or sharing images of sexual abuse, the FBI and our partners will continue to seek justice for innocent victims by holding offenders accountable.”

“HSI Los Angeles is committed to removing sexual predators from our streets and working aggressively to hold them accountable for their heinous actions,” said HSI Acting Special Agent in Charge Wang.

The new cases announced today are:

United States v. Griffin

Dakota R. Griffin, 33, of Benton, Illinois, was arrested on March 8 for allegedly coercing a 16-year-old girl he encountered online to produce child sexual abuse material (CSAM) by making her believe he was holding one of her online friends captive and that he was associated with the Ku Klux Klan. The complaint alleges that Griffin further demanded that the victim travel to Illinois to have sex with him. During their communications, Griffin allegedly threatened to kill her and her family. After learning that the victim suffered from seizures, Griffin told her that he had always wanted to sexually abuse “a girl while she had a seizure,” according to court documents. During his initial appearance in a federal court in Illinois, Griffin was ordered detained pending trial. The FBI is investigating this case. Assistant United States Attorney Jeremiah Levine from the Violent and Organized Crime Section is prosecuting this matter.

United States v. Lozano

A criminal complaint filed Friday charges Ivan Lozano, a 36-year-old resident of Long Beach, with enticing a minor victim to commit sexual acts and possession of child pornography. Over the course of nearly two years, starting when the victim was 14, Lozano allegedly encouraged and enticed a girl a residing in Tanzania to repeatedly send him videos and photos of a sexual nature using the WhatsApp social media application. In October 2021, according to the complaint affidavit, Lozano traveled to Tanzania for the purpose of having sex with the girl, which he recorded on video. Lozano is currently a fugitive being sought by the FBI, which conducted the investigation in this matter together with the Los Angeles County Sheriff’s Department. Assistant United States Attorney Bruce Riordan from the Violent and Organized Crime Section is prosecuting case.

United States v. Sheehan

Dustan David Sheehan, 45, of Hollywood, surrendered on Friday after being named in a criminal complaint that accuses him of distributing child pornography and possession of and access with intent to view child pornography. In an August 2020 conversation with an undercover agent on the Kik internet messaging platform, Sheehan discussed his desire to meet and sexually abuse the undercover’s fictitious 9-year-old daughter, according to the complaint affidavit. Sheehan allegedly also shared sexually explicit images with the undercover agent. During a subsequent search of Sheehan’s residence, investigators FBI identified approximately 2,919 CSAM images and 21 CSAM videos on Sheehan’s digital devices, the affidavit states. During his initial appearance Friday afternoon, Sheehan was released on a $100,000 bond and was ordered to reside at a residential rehabilitation center. The FBI is investigating this matter. Assistant United States Attorneys Jeffrey Chemerinsky and Hava Mirell from the Violent and Organized Crime Section are prosecuting this case.

United States v. Kicyla

A federal grand jury on March 8 returned a three-count indictment charging Nathan Kicyla with coercing a 10-year-old girl he encountered online to engage in sexually explicit conduct. The indictment charges Kicyla with sexual exploitation of a child for the purpose of producing a sexually explicit visual depiction, enticement of a minor to engage in criminal sexual activity, and commission of a felony offense involving a minor while required to register as a sex offender. If convicted, Kicyla would face a mandatory minimum sentence of 35 years in federal prison.

Kicyla, 39, of Van Nuys, whose screen name was “Nathan-Bert-2,” is currently in federal custody on a supervised release violation stemming from a 2007 conviction of sexually exploitation of minors in the Eastern District of California.

The FBI field offices in Los Angeles and Washington, D.C. are investigating this matter. Assistant United States Attorney Kevin Butler from the Violent and Organized Crimes Section is prosecuting this case.

United States v. Johnson

Ian Nathanial Johnson, 36, of Santa Clarita, was arrested Friday after prosecutors filed a criminal complaint charging him with distribution and possession of child pornography. The investigation into Johnson was launched after the National Center for Missing and Exploited Children received information that Johnson had uploaded CSAM to a Dropbox account, according to the complaint affidavit. Pursuant to a search warrant, agents seized Johnson’s digital devices and discovered over 200 images of child pornography and chats on Telegram, several of which included images of prepubescent children and children in bondage, the affidavit states. Johnson is scheduled to make his initial appearance on Wednesday in United States District Court. Homeland Security Investigations is conducting the investigation into Johnson. Assistant United States Attorney Catharine Richmond from the Violent and Organized Crime Section is prosecuting this case.

United States v. Anderson and Thomas

Norrell Alan Anderson, 24, of San Francisco, and Raeonnah Raina Thomas, 20, of Santa Rosa, were named in a criminal complaint filed on March 3, alleging they conspired to transport minors across state lines for the purpose of prostituting them. Anderson and Thomas are currently in state custody on charges that have been brought by the Orange County District Attorney’s Office. Homeland Security Investigations and the Orange County Human Trafficking Task Force – which includes the Irvine, Anaheim and Santa Ana police departments, as well as the California Highway Patrol – are investigating this case. Assistant United States Attorneys Lyndsi Allsop from the Violent and Organized Crime Section and Kristin Spencer from the Santa Ana Branch Office are prosecuting this matter.

United States v. Gissell

Thomas Gissell, 27, of Moorpark, was arrested on March 6 on charges of attempted enticement of a minor to engage in criminal sexual activity for allegedly soliciting sexually explicit photos from two individuals he thought were 14-year-old girls, but who were actually undercover agents. Gissell is scheduled to be arraigned on April 11. The newly formed, FBI-led Ventura County Child Exploitation and Human Trafficking Task Force is investigating this case. Assistant United States Attorney Kellye Ng from the Violent and Organized Crime Section is prosecuting this matter. AUSA Ng is the office’s Project Safe Childhood coordinator.

United States v. White

Parker William White, 22, of Johnsonville, New York, a former Army private based at Fort Irwin, was indicted by a federal grand jury on Friday on charges of possession of child pornography. White was arrested on February 24 pursuant to a criminal complaint that alleges White used Instagram and other social media platforms to find minor “girlfriends” as young as 14. White would groom these minor girls by telling them that he would treat them like “queens,” according to the complaint’s affidavit. Homeland Security Investigations and the U.S. Army Criminal Investigation Division investigated this case. Assistant United States Attorney Lyndsi Allsop from the Violent and Organized Crime Section is prosecuting this matter.

 

There have been developments recently in other child exploitation cases being prosecuted by the United States Attorney’s Office. Those cases are:

United States v. Dorame

Francisco Anthony Dorame, 41, of Echo Park, was sentenced on March 8 to 20 years in federal prison for using an online messenger app last year to attempt to sexually traffic two children – ages 7 and 9 – and for distributing sexually explicit images of children. Dorame was also sentenced to a lifetime period of supervised release and ordered to pay $33,000 in restitution to 11 victims. Dorame pleaded guilty in October 2022 to one count of attempted sex trafficking of a child under 14 years old and one count of distribution of child pornography.

During a conversation on the Kik platform, Dorame made two payments totaling $100 to a person who had access to the victims. Among other things, Dorame requested photographs of the victims, expressed his desire to “play with them right away” upon meeting up, and set a specific date, time and location for the meeting. In April 2022, Dorame used Kik to distribute sexually explicit images of children between 4 and 6.

“[Dorame’s] lifelong and dangerous obsession with girls has manifested in an extensive collection of child sex abuse material, several attempts to procure girls for sex acts, and inappropriate relationships with then-minors,” prosecutors argued in a sentencing memorandum. “[Dorame’s] possession and dissemination of child sex abuse material are not victimless crimes, either. Here, the real victims portrayed in the child sex abuse material defendant possessed and distributed provide heartbreaking accounts of the harm they have suffered, and continue to suffer.”

The FBI investigated this matter. Assistant United States Attorney Kathy Yu from the Violent and Organized Crime Section prosecuted this case.

United States v. Rodriguez, Bocardo and Banguguilan

Two men who were found guilty by a jury last year of receiving and possessing videos of sexual assaults of severely disabled children were sentenced on February 24 to lengthy prison terms. Miguel Bocardo, 23, of Baldwin Park, was sentenced by United States District Judge John W. Holcomb to 18 years in federal prison. Cyr Dino Banguguilan, 36, of Azusa, was sentenced to 12 years in prison.

Their co-defendant – Steve Rodriguez, 38, of Pomona – systematically raped at least three disabled children for years while working as a certified nursing assistant at a group home facility in San Bernardino County. Rodriguez filmed these repeated attacks and sent some of these child pornography films to others, including Bocardo and Banguguilan.

Rodriguez pleaded guilty to eight child exploitation offenses and in January 2023 was sentenced to life in federal prison.

Homeland Security Investigations investigated this matter as part of the Los Angeles Internet Crimes Against Children Task Force. The United States Postal Inspection Service, the FBI, the Baldwin Park Police Department, the Los Angeles County Sheriff’s Department, the Los Angeles Police Department, the Pomona Police Department, and the Burbank Police Department provided assistance. Assistant United States Attorneys Catharine Richmond and Scott Lara from the Violent and Organized Crime Section prosecuted this case.

United States v. Schmitt

Matthew Timothy Schmitt, 36, of Fontana, was sentenced on March 6 to 135 months in federal prison for attempted enticement of a minor for sexual purposes. Schmitt was arrested after communicating with an undercover agent, whom Schmitt believed was a 13-year-old girl, and travelling to Riverside for sex with the minor. The court also ordered that Schmitt serve a lifetime period of supervised release. The Riverside County District Attorney’s Office investigated this matter with assistance from the Fontana Police Department. Special Assistant United States Attorney Kaitlyn Lasater from the Riverside Branch Office prosecuted this case.

United States v. Bradford

Donavin Dwayne Bradford, 31, of South Los Angeles, was charged in a superseding indictment filed on February 24 with sex trafficking four victims, including three minors (ages 15 to 17), and an adult victim, whom Bradford allegedly trafficked using threats of force, fraud and coercion. Bradford is also charged with producing and possessing child pornography featuring his trafficking victims. Bradford allegedly advertised his victims on the internet and instructed them to walk “blades,” areas commonly known for prostitution, to make money for him. He also allegedly used violence and threats of violence to control his victims. Bradford is detained pending a trial scheduled to begin on April 11.

The FBI’s Los Angeles Child Exploitation and Human Trafficking Task Force investigated this matter in coordination with the Los Angeles Police Department, the Inglewood Police Department, the Pomona Police Department, the Los Angeles County Sheriff’s Department, the Ventura County Sheriff’s Office, the Santa Maria Police Department, and the Los Angeles County Department of Children and Family Services.  Assistant United States Attorneys Chelsea Norell and Kathy Yu from the Violent and Organized Crime Section are prosecuting this case.

Indictments and criminal complaints contain allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty in court.

The charges of enticing a minor victim to commit sexual acts and producing child pornography carries a mandatory minimum sentence of 15 years in federal prison and a statutory maximum penalty of 30 years in prison.

The charges of distributing and receiving child pornography carry a five-year mandatory minimum sentence and a statutory maximum penalty of 20 years in prison.

Possession of child pornography does not carry a mandatory minimum sentence, but a conviction on this charge can bring a sentence of up to 20 years in federal prison.

The charge of conspiracy to transport minors across state lines for the purpose of prostitution carries a mandatory minimum sentence of 10 years in federal prison and a statutory maximum penalty of life imprisonment.

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These cases are being prosecuted as part of the Department of Justice’s Project Safe Childhood program, which combats the sexual exploitation of children through impactful federal criminal investigations and prosecutions. The goal of the program is to provide children with a childhood safe from sexual exploitation and with resources if they become victims.

In addition to the efforts of prosecutors and investigators in bringing child exploitation offenders to justice, authorities are engaging in public outreach efforts designed to prevent children from being victimized in the first place. Educational efforts aimed at teens encourage them to reject online solicitations, warning young people that you don’t really know someone online, especially if you have not engaged in video chats with them. Those warnings include typical “red flags” that include requests for “nudes,” to talk about sex, to meet in real life, or for money.

When any problems arise, teens are encouraged to get help from a trusted adult, to block the other person from contacting them, and to get help removing any unwanted images from the internet. If you believe you or someone you know are the victim of child sexual exploitation, please visit our website, which contains information about reporting, education, services and how to submit a request to remove child exploitation images posted online.

LOS ANGELES – A former resident of the Fairfax District of Los Angeles has been arrested on a criminal complaint alleging he defrauded investors, primarily members of the Orthodox Jewish community, by inducing them into investing millions of dollars in his security camera business and his purported real estate ventures in Israel, the Justice Department announced today.

Yossi Engel, 35, who moved to Israel in March 2021 but temporarily returned to the Los Angeles area last month, is charged with one count of wire fraud.

Engel was arrested Wednesday night at Los Angeles International Airport as he was attempting to leave the country. He is expected to make his initial court appearance this afternoon in United States District Court.

According to an affidavit filed with the complaint, Engel orchestrated a scheme in which he made false representations and used forged documents to induce victims to make investments in and provide loans for iWitness Tech Inc., a Hancock Park-based security camera company and for properties Engel falsely claimed to own and be developing in Israel.

From September 2018 to January 2021, Engel allegedly used his community relationships to defraud victims, who primarily came from the Orthodox Jewish communities in the Los Angeles and New York areas. Engel allegedly claimed to need money in the form of short-term loans with high rates of return for iWitness’ business operations, namely the purported purchase and installation of security cameras for its customers.

Engel offered short-term investments and loans in iWitness that ranged from $15,000 to $1.3 million. The investments and loans were for two weeks to six months and would purportedly provide investors with 10% to 60% annualized interest, according to the affidavit. Victims were duped, in part, by being shown copies of false and fraudulent invoices of work iWitness purportedly did with other companies.

Engel told victims that iWitness was a large business with many clients, but in fact it did not have as much business as he claimed, and work was so slack that at times iWitness employees sat around waiting for work while Engel slept on a couch, the affidavit states.

In another part of the scheme, Engel allegedly also falsely claimed to own and be developing real estate in Israel, telling victims that he needed money for redevelopment work, and falsely promising he would sell the properties and share the profits with investors. Engel showed victims a video depicting himself socializing with the mayor of Bnei Brak, Israel, and claimed to have met with the mayor concerning Engel’s purported real estate deals in the city, the affidavit states. But Engel did not have a close relationship with the mayor, and he did not discuss with the mayor these real estate ventures in the city, according to the affidavit.

Engel allegedly used fraudulent Israel land documents to dupe victims into thinking he owned these properties. Through these fake documents and his own trusted position in the Orthodox Jewish community, Engel allegedly lulled existing victims and encouraged new victims to send him money.

Engel lied to investors that he needed private investments for both iWitness and the Israeli real estate projects because he was from Israel and did not have sufficient credit in the United States to obtain the lower interest rates available through U.S. banks, the affidavit states.

But, the affidavit alleges, Engel did not use the victims’ money as promised, and instead used it for his personal expenses – including trips via private jets and casino visits – and to make Ponzi payments to investors to perpetuate the scheme.

Once the alleged scheme fell apart in early 2021, Engel fled the United States for Israel.

At this time, the FBI has identified losses of approximately $5 million. The federal criminal investigation is continuing.

A complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

If convicted, Engel would face a statutory maximum sentence of 20 years in federal prison.

In January 2023, the United States Securities and Exchange Commission sued Engel, alleging he used his ties in the Orthodox Jewish community to perpetuate a multimillion-dollar million affinity fraud.

The FBI is investigating this matter.

Assistant United States Attorney Steven M. Arkow of the Major Frauds Section is prosecuting this case.

LOS ANGELES – As part of an international law enforcement effort, federal authorities in Los Angeles this week seized an internet domain that was used to sell computer malware used by cybercriminals to take control of infected computers and steal a wide array of information.

A seizure warrant approved by a United States Magistrate Judge on March 3 and executed on Tuesday led to the seizure of www.worldwiredlabs.com, which offered the NetWire remote access trojan (RAT), a sophisticated program capable of targeting and infecting every major computer operating system. “A RAT is a type of malware that allows for covert surveillance, allowing a ‘backdoor’ for administrative control and unfettered and unauthorized remote access to a victim’s computer, without the victim’s knowledge or permission,” according to court documents filed in Los Angeles.

As part of this week’s law enforcement action, authorities in Croatia on Tuesday arrested a Croatian national who allegedly was the administrator of the website. This defendant will be prosecuted by Croatian authorities. Additionally, law enforcement in Switzerland on Tuesday seized the computer server hosting the NetWire RAT infrastructure.

The FBI in Los Angeles in 2020 opened an investigation into worldwidelabs, the only known online distributor of NetWire. Undercover investigators with the FBI created an account on the website, paid for a subscription plan, and “constructed a customized instance of the NetWire RAT using the product’s Builder Tool,” according to the affidavit in support of the seizure warrant.

While the website marketed NetWire as a legitimate business tool to maintain computer infrastructure, the affidavit states that NetWire is a malware used for malicious purposes, the software was advertised on hacking forums, and numerous cyber security companies and government agencies have documented instances of the NetWire RAT being used in criminal activity.

“Today’s action is a testament to the innovation and flexibility necessary to fighting cybercriminals who operate without borders,” said United States Attorney Martin Estrada. “Our office will continue to forge international alliances to protect our communities from cyber threats. Criminals used NetWire on a global scale, and we have responded by dismantling the infrastructure that has caused untold harm to victims around the world.”

“By removing the Netwire RAT, the FBI has impacted the criminal cyber ecosystem,” said Donald Alway, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The global partnership that led to the arrest in Croatia also removed a popular tool used to hijack computers in order to perpetuate global fraud, data breaches and network intrusions by threat groups and cyber criminals.”

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This matter is the result of the United States’ strong law enforcement cooperation with Croatia and other global partners. The FBI’s Los Angeles Field Office; the Croatia Ministry of the Interior, Criminal Police Directorate; Zurich Cantonal Police in Switzerland; the Europol European Cybercrime Center; and the Australian Federal Police conducted the investigation in this matter.

Assistant United States Attorneys Lisa Feldman of the Cyber and Intellectual Property Crimes Section and Maxwell Coll of the Asset Forfeiture and Recovery Section obtained the seizure warrant for the internet domain. The Office of International Affairs in the Justice Department’s Criminal Division provided substantial assistance during the investigation.

LOS ANGELES – Three Mexican men arrested in El Monte on Wednesday for allegedly possessing 1 million fentanyl pills have been charged in a criminal complaint with violating federal drug laws, the Justice Department announced today. 

The complaint filed today charges the following defendants – each of whom is from Sinaloa, Mexico – with one count of possession with intent to distribute controlled substances:

• Florencio Camacho Allan, 28;
• Gerardo Gaixola-Patino, 29; and
• Alex Valdez Oroz, 25.

The defendants are expected to make their initial appearances this afternoon in United States District Court in downtown Los Angeles.

According to an affidavit filed with the complaint, the defendants met with two buyers at a restaurant in El Segundo on Tuesday to discuss a 10,000-fentanyl-pill sample sale which would be followed by a deal for 1 million fentanyl pills. During the meeting, Allan and Gaixola met with the buyers while Oroz remained in the car, a white Volkswagen Jetta, the affidavit states.

After the meeting, Allan and Gaixola went to the parking lot where they allegedly sold 10,000 fentanyl pills to the buyers for $7,500. The defendants then left the restaurant under the surveillance of law enforcement.

Later that day, Allan allegedly confirmed with one of the buyers that they were interested in doing the 1 million pill deal later that day and showed one buyer the pills, which appeared to be in the Jetta’s trunk, via a WhatsApp video call.

Upon receiving information about the pills’ location, law enforcement conducted a traffic stop on the Jetta, which was stationed in a lot at an El Monte hotel, searched the car, and allegedly found approximately 1 million fentanyl pills in the car’s body and trunk. Law enforcement then arrested the three defendants on Wednesday morning.

A complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

If convicted, each defendant would face a statutory maximum sentence of life in federal prison.

The Drug Enforcement Administration is investigating this matter as part of the High Intensity Drug Trafficking Area (HIDTA) program with Homeland Security Investigations, the Hawthorne Police Department, the Fullerton Police Department, the El Monte Police Department, and the California National Guard providing assistance.

Assistant United States Attorneys Lyndsi C. Allsop of the Violent and Organized Crime Section and K. Afia Bondero of the General Crimes Section are prosecuting this case.